A gutsy call

May 12, 2011 Features / Columnists, Peeping Tom

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The sugar industry has never been, and is presently not, bereft of managerial talent. While there are serious problems now facing the sugar industry, those problems are not primarily as a result of the lack of effective management, or as a result of a shortage of sound policies at the level of the Board.
Guysuco has always had and still today possesses top class managers who understand the local sugar industry. There are excellent managers who understand the field issues and who know how to manage factories. There is no shortage of that talent.
The problem with the sugar industry is that it has always been too linked to external markets for bulk sugar, and therefore when the prices dipped Guyana suffered.
A second problem is politics. One of the reasons why the sugar industry suffered in the past had to do with politics. The bulk of the workers were perceived as supporters of the opposition, and therefore empowering these workers and placing the industry in their hands, or giving them better pay was always, in many ways, linked to political considerations.
Not also to be underestimated was the financial hemorrhaging which took place at a critical stage of the industry. Just when the industry needed to recapitalise after independence – having gone through a long period in which there was limited retooling and investment, and at a time when sugar prices were high and therefore the resources were available – the then government placed a levy on the industry which took away its lifeline for recapitalisation. The sugar industry has never recovered from that mistake.
It is a tribute to the management of the industry then that the sugar corporation managed to stay afloat, given all the difficulties. This ability to maintain the industry was helped in no small measure by Guyana’s long-term market arrangements with the European Union. These arrangements granted preferential prices and long-run market access.
Those guarantees disappeared a few years ago, plunging the industry into a crisis. Export prices have been significantly slashed to the extent that the industry is no longer profitable. The corporation was unable to pay workers wages that keep on top of inflation. The workers have responded by simply moving away from the industry.
The situation has not been made any better, because of the reduction in the potential labour force in the very area where production is to be concentrated. The bulk of the production in future years will be based around the Skeldon Factory. The workforce, however, is simply not there to sustain the anticipated levels of production, and this is not just because of the workforce turnout, but also because there is simply not the pool of labour from which to draw.
The population of most of rural Guyana is on the decline and more and more persons gravitate towards the towns and cities where there are better paying jobs. Where, therefore, is the labour force to be found to sustain the Skeldon Factory?
It is not for the managers to answer that, it is for the politicians to do so, because it is their obligation to create the conditions that would allow for a large enough stock of labour to be available in the right areas.
Just looking at the aggregate numbers of workers will remove the problem, because a worker in Diamond, which is now closed, or Leonora or Enmore cannot pick up and relocate to Berbice without incentives.
The sugar industry and its managers cannot provide those incentives. It is the government which has to create that shift in both production and the availability of a labour force within the areas where sugar production is to be concentrated.
But instead of relocating housing schemes that would allow sugar workers and those interested in cane harvesting to settle in those areas, the opposite is happening. Schemes are being opened in other areas nearer to the towns.
The managers and the Board have unfortunately borne the brunt of criticisms over the future of the industry, and perhaps they need to face some heat so that they could muster the courage to tell the politicians that in the face of declining sugar prices better policies need to be pursued.
But the managers and the Board should not be made scapegoats for something that was always going to be a problem even with the right conditions. Companies hardly recover from such shocks where your price declines by more than thirty per cent. If any local manufacturer had suffered such a fate, the owners would have been forced to make a decision to declare bankruptcy or move into another line of business.
But the corporation, the Board and the government have made a more difficult choice. They have opted to stay in the business despite suffering a huge price cut. For that alone some understanding must be shown, and definitely some credit has to be given for the gutsy call to reinvest in an industry which has been subject to such shocks. Without that call, the situation could have been far worse than it is today.
Sugar may never recover, but at least with the new investments it is not going to fold overnight, thereby creating a massive crisis in the economy and within society.

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