Dear Editor,
The Guyana Agricultural and General Workers Union (GAWU) wishes to present to the public the under-mentioned facts relevant to the current performance of the Guyana Sugar Corporation Inc (Guysuco) lest the public be misguided by the Corporation’s perspective only.
EARNINGS, PRODUCTION – AND IMPLICATIONS
Notwithstanding that the Corporation is confronted by a 36 per cent price-cut imposed by the European Union, Guysuco’s average export price has not been on the decline. Instead there has been an increase which undoubtedly is attributable to the appreciation of the Euro vis-à-vis the US dollar. The Euro, when it was introduced on January 01, 1999 was at par with the US dollar. Subsequently it depreciated and by October, 2000 it reached an all-time low whereby one Euro was equivalent to US$0.82. However, since then, the Euro has gained significant value and as at October 27, 2009 one Euro was equivalent to US$1.48. Guysuco’s export-earnings are repatriated in US dollars.
Taking in account the average export prices over the last five years, it was, according to Guysuco’s own 2008 Annual Report, as follows:-
2004 – G$87,498 per tonne
2005 – G$92,835 per tonne
2006 – G$107,332 per tonne
2007 – G$110,676 per tonne
2008 – G$115,832 per tonne
It is important to note that from 2005 the year prior to the first phase of the price-cut, to last year (2008), the second phase of the price-cut, the average price rose by 24.7 per cent.
Accordingly, the Corporation’s revenue position has not been declining over the last five years, as is illustrated hereunder:-
Had sugar production remained at the 2002-2004 level, averaging almost 320,000 tonnes per annum and even higher, the revenue position of the Corporation would have been immeasurably higher. The currently high world market price of over US23 cents per pound at this point in time, would have contributed to even higher revenue.
The Union also finds it interesting that the Corporation yielded almost the same levels of revenue in 2006 and 2008, but however made a profit of G$476M in 2006 and a loss of G$4.089B in 2008.
The loss last year can be attributed to the excessive amount of canes utilized at Skeldon during the trials of the new factory – approximately 60,000 tonnes. For 2008, the cost of production at Skeldon was approximately US40 cents per pound undoubtedly as a result of the massive wastage of canes and the delay in new factory becoming functional.
The Employment Cost for all categories of employees of this labour intensive industry for the corresponding period was as follows:-
It is noted that despite a thirty-four per cent compounded increase in wages over the above-mentioned period, the Corporation’s Employment Cost rose merely by 6.7 per cent. It is also worthy of note that the aggregate annualized inflation rate was forty-four per cent resulting in the deterioration of workers’ real income. The Corporation’s argument that a rise in pay of every one per cent will require G$150M, noting the analysis and revelation of the above-mentioned table, is baseless.
The seasonal sugar industry does not provide work to its field workers regularly, the bulk of whom are offered work less than forty (40) weeks per year. Further, the fact that the industry’s workforce is gradually on the decline, the rise in the wage bill is not proportional.
The Union submits that the industry, given its almost 45,000 hectare cultivation, the capacity of its eight factories, its other assets and its reliable and hardworking workforce, is simply not growing the requisite quantity and the quality of canes to utilize adequately its productive capabilities.
MIS-MANAGEMENT AND PRODUCTION DECLINE
The Union, over the last five years, had identified the abysmal management of the industry by Booker Tate as the main cause of the industry’s woes, but our calls fell on deaf ears and the Corporation did not terminate that institution’s entanglement with the industry earlier than when it took place. The contract was finally terminated in March, this year. It was pellucid that Booker Tate had departed from its obligations enshrined in the contract it entered into. Noteworthy is that among its contractual obligations, it had agreed “to monitor and maintain the standards and best practices of management/operations in the areas of agriculture, factory, finance, procurement, administration, human resources, information technology and marketing.”
In the Union’s opinion the inability of Booker Tate to fulfil its contractual obligations constituted a breach of contract and, therefore, justifies the need for compensation by Booker Tate, as the Union finds it difficult to fathom how such clear-cut cases of mismanagement could have been perpetuated.
