With some serious managerial and policy changes, sugar could make the turn for the better

Mar 16, 2014 Letters

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Dear Editor,
Even after the worst showing in over two decades by Guysuco, I cannot subscribe to the opinion that “sugar has passed its point of no return” as expounded on, quite skillfully by Professor Clive Thomas.  The sugar industry has formed an important bottom in 2013 but that bottom could be a false bottom proving Thomas correct.  But I am intimately aware of the talent in the sugar belt and I know with some serious managerial and policy changes in 2014, we could make the right turn for the better.  I was hearted that Guysuco was able to produce some 18,000 tonnes of sugar over the last two weeks and that is the kind of performance that can easily roll out production levels of 225,000 tonnes in 2014, which is critically needed to stabilize the cash flow situation in the industry.
I have observed some commentators postulated that “it is better Guysuco cut its loss and diversify into ethanol production”,  This comment makes much sense, since any sugar or sugar value-added product bears a good omen for the sugar belt.  However, I do not believe switching is the most cost effective strategy.  I believe that we should expand production and use the additional production to compliment sugar with ethanol, increase agro-energy and increase packaging of “table quality” Demerara Gold sugar.  Sugar is here to stay, since it is intertwined with the socio-economic life of the nation, especially for those 80,000 mouths that feed directly from the industry.  I was extremely happy that the AFC cleared the air on sugar and provided 100 percent support to the industry, since any other path would have been political “hara kiri” for that party that got more than half of its support in the 2011 elections from the sugar belt.
But these comments from the experts to diversify into non-sugar activities are nothing but careless political adventurism that ignores the core competence of the people in the industry. Any dabbling in non-sugar projects is a recipe for disaster and Guysuco should reject any such ideas swiftly. This business of “ultimately getting into aquaculture farming in the long run” is a great idea to be conducted by the Guyana Private Sector using their experts on un-utilized lands, but is not a project for Guysuco.  Sugar planting and manufacturing remains Guysuco’s forte and should never be watered down on economic sideshows.  In the days of cooperative socialism, the PNC Government tried its hands at diversification with the clear intention of reducing the industry’s vulnerability to external market forces. All these diversification projects failed miserably.
Land at an old sugar estate at Versailles was converted into a diary project which was supposed to feed the dietary needs of the nation for milk products including cheese. Tens of millions were lost in this adventure and caused Guysuco to lose focus on its fundamental business. Guysuco clearly did not have the core competence to pasteurