Aquaculture is the ideal way to expand seafood exports without jeopardizing the country's marine resources.

An acre of rice yields about 25 bags and at current prices gives a profit to the farmer of perhaps $5000. Take that same acre and grow freshwater prawns and the return might be a high as 1000lbs and the gross revenue around $360,000.

With natural stocks of seafood not growing to meet the world demand, aquaculture will have to increasingly fill the shortfall. World trade in seafood is estimated at more than US$100 billion. The major markets are those of Japan, USA and EU, which depend on im-ports, ranging between 30-60% of their consumption. U.S. imports total about 1.5 million tons per year, valued at almost US$ 6 billion; the European Union about 5 million tons per year, valued at US$ 11 billion.

The increase in world demand is estimated at 0.5 - 3.0 % per year. On average, this means additional annual requirements of 650,000 tons in the EU, and 250,000 tons in the USA. By the year 2005 there will be a shortage of about 20 million tons per year, and by 2010 it will increase to 40 million tons per year.

The Giant Malaysian Freshwater Prawn (macrobrachium rosenbergii) is the most popular freshwater shrimp now being artificially cultivated worldwide. It grows from a larvae stage to full adult size in 6 to 9 months with 10 to 12 whole adults weighing one pound and measuring 34cm each. It is indigenous to South and South-East Asia, parts of Oceania and some Pacific islands. The species has been imported into many other tropical and sub-tropical areas of the world and is most favored for farming purposes due to its high growth rate, suitability to pond culture conditions, and ready acceptability of a wide range of feeds. Large farming operations of this species can be found in Hawaii, Honduras, Maur-itius, Taiwan and Thailand, while farms are currently being set up in Costa Rica, Indonesia, Israel, Malaysia, Mexico, the Philippines and Zimbabwe.

Successful cultivation requires a warm climate and as such North American farms are limited to the summer months. Guyana is considered an ideal climate and its close proximity to the United States keeps shipping costs low.

While Macrobrachium rosenbergii is not native to Guyana, it has been found locally. It is assumed that the species was the subject of an undocumented introduction during the early to mid 1980's, as part of Guysuco's Other Crops Programme.

The U.S. based Global Seafood Technologies Inc. (GSFT) and Ocean Com-modities Inc., have entered into a joint venture agreement with A.T. Rahman and Sons Inc. of Guyana and have incorporated under the name Guyana Aquaculture Farms Incorporated. The company has selected a site near Parika at Hubu, East Bank Essequibo, where it intends to develop a 500-acre farming operation.

Presently the larvae are hatched by Global Seafood Technologies in Biloxi Mississippi and then ship-ped after only three days to Guyana via New Orleans and Miami. Shipping to date has been a major obstacle as the batches have not been able to survive the delays occurring in the last leg of the journey. The first and second shipments saw all the post larvae perish and even now a 75% survival rate is the norm.

There are currently three two-acre ponds in operation and another 19 dug and waiting for produce. The ponds, 400 ft to 700 feet in length and 150 ft wide, are built with an incline with the shallow end at 3.5ft and the deep end at 5ft. This facilitates draining at harvest time. Selective harvesting can also be done using large meshed seines. The acidity of the soil means the water which is pumped in from the nearby river through a series of filters is too acidic for the prawn's survival so limestone has to be dumped in at a rate of four tonnes per acre to get the Ph up to the ideal level of 7- 8.5. Despite the filters, eggs from various fish including highwater and Suriname mullet pass into the ponds and the subsequent adult fish feed on the shrimp. In addition alligators have been spotted in the ponds. Controlling the fish population is a problem as the most popular drug Rotenone (which does not kill the prawns) is banned in Guyana. Keeping dissolved oxygen at high enough levels is presently not an issue given the windy, open conditions of the site but as population density is increased to the maximum level of five prawns per sq metre, aerators which churn up the water would likely be needed. The major expense is in feed. Trials using various formulae of protein, fat and crude fibre showed that lower protein feeds were just as effective as higher protein ones which cost much more. It is significant because a fully stocked two-acre pond will need over 2 tonnes of feed every 22 days. As such a 180-day or six month batch will use 18 tonnes per harvest. Cow manure is initially deposited in each pond to promote the growth of microorganisms upon which the prawns can feed.

Having to import the post larvae is a costly and risky operation so the company plans to build a large-scale commercial hatchery to support approximately 5,000 acres, at which time it will transfer the grow-out technology to surrounding farmers to expand its acreage. Farmers would then be able to sell produce back to the company much like the arrangement in the poultry industry.

