Georgetown: The Guyana Sugar Corporation Inc. (GuySuCo) has taken note of the concerns of the Guyana Manufacturing and Services Association (GMSA) relative to production and supply of white sugar (Plantation White) by regional sugar producers such as, GuySuCo and Belize Sugar Industries Limited (BSIL).
According to GuySuCo, the GMSA’s rejection of a 40% Common External Tariff (CET) on refined sugar reflects a lack of depth of understanding of the market requirements and classification of a range of sugars that are refined by annexing or standalone systems to sugar factories.
Key findings, of a study of the ‘Substitutability of Plantation White Sugar for Refined White in Industrial Processes’ done by LMC International on behalf of the Sugar Association of the Caribbean (SAC) in January, 2019, stated that: “It is clear that a CET is required to sustain the sugar industry in the Caribbean. The current situation where the CET is applied to brown sugar only, has distorted the market encouraging end users to demand duty-free refined sugar even if it is not strictly required for their product”
The Corporation appreciates the underlying factors, as well as the anxious tone of the GMSA in its statements to the press, however, members of the manufacturing association can be assured that GuySuCo and other Caribbean sugar producers have been addressing opportunities for the requirements of the region’s industries in response to the major market adjustments that have arisen since the European Union (EU) announced the repudiation of the Sugar Protocol, which from October, 2009, removed price guarantees which impacted adversely on the sugar industry and markets of African Caribbean and Pacific (ACP) States.
As shifts continue in the global, regional and local markets, GuySuCo has to become more and more flexible and agile and place more emphasis on the demands of the domestic industry. The Corporation appreciates that the white sugar it produces will have to satisfy the quality requirements of all of its customers.
It is important to note that Grades of sugar are produced in response to market requirements. Substitutes in the food industry have universally dominated market thrust, with the not so recent corn sweeteners which have been treated as replacements for sugar. This has not caused a reduction of quality of consumer food products.
The Inter-American Development Bank (IDB) 2017 ‘Latin America and Caribbean – Macroeconomic Report – Routes to Growth in the New Trade World’ stated that, ‘…Latin America and the Caribbean has been hit by negative external shocks including declines in commodity prices and the rise in global interest rates. As negative external shocks reduce net income earned from abroad, countries …attempt to find new sources of foreign income, or rebalance their spending towards domestic production to maintain the same level of consumption…’.
The report further stated that, ‘…Import Substitution Exchange rate depreciation may also open up opportunities for local industry to substitute for foreign suppliers…’; hence GuySuCo’s decision to pursue the production of white sugar (Plantation White) is also premised on the fact that as one of the largest businesses in Guyana, it is essential for the Corporation to include into its reorganization programme, factors to mitigate external shocks. Accordingly, import substitution is appropriate.
Reliability of Supply of White Sugar for the Manufacturing Sector
In addition to the production of white sugar by GuySuCo as a value added product, another benefit for the local manufacturers is reliability of the supply of white sugar. According to the Based on trends, for instance, as reported in the 2018 Global Risks Report, the two top Global Risks in Terms of Likelihood, are: Number one, extreme weather events and at Two, is natural disasters. Among the Top five Global Risks in Terms of Impact are: Extreme weather events at number Two and Natural Disasters at Three. As a part of its medium to long term planning, GuySuCo is maximizing on Guyana’s geographic positioning, to develop its business to provide reliable brown and white sugar and molasses, even during periods of high risks in the Caribbean; as was seen in 2017, after the hurricane season, which saw local manufacturers being impacted negatively.
Generally, local manufacturers will have more ready access to white sugar from GuySuCo.
Foreign Exchange Savings
One of the concerns of the GMSA is the perceived potential loss of foreign exchange. From GuySuCo’s perspective, the ability of local manufacturers, as well as the country to save much needed foreign exchange, will be greatly enhanced since the local demand of 20,000 tonnes of white sugar can be supplied by GuySuCo. The other 30,000 tonnes of GuySuCo’s planned annual white sugar production of 50,000 tonnes will be supplied to the regional market which will also save foreign exchange regionally.
Difference between Refined White Sugar and Plantation White Sugar
Plantation white sugar is an acceptable consumer quality sugar, and, like refined sugar, because of its high purity and microbiological stability, is one of the safest products on the market. In fact, most of the white sugar that is deemed “refined sugar” imported extra-regionally from Guatemala and Columbia, and used by local and regional manufacturers, is actually Plantation White.
It is very important for manufacturers to note that neither sulphitation nor bleaching will be involved in the process for producing white sugar by GuySuCo. Rather, GuySuCo would employ a re-melting process of sugar produced, that involves successive boiling and recrystallisation with Plantation White Sugar boiled from the highest purity of available ‘A’ remelts. This is essentially the same process followed in refineries. A process that enhances the quality of sugar with the resultant product having a colour value of 100 – 150 Icumsa (ICU).
Another key point, is that bottlers’ standards (Coca-Cola and PepsiCola for example) are different but not elusive, and GuySuCo will work with soft drink producers on the requirements of including in its processing, a declorisation plant and corresponding equipment to meet those requirements. There is already a precedent from a successful collaboration with the Belize Sugar Industry Limited and the Coca Cola franchise in that country.
You must be logged in to post a comment.