Guyana’s vast tracts of productive land present enormous opportunities for growth. Indeed, agriculture already represents a significant proportion of Guyana’s domestic production (approximately 25 percent of GDP) and agriculture exports amounted to over a third of Guyana’s total exports in 2004. While about 90 percent of Guyana’s 2005 agriculture exports consisted of rice or sugar products, the value and share of processed goods and fresh fruit and vegetable exports have experienced a positive growth trend in recent years. This is a result of efforts by the Government and the private sector to diversify Guyana’s agricultural sector. With the right investments, Guyana could easily become the ‘breadbasket of the Caribbean’ while at the same time increasing exports to markets in North America and Europe.
Traditional Agriculture Products
Recent changes in the global trading environment, such as the reduction of guaranteed prices for rice and sugar in the E.U., have placed pressure on Guyana’s traditional agricultural exports. Nevertheless, investments in productivity and efforts to shift exports towards non-E.U. markets can help ensure that rice and sugar remain mainstays of Guyana’s economy for some time into the future.
Sugar accounts for nearly 12 percent of GDP and over 20 percent of Guyana’s exports (2005). Most sugar exports are destined for the E.U. under a preferential trade agreement. The CARICOM region, which is protected by the common external tariff (CET), is also an important market for Guyanese sugar. Sugar is produced by the state-owned Guyana Sugar Corporation (Guysuco). In 2005, production amounted to nearly 259,000 metric tons. While cuts in the E.U.’s guaranteed prices will have an impact on the industry, a modernization program with significant investment by Guysuco (see Box 2.3) will help maintain the profitability of the sector by raising annual production to 450,000 metric tons.
Although the sector is mature, opportunities still exist in processing the raw product into crystallized sugar, as well as the brown sugar market, which Guysuco reports to be under-served throughout the CARICOM region. Opportunities also exist for the by-products of sugar-based products, such as ethanol.
Guysuco Responding to Challenges in the Global Sugar Market.”]Recognizing the challenges posed by recent developments in the global sugar market, Guysuco is embarking on an ambitious plan to modernize Guyana’s sugar industry. Guysuco plans to expand and enhance production through a US$165 million modernization program, including a new US$135 million sugar-processing factory at Skeldon in Eastern Guyana. The company plans to expand sugar cane cultivation on 13,000 hectares of new land while cutting the current cost of sugar production in half. As part of this project, Guysuco plans to include a co-generation electricity plant fuelled by cane waste, as well as a white sugar factory. Guysuco expects overall production to grow by more than 25 percent over the next four years.
Rice accounted for nearly 9 percent of Guyana’s exports in 2005. Like sugar, Guyana exports rice primarily to Europe and the CARICOM region. According to the Guyana Rice Development Board, this trade pattern is starting to shift following the E.U.’s reduction in the guaranteed price for Guyanese rice. However, Guyana could further expand its market share in the Caribbean; currently it holds 50 percent of the Jamaican rice market. Furthermore, Brazil is emerging as an important export destination, as the Brazil-Guyana Partial Scope Agreement established a quota for duty-free importation of Guyanese rice. While sufficient Brazilian demand exists, this quota has yet to be met due to a lack of supply. Opportunities exist to improve productivity by upgrading milling facilities for export so they can manufacture value-added rice products, such as breakfast cereal and quick cooking rice.