Guyana: Growing Caricom competition for regional sugar markets – 2 articles

Prime Minister Moses Nagamootoo addressing the opening of the National Conference of Private Cane Farmers.

Guyana facing growing intra-Caricom competition for regional sugar markets

Friday, 14 August 2015- Demerara Waves

Photo: Prime Minister Moses Nagamootoo addressing the opening of the National Conference of Private Cane Farmers.

The Chairman of the Board of Directors of the Guyana Sugar Corporation (GuySuco), Professor Clive Thomas and the entity’s Chief Financial Officer (CFO), Paul Bhim on Friday differed about the viability of marketing sugar in the Caribbean due to increasing competition from sister producers.

Delivering a presentation at the inaugural National Cane Farmers Conference, Thomas said one option open to the loss-making entity is to sell more sugar to sister Caribbean Community (Caricom) countries by taking advantage of market protection through the 40 percent Common External Tariff (CET).  

In contrast to large producers like Brazil that would hardly be interested in tapping into the small regional market because it would be too expensive. Thomas reasoned that Guyana could take advantage of cheap marine transportation and ship quantities of the sweetener to Caricom and greater Caribbean markets. “We have an advantage in terms of transport….We have a built-in transport premium that we can exploit in the sale of our sugar,” he said.

But Bhim, in his presentation, argued that marketing sugar in the Caribbean might not be so easy because of emerging competition from sister Caricom producers- Belize and Jamaica- that are also eligible for CET protection from extra-regionally produced sugar. He noted that already Belize has been making inroads into the Trinidad and Tobago market. “Guyana, which had basically a monopoly in terms of selling sugar into Caricom is also facing competition from within Caricom itself,” said Bhim. He said due to lower world market prices, Belize and Jamaica have been turning to regional markets.

Another challenge, the GuySuco official noted that several importers-mainly Trinidad and Tobago- are purchasing sugar from outside Caricom, paying the CET and selling it cheaper than what Guyana could sell at.

Minister of Agriculture, Noel Holder told the opening of the National Cane Farmers Conference that GuySuco sold 17,434 tons of sugar to the Caribbean in 2014, and projects to increase that figure by 69 percent  in 2015 to 29489 tons and a further 42 percent in 2016 over 2015 to 41,784 tons.

“With the dwindling exports to Europe, the Corporation has begun to tap into the Caricom market; sales of direct consumption and packaged sugar have been the focus in this region,” said Holder. Saddled with producing sugar at 40 US cents per pound and selling it back at about 16 US cents, a Commission of Inquiry is next month expected to recommend the future path of the industry that directly employs 16,539 persons, accounts for 9.5 percent of Guyana’s Gross Domestic Product (GDP) and US$87 million in export earnings in 2014.

Professor Thomas said Guyana should also seek to market its Demerara sugar as an authentic Guyanese product to the Diaspora.

“We need to find a way to make it known to the rest of the world and certainly beginning with our Diaspora legitimate Demerara sugar can only come from Demerara, Guyana, it can’t come from anywhere else,” he said.

However, marketing Demerara-branded sugar in the United States and Canada by GuySuco is not possible because Bedessee Limited has won a court case against GuySuco after the latter had challenged that company’s acquisition of sugar from Mauritius and branding it as Demerara Gold.

GuySuco is now banking on the success of Enmore Crystals in the North America and Canada through a marketing and distributorship deal that would initially start with 20,000 tons at a “premium price,” said Bhim.

The company hopes to place greater emphasis on packaged sugar rather than bagged sugar “in order to improve on that average price that we get for sugar,” he said.

————————-

The future of the Barbados sugar industry – Direct consumption

Published on August 14, 2015 – caribbeannewsnow.com – By Aisha Reid sugar_industry.jpg

BRIDGETOWN, Barbados (BGIS) — Barbados has had a long tradition of producing some of the best quality sugar in the world. However, although the industry remains an important contributor to foreign exchange earnings, rural employment and the environment, the removal of the European Union’s subsidies has meant that Barbados can no longer produce sugar competitively using its current model.

