Dear Editor,
In an SN letter of February 20, Vic Oditt, a former chairman of the Guyana Sugar Corporation (GuySuCo) and a businessman with varied investment interests stated that gross mismanagement by GuySuCo and specifically its agricultural operations of the Wales Sugar Estate (WSE) has been responsible for operating losses over the years and will result in closure of WSE at the end of 2016. He concurred with others that GuySuCo in its present form and structure cannot survive without annual subsidies from its sole owner, the APNU+AFC government, which apparently has made the decision to start shedding unprofitable GuySuCo assets.
During Mr Oditt’s tenure as Chairman of GuySuCo there is no evidence which would indicate that he formulated and implemented strategies to ensure the longer-term viability of the sugar industry. He now claims to have several bright ideas to get WSE back on track to profitability. Firstly, he proposes that WSE be converted into a public company and its shares sold to Guyanese. A new, competent management team would then be appointed and skilled senior staff and other employees who were forced out of the system for political reasons will be re-hired on newer and fairer terms. The newly appointed management team would be able to increase sugar production from 9,000 to 30,000 tons per year, returning WSE to profitability in three years. Power generation, sugar refining and packaging as value added products will be installed through participatory privatization. He gave no detail as to how these fantasy ideas will become reality and where funding will come from to resurrect a run-down sugar estate to its former glory, but he noted that grants and soft loans were available for the taking, probably from the clouds. Unfortunately, GuySuCo was unable to access money from these sources to upgrade its operations although it did receive generous EU sugar price support which it squandered.
Turning around any loss operating corporation is difficult. Turning around a farm based one is unheard of. For the past several months the government has been deliberating on GuySuCo’s blueprint Commission of Inquiry (CoI) report, but has failed so far to present publicly a viable plan for the industry. Sugar production is costing GuySuCo about US$0.43 per lb. while world markets are paying about US$0.14 per lb. for sugar, FOB. It is inconceivable therefore that GuySuCo could narrow this gap in the foreseeable future to make its operations profitable without large capital investments in an industry with poor infrastructure and whose field operations need to be mechanized if field layouts could be changed, as labour availability has been getting scarcer, erratic and expensive. The TS/TC yield ratio would need to be increased significantly also. Manufacture of value added products from sugar such as ethanol is possible, but GuySuCo does not have and would be unable to obtain the investment capital needed for plant installation since investors would find such projects unattractive at this time, as the low cost of fossil fuel has made ethanol production uneconomical.
Crop diversification for GuySuCo is not a viable proposition because it lacks capital, technical know-how and management skills to convert sugar cultivation to other profitable tropical crops such as bananas, plantains and citrus. Therefore, if the large subsidies paid to GuySuCo are to end, govrnment will have to think outside the box and dispose of GuySuCo’s assets in a planned way and invest the proceeds into other segments of the economy to create the jobs which are so desperately needed, not only for the displaced sugar workers but others as well.
To prevent prime arable sugar lands and other valuable GuySuCo assets falling into the hands of unscrupulous speculators, the government would have to include caveats in its sale agreements to ensure that the properties sold are used for specified purposes aimed at developing the economy of Guyana for the benefit of its people and not for the quick financial reward of speculative investors.
Finally, the closure of WSE will have serious adverse effects on the lives of its workers. The offer of alternative employment at Uitvlugt Estate some 21 miles away for the redundant WSE workers without any compensation for their resettlement or daily transportation, will most likely be difficult for them to accept as at the end of the day they have to earn a living wage. Similarly, the small WBD farmers who have been supplying cane to WSE will find the additional transportation cost and time spent in travelling and waiting to make their deliveries to Uitvlugt Factory too costly, and the thin profit they were making will be wiped out unless GuySuCo is willing to up the price paid to them. If not, they too will be heading for the sunset as cane cultivation will become too costly for them to make a profit.
Yours faithfully,
Charles Sohan