The expected yield from the initial site will be approximately 75% of the stock, or an average of 480,000 lbs per year for all the production ponds. All prawns reared and harvested will be sold to Guyana Quality Seafoods' processing plant located at New Hope, East Bank Demerara. This processing plant plans to export the prawns to overseas markets. There are also plans to supply the local market, when the commercial phase is established. Processing and marketing of the product will be handled through the U.S. partners which currently have an ownership interest in Guyana Quality Seafoods

Guyana already has a thriving seafood processing industry exporting to the United States and has proven to be an efficient and high quality producer. But with some species such as the seabob showing initial signs of over- harvesting, the logical path would be to expand the industry beyond its limited marine resources, through aquaculture projects.

The Bank of Baroda ... small but profitable

Bank of Baroda may be a minnow in the fish bowl of Guyanese banking but it has managed to remain healthy at a time when the larger banks are ailing under bad loans.

A return on average assets of 3.79% compares favour-ably with other institutions. Baroda's total loan portfolio upto March 2001 was $176m of which only $6.53m or 3.6% were non-accruing. The bank made provisions for these of $4.577m or 80% and has since moved to increase these provisions further in excess of the guidelines set out under the FIA.

Conservative is the adjective that would best describe Baroda's lending policy which focuses as much on how a loan can be repaid from a "gone" or out of business concern as much as a "going" one.

The bank is an overseas subsidiary of the Indian based Bank of Baroda which has been in operation since 1908 and has a presence today in sixteen countries.

The bank has also had little demand for loans from the agricultural sector (2% of total advances excluding the fishing industry) mainly because its only branch is in Georgetown and as such its officers were not in a position to monitor out of town customers. 51% of its business comes from the service industries primarily traders with another 25% in personal loans to professionals such as doctors. This approach to lending while appearing judicious at this moment, could also be seen as overly cautious as the bank failed to capitalize on the boom years of the early to mid-1990's.

However it is now in a position to increase its 2% market share by offering lower lending rates. Presently its prime lending rate is at 14.5% and the bank is considering further cuts. As such it could attract better customers from some rival banks which are hampered in lowering their rates given their non- performing accounts.

Gold outlook

Gold is suffering in the current recession just like any other commodity

Buy gold. It's a good investment in these uncertain times. Sell gold. The global recession means less demand for jewellry and therefore lower prices. Both pieces of advice might apply but gold in the last two decades has certainly lost its status as a safe haven in times of crisis. In the days after September 11,surely the mother of all crises, gold prices barely hiccupped despite the severe disruption to equity trading and subsequent plunging stock markets.

Throughout much of history, gold has been a place of refuge from financial uncertainty. Many Germans treasured gold during the hyperinflation of the 1920s. During World War II, people fleeing the Nazis used gold coins to pay for help in their escapes. When inflation took off in the late 1970s in the United States, people rushed to buy gold, which soared to more than $850 an ounce in 1980. For many people, gold is portable, virtually indestructible and universal as a store of wealth.

But ever since the demise of the gold standard in the 1970s, many central banks and international monetary institutions have concluded that their holdings of some 34,000 tons were excessive. The United States alone holds 8600 tonnes of bullion and the IMF a further 3219MT. From 1990 to 2000, net official gold sales totaled 3,600 tonnes and central banks continue to relieve themselves of their bullion assets at a rate of over 400MT per year; enough to make up for any shortfall in production. And unlike the 1970s, when US inflation hit nearly 13%, the dollar remains the world's strongest and most sought-after currency in spite of economic slowdown, lower interest rates and even terrorist attacks. The greenback is the new safe haven for investors.

Gold has simply joined the ranks of other more mundane commodities and as such its price is more influenced by supply and demand than whether a war has broken out on the planet. Therefore where a recession or severe inflation might in the past have been a spur to gold prices, as investors looked to invest in tangible wealth, gold follows the crowd of other commodities slumping from reduced de-mand. Over the decade of the nineties its value declined from $370 per oz in 1991 to $269, a 30% slip and that does not even take into account inflation. Today the price continues to languish with some stability at well under $300 per oz and for the first half of 2001 had a range of $255-275. This was caused by both a slow down in demand especially for jewellry fabrication wh-ich is very sensitive to economic softening and on the other hand by only a modest gain in supplies.

Demand for gold in the use of fabricating jewelry accounts for 85% of total demand which including scrap was 3739MT in 2000. Jewelry represented 3174MT; the electronics industry saw its demand increase by 15% from 1999 levels to 282MT; dentistry requirements 69 MT; other industrial and decorative uses 105 MT; and gold coins and medals made up 106MT.

