Historical explanation why sugar failed

Sep 27, 2016 Letters

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Dear Editor;
This is the continuation of Mr. Suhkdeo’s letter carried in our Monday edition
It is imperative that the government and Guysuco undertake some immediate structural changes or the industry will die a natural death which would definitely result in serious racial, political, economic and social insecurities. Foreign exchange would be heavily reduced, national income would shrink considerably in response to an inverse multiplier effect, and the economy would experience negative growth rates. Unemployment would soar, and the unemployed would definitely resort to survival by any means necessary such as crime, marijuana cultivation and cocaine peddling.
One should note that these three activities are already prevalent in Wales, and perhaps other estates as well. I know about Wales because I am from that area. I personally know that three of the biggest drug dealers in the country are from that area. They are (all three), presently on charges.
As stated before, past efforts to improve the performance of Guysuco have been ineffective because they failed to address the issues of alienation of labor and alienation from the pricing mechanism. But they also failed because there were short-term planning, and piece-meal improvements; they addressed the symptoms of the problem, not the problem itself, and involved little or no structural change of the industry or the economy.
For industrialization and development to take off, holistic long term planning and structural changes are required. Development Economics theorists agree that a country must start on an industrialization path; with that economic activity in which it enjoys a comparative advantage. For Guyana, it’s undoubtedly agriculture. Development economics is about restructuring and transformation of the means, forces and relations of production as well as markets and supportive educational and vocational institutions; hence it incorporates social and political factors to devise particular plans that not only promote economic development, economic growth and structural change but also improve the potential for the mass of the population, through health and education, work ethics, family and community values, racial harmony and social cohesion.
In essence, we are talking transformation of the economy.
As an aside, it should be noted that Sir Arthur Lewis spent practically his whole life articulating models for transformation of the economies of developing countries, in particular those that are predominantly agrarian, and enjoying a comparative advantage in agriculture production. For him, agriculture, along with agro-based industries, was seen as the engine of growth that would transform over time the economic, industrial and institutional structure of an underdeveloped economy. For this he was awarded the Nobel Prize in economics.
Unfortunately, his expertise was not adequately utilized in the Caribbean. Today, Caricom countries which possess such great soil, and a population of only sixteen million people, has an exorbitant food import bill of $5 billion. Every year, a matter that has been of serious concern over the past decades by several Regional and International organizations who have all noted that these countries experience very low or no economic growth, extremely high ratios of debt-to-Gross Domestic Product (GDP) and declining foreign exchange earnings in many of the 14 independent nations that comprise the Caribbean Community (CARICOM). The majority of them continue to spend huge sums on buying food outside the Caribbean.
They have further stated that Guyana, of all 15 Caricom states, has the largest land mass, the most arable agricultural lands, and the greatest potential for food production. It is shameful that golden opportunities to produce more food in the Caribbean and significantly reduce the astronomically high annual food import bill of US$5 billion are being woefully neglected. If this misguided trend continues, the economies of many of the countries of the region will be increasingly imperiled.
Diversification is the means by which this transformation can be effected
Should Guyana accept this challenge and adopt this proposed path and model to development, then the Diversification of Guysuco should be the main instrument through which this can be accomplished. Guysuco must play the most significant role in the transformation of Guyana. One should note that in the colonial 60’s when sugar was king, and contributed directly and indirectly as much as 60% to the GDP, British Guiana was sometimes called Bookers Guiana. Currently Guysuco is just a small entity owned by the government, and its contribution to GDP is less than 10 percent. But for Guysuco to be the engine of growth, and play a prominent role in Guyana’s development, it must move away from sugar.
Moving away from sugar towards diversification is the only way Guyana can break out from this dependency syndrome. It must produce goods for which there are ready and growing markets, goods that are in demand, and for which the pricing mechanism is not totally out of Guyana’s control. It must produce raw as well as canned fruits and vegetables, grains and legumes, meats and fresh water fish, dairy, dairy products and confectionary which are in heavy demand by Caricom countries and the diaspora in North America.
It must take advantage of Caricom’s $5B food imports from extra-regional sources to satisfy its population of sixteen million, as well as the six million visitors to the region every year. And vacationers who come to the Caribbean and are given pineapples from Hawaii, guavas from Mexico, oranges from California, and sapodillas from India. The North American markets might be even more attractive, while neighboring Venezuela might also be a potential market.
Gokarran David Sukhdeo

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