The Ministry of Agriculture has challenged the severance pay figure of $675 million for Wales estate workers mooted at a recent Moray House Trust (MHT) forum and it has also cast doubt on a proposal that the sugar estate can be transformed into a public company.
At the MHT event on February 5, former GuySuCo Human Resources Manager Jai Petam posited that whatever transition is planned for the Wales Sugar Estate which GuySuCo says is to be closed by the end of the year there are likely to be significant costs attached.
Petam, according to a MHT statement, raised the question of who would fund the development of cane lands into other crops or any diversification venture. He said that a conservative estimate of the cost of severance, based on 1,500 workers receiving an average of $15,000 per week and with a service average of 15 years, would be $675 million.
Based on the numbers cited at the forum, there are approximately 1,800 workers employed at the estate and about 800 private cane farmers farming at Wales. It was noted that these farmers account for over half of the estate’s cane supply and while yield from cane grown on the estate by GuySuCo dropped between 2008 and 2015, the farmers were able to increase their supply, which accounts for 51% of the total supply.
In a statement on February 11 and without referring to a specific media report on the MHT forum, the Ministry of Agriculture said the “costs of severance pay to imagined numbers of workers is but a fabrication which bears no relation to facts. Presumably it is only intended to excite – for no positive reason. Sadly, this coming from a former Human Resources Director of GuySuCo!”
The ministry said that the statement at the forum by former GuySuCo Chair-man Vic Oditt that hundreds of workers are turning up at Wales estate with nothing to do was a misrepresentation.
It further said the impression received by some that farmers, workers and unions had not been engaged on the plans for Wales is inaccurate.
“In addition to the management staff, a series of information meetings were held—with cane farmers, workers, and the unions (GAWU and NAACIE). That last meeting followed one with the two union leaderships (8 persons) that was aborted following their insistence on expanding their respective delegations (to 16 persons). This was unfortunate since it was in fact the very earliest meeting planned to inform the unions of the corporation’s intention of integrating Wales with Uitvlugt, before any mention was made in the media,” the ministry statement said.
The ministry said that of the two meetings with the private cane farmers, the second was most cordial and constructive. It said that discussion on the movement of canes to facilitate the proposed integration of private cultivation with Uitvlugt Estate concluded with a joint task force being set up to examine and resolve all the attendant logistical issues.
The ministry further added that the most recent meetings with the workers directly also proved to be a positive engagement in that the management was able to respond in detail to every query that concerned each category of employee’s future.
Productive work
“As it turned out productive work can be found for all but 13 mechanical tillage operators who could be severed, but only if the equipment they operated were not available. This situation is about to be resolved.
“In addition, during the positive interactions, including that with the unions, an undertaking was given by the management of the corporation to report on its diversification plans, by no later than October 1, 2016,” the ministry said.
Despite the meetings, both Wales workers, their unions and private cane farmers have expressed unease to Stabroek News over the arrangements for the planned closure of the estate and the aftermath.
The ministry also criticised a plan floated by Oditt at the MHT forum for a public company to be established to take over the Wales operations. Oditt had said that if one million shares were sold at a cost of $5,000, it would raise $5 billion in capital for the venture. Oditt told the audience that the company would lease the estate, factory, lands and equipment from the government/ GuySuCo at a rate of $1 per year for a 25-year period, with an option to renew it later for an additional 25 years.
He said the public company would not own any lands and therefore could not dispose of them. He added that the company would continue the cultivation and production of sugar and by-products at Wales and also invest in field and factory equipment necessary to produce three or four times the 2015 production figure.
The ministry said that this proposal would raise questions about two basic factors: a) How to gather the skills and competencies necessary for upholding such an enterprise? b) How it is expected that the activism of shareholding employees and unions will be contained or even adapted?
“Expectedly the business plan must confirm longevity of the enterprise. The business plan should reflect the strategies to bridge the cost of production (which was USc38/lb Wales in 2015) to the world market prices of bulk sugar of USc13/lb to USc14/lb and refined sugar of USc18/lb in order to arrive at a profitable and sustainable company in the best interest of its proposed shareholders. Otherwise the $5 billion capital raised will be depleted within 2 ½ years due to losses,” the ministry statement said.
Spin-off products
The ministry also noted that two of the outlined strategies were spin-off products such as molasses and the generation of electricity for the national grid. However, the corporation, inclusive of Wales, already produces and sells molasses. This revenue is already taken into account in the huge losses suffered by the corporation in the recent years, it said.
It acknowledged that supplying the national grid with power is indeed an option to be explored across the industry however, this would require substantial investment. At Wales, the ministry said that it would mean installing a high pressure boiler and a turbine which would cost a minimum of US$10 million. It would also require the Guyana Power and Light to invest/upgrade infrastructure to tap this power.
The ministry also said that no explicit mention seemed to have been made at the MHT forum of GuySuCo’s chronic financial indebtedness.
“For example at the time of the management change in mid-2015, even the workers’ deducted contributions to their credit union had not been paid up – in the order of $165 million. Additionally, between the National Insurance Scheme and Guyana Revenue Authority a total sum of $6.3 billion [was] owed. Embarrassingly, even the pension fund contributions were not handed over to the fund,” the ministry said.
“Subliminal to all the foregoing debate, however, is the message that the whole is worth sacrificing for the good of its parts,” it added.
In its statement on February 6 on the forum, MHT had said that in the interest of offering a plurality of views it had invited the management and board of GuySuCo along with several ministers and the private sector. GuySuCo was also offered a place on the panel.
“The Trust was disappointed to note an apparent lack of willingness to engage, particularly on the part of those who hold public office or who are paid by the public purse,” the statement said.
