Boondoggle: The Skeldon Sugar Modernization Project
By DR CLIVE THOMAS | FEATURES, SUNDAY | SUNDAY, AUGUST 14, 2011

Introduction

The columns I have written so far on the sugar industry, starting on May 29, 2011 are intended to conclude with a broad appraisal of its prospects and suggestions for the way forward. From this perspective, the importance of the three preliminary considerations examined in last week’s column, cannot be over-emphasized. The Skeldon Sugar Modernization Project (SSMP) provides a stark warning against mis-management. It has been far too long in the making, given its size and scale, even by the snail-paced standards of agricultural projects in developing countries. It has many of the classic features of a boondoggle or white elephant project. The records show that, as we approach a decade-and-a-half after its commencement, it is still not certain when the project will be fully operational!

Further, readers were alerted last week that the SSMP was intended to be immediately followed by the expansion of Albion and the closure of Rose Hall. Indeed, this extension was scheduled for completion as long as four years ago. It was also noted that, in retrospect, there was a clear error of judgement on the part of the government in accepting Booker Tate and GuySuCo’s self-serving rationalizations to finance the expansion of sugar output beyond 450,000 tonnes in order to “secure economies of scale,” thereby lowering unit costs of production. With unit costs of producing sugar in Guyana both high and rising, the scale economies, which could potentially be afforded by this expansion, are marginal, when one relates this to the size and scale of cane sugar industries around the world with which GuySuCo would have to compete, if we continued to export sugar.

It should be recalled that I have also speculated the government might well have been pre-disposed to being duped, because of the lavish benefits that the SSMP project analysis portrayed as coming to one of its largest and most dynamic political constituencies. Next week I shall offer a sample of these benefits touted by GuySuCo to the government.

Questions raised

Readers might well ask at this stage: why were the proposed new factories at Skeldon and Albion considered so urgent? In response I would argue that, first and foremost, this was because the then existing factories on those sugar estates were aged and had long outlived their efficient lives. The planned increase in cane cultivation on the estates required that factory grinding capacity correspondingly rise to around 350-420 tonnes cane per hour. At the time the Skeldon factory, which was built in 1924, had a rated capacity of only 90 tonnes cane per hour. Technological developments affecting factory operations (and as we shall see next week agricultural ones too) had by the late 1990s made substantial leaps. An efficient and competitive Guyana sugar industry required that several of those developments were incorporated in strategically-located factories.

Another key question is: what were the new innovations? First, process control needed to be centralized and reliant on digital technology. Second, continuous vertical crystallizers were required for increased sucrose recovery. Third, short retention clarifiers impeded colour formation, thereby improving sugar quality. Fourth, continuous vacuum pans were essential to further enhance product quality and stabilize steam flows. Fifthly, by then it had also become well established that installed sugar driers were essential components for improving sugar quality.

From a wider standpoint significant value-added could be obtained if the new factories were large enough to incorporate co-generation capacity through the installation of high pressure boilers and pass out/condensing turbo alternators.

To aid in lowering capital and operating costs, four other technological improvements were required, namely 1) the incorporation of continuous ‘B’ centrifugals; 2) intensive sugar cane preparation; 3) the installation of diffusers to enhance sugar extraction; and 4) the installation of punt dumpers to reduce cost and increase efficiency in the off-loading of sugar cane.

Expected benefits

These technological developments were expected to yield considerable benefits, including 1) improved factory productivity (as measured by the conversion rates of tonnes cane per tonne sugar); 2) reduced unit cost of production; and 3) improved sugar quality.

The schedule below displays the key specifications of the new Skeldon factory.

