SAVING SUGAR

Jun 04, 2013 Features / Columnists, Peeping Tom

The sugar industry in Guyana is too big to be closed and too strategic to be privatized. There is therefore no option but to save the industry from its present difficulties.
Sugar has been recording steep losses over the past few years. But being in the red was not unexpected. It was always going to be difficult for the sugar industry to recover from a one-third cut in the price paid for its exports to its main market in Europe.
Very few industries ever recover from such a steep cut but the government opted to try to offset the anticipated losses by launching an ambitious plan to reduce the cost of production through the construction of a large factory at Skeldon. They also invested billions of dollars in a packaging plant so as to move away from the sale of only bulk sugar.
Unfortunately, the plant at Skeldon malfunctioned in a major way. It is doubtful whether it will ever work to full capacity. As a result of this and an overall contraction in production in the industry, the packaging plant also reportedly encountered problems in securing enough sugar to package. As a result, the industry borders on the precipice of collapse.
But are we to assume that the problems of the industry are merely confined to the failure of Skeldon, the shortage of labour and the steep reduction in the prices paid for bulk sugar? Or are there other problems which are not being recognized.
For one, what is verdict in relation to the weather? And now we have two sets of excuses being added to the pot. The first is that insufficient canes were being planted and thus not enough canes are there to be reaped. The second excuse is that there is a problem with the quality of the canes.
In the face of all of these variables, the debate as to just what are the primary causes for the fall in production in the sugar industry and just what is responsible for the loss of profitability will continue. No definitive position will be arrived at unless a top level team of experts is appointed to examine the state of affairs of the industry.
The President may have his views as to what is behind the fall in production. He may also have his views on the decline in profitability and how this is related to the reduction in production. The managers within the sugar industry will have their views. The sugar unions will have their perspective and so too, the sugar workers.
It will always be difficult to reconcile these views and come up with a definitive answer because those who have to make this judgment have their interests to protect. The managers will try to deflect attention away from poor management. The workers will not be willing to accept that it is their staying away from the job that has led to a fall in production.
The government will in turn not want to concede that Skeldon has placed the industry in dire straits. The game of shifting blame will continue unless an expert panel is commissioned to study the industry, its turnaround plans and to advise on a way forward.
It is unfair to ask the National Assembly to continue each year to bail out the sugar industry unless there is a commitment to undertake the necessary study of the sector. The government should be seeking to determine the causes of the problems in the industry and the relative weight to attach to each cause.
Once it knows how these causes stack up, it can then develop a rescue plan because this is what the industry needs. The industry has long passed the stage of turnaround. There is now a need to save the industry and who know, perhaps save it from the government.
It does seem ironic that the decline of the industry began just as the contract with Booker Tate was terminated. With the ending of that contract a few hundred million dollars should have been saved. What has become of those savings? Or have they been wiped out by the cuts in the export prices for Guyana’s sugar, an eventuality that should have been predicted since it was long in the making and in fact advance notice was given of these cuts.
The time has come to end the speculation. There is now a need for an investigative commission of inquiry into the sugar industry. A top- level panel should be assembled to undertake this task. It will cost the Treasury some big bucks but failure to not undertake this exercise has the potential to result in billions more in losses and great social upheaval.
The PPPC should move towards appointing an independent panel of experts to review the state of the industry and come up with proposals for the way forward.

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SAVING SUGAR

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