Govt. to keep only three sugar estates

May 09, 2017 News

By Abena Rockcliffe-Campbell
The story of how the once mighty sugar industry has fallen was told to the National Assembly, yesterday, by Minister of Agriculture, Noel Holder. This was as Holder delivered inevitable news that the industry will be further scaled

Agriculture Minister, Noel Holder

down.
Amidst questions like “What will happen to the workers?” and “Is this the good life?” Holder announced that of six estates, only three will remain open. The Minister of Agriculture emphasized that this is necessary for the sugar industry to survive.
The Minister told the House that Government is cognizant of the invaluable contributions of the sugar industry over the years. He said that the administration will not allow the Guyana Sugar Corporation (GuySuCo) to die from preventable causes.
He said, however, that the government simply cannot let GuySuCo continue to utilize “a business model that is based on waste, inefficiency and hopelessness, ultimately leading to its undoing.”
Holder said that the future of the industry is considered to lie in a smaller sugar sector. He said that this will result in reduced losses and cash deficits coupled with a separate and profitable diversified enterprise which would ensure a viable future. The Parliamentarian said that focus on the poorly-performing estates should shift from sugar to diversification.
When the sugar industry was nationalized between 1975 and 1976, there were 11 sugar plantations countrywide. The 11 estates were located at Leonora, Uitvlugt, Wales, Diamond, Enmore, La Bonne Intention, Ogle, Albion, Blairmont, Rose Hall and Skeldon. Years later, this was reduced to six.
Minister Holder said that the proposed course of action is to merge Wales Estate with Uitvlugt Estate and reassign its cane to the Uitvlugt factory, “since the estate (Wales) is operating at 50 percent capacity; 60 percent of its drainage and irrigation infrastructure is in a dilapidated condition…”
The Parliamentarian told the House that the estates of Albion and Rose Hall are also to be joined. The Rose Hall factory is to be closed.
GuySuCo would then consist of three estates and three sugar factories. The estates would be Blairmont in the West Bank Berbice, Albion-Rose Hall in East Berbice and the Uitvlugt-Wales estate in West Demerara. The three estates will be complete with factories and will have cane supplied from all five locations.
Holder said that the merging process will result in improving the relationship with some cane cutters, estate staff and about 1,710 private cane farmers.
“These adjustments mean that GuySuCo would be scaled-down into a more efficient entity that focuses on producing sugar to satisfy the domestic and foreign markets that provide preferential access to our sugar. This entails taking advantage of the opportunity to merge better performing lands to operate factories more efficiently.”
GuySuCo plans, apart from restructuring the estates and factories, to transfer to the state charges for the drainage and irrigation and health services that it provides to the communities, and around the estates.
The state entity also proposes to surrender land for lease to employees for them to engage in agricultural production. The resources that exist under the “Green economy” and “Regional Food Self-Sufficiency” drive would support their efforts.
Holder said that the government proposes that sugar production should be contracted to approximately 147,000 tonnes of sugar annually produced from Albion, Blairmont and Uitvlugt Estates, to satisfy the demand in the local markets (25,000 tonnes pa), CARICOM and regional (50,000 – 60,000 tonnes pa) USA (12,500 tonnes pa) and the World Market (50,000) tonnes. Focus would be on producing for direct consumption, value-added sugars and providing electricity to the national grid (co-generation).
He said that Albion and Rose Hall estates cultivation will be amalgamated. “This will result in the closure of the Rose Hall factory at the end of 2017. Some lands will be made available for diversification purposes,
The Enmore factory will be closed at the end of 2017 when all cane would be harvested. The East Coast Estates would be earmarked for diversification, he added.
GuySuCo will retain as many workers needed for all operations on the merged estates/factories, said Holder.

PRODUCTION/DEBT FIGURES
Holder said that production in 2016 fell by 18.7 percent. He said that foreign exchange earned by the crop also declined by 15 percent. The Agriculture Minister said that this poor performance follows a pattern of inconsistent output in which the average annual output of sugar declined by 14 percent between 2006 and 2015.
The Minister indicated that GuySuCo incurred a debt of more than $82 billion by 2015. The Government, owing to the industry’s ongoing financial crisis, had to provide the required financial relief from the Treasury. Within less than two years (since 2015), Government subsidies were $32 billion.
Holder said that GuySuCo was forced to finance its long-term investment by borrowing money and by relying on subsidies through the national treasury even though all the internal equity was being put back in the business.
The Minister noted that the sugar industry now lags behind mining, construction and the rice industry in its contribution to the national economy. Holder indicated that other industries, such as the wholesale and distribution trade, transportation and storage and information and communication technology, also contribute more than the sugar industry to the output of the country. Holder said that sugar now finds itself competing with other agricultural crops and forestry in its contribution to the economy.
Further, he noted that the management of GuySuCo estimated that the Government would have to provide annual subsidies averaging G$17 billion over the next four years to keep the estates open and operating.
He said that the government will be hard pressed to justify such expenditure since the opportunity cost of keeping GuySuCo as a going concern in its present state is too high.