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Sugar crunch time

May 15, 2013 Editorial

We believe that it is time for the powers that be to either put up or shut up about sugar. This newspaper has been in the forefront of acknowledging the historical and contemporary importance of the sugar industry to our economy. But in the life of an individual or a nation there comes a time when hard decisions must be made for the long term survival of the entity. The decision that has to be made is whether sugar is a viable industry for us based on the present and near term realities.
What are those realities? The elephant in the room is the Skeldon Factory, constructed at a cost of US$ 200 million and counting. “Counting”, because of the funds that are continuously being expended to fix one defect after another. Just this year we were told that they had to re-engineer the bagasse feed system, re-design the cane conveyors, fix once again, the problematic punt dumpers, drill a new well and replace a five-megawatt alternator to a power engine. Practically every year, GuySuCo has to receive a multi-billion dollar subsidy from the taxpayers’ pockets.
There will be no end to this process, as insiders have revealed that with every “fixing”, one or more new defects are unearthed. Any hope of this factory achieving its target of processing 350 tonnes of cane per hour to eventually deliver 115,000 tonnes of sugar annually is long gone. But what is more criminal is that because of the defects in the factory, rather than using 10 tonnes of cane to produce 1 tonne of sugar, the factory is presently consuming almost double that amount. It does not take a rocket scientist to figure out that rather than bringing down the cost of producing sugar from the old US 12 cents per pound to US 8 cents per pound as was promised, Skeldon has actually pushed its production cost to way beyond 24 cents per pound.
With the above background we have to question whether, when the authorities speak of “fixing” the Skeldon Factory, they are looking at it purely from a “production” standpoint as Booker-Tate used to do, or the production cost standpoint which considers the bottom line. Are we going to make profits or not through lowered production costs? While we understand the social implications of sugar production, in the long term sugar has to make profits. We have been riding a bullish world market for sugar the past few years, but we cannot expect this to last. Imagine what the subsidies would amount to if sugar prices were to fall back to their historic levels.
But Skeldon’s woes are not confined to the Factory – they are as extensive in the sugar cane fields. When the agricultural expansion plan started in 2000 to eventually supply the more than 1 million tonnes of cane the new factory would process in its scheduled 25 weeks of operation annually, it was envisaged that private farmers would cultivate more than a quarter of the 13,000 hectares needed. This would have tripled the acreage under cultivation. It never happened, even though the government has pumped untold billions in the programme. There has been a studied silence about this shortfall.
Overall, the production figures are just as bleak across the industry. Historically, in the 1960s, sugar output averaged about 300,000 tonnes per year, 1970-1980 306,000 tonnes per year, but during the 1990-2000 period, average sugar production fell to about 245,000 tonnes. Since then we have not been able to even maintain that average. Every year we make unrealistic predictions that invariably have to be revised downwards. The latest insult was that even though the operations of the factories were curtailed to accommodate the new weather patterns (the standard answer to falling production) we evidently will only produce about 50,000 tonnes of the projected first crop of 71,000 tonnes.  Even the head of GAWU, the largest sugar union, had to snicker when the overall target for this year was set at 265,000 tonnes.
What do we do about sugar?

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