There has been a significant weakening in fabrication demand in the first half of 2001 primarily because of weakened consumer demand brought upon by the slow down in the global economy. This was particularly true in North America with a 12% downturn in demand by the jewelry sector and 25% for electronics. But this was offset by stronger demand in Indian and China whose economic growth continues to buck the worldwide trend.

Supply is made up: of mine production which in 2000 represented 65% or 2576MT of total supply (3971MT); sales of old gold scrap accounted for 607MT and official sector sales from central banks 487MT. Analysts note that while production makes up the largest component of supply it does not have much effect on short term price moves as year on year changes are normally insignificant. However it is expected that with predicted sharp drops in gold production caused by consistently low prices and subsequent low expenditure on exploration, reduced production levels could have a more significant effect.

Supply from mines in-creased by only 1.1% year to year. It is this trend that offers producers most hope for gold prices in the long run. With weak prices many older mines have closed. And in 2000 levels of exploration- a good indicator of future levels of production fell to record lows from $US550 million in 1997 to $US200 million.

The European Central Banks' Gold Agreement of September 1999 which sets limits on how much gold central banks could sell in any given year to 400MT has also helped to bring some predictability to the market. The agreement was a response by the banks to complaints by developing countries, in particular South Africa that excessive sales of reserves were affecting their economies and undermining their ability to service external debts. This had resulted in prices dropping to record low levels of $252 per oz. The Bank of England gold auctions end in March 2002, and the Swiss disposal will end in 2005. Other central banks will have already completed their sales programmes, or have got a substantial way through them. As these sales end, their downward pressure on gold prices will be removed.

In the foreseeable future producers have to concentrate most on keeping their costs of production to a minimum. Total costs of production fell in 2000 to $238 per oz but much of this was due to the devaluation in the South African and Australian currencies against the US dollar. South Africa the world's biggest producer continues to see declines in output due to the closure of old marginal mines. It now only produces 15% of world output compared to 30% back in 1993. The nature of mining in South Africa with hard rock at deep levels meant that in 1999 the average total cost of production at $266 was barely below the spot price of gold on the world market. Reductions in the labour force have helped to reduce costs in the industry but analysts note that more significant rationalizations in a labour intensive process would be limited.

American and Canadian mines with a combined output of 510Mt in 2000 had total costs of $243 and $267 respectively. In Australia with total output in 2000 of 296MT total costs were $245 but this belies the efficiencies of some producers one of which enjoyed production costs of only US$83 per oz.

For Guyana the gold industry is obviously greatly affected by swings in price. Official exports reached 13MT in 2000 down from their highs of 1997/98 of 14.5MT when gold prices averaged $331 per oz. Omai, Guyana's largest mine has adopted a number of measures to cut costs and the two most important were to get suppliers to reduce their prices and to improve the mine's productivity. Those measures have helped lower costs to $217 at the present time. This is considered about average for a low grade/high volume mine like Omai's operations. The higher the grade generally the lower the cost of production. Fuel is probably the most important factor and this was running as high as 31% of costs. With oil prices declining from early year highs of $30 per barrel the cost of fuel for Omai has gone down and it now stands at 25.3% whilst labour now accounts for 13 %. As it stands Omai has 4 years of mine life to 2005. But aggressive exploration is taking place and the company hopes to continue producing past this date. The output for 2001 is targeted at 352,000 ozs, and 2002 it is estimated to reach 285,000 ozs.

Profile - Bruce Vieira

- The Pioneer of seabob processing in Guyana

- Bruce Vieira's early career in the fishing industry was one of great struggles in the choppy waters of Guyana's newly independent economy. But with the establishment of a shrimp processing factory in 1983 his ship finally came home.

After two years at an agricultural institute in Trinidad Bruce Vieira returned to Guyana in the early seventies and started planting cabbage and other vegetables on his family's land at Houston. This was later expanded to include a poultry farm rearing around 30,000 chickens. At that time he was managing director of his family's company JR Vieira Investments ltd.

But by 1979 price controls on chicken had slowly eroded any profits so Bruce and his brother Eddie formed their own company BEV Enterprises Ltd and bought 3 trawlers to catch prawns mainly for the Japanese market. Eddie eventually went his own way and the remaining shareholders were Bruce and his wife Stella. Initially the business was a success but the exchange controls of the early eighties made expenses paid for at the black market rate much higher than revenues which were being paid at the official rate. On top of this (and what is a lesson for the existing industry) over-harvesting eventually led to a rapid depletion in stocks . At the same time the company was also exporting fish in commercial quantities to the United States and the Caribbean and as such pioneered this field in Guyana.

