Written by 9:33 pm Food

#BT Column – The oil and gas sector in Guyana: Catalyst for agriculture and food sector growth

Guyana lifted its first business shipment of oil in December 2019. That is projected to be the beginning of a really dominant national oil and gas industry with estimated reserves of ten billion barrels of oil equivalent (boe).

To extract this quantity of oil, the variety of Floating Production Storage and Offloading vessels (FPSO) is estimated to extend from the present two to seven in 2027 and thereafter to 12. By 2027, the projected day by day production is predicted to extend from 340,000 barrels in the primary quarter of 2022 with the approaching on stream of the Liza Unity, the second FPSO, to at least one million barrels roughly. More recently, this has been increased to 1.5 million barrels.

This recent wealth has, as of the top of 2021, resulted in earnings to Guyana of US$608 million, as reported by the Governor of the Central Bank. Similarly, Gross Domestic Product (GDP) has increased from a mean of 4.2 per cent over the past decade to 26.2 per cent in 2020 and is projected at 49.7 per cent in 2022 by the World Bank.

It’s imperative that the appearance of the national oil and gas sector (NOGS) and the concomitant riches shouldn’t, as could easily occur, be related to a decline within the country’s agriculture and food sectors. Somewhat these assets should be used to modernise, restructure, and reinvigorate the agriculture and food sectors: especially those components that would readily “piggyback” on the NOGS. Doing so can form a crucial and achievable element of Guyana’s efforts in local content. Unlike many highly sophisticated inputs demanded by the oil and gas industry, reliable and protected food service is something Guyanese can quickly enter and take advantage of.

This text introduces some ideas as to potential characteristics and processes to facilitate effective “piggybacking” whilst contributing to the sustainable growth of the relevant components of a restructured agriculture and food sector with definitive from side to side linkages to the opposite major national economic sectors, and facilitation of a demonstrative and/or multiplier effect on the remainder of the agriculture and food sectors. It is just not intended to supply all the main points for the implementation of the suggested programme. It is meant to start out the conversation that might result in the initiation of implementation.

As stated above, by the top of the last decade there might be as many as 12 FPSOs accompanied by an estimated eight or nine drilling ships. The estimated personnel required per vessel ranges from 60-100. That’s, food should be available for a current minimum of 240-360 to a maximum of two,000 able-bodied adults.

To adequately provide for such a cadre of crew substantial quantities of food will likely be required. For instance, 59,49,14 and 28 tonnes of chicken, beef, fish and tomatoes, respectively. These are commodities that may all be technically grown in Guyana. Nonetheless, to engender end-user and investor confidence, there should be the reliability of supply and nutrition and food safety adequacy. A totally integrated approach involving key segments of the private and non-private sectors is required.

Recently, there have been many media reports of four- and five-star franchise hotels to be commissioned. These are primarily to service the accelerated personnel inflows related to the rapidly developing NOGS. These hotels will increase the demand for protected and nutritious foods.

The provision to those hotels will likely be subject to similar conditions required for the offshore vessels as described in the next sections. Consequently, the connection between the agriculture sector and the offshore elements of the NOGS could have a teaching and multiplier element.

Shaping the agriculture and food sectors to fulfill the necessities of the NOGS.

This chance to organise segments of Guyana’s agriculture and food sectors must allow for the provision of protected foods whilst maintaining the critical national and sectoral objective of sustainable development.

Sustainable development has the next three basic pillars: economic, environmental, and social. Pillars one and two are relatively self-explanatory and usually are not expanded on in this text. Nonetheless, for the proposed revitalisation and reorganisation of the agriculture and food sectors, pillar three is being specifically equated to “equity”.

This emphasis is deliberate. The United Nations Development Programme placed Guyana within the medium rank (0.55-0.69) throughout the Human Development Index (HDI) with figures of 0.654 and 0.682 for 2017 and 2019, respectively. Nonetheless, when the 2017 figure (latest data available to the creator) is discounted for Inequalities, this figure becomes 0.52, which is below the minimum of the medium rank. That’s, a discount of 18.6 percent and lower than the 1990 HDI of 0.59.

Consequently, all willing and suitably capacitated agri-entrepreneurs should be eligible for participation. This initiative must not be confined to the higher (financially, intellectually, and technologically) resourced groups.

Amongst the groups who should be allowed to participate shall be the youth, who’re more amenable to technological innovations and represent the longer term, and the smaller farmers, including women, who traditionally have borne the responsibility for keeping the nation food secure.

The Way Forward

This initiative will best be implemented by a Public/Private Partnership. The role of the Public Sector will likely be primarily to supply funding (possibly from the Natural Resource Fund) for the essential development/non-commercial activities, promote the commodities to be chosen and conduct facilitatory functions.

These actions will include:

• –  Putting together the technical and human elements required to successfully operate and manage the chosen value chains;

• –  Subsequently, monitoring their individual and collective performance against previously agreed coefficients;

• –  Developing criteria for the choice of the foremost actors, particularly the agri-entrepreneurs, along the chosen value chains and, subsequently, choosing individuals/entities in a prioritised/phased manner;

• –  Developing curricula and conducting training sessions primarily for producers to (i) ensure their adherence to the principles of the production of protected food, including traceability, and (ii) with time, take over the executive and organisational responsibilities of the Government;

– Performing quality control measures following predetermined coefficients.

The role of the Private Sector will involve human, capital and recurrent investment within the implementation of all elements of production, packaging, storage, transport and delivery following agreed guidelines.

At an early second stage, coinciding with the approaching on stream of cheaper electricity from a gas-to-energy plant, it’s going to be necessary to explore new opportunities across the commercial side of the worth chain where lower power prices could make Guyana competitive.

The successful implementation of this initiative will achieve the next objectives:

i. Implementing a sustainable Programme where food requirements of the NOGS are obtained primarily from local production,

ii. Developing a cadre of producers, with ancillary support actors, who can supply the very best quality products to local or foreign markets,

iii. Contributing to the event of a template for the event of economically viable value chains, and

iv. Providing examples of investment opportunities inside restructured and reinvigorated non-traditional segments of the Guyana agricultural and food sectors.

Now could be the time to know this waiting opportunity. The euphoria of the appearance of oil and gas should be “milked” in a meaningful, tangible and sustained manner to reset, reinvent and re-innovate the agriculture and food sectors of Guyana.

Dr H. Arlington Chesney is a number one Caribbean agricultural skilled who has served his country, the Caribbean and the hemisphere. He’s a Skilled Emeritus of IICA and in 2011, was awarded Guyana’s Golden Arrow of Achievement for his contribution to agricultural development in Guyana and the Caribbean.

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