Government worried over falling gold price, and rice and sugar crisis

Worry as rice, sugar face crises…Govt. contemplates selling off gold amidst price jitters

April 28, 2013 | By |

With the country’s biggest earners being threatened with low prices and in one case poor production, Government on Friday admitted that it is worried about the situation and has been examining a number of measures to ease the possible impacts on the economy.

President Donald Ramotar

According to President Donald Ramotar, prices for gold on the world market have indeed impacted on buying by the state-owned Guyana Gold Board. The Head of State was responding to questions on the low rice and gold prices and on sugar production.

Gold production has been a major prop for the country’s economy in recent years raking in hundreds of millions of dollars in foreign revenues as price climbed to over US$1,800 per ounce at one time. It was an area that attracted more than US$100M in local and foreign investments last year, officials say.
Last year, gold production reached a record breaking high of 438,645 ounces, in the absence of large scale producer Omai Gold. The commodity earned US$737M. 

Investors, who have been banking on the prices to remain high, became worried after price fell below US$1,400 per ounce as news surfaced that Cyprus, one of several European countries seeking bailout for their failing economies, would be selling off its gold. Yesterday  (April 27), there were indications that gold prices have started to edge upwards again staying at around US$1,460 per ounce.

At this time also, rice and sugar are going through a crisis. Sugar fell to a 20-year production low last year with Guyana Sugar Corporation (GuySuCo) unable to meet salary payments on Friday because of its cash problems.

The matter has been compounded by a number of factors, including an unstable work force and the fact that international banks financing crops have pulled out of the Caribbean, leaving Guyana in a lurch and GuySuCo to feel the squeeze to find additional monies.
GuySuCo was only able to meet its $250M salary bill after a $1B cash injection, in the form of assistance from Government.

Rice also has been taking a beating. Last year’s production broke records and this year there has been report of significant increases in production. Yet a paddy bug in Essequibo and delays to ink a new rice agreement with neighbouring Venezuela have seen in some cases rice farmers reportedly being offered as little as $500 per bag of paddy.

Recent elections in Venezuela have delayed the signing but Government is hopeful this will be resolved in the coming days.

Prices have been hovering over the years between $2,500 to over $5,000 per bag of paddy.
There have been long lines at the rice factories throughout the Essequibo Coast as nervous farmers waited to sell their harvest.

Questioned about the situation, President Ramotar on Friday, admitted that it is indeed a worrying one. He noted that in the case of gold and rice, the situation is not entirely in the control of Government’s hands.

This year, Government is projecting real growth of 5.3 per cent, higher than last year and would be depending on the big earners to maintain its seven-year run of positive growth. Regarding gold, the President admitted that the Guyana Gold Board would have been left with some losses after gold prices fell on the world market.  “We don’t determine prices….we are more of price takers.”

The administration through the Guyana Gold Board and other technical officers are now examining the situation to determine whether to sell and cut the losses or hold on to its gold.
The President assured that the situation is being closely monitored, disclosing that similar situation had occurred shortly after he entered office.

The Gold Board, however, decided to hold its gold as the price climbed on the world market, allowing the country to even make a profit. He also said that “gold don’t spoil.”
A significant portion of the country’s workforce has migrated to the goldfields, much to the misfortune of forestry and other industries. The banks have been lending millions of dollars to buy excavators and finance mining operations.

The President also discussed the sore issue of sugar, the future of which has been questioned. The issue is being tackled in a comprehensive way. The measures include converting more cane fields to use mechanized harvesters, thus reducing the dependence on labour.

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  • de castro  On April 30, 2013 at 8:50 am

    Sugar rice gold
    Market forces will determine the future of the these industries.
    My advice is simple.
    Diversify and survive.
    Obviously the markets can go up or down but the government
    should leave that to the “marketeers”…gamblers !
    Investors who take high risks for more profit.

    Production and storage the issue…which is as important
    or even more important.
    The long term thinking is also simple…
    The world needs more food therefore agriculture is as important
    even more important than tourism.
    Gets the balances right and Guyana and Guyanese benefits.

