Wood importers cancel orders from Guyana
Minister of Agriculture Robert Persaud met with Chairman of the Private Sector Commission, Gerry Gouveia, President of the Guyana Manufacturers and Services Association (GSMA), Ramesh Dookhoo, its directors, and members of the wood value added group last week.
This newspaper understands that the wood processing sector was one of the main issues discussed.
According to reports, the macro environment was the main issue of discussion as the GMSA expressed concern with the impact on this sector as it relates to the global financial meltdown.
It was noted that there has been a marked decrease in orders for wood and its products as well as a number of cancellations from interested buyers.
Minister Persaud announced some extremely beneficial changes to the trading arrangements for value added wood products being exported, and the GMSA committed to supporting these policy changes by coming up with a blue print for the further development of the sector in three years. Indications are that the plan would include the achievement of a $150M to $200M size sector.
Last year, the forestry sector in Guyana had a very challenging year which was precipitated by the rippling effects of the current financial crisis.
Several countries, particularly Canada, are facing severe hardships in this sector as a result of the global financial crisis.
Chief Executive Officer (CEO) of the Guyana Office for Investment (Go Invest), Geoffrey DaSilva had said that when compared with the previous year the export revenue and production for 2008 was less.
According to him, in the years prior to 2008, the sector was growing significantly in terms of production and export revenue but that fell during last year.
DaSilva noted that while the downturn was negative it provided the opportunity to look at the sector and assess where it is going and also to make any necessary adjustments.
He reiterated that growth in this industry will be tempered by the situation in the international market.
He also stated that while there are going to be some challenges in some of the markets, more and more companies are starting to do value added products like flooring.
“If they are high-end products they might not face so much of a decline meaning that the buyers or customers will have a little more money than the normal consumer so that is one of the key things that we are looking at too.”
Meanwhile, this newspaper understands that at the meeting, members also discussed at length the opportunities for investing in the agro- sector at the primary and secondary levels.
Collaboration with the Ministry of Agriculture’s research arm- NARI and the GMSA was discussed and a number of manuals aimed at guiding future investment in the sector are being developed for circulation to the private sector.
The private sector, and particularly the agro- processing sector is to review these manuals to look for opportunities for developing bankable projects.
Sanitary systems, especially its impact on the agro-processing sector was discussed the GMSA will join in the effort to take these standards forward nationally.
The impact of the supplies of sugar to local food processing industries was also discussed and the Minister indicated his full support that those industries that will be affected, including a temporary liberalization of the sugar import market.
Also, the future of power costs and its impact on future generation for the manufacturing sector was discussed and references were made to President Bharrat Jagdeo’s efforts to secure investment in a hydropower station.
The group also lauded President Jagdeo’s success in gaining support for Guyana’s position for a compensatory mechanism for avoided deforestation.
This meeting was held as part of the GMSA’s effort to lobby for better conditions/environment and to aid competitiveness.
Reports state that a series of meetings to address the sectors that have already begun to feel the impact of the global financial meltdown have begun.
The world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems.
A global financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-connected world.
Guyana has felt sparse direct impact of the crisis but from all indications several industries are going to be, if it has not happened already, affected indirectly. Some developed countries have been affected tremendously.
It was reported in the Canada press in October that the current economic turbulence may cause the death of Canada’s forestry industry, and the federal government is doing nothing to prevent it.
It added that in the first six months of 2008, the forestry industry lost $1.2 billion, according to CEP and for next year, several companies will have to refinance large debts, including Montreal-based AbitibiBowater and Richmond, B.C.-based Catalyst Paper.
The global economic crisis, driven by falling markets stemming from the bust in the housing market in the U.S., should propel the Canadian government to step in before the forestry industry collapses.