Schedule: Skeldon Sugar Factory Specifications

Skeldon Sugar Modernization Project – New Factory Statistics

● Sugar production - 116,000 ts/y

● Cane consumption - 1,115,000 tc/y

● Cane processing rate - 8,400 tc/d

● Hourly processing rate - 350 tch

● Sugar production - 35.5 tch

● Pol extracting - 97.00

● Overall recovery - 85.5%

● Boiling house recovery - 88.10%

● Sugar quality

Pol – 99.30%

Colour – <1,350 Icumsa

Moisture - 0.18%

Grade – VHP

● Steam pressure - 54 bar

● Boiler capacity - 2X 125 ts/h

● Boiler efficiency - 86.0%

● Steam temperature - 485 deg C

● Power generation capacity (steam) - 2 x 15 MW sets

● Power generation capacity (diesel) - 2X2.5 MW & 1X5.0 MW sets

● Total generating capacity - 40 MW

● Export capability - 25 MW

Source: Y Abdul (Guysuco) and D. Munasinghe (Booker Tate Ltd).

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GuySuCo’s several strategic plans never admitted a dearth of competencies to manage the Skeldon factory
By STABROEK STAFF | LETTERS | TUESDAY, AUGUST 30, 2011

Dear Editor,

It bears repeating: ‘You can fool some of the people all the time; all the people some of the time; but you can’t fool all the people all the time,‘ except, of course, your own selves. This truism is most applicable to the press release regarding GuySuCo’s Skeldon ‘flagship’ (turned shipwreck) being ‘refloated’ by a choice of either Indian or Chinese contractors, who have been specifically identified for assignment to a lifeboat.

It is nonetheless a curious dilemma for the reputed decision-makers who, at the very beginning, had rejected the bid of an even more reputable Indian Engineering Group – representative of the second most acknowledged sugar factory builders in the world (after Brazil), in preference to a Chinese entity with comparatively little track record, who in the end delivered a malfunctioning range of technology that defied the comprehension of GuySuCo’s engineers, technologists and other operators (now described as ‘incompetents’); and, not to mention, that of the Board.

It must come now as a shocking revelation to the faithful, or generally under-informed, to learn that all they were previously told was an obfuscation of facts, by carefully contrived programmes of spin. The profound truth (well known to informed analysts) has now publicly been urged that GuySuCo’s several strategic plans never admitted the dearth of competencies within the organisation, to manage and operate the wonders of the Skeldon factory.

But this is not to say that amongst the organisation’s decision-makers are those who are quite aware of a willing body of experienced relevant expertise available locally, which is not necessarily unfamiliar with the Skeldon Project. So it is reasonable to enquire why no attempt has been made at least to conduct an examination of their individual and collective capabilities, if not prior to, but alongside the predictably more expensive options now being confusingly touted as ‘ongoing,’ and on whom future dependence will be interminable, particularly if no performance monitoring and evaluation mechanism were put in place to measure effectiveness.

Incidentally the press release should be read alongside Professor Clive Thomas’ column of Stabroek News, August 21, in which he makes the indisputable point that the productivity of a sugar factory is directly related to the volume (and quality) of cane supplied; and vice versa. When in the case of Skeldon, for example, adequate and timely cane supply is so much dependent on a number of apprehensive cane farmers, there seems need for very close consultation between GuySuCo and the latter, most of whom are newer farmers than is the factory itself.

Therefore with the prospect of its management by a team deriving from a different business-management culture, it is only right that private farmers’ interest be protected – in the first instance, through a prior joint review with GuySuCo of the National Cane Farming Committee Act, and the accompanying Regulations, which contain the statutory contract required to be entered into between the ‘manufacturer’ and the ‘cane farmer’; and which also quite articulately addresses issues raised by Professor Thomas, about the testing for quality, and pricing, of canes sold and bought – an area of competency that may well have eluded GuySuCo’s more recent appointees in factory and field.

An obvious concern must be the identification and preparation of replacements of the overseas managers by an agreed target date – as part of an overall performance agreement, with appropriate benchmarks to be achieved. Hence the need for a monitoring and evaluation mechanism managed by specific technical competences – which are not necessarily represented by the current GuySuCo Board. The quality of training (involving the possible use of translators) will add to a predictably costly imposition on taxpayers.

