The Guyana Sugar Corporation (GuySuCo) yesterday declared its preliminary results for 2021 and touched on several issues that affected its production and profitability.
In a release yesterday, GuySuCo reported a reduction in the annual financial losses to the Corporation. Despite, it said, the worst flooding the sugar belt has experienced in 40 years. Pre-audited production results were reported at 58,025 MT (metric tonne) in 2021 compared to 88,890 MT in 2020.
According to the release, at Albion, where 50% of the production was programmed to be made, the mortality rate for the standing canes planned to be harvested for the 1st Crop of 2022 is estimated at 80% due to the floods. On the Berbice Estates where more than 77% of the production occurs, the rainfall in 2021 was 72% more than the previous year. In addition, despite losing some 35% of the standing cane for the 2nd Crop of 2021 as a result of the flood, the corporation stated that it still managed to meet local market demand for 2021.
GuySuCo Chief Executive Officer (CEO), Sasenarine Singh had this to say about the matter. “Despite the challenges from this unprecedented floods, the worst in 40 years on the sugar belt, GuySuCo was able to soldier on and continue production soon after these devastating floods to beat the prediction in September 2021 that the industry will not pass the 50,000 MT mark. GuySuCo pre-audit production as at December 23, 2021, is 58,025 MT.” The CEO added, “The Agriculture Team was able to strategise and re-focus on rehabilitating the damaged fields. Some 4,300 hectares of sugar canes were destroyed across the industry (this land is equivalent to over 52,000 house lots) and the industry was able to rehabilitate some 38% of those damaged cultivation in 2021. I have seen nothing but champions by their thousands across the sugar belt who over the last year worked tirelessly to drain some 4.5 million tonnes of water from the flooded lands every day during those 65 days (that is water that fill 2,000 Olympic sized swimming pools every day). This herculean effort allowed the industry to save the remaining surviving cane and secure a 2nd Crop for 2022.”
The Senior Marketing Manager meanwhile noted that the company was able to meet its obligations of the local brown sugar market for 2021 and assured that it had enough stock of brown sugar in its bonds to last until Valentine’s Day 2022, when the factories are expected to recommence grinding. Giving a glimpse into the future, the marketing executive disclosed that GuySuCo is adopting a “forward-looking” marketing strategy in an effort to advance the sale of its value-added packaged sugar (Demerara Gold and Enmore Crystals brands) with the primary focus being the local and CARICOM markets. “The Corporation’s strategy is to move the industry away from the EU bulk market that procures sugar at an average price of US$400 per MT when compared to US$600 MT in the Caribbean market.”
Meanwhile, the Field Operations and Research Director (Ag) addressed the issue of insufficient mechanisation and its effect on the company’s bottom line. “The Corporation urgently needs to advance its mechanization strategy to be able to increase its harvesting capabilities and reduce operating cost especially in this new environment where unseasonal rainfalls are now the norm rather than the exception.” He also pointed out that this is why mechanisation at this time is critical to reduce the production period and increase the throughput in the factories in the productive months, adding that what is critically needed are “two shorter crops with more output per day and this will help to reduce cost in the industry.” And to achieve this would require “over $3 billion in immediate and urgent capital investment in land conversion, machinery and field infrastructure.”
The Director then shifted to another factor affecting output – fertilizers and agrochemicals. He stated, “In 2020 the industry was faced with a dire shortage of fertilizers and agrochemical which had an adverse impact on 2021 cane growth which affected cane yield. In 2021, this shortage of critical agricultural input was resolved with great support from the Government of Guyana.
And to compound the challenges of 2021, the release stated, the industry was faced with a “dismal” shortage of labour (average turnout in the 2nd crop of 2021 being 49%) which compromised critical operational activities such as harvesting. The outcome from this situation was that the factories did not have adequate cane to grind consistently for a 24-hour period, thus increasing inefficiencies. In fact, GuySuCo’s Head of Human Resources confirmed that there were 63 strikes in the sugar belt for 2021 which caused some 20,000 man days to be lost. The financial consequence of industrial action was a loss in value to the sugar industry totalling $740 million. In October 2021 (the most favourable month of the year for sugar production), there were strikes for issues that were unrelated to the operations in the sugar sector (strike for $250,000 cash grant and strike for flood relief). The adverse financial impact of those October strikes totalled some $378 million.
Last, but not least, the CEO spoke of the deleterious effect the estate closures had on the company. “The opening balance sheet given to the new executive management after the Dr. Irfaan Ali Government came to office illustrated that the Corporation was never compensated for the G$60 billion as a result of the Vested Order that harvested Skeldon, Enmore, Wales and Rose Hall from the books of GuySuCo”. He explained, “When we turned up at Rose Hall for the initial take-over/hand over process, GuySuCo found a graveyard of scrap metal as the factory was allowed to deteriorate and many of the functional moveable machines that GuySuCo left at the location in 2017 either disappeared or fell into unrecoverable disrepairs.”
The release disclosed that as part of its efforts to turn the tide, its Executive Management has prepared a five Year Strategic Plan which was approved by the Board of Directors in March 2021 but because of the destructive floods, the entire Plan had to be re-engineered to cater for the new dispensation. However, it pointed out that the modified 5-Year Strategic Plan is scheduled to be presented to the February 2022 Board Meeting.
The release, however, struck an optimistic note as it was observed that on average, sugar prices internationally are set to rise by about 20% and GuySuCo is currently developing a tillage, planting, and factory rehabilitation program to meet this future opportunity especially in the Caribbean Market.
