Dear Editor,
I refer to the letter written by Mr Nick Jackson which was published in your issue of September 28, 2008. Since Mr Jackson has decided to get personal with me and has now called me a “nihilist” in his letter, I will now have to conclude that Booker Tate is complicit in this disaster. He did come to the parliament and he did give evidence to our Economics Services Committee, but I am one Guyanese who did not accept what the GuySuCo team was saying; a lot of it raised more questions than answers, and I am not speaking for the committee.
The PNCR-1G had made 5 charges that pointed to poor judgement/management by GuySuCo in its 1998-2008 strategic plan.
1. We said that there was a refusal to accept that the preferential price for sugar would not be guaranteed since the EU had expressed a clear intention to remove it. But incredibly even though Guysuco was adamant that the EU markets were guaranteed, and had enshrined that concept in its strategic plan, Mr Jackson now says that the corporation was still tooling up for “adding value to the core product by retail packaging of branded sugars, refined sugars, etc.” I am saying that having made this monstrous mistake they are now trying to hide the magnitude of the lapse in judgement by putting in place, only now, alternatives which may not help much.
Let’s see how successful GuySuCo was at doing this. Last year GuySuCo sold to international markets the following tonnages, to the European Union they sold 156,728 tonnes under the (now 13.8% reduced) protocol at a price of $114,886 a tonne; under the second EU quota they sold 44,651 tonnes at $117,122/tonne and this accounted for a total of 201,379 tonnes of the 266,499 tonnes the industry produced last year. GuySuCo’s Caricom markets, which Mr Jackson claims his master plan has prompted him to seek out since he thought we might lose European preferential prices, earned 36%/tonne less than what the EU is paying!
The corporation also sold only 2165 tonnes of Demerara Gold sugar to Caricom for 105,294 dollars a tonne; in other words after 8 years of this Demerara Gold promotion and production we are only selling around 2000 tonnes of it! As far as refined white sugar is concerned, we exported 18 tonnes of white sugar last year; like everywhere else, GuySuCo is failing in these projects.
Mr Editor, the European Union’s prices are expected to decline in the following manner: Starting from our normal access price of 520.73 euros/tonne up to June 2006; after June 26, 2006 it was made 4.5 % less/tonne up to September 2008; then was reduced by a further 9.2 %/tonne or 448.80 euros/tonne up to October 2009; then the final reduction of 21.8 % or euros 335.20/tonne from October 2009 onwards. So even at the reduced rate of 13.8% from the EU last year progress in marketing Guyana’s sugar in Caricom and the corporation’s packaging and refining achievements can only be described as pathetic. Therefore his statement that “supplying the Caricom market with brown and refined sugar is moving us forward” means this: had we sold all of the sugar we sold to the EU last year (201,379 tons @115,381 a tonne) to Caricom, we would have not made $23.235B from it; we would have made $15.059B from it! In other words we would have made an additional loss of $8.176B in the industry which would have to be added to whatever loss GuySuCo incurred last year.
2. We said that there were widespread labour shortages in the industry today leading to dire consequences for the industry, since high rainfall especially in Berbice has hampered mechanisation. Jackson now confirms that this is true, due (he says) mainly to the massive migration of the workers. I hope that the house to house registration reflects this massive and large-scale migration of the sugar workers into the Caribbean and the US. He however declines to mention that GuySuCo was boasting of their increased efficiencies in their 2001 review of the 1998-2008 strategic plan and of having reduced the workforce by 10,000 workers by 2001. He now appears to be saying that rather than intentionally reducing the workforce, in fact the workers migrated. Now that the migration continues, creating a huge shortage of labour in the industry he is crying that the corporation does not have the labour to do the work. Faced with massive migration 10 years ago how could Booker Tate not see that they had to stem the flow, or contract the industry, otherwise they would end up in the dire situation they have to face now?
