Reporting higher sugar production without providing productivity figures is to raise false hopes

Dear Editor,

One of the clear signals of how private sector businesses respond to falling product prices is to decrease production or close operations in order to minimize losses. For example, inefficient operations, especially those with high per unit operating costs above market prices, go out of business, as sustaining losses are not part of an effective business strategy. This is what most of the Caricom sugar producers have done and we have seen similar adjustments by gold producers in Guyana. Specifically, the fall in the price of gold has seen output and the number of gold mining operations decline as marginal gold mining producers exit the business. Also, input and credit suppliers scale down their operations, while employment opportunities contract below seasonal adjustment levels. In other cases, some producers through their representative organizations ask for tax concessions and access to higher yielding deposits in order to mitigate the shocks to the system. This is all part of normal business practice in a challenging environment.

In contrast, this cannot be said of Guyana sugar production, where export sugar prices have declined significantly and preferential market access has scheduled termination dates. In spite of these known conditions, GuySuCo management has been in denial about the impending outcome, given the tacit political support of the PPP/C Government and the unending claim on taxpayer money that is constantly used to bail out an unprofitable political enclave. For example, the frequent downgrade of production targets by GuySuCo management in the production cycle, followed by the same management team gleefully reporting above target level production achievements is the worst kind of deception and public trickery. This is a continuous tragedy that is visited on Guyanese every production cycle and it must be stopped. In addition, the reported statement by Dr Raj Singh (CEO GuySuCo) is instructive of the current conditions. Dr Singh is quoted in a Kaieteur News article of December 30, 2014, “that there is still much to be done to ensure that the Corporation returns to profitability … that the performance of the industry was encouraging and that most of the key performance indicators were achieved.” This statement is symptomatic of the contradiction in sugar, for the key indicators were not provided; and without the reporting of the financial and productivity data no real objective analysis of the operations can be made. In this regard, Mr Tony Vieira (SN, December 31 2014) asked the most important question about the productivity measure: How many tonnes of sugarcane (TC) are required to make one tonne of sugar (TS)? The answer to this question presents an indicator of the efficiency level in sugar production as well as presenting a critical marker for measuring the average cost of production relative to the price of sugar. Consequently, reporting higher production numbers as Dr Raj Singh did without revealing the TC/TS is only building false hopes of positive changes that will lead to financial viability. I would therefore conclude that the approach in GuySuCo is unbecoming of a government entity which has a non-transparent, unaccountable and endless draw on taxpayer money. Wake up Guyana, stop the bleeding!

 

Yours faithfully,
C Kenrick Hunte