Demerara Distillers Ltd (DDL) is expected to access a grant of some 13 million Euros ($2.2 billion) from the European Union (EU) which is aimed at regaining rum markets lost through liberalisation and to create new ones.

A press release from the delegation of the EU to Guyana and Suriname stated that it was a four-year project which would start in June next year to assist rum producers in CARIFORUM countries (CARICOM plus the Dominican Republic).

The West Indian Spirits and Rum Producers Association (WISRPA) is targeted in the programme and DDL will be the sole beneficiary as it is the only company in Guyana which distills its own spirits and is a member of WISRPA. In total, the four-year project is worth 70 million Euros.

DDL expects that with the assistance from the EU it would be able to address environmental issues, acquire new distillery equipment, improve training for distillery staff and be able to better market its products in Europe, the release stated.

It said the main aim of the project is to enhance the competitiveness of the sector by improving its export capability especially in the area of branded products.

It was noted that currently Caribbean rum producers are exporting mainly bulk rum and it is hoped that by addressing technical and marketing issues the transition will be made to branded products.

The project has three main components: 1. Institutional capacity building of WISRPA. 2. Plant modernisation and meeting environmental needs. 3. Implementation of a marketing and distribution strategy.

The release said, however, the overall objective of the project is to develop the Caribbean rum sector thereby contributing to economic and social development and preventing socio-economic deterioration triggered by trade liberalisation.

According to the release, the project became necessary for the survival of the Caribbean rum producers after the US and EU agreed in 1996 to liberalise the rum market in "a zero for zero arrangement."

Producers who previously enjoyed quotas under the Lome Convention and were involved mainly in the export of bulk spirits were now faced with competition from rums which were available at a cheaper price. This resulted in lower export volumes and lower commercial margins.

The release said the EU recognised that there was a need to provide support for the African, Caribbean and Pacific producers and the project was in keeping with the objectives of the Cotonou Agreement that allows for assistance to the private sector and disadvantaged producers affected by trade liberalisation.

The current programme is as a result of a strong lobbying effort on the part of WISRPA and was critical since the export of rum is the second largest foreign exchange earner after tourism for Caribbean states.