    Suriname will be market leader in region with the completion
    of their “smelter” to produce gold bars….for world markets.
    Most of Guyana’s gold ends up in Suriname anyway as their
    Taxes are lesser than Guyana’s ….that needs to be addressed
    ASAP….forward/futures gold prices can go up or down
    therefore the decision to buy or sell is very high risked..
    The world markets will decide this…The president
    is a politician not a marketing GURU….hope he realises
    this…QE (quantative easing) as it is known is “MONEY PRINTING”
    GUYANA s dollar must be backed by GOLD as per SWITZERLAND
    INTERNALLY holding gold as a back up to its currency….guarantees
    the internal market …the excess Gold of which Guyana is a producer
    should be sold off when gold prices have peaked…or before they fall…
    Common sense approach to decision making….hope the
    President gets it right or he may become de-selefted.

    My spin entirely but economics and politrics must are so intertwined
    that one can be deceived.


  • Cyril Balkaran  On April 30, 2013 at 11:42 am

    The Guyana Gold Board needs to put its act together. They must restrict the granting of liscences to brazilians and Venezuealans who smuggle gold out of the production areas and these smuggled gold reach Suriname and elsewhere. The Gold mines in the interior lack the physical infrastructure and the security system must be overhauled. The tax structure on raw gold also needs to be revised and brought on par with that of Suriname. Our production of gold annually is five times the declared official figures but unfortunately these find their way to other shores. Remember the recent Curacao Fiasco of the smuggled gold bars! The Gold Board has to act and the sooner the better.

  • de castro  On April 30, 2013 at 5:12 pm

    Thanks Cyril for the reminder…
    maybe some form of incentive should be employed to encourage
    “Pork knockers” to sell their gold to government based on world market price.
    Offer the “gold diggers” Venez Brazil better prices and they will sell to Guyana government…market dictates.
    The gold board as you suggested must find the solution.

  • Cyril Balkaran  On May 3, 2013 at 11:19 am

    The authorities in Guyana have displayed a poor sense of Negotiation skills eversince the debacle of ownership of the now infamous Omai gold mines and Gold Plant. They bargained for a mere 5% ownership and they indeed had 5% only.While that record may be past and must be considered a big mistake to allow these foreign investors to own 95%, its a National Disgrace until Jagdeo dealt with it and Omai came under new management arrangements,
    There have been always reports of security lapses and of light planes being used to smuggle out the finished gold bars from the Omai Plant. These went to the dealers in Brazil and Venezuela. Today gold mining is a highly mechanized operation and the small “Pork Knockers” may very well be minimum. So the Gold Board must provide the solution to the smuggling of Guyana’s high premium gold bars. They must begin by providing heavily armed security network with communications in and around the gold Production mines. They must monitor the grantind of licences and deal with the law breakers and Smugglers. The Guyana Government is the owner of the mines and lands where the operation is taking place and it is their duty to invite prospectors and set the rules. The other day it was reported that an American TV crew came in the area and filmed the processing of raw gold into Gold Bars and they too were given liscences to operate in the gold fields. What is going on. The President must order an Investigation into the operations of this entire Gold operations in Guyana nad the Gold Board has a lot to answer for. Bad management has always caused any profitable industry to collapse and fail. This is no ordinary market nor business!
    It is gold overwhich wars were fought Wake up Mr President and take some action before we lose all our gold and gold fields!

  • de castro  On May 9, 2013 at 2:34 am

    I share your sentiments on the Gold issue….
    Bank of Guyana (central banks) should always hold Gold to back their money printing (alias QE ..quantative easing in today’s jargon)
    As a producer and not a consumer GUYANA is in a very “strong” position
    in the market place …but it must be decisive in its fluctuations in world markets
    as Gold is a high risk product to speculators.
    China India and some others big players in the gold markets.
    Soros the gambler billionaire another.
    Politics has everything to do with economic
    but must remain seperate in decision making.
    Get it right and its a win win situ..
    Get it wrong could be fatal…
    Comrade Ramotar better get it right first time.


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