Dear Editor,
I note with interest an SN article ‘Revised business plan to tackle production cost, value-added –GuySuCo’ in the March 28, edition. The article says that the sugar company will shortly make public its revised Business Plan for 2014- 2017 that will seek to address the “means of reducing the cost of production, increasing harvesting efficiency and embracing value-added production.” How could any organization submit a Business Plan to the public that focuses on the past, which in this case is 2014? One could only analyse the past to chart the future, but one cannot plan for the past, which is what the sugar company is doing. Secondly, we don’t know when this plan will go public and we are already in the second quarter in the current year, so why is the company also planning for this year when there is already an approved budget on which expenditures are already incurred? This then leaves the company with two future years – 2016 and 2017.
Editor, a company as large as GuySuCo which faces huge challenges, local and foreign, relating to labour, a limping Skeldon factory, poor cane yields and a perpetually declining world price of sugar, proposes to submit to the pubic a business plan that focuses on two future years. Doesn’t the management have a vision of where GuySuCo will be in 5 years? Most organizations, smaller and less complex than GuySuCo, have business plans that focus on at least 10 years.
A glimpse of happenings on the world stage with sugar shows a very dismal picture. The International Sugar Organization opines that global sugar consumption needs to outstrip supply by at least 3-4 million metric tonnes before the current price of sugar could significantly recover. In the 12 months beginning in October last year it is forecast that the world market will have a surplus 1.3 million tonnes, yet there needs to be a deficit of 3-4 million tonnes for prices to move significantly. To expand the deficit and ensure a recovery in prices, supply decline will be needed from the top exporters – Brazil, Thailand and Australia, which is highly unlikely in the near future. This scenario therefore places GuySuCo, an insignificant supplier in the world market, in a real and present predicament. The world price of sugar as at today (March 28) is US12.13 cents per pound. The latest report from newspaper publications, which has not been disputed by GuySuCo, shows that sugar is being produced at US35 cents per pound. What cost-cutting strategy and efficiency interventions will the sugar company come up with in its soon-to-be published Business Plan that will bring the cost of production down to even US15 cents per pound, a reduction of US20 cents per pound?
The long-term forecast is that if GuySuCo cannot bring its cost of production down to parity with the world market price, at best, then either it will remain a burden on the taxpayers of this country or it goes out of existence, or for a sustained existence it moves into the hands of private investors.
Yours faithfully,
(Name and address provided)
