Acknowledging that GuySuCo’s big loss on every pound of sugar produced cannot continue, President Irfaan Ali yesterday said that steps are being taken to ensure that the number is cut significantly but blamed the opposition APNU+AFC for bequeathing a sector where heavy subsidies are needed.
“First of all, let me answer by saying we cannot continue at that price of production. The objective is working on reducing the cost of production. There a high cost of production now because of the capital that was required to bring back the industry to where it is today,” Ali said during the first of a series of interviews with a five-panel team of journalists called ‘In the Seat’.
“The cost of production has to do with current and capital expenditure. We have to fix that. We have to invest in improving efficiency, creating higher yields and reducing the cost of production…and that is a work in progress,” he added in response to a question from Stabroek News.
In addition, Ali said that while the financial aspects depict losses, one cannot evaluate the sugar sector here from that perspective alone as socio-economic and other factors play a role in the industry that is hundreds of years old.
“We also cannot look at sugar from only a financial or the measurement you use. There is tremendous other impact for sugar that is non-book financial but more economical. So there is something called financial viability and economic viability. When you look at what sugar meant, take Wales for example, when the factory was closed down, Wales went dead overnight. A market that had hundreds of vendors closed immediately. The shops closed so the spinoff effect was gone. There was a dispensary, the sports facility…all the sport facilities we lost. The drainage and irrigation to support farmers, GuySuCo maintained that. So there is a spinoff effects and economic measurement. It must be taken into consideration”, he contended
“When you invest in sugar it is not only for the sugar workers but for the economy that sugar supports. Same with bauxite…” he added.
Stabroek News last week reported that already experiencing dismal sugar production, GuySuCo is facing further woes as its factory at the Albion Estate has recently been plagued with a number of issues that have seen boiler and crystallizer malfunctions, added to the poor quality of cane produced and now, overproduction of molasses.
And while government has been mum regarding the situation, industry insiders have revealed that this country has been making a US96 cents loss on every pound of sugar as it is being produced at a cost of US$1.31 when world market prices are currently at US35 cents.
This newspaper has also reported that even with a $15 billion subvention for 2023, GuySuCo recorded a $4.7 billion loss, according to the corporation’s preliminary audit report, and the forecast is that the trend will continue as projections show that the 2024 production figure will be the worst in the corporation’s history.
The President has asked Minister of Agriculture, Zulfikar Mustapha, to provide a report on the industry.
“I was with the President a few days ago and he said to the Minister of Agriculture, directed him to meet with all the parties; the union, the management, and a number of other people who have an interest or knowledge of sugar, and to get a report back to him,” Vice President Bharrat Jagdeo last week told a press conference.
He said that he prefers to wait on that report but has received preliminary word about the reasons for the low performance.
Bright spots
The President yesterday promised to visit a GuySuCo estate with the press where they can see firsthand what is happening and he will also address concerns on the spot with relevant persons from the corporation there.
An almost defunct sector, he said was inherited by his government and at a time when most of the assets of the corporation were gone or left in states of deterioration.
“We can address GuySuCo holistically because I want to have the management. However, one must remember what we inherited. One week after we took office, I went to the plantation. When I looked in the fields, I said to Minister Zulfi (Zulfikar Mustapha), ‘this is going to take tremendous effort’. The fields were left abandoned; big trees were in the canals. All the punts were rotten…it was like a forest. We had to build back from the field up,” he related.
“So now is the process of rebuilding. Now this year they are at 40,000 tonnes and they expect to grind until late December because the canes are in the field. We went to the mechanization process and we were able to plant greater acreage of cane. The first crop next year will have greater acreage coming into the system,” he added.
Ali noted that while a lot of money has been plugged into the sector here, it is nothing new globally as most countries invest heavily in their agricultural sector.
“In the major economies, agriculture cannot survive without the major subsidies they push into it. Massive subsidies are given to farmers sometimes to dump the produce,” he said.
He pointed out that he wasn’t making excuses for the industry and “as the country grows we have to realize that we have to make these things viable. “
He added: “We have invested in improving our competiveness and naturally that cost will come down when the cost of energy comes down also. While I agree with you that it [cost of production] is unacceptably high now, we are working on bringing it down and there are some bright spots ahead of us that would naturally allow us to bring that down,” he said without elaborating further.