Last year, the industry sunk to its lowest level since 1990 having produced 226,267 tonnes of sugar. The Union submits that had the industry produced according to its revised target of 260,000 tonnes as was determined by a Booker Tate official, among others, following the conclusion of an audit of the industry’s cultivation, before the commencement of the second crop last year (2008), the industry’s revenue would have increased by G$4B and thus there would not have been the massive loss of G$4.089B in 2008 as declared by the Corporation earlier this year.
We wish now to make some references to the poor and plummeting sugar production reflected mainly on the Demerara Estates:-
The four Demerara Estates – Enmore, LBI/Diamond, Wales and Uitvlugt produced a total of 85,068 tonnes of sugar in 2008 (a bad year) as against 128,208 tonnes in 2004 (a good year), representing a decline of 50.7 per cent.
A ministerial appointed Commission of Enquiry, in 2008, in its report on the performance of East Demerara Estates, found that cane fields, just a stone’s throw away from Guysuco’s Head Office, where the CEO and other senior functionaries are located, had had sparse cane growth, significant weed infestation and poor drainage.
Wales Estate, which was producing sugar at sixty-two tonnes per hectare in 2007, is now producing canes at forty-two tonnes per hectare. This estate’s factory facilitates 775 farmers who supply almost 50 per cent of the canes crushed at that location for their almost 2,200 hectares or 5,400 acres. Should this Estate be allowed to decline?
A Review Committee found in 2007 that Uitvlugt Estate’s cultivation was significantly rundown with a significant proliferation of weeds in the fields and in the canals of the Estate. Even more revealing was the testimony given by a previous General Manager to the Committee, whereby he confirmed that he was tasked by the Chief Executive, a Booker Tate employee, to prepare a Paper for the closure of the Estate despite the mandate of the Guysuco’s Board to maintain productively all eight 8 estates. The rumour that the Estate was slated for closure had a demoralizing effect on the Estate’s workforce as it was widely said that the Estate was going to be closed leading to high incidences of absenteeism and lack of commitment.
The closure of the Diamond cultivation, a sizable area of some 2,600 hectares (6,424 acres) of prime arable land requiring no drainage pumps unlike many of the industry’s other cultivated areas, is imminent. The Corporation has proposed the expansion of the East Demerara cultivation in order to offset the production loss resulting from the closure of the Diamond cultivation and to satisfy the cane demand of the consolidated Enmore factory which is slated to become operational in 2012. Interestingly, it is known that the proposed “new land area” was previously retired by Guysuco because it was established that the soil was not adequately productive and, as marginal lands, it was not economically viable to cultivate.
The Union asks Why Abandon Prime Arable Land and Adopt Less Arable But Marginal Lands? Is it to further drive another nail in the coffin to establish that the Demerara Estates are not economical to retain? Who will buy the land of this cultivation valued by Guysuco at G$30.6B? Will squatters take it over? Or will it be acquired without compensation by the Government?
The expansion of Skeldon Estate’s cultivation by 4,685 hectares is now being aggressively undertaken by the management of Skeldon Estate. The expansion should have been completed simultaneously with the commissioning of the new factory. The project, while under the direction of Booker Tate, merely expanded 1,500 hectares from 2002 to 2008 when Booker Tate was belatedly released from the land expansion component of the contract. Not having the 1.2 million tonnes of cane to supply the new factory, is depriving the industry from benefiting from sugar production this year by almost 80,000 tonnes.
Sugar workers are the industry’s prime stakeholders. Their presence, contributions and dedication are required to ensure the industry’s prosperity. The Corporation needs to invest in the workers and to sincerely take into account the workers’ role to keep the wheels of the industry turning profitably once there is adequate production arising from better productivity.
The Union and the workers stand ready to negotiate a settlement to the current wage dispute taking into account the crossroads at which the industry has unfortunately found itself. Guysuco should it fail to invest in the workers could very well contribute to the further weakening of the industry at this crucial juncture. Never to be ignored is the role of the industry in terms of employment opportunity, employees contribution to taxes, its foreign exchange capacity, etc and not forgetting its contribution of G$34B to the coffers of the Government by way of the controversial Sugar Levy.
GAWU’s stands ready to discuss and defend its position as outlined in the above brief.
Yours faithfully,
Aslim Singh
Research Department
GAWU
