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National strategy for commodities, especially sugar, recommended

Last Updated on Thursday, 10 June 2021, 12:54 by Denis Chabrol

An International Labour Organisation (ILO)-supported study on the impact of the closure of four of Guyana’s sugar estates has recommended the crafting of a strategy to withstand market volatility of commodities and gear up the sugar industry to invest in  ethanol production.

The report titled “Study of the socio-economic impact of the closure of GUYSUCO sugar estates on sugar workers
in Guyana”,  produced by Dr.  Thomas B. Singh, Director of the University of Guyana GREEN Institute, recommends the development of a National Investment and Diversification Strategy for Guyana, with a particular role being identified for the sugar industry.

“The existing and growing dependence of the Guyana economy on commodity exports must be accompanied by carefully designed efforts to diversify the economy in ways that would counterbalance the price volatility that characterizes commodity markets,”  the report states.

The report cited the need for a closer understanding of the way the commodities being exported by Guyana behave in an effort to exploit any opportunities f0r hedging against downturns in commodities being exported by this South American nation.

The ILO report, done under the umbrella of the Decent Work Agenda, recommends diversification into non-commodity sectors by taking into serious consideration the adverse impact of commodity production, “and the oil bonanza in particular, to reduce the competitiveness of other sectors.

The study acknowledges that the diversification process can face a number of challenges such as underestimating or overlooking the riskiness of new activities because Guyana will become wealthier and the State can better afford to finance projects. Other challenges include the high cost and poor quality of energy and the sometimes  severe shortage of human resources; the high cost of doing business in Guyana; and the relatively small domestic market for the goods and services that Guyana can produce.

According to the ILO study, a National Investment and Diversification Strategy should not merely identify investment opportunities but address those challenges and identify the functions of government, the private sector, labour and civil society.

Dealing specifically with the sugar, the study says that industry must not be regarded merely as a sector that needs investment and revitalisation but the role it can play. For instance, the ILO study says materials from plants that are not fit to be eaten can be developed into ethanol as “a source of renewable, low-carbon energy that could be developed to boost the very profitability of the sugar industry.”

Also at the top of the list of recommendations is the building of a biorefinery to produce other high-valued chemicals from  dry plant matter to reduce costs and further diversify the industry. “Biorefineries would make use not only of bagasse but will also use other kinds of biomass including rice straw, saw-dust, and  so forth. They will also allow for the production of several commercial-scale, high-valued co-products  that will enhance the profitability of the core cellulosic ethanol facility,” the report states.

Even as the technologies for cellulosic ethanol production and other related products are still being done, the study said the University of Guyana should begin offering programmes in biotechnology.

The ILO study say Guyana can become a large-scale ethanol producer and so generate may job opportunities, public, private and trade union investments based on risks and expected dividends.  “Additionally, public sector equity financing, with reasonable dividend policies, along  with equity involvement by organized labour within the sugar industry, would reduce the financing cost of cellulosic ethanol production while also ensuring that there is appropriate risk-sharing among the various stakeholders,” the document states.

In line with a green energy strategy, the study says a system for the granting of credits for emissions reductions to investors,  commensurate with their equity holdings, must be put in place. “This will allow private sector firms, and
especially the major investors, to earn valuable carbon credits.,” he document states.

Together, these two elements of the proposed framework form the basis of a “Green Research and
Innovation” Industrialization Strategy, according to the study, that would take advantage of the efforts to revitalize the sugar industry at a time when revenues from the oil industry would become increasingly more significant.