Dear Editor,
Reference is made to the editorial `Sugar news not good’ (SN Dec 28). You are right. But that is not justification to close the industry or estates. A huge industry like sugar is tied to the overall economy. It is about microeconomics, macroeconomics and political economy. One cannot really run a country like a business to make a profit. A studious economist or political scientist has to consider all of that knowledge and information in making a decision on what to do with the sugar industry. There is a history and a political economy of sugar that cannot be ignored; there is a social and political aspect of sugar. Any government that ignores it does so at its own peril as experiences showed in 2011, 2015, and 2020. The modern state must protect jobs of its citizens especially an industry that provides jobs for over 15% of its total workers.
Sugar is needed for job creation. It can be turned around. But a lot of work needs to be done to rehabilitate the industry to make it cost effective. The government should look at various options to reduce cost, including privatizing estates or parcelling out the land to sugar workers (of around 15 acres each) and let them grow cane and the government run the factory and pay the farmers for their cane.
Your editorial correctly states that the cost of sugar in Guyana is 33 cents with market price at 11 cents a pound. One cannot really predict whether management will be able to turn around sugar. Skeldon was supposed to bring down cost to eight cents, but regrettably it has been a failure. The 33 cents cost of sugar production does not included all the revenues that should result from the sale of byproducts. But much of that cost is loaded with management. In addition, there is a lot of theft of materials – equipment, fertilizers, man hours, etc. There is stealing from top to bottom of materials. Accountability and management cuts can reduce costs significantly. Guysuco is responsible for draining the land of floodwater and other infrastructure works that should fall within the domain of the national government (Ministry of Public Works). If the government assumes that cost, the cost of sugar production will further drop, perhaps even below 11 cents. There are several byproducts in sugar production that bring in revenues that are not deducted from the 33 cents. Money spent by Guysuco within Guyana and also that paid to workers have ripple effects through the circular flow of money; there is a multiplier effect of three to five. The entire economy benefits from keeping the industry functioning at all the estates in because it results in job creation elsewhere and productive community industries. The money spent on Guysuco becomes recoverable in other areas that are tied to sugar and its workers.
Nevertheless, there is need for efficiency in the sugar industry. Currently, about 14 tons of cane produces 1 ton of sugar. In Belize, Guatemala, and other countries it is about 7 tons cane to one tone sugar. In India it is less. The yield per acre in Guyana is also about half that in other Latin states. In India, farmers are known to get three times the yield of Guyana. Perhaps Guysuco should look to bring the Indian variety of cane to increase yield. Quick turnover is also needed between harvesting and grinding (within 24 hours) to prevent loss of sucrose content. Three times yield in Guyana per acre will reduce the cost of sugar production by a third. And reducing waste, cutting heavy management, and eliminating theft will make the industry profitable. The sale of byproducts and power generation will make the sugar industry even more profitable.
It is noteworthy that the 2016 APNU-led commission of inquiry report into Guysuco concluded that the estates needed rehabilitation or investment to get to a point of sale. Clearly, money must be injected into the estates to make them viable economic entities and then they can be sold. Thus the $4.5 Billion approved last Monday is welcome. Clive Thomas made a similar recommendation to rehabilitate the factories; to their credit, he, David Hinds, Eusi Kwayana, and Moses Bhagwan were against closing the estates when there was no other work for the thousands who would lose their jobs. And as Minister Jordan stated at the time, people would not buy a factory that looked like scrap iron. The problem however was that Jordan and his government turned the estates into scrap iron. They are now recognizable now and need investments for total overhaul to make them attractive to buyers.
The $4.5 B approved this week for Guysuco is welcome. One cannot spend money erratically. A proper plan is needed for the $4.5B and the $3B before it approved in the interim budget. The plan must be scientific. Was there not a plan a couple months ago by some sugar experts on the way forward for Guysuco that required $15 B to completely transform the industry to make it profitable? Is it being followed? Or is there another plan?
We need to know where the $3B approved in the September budget went. Was it to pay debts? And where did the $19B NICIL loan go from 2017 to July 2020. Guysuco must trim costs in management and give incentives to workers to increase productivity – raise their pay. Workers produce sugar, not managers in AC offices.
Indeed, as the editorial captioned, sugar is not good news but not because of what the President Ali government is doing. What he has inherited must be fixed. Sugar must not be allowed to fail. Too many lives and communities depend on sugar. The Agriculture Minister, Zulfi Mustapha, is doing an excellent job working with management and the Board in trying to resuscitate the industry. Guysuco’s new management is trying. Perhaps privatization should be considered – or bring cane and workers from India to save the industry.
Yours faithfully,
Vishnu Bisram