One would also expect that both GAWU and NAACIE will have very active interests in the human relationships to be forged between the new managers and, expectedly, two sets of employees: theirs from overseas and the unions’. The latter must insist that the relevant regulatory authorities be consistent in dealing with labour relations issues at Skeldon as with procedures observed at sister estates, particularly bearing in mind the differentiations recently exhibited by the Ministry of Labour in matters affecting bauxite workers. These reservations should be firmly inked into the proposed management agreement. It is pertinent to note that there is the normal movement of labour, and the transfer of staff from time to time across GuySuCo’s various locations.

The portents suggest the need for a high level human resource management capability at this location when the time comes, possibly involving more directly the current Chairman of the Board (given his industrial relations qualifications) whose responsibilities in any case seem to have been usurped by the subject ministry. At this juncture one can’t help speculating whether these developments were anticipated in the last (colour) print or plan.

It needs to be emphasised that the fundamental task is not so much the management and operation of the technology, difficult as predictably it will continue to be, but that of the equally predictable human relations problems which are bound to surface. The challenge will be of managing a group of demotivated ‘incompetents’ who are unlikely to succumb to a different cultural orientation.

Notwithstanding, there is no escaping the need for stringent accountability arrangements to be written into any contract. Reporting relationships must be clearly specified, the latter preferably being totally organisational, and exclusive of political interventions.

In the face of these major challenges, it is churlish to utilise energy on ad hominem comments on other legitimate perspectives. It is even more disingenuous to exhume an impressionistic observation, on a fleeting visit by the late Winston Murray, to controvert the acknowledged depth of knowledge of an experienced sugar manager, who voiced apprehensions not unrelated to those expressed above.

The described ‘complexity’ of issues could only reflect a spurious appreciation of the industry, while being more easily comprehended by the dozens of committed former GuySuCo experts, on whose behalf this submission is made. Incidentally one does not recall any public notification that the second crop has begun, with all estates grinding; and of the production targets to be achieved, individually and severally.

Yours faithfully,
EB John

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The Problem with GuySuCo is the PPP Government!

Minister of Agriculture, Robert Persaud, has finally acknowledged that the Skeldon Sugar Factory investment is a failure. This investment amounted to about US$200 million in an economy with an annual GDP of about US$ 1.2 billion. As a percent of GDP this investment amounts to about 17% of GDP. This makes it the largest single investment failure since Guyana’s independence in 1966. Even the PNC did not accomplish a failure this gigantic.

The PPP Government is hustling to exonerate itself from blame, fixing same on a hapless GuySuCo Board and Management. Guyanese must not be fooled by this false claim. The collapse of the Skeldon Sugar Factory is squarely at the hands of President Jagdeo, Minister Persaud, and Donald Ramotar along with the cronies they appointed on the Board. The entire lot should bow out in shame if they have any sense of honour and decency!

The first cause of failure was the mis-advised grant of the contract for construction to the Chinese firm, CNIC, which had no experience in sugar factory building. The other failings included the acceptance of the factory as complete before the Chinese firm had proven to GuySuCo that it was fully complete and operational; the non-training of locals to operate the factory after the Chinese would have left; the stifling political interference which resulted in experienced, qualified and senior staff including agro-engineers and agronomists being forced out and being replaced by friends and supporters of the Government; the ill-preparedness in not expanding cane cultivation to feed the factory; and, the disrespect for sugar workers which has resulted in massive migration away from work in the Estate.

To solve this problem the PPP Government, fully backed by its Presidential Candidate, Donald Ramotar, a Director on the Board for some 19 years, plans to enter another management contract with either an Indian or Chinese company. Minister Persaud is quoted as saying that the Government was currently evaluating two proposals to manage the said factory.

