GuySuCo now produces sugar three times world market price
Jun 29, 2017 , http://www.kaieteurnewsonline....-world-market-price/
Sugar prices on the world market for the past six months have dropped significantly to between US$250 -$275 per tonne, further compounding the problems of the state-owned Guyana Sugar Corporation (GuySuCo). The prices translate to about 12.5 cents per pound (c/lb). As of yesterday, the price was 12.66 cents per pound.
The figures would continue to send warning signs, as it was only in January that GuySuCo officials appeared before a Parliamentary committee and disclosed that the cost for which sugar is traded on the world market is an average US$0.19 per pound.
This would contrast starkly with GuySuCo cost per pound of approximately US$0.40 -more than double. It is now thrice of what it is being sold for.
The world market price disclosure by GuySuCo would only serve to underscore the plight facing the industry which is rocked by industrial unrest and protests over plans to close the Rose Hall and Enmore estates in a last-ditch attempt to keep the industry alive.
GuySuCo explained yesterday that it supplies annually about 65,000 tonnes of bagged and packaged sugar to Caribbean and local markets. Another 12,000 tonnes of raw sugar is supplied to the North American market while the remainder, which is also raw sugar, is sold on the European market.
The supply to Europe for the second crop 2017 is expected to be around 70,000 tonnes.
“The current forecast is that there will be a surplus of sugar on the World Market for the marketing year 2017/2018. In addition, from 1st October 2017, the European Union market will also see some radical changes, since it is anticipated that significant additional amounts of beet sugar will be available for sale and this will compete directly with cane sugar.”
This, GuySuCo said, may result in reduced sugar prices in Europe.
“Due to the competition with beet producers, the price paid by the refiners for raw cane sugar (as supplied by GuySuCo) will be more in line with the World Market Price, which currently is trading at US$275 per tonne and the forecast is that it will not increase significantly in the near future . The price at the commencement of the year was US$396 per tonne.”
GuySuCo argued that the anticipated lower prices for the sugar sold will not assist the corporation’s fragile financial position and poor liquidity will continue to pose a serious challenge in the upcoming second crop.
“The Corporation is therefore encouraging its employees, particularly harvesters and planters, to turn out and assist their estates to harvest all canes in the cultivations and maximize on sugar production. Sugar-dependent communities are also urged to support the corporation’s outreach drive to increase attendance on all estates for the second crop which starts mid-July.”
The new administration has been under political and economic pressure over GuySuCo.
An average of almost $10B has to be pumped annually to pay workers and keep the industry alive.
With thousands of workers, options like diversification to rice, estate closures, and a tighter lid on procurement, have not been popular.
Last December, the century-old Wales estate, West Bank Demerara was closed,
GuySuCo told the Parliamentary committee in January that “the employment cost of retaining the workers in this industry exceeds revenue.
In fact, the actual figure is 101 percent, with more spent on employment than received in revenue from selling sugar. These employment costs range between 60-65 percent of the total cost across the estates.
The current workforce of the sugar corporation is approximately 17,000 persons with more than 70,000 family members who would be affected if there is a closure of the industry.
In January, GuySuCo had debts in excess of $75B.
Chief Executive Officer of GuySuCo, Errol Hanoman, noted that under the corporation’s current configuration, reducing “head count means production will decline significantly. He also explained that in order to maintain high production levels with the workforce intact, substantial financial investments are required.
Poor labour turnout has also contributed to reduced sugar production. The CEO had reported that cane harvesters’ attendance between 2009 and 2014 ranged from 52 per cent in 2011 to 60 percent in 2016.
A Cabinet sub-committee was appointed in 2016 to examine the way forward for the GuySuCo. A white paper has since been laid in the National Assembly.
The Opposition has been galvanising support in the sugar-producing areas, blaming the administration for inaction.