In 1983 BEV sold its six trawlers and Bruce was forced to look for an alternative product. He had long noticed that fishermen on the East Coast had been catching and selling, albeit in small quantities, what were locally called coarse shrimp or seabob. These were dumped by the large trawlers as they tended to clog up the nets and were not considered marketable. But in a trip overseas Bruce discovered a shrimp peeling machine and the idea was born. So in 1983 he invested US$100,000 in one processing line partly financed by an IDB loan facilitated through GAIBANK .At first BEV sold the product locally to the army and supermarkets. Eventually Bruce made contact with an acquaintance at a large processing company in Florida which produced finished seafood products. In October 1984 the first ever shipment of seabob left Guyana. It was to start a whole new industry for the country which today includes five processors and directly employs over three thousand workers along with bringing in billions of dollars in export earnings. Back then Bruce, despite struggling with exchange controls, was able to process 2m lbs of raw product per year. There was initial resistance to the unfamiliar seabob in the U.S. but eventually BEV, by hard work and diligence, established a reputation for a quality product.

By the early nineties the company had expanded its production to 6mlbs per year.

But Bruce was wearying of what is a truly high pressure job requiring a variety of management skills and long hours. In 1995 he sold a majority of the shares of the business to Goddard Enterprises Ltd, a Barbados company, and Demerara Distillers Ltd. Presently PBS Investments Ltd a company owned by himself and his wife Stella holds 20% of the shares. He hoped that he could then take a back seat . However BEV ran into some difficulties under its new management and Bruce was back at the helm to ensure the successful continuity of the company. With operations back on an even keel he eventually relinquished his position as managing director which is now being filled by the able John Carpenter.

BEV now has five complete processing lines and is processing 15mlb of raw shrimp per year along with various fish for export. Bruce still takes an active interest in the business and BEV is involved along with Bounty Farm Ltd in a joint venture, Protein Recovery Inc., operating a poultry meal plant using fish and shrimp bi -product. BEV also formed a subsidiary company Roraima Aquaculture Inc which is presently conducting feasibility studies on rearing tilapia in the Mahaica area.

Bruce is currently the President of the Guyana Association of Trawler Owners and Seafood Processors and a member of the council of the Private Sector Commission.

He has two daughters and his favourite pastime is of course fishing...

A Stock Market ...believe it or not

The liquidity of a securities exchange could transform how local companies access financing and make them more accountable to investors.

Something quite inconceivable could occur in the next few months; Guyana could have its very own functioning stock exchange.

Such a momentous event has, like most things in this country, been a long time in the making primarily because of the perverse socialist aversion to capital creation. But since 1988 there have been various initiatives to craft the necessary legislation to establish a well regulated securities industry. This was revived in 1994 and culminated in the passage of the Securities Industries Act of 1998. Now with the commitment by DFID to fund the operations of an oversight body and a traders association for the exchange's first two years, trading could begin early in 2002.

The advantages of a secondary market for shares and bonds are obvious in that it sets the true value of securities and thus directs capital to where it is most productive. Directors become more accountable to their shareholders who are free to sell their holdings if they see a company under performing or to buy more if they are encouraged by management decisions. That is far more eloquent than standing up at the AGM and berating the head table for twenty minutes. This daily assessment of performance and prospects ultimately leads to better run corporations, something urgently needed in Guyana as global competition increases.

Many of the directors of existing public companies might be feeling nervous at the prospect of their shares suddenly being valued by the fickle market place. Not least because hostile takeovers might be in the offing. But their ability to raise financing would be hugely enhanced by the liquidity a secondary market could bring. Investors would have the protection of being able to sell stocks and the incentive to make money on rising share values.

With depositors looking to earn more than the current miserly 5% on their savings accounts, the time could be opportune for many businesses, chafing under high interest loans. The area of bond issues is seen as offering significantly lower cost finance than that available from banks. The economy might be up the creek at the moment but eventually commodities will rise and the promising growth rates of the early 1990's will return. A stock exchange could go a long way in sparking that revival and its inclusion in the Poverty Reduction Strat-egy Paper is a recognition that efficient capital creation is key to a country's development. The real question lies in how liquid any market would be. For many exchanges in the region such as Barbados where per capita income is ten times that of Guyana's, trading is very thin.

The recently established Ba-hamas International Se-curities Exchange with a listing of 18 companies has already approached the government for operational funding because of low trading volumes.

Most shareholders in the Caribbean tend to be in for the long term and only sell equities for retirement or other personal needs. There is none of that speculative fever so popular in Asia and most trading is done between financial institutions. The resulting lack of liquidity tends to keep stock prices depressed. The establishment of any securities market is to some extent an act of faith and depends very much on the volume of new issues. If the various offerings now being suggested materialize there ought to be enough business to sustain a market provided costs are well controlled. It has to be recognised that the is-suers and the savings institutions do have an interest in there being a market given the current low level of interest rates for government treasury bills and the weak de-mand for loans.

