by Gokarran Sukhdeo
With regards to African Caribbean and Pacific (ACP) sugar, the writing has been on the wall for at least quarter of a century, perhaps more than a century. At the most recent European Union (EU) meeting, a decision has been made that EU preferential price will decline by 36 percent in four years. Since the EU absorbs about 80 percent of Guyana’s sugar, this spells disaster for the already ailing industry struggling to produce at break-even point, and worse for a country whose social, economic and political super-structures were founded on sugar. It is for this reason, in addition to enjoying a comparative advantage1 over other Caricom sugar producing countries, that Guyana holds on to its sugar industry, while at the same time, managing to corner the Caricom market as a result of the collapsing sugar industries in Caricom countries.
This four-year grace period offered by EU will give sugar (enough) time to fix its house. Failure to do so means its fate will be sealed for good.
I would like to submit that all is not lost for Guyana sugar industry; that it can, like a good chess player, turn a situation of disadvantage into one of tremendous advantage, and that sugar, which from time immemorial, has been synonymous with bitter oppression, can indeed assume a sweet taste.
Further, I would like to maintain that, just as sugar has been used historically by imperialists as an instrument to create great social aberrations – racial divisions, poverty, racial crimes, etc. – it can similarly be used to revolutionize the industry and correct those same aberrations in society.
For two main reasons sugar has never been a solid foundation for any economy. Both reasons can be expressed with one word – alienation. In the first place, despite its labor intensiveness, sugar production depends heavily on foreign capital (tractors, machinery, fuel, fertilizers, packaging, etc.) the price of which is dictated by the developed counties – the same countries that buy our sugar – also at a price dictated by them. Sugar companies are totally alienated from the pricing mechanism and have absolutely no control of the terms of trade, which have mercilessly always taken an unfavorable course against sugar.
Apart from alienation from the pricing process, alienation in the context of Guyana also manifests in a more devastating way.
Labor is alienated from capital.
The industry, formerly owned by foreign capitalists, continues to be operated as if it is still of that era. Thus, a feeling of alienation still exists with labor, and perhaps more so since the nationalization of the sugar industry.
The chief result of alienation is declining productivity2 of all factors of production – land, labor and capital.
Throughout the history of sugar, the general response to declining productivity has been (a) increased capitalization, and (b) increased management and further tightening of labor supervision. Both responses, unfortunately, eventually lead to further alienation. There has never been any significant structural change to address the issue of alienation. The panacea has therefore always addressed the symptom, not the problem itself.
Despite increased capitalization, production has not generally moved to secondary or tertiary stages, but constrained, through unfavorable and dictated trade agreements, to remain at raw material level, that is, the US and EU only let us have a preferential price or reduced tariff for our raw sugar, not processed. This was acceptable so long as we enjoyed indefinite preferential treatment, but can now only be acceptable if they would not only increase our quota over a medium term, but also increase the price relative to the deteriorating terms of trade between developed and developing countries. Unfortunately, this is not so.
The US only buys about 5 percent of our raw sugar at a preferential price which itself is not fixed, but continually decreases. Because of the constantly deteriorating price and fixed quota, the industry cannot increase its income even if it increases production. In addition, because of the deteriorating terms of trade, real income persistently decreases as it costs more and more in foreign capital to produce at a fixed quantity3.
Will the US entertain a request from Guyana for a better deal? Hardly likely! US trade policy is intricately tied to its own political, ideological and national security.
Likewise we cannot continue begging the EU for preferences. Preferences by our former colonial masters were intended to assist us (and our infant industries) during our early years of independence. But we refused to grow up after forty years of independence, and now ‘Mother’ Europe is pushing us out of the nest for our own good.
Preferences in trade today are granted to countries with commodities, say uranium or oil which are highly valued and are in strong demand, particularly for security reasons. Preferences are granted by countries that overtly or covertly expect something else in return, such as political or ideological alliance or military support. In some cases and times, geo-political importance play a part in obtaining preferences. In short, global liberalization of trade is not likely to become a reality because of the hardline practices of WTO and first world manipulations, for example, agricultural subsidies, which delimit fair trade and make the playing field very rough indeed for third world countries.
Cane sugar is no longer a commodity of power. The EU doesn’t need our cane sugar, or our infinitesimal military or political alliance.
It is unrealistic to ask for preferences when we have no collateral or anything of value to reciprocate. Arguably, it is also unrealistic to ask European countries to continue to subsidize and support us after forty years of independence. It is unrealistic to expect European countries to subsidize our industries as equally as they do their own so that our products would compete with theirs and threaten their own industries. There is no moral imperative!
