— GuySuCo projected to be ‘cash positive’ in 2020

FOR the next two years, the Guyana Sugar Corporation (GuySuCo) would require financial support to stay afloat, but by 2020 the corporation is expected to be ‘cash positive’ with no need for Government’s intervention, according to GuySuCo Finance Director and Deputy Chief Executive Office (DCEO) Paul Bhim.
Bhim was among senior officials from the sugar corporation who addressed reporters on the future of the sugar industry during a televised press conference at the National Communications Network (NCN) on Friday.
Yusuf Abdul, General Manager,Technical Services; Deodat Sukhoo, Chief Industrial Relations Manager; Gavin Ramnarain, Head of the Agricultural Research Centre and Audreyanna Thomas, Senior Communications Officer were among those who sat on the panel.

“Profitability at the end of 2020 may not be ‘possible’,” Bhim posited, but said the corporation has its eyes fixed on becoming “cash positive,” thereby removing its dependence on government’s subvention.
“In 2018 and 2019 we could see ourselves still needing subvention but by 2020 we should be self-sufficient and cash positive,” the DCEO emphasised.
For decades billions of taxpayers’ dollars have been pumped into what is now considered as the ailing sugar industry.
In 2015, GuySuCo received a $12B subvention. That year, the corporation had raked in $19.6B in revenues, but its labour cost stood at $21.4B. Bhim said in addition to labour, $2B was needed for the purchase of fertilisers, another $2B for fuel, while transportation expenses totalled $1.4B. Also in 2015, the sugar corporation was required to repay the National Commercial Bank of Jamaica $2B.
In 2016, the corporation received a reduced subvention of $11B, and though its labour cost that year – $18.3B – did not surpass the revenues garnered – $20.9B – Bhim said the corporation still had to clear expenses relating to fuel, transportation and fertiliser, among other things.

This year, GuySuCo was given a $9B subvention. The corporation is forecast to have garnered $17.4B in revenue, while labour is expected to cost the corporation $18.5B.
In unveiling government’s White Paper on the future of the sugar industry in Guyana to the National Assembly in May 2017, Agriculture Minister Noel Holder said that the future the industry lies in a smaller sector, with reduced losses and cash deficits, but coupled with a separate and profitable diversified enterprise, which would ensure a viable future.
In accordance with that White Paper, it was outlined that the “New GuySuCo” would consist of only three estates and three sugar factories. The estates would be Blairmont on the West Bank of Berbice, Albion-Rose Hall in East Berbice and the Uitvlugt-Wales estate in West Demerara.

The three estates will be complete with factories and will have cane supplied from all five locations. By virtue of the amalgamation, the Enmore, East Coast Demerara (ECD) and Rose Hall, Berbice factories will be closed by year-end. In the case of Enmore, that factory will be closed at the end of the year when all canes would have been harvested and the East Coast estates would be earmarked for diversification.
REDUCED WORKFORCE
With a contracted workforce of about 10, 000 from a high of 16, 000, and focus on only three estates and three factories, Bhim said sugar production in 2020 is estimated at 150, 000 tonnes. But with Blairmont having the capacity to expand, another 10, 000 tonnes could be produced.

That tonnage is expected to satisfy demand in the local market (25,000 tonnes pa), CARICOM and regional (50,000 – 60,000 tonnes pa) USA (13,000 tonnes pa) and the World Market (50,000) tonnes.
Between 1959 and 2009, the sugar industry operated in a largely protected market with Guyana being among nine countries to have benefited from the Commonwealth Sugar Agreement (CSA). Additionally, Guyana along with other African, Caribbean and Pacific (ACP) states benefited subsequently from the Sugar Protocol under the ACP-EU preferential system. It also had access to the Canadian and U.S. markets at preferential rates.
Preferential sales to the EU market accounted for 50 per cent of the company’s sugar output and 70 per cent of its revenues. In November 2005, the European Agriculture Council (EAC) decided to reduce the guaranteed price for sugar by 36 per cent over a four-year period that began in 2006. The EU was forced to withdraw the preferential treatment as a consequence of global pressures to liberalise its trade.
And though a large quantity of sugar is still being sold to Europe, Guyana continues to reel from the effects of the significantly reduced price of sugar.
“The world market price is about US$310US per tonne, if you think about when we were getting the preferential price, on average we were getting about US$600 per tonne,” the DCEO pointed out.

Cognisant of the challenges facing the sugar industry, he said the corporation this time around will be placing significant emphasis on value-added sugars.
Currently, the corporation is shifting its focus from producing raw sugar to bagged and packaged sugar. “We are also looking at doing something called Plantation White Sugar. Plantation White is really a substitute for refined white sugar,” Bhim added.
According to him, CARICOM on an annual basis imports approximately 190, 000 tonnes of refined white sugar, but research has indicated that it needs only about 10 per cent of refined white sugar to make certain products and the rest could come from plantation white sugar.

Bhim said if Guyana, Jamaica and Belize – members of the Sugar Association of the Caribbean – could press the CARICOM Secretariat to grant them the Common External Tariff, white sugar coming in extra regionally could attract a tariff of about 30-40 per cent. At the moment brown sugar attracts a tariff of 40 per cent. Such a move would make Guyana’s plantation white sugar competitive, Bhim posited.

“That’s about it in terms of sugar production, not forgetting we also have molasses, [and] we are looking at cogeneration at Albion in particular,” the DCEO he added.
As part of its new business model, the Senior Communications Officer Audreyanna Thomas said GuySuCo at its Albion Estate and factory will be focusing on bulk sugar, plantation white sugar, cogeneration and molasses.
At the Blairmont Estate, the focus will be on bagged and packaged sugar, while at the Uitvlugt Estate and factory would bag plantation white sugar.