After three years of lower global commodity prices, there are signs that prices are edging higher. For Guyana’s economy this would be welcome news given that rice ($9.41bn) gold ($21.9bn) and bauxite ($13.86bn) made up almost half of all exports G$91.6bn in 2000.

The best news is with gold which in the last month has managed to clamber over the critical $300 an ounce mark something not seen for a prolonged period since 1998 and follows 20 year lows. Gold hit a 26-month high of $308.7 a troy ounce in London last Thursday.

Much of the past decline was caused by central banks selling off parts of their massive reserves. The European Central Banks Agreement of September 1999 put limits on this to 400MT per year and most of the auctions will conclude this year and after then, central banks are constrained from offloading gold until September 2004.

The United Kingdom’s final auction occurred in March and soon after prices began to rise.

Another factor, something which had become more and more doubtful, was the traditional role of gold as a hedge in a time of uncertainty. The political instability in the Middle East and the threat of higher oil prices has investors turning to gold. Buying in Japan has been particularly strong in the face of a domestic economy which simply refuses to grow. At the same time the pick up in the global economy promises increased demand for gold in jewellery and other commercial uses. On the supply side mining companies are still consolidating operations after the lean years and current low expenditures on exploration means supplies will not increase significantly in the short term.

U.S banker Goldman Sachs in April upgraded its price expectations for this year from $285 to $300 an ounce. The bank expects gold to stay relatively flat at $300 an ounce until the end of next year, before ticking up to $325 an ounce in 2004.

Locally suppliers of mining equipment are seeing some pick up in sales, an indication miners now have an incentive to resume or expand operations.

Rice is a little more problematic but there is evidence that world prices are moving off their lows of the last few years.

The Economist Intelligence Unit predicts that although overhanging rice supplies in several major exporters will keep markets subdued in the rest of 2001, conditions will change in 2002 and 2003 as rising demand starts to erode stocks.

The FAO which monitors rice production worldwide noted in its March release. In the Southern Hemisphere, the 2002 paddy season is already well advanced, with the harvest due to commence in March. Prospects remain uncertain, but weather conditions have been less than ideal so far, with drought in January in some important producing countries in South America, excessive rains in Indonesia and Malaysia and lower than normal temperatures since the start of the season in Australia. Growing conditions in Southern Africa have been favourable. A number of countries have expressed concern over a possible recurrence of an El Niño climatic anomaly next spring. El Niño last manifested itself in 1997-98 through storms and flooding in South America and prolonged drought spells in South East Asia where it seriously damaged agricultural production. Based on recent observations of the National Oceanic and Atmospheric Administration (NOAA), it is likely that a new warm El Niño episode develops in the next three months, although there is still considerable uncertainty as to its strength.

International trade in rice in 2002 is currently forecast to rise by about 2 percent, to 23.8 million tonnes, in milled rice equivalent. Much of the anticipated growth reflects expectation of a surge of imports by China, through to the opening of WTO preferential tariff quota. International rice prices have shown signs of a recovery in the past few months, with the FAO price index averaging 90 in January, two points above November. However, prices for individual types of rice have followed divergent trends. Rices from Thailand have benefited from the launching of a new round of Government domestic purchases in November and from strong import demand, due in part to the imposition by Vietnam of a temporary export ban. By contrast, in the United States, large domestic supplies from the excellent 2001 crop have exerted strong downward pressure on rice quotations. Among the other traditional exporters, prices of Indian parboiled rice remained particularly competitive. By contrast, low supplies in Vietnam and Pakistan and the ending of the subsidy programme last September in Egypt have upheld prices in the three countries.

Prospects for prices in the next few months remain uncertain. Indeed, the maintenance of subsidized export prices in India could exert much downward pressure on the market until the end of March, and beyond if the government export programme is extended. Moreover, by then, Vietnam will have returned to the export market with fresh rice supplies. Prices will then heavily depend on the size of the new rice crops, which will begin to reach the market in March, and on whether China will start buying.

Locally prices to farmers have largely stayed the same as last crop although in some regions, competition by millers concerned about shortages has resulted in slight increases. Exporters to Europe report that prices for cargo rice have not moved.