Moreover, according to recent market forecasts, a 30 percent decline in world sugar prices is predicted in 2016, with no increases likely until 2020.

Representatives of the ministry of agriculture, as well as players in the industry, have recognised the need for a different approach. So far, one of the ways identified has been an increase in the production of ‘direct consumption’ sugar. This will involve more sugar being sold locally and regionally, as well as through high-value exports to major retailers in the United States, United Kingdom, the Middle East and even China.  

In 2008, the West Indies Sugar Trading Company (WISTCO) was established as a partnership between the Barbados Agricultural Management Company (BAMC) and players in the private sector, to further develop the sugar industry on the island.

So far, the company has developed a direct sugar consumption brand known as Plantation Reserve. This Barbados-produced sugar receives approximately three times the average world price, and the brand can be seen in retail stores in Barbados, the Caribbean, the UK and the EU. Plantation Reserve Sugar sachets can also be seen in a number of restaurants and hotels around the island.

Minister of agriculture, food, fisheries and water resource management, Dr David Estwick, believes that direct consumption is indeed one of the ways forward if the sugar industry on the island is to make a turnaround.

“It has created BD$1.98 million (US$990,000) in added-value to the industry above the world sugar price in 2013. And while there has only been a limited amount of direct consumption sugar available to date, the success of the brand across multiple countries forms the basis for expanding direct consumption sugar production and creating a genuinely profitable industry in the future,” Estwick indicated.

He continued: “WISTCO will sell all of the approximately 2,000 megatonnes (MT) of direct consumption sugar that was produced by BAMC in 2015, around 15% of annual production. We are actively looking to drive a significant increase in the coming years in order to contribute further to the industry. Our sales projections for direct consumption are practical, achievable, and are based on increasing distribution worldwide based on our existing sales into retailers and manufacturers in Barbados, the Caribbean, UK and the European Union. In 2016, we project sales of 5,000 MT; in 2017, 8,000 MT; in 2018, 10,000 MT; and in 2020, 25,000 MT.”

The sugar industry in Barbados is in the first stage of its transformation, and to meet the projected figures for direct consumption, an excess of 250,000 MT of sugar cane will need to be grown across the island.

As the stakeholders in the industry seek to develop and explore markets for the Plantation Reserve brand, it is expected that this new venture will again show the world the quality of sugar that can be produced right here in Barbados.

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Comments

  • albert  On August 15, 2015 at 12:40 pm

    Really feel for these guys trying their best to market the product of a dying industry. Thomas, a brilliant economist with ideas, is now in the real world of business. Its tough to compete with declining global production cost and consumer search for alternatives with new dieting trends. We rarely use raw sugar in my home. Splenda and and some new substitutes is a growing industry.

  • Rosaliene Bacchus  On August 15, 2015 at 1:26 pm

    Phasing out sugar while transitioning to another cash crop or crops may be a solution.

  • Ron. Persaud  On August 15, 2015 at 6:55 pm

    DC, YC & WC – 3 terms that are indubitably “Demerara” and “Sugar” in name and nature.

    Dark Crystal – 2lb. for 13 cts. ever since I was old enough to fetch home the week’s groceries from the Kassieram’s “Parlour and Grocery”; at the corner of James and Hunter streets in Albuoystown. It appeared second on the list – preceded by flour and followed by salt. It was the sweetener of the working class. It is my opinion that the higher molasses content with its trace elements did good to both a working adult body, and a playing youthful one.

    Yellow Crystal – might have been a bit (8 cts.) per lb. But that is what sugar should be. The crystals were large and separate, translucently gilt.
    The product poured.
    It was kept in a crystal clear jar and reserved for use when relatives from the country visited. After all, a trip to town had benefits – like YC sugar and baker-shop bread.
    So, GUYSUCO, quick! Patent “DEMERARA YELLOW CRYSTAL” sugar before Mr, Bedessee beats you to the punch – again! And ….. You are most welcome!

