As outlined in yesterday’s editorial, the manner in which the APNU+AFC government and GuySuCo communicated the decision to close the Wales Sugar Estate was insensitive to a community that faces the loss of hundreds of jobs and puts families at risk of further penury and disintegration. Trust in the government, GuySuCo and the Commission of Inquiry (CoI) in relation to what will follow for the sugar industry has taken a significant blow. It was GuySuCo which had refused to enter wage negotiations in October last year with the Guyana Agricultural and General Workers Union on the grounds that it was awaiting the report of the CoI and advice from the government on the way forward. What then gave the government and GuySuCo the impetus to close an entire estate without a final position on the CoI report and its assessment by the Economic Services Committee of Parliament to which the government had consigned it? In all likelihood, it appears that some persons connected to the CoI and government were determined to shut at least one estate irrespective of the work of the CoI and notwithstanding the fact that the report made no recommendation for the closure of any estate. This duplicitous behaviour does no one connected to this exercise any credit and raises yet again questions about the sincerity of this coalition government and its constituents as regards major decisions. It also explains the toing and froing by Cabinet over the content of the CoI report. That radical solutions are needed to stanch the haemorrhaging in the sugar industry was never in doubt however the communicating of the decision has presented the government as insensitive and will make its task more difficult considering the need for all stakeholders to be on board.
Now, a word about the PPP/C. As expected, in this competitive, adversarial political system, each party will seek maximum mileage from the discomfort of the other and the former ruling party has wasted no time, helmed in this campaign by former President Bharrat Jagdeo. The PPP/C and its governments, particularly between 2005 and 2015, bear major responsibility for the present state of the sugar industry and the poor production. Exogenous circumstances, primarily as a result of the brutal reform of the EU sugar regime and the treacherous ending of the Sugar Protocol undoubtedly played a significant role in the decline of revenues to the sugar industry. However, it was the conduct of GuySuCo and the PPP/C governments that must take the lion’s share of the blame. The CoI report and other testimony in past years have crystallized how the Skeldon Sugar Modernisation Programme (SSMP) drained away resources from GuySuCo sparking a catastrophic series of events which saw foolhardy cutting of expenditure on vital areas like agronomy, fertilising schedules, much needed investments in field and factory and mechanising operations to cater for the declining labour force.
The SSMP was the brainchild of Mr Jagdeo and while it may have been well-intended in terms of scaling up production and at the same time securing the PPP/C’s political constituency, it was and is a monumental failure; a white elephant which will go down in regional history as one of the worst examples of mega-project conceptualisation, decision-making, execution and salvaging. Mr Jagdeo took a personal interest in this project. He was the key driver but it was clearly beyond retrieval by the time he demitted office in 2011. His successor, former President Ramotar, who served as the highest PPP/C representative on the GuySuCo board for 19 years kept up the pretence and there was no concrete effort by either of the two leaders between 2005 and 2015 to take drastic measures to reform the sugar industry as they clearly were unwilling to risk their political fortunes. Instead, they both facilitated via state subventions and other acts the deepening debt of GuySuCo and the inexorable decline of factories, fields and performance. The industry has now arrived at the point where it is $82b in debt at last count, no estate is profitable and market opportunities for bulk and branded sugar continue to shrink.
There is no way in which the state could continue to justify large subventions for an industry which could show no sign of recovery – $12b last year and another projected $12b this year. It was therefore inevitable that unpalatable decisions had to be made. Former Presidents Jagdeo, Ramotar and the PPP/C should seek to have their views about the way forward incorporated at the level of the Economic Services Committee of Parliament and in direct contact with the government.
Having made its decision on the Wales Estate, there are several immediate challenges for the Government and GuySuCo. First, as the employer of the workers at Wales, the state has to ensure that all of the benefits due to those who would be immediately made redundant and the others are drawn up and paid out. It should not necessitate the court action that Diamond workers had to embark on in 2010 when their fields were retired by GuySuCo and they were transferred to the LBI estate. Their termination benefits, which request had been rejected by GuySuCo, were only paid when then President Jagdeo, no doubt with an eye on the impending General Election that year, intervened in May 2011 and ordered that the payments be made. In addition to the termination benefits, the government is also obliged to begin the process of finding alternative livelihoods including making lands at Wales available to these workers for agriculture and other ventures. The community of Wales itself will also need assistance to recover from this major blow and it is disturbing that neither the President nor the Prime Minister or for that matter any minister has seen it necessary to immediately engage with the residents of Wales. Isn’t this one of the tasks that the oddly named Ministry of Social Cohesion should be taking on?
Second, workers across the industry need to be assured by GuySuCo and the government as it relates to their future and that of the corporation. There must be no more unsavoury surprises. Shutting an estate is not a run of the mill thing. The morale of workers across the industry, already in the doldrums, would have suffered as a result of the Wales announcement and they need to be reassured about the trajectory of changes to come. There should be immediate visits to the various estates by the government and board of GuySuCo on the way forward and workers must be made aware of planned reforms.
Third, the government and GuySuCo must grapple with the other huge losses facing the industry, Skeldon being the prime example. Skeldon’s loss in 2014 was a startling $4.2b and this trend was more than likely replicated last year. There is no circumstance under which losses of that magnitude can be sustained. Skeldon’s cost of production per pound of sugar is unsustainable. The East Demerara’s estate loss was $2.8b in 2014. What will the government and GuySuCo begin to do to immediately to reverse these losses? Should GuySuCo vigorously pursue damages from the Chinese contractor for the Skeldon factory? Does it make sense to continue absorbing huge losses at Skeldon even in consideration of the huge sunk cost? What other cost centres will be targeted? These are the detailed discussions that GuySuCo should be having with its workers and their unions.
Fourth, deferred for many years, the moment of truth has now arrived for the government and GuySuCo. Will sugar production be confined to the Berbice belt? What other viable value added possibilities will be considered for the industry? A refinery? Power generation is an option if Skeldon can retrieve control of the power assets sold under the PPP/C and what about ethanol blends to power vehicles? When the European Union sugar quota ends next year and prices are expected to decline further what plans are there to tap into new markets. Is agricultural diversification feasible at all on any of the estates? These are the areas that the government needs to urgently begin frank and good faith talks with the unions and other stakeholders in the industry.
