GuySuCo needs ‘shaking up’ to be profitable - APNU

GuySuCo needs ‘shaking up’ to be profitable – APNU

Mar 06, 2014 News

Speaking on the declining state of the Guyana Sugar Corporation (GuySuCo), A Partnership for National Unity’s (APNU) Executive Member Joseph Harmon has said that a new Board of Directors is needed to turn the company around and not the “recycling” that’s taking place.
According to Harmon, APNU has to address substantively the issue of GuySuCo. He related that in the last Budget debate after the Opposition coalition cut money from GuySuCo, shadow Finance Minister Carl Greenidge had asserted that “we were pouring money down a dark hole.”

APNU Executive Member Joseph Harmon

As such Harmon contended that over the last twelve months or so “we have been able to understand that’s really what is happening.” He said that there has been a shaking up of the Board, in which a person who was the Chairman was promoted to the Chief Executive Officer and things to that extent. “The reality is GuySuCo has had so many turn around plans that the Board is in a tailspin. We have always said that the Board of GuySuCo, if it is to be brought back to profitability, that and the management must be shaken up… we have to have a fresh Board not the same people being recycled.”
He further said that with respect to the Board, “we have to have clear representation from people that are recommended by the Opposition. We cannot have an entity that consumes and utilizes so much of the national resources and we don’t have representatives of the Opposition making clear recommendations as to the directors of that entity, we have to get that fixed” Harmon outlined.
When asked recently whether privatization would be a possible alternative to make GuySuCo competitive and efficient, Harmon said that was the initial position of APNU but that idea was shot down by the Private Sector Commission (PSC).
According to Harmon, in 2011at a conference of the PSC at Pegasus, Leader of APNU David Granger made certain proposals in relation to sugar. “What we recognized was that you had a problem with labour in the sugar industry; that the amount of downtime in so far as labour was concerned was exceedingly high, whereas the production of the private farmers who were doing cane farming was exceedingly high so one of the recommendations Mr. Granger said was to look and see whether we can separate these functions, allowing the private cane farmers to take care of the cane farming itself; planting the cane, cutting it and then by some arrangement delivering it to the factory that is operated by GuySuCo.”
Harmon stressed that the PSC went to town on APNU over their position. “I was there and now slowly but surely they are coming around back to that position because it is inescapable. Where you have a problem with labour force in this country and you do not have the ability to fully mechanize in a short period of time you will have to deal with the issues of labour and that is one of his recommendations.”
According to Harmon, “we were not talking about fully privatizing but vesting some functions of the industry to private entities for them to deal with it…”
GuySuco’s production for last year was below the 190,000-tonne figure that had been targeted and which had been revised again and again from the original 260,000 tonnes at the beginning of 2013. The situation has now left the Guyana Sugar Corporation (GuySuCo) owing banks and suppliers in excess of $10.5B.
Last year, the National Assembly approved a $4B bailout to help GuySuco pay its 16,000-plus workers and meet other critical expenditure. However, according to Seepaul Narine, General Secretary of the Guyana Agricultural and General Workers Union (GAWU), the largest sugar workers’ union, this figure will not be enough.
Dr. Clive Thomas, who has been analyzing GuySuCo’s situation in several of his columns, has expressed alarm. He articulated recently that “the present configuration of the industry is leading it to produce less and less sugar at a higher and higher cost! Given the inevitably resultant losses, this is clearly an unsustainable commercial dynamic for GuySuCo’s operations. In light of this, both the EU’s (European Union) continuing sugar assistance and Government’s bailouts of GuySuCo can be viewed as seeking to rescue the Industry from total collapse.”
Such a situation, however, represents, in essence, a classic case of throwing good money after bad, Thomas said. “As worldwide experience has shown, while it is hard politically for governments to stop providing unwarranted subsidies to state industries, it is far worse for them to yield to those interests that are driving the need for the subsidies. The misallocation of national resources implicit in this posture is inevitably bad for everyone economically, but it will eventually also carry a devastating political cost, given the size and configuration of the sugar industry in Guyana’s political economy” Dr. Thomas outlined.