Guyana Sugar Corporation

The rapid nationalization of the sugar industry in the mid-1970s led to severe management difficulties and an emigration of talent.[2]

The Guyana Sugar Corporation, which took over the sugar plantations, initially lacked needed experience and perhaps more importantly, did not have access to the reserves of foreign capital required to maintain sugar plantations and processing mills during economically difficult periods. When production fell, GuySuCo became increasingly dependent on state support to pay the salaries of its 20,000 workers.[2] Second, the industry was hard-hit by labor unrest directed at the government of Guyana. A four-week strike in early 1988 and a seven-week strike in 1989 contributed to the low harvests.[2] Third, plant diseases and adverse weather plagued sugar crops. After disease wiped out much of the sugarcane crop in the early 1980s, farmers switched to a disease-resistant but less productive variety. Extreme weather in the form of both droughts and floods, especially in 1988, also led to smaller harvests.[2]

Guyana exported about 85 percent of its annual sugar output, making sugar the largest source of foreign exchange.[2] But the prospects for sugar exports grew less favorable during the 1980s. Rising production costs after nationalization, along with falling world sugar prices since the late 1970s, placed Guyana in an increasingly uncompetitive position.[2] A 1989 Financial Times report estimated production costs in Guyana at almost US$400 per ton, roughly the same as world sugar prices at that time.[2] By early 1991, world sugar prices had declined sharply to under US$200 per ton. Prices were expected to continue decreasing as China, Thailand, and India boosted sugar supplies to record high levels.

In the face of such keen international competition, Guyana grew increasingly dependent on its access to the subsidized markets of Europe and the United States.[2] The bulk of sugar exports (about 160,000 tons per year in the late 1980s) went to the European Economic Community (EEC) under the Lomé Convention, a special quota arrangement. The benefits of the quota were unmistakable: in 1987, for example, the EEC price of sugar was about US$460 per ton, whereas the world price was only US$154 per ton. (The gap between the two prices was not so dramatic in other years, but it was significant.) Guyana was allowed to sell a much smaller amount of sugar (about 18,000 tons per year in 1989, down from 102,000 tons in 1974) in the United States market at prices comparable to those in the EEC under another quota arrangement, the Caribbean Basin Initiative.[2] Maintaining preferential access to the European market was a priority in Guyana; in 1988 and 1989, production levels were too low to satisfy the EEC quota, so Guyana imported sugar at low prices and reexported it to the lucrative European market. Even so, Guyana fell 35,000 tons short of filling the quota in 1989 and 13,000 tons short in 1990.[2]

This date's back to 1658 when the crop was established as a viable one. Since then, the industry has progressed from periods of manuals and animal power to machine power and electronic equipment. The government of Guyana restructured the sugar industry in the mid-1980s to restore its profitability. The area dedicated to sugar production was reduced from 50,000 hectares to under 40,000 hectares, and two of ten sugarcane-processing mills were closed. GuySuCo also diversified into production of dairy products, livestock, citrus, and other items. Profitability improved, but production levels and export earnings remained well below target. In mid-1990, the government took an important step toward long-term reform of the sugar industry—and a symbolically important step toward opening the economy—when GuySuCo signed a management contract with the British firms Booker and Tate & Lyle.[2] The Booker company owned most sugar plantations in Guyana until the industry was nationalized in 1976. A study by the two companies reportedly estimated that US$20 million would be needed to rehabilitate Guyana's sugar industry.[2]

In 2004 it was announced that the Guyana was moving to modernize its sugar industry to cushion the impact of the African, Caribbean and Pacific ACP countries on the world market. As part of a strategic plan to reduce costs and improve productivity, the Guyana Sugar Corporation and the China National Technology Import and Export Corporation (CNTIC) signed contracts on June 22, 2004 in Beijing.[3] As a result of the $110 million agreement which was partly funded by the World Bank, International Monetary Fund and the Exim Bank of China, a new factory was built, which included the Skeldon Sugar cogeneration plant, a distillery and a refinery to be constructed at a later stage in 2008.[3] The agreement was also made in compliance with the World Bank targets and obligations to contribute to an overall reduction of global greenhouse gases and to introduce modern technologies to the sugar industry which would improve efficiency.[3] In November 2007, sugar factory workers of GuySuCo trained in South Africa to become familiar with the new technology.

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