    White Crystal was always referenced by its full name because the initials were associated to the WC that healthy Guyanese children were encouraged to visit at least once a day. (also Number 2 on another short list). In my time it was made at Uitvlugt and Wales. Guyanese probably were prejudiced against white sugar because it was not sweet enough (the molasses factor again). Incidentally, I was told than a certain African country developed its own sugar industry at great expense and over a long time. To the consternation of the planners, the people refused to buy the brown sugar; they having been accustomed to imported (white) sugar.

    It has been said that ‘Capitalism’ earns; ‘socialism’ spends. My opinion is that the Guyana Sugar Industry may now offer the opportunity for a new approach – one that embodies elements of both systems for the continued upliftment of sugar workers. As far as I can remember that has been the stated goal of every political personage and party.

    I am reminded of a quote attributed to Disraeli “Strange that a commodity which comforts infants and soothes old age, should so often occasion a political disaster.” Forgive any inaccuracy. I invoke the privilege of age.

  • Clyde Duncan  On August 15, 2015 at 9:11 pm

    I believe natural Demerara sugar is the best – It comes down to marketing and packaging our sugar for the marketplace and consumers.

    Artificial sweeteners have been the subject of intense scrutiny for decades. Critics of artificial sweeteners say that they cause a variety of health problems, including cancer. That’s largely because of studies dating back to the 1970s that linked saccharin to bladder cancer in laboratory rats. [Only in Canadian rats, the USA said, because Canadians discovered that side effect]

    Yet many other claims — confusing claims — have been cited over the years. Studies spanning the past 40 years have suggested alternately that sugar-substitutes may be ‘potentially helpful,’ ‘potentially harmful,’ or have ‘unclear effects’ with regard to your health; new evidence, in fact, state that people who frequently consume sugar substitutes may be at an increased risk of excessive weight gain, metabolic syndrome, type 2 diabetes, and cardiovascular disease.

    Taken together, findings from all of the studies suggest that consuming artificial sweeteners is just as bad for you as sugar … and artificial sweeteners may even exacerbate the negative effects of sugar.

    Demerara sugar – the natural cane sugar is the best – we need proper packaging and marketing of the commodity for the consumer to choose wisely.

  • Clyde Duncan  On August 16, 2015 at 6:54 am

    Here is a marketing example:

    Do you remember back when Red Bull first came out?

    It seems so long ago… I remember thinking it was cool that they used a smaller can to distinguish their drink from all others immediately.

    This way you knew right away that you were drinking a Red Bull – instead of some generic soft drink:)

    But now you see all kinds of energy drinks, with all different shapes and sizes.
    You have the over-sized Monster Energy drinks to the tiny 5-Hour Energy shot bottles.

    So why this sudden popularity in energy drinks?

    Well, partly it’s the marketing hype… but I think the other reason is that we’re all deprived of energy. Over-worked and under-rested means people depend on stimulants to keep up with the hectic pace.

    Is it healthy? Of course not… but I seriously doubt that people are going to slow down any time soon.

    So what’s the alternative? Well, other than getting more sleep and trying to find a happy balance in your life…

    – you can consume this natural energy drink instead. You can make this yourself because there’s nothing to it – except this one vegetable. And the great thing is, it’s not bitter and nasty like kale… it’s actually quite tasty.

    And it’s been shown to significantly boost your energy and stamina!

    http://www.maxworkouts.com/articles/entry/The-Natural-Energy-Booster

    Stay Lean,

    Shin Ohtake

  • walter  On August 16, 2015 at 10:11 am

    I don’t believe that the sugar industry is a dying industry. Used as a Vote Getter, maybe. In the stores the rising popularity of pure sugar can be seen, larger counter spaces, probably an off shoot of the cooking shows. Artificial sweeteners are going away slowly too. The idea of Caricom “Partners” getting into sugar production, might be another reason for us to get out of Caricom. Naïve maybe, but I think, modernised, streamlined, rebranded, people tend to forget, taste, good, strong, powerful. I never, did,nor would I ever buy that fake Guyana sugar. Hope it rebounds, and take it’s rightful position above the others.