The AFC sees this development as a grand opportunity for massive corruption. There is no record that any management contract was ever put to a public tender. Moreover, the AFC is aware that taxpayers’ dollars of nearly US$2.5 m would have to be paid to the contract manager per annum!

More significantly, the AFC has come by reliable information that the Chinese company identified is the selfsame CNIC, the same company that built the third rate, very high cost Skeldon factory, where the exploded boiler has not yet been properly fixed, the new cane dumper cannot function, and numerous other problems caused by poor quality components are being experienced every day! The maker of this defect-riddled 8400 tons cane per day grinding capacity factory, which has not yet achieved even half that amount for one day, is being evaluated as a potential contract manager!

Also, the Indian company being evaluated is none other than Surendra Engineering which has the contract for the US$10.0 m Enmore Demerara Gold sugar packaging plant, which plant recently exploded and killed a worker. That specific equipment has not yet been fixed and, in addition, the massive internal work on the factory upgrade to supply the bagging plant has not yet been completed. GuySuCo's technical managers have refused to accept this work despite political pressure to do so.

This same Surendra Engineering, obviously specially favoured, was awarded by the Ministry of Agriculture a contract for the recently tendered 8 big drainage pumps despite the fact that it does not make pumps at all! Surendra Engineering through another Dubai based front Company, Salim al Midah, was given the consultancy contract valued approx US$500,000 to provide the plan to upgrade Enmore and Blairmont factories. There is every indication of an unholy alliance between Surendra Engineering and key GuySuCo managers, directors, and politicos to huff all of GuySuCo's engineering projects including the one now to manage Skeldon, a task Surendra Engineering, like CNIC, is incapable of doing, both not having the history, experience and managerial capacity in running sugar factories!

The AFC is aware of very experienced and well known Indian and Brazilian consortiums which ought to be invited to give proposals to manage the Skeldon Factory and possibly to procure finances from their respective Governments to assist in doing so.

The AFC has crafted an alternative vision for GuySuCo that will assure simultaneous accounting and social profits for the people. We propose, for starters, a professional Board with no political interference; the incremental mechanization of the industry to avoid the almost slave-labour conditions workers have to experience; and, creating a captive market through our E10 framework in order to save the Demerara and West Berbice Estates, by the production of ethanol. Then we intend to seek foreign investments into developing alternative lands for ethanol production for export.

The AFC wants to make it clear that an AFC Government will not be fettered by the contractual terms of any management agreement entered into by the PPP/C Government and either CNIC or Surendra Engineering. A management contract ought not be entered into now but ought to await until after the elections.

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At one time the Guyana sugar industry was recognized as the training institution for other sugar-growing countries
By STABROEK STAFF | LETTERS | SUNDAY, SEPTEMBER 11, 2011

Dear Editor,

I have been bombarded from some expected, and other not so expected quarters, with commentaries and observations on my letter to SN of August 30, 2011 regarding the reported impotency of GuySuCo’s current personnel to manage and operate the Skeldon ‘complexity’ – as perceived by the Minister of Agriculture. Most, if not all, of the commentators, constituted vital institutional memory of the Guyana sugar industry’s historical capacity for training and development – not only of its own human resources, but those of counterpart organisations, locally and around the world. Their reminders are worth sharing, not only with all those who have been seeing and hearing, from various distances, about the industry’s depreciation (at an exponential rate); but more particularly with those newly initiated to direct, manage and operate the various components of its operations.

The following itemisation is not necessarily in a particular sequence, which is hardly required, given the distinctive significance of each initiative mentioned. But first of all I am reminded that the Guyana sugar industry was for a considerable time recognised as the training institution for personnel of sugar companies not only in the Caribbean region, but also from sugar growing countries – in Africa and Asia. I was also reminded of my own involvement in coordinating the selection of specifically local factory management and operative skills, to help build, and operate factories – in Nigeria (Bacita), Kenya (Mumias); as well as to train indigenous skills in places like Tanzania and Zambia. En passant, Bookers London would arrange for expatriate recruits to be inducted in Guyana, before assigning them to substantive senior positions in those countries where Bookers had interests.

