Dear Editor,
With so many daunting challenges facing GuySuCo, particularly a foreseeable lengthy period of low sugar prices, increasing labour costs, difficulties in mechanization, and negative impacts of climate change, it is very unlikely that GuySuCo in its present configuration can attain the level of production and profitability needed to give it a stable and sustainable future. Added to this, is the high level of subsidization that is required to keep things going at this time.
The GuySuCo Commission of Inquiry (CoI) made a recommendation for the privatisation of the sugar company, preferably over a period not exceeding three years. Unless there are specific opportunities that have arisen and which are actively being pursued at this time, the suggested period of three years for privatisation is a little ambitious. However, as I pointed out in previous correspondence, a wide range of options under the banner of privatisation may be possible, including limited divestment of just some aspects of the company’s activities.
Whether or not the government will take the recommendation seriously, is yet to be seen. However, in any agricultural operation, time is of the essence and the longer we are satisfied to just tag along the more difficult and expensive it will become in the long run to make the changes that are required. In the interim, and whether we choose to privatise or retain full state ownership and control, some amount of industry restructuring must still be undertaken to make it more competitive, and less of a drain on the economy.
If restructuring and limited divestment are accepted as the better options, only some of the current roles of GuySuCo will be retained, while new but not unfamiliar activities will become part of the new arrangement. What roles should be fully retained under a restructured GuySuCo, and possibly expanded are the factory operations, infrastructural development and maintenance, agricultural research process engineering, and new product development and marketing operations.
In previous correspondence, I looked at how private sugarcane farmers, particularly in the West Demerara and Upper Corentyne regions, are selling cane to the estates at a profit. This is one viable area, the expansion of which should be supported as part of an overall strategy of limited divestment.
A new, restructured GuySuCo should focus its limited resources on a few critical areas, such as:
- Agricultural research and development, particularly the breeding of more productive and resilient varieties of sugarcane, and the introduction of enhanced mechanized operations;
- Improving factory operations, with a view towards installing dual systems for receiving canes (punts and cane-carts); increasing throughput (grinding rates) and sugar-recovery (reducing cane-to-sugar ratios);
- Exploiting industry-wide opportunities for new streams of revenue, particularly by investing in electricity co-generation;
- Provision of technical services to farmers, such as in the areas of soil, water and tissue analyses, and crop-extension education, with particular emphasis on the transfer of best practices;
- Developing and leasing to private farmers, lands that are suitable for sugarcane farming;
- Development and maintenance of agricultural infrastructure which can enable timely and efficient drainage, irrigation, cane transport and access to all parts of sugarcane cultivations, including farming areas;
- Expanding the sugar product line, and the range of value-added sugar-based products offered locally and abroad;
- Leasing of agricultural machinery and equipment to sugarcane farmers, more particularly to facilitate new entrants to the industry;
- Procuring and reselling of agricultural inputs to sugarcane farmers, particularly agrochemicals (pesticides, fertilizers and ameliorants). Though this is already being done on a limited scale, it is an area that needs to be thoroughly examined before being taken on as a full-fledged service to farmers, since there can emerge many loopholes, with the potential for collusion, something that GuySuCo is not unknown for.
- Last but not least, environmental management, with specific emphasis on the use of agricultural resources, safe disposal of agricultural and processing wastes so as to prevent environmental contamination, and use of such wastes/by-products as base materials for producing other saleable commodities.
The possible restructuring of GuySuCo should be a well-thought-out, consultative process that seeks to draw from successful international agro-industry models which feature a high level of public-private partnership.
Developing a suitable industry model for such an approach can be informed by examining the practices of existing, state-operated agricultural entities such as the Mahaica-Mahaicony-Abary Agricultural Development Authority (MMA/ADA), and the Guyana Rice Development Board (GRDB) and its predecessors, and from reviewing how agricultural cooperatives such as those found in Maharashtra (India) and Florida operate.
The local entities in the rice industry have worked well to facilitate increasing rice production over the past thirty-odd years, while not being direct players. These entities are largely service-providers that facilitate an ongoing interactive process by which ideas, concerns and best practices emanating from entrepreneurs in the rice industry are field-tested and if found feasible, extended to other parts of the industry. The outcome has mostly been one that allowed for a rapid, industry-wide uptake of cost-cutting innovations, and improved productivity, production, profitability, and product range and quality.
Growers’ cooperatives are not altogether new to Guyana, even though those that were formed have not had much success. Nevertheless, the fact that cooperatives have thrived in both developed and developing countries gives hope for a renewed attempt here in Guyana.
It therefore means that the sugar industry model which can emerge will show a central entity that exercises a combination of production, oversight and service-oriented functions.
The foregoing suggestions, in my opinion, reinforce the notion that limited privatisation of the sugar industry can be more beneficial than either maintaining the status quo, or going fully privatised.
Yours faithfully,
Khemraj Tulsie