  • Ron. Persaud  On August 16, 2015 at 11:46 am

    IN GUYANA, “the sugar industry is a dying industry.”
    The cost of production is too high for world competitiveness. In my time some ‘buffering’ was provided through the Commonwealth Sugar Agreement which was negotiated annually for the next seven years. That is why things like “Profit Sharing” and minimum wage increases were negotiated in arrears.
    The reasoning went like this. For the next seven years, the price for sugar is set at $ XX per ton. We can now negotiate a minimum wage increase for the year 2012 and afford the back pay and the new minimum wage going forward. When we see what happens next year, we will negotiate for 2013. That is the best way I can explain it.
    I really do not know if any favorable agreements or quotas exist. If they do not, then the sugar industry as I (and maybe, you) know it will cease to exist.
    If you spend a dollar and make back anything more than a dollar, you can stay in business no matter how tenuously. But if the return is less than a dollar, you will go out of business.
    I have often said that I can sell anything in the USA. It is a big country with a massive consumer base. The trick is finding that niche for the dried cow dung which I can process and deliver better than anyone else.
    I really do hope that UG and/or GSA are jointly or severally pursuing agricultural diversification – aggressively!! In my time there was the Other Crops Division, headed by Dr. Muller. Black-eye at Albion and cucumbers at Wales were two potential alternatives.

  • albert  On August 16, 2015 at 12:12 pm

    I did my research on sugar, sugar substitutes and diabetes some 2-3 years ago and dont have the detail information only some broad conclusions.
    Two of the major health issues in the US are obesity.and diabetes, especially in young people. Obesity is considered a contributing factor to both diabetes and heart probems. What has been the overwhelming response? cut back on calories, sugar, and fattening stuff, eat more vegetables/fruits, exercise etc.
    Here comes sugar substitutes…..two I know of that are recommended by health authorites are splenda and ? Splenda is actually sugar but the chemicals causing the calories has been removed in a manufacturing process involving chlorine. Thus the end product is sweeter than sugar without the calories. Sugar producers actually sued splenda for using the name “sugar” and loss. The drawback with splenda is that the end product might have a residue of chlorine but it is considered harmless. Secondly, those with a sweet tooth retain the desire for sweet tasting substances. Next time you visit a major super market observe the different variety of splenda on display vs sugar. Incidentally, there are even medications tested to reduce obesity but the insurance will not pay for it and this removed the incentive for production.

    In business if you are not growing you are dying. Major sugar producers are looking for alternatives. Hawaii has turn to pineapples and multi farming. Its tough to compete in the global market where some producers pay starvation wages to canecutters and buyers are looking for the cheapest sellers.

    What I am writing is now old history. One only has to look at what businessmen are saying/investing in and the commodity/stock markets.These guys put their money the same place as their mouth.

  • walter  On August 16, 2015 at 12:39 pm

    I am sure that “Caricom” nations willing to invest in a dead industry, have read all the pro and cons (hopefully) before investing their hard earned taxpayers dollars. The value of pure ingredients is making a huge impact on the “Whole Food” generation. I would hazard a guess, Hawaii has a proximity problem. We, Guyana, still have a slight edge in the labour cost department. A more streamlined production, and manufacturing, combined with some North American branding and marketing, looks like a good bet to me. Don’t forget my observations and views are based on ninety percent Hope and ten percent knowledge.

