Radical changes could make GuySuCo profitable

Dear Editor,

As uncomfortable as it is to admit, we must acknowledge that the Guyana Sugar Corporation’s financial position is dismal and, in many respects while a lot is being done to improve the operations of the estate, if the industry cannot compete in a globalized market, then it will continue to suffer significant losses, resulting in heavy reliance on State support for its survival.

There are, however, several factors outside of the government’s control that affect the industry’s profit margin, and some opportunities for investment that can contribute to the estate’s profitability, our economy and cost-of-living in positive ways, let’s examine.

I am not calling for the closure of these estates as the industry itself sustains indirect economic activities in areas where they operate, (sugar workers supporting the supermarkets, convenience stores, etc.) It supports local drainage and irrigation which helps communities against flooding and mosquito borne infections and contributes to the strength of the Guyana Dollar through exports, but most notably it sustains the livelihoods of thousands (to some extent).

Since 2020, the Government of Guyana has injected over $40 billion GYD into the industry.^[1] Using 2020 as a benchmark, GUYSUCO has struggled in the sense that it has failed to reach annual targets with its operational costs exceeding market prices globally.

This is primarily because of a huge price drop in sugar with excessive surplus produced by countries like India and Brazil that are saturating the global market. Coupled with other performance metrics like weather, labour shortages and the floods of 2021^[2] then you have an idea of the market and environment with which the industry operates in and the challenges it faces. However, there have been major investments via the government in terms of its mechanization capacity with close to 5,000 hectares of land being converted to mechanical harvesting^[3], and significant investments in repairs & maintenance of estates. But improving the processes alone is not going to change the direction of the industry (at least not in the long term) especially if the primitive business model is maintained.

We need investments in adapting radical solutions to create not only new industries within but also generational wealth for cane harvesters, all in the interest of making GuySuCo profitable. The most direct positive impact on the spreadsheet of the company would simply be reducing its operational expense through privatising the cultivation and harvesting aspect, by giving lands to “Cane Cutters” (who probably are at the bottom of the paygrade in this country) so they can become their own private farmers, feel a sense of ownership and increase the income they bring to their households.

The government can adapt the same textbook principles of the rice industry, keep the estates under their control and provide technical and financial support. The result is immediate; the operational expense would theoretically be reduced all while pulling thousands of Guyanese out of poverty, with that, the government can shift its focus on gaining entry into new markets and the system by itself becomes a “win- win” for everyone involved.

The ripple effects from this can result in new industries that other Guyanese within the private sector can take advantage of (even the government) to further support the “Sugar Cane Farmers” and estates by acting as a domestic shield to protect from volatile price swings within the global market, such as; bagasse, which is the fibrous debris of sugarcane, is usually burnt in highly pressurised chambers to produce energy, this can be added back to the national grid to meet the supply by expanding capacity to satisfy our energy demands, India for example has adapted this technology by investing in Biomass plants that generate close to 9,800 megawatts of energy. Organic matter (Press Mud) can be used to create biomethane (Biofuel) which can be used for industrial applications. Sustainable packaging is also a new industry in which startups can invest in to combat single use plastics in Guyana because the fiber content of bagasse can create biodegradable plates, cups, trays, and food containers, acting as a sustainable alternative to Styrofoam and plastic. There is also research being conducted where scientists are extracting nanocellulose particles from bagasse for applications in lightweight automotive composite parts. Bagasse can be used as a fiber source in livestock feed, often mixed with molasses to increase nutritional value. Molasses can be used to make certain beauty products and waxes for candles. Every day the industry dumps tons of materials as waste that could be repurposed for many potential business opportunities, all that is needed is the effort to think outside the box!

In conclusion, we have an existing sugar industry with the groundwork already laid out, what we lack is the innovation to sustain it for generations to come.

References

1. ‘Sugar will be great again’ – President Ali outlines bold plan for sugar industry – Department of Public Information, Guyana — dpi.gov.gy ↩
2. GuySuCo produced 58,000 tonnes of sugar for 2021 despite floods - Guyana Times — guyanatimesgy.com ↩
3. Almost 5,000 hectares converted for mechanised cane harvesting – Department of Public Information, Guyana — dpi.gov.gy ↩