Since taking office in August 2020 the PPP/C government has spent $20.9B in various subventions to the Guyana Sugar Corporation.
Assuming a workforce of 7000, this amounts to $2.9M per worker. During this two-year period the corporation has produced 138,937 tonnes of sugar over four crops meaning the subvention cost to the taxpayer is US$716 per tonne for a product that has a worldwide price starting at $250. Add the $7B per year under the coalition and GuySuCo has for several years been a massive drain on government finances. Were it not for oil revenues, it is hard to see how the company would have survived. Even with these mass infusions production continues to decline with the first crop of 2022 amounting to just 29,650 tonnes.
It is probably redundant to elaborate further on the reasons for this implosion, nor to assign blame except to say the genesis of today’s unmitigated disaster began with the decision by the EU to scrap preferential prices, followed by then President Jagdeo’s bungling of the Skeldon Project. Perhaps even more damaging have been the deep political dynamics revolving around the proprietary attitude the PPP/C has towards the corporation, and the party’s relationship with the Guyana Agricultural and General Workers Union which has meant rampant strikes and unbridled wage increases despite falling production and massive losses. This culminated in a wage bill in 2020 that actually exceeded its revenue. According to GuySuCo management, “In 2016, there were 148 strikes and 44,500 man-days were lost. Over a period 2005 to 2015, there were a total of 2,260 strikes and the total man-days lost to strikes for the same period, were 813,437.” This continued up to July with a wildcat strike at Uitvlugt.
The most recent troubles at the corporation surround its board and management. On this point the government must take responsibility for the appointment of an individual with no experience of the industry or of managing a large corporation. It has hurt morale at the management level and set off unnecessary conflicts with the union and its workers.
The CEO’s volatile and forthright character while suitable for a Guyanese election campaign appears unfit for the methodical decision making and teamwork needed in any corporation. This was made apparent in a recent audio recording of a board meeting that had all the characteristics of a rumshop ‘buse’ down.
What was also clear is that the Chairman appears to have little authority over his board and management even as questions remain how he could preside over a company that borrows money from the bank of which he is the CEO. But this is Guyana where, as the pool of qualified and/or loyal individuals willing to serve continues to dwindle, potential conflicts of interest abound.
Controversies have erupted over purchases of tractors, repairs to the Uitvlugt factory, overpayments of contractors, allegations of shortages of sugar, along with the recent announcement that the company is suddenly advertising for private cane growers. It is all a very expensive and embarrassing mess.
So what should the government do? It is in quite the quandary having vowed in its manifesto to reopen estates shuttered by the coalition. This now looks like a long shot given overgrown fields and degraded equipment. So can it continue to pour tens of billions into a shell of a corporation? Probably yes, because the source of the funds is now muddled by the arrival of oil revenues and, as mentioned several times previously, this undermines the traditional accountability to the taxpayer.
What is really needed is a realistic path that emphasises the preservation of communities surrounding the estates while stemming the haemorrhaging of government revenues. This might be done through diversification into new agricultural initiatives although it is not clear the corporation has the culture and skill sets to diversify. GuySuCo must also continue to be funded in its role as maintaining large swathes of drainage and irrigation systems. The corporation was once a place of technical, managerial and agricultural excellence and the degradation of these skills has gone hand in hand with production declines. This is probably the most unfortunate aspect and why with any amount of money it will not return to profitability and contribute to Guyana’s economy. GuySuCo has morphed from a world leading producer of high quality sugar to a bankrupt cash cow – a mere vehicle to dispense government funds to workers, contractors, lenders and suppliers. The pretence of a turnaround must come to an end starting with a change in strategy.
