Sugar was once the most valuable commodity in the world. It led to, and sustained the slave trade, for over four centuries and the profits financed the industrial revolution and the development of Europe and North America. For centuries, the sugar industry had depended on cheap slave labour, because the harvesting of sugar cane required constant exposure to tropical heat in the Caribbean and elsewhere. No ordinary human being could have endured doing this type of work other than slaves from Africa. Free slave labour guaranteed the lowest production cost and huge profits not for the colonies but for the colonizers.
The abolition of slavery in Guyana led to the introduction of indentured labour from India, China and Portugal to replace the African slaves, some of whom fled the plantation life for the cities.
However, many remained on the plantation and worked for low wages because they could not eke out a living elsewhere due to the fact that they were denied farming land, which the Crown had in abundance.
By the mid-20th century sugar could not be produced profitably at world market prices, therefore, Britain and the other colonial powers had devised a system of preferential market arrangements which in essence had guaranteed a quota and a price above those on the world market for Guyana and its Caribbean colonies.
This boosted the profits of British and American companies in the Caribbean and Guyana where sugar was the main industry that sustained a number of communities across the country.
By the early 1970s, it was clear that the preferential market arrangements were untenable in the long run and the British firm, Tate & Lyle, withdrew from them, because it claimed that it was operating at a loss. Yet the government of the late Forbes Burnham went ahead and nationalized the sugar industry in the 1970s as part of his socialist philosophy to take control of the commanding heights of the economy.
The sugar industry was the main source of foreign exchange earnings for Guyana until the advent of the bauxite industry. Following the takeover of the sugar industry, the government spent an enormous amount of money on mechanization to increase production, but it was not enough to modernize all the sugar factories.
As a result, the mechanization of some was continually delayed, agronomy was ignored to the detriment of yields, and several irrigation projects were neglected while others were stalled.
While the amount of time, money, and expertise spent on the sugar industry did indeed improve production, it was not enough to guarantee the preferential trade arrangements which were eventually cancelled.
Despite the spending of over US$200 million by the last administration to construct the Skeldon sugar factory and the Enmore packaging plant, which both became white elephants, Guyana is still producing only brown sugar, at prices way above the world market price. Since the mid-1990s, the sugar industry – in essence GuySuCo – has been on a financial life support, with huge government subsidies of billions per year.
Ending the subsidy on GuySuCo was meant to salvage a part of the sugar industry that can be made viable for the production of sugar for local consumption and export, and molasses for rum production.
The current government realized that GuySuCo could no longer be subsidized and decided that its land and resources should be used for the production of other agricultural crops, given that it is the best farming land in the country.
The options to continue subsidizing GuySuCo would have been costly economically and the closure of some of its factories have been difficult socially.
However, experts have opined that it made sense for the government not to postpone the decision to close some of the factories and lessen the burden on the taxpayers.
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