Dear Editor,
I read your article (SN 10-11-2014) captioned, `Rice cereal factory still to be built’ and noted several claims being made about the profitability of this so called project. I call it so called because it fits neatly into the same pattern of half-baked ideas, such as: the high-cost road to Amaila Falls without confirmed financing for both; the start of the Marriott Hotel without confirmed financing and Court challenges; the many unending technical and labour problems of Skeldon and the packaging plant; the Airport runway lengthening project with soil testing after construction commenced, a brilliant design blemish; incomplete law books; unqualified contractors; questionable procurement practices; the huge waste of tax payer money in the President’s Youth Choice Initiative; the specialty hospital of alleged corruption and Court challenges; the Hope (less) Canal; the building of the East Bank road for several years must be a record for road building anywhere; poor construction and maintenance to bridges, wharves, sea defence and kokers that malfunction or collapse soon after commissioning (see Mr. Tony Vieira’s letter SN 10-12-2014; see Mr. Charles P Ceres letter SN March 3, 2012). The list of ill-conceived, poorly designed and executed projects is endless, with some structured as a cart before the horse, or a horse with no cart.
The link among these projects are design flaws; unsecured financing; procurement troubles; no timely oversight and a late Auditor General Report where no real corrective action is subsequently observed. Consequently, more upfront action is needed by Parliament to correct these problems. Furthermore, the lack of professional feasibility studies that require in some cases a market demand study, along with technical, financial, economic and managerial analyses; and social/environmental impact studies are usually not available.
It could be argued therefore that without these components and viability criteria for approval/rejection, no spending on Government projects of these types should be undertaken. In fact, these so called expenditures are incorrectly being incorporated into the GDP data, resulting in inflated investments and overly optimistic GDP annual growth rate figures. Clearly, expenditures for things that do not work are not investments; instead, these expenditures only add to the national debt, increasing thereby the number of white elephants that waste tax payer money.
Among the things that caught my attention on the rice cereal advertisement was the fact that this is a pilot project in a research setting, where the criteria for success are not the same as the criteria for commercial viability. The two are vastly different in focus and objectives and this pilot is only good for ‘political niceties’ and nothing else.
This dilemma is also observed in the premature announcements of new agriculture crops being touted as ready for commercial adoption when in fact only the research trials and demonstrations have been attempted in a government facility and not on the farms of small farmers whose lives will depend on commercial success (See SN article of April 19, 2014, “NAREI harvest first batch of English potatoes”; also a review of ‘the Grow more food campaign’ should be undertaken to estimate its impact and cost effectiveness). I know farmers in Guyana are not gullible, for they know what works and what does not, since they know that their livelihood and their families’ welfare depend on the choices they make and nothing else.
It was reported that the sampling of the rice cereal was conducted at GuyExpo. From a marketing standpoint, this is not the way to conduct a marketing study to test the demand for a new product that goes on the breakfast table.
Anyone who studies product marketing will know that this is an extremely flawed and unprofessional approach. In addition, the price of the product was a secret and how the decision was made to locate the plant at Anna Regina should be examined. Other sites that were considered should be revealed and the justification given.
Finally, given what has been reported, it is plausible to believe that the total project cost is still to be determined; only the capital cost of $75 million has been announced and a full specification of the other costs and income stream are critical for determining financial viability; but surprisingly, the rate of return on the investment is already estimated to be a whopping 27 to 33 percent! In the legal world of finance and economics, a rate of return of such magnitude is almost impossible, especially in high risk agriculture in Guyana. Somebody is having fun in Guyana at tax payer expense, what a tragedy Guyana.
Yours faithfully,
C Kenrick Hunte