The Jamaican market has recently presented opportunities since the closure of Jamaica Grains rice mill three months ago. Guyanese millers have been exporting more to a market with an estimated annual consumption of 79,000 MT and been able to get higher prices.

Finally aluminium prices are rising and this will eventually trickle down to bauxite prices perhaps by the end of this year. This would be a great relief to ABC and Bermine both of which have been producing at costs well above their selling prices.

Aluminium prices fared better than most traded metals in 2001 falling by 7 percent against a general 13 percent decline, because of the psychological impact on the market of the shut-downs in the Pacific Northwest and in Brazil, which had a power crisis of its own.

Much of the optimism comes from tentative signs the U.S manufacturing sector is recovering although somewhat haltingly. In March, prices for aluminium moved up by 2.3 percent. An improvement in demand would help weak prices claw their way out of a depression and eat into huge stocks of refined metal stashed in warehouses around the world. Several aluminium producers with plants in the U.S. Northwest have already announced plans to either restart operations or take preliminary steps to be able to do so.

Refractory grade bauxite produced by Linmine is not so susceptible to economic influences. But if Omai does eventually start production at the site exports would surely increase many folds. The present management reportedly sent its first shipment for this year in March.

In conclusion, better days may be here again for these three commodities. All one can hope is that producers are in a position to make hay while the sun shines.

Manufacturing
DDL’s Award Winning Rums

What goes into making an award winning rum?

DDL is not giving away too many of its trade secret.

The list of awards for Demerara Distillers Ltd various rums is an embarrassment of riches. 15 years Old El Dorado Special Reserve has won Best Rum in the World for the last four years at the International Spirit and Wine Competition held in London; and a platinum medal this January at the Institute of Tasting in Chicago.

El Dorado Superior White Rum won a Gold medal in its category at the London competition for the second consecutive year.

Meanwhile El Dorado 12 years Old Rum placed first in the Caribbean Rum Taste Test 2000 competition in the premium category and has been winning the top spot in the competition held in Barbados for a number of years. The list goes on.

It is fair to say then that DDL produces the best rum in the world but trying to find out how they do it, is harder than finding out the secret recipe for Coca Cola.

Discreet enquiries to the cagey marketing department indicated that the 'master blender' could not be interviewed, not even identified for fear of poaching by a competitor. This is a common practice in the spirits industry where cognacs and whisky blenders have their own secretive ways.

Historically rum was never considered in the ranks of those spirits being a mass market, relatively cheap concoction suitable for sailors on shore leave and garish cocktails.

But DDL has led the way in sprucing up rum’s image as part of its own strategy to create a premium quality brand. Previously the company had been shipping most of its product in bulk and as such was dealing in a commodity available anywhere depending on the cheapest price. The company realised some years ago that with free trade inevitable the historical connections to Europe would soon be just that, historical. So it went about creating a top of the line product, the El Dorado 15 year old, both in its content and packaging. The warm brown glass container was designed on an Old Dutch bottle and the beige box with gold embossed lettering conveys a message of luxury with the adventure of the high seas.

But that does not answer the question of how they make the rum! Rum is made from molasses which are fermented, washed and then distilled. The continuous distillation process produces light rums. Batch distillation in pot stills, makes the heavy types including what the company calls the Port Mourant variety which is very heavy. The rums are then put in oak barrels imported from the United States and warehoused. Oak is a unique wood in that it improves alcohol over time by allowing it to soak into the wood’s pores imparting flavour and a rich colour. At each stage of this process DDL has installed stringent quality control systems monitored by analysts who have the rather enviable task of tasting the product to ensure it is consistent with its designation. The company was the first distiller in the Caribbean to be given ISO 9002 International Quality and Standard certification.

After many, many years the barrels are emptied and reduced to drinking strength, 40% alcohol by volume for the U.S. and the traditional 43% for Europe. Then the master blender goes to work mixing the various categories to create the El Dorado 15 year old and other blends. Just as in scotch whiskies which can have 25 different malts, so better quality rums can be made up of many different types to give the most desirable balance. It is an art and a science in that the product must be consistent for every batch. DDL’s success has come from its ability to produce so many varieties of product and then blend them consistently every time.