3. He agrees that the weather pattern is changing and that it is hampering the progress of the Skeldon project; indeed, he says the last three years were the wettest years between 2001 to 2007! Was a serious examination conducted into our rainfall pattern for at least the last 30-40 years before this nation was committed to this expensive and dicey project? Was the company only armed with rainfall data from the recent past, when we knew that we were not getting the typical rainfall for this country for the years 1992 to 2004? I have pointed this out to the public on numerous occasions over the past four years and that is why when the rains came in 2004 we were totally unprepared for it.
Mr Jackson can quote me: we will have relatively high rainfall for at least the next eight years.
4. We said that the private farmers at Skeldon will not be able to find US$50M to expand their cultivation to 10,000 acres in three years, something which is essential to the Skeldon project. I said that they have currently planted around 400 acres; Mr Jackson said that they have in fact planted 1000 acres. We’ll see. They will have to plant 10,000 acres Mr Jackson! And I want to know where they will get loans to the tune of $10B to do it. Mr Editor, I am using Guysuco’s own estimate for a 10,000 acre field expansion (double the normal Skeldon cultivation before this expansion). They said that this project will cost US$181M − US$131M for the factory, and US$50M or G$10B for the expansion of the cultivation by 10,000 acres. Jackson now says that the corporation has to buy additional machines since the opportunity days have shrunk from 120 to 60 days. I also want to know which farmer will be able to reap his canes mechanically, since it would be impossible to reap this farmer expansion by hand.
5. Does anyone know what Mr Jackson is saying in this huge section of this response occupying one third width of an entire page length of the newspaper? In 2007 didn’t Albion ask for $528.6M to do its capital works and was only given $183.2M? Didn’t Rose Hall ask for $413.6M and was only given $193.4M? If this is not correct could Mr Jackson tell us what was asked for and what was actually given? Could he tell us what the other estates asked for in capital expenditure and what they actually received?
Now that Booker Tate has decided to get involved in this matter, even though I was trying to keep them out of it, I want them to tell me how they can accept their salaries and bonuses and produce such total shambles for us to unravel some time in the not so distant future.
GuySuCo have now told us that they have started the old Skeldon factory and that they will have a bumper crop. Mr Editor, last year Skeldon started their crop in June/July; this year; the alleged bumper crop will commence in September − in other words with canes which are already past their ripening period of 12 months and are turning to cork. Bumper indeed!
What is clear, and Mr Winston Murray questioned Minister Robert Persaud closely on the matter, is that the industry is not run on purely business criteria.
For the purpose of comparison, here is how the industry fared over the past 6 years, 2001-2006. In 2001 they made a loss of $869M; in 2002 they made a loss of $274M; in 2003 they made a loss of $4.3B; in 2004 they made a profit of $261M; in 2005 they made a loss of $1.866B; in 2006 they made a profit of $476M. So in the last six operating years during the height of their strategic plan, Guysuco lost a total of $6.577B. In the previous 6 years when the strategic plan was not yet implemented they made the following profits: in 1994 the industry made $3.719B; in 1995 they made $3.220B; in 1996 they made $4.865B; in 1997 they made $2,228B; in 1998 they made $2.271B; in 1999 they made $3.058B. So in the six-year period 1994-1999 immediately prior to the Guysuco strategic plan being implemented in full, the industry made a total profit of $19.361B, and in the six-year period after that, 2001-2006, they made a loss of $6.577B! That is some strategic plan Mr Jackson! What was the strategy?
The GuySuCo strategic plan is already a disaster. The plan took a company which was making money and turned it into an economic basket case so far. We just have to wait for the full effect of the Skeldon disaster to manifest itself. But any fool can see that the expansion has had a most deleterious effect on the entire economics of our sugar industry, since GuySuCo is financing more than 30% of it from within Guysuco with their own funds which they do not have, and it is affecting the profitability and performance of the industry. That is what I said, and the figures above prove it. This year we had to provide a subvention of nearly $800M to Guysuco from the consolidated fund.
Yours faithfully,
Anthony J. Vieira, MS, MP
