The much anticipated report by the Commission of Inquiry into the sugar industry advocates privatisation and bringing the estates into good working order and no recommendation was made to close any of the estates, sources with knowledge of it say.
Stabroek News was told that the recommendation that no estates be shut down does not mean that the merging of estates will not be considered.
According to a source, the recommendations focused heavily on agronomy and the need for human resource development. The report was submitted to the Ministry of Agriculture this week and Cabinet has to deliberate on it.
Over the next two years there will need to be heavy emphasis on bringing the sugar fields up to standard with the aim of lowering production costs, the report posited. Stabroek News was told that simultaneously the reform in human resources could result in layoffs. Additional layoffs could be possible should the recommendations evolve into consolidating estates.
During the hearings held by the Commission of Inquiry it was revealed that none of the estates was turning a profit and the industry’s average cost of production was a whopping US$0.45 per pound of sugar.
This newspaper was told that even while the Berbice estates have a more reasonable cost of production the Skeldon estate and the West Demerara estates, Wales and Uitvlugt, are driving this figure up. Stabroek News was made to understand that Skeldon’s cost of production is in the range of US$0.50-US$0.55 per pound of sugar. The Guyana Sugar Corporation is expected to continue to invest in promoting private cane farming at Uitvlugt. The estate, which ceased grinding operations last week for the 2015 crop was out of canes. The Uitvlugt estate and Wales could see a possible merger but more research is needed before any decisions are taken, the sources say.
Guyana still benefits from a preferential-priced market, however the pricing has been significantly declining and will completely end in 2017 when the arrangement between African, Caribbean and Pacific (ACP) countries and the European Union (EU) expires. Over 75% of Guyana’s raw cane sugar is sold to the EU with the remainder being locally consumed or sold within the Caribbean market and a smaller percentage is being sold to the United States.
GuySuCo’s longstanding relationship with its main EU buyer Tate and Lyle will most likely remain strong, according to the report, which would ensure GuySuCo marketability well after the 2017 end of quotas.
Additionally, Stabroek News was told that the Caribbean imports roughly 300,000 tonnes of refined sugar. The source said that while it is not likely that there will be government or GuySuCo money available to invest in a refinery, that is still an option being touted. Guyana would benefit from the Common External Tariff.
However, given that globally sugar is heavily subsidized that may not be enough to compete price per pound with India and Brazil even in the Caricom market.
The report was handed over to the Permanent Secretary of the Agriculture Ministry, George Jervis as Minister Noel Holder is not in the country. The minister is expected to take the report to cabinet next week where it will be discussed.
For three months commissioners of the CoI heard from 41 contributors ranging from former GuySuCo CEO’s to the heads of the main sugar unions, private cane farmers, representative from Tate and Lyle and other stakeholders in relation to the needs of the sugar sector.
The commission comprised Chairman Vibert Parvatan as well as Professor Clive Thomas (Financial and Economic Analysis), Dr. Harold Davis and John Piggot (Agronomists), John Dow and Joseph Alfred (Factory Operations), George James (Sugar Processing), Nowrang Persaud (Industrial Relations), Claude Housty (Marketing), Seepaul Narine, GAWU Repre-sentative and Omadatt Chandan who served as the Commission’s Secretary.
The eleven-member Commis-sion, during its investigation was supposed to develop a 15-year plan expected to bring the industry back to profitability and ensure long-term environmental and economic sustainability.