I am also reminded of my own secondment to restructure the St. Kitts sugar industry in the 1970s; while my colleague Nowrang Persaud, as a young cadet, teamed up with an international group which was mandated to restructure the Trinidad and Tobago sugar industry during that same period. He went on to become, and still is, an international adviser and management consultant.

One colleague reminded that the industry’s first venture into mechanisation occurred at the now extinct Diamond Estate, and that the first punt-dumper which was designed by local engineering, was transferred to LBI Sugar Estate, after the closure of the Diamond factory. This raised the issue of contentious punt-dumper at Skeldon Estate; and the question was posed as to whether it was generally known that punt-dumpers have long been operational at Uitvlugt and Blairmont Estates, without the malfunctions with which Skeldon’s has been identified.

Another recalled the fully coordinated range of internal training programmes, including those for technical personnel at various levels; of the engineers identified in each factory as responsible for training the young talents recruited externally, or graduated from the Apprentice Training School at Port Mourant; of each trainee being profiled and the programme of development being carefully documented and performance reported on. There was also the very comprehensive induction programme – lasting up to eighteen months – specifically designed for UG engineering graduates, all of whom had to undergo initial exposure at the Port Mourant Apprentice Training Centre.

The point was made of the company’s total commitment to training, as an investment in the industry’s future sustainability. In this connection it was observed, not irrelevantly, that there was no discrimination with respect to the identification of potential for development.

However nostalgically, reference was made to the very detailed succession planning process, which was so transparently implemented that it earned the ‘trust’ of even those who might have been bypassed – one reason being that the plan was founded on a series of very rigorous performance appraisal exercises, the results of which were communicated directly to all affected personnel. All, so to speak, were involved. Inherent in the plan were the variety of training and developmental interventions proposed to improve strengths and remedy weaknesses, whether locally or overseas, whether on estate or at Head Office. So that, for example, future general managers, and departmental heads were identified years in advance, and appropriately prepared.

Another recollection expressed more excitement about what was considered the seminal exercise known as the ‘Regrading and Reclassification Scheme.‘ It was the first formal industry effort to train, test and evaluate skills for factory and agricultural engineering tradesmen and operatives, and eventually related charge-hands. Formal examinations were instituted in order to confirm the upgraded skill, for which the employee was appropriately remunerated. One encouraging feature of the scheme was that it took account of the literacy factor, and thus provision was made for oral testing. The scheme is recalled as an experience which released previously hidden talents and ambitions, while energising the will to compete with more recognisable co-workers, and interestingly, provided at the same time a basis for socialising on equal terms.

But for those who had graduated from the Port Mourant Apprentice Training School, and reached the pinnacle position of factory manager, one could appreciate their respect for an institution whose graduates in turn had earned respect in the developed production economies of Canada, the UK and the USA, for example. (One assumes that the Honour Roll of high achievers continues to be maintained by subsequent generations of apprentices.)

One recalls however that this residential institution was usually packed to capacity, while also accommodating non-residential students, some of whom attended from other industries like bauxite, in its day. There are memories of high standards: of discipline, of performance; even of catering, and organised social events. There was no substitute for merit; and lecturers were devoted – responsive as they were to the needs of the students, who were taught to be a team; to be professional as individuals; and to aspire to be future managers and leaders.

Another contemporary recalled that at a graduation ceremony some four/five years ago, it was announced that the school’s curricula would be upgraded; that new technological programmes would be taught – to ensure the provision of knowledge compatible with future mechanisation. He mused at the idleness of the statement, as it made no mention of the fundamental retraining (or replacement) of lecturers who then (as now) were but ex-apprentices. Nothing, he remarked, has happened to fulfil an undertaking so crucial to the industry’s future. Indeed his information was that there were discouraging indicators of deterioration in lectureship, reading, report writing, the physical and intellectual environment in which current generations of apprentices subsisted.

