Agriculture: Huge potential: Sugar’s bitter-sweet modernisation

Guyana is the only food secure nation in the Caribbean. It has the potential to reduce the region’s $US4bn food import bill. Challenges are climate change, improving the competitiveness of the sugar industry and diversification into other crops such as fruits and vegetables, says Agriculture Minister, Robert Persaud.

“For us the biggest worry is climate change and its impact on food security. It means changing our whole approach to agriculture”, says the Minister. The damage done by the 2005 floods is still very vivid in the memory of many Guyanese. Climate change has led to larger amounts of rainfall and longer periods of drought with the need to adjust infrastructure to manage less water during times of drought (drip irrigation) and handle more when rainfall is heavy.

The country is also adapting to the post-EU sugar protocol market. The former sugar protocol contained in the Cotonou Agreement with ACP countries (2000-2020) provided set quantities for the country’s sugar exports to the European Union at fixed prices which were above the world price. The phasing out of set quantities and prices has resulted in losses for the industry. “It has been devastating. We have potentially lost between $30-45M per annum. We felt the impact starting last year when for first time ever we were without a preferential price and a preferential market”, says Minister Persaud. The changes to the EU’s import regime have pushed Guyana’s Caribbean neighbours; Trinidad and St. Kitts from the sugar market with Jamaica, Belize and Barbados the only remaining English-speaking Caribbean countries still active.

EU funds for sugar reform

In 2005, EU Ministers agreed to cut the EU’s institutional price by 36 per cent over four years starting in 2006 and set quantities under the protocol have been phased out. To offset the losses incurred, the EU approved in 2006 a €1.24M (2007-2013) ‘Accompanying Measures’ – an aid package for all beneficiaries of the ACP sugar protocol.

Under the package, the EU drew up financing proposals based on the government’s own Action Plan to modernise the industry and state-run sugar company, Guyana Sugar Corporation (GuySuCo) which currently has around 16,000 on its payroll. Disbursed as budget aid, the goal of the EU funding is to make Guyana’s sugar industry more competitive.

According to European Commission statistics, Guyana has received €58.17M to date under the Accompanying Measures programme, including funds for the construction of a new packaging plant at Enmore named ‘Project Gold’. A new schedule of funding, 2011-2013, for all ACP countries benefitting from the Accompanying Measures, is being currently being finalised at the Commission’s headquarters in Brussels, confirmed an official at the EU’s Georgetown Delegation.” The new funding will come from the original €1.24bn package. But Minister Persaud says that the country has had to put $US180M of its own money into the restructuring process. “The bitter taste of the abolition of the sugar protocol is still on our tongue but we’re looking ahead and want to move forward. What we have expended so far is 30 per cent more than we will ever get from the EU,” says the Minister. He encourages the EU to show more flexibility with regard to the criteria agreed with the EU as conditions for disbursement of the sugar aid: “They were made pre-global economic crisis and post-crisis, there is a reluctance [Ed: on the part of the EU] to change the economic indicators to the new reality”. All the investments should put the country in a position to be able to better compete in the European and world markets, especially since it has unlimited access to sugar under the Economic Partnership Agreement signed between the EU and CARIFORUM. The Agriculture Minister points out that rice underwent a similar restructuring process and also received EU support for its modernisation. Last year was a boom year for rice exports.

The bulk of the country’s sugar and rice exports still go to the EU. “We see the EU as a very vital trading partner for exports of fish, rice, timber and sugar”, says the Minister adding that he would like to see more European investments in the sector.

Debra Percival