However there are a number of steps which have to be taken to ensure that the widest possible number of investors have confidence in a stock market. First and foremost a set of detailed regulations to give effect to the SIA establish the concept applied to all stock exchanges world wide of "just and equitable principles of trade." Investors must be assured that their transactions whether to buy and sell securities are done in a transparent and timely manner. Imple-menting the regulations and making the SIA work is the job of the Guyana Securities Council, a five-member body created by the SIA. The four members already chosen for the council are Brian James, Bryn Pollard, Dev Rawana and Gobind Ganga. A fifth member is yet to be named but the council can function on a quorum of three.

The SIA also requires the mandatory registration of all brokerage companies, dealers and underwriters-.anyone who will be making transactions on the exchange. At present it is thought that only three companies will need to register as brokers or dealers. These are the Trust Company Guyana Ltd, The GNCB Trust Corporation Inc. and Beharry Stockbrokers Ltd. They in turn have formed their own self-regulatory organization, the Guyana Association of Securities Companies and Intermedi-aries (GASCI).

The rules of this association will establish guidelines on how and when members will trade and other technical aspects of a securities exchange. GASCI is now in the process of finding a suite of offices within which a room will be demarcated for the actual physical exchange. The Council meanwhile is scouting for a general manager who will run the day to day operations of the market including processing transactions and settling accounts.

The SIA is a weighty document which apart from the registration of participants outlines two other areas of the industry. The first pertains to the primary market and the issuance of securities. The SIA sets out how all companies wishing to issue bonds or shares must make a full and timely disclosure of their operations.

This is essential to the credibility of a security's market valuation and is a perennial problem for stock markets everywhere when companies announce glowing profits which are later discovered to be more the result of creative bookkeeping. Most famously Enron the US natural gas company saw its shares slide from US$90 to .26 cents when supposed dubious accounting practices were uncovered. In Guyana the quality of audited accounts vary tremendously. The final area aims to protect investors from fraud such as the manipulation of market prices through spreading false rumours, insider dealing on restricted information about a company's status and other sharp practices. These include the very common activity of artificially running up a stock's price so as to give the impression that it is a good buy. Brokers are rascals and clients their victims is a popular adage. Joking aside these unsavoury practices give a stock market a poor reputation and scare away in-vestors. Ultimately the ex-change is unable to perform its vital purpose of raising financing for legitimate companies. It is necessary therefore for the council to be exceedingly vigilant of such activities especially in times when speculative dealing is widespread.

Trinidad's experiences might be instructive where after a speculative bubble many investors bailed out. At present Trinidad's market capitalization totals TT$ 29,322.6m and 12m shares issued by BWIA have been received very poorly.

There are a number of areas where the SIA overlaps with the Financial Instit-utions Act of 1995. Obser-vers have noted that this is not fully outlined in the SIA and as such a memorandum of understanding would be required between the Bank of Guyana and the Council. Various amendments to the SIA could go a long way in improving the exchange's compatibility with other markets in the region something which should be desired in the run up to a Caribbean Single Market and Economy. One electronic market for the whole region would be the way to go such as the initiative of the Eastern Carib-bean Securities Exchange which serves eight islands with no physical trading floor. Dealers, mostly financial institutions, place bids during the working day and at close of business the software simply sets a price which clears the largest volume of trades. All shares change hands and are paid for the day after the trade in what is called a T+1 Ex-change, something not done anywhere else in the world to date.

Meanwhile Guyana's market's capitalization - the entire value of the existing stocks and bonds estimated at US$100m from six companies and outstanding bond issues spread amongst some 30,000 shareholders is very small. Trading is expected to be very limited initially but may be enlivened by new stock and bond issues on behalf of various companies. At first transactions will be done manually using a call board, literally a blackboard, where orders to buy or sell blocks of shares will be posted. This could also be done verbally since the numbers of brokers will be very few. Later the system could be computerised with no need for a physical area. Then the board would be a computer screen and orders would be placed on the site by the participants. Jonathan Miller, currently with the London based Ad-am Smith Insititute has of-fered legal and technical advice since the late 1980's, and has already been discussing with the principals of the three prospective registered companies the procedures that will be required for conducting and settling trades.

There will not be the hectic rugby scrums you see on Wall Street. In fact the atmosphere will be as exciting as a drawn Test match. However the same principles apply and Guyana will have finally joined the rest of the capitalist world.

Where for the internet?