Manufacturing of by-products in sugar sector takes hit – PSC report

Closed Rosehall Estate

…declines by 23% for 2018; rice milling also shows decline

Guyana’s manufacturing sector has had its share of ups and downs for the past year. This is according to the Private Sector Commission (PSC) 2018 annual report, which found that despite a marginal overall improvement, all is not well with manufacturing.

According to the report, the manufacturing sector accounted for 3.3 per cent or $22.9 billion of Guyana’s Gross Domestic Product (GDP) in 2018. This is a reduction compared to the sector’s share of 3.5 per cent ($22.4 billion) the previous year, although an increase in dollar terms.

“The manufacturing sector improved marginally during 2018. Growing by one per cent compared to the 4.2 per cent during the previous year … it is quite apparent that much of the sector’s growth was ascribed to an improvement in the light manufacturing sector, which grew by 5.2 per cent in 2018,” the report noted.

Closed Enmore Sugar Estate

It added that Guyana’s main manufacturing sub-sectors include rice milling and value-added production in the sugar industry and other light manufacturing. Not unsurprisingly, however, manufacturing in sugar has taken a significant hit.

“Manufacturing in the sugar industry declined significantly in 2018 by 23.78 per cent,” the PSC report states, before adding that “rice milling during 2018 declined marginally by 0.5 per cent”.

Among some of the manufactured products in Guyana the report pegged were bottled rum, Malta, wine, shandy, Vitamalt and beer. When it comes to edible items, it referenced baking fat, margarine, ice cream and cereals, among others. In terms of industrial goods, the report identified livestock feed, detergent, paint, putty, acetylene and oxygen.

Since the Government decided to downsize the sugar industry, it has been heavily criticised for that decision which has put thousands of sugar workers out of a job. Among the criticisms levelled at the Government has been the lack of a social impact assessment before the closures.

In December 2017, some 181 workers from the Rose Hall Estate lost their jobs when the entity closed its doors. Most of those who were transferred to the Albion and Blairmont Estates were from the East Bank of Berbice.

Closed Rosehall Estate

But the closure has also had an impact on local manufacturers like he Demertara Distillers Limited (DDL), which has already expressed concerns about developments regarding the state of the sugar industry, and the potential downsizing of sugar production.

DDL has long had a relationship with the Guyana Sugar Corporation (GuySuCo) given its dependence on the sugar estates for molasses, one of its raw materials, and has been a significant source of cash flow to the sugar company for its operations.

In 2017, it had said that its molasses requirement for 2018 was 70,000 tons. In contrast, GuySuCo had at the time set a sugar production target of 115,000 tons at the three estates earmarked to remain in operation, with molasses production being pegged at 52,000 tons.

In light of this shortfall, DDL had said it was actively exploring its potential role in the future of the sugar industry, and had executed a high-level technical and economic feasibility study on innovative approaches to use the existing sugar assets to meet the current and future needs for molasses for an expanding distilling industry.

Fast forward to 2019 and in March of this year, DDL Chairman Komal Samaroo had revealed that his company had to import 14,000 tonnes of molasses last year for its rum operations owing to the shortfall in sugar production.

At one point in the running for the Enmore Estate, the company was forced to pull out after considering the costs to rehabilitate it. Continuing the woeful business news, DDL’s annual report had revealed that Demerara Rum Company would be liquidated in 2019.

At present, Government is in the process of seeking private buyers for the Rose Hall, Enmore and Skeldon Estates. In fact, talks have progressed to the point where the Government is optimistic of a deal for the Rose Hall Estate by this month.