  • Gigi  On August 16, 2015 at 1:44 pm

    Several years ago I read an article on Brazil’s gradual modernizing of its sugarcane industry by replacing cane cutters with machines/vehicles that can cut the cane much faster and cheaper. The reason for this gradation strategy was to retrain cane cutters in another field and move them into alternative employment at incremental rates rather than eliminating their positions and have them suffer, and Brazil, ultimately, undue hardships. The human factor – the backbone of every country – should always be considered.

    Most of Brazil’s fuel (Biofuels) contain ethanol from sugar cane which increases fuel efficiency. There are also other benefits to ethanol fuel such as its renewable factor and its role in reducing green house gas emissions.

    We do not use artificial sweeteners. We did the competing research and arrive at our decision. We do purchase both white and brown sugar because while my kids prefer to drink their tea without milk, claiming it affects the flavour, they all drink their tea with sugar and some prefer brown to white and vice versa. I don’t use sugar in my tea but I HAVE TO HAVE MILK (this is a result of my days living in G/T without having milk some days. When we lived in the country, we used to throw away milk). I don’t buy the ‘sugar in the raw’ brand of brown sugar. I actually buy the moist brown sugar, which is basically white sugar that has molasses added back to it. How stupid is that? Why take out the molasses to the point of bleaching the sugar white only to add it back? I also buy sugar cubes – both brown and white – when I can find them because my kids like the concept. In Guyana, my mom used to throw out the sugar lumps. The more things change, the more they stay the same.

    Privatizing the sugar industry and other state control industries is not a good decision if Guyana wants to retain control over her sovereignty.

  • albert  On August 16, 2015 at 2:36 pm

    Gigi: “Privatizing the sugar industry and other state control industries is not a good decision if Guyana wants to retain control over her sovereignty”

    The above piece caught my attention. Nationalizing the sugar industry was one of the most unwise thing I think Burnham did from a business point of view….and I venture to guess, as a socialist, Cheddi did not disagree with him. For one thing those politicians have no idea how much it cost us in foreign exchange. Bookers agencies: shipping, insurance, brokerage, head office administrators and others wanted extra funds upfront. No credit for a risky country. The sugar industry is organised as a private enterprise…..not to be controlled and manage by politicians. How could they compete with central american producers for major markets.
    AS an example Dominican Republic sugar industry is large, privately owned and pay cut throat slave wages because they have a large pool of unemployed. On my visit last year they seem to be striving.
    I think the sugar industry in Barbados is still alive and is private….wonder how those private thinkers are surviving.

  • Ron. Persaud  On August 16, 2015 at 6:24 pm

    Nationalization of the sugar industry was a good thing for the country and the national interest. Managed along Capitalist principles it made profit. Which was spent along Socialist principles – the sugar levy, for example. Throw in the politics; a labor force that was not supportive of the Government, a few little tin gods claiming to represent the sugar workers (didn’t you see that coming?), but in reality, making unreasonable demands and all they were interested in was their ‘average day’s pay’.
    And I must take strong exception to the notion that Guyanese were not competent to run the industry. The number of non-Guyanese in management positions at the time of nationalization could be counted on the fingers of one hand.
    Guyana was the leader in both Factory and Field technology in the Caribbean.
    The failure lies elsewhere.

  • Ron. Persaud  On August 17, 2015 at 3:32 am

    Brazil probably saw the writing on the wall and used sugar cane to produce ethanol instead of sugar. I believe that they mandated a 15% ethanol content in all gasoline blends; but they also modified the engines to accommodate this change. It is very difficult to make any clear cut statements about ethanol; except that it seems to work for Brazil.
    http://ask.metafilter.com/40494/Ethanols-pros-and-cons

    • albert  On August 19, 2015 at 1:50 pm

      Ron: It is very difficult to make any clear cut statements about ethanol; except that it seems to work for Brazil.