Making a product which will eventually be sold only many years later presents challenges in long term planning. A factory producing widgets can simply increase capacity as demand increases. All spirit makers have to closely watch drinking patterns and assess the needs of tomorrow’s drinkers. DDL has built a number of new warehouses to hold increased stocks in anticipation of future sales.

Warehousing the barrels which are constructed on site, and at times having to empty the rum into new ones, is costly and is therefore reflected in the final price.

For DDL however the marketing of its premium 15 years Old El Dorado Special Reserve has been perhaps the most challenging experience. Europe remains the main market but just to get a spot on the shelf of a supermarket chain can cost as much as US$10,000. Currently El Dorado is available in the Waitrose chain in the United Kingdom and in some Sainsburys stores. The brand has also made inroads into much of continental Europe through the firm’s marketing arm based in Holland. DDL is now concentrating on the United States, a traditionally difficult market given the dominance of Bacardi and certain tax rebates to producers in Puerto Rico and the US Virgin Islands.

DDL along with other Caribbean rum producers have also had to defend their position in Europe following the continent’s zero for zero agreement with the U.S.

Vigorous lobbying by the West Indian Wine and Spirits Producers Association has resulted in the European Union putting forward a EU70m grant which will go to the whole Caribbean industry to upgrade and modernise its plants. DDL hopes to benefit from this programme.

Retail
Starting over

The fire of April 9th 2001 destroyed a number of businesses on Robb and Regent streets resulting in damage estimated at $600m. One year later most owners have starteds over although business is not like before.

The Kissoon Group of Companies had only a year before the fire taken over the building on the corner of Camp and Robb Streets and had spent $60m in renovations. Hemraj Kissoon recalls the business was excellent up to that point.

Since the fire the company has moved into a smaller building opposite the site but Kissoon says sales are now reasonable 'according to the economy.' The company is currently considering plans to construct a five-storyed shopping mall, completely air conditioned, which would be connected by walkways to other buildings they own in the area. Despite the political uncertainty, Kissoon has faith in Guyana’s economy saying it is well situated with tremendous resources. "There’s nothing wrong with the people ... it’s the politicians."

Alicia’s which sells ladies clothes and accessories had been on Regent Street for fifteen years and Michael Pertab the owner says the area had been a good spot although in the years leading up to the fire business had slowed. The store was burnt out completely and he received full and prompt compensation from Nafilco insurance company.

He owned a lot at King and Charlotte streets which he had been renting out to among others Buddy’s Auto Sales. Initially he decided to build just for Alicia’s and his former neighbour on Regent Street Daswaney’s. But then decided on something more ambitious; a two storey building with five shops in a row -Sharon’s. He recalls that his application was speedily approved by the Central Housing and Planning Authority and the $50m building was opened late last year.

It is not he insists a sign of his confidence in the economy. He just considers becoming a landlord a safer proposition at this time and the building was a compromise. All the rentals are now fully occupied which indicates to him that others believe in the economy. He is not too concerned about another fire saying when you look historically the chances are slim of another occurring.

R.Sookraj and Sons has built back at the same location where they had been selling cloth and sundries since 1970. Everything was destroyed on April 9 and while they received insurance money for the stocks, the valuation of the building has been a source of conflict between them and Hand in Hand. The matter is now in arbitration.

In addition, their application for the new building was held up with Central Housing and Planning and the City Council and they only got their plan approved 2 weeks before their opening on November 13th of last year, in time to catch the Christmas rush. This they say was despite assurances by the government that all assistance would be timely. Duty free concessions were promised to all those affected but the owner Ramdat Sookraj says they are not worth the wait.

Sookraj says the whole episode was very distressing but he never doubted that he would start all over again adding that he has children and grandchildren depending on the business’s future. Still sales have not been good since the fire and he does not see the economy improving any time soon.

