SAVING GUYSUCO!

Jun 01, 2012 Features / Columnists, Peeping Tom

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The sugar industry should no longer continue to hemorrhage. The recent shortfall in production for the first crop now means that the original target for this year is not likely to be achieved, even if the commencement of the second crop is extended.
The usual excuse about strikes and poor weather has been offered, but it is certain that the authorities know that the problem also includes other factors, including the need for increased mechanization and the reliability of labour.
The present industrial dispute that is taking place is an indication that workers want what they are entitled to, and if the corporation cannot afford to pay the workers, then the corporation has to be held liable. The workers have provided their labour under certain assumptions and expectations and they are entitled to be paid in accordance with those factors in mind.
If the sugar company finds itself cash-strapped, it should not expect workers to take a hit. This would be unfair to the workers.
However, the workers have to also accept that their employer is not in good shape, and it may be necessary at this stage and in the interest of the future of the sugar company for them to agree to defer benefits so as to save the sugar company from total collapse. It is almost certain that while the future of sugar depends on cane cutters, it is also in the present crisis dependent on the mood of the budget cutters in parliament, who will almost certainly next year not approve as healthy a transfer as they did this year.
The workers must therefore understand that while they have a legal entitlement to their benefits, they can lose “corn and husk” if they do not show greater understanding towards an industry that needs a rethink.
The turnaround plan is not working, because it is based on certain assumptions about the reliability of labour and the level of functioning of the new factory at Sheldon. These assumptions have not held true. The Skeldon factory is not yet running at the capacity it was expected to, and even if it did, there would have been a problem with the supply of cane due to the poor turnout of workers.
The sugar company keeps reporting that the turnout of workers is just about fifty per cent, but it does not provide any indication as to the level of turnout that would be needed to improve production.
If a higher turnout is needed then the sugar corporation has to look towards market mechanisms to address the issue. It should in fact tender in the open market for the supply of additional labour, thereby allowing private contractors to be responsible for bringing on stream more gangs of labourers and also a more reliable workforce.
If the sugar company is unable to attract consistent attendance by cane harvesters, then what can be wrong about seeking additional labour by contracting out the labour?
There is also the possibility of bringing Brazilians to work the fields until such time as operations can be mechanized. The mechanization of sugar is going to take a very long time and is going to involve billions of dollars which the sugar corporation does not have or can attract without government help.
And with the new dispensation in parliament, the sugar company cannot expect to continue to receive the continued bailout by the State.
There is a viewpoint that suggests that even with production under 300,000 tonnes that sugar can break even financially by moving towards higher end products such as packaged sugar, ethanol and by supplying power to the national grid.
The difficulty is that all the future of sugar revolves around the new factory at Skeldon which represents the largest investment in Guyana. The feasibility of Skeldon is premised on moving production rapidly to 450,000 tonnes. Thus, even if the sugar company is able to move in small scale ethanol or secure larger markets for its packaged sugar as opposed to bulk exports, the sugar company is still going to be saddled with a monstrous debt burden unless it can justify the expenditure on this factory by upping production to 450,000 tonnes within three years, something that now looks remote.
In the short term, the future of the sugar corporation looks bleak. But that is only because the sugar company is restricting itself to sugar production. As a major company in Guyana, it should look to do what Bookers did in colonial Guyana and diversify into other areas including commerce, shipping and insurance.
It certainly has the storage space, the managerial skills, and with factories spread along the coast, if GuySuCo is to move into other businesses by establishing subsidiaries for supply goods to its many workers, it could make a huge profit which could tide the company over until it solves its problems.
Why should GuySuCo only produce sugar when Bookers did not? Why should GuySuCo not import for sale, fertilizers which are required by rice farmers? It has to purchase fertilizers for its own use, so why not get into the business of selling fertilizers in the market?
Why not become a distribution chain for other goods and services and thereby utilize the spare capacity in other areas? Why not use its factory workshops to undertake mechanical work for the private sector?
Why should GuySuCo be yielding land to the government for housing schemes? Why not have Guysuco become a major player in the housing industry, thereby utilizing the skills of its workers in construction during out of crop? Why not allow GuysuCo to sell its lands at market rates instead of releasing it to the government which will then give it to private developers who will end up making a jewel and a crown?
In short, what is needed is for a new corporate strategy for the sugar company, one that would see it diversifying into various areas just like Bookers did in the old days.

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