GUYANA: GuySuCo sells bulk sugar for half the cost of production

GuySuCo’s CEO, Sasenarine Singh.

Mar 23, 2021- Kaieteur News – The Guyana Sugar Corporation (GuySuCo) has in recent years found itself in dire financial straits with newly appointed Chief Executive Officer (CEO), Sasenarine Singh, now conceding that the industry currently sells bulk sugar for about half of what it costs the industry to produce.

Compounding the situation, the three factories that Singh have been tasked with resuscitating—shuttered by the David Granger administration—are in fact now ‘junkyards’ the like of which the new CEO describes as, ‘Sanford and Son’ type facilities.       

Singh gave the damning revelations on Monday during a candid interview with moderators Dr. Asquith Rose and Charles Sugrim—broadcast by Globespan24X7.

The newly appointed CEO told the moderators that the industry currently sells sugar for just about US$340 on the international market but its production cost is closer to US$600.

He said, the sale of bulk sugar was unprofitable for the industry, hence the decision to move away from a focus on production to a more market-driven industry, with an emphasis on value added sales.

Pointing to the packaged sugar produced by GuySuCo, Singh noted that only 29 percent of its production winds up in the value added chain.

According to the CEO, the industry can rake in, in excess of US$670 per ton selling packaged sugar.

He noted, however, that this past year the industry was only able to export about 29 percent of its packaged sugar.

The CEO has since projected that the industry is looking to increase its sale of packaged sugar by at least 10 percent this year.

“Selling at US$300 a ton when production is US$600 doesn’t make any economic sense…what we are focused on is getting a greater percentage of the business at a profitable level,” Singh said.

The new CEO disclosed too that gone are the days when the sugar industry produced and sold upwards of 300,000 metric tonnes of sugar annually.

He said, the industry has since set itself more moderate targets by looking to produce just about half of that but with a greater focus on value added sales.

Singh pledged too, to focus the industry efforts on greater partnerships with the private sector. According to the CEO, “it is very important for the private sector mentality to invade GuySuCo.”

This, Singh posited, since the industry is “too stuck in democracy” as he lamented the amount of loopholes to get basic things done.

He said too, that key among the industry’s new efforts under his stewardship, in addition to increasing revenue, is cost cutting measures, in addition to greater diversification on the value added front.

Singh cited as an example, agro energy and ethanol production.

While not getting into details, Singh documented examples of revenue wastage such as on the purchase of parts where GuySuCo had been found to be paying as much as 10 times more that the item can be acquired for.

With regards to the move to a more value added focus on production and likely added cost, Singh illustrated for the moderators that this would be negligible since it would cost the industry just about US$50 to convert bulk to packaged sugar.

Speaking to the resuscitation of the estates that had been shuttered by the now ousted coalition, A Partnership for National Unity, Alliance for Change (APNU+AFC) administration, Singh lamented, “GuySuCo in 2010 and 2011 was a kingdom compared to what we have.”

He said that the facilities have become so dilapidated that a visit to the Rose Hall estate recently documented that there were only two tractor frames at the location when records show that there were 17 functional tractors left at the estate.

“After three years of plunder by the Ramjattan administration, they left frames…it was a disaster that’s why I said Sanford and Sons.”
He told the moderators “…on those three estates…it is a junk yard…we have to rebuild from scratch.”

The sugar industry, according to its new CEO, managed to produce some 88,898 tonnes of sugar with 22,000 tonnes being consumed by the domestic market.

The United States of America, he said, had been providing a preferential price for Guyana’s sugar for about 12,500 tonnes even as the industry looks to secure additional US customers.

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Comments

  • brandli62  On 03/24/2021 at 5:09 am

    Hardly a sustainable practice…… At least, the new CEO is recognising the many problems… and does not blame all the problems on the previous government.

    Given that Guyana was in the past with Brazil and South Africa in the group of low cost sugar producers, it should be possible to get profitable again, if the industry is properly managed and costs are cut. I would look at Brazil to understand how the remain profitable and competitive in sugar cane production. Mechanisation and land reform may be part of the secrete ingredients.

  • Peter De Abreu  On 03/24/2021 at 8:24 am

    1) There are 2 countries selling packaged brown sugar in Canada as “Demerara” sugar.
    Guyana needs to protect that name just as France has protected the name “Champagne “.
    2) ask Brazil for help in converting the bulk of sugar production to ethanol
    3) We should treat oil as though it were cocaine; sell it but don’t use it. Oil revenue should be used to make Guyana self sufficient in green energy. When the oil runs out we will survive and be free from economic dominance by 1st World Countries.
    4) Start bottling cane juice and exporting it as a health/Sport drink. Jamaica bottles coconut water, freeze it and ships it to Canada.
    Please let us stop this blame game. The sugar industry has been in decline long before the Granger Administration. Let’s just buckle down and do what’s necessary to make the sugar industry profitable. This would most likely mean mechanizing the production along the lines of the Australian industry .
    My 2 cents.
    Bro Pete

    • brandli62  On 03/25/2021 at 4:18 am

      All good points, Bro Pete! I could not agree more. Mechanisation will be key, particularly in light of labor shortages that will come inevitably with the expanding oil sector and its growing demand for services onshore.

    • Dennis Albert  On 03/25/2021 at 2:35 pm

      Ya most Caribbean and South American brand names are actually from Sri Lanka or Thailand. The West Indian stores in America and Canada continue to sell the “Demerara Gold” sugar from Sri Lanka.

  • wally n  On 03/25/2021 at 3:02 pm

    well for years my wife bought… never had time to read the label

    Demerara sugar is produced from sugarcane and consists of large grains which provide a nice, crunchy texture in baking. It originates from Guyana (formerly Demerara) in South America. However, most demerara sugar available today comes from Mauritius in Africa.Aug. 20, 2018
    There is a large market, outside Guyana… Guyana should “steal” a page from bedese… has good marketing….but first might have to fix that minor production problem…then watch the money flow..in.

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