      Something to chew on from my research some 5 years ago. There are millions of “mixed fuel”cars in the US that can run on ethanol or methanol. It may be 100%. Many consumers dont know they have vehicles that can do this. Think they were largely Ford cars. If memory holds there is a software converter that could convert some regular gas cars to use ethanol. The problem is that technology changes so rapidly that a new form of energy may dominate in the future.

  • Gigi  On August 18, 2015 at 3:24 pm

    @Albert, take a look at Dave Martins’ ‘Gems I stumbled Upon’ post and view the video by the Indian PM to get an brief insight into how privatization impacts a country’s economy.

    Does Guysuco produced sugar cane syrup? Several years ago I purchased a 750ml bottle of cane juice syrup at a farmer’s market during a vacation get away. It was the first and only time I came upon this treasure. I think I paid around $12 – $15 for the bottle and it was worth it. We used it for tea and as a syrup for pancakes/waffles/french toast. I also used it to make bake and my bake was the best I’ve ever made since leaving Guyana. I’m sure it can also be used in place of corn syrup for baking pies and other desserts. The cost works out to about the same cost for 3 bottles of corn syrup, and I would take sugar cane syrup any day over corn syrup. And I’m sure others will!

  • Ron. Persaud  On August 18, 2015 at 7:57 pm

    It would be ironic if sugar turned out be a by-product of say- alcohol production; or cane syrup – a by-product of bagasse production. But even if the demand for those end-products went through the roof, I doubt that Guyana could exploit the market. The raw material, sugar cane, delivered to the factory would be prohibitively expensive. And mechanical harvesting is not a practical solution. Soil physical properties do not allow for a field layout that would facilitate the efficient use of mechanical cane harvesters.

  • albert  On August 18, 2015 at 9:01 pm

    Gigi: “………brief insight into how privatization impacts a country’s economy.

    What this speaker is saying is very old news debated several times. If England was to provide reparation to all the countries it did harm it would go bankrupt.
    We all have to be concerned about the one percent private owners who own most of America.

  • walter  On August 19, 2015 at 11:39 am

    I was talking “Sugar” because I thought that all that Rum etc. produced in Guyana was from Guyana sugar cane and that was a large revenue generator. Is it not, or is it too small to matter? I was so sure the discussion was exploiting other potential income sources.

  • Ron. Persaud  On August 19, 2015 at 4:21 pm

    I believe that Walter is on to an idea. The trouble is that:-
    Sugar cane is the raw material for many end-products.
    It has to be grown and delivered to the specifications of the processor!
    In my time one of the end-products was raw sugar; not for consumption, but for refining in the USA. There were strict specs. Shipments were penalized – even rejected, if they were not up to specs.
    At Uitvlugt and Albion there were distilleries which processed molasses, a by-product of raw sugar manufactory, into alcohol. I am sure that the molasses had to meet rigid specs.
    So, to produce alcohol, one had to first produce raw sugar.
    In the processing of cane juice into raw sugar, the cane juice extracted in the mill house, is carefully thickened into a syrup. Perhaps the best known was “Tate & Lyle Golden syrup”. Looky here!
    https://images.search.yahoo.com/search/images;_ylt=AwrBT4HB3NRVyYQAmwlXNyoA;_ylu=X3oDMTByMjB0aG5zBGNvbG8DYmYxBHBvcwMxBHZ0aWQDBHNlYwNzYw–?p=Tate+%26+Lyle+Golden+Syrup&fr=mcafee

    Well yes! If the customers want syrup, sell them syrup. No need to go the extra step and expense.
    I have to tell you that to have an adult reach up into the syrup tank and scoop some of the thick sweet stuff on a chunk of sal’ bread; and hand it to you to eat; to have the sweet sticky stuff and bits of bread crumbs sticking to your face; is to grow up in Guyana with loving adults. So thank you very much, Cecil Wade, wherever you are.
    In Guyana bagasse was the boiler fuel to generate steam. I once witnessed a boiler attendant berating a Senior Engineer over the moisture content of the bagasse that was coming into the boilers. Specs. again and again!

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