President Jagdeo, just back from Europe and full of optimism about the unity of ACP countries hinted at a possible derailment of the upcoming Doha Talks in Hong Kong if developing countries do not elicit favorable responses, like what happened in Cancun. But derailment of WTO talks is more about failure than success, and there is no guarantee that ACP countries will get any concessions, and even less guarantee for Guyana. If by "expected responses" Jagdeo means promises by the Developed Countries, well, promises are not good enough on which to hang our future. Developed Countries have not honored previous promises. Pursuing after preferences and subsidies is therefore a deadbeat issue for us.
In addition, rosy reports of G90 and Caricom cohesiveness are a myth. Brazil, Thailand, Australia and other large-scale producing countries are producing cheaper sugar than the former British colonies and thus unlikely to give us whole-hearted support. Right in our Caricom backyard there is a lot of bickering. Jamaica only recently "stabbed us in the back" on importation of our rice; and Caroni (Trinidad), trying to sneak-buy Guyana sugar to keep their export quota, was turned down by Guysuco. It must be noted that, with respect to sugar, Guyana, the largest of English-speaking sugar exporting countries in the Caribbean, needs Caricom support at Doha and other trade talks more than Caricom countries need Guyana. Is Guyana likely to get that support, noting Caricom's past failure to speak out on behalf of the Guyanese people (for example, against electoral rigging)? Frankly speaking, I do not believe any of the large Caricom countries sincerely support Guyana's development.
Going back to Europe – as sympathetic as British PM Blair may appear towards former British colonies in his recent speeches, two things are to be noted. (1) His is only one voice in the EU among two-dozen others who are firmly against preferences to ACP sugar. The EU is bent on subsidizing their beet farmers to the extent of US$7 billion, while doling out US$40 million in pittance to ACP sugar (Guyana alone stands to lose that much per year); and (2) considering the nature of his character and his close association with President G.W. Bush, Blair's sympathy, in all likelihood, is crocodile tears.
It seems to me that each country should paddle its own boat at this point. And especially Guyana for two reasons: (a) because its system and scale of sugar production are different from Caricom countries, it stands a good chance (unlike its Caricom neighbors) to be able to revolutionize its sugar industry and reduce its cost of production to levels attained by Brazil, Thailand and large-scale multinational corporations; and (2) Guyana stands to gain the lion share of the expanding Caricom sugar market when they totally abandon their sugar industries – which, in their case, is definitely inevitable.
For Guyana, unlike its Caricom neighbors whose main economic industries are non-agricultural, agriculture is the single most important sector of Guyana's economy, both in terms of foreign exchange generation and the number of persons employed. Sugar and sugar based products contribute almost 20 percent to GDP, and in terms of foreign exchange, earns about US$135.0 million a year. One in every seven persons is directly or indirectly connected to sugar in Guyana.
Abandoning the sugar industry is not an option for Guyana.
Pursuing after preferences and subsidies is therefore a deadbeat issue for us.
How then can the Guyana sugar industry survive?
I would like to outline some revolutionary ways that I feel would definitely help.
Firstly, Guyana Sugar Corporation (GUYSUCO) will have to change its name to Guyana Agricultural Corporation. This implies it will have to embark on a massive diversification program.
Previous attempts at diversification failed for a number of reasons, the main one being the alienation problem. The workers who worked in the Other Crops Division of Guysuco were no more than subjugated servants producing tilapia, cheese, milk and yams for managerial staff. They tasted no benefits from their labor (except what they stole). They sabotaged the works and OCD became a liability to Guysuco.
Therefore, to make diversification work, the issue of alienation must be addressed. My proposal in tackling this issue may be called the Diversified Mobilization Plan (or any other attractive name). This plan will not only address the alienation issue, but also the issue of declining productivity of land, labor and capital.
Declining productivity, as mentioned before, is the chief cause of increasing cost of production, and the direct result of the alienation process explained above. For simplification, I would like to outline my Diversified Mobilization Plan in a number of parts. These parts are not mutually exclusive; they are concurrent.
The Diversified Mobilization Plan calls for the sugar workers to become lease owners of the cane lands. Acreages and terms of lease (5-10 years) vary according to years of service of the workers. Leases are renewable only to those who maintain a certain level, or show increase in productivity. In terms of cane production, productivity is measured by the ratio of tons cane or tons sugar per acre. Consistent productivity over 10-15 could result in full (conditional) ownership of the land.
In the case of factory and office workers, they could be made shareholders in the Corporation, in which event their productivity would be measured, say, in terms of decreasing factory and office down-time, or other devised measures of efficiency.
The second part of the Diversified Mobilization Plan calls for the earmarking of Guysuco lands, most of it already primed with an excellent drainage and irrigation system, for certain crops, depending on soil suitability or, in some cases, proximity to utilities and social infrastructures. Thus, there would be allocations for citrus, pineapple, cocoa and coffee, livestock (dairy, cattle, pigs and poultry), and other products. Dairy farmers would plant antelope grass, perhaps on a cooperative basis. Again, lease-holders are committed to a certain production level or face non-renewal on the expiration of their leases.
