Sugar in deep trouble

Oct 20, 2013 AFC Column, Features / Columnists

– Workers livelihood threatened

By Rajendra Bisessar

GuySuCo is in shambles. Production in 2013 is lowest in two decades. 1993 and 1999 production was 246,528 and 321,438 respectively.
GuySuCo will not meet its target of 240,000 tonnes or the 190,000 tonnes intended for the European market. There is an information shutdown. A director of the corporation refused to disclose information saying GuySuCo took a decision not to, and so the situation seems ominous.
Insider information indicates that production at present may be around 150,000 tonnes.
If sugar falls under 200,000 tonnes its very existence is threatened. Despite Government’s injection of $5B last year, sugar recorded its lowest production of 218,069 tonnes in two decades, a consequence of neglect for the workers, incompetence of the Board, neglect of best practices, imposition of Jagdeo’s Chinese-built factory and refusal by the government to listen to the AFC and the sugar unions.
The Skeldon factory was to solve the problems, however it is producing just 36% of rated capacity.
The Indians, the Australians, the Americans, the English, the South Africans and the Brazilians know about sugar, but China does not.
The AFC insists that the GuySuCo Board did not carry out due diligence on the “Turnaround Plan” or the “Jagdeo white elephant”. No one, including President Ramotar, acted responsibly and sought to interrogate those plans carefully. So Guyana got shafted, thanks to the incompetence and cowardice of this GuySuCo Board.
The AFC and the sugar unions warned GuySuCo, since 2009, of the imminent challenges facing the sugar industry. AFC pleaded with the Government to lessen the risks by investing more in the field infrastructure to enhance productivity.
Best practice, now abandoned, allows for flooding and replanting to be every five years instead of the present 8-12 years, resulting in poorer canes for the factories. Consequently the industry moved from around 3.4 tonnes of sugar per acre to around 2.4. The spin-off effect was large quantities of fish let loose into the canals.
What has caused this deterioration? The AFC is of the view that among the Board of Directors of GuySuCo, friends of the PPP, who want to live the high life off the sweat of the workers, have abandoned the one thing that would turnaround GuySuCo… good quality cane. The AFC had called for redirecting resources from the “fat cats” to the field and factories to raise the cane/sugar ratio from 12.69 in 2012 to the pre-1999 levels of 10.88. Skeldon Factory is at 16.29 while Albion is just over 10.
AFC notes that in 1990, when 129,722 tonnes were produced, factories were grinding for a mean of 44% of the in-crop season. In 2012, factories were grinding for a mean of 50% of the in-crop season while international standard, net grinding time is over 80%.
Why such a low rate? It is due to poor and visionless leadership, which is why AFC has called for the entire Board of Directors to be revamped.
This brings us to the recent debate regarding the Chairman of the Board.
Ashni Singh says that the Chairman Mr. Raj Singh is “eminently qualified, worked in sugar at a senior level, [and] has expertise in areas relevant to the management of organisations like the sugar company”. However, according to GuySuCo’s Newsletter of October 2007 – Mr. Singh “joined the Sugar Industry in 1975 as an Industrial Relations Officer and left the industry as a Regional Industrial Relations Manager”. But never with a factory nor field team.
In the USA, he was employed in the human resource field and is presently employed as a Head of a Division within the Human Resources Department.
Mr. Raj Singh is definitely not qualified for the specialized task of rejuvenating sugar, Public service Minister, yes, if PPP wants to repay him for services rendered to the party.
Raj Singh’s monthly emolument is excessive.
“You cannot throw bacon for the boys and bones to the workers,” was the response of Alliance for Change (AFC) Vice Chairman, Moses Nagamootoo.
When Booker Tate took over in 1990, they recognized the most important input was the human resource. They increased the wages by over 200% between 1990 and 1992. Labour unrest reduced significantly and there was an influx of new labour into the industry.
The AFC in its 2011 campaign demanded a 20% across the board increase in wages for all workers. The AFC has since amended its demand to 10% for those at the bottom of the wage scale to stimulate a repeat of the labour relations success achieved by Booker Tate. The PPP overlords refused to budge.
Ashni Singh stated that sugar in Guyana has a comparative advantage, so it’s inexplicable that our citizens could have gone to Trinidad and Tobago and Barbados and worked in the fields and sent back money to accomplish so much for their families, but the workers in sugar here are catching hell.
Does the AFC have proposals? Yes it has and these among others were made public.
Diversification
Production of ethanol; the AFC Action Plan advocates a National E10 (10% blend of ethanol and gasoline) thus enhancing the cash-inflows, therefore guaranteeing Workers’ wages. The AFC would transform sugar from a subsistence level industry, with “slave-like” conditions of employment, to a value added industry that focuses on mechanised harvesting, ethanol production, packaged sugar, refined sugar and alcohol production.
Emolument
The AFC has mapped the funding for increased pay: charging NDIA a premium rate for technical assistance in times of flooding; re-negotiating the shipping contracts to secure better value; negotiating a reduction in the interest rates with the banks; cutting administrative cost by weeding out multi-million-dollar perks for cronies; asking the Ministry of Commerce to foot the bill for Marketing and Distribution expenses; identifying more non-value added cost streams in the industry and weeding them out swiftly without political interference.
The members of the new Board must have access to line managers to share ideas on a programme of rehabilitation and rationalization to enhance the efficiency on each estate by allowing them to contribute towards fixing the problem.
Such a plan will ensure GuySuCo’s Board, senior management and line-managers have cash flow numbers per estate/cost centre on a weekly basis to make decision at different levels.
Increase and mechAnise cane cultivation
Private farmers at Skeldon are hesitant and uneasy about growing more cane because of the financial risks. The AFC suggests public/private partnerships with the private planters to get all the new fields at Skeldon mechanised and planted within a defined time by using the billions from NICIL/LOTTO funds finally for a national project that is beneficial to the nation. The AFC advocates the use of these funds to leverage more funds from the banking sector to accelerate the mechanisation and planting schedule
CONSOLIDATION OF ESTATES
The CEO needs full freedom to cap financial leaks and to consolidate the operations of more Estates – one Administrative Manager for West Demerara and one for East Demerara – and to sell some of the excess houses.
FULL TRANSPARENCY
Involve all stakeholders, the Unions, the Parliament and the Private Sector. GuySuCo’s books must be open for the key stakeholders. Minister Singh must lay the new three-year turnaround plan in Parliament and publish it in the national newspapers to build a winning coalition to save the industry.