Dear Editor,
In the article captioned “We cannot continue at that cost of production at GuySuCo – President” carried in your November 14 edition it did not state what “cost of production” President Ali was referring to. One could only assume that it is US$1.31 per pound as stated in the Sunday, November 10 edition as quoted by a “GuySuCo source”. The President sought to lay blame on the previous APNU/AFC government for “bequeathing a sector where heavy subsidies are needed”. This “heavy subsidies” has amounted to approximately $50 billion since the PPP government came into office. Editor, I will return to analyzing the President’s statement, but first I wish to briefly analyze what the same APNU/AFC government did to the sugar industry. A few years into its ascension to office it shuttered four grinding estates: Wales, Enmore, Rose Hall and Skeldon. Was it necessary to do so? Let’s briefly look at each estate and analyze the logic and prudence of that decision.
Wales, an estate that potentially could produce 28,000 tonnes of sugar per year, has the most cost-effective drainage system in GuySuCo. It is 100% gravity drained, with sluices that drain its outfall into the Demerara River, and is blessed, except for a narrow swath of land in the backlands with highly acidic soil, with the most arable, productive lands. Between 40 – 50% of the estate’s cane supply was from the farmers who practiced both labour intensive and commercial cane farming. The estate has an easy and adequate all year-round supply of fresh water for both irrigation and navigational purposes from the Kamuni Creek, and ready availability of labour. It was among the highest cost-effective estates. The closure of this estate was therefore an ill-conceived decision.
Enmore was a low cost and high producing estate that was previously merged with LBI cultivation. It had very productive soils, with good cane yields and a steady supply of labour from a large catchment area on the lower East Coast and was the main source of employment east of the city. It benefited from the economy of scale through a packaging plant that processed dried, value-added sugar that carried premium prices, and through which its cost of production was at very manageable levels. The closure of this estate was a poor decision. The entire Rose Hall estate should never have been closed. The estate is contiguous and navigationally connected to Albion. A more prudent decision would have been to close the factory and expand the capacity of Albion factory from its current 165 tonnes cane per hour (TCH) to 220 TCH and keep Rose Hall cultivation alive. At 220 TCH the Albion factory could have produced 75,000 tonnes of sugar per year, with canes being supplied by Albion and Rose Hall. The closure of the Providence cultivation could be justified by the logistical nightmare and huge cost to move empty and loaded punts across the Canje Creek. The closure, therefore, of the Rose Hall cultivation was also an ill-conceived decision.
The two main problems at Skeldon were the cane preparation section of the factory and the exposure of the fields to the vagaries of the weather. On the latter, except for the old Skeldon Estate’s cultivation, which was about 4,300 hectares and conducive to manual and semi-mechanical harvesting, the areas cultivated by the farmers and the new estate’s lands, which were approximately 8,500 hectares were prepared for mechanical harvesting. Under suboptimal condition mechanically harvesting these 8,500 hectares resulted in huge amounts of mud, thrash and other extraneous materials getting into the factory, which operated on the diffuser system. These extraneous matters create massive problems for the preparation of the cane juice for the process house, which had world-class processing capabilities. The extraneous matter, in particular mud particles, not only affected processing but blocked the tubes in the boilers that ultimately affected power generation. Remedial work was therefore needed to improve the factory cane preparation and split the 8,500 hectares of land layout to make them conducive for both semi-mechanical and mechanical harvesting; so that under wet condition canes can still be harvested, under sanitary conditions, manually and semi-mechanically. The closure, therefore, of Skeldon estate was again an ill-conceived decision.
Editor, now to the President’s statement, and would do so with extreme political neutrality. The two years (2018 & 2019) post the shuttering of the four estates, under the previous government, GuySuCo produced 104,641 and 92,435 tonnes, respectively: an average of 98,538 tonnes per year. Under the current government, the average production (2020, 2021, 2022 and 2023) is 65,413 tonnes. Credit must be given to the previous administration for 2020 production of 88,869 tonnes, since canes for this production were under their management. Under the current administration, the average production for the past three years (2021, 2022 and 2023) is 58,590 tonnes: almost 40,000 tonnes less than the previous administration. According to current reports, this year’s production is heading for less than the previous three years’ average. Note that these figures were obtained from the company’s public disclosures and annual reports.
It is obvious that the previous administration handed over the current estates, excluding Rose Hall, under conditions that are better than what currently exists, if production figures are to be used as a measuring indicator. On the cost of production, unless GuySuCo strives to produce not less than 140,000 tonnes of sugar per year from the four operating estates at a cost of less than US$0.34 per pound, which is the cost per pound selling price at their most premium market, the company will continue to be a drain on the taxpayers. 140,000 tonnes are less than the true potential of the four operating estates. It would be better for the government to stop focusing on the previous administration and focus on what needs to be done to increase cane yields, improve factory efficiencies and reduce its overall cost of production; if not GuySuCo will continue in its downward trajectory until there will be no other choice than to withdraw its life support.
Sincerely,
Raj Parmanand