The third part of the Plan involves Guysuco embarking on a massive capital investment program that would build factories to process milk into cheese; factories to use milk, cocoa and sugar, nuts and other fruits to produce chocolate and confectionary; and factories to can pineapple and citrus juices, jams and jellies, and fruits such as mangoes, pineapples, coconuts, etc. Imagine, Guyana will no longer be selling its tropical nuts and fruits, cocoa and sugar at the dictated prices of Developed Countries (DC), then turn back and buy their chocolate, again at the dictated price of the DCs. Instead, Guyana would be biting into the Caricom confectionary markets currently controlled by the DCs.
Can we do all these in four years? I say we can.
A fourth part of the Plan calls for in-depth research and analysis by Guysuco of the North American markets, particularly New York, New Jersey, Florida and Toronto, which are rapidly becoming cities of immigrants whose demand for tropical foods is growing exponentially; and to embark on a greater integration and supervision of the cultivation, processing and exportation to those immigrants the highly demanded items such as pepper sauce and achars, condiments, chataigne and breadfruit; vegetables; all types of fruits (mangoes, sapodillas, guavas, star apples, dunks); beverages in concentrates (sorrel, mauby, mango; jams and jellies; fish and seafood (hassar, tilapia, snapper, prawns, shrimps).
The Guyana Consulates/Embassies must thus be fortified with skilled trade officers and not mere cynosures.
It is unfortunate that only a small percent of the tropical foods demanded by Guyanese in New York actually come from Guyana (according to a preliminary study done Dr. Gary Girdhari). The demand for Guyanese foods is so great from Guyanese and other West Indians that many stores falsely advertise hassar, eggplants, pumpkin and dozens of other items as originating from Guyana.
At the same time Guysuco would investigate the viability of growing some of the very tropical and temperate produces that Guyana imports, such as garlic, onions, cinnamon, geera, tumeric, potato, split peas and a host of others, and to vigorously pursue after a strong foothold into the multi-billion dollar food importing industry of the Caribbean.
The next part of the Plan is to attract the youth from areas of high unemployment such as Georgetown, Buxton, Rosehall, etc. and (1) lease them the marginal cane lands bordering their villages (converting bandits’ nests into productive entities), and (2) train them in the skills of farming, livestock rearing, carpentry, building bio-gas digesters (which will use the waste from their farms). The Guysuco Port Mourant Training School in collaboration with UG and Guyana School of Agriculture will have their work cut out for them.
(I have always advocated for a non-political, socio-economic approach to solving the Buxton problem. This Plan might well provide that opportunity.)
Someone once wrote in the Stabroek News that it was Burnham’s pampering and paternalization that took away the pride of artisanship that Buxtonians were once noted for, thus causing (their) labor, already stripped of its dignity, to become a bastardized commodity to be bartered for the highest bid. But the bastardization of labor started long before. Burnham merely created the opportunities for an easier expenditure of labor to exchange for bigger gains not only in Buxton but also all over, which helps to explain the meteoric rise in banditry, drug peddling, prostitution, proliferation of rum shops, and other vices.
Now, the imperialist banks or countries may not want to lend us the money to embark on this Plan. How do we raise funds? Simply by selling Agriculture Development Bonds to the three-quarter million overseas Guyanese (as well as local investors). I have no doubt that just as they repatriate US$100 million annually to Guyana without expecting any returns, they would gladly invest in these bonds that promise and guarantee good interest. After all, the world’s demand for food is always increasing, and which other country, devoid of natural disasters possesses such potentials for food production?
You may call me a dreamer as John Lennon sang; but let’s face it, either we embark on revolutionary changes in Guysuco or face the stark reality of massive lay-offs, crime, migration, economic collapse and a country reduced to a barren wasteland, a country once called the El Dorado and the Food Basin of the Caribbean.
Let’s start thinking out of the box!
Notes
1 Comparative advantage resulting from such factors as easier access to production resources such as land and labor, more extensive area under cultivation and scale of production, more efficient irrigation and drainage system, easier conveyance of canes to factories.
2 Productivity is measured by a ratio of output to a particular unit of input. Thus, if output is, say, 100 tons of canes, and input is 2 acres of land, then productivity is 100/2. If the following year output drops to 90 tons of cane on that same two acres of land, productivity is 90/2 showing a decline in the productivity of that land.
3 By deteriorating terms of trade is meant that we have to give more and more of our products [sugar] over time to get the same quantity of import, such machinery, fuel, etc.
Gokarran Sukhdeo, BS (Econ.), MA (Soc. Psy.) was an Agriculture Economist, Ministry of Agriculture, Guyana; he nows works in a senior capacity in Social Work, New York City. He writes analytically on a variety of subjects, including trade and foreign policy. He is also the author of the Prize-winning novel The Silver Lining.
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