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‘Santa Claus’ measures will not solve sugar workers’ pains

May 20, 2011 Letters

Dear Editor,
Acting as the only saviour of the land, as he did several times in the past, President Jagdeo intervened and ordered Finance Minister Ashni Singh to find $300 million dollars to pay severance for Diamond sugar workers.
This initiative of the President only relieves short-term pain of the 325 workers and their families. While delivering his election year political gift, President Jagdeo went on to scold Mr. Granger and the AFC at the meeting. Please allow me to set the record straight. The evidence will show that sugar workers are suffering today because of bad decisions made in the past way back in the 1970s.
I wrote several columns in the SN on these bad decisions. We cannot blame the post-1992 PPP for the errors of the early 1970s. However, GuySuCo’s present crisis was also engineered by the inability of the post-1992 PPP and more so the Jagdeo PPP government to anticipate global trends and implement production strategies to circumvent them.
By 1995 several analysts argued that the new World Trade Organisation (WTO) rules will come into conflict with Europe-ACP sugar price agreement, which provided an above market price for sugar (an effective subsidy).
This fact is well documented in the academic literature of the mid-1990s. The PPP simply failed to anticipate and plan for this serious threat to the sugar price Guyana would soon receive. The PPP made the assumption that the European sugar subsidy will continue indefinitely. Therefore, they went ahead and build a sugar factory for US$200 million in Skeldon. Today the factory is fraught with engineering problems and some people believe the Jagdeo government awarded the contract to the wrong builder.
Of course, the idea behind the Skeldon factory was to reduce the unit cost of sugar production, although no firm unit cost target was ever released to the public. So in a sense we can say the PPP planners might have anticipated the sugar price cuts that were coming down. However, this is negated because we soon learnt that they did not plant the amount of canes that was necessary to earn the economies of scale (efficiencies) to drive down the unit cost of production.
This is what workers must understand when they are given political gifts at election time. These gifts will not make them better off in the long-term. Rather, it is sound planning which will preserve their jobs and allow for alternative industries to develop. Sugar workers are suffering today because of very bad policies implemented by the post-1992 PPP Administration.
The AFC does not pursue short-term politically motivated Santa Claus policies as President Jagdeo. Our sugar sector strategy would have preserved the jobs of these Diamond workers. Our strategy is premised on diversifying the output of GuySuCo, which will become a major provider of renewable energy in Guyana. The AFC would institute a nationally mandated E10 policy (as is done by several states in the United States where they use the inferior feedstock corn).
The purpose is to create a captive market for Guyanese made ethanol that will be blended with imported gasoline. Our present vehicles could be powered by GuySuCo made ethanol. With a captive market for ethanol we believe this would allow Demerara sugar estates to survive as all sugar canes from this region could be converted into ethanol. As
part of the renewable energy focus of the AFC, keeping sugar production up will give us bagasse for electricity until the country has the capacity to demand a large-scale hydroelectricity project. Speaking about renewable energy, dynamic and legendary Guyanese corporation DDL has showed the way by establishing their bio-methanization plant. These initiatives must be encouraged with suitable government incentives for other corporations.  President Jagdeo urged the Diamond workers to find alternative work in IT, a sector which is almost non-existent. In any case, these workers will require significant re-training to move into the almost non-existent IT sector. We have already noted that the One Laptop Per Family project will not create jobs, but is within the realm of a politically motivated Jagdeo strategy. Furthermore, the AFC believes in preserving the industries we already have, especially when they serve a social purpose as GuySuCo; and moreover when that industry, like GuySuCo, can play a vital role in Guyana’s energy security.
Tarron Khemraj

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