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Guyana facing growing intra-Caricom competition for regional sugar markets

Prime Minister Moses Nagamootoo addressing the opening of the National Conference of Private Cane Farmers.

The Chairman of the Board of Directors of the Guyana Sugar Corporation (GuySuco), Professor Clive Thomas and the entity’s Chief Financial Officer (CFO), Paul Bhim on Friday differed about the viability of marketing sugar in the Caribbean due to increasing competition from sister producers.

Delivering a presentation at the inaugural National Cane Farmers Conference, Thomas said one option open to the loss-making entity is to sell more sugar to sister Caribbean Community (Caricom) countries by taking advantage of market protection through the 40 percent Common External Tariff (CET).

In contrast to large producers like Brazil that would hardly be interested in tapping into the small regional market because it would be too expensive, Thomas reasoned that Guyana could take advantage of cheap marine transportation and ship quantities of the sweetener to Caricom and greater Caribbean markets. “We have an advantage in terms of transport….We have a built-in transport premium that we can exploit in the sale of our sugar,” he said.

But Bhim, in his presentation, argued that marketing sugar in the Caribbean might not be so easy because of emerging competition from sister Caricom producers- Belize and Jamaica- that are also eligible for CET protection from extra-regionally produced sugar. He noted that already Belize has been making inroads into the Trinidad and Tobago market. “Guyana, which had basically a monopoly in terms of selling sugar into Caricom is also facing competition from within Caricom itself,” said Bhim. He said due to lower world market prices, Belize and Jamaica have been turning to regional markets.

Another challenge, the GuySuco official noted that several importers-mainly Trinidad and Tobago- are purchasing sugar from outside Caricom, paying the CET and selling it cheaper than what Guyana could sell at.

Minister of Agriculture, Noel Holder told the opening of the National Cane Farmers Conference that GuySuco sold 17,434 tons of sugar to the Caribbean in 2014, and projects to increase that figure by 69 percent  in 2015 to 29489 tons and a further 42 percent in 2016 over 2015 to 41,784 tons.

“With the dwindling exports to Europe, the Corporation has begun to tap into the Caricom market; sales of direct consumption and packaged sugar have been the focus in this region,” said Holder. Saddled with producing sugar at 40 US cents per pound and selling it back at about 16 US cents, a Commission of Inquiry is next month expected to recommend the future path of the industry that directly employs 16,539 persons, accounts for 9.5 percent of Guyana’s Gross Domestic Product (GDP) and US$87 million in export earnings in 2014.

Professor Thomas said Guyana should also seek to market its Demerara sugar as an authentic Guyanese product to the Diaspora.

“We need to find a way to make it known to the rest of the world and certainly beginning with our Diaspora legitimate Demerara sugar can only come from Demerara, Guyana, it can’t come from anywhere else,” he said.

However, marketing Demerara-branded sugar in the United States and Canada by GuySuco is not possible because Bedessee Limited has won a court case against GuySuco after the latter had challenged that company’s acquisition of sugar from Mauritius and branding it as Demerara Gold.

GuySuco is now banking on the success of Enmore Crystals in the North America and Canada through a marketing and distributorship deal that would initially start with 20,000 tons at a “premium price,” said Bhim.

The company hopes to place greater emphasis on packaged sugar rather than bagged sugar “in order to improve on that average price that we get for sugar,” he said.