Tell us what it's going to take for you to return to Guyana.

Monday, March 19, 2007

Ethanol, Sugar and Guyana

If you've come to read about Miranda LaRose's journalistic misstep, scroll down and you'll see that below this.

Here's something that we need to know about Ethanol and Sugar.

Let me begin with Ethanol Production in the US. The installed Ethanol production capacity in the US will arguably (depending on who you talk to) will be too much becuase the corn that it will take to feed these ethanol production facilities will take such a huge chunk out of the annual corn crop, that that price increases for corn will almost eat up the profit of producing ethanol.

Look at the price of corn tortillas in Mexico over the past year. It's gone up 400% because the corn is flowing north to Ethanol production facilities.

Many in Mexico are furious over this because of the implications of this for the poor. I believe that it was President Cardenas (not sure) who said that this is a good development for poor Mexican farmers who will now get more money for their corn.

Let's apply this to what we know about Guyanese sugar production:

As much of the world converts to making and using flexible fuel vehicles that burn up to 85% ethanol and mandating at least 10% ethanol be used with any and all gasoline, more ethanol will be demanded.

More ethanol will be produced from other starchy crops, cellulosic feedstocks and yes, sugar.

As more sugar is utilized in ethanol production, the price of sugar for those who want to use it as food, will increase.

People may be outraged at the expensive sugar, but people will come out and say that this is good for the poor sugar producing countries who "NEED" sugar revenue to survive and develop (of course we know that it probably stifles development).

The truth is that Guyana may never produce sugar or ethanol as efficiently and cheaply as Brazil and some other big industry players,BUT high prices leave room for inefficient producers, like Guyana, to stay in business. Maybe to the chagrin of people who tend to blame the sugar regime for the continuing backwardness of the country, Guyanese sugar isn't dead yet.

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