He confessed a disbelief about rumours of segregation of students of different cultural backgrounds, noting the resultant stupidity in demoralising one group or the other. Consistently he refused to accept that there could be substance to any suggestion that the institution of which he is still so proud and which infused his career, could ever become the chaotic operation complained about to him.

“When,” he reflected, “and from where then are we going to develop the future competencies which they say are now missing? How for example, will we produce the local replacements when the visiting teams of managers and operators who are coming to man Skeldon, would have left? Could we even look forward to being the repository of training in sugar production ever again?”

At that juncture I could not help but recall my own close association with the Apprentice Training School, when it became part of my oversight responsibilities as Personnel Director. Regular visits were arranged for me to monitor, discuss and resolve issues of management and student welfare on the ground. It was always a rejuvenating experience to be recognised by the youths, male and female, and to share a meal with them.

Teamanship was encouraged, through sports and games, participation in which was mandatory. It was important to integrate healthy minds and bodies; and for these young persons to understand in the process that there was no substantive differentiation amongst co-workers seeking to attain the same goals and objectives. Theirs was the foundation of the industry’s human resources development programme. It could not be depreciated; the tools and materials could not be depleted; the work and living environment simply could not be allowed to fall into dilapidation. For me therefore the rumours my contemporary reported just could not be true.

Notwithstanding the foregoing laments over the industry’s recent experience of descent, we all shared some sort of celebratory memories about the programme of regular interactions of specialists units – engineers/chemists; agriculturalists, human resources, finance managers, at regional, and then industry-wide meetings – reinforcing one another’s knowledge, mutually filling experience gaps, bringing all involved up to date as members of cohesive teams (without any reference to ethnicity). Even then perceived deficiencies of critical substance were addressed in the historic residential Management Training Centre at Ogle. Its displacement was a prophetic signal of the direction in which future management and technical competencies would trend.

We concluded on the high note of how recommendations for policy changes and improvement which emerged out of these intensive brainstorming sessions, were welcomed by the Board of Directors for implementation. With a track record of board approval, self-confidence rose, increasing the quality of decision-making. The principle was actively recognised that authority was not confined to the top; but, that a vertical ‘partnership,’ informed by trust, contributed best to productivity, increased morale, and ensured stability in the organisation structure.

One final advantage may have been that communication was in one explicit language.

Yours faithfully,
E B John

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Halt the ‘business as usual’ at GuySuCo
By DR CLIVE THOMAS | FEATURES, SUNDAY | SUNDAY, SEPTEMBER 11, 2011

Introduction

In an effort to encourage ACP countries to embrace the Sugar Protocol (SP) in the mid-1970s, European officials were at pains to stress that, when fixing the annual price for sugar, account would be taken to ensure a “reasonable rate of return for a reasonably efficient sugar enterprise, over the long run.” To be sure this was crucial if the privately- owned sugar companies operating in the ACP were to survive.

As I indicated last week, at that time the expectation was that, over the long-run, there would be intensified world commodity shortages as global supply would fail to keep pace with the growth of global demand. As matters turned out, however, except for brief interludes (for example 1980-81) world raw sugar prices were relatively low until recently, after the SP came to an end in 2009.

Value of income transfers

Several estimates have been made of the value of income transfers to Guyana as a result of the SP arrangement. As stated last week, these have been arrived at by multiplying the volume of sugar sales made under the SP by the prevailing difference between the price on the world market and that paid by the SP. For the convenience of readers, Table 1 below shows the estimates made by the IMF; these have the virtue of access to official data on prices and quantities exported:

Table 1: Estimated Income Transfers to Guyana:
Sugar Protocol

Period ---------------% of GDP (Approximate)
1990--------------------------8.5
2000-05-----------------------6.5
2008-09-----------------------2.75

Source: Based on IMF Estimates

As the data above show, on average during the 1990s up to 2005 when the SP was still in force, it afforded transfers equivalent to 7.5% of Guyana’s GDP. During this period, on average, Guyana’s SP annual quota was 160,000 tonnes of raw sugar. However, the income transfers shown would only yield a net gain for Guyana’s economy if GuySuCo did not waste these through mismanagement, corruption and inefficiency, which it did.

