It should not be surprising to note that the authors of the NDS carefully studied GUYSUCO's plan which was described two weeks ago in this column, and held discussions with representatives of the corporation's Board of Directors and management. They fully appreciated, of course the important role which the sugar industry plays in Guyana's development and therefore resolved that a strategy should be devised which would ensure that as far as possible the sector continued to contribute to the country's well-being. However, because many of the factors which might influence the level of its contribution to the economy are beyond the country's control, the authors of the NDS decided to proceed in a measured manner and not to over-commit scarce financial resources to a programme that might be based on insecure assumptions and premises. They therefore focused their attention on the probable future world price of sugar, the future share of the CARICOM market for Guyana's outputs of sugar and sugar products, the future status of the country's traditional preferential markets and, most important, on Guyana's ability to compete in the future in a globalised world.

The authors of the NDS soon agreed that it would be a somewhat futile exercise to engage in calculations that were meant to indicate what the future world price for sugar would be after the current preferential conditions were removed. They considered that this would be an exercise in futility for three basic reasons. First, it is inherently difficult to forecast the price of a commodity such as sugar over too long a time horizon, simply because technologies tend to change, there may be unanticipatable structural changes in the political economy of the industry, and also because it takes only two or three years to bring idle sugar land back into cultivation. Second, the authors were convinced that there is really no "world price" for sugar, because much of the world's sugar is either sold in preferential or in home markets in which prices differ considerably, are often subsidised, and are definitely not market prices. Third, the "residual sugar price" or the non-preferential sugar price" has fluctuated wildly over the last decade or two. Accordingly, there is no reliable trend on which to assess future prices, and even if there had been such a trend, so the authors of the NDS argued, it would have little validity in a non-preferential world, because the residual market is only a portion of world consumption.

They therefore concluded that it would not be entirely convincing to base the future of what is certainly one of the most important industries in Guyana on shaky forecasts of future prices. Instead they formed the opinion that what should be done, in undertaking the hazardous task of assessing the country's future competitiveness in this area, was to examine the price structure of GUYSUCO and other producers, in order to determine which producer, or which country, would have the competitive edge.

They came to the conclusion that GUYSUCO would indeed be in a position to compete effectively, provided that (i) radical changes were made in its field production methods, including the mechanisation of a significant proportion of its operations; (ii) improvements were realised in its sugar cane procurement practices; (iii) the quality of the management and administration of some of its sugar estates was tightened; (iv) its factories were modernised; and (v) its transportation costs were reduced.

This positive conclusion in regard to GUYSUCO's future viability was based on several factors.

First, the evidence suggested that if controlled drainage and irrigation regimes were applied to the West Demerara estates, where sucrose yields are generally low, the water content of the soils could be significantly reduced at specific periods in the growing cycle, thus leading to an increase of the sucrose content of the cane. In addition, it became clear to them, from their investigations, that the utilisation of certain "ripening" techniques might also enhance the cane's sugar content. Indeed, there appeared to be a close correlation between the application of these agronomic and chemical methods and the profitability of the West Demerara estates.

Second, it was demonstrated to the authors that it was possible to reduce the unit costs of the cane purchased from private cane farmers by intensifying extension assistance, and by helping them through the provision of relevant inputs to increase their productivity.

Third, preliminary studies undertaken by the NDS revealed that there was a dearth of administrative, managerial, and technical skills on some of the estates. The authors of the NDS therefore held the view that if steps were urgently taken to train the required personnel in these areas, GUYSUCO's competitive position would be much improved.

Fourth, it became evident that if the corporation's plan to purchase a modern factory, and to amalgamate others, bore fruit, not only would its overall productivity significantly increase because of improvements in efficiency, but it would also be able to enjoy the benefits of scale economics.

Fifth, it was evident that the deepening of the harbour in the Berbice River would almost inevitably reduce transportation costs.

And sixth, the authors of the NDS were convinced that the corporation's plans to add value to the sugar cane raw material through the expansion of the manufacturing process, and through improved packaging, would also help to increase its profitability.

Overall, their calculations indicated that, when all these factors were taken into account, GUYSUCO would be able to reduce its production costs to something approximating to US$0.10 per pound. On the other hand, their investigations suggested that those countries which produce sugar at costs that are now lower than GUYSUCO's have, in several respects, already attained optional efficiency. It therefore appeared to them that it would be most difficult for GUYSUCO's competitors significantly to improve their productivity in the future.

This is not to pretend by any means that the process of reducing production costs in Guyana would be easy. Indeed, the exercise depends in great part on the corporation's ability to secure the financial resources that are required to establish the new mill, to amalgamate others and, generally, to rationalise its entire production system. Moreover, it will take time to transform the industry into the efficient enterprise it needs to be.

The authors of the NDS did not, of course, consider the development of the sugar sector in isolation. In particular, they remained concerned that the relatively low productivity of the Demerara estates (compared to that of the eastern estates) might reduce the competitiveness of the entire sugar industry. Accordingly, they recommended that a detailed plan for the diversification of economic activity in those areas in which the Demerara estates are located should be formulated and implemented immediately. Such a plan, they prescribed, should include the establishment of special micro credit facilities; training in various disciplines, trades, crafts, and entrepreneurship; and the provision of land for cultivation, housing and business development on favourable terms. The point which the authors of the NDS considered it important to emphasize in this regard is that undue reliance should not be placed solely on sugar in these districts, and that other suitable options for employment should therefore be made available. Indeed, throughout the NDS, the need for diversification is stressed.

The authors of the NDS were also somewhat perturbed at the inequitable distribution of land on the country's coastland, and at its obvious overcrowding. They therefore urged most strongly that steps should be taken to ensure that all the land now occupied by GUYSUCO should revert to the State. The State would then lease to the corporation any land which it requires for future expansion at normal rates, and distribute the remaining areas to the many landless Guyanese.