Dear Editor,
The political opposition’s push to “right-size” the sugar industry presents a direct threat to the current economic model that shields the rum industry. While the government uses oil revenue to maintain the status quo, the opposition argues for a transition toward a strictly sustainable and profitable model, which would likely mean closing high-cost estates and reducing the massive state subventions that currently keep molasses prices artificially stable. For Demerara Distillers Limited and Banks DIH, this right-sizing would almost certainly translate into a sharp increase in production costs and a potential supply crisis.
If the opposition’s proposals were implemented, the immediate casualty would be the “molasses pipeline.” Historical data shows that when sugar estates were shuttered in the past, DDL was forced to import molasses from as far away as Nicaragua to meet its requirements. These imports come with high logistics costs and the risk of price volatility that a state-subsidized GuySuCo currently absorbs. For a company like DDL, which has warned that it cannot indefinitely manage the increased costs of imported raw materials, a right-sized sugar industry would likely lead to higher shelf prices for its prized rums and a potential rationalization of its global market presence.
Furthermore, the opposition’s focus on management accountability and value-for-money challenges the government’s use of sugar as a social and industrial buffer. If GuySuCo were forced to operate on a commercial basis without the current $8.4 billion annual support for wages and salaries, the price of every pound of sugar used by Banks DIH for its food and beverage divisions would likely rise. The “Demerara” brand’s competitive edge is currently sharpened by the fact that the Guyanese taxpayer, via oil revenue, picks up the tab for the industry’s operational inefficiencies. Stripping away this support in the name of fiscal responsibility would force the rum industry to compete on an unlevel global playing field without its state-funded advantages.
Ultimately, the debate over right-sizing is a debate over who should bear the cost of Guyana’s industrial heritage. The opposition argues that the current model is a reckless reward for failure, while the rum industry’s success suggests it is a highly effective, if opaque, industrial strategy. If the right-sizing advocates prevail, the “management fee” for the rum industry would shift from the national budget directly onto the balance sheets of DDL and Banks DIH, testing whether these icons can survive in a world where the sugar they rely on is no longer a subsidized guarantee.