Denouncing the SP

It is a matter of historical record that the European Union Council notified the ACP sugar-supplying countries in 2009 that with effect from October 2009 it would “denounce” the SP. As an indefinite (treaty) arrangement the ACP countries could have legally challenged this and taken it to international arbitration. But none of them had the courage to do so as the EC had made it known it would retaliate. Accompanying this, the EC introduced a phased reduction in the import quota price paid under the SP. This fell annually from 523.7 euros per tonne of raw sugar in 2006 to 335 euros per tonne of raw sugar by October 2009.

This phased reduction was treated as part of a number of transitional arrangements, including an EU offer of financial support for ACP countries to diversify out of sugar or make their existing sugar enterprises more efficient in order to cope with lower, and henceforth more “market-based” arrangements for selling sugar in Europe.

For the period October 2009 to September 2010, a price floor was guaranteed for raw sugar sold by Guyana to the EC. If, however, the world price of raw sugar exceeded this price floor (or minimum reference price) Guyana was free to sell its sugar on world markets. As we shall note later, recently the world market price for raw sugar has been enjoying an unusual boom and GuySuCo has been, since the last quarter of 2009, taking advantage of this arrangement. It should be noted here that it still remains doubtful whether the guaranteed minimum reference price will be in place after 2012.

Under the Cariforum-EC, Economic Partnership Agreement (EPA) which came into force on October 2008, Guyana can sell sugar to the EC “duty free and quota free” (DFQF). There is a transitional safeguard mechanism in place for the first six years to protect Europe if a surge of exports to their markets causes serious disruption to the sugar supply-demand balance in European sweetener markets.

Three observations

Three observations are warranted at this point. The first is that as observed earlier the price of raw sugar on the world market has been enjoying an unusual boom since Q1, 2010. The data in support of this observation are shown in Table 2. From an annual average of 13.84 cents per lb in 2009, prices have nearly trebled by Q2, 2011 (at 38.56 cents per lb).

Second, it would be unrealistic to expect that this rise in sugar prices would not (as on previous occasions) be followed by a longer-term decline in world prices. One must caution against being lulled into the false belief that this time, if not before, commodities have made a breakthrough and that their prices will spectacularly rise in relation to the prices of manufactured and industrial goods, as well as services.

Third, I cannot pursue in any depth in this column the reason why the EC has sought to bring the Sugar Protocol arrangements to an end. I do, however, want readers to note that, in my view, the principal motivation for the changes it has introduced is to “reform” the sugar marketing regime in force in Europe over the previous decades. That regime was not market-based and ended up with Europe being simultaneously one of the world’s largest importers and exporters of sugar! The hope is that with the new regime, the market would determine the demand and supply of sugar. When, however examined in close detail there is a lot of hypocrisy in this approach of the EC.

Table 2: After the Sugar Protocol: World Price of Raw Sugar (2009-2011)

----------------------------------Price (US cents per lb)
2009 (annual average)--------------------13.84
2010 (Q1 average)------------------------25.86
(Q2 average)-----------------------------20.23
(Q3 average)-----------------------------26.57
(Q4 average)-----------------------------35.45
2010 (annual average)--------------------27.03
2011 (Q1 average)------------------------34.78
(Q2 average)-----------------------------38.56
2011 (semi-annual average)---------------36.67

After 12 weeks of analysis of the sugar industry, I intend over the next two or three weeks to provide my assessment of where the Guyana sugar industry stands today and outline a possible way forward. Regrettably, ‘business as usual‘ at GuySuCo means more hard times and wasted resources for Guyana.

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