Kirpalani’s had open-ed a brand new store with a marble façade at 109 Regent Street only in June of 2000. The fire completely destroyed this and a nearby shop Shamdas Kirpalani. Immediately after the fire the family wholesaled cloth and other sundries out of their Water Street store. In June they rented out a building nearby their old location and eventually plan to build on the original site again.

Daswaney’s had been wholesaling and retailing sundries at 104-106 Regent Street since the sixties and Sunil Daswaney took over the business from his father. After the fire his immediate thoughts were to emigrate but as he says life abroad isn’t exactly a bed of roses. You don’t just click your fingers and the money starts rolling in. For three weeks he stayed at home which came as a terrible shock since he had never been unoccupied in his life.

Eventually he took a spot upstairs of Gobin’s Variety Store where "he caught hell" since traders who make up 85% of his business were not prepared to climb the stairs.

He has now rented one of the stores at Sharon’s building but business is certainly not back to normal. First because it is not on Regent Street and competition in the wholesale trade is increasing every day. He says the general state of the economy and emigration means businesses are competing for an ever smaller piece of the pie, so the profits are not there.

Archie’s Electrical Co Ltd formerly at 73 Robb Street is now operating out of a residence at 122 Laluni Street. He declined to be interviewed for this article.

Tau-am’s had moved to 73 Robb Street from their previous location at 107 Regent Street in February 2000. In any event both places got burnt down. After spending $4-5m in renovations business was slow mainly because many of their regular customers did not know they had moved. The store sold cosmetics, gift items, games and toys along with various wedding accessories and cake decorating equipment.

Within a month of the fire the parents Mr and Mrs Chan migrated to the United States frustrated with the whole situation in the country. Their daughter subsequently left for the United Kingdom. Now Wayne Chan does some wholesaling of cosmetics from the family home at 265 Forshaw Street.

He says business is reasonable but the lack of a retail front means less exposure. He says he does not have the energy to deal with the frustrations of reopening a store and is now in two minds whether to migrate.

Small business
M&M Snackette

A good location is a must in the fast food industry.

But service makes the difference.

M&M Snackette got started about 20 years ago when the Mookram family opened a tiny 4ft by 4ft cane juice stand on the East Bank Road close to the Demerara Harbour Bridge. It is probably one of the best locations outside of Georgetown, attracting commuters from over the river and all those going to and from the airport and Linden.

The stand soon got a reputation as the place to traditionally stop for a cane juice and egg ball- a quick snack often eaten standing up as traffic rushed by. Many persons would know the father of the family "Mookram" who works part time now but was always friendly and attentive to customers. Business was very good and through the efforts of the whole family it progressed to larger and larger stands as the years went by. However it was located on the government reserve and there was always the risk that one day the stand could be removed by some fickle official. They had applied for a piece of land belonging to GUYSUCO only a few yards away and in 1999 this came through. With the security of a permanent site M&M decided to build a more substantial structure, a twin mobile steel trailer with sides that open. Joe the eldest of the three sons says the investment in preparing the foundation including driving piles, preserving a trench and building the $2m aluminium trailer has been well worth it. With the added space, M&M has been able to offer a wider range of snacks, hot food, various juices and soft drinks. But cane juice is still the best seller. The business now has two diesel-generated mills, which produce a staggering 100 gallons per day.

A former teacher, with no degrees in business management or marketing, Joe has still put in place some unique systems to keep his customers coming back for more. A person approaching the stand must have contact with an employee in less than 10 seconds and must start being served within 30 seconds. He realises that customers are in the process of going somewhere and at that moment time is of the essence. "Everyone makes an egg ball at the same price," he notes, 'the ability to sell it is what makes the difference. And that difference is extra fast service. He has not even installed a computer system as he believes it would take customers longer to be served. The emphasis is also on cheap food with an egg ball or poori and cane juice costing just $100. 'This is the kind of place two people can go with $300 between them and say let we make a little hustle here.' M&M offers doubles, a Trinidadian staple, which is now catching on here. He also ensures that in the curry and roti there are no bones as many persons nowadays like to eat and drive and bones are an annoyance. Employees are all attired in M&M uniforms which helps to promote an image of a professional operation.

