Dear Editor,
The recent strike which was called by Guyana Agricultural Workers Union (GAWU) is yet another example of insensitivity towards the welfare of the sugar industry in Guyana. The inclination is always to blame another entity. GAWU, the government, and GuySuCo’s management are all blamed when it is convenient to do so. This industry has been one of the most heavily subsidized industries in the history of the Caribbean, and continues to be heavily subsidized.
Unlike the sugar industry in other Caribbean countries, the industry in Guyana failed to diversify and invest in alternative industries. Unlike most of the Caribbean, Guyana continued to receive support for 160,000 metric tonnes of sugar at fixed preferential prices from the 1970s. As of October 2009, most of these preferential arrangements ended. However, some transitional arrangements are in place to mitigate the effects of the elimination of the Sugar Protocol. Last year’s price of approximately US$530 per tonne of sugar is roughly equivalent to world market prices and constituted a form of minimum price for our sugar until September 2012. This is a substantial reduction from the US$830.27 per tonne of sugar that was received a few years ago.
This year, the gap between the price support for sugar and the prevailing world market price will be virtually eliminated. For the last three decades, the price support amounted to over 200 per cent above the prevailing market price for sugar. Guyana has been a beneficiary throughout this period. Somehow, we fail to acknowledge that this lucrative period of price supports is now over. We can no longer rely on the European Union to support our industry.
What we have in our favour is the potential of a new factory in Skeldon that may mitigate the negative consequences of the withdrawal of the EU’s price support. However, even if the factory was to operate at an optimal level, the labour disputes may curtail its ability to produce the required tonnes of sugar. The union’s demand for a 15 % pay hike may well be devastating to the industry, considering that the cost of sugar production in Guyana is way above the international average. Notwithstanding the fact that GuySuCo and the government have spent billions of Guyana dollars on drainage and irrigation, flooding continues to be a major problem for the industry.
In the period after the great flood in 2005, the industry still continues to suffer. Production in 2007 was 266,483 tonnes, but stood at 233,736 tonnes in 2009. The inclement weather and the ongoing labour dispute are factors which contributed to the industry’s failure to meet its production targets. During the first half of this year, production stood at 81,864 tonnes, representing a 1.8 % reduction from the 83,357 tonnes in 2009. The severe weather conditions earlier this year negatively affected the replanting of cane. The result of the adverse weather conditions, labour disputes, and management deficiencies directly affected export earnings.
For the first half of each of the previous years, sugar exports earned US$57M in 2008 which declined to US$47M in 2009. In 2010, sugar earnings further declined to US$37M, representing a 21% reduction from the 2009 level. Apart from domestic problems that plague the industry, we are still faced with an insurmountable task: sugar prices are subject to fluctuation. The export price fell by 22% to US$494 per metric tonne in the current fiscal year. In other words, even if we were to be successful in increasing our production and export earnings for sugar, we may still be faced with the possibility of declining prices on the international market.
So all that the striking workers are doing is to compound the problems of management. GuySuCo’s management has limited jurisdiction in controlling the inclement weather and influencing the international market prices for sugar, however they may be able to provide some additional incentives to workers. Clearly, a 15% wage hike may be unreasonable considering the decline in export earnings. In addition, the revised production target of 264,000 tonnes of sugar has to be achieved. It is a contradiction for the union and its workers to seek to attain this production target and simultaneously engage in strike action.
However, this is where management comes in. Ultimately, it is the responsibility of management to motivate workers to perform at their maximum and meet the production target.
Yours faithfully,
Andrew Felix
