Shifting the goalpost
In most cases of deliberate political and intellectual deception or expediency, persons and organisations would, as the saying goes, seek to shift the goalpost during the debate, in order to defeat the opposing point of view. As we all know in such a circumstance the aim is to ensure that the goal of the opponent is never met. In the case of GuySuCo, political spin from both GuySuCo’s corporate leaders and the relevant Government of Guyana authorities, however, seek to shift the goalpost in order to score a goal for themselves, which in their language means making GuySuCo and the local sugar industry, look ‘good’ to the Guyanese public. This is a deliberate tactic of watering-down targets, which have been previously set.
Unfortunately for the proponents of this strategy, GuySuCo’s performance, over the past two decades has been so disastrous (as my analysis in the 12 previous columns on this topic reveal) that the rot at GuySuCo can no longer be hidden from a discerning public. The time is therefore, ready now for drastic remedial action; even though from private communications with several specialists (including ones presently connected to the industry and in the past) their considered view is that it is already too late to change the culture at GuySuCo and, worse, the stubborn government unwillingness to grasp the nettle it is now confronted with in what is perhaps its most important labour constituency.
Let us look at a few of these efforts to shift the goalpost at GuySuCo. First, as I have indicated in earlier columns, GuySuCo had originally targeted (with the blessing of government) for the Skeldon Sugar Modernization Project (SSMP) to be immediately followed with 1) the rehabilitation of the Albion factory 2) the expansion of nearby agricultural lands, and 3) the closure of the Rose Hall estate. Indeed, the scheduled date for the completion of this entire project has long since passed. There is, however, virtually no public reference to the Albion expansion and Rose Hall closure. There has also been no public questioning as to why, what was previously presented as such an essential complement to the SSMP, would have been abandoned without any public acknowledgement or discourse about it.
Second, when the SSMP began, the plan was to have over 450,000 tonnes of sugar produced annually by 2010. Now we all know that last year’s production was less than half this target, but with no mention of the original target. Instead, we are now being told that the target set for GuySuCo in order to ensure its commercial sustainability is 300,000 tonnes of sugar per year, with no clear indication of how this would make GuySuCo a reasonably profitable enterprise.
Other goals (targets) were also originally given and are now abandoned; for example that GuySuCo would have:
1) 40 per cent of its cane cultivation mechanised by 2011
2) And, the remainder semi-mechanised by 2014
3) Computerized its human resources management system (HRMS) by 2011
4) Produced value-added packaged sugar to an amount variously listed as 40,000 tonnes to 60,000 tonnes by Q1, 2011
What we find is that, increasingly in recent times, with every setback at GuySuCo, just being able to get close to the level of performance prevailing prior to the setback is trumpeted as a monumental sign of progress. At present the ridiculous claim is being made that, if GuySuCo manages to produce close to 300,000 tonnes of sugar this year (2011), this would be the surest sign that the Turnaround Plan, the Strategic Blueprint and the Business Plan “have kicked into top-gear.”
I believe that such attempts at spin do the industry more harm than good. You cannot deliberately dilute or lower the meaning of success so as to ensure it happens. This is especially the case in the real world of commercial production. Here, the bitter truth will always emerge when the enterprise’s financial data are prepared and published in order to meet its statutory obligations.
Commercial viability
Readers need to be constantly aware that producing 300,000 tonnes of sugar this year is far below what is needed for GuySuCo to ensure its sustainability and commercial viability. From an economic standpoint it would be necessary for GuySuCo to:
1) Repay or guarantee to repay in full all its overdue indebtedness. Presently it is deeply indebted to private lenders, the Government of Guyana as its shareholder, and other creditors (including commercial credit, workers pensions and benefits, rates and taxes).
2) Cover the full commercial cost of its operations, including administration cost, depreciation, and capital financing loans for long-term, medium-term and working capital requirements.
3) Secure commercial financing for reasonable investment in improvements to cost reduction; working conditions and benefits; output productivity; and R&D expenditure.
Further, GuySuCo has to ensure the full payback out of future earnings of the over US$200 million already expended on the SSMP, if it is to be commercially viable, sustainable, and not dependent on public subsidies. An annual output of 300,000 tonnes cannot secure over the long-term the resources required with which to afford the levels of expenditure indicated above, given its cost of production and the likely long run price of sugar in the absence of the Sugar Protocol. This situation should be apparent, since as we know, decades ago, with far less resources (no SSMP) the Guyana sugar industry was annually producing at levels over 360,000 tonnes of sugar.
Next week I shall continue this point and begin by reminding readers that, as I revealed last week, since 1992 and during the full Sugar Protocol period (pre-2006), GuySuCo was obtaining annual income transfers from the European Union equivalent to over eight per cent of Guyana’s GDP! Where have these benefits gone?