Since moving onto the new land he has installed a seating area with a television for those not in so much of a hurry and this is part of a larger strategy to get into fast food as opposed to the traditional snacks. With KFC only a few doors away, Joe is investing in deep frying equipment to go head to head with the franchise. Business did decline when the branch opened but Joe believes the greater variety means customers come back more often to his snackette. He is confident that faster service, cheaper prices and halaal chicken will make him competitive.

The family also knows the road well, like a farmer knows his land. Joe says the busy times are from 9am to 1.30pm and then there is a little rush after 4 up to 6.30pm although the operations are open from 6.30am until 10.30pm. He is now contemplating going 24 hours after requests from sand truck drivers who ply the road well before dawn. Weekends too are very good especially after the opening of various resorts on the Linden highway.

But Joe is not content with just one stand. "I am not greedy ... I just want it all." He laughs saying he always wants to stay ahead of his competitors by never giving a customer an excuse to go elsewhere. He had noticed that truck drivers were being hassled by the traffic police given that when they stopped they would impinge on the roadway. So he opened a second location at Eccles two years ago.

Managers at Pritipaul Singh had long asked him to open a concession at the fish plant at Eccles and he now operates a concession in one of the company’s canteens keeping his prices lower to compensate for the use of utilities.

Now M&M has its sights set on Georgetown and plans to roll out 6 mobile units in the coming year all supplied by a central kitchen. He hopes to get some duty free concessions for the project given the job creation which will come from it . Once again Joe has his strategy pretty well thought out realising he could service schools up to 3pm and then move stands to locations, which are busy during the evening hours. Currently the company employs all told around 40 persons and managing them has been a challenge. There is some training on customer service and Joe offers promotions to those who work hard.

Knowing your customer’s habits and wants is key in the food service industry. M&M has managed to deliver a cheap quality product quickly. It has been a recipe for success.

The Double-striped Thick-knee and Two Tom Cats

If you go to any search engine on the internet and enter 'Guyana tours' you will reach a whole host of tour operators offering trips here.

Avian Adventures a bird watching tour operator now offers a two week Christmas package with opportunities to 'see some sought-after bird species amidst Guyana’s ever-changing scenery of dense rainforest, mountains, marshes and grasslands...The beautiful Point-tailed Palmcreeper, Guianan Cock-of-the-Rock and Racket-tailed Coquette, Green Ibis, Orange-breasted Falcon, Double-striped Thick-knee, Spotted Puffbird, Striped Woodcreeper and Saffron-crested Tyrant-Mannakin.'

Condor Journeys of-fers two week trips from March to July, during the turtle nesting period averaging $2500- $3300 all inclusive GAP Adventures the largest operator in the adventure category offers trips to Guyana for the first time with seven dates this year offering an 11-day package starting and ending in Georgetown for $1670. 00. Apart from the obligatory visit to Kaieteur Falls there are canoe trips up the Burro Burro river to observe the bird and animal life in the area. ‘Enjoy a dinner cooked over an open fire before spending the night in your hammock camp.' The Iwokrama Field Station, 'whose mission is to develop new sustainable uses for tropical rainforest ecosystems? A trip over vast rainforests and rolling savannahs to Annai. We then travel by four-wheel-drive vehicles to Surama for a tour of this indigenous Amer-indian village.

Tonight, enjoy an educational walk to observe wildlife and experience the mystique of the forest after dark.'

Latin American Es-capes offers nine different trips to Guyana. Included are the five day 'Kaieteur Falls Over-land' costing $775 (re-turn flight included); 'In Search of the Harpy Eagle' with a stay at Dadanawah Ranch-8 days starting for $1595. 'Rupununi Explorer' with stops at Rock View Lodge and Iwokrama- 14 days $2465 based on more than four persons.

And then there is the curiously named lifestyle site - Two Tom Cats, created by, 'a loose affiliation of rum-soaked Guyanese seventeen-hundred miles in a fortnight, up-to-their-knees-in-mud, ne’er-do-well four-wheel drive enthusiasts. And their husbands!' The site which casually invites you to come to Guyana has as its motto 'Where do you really want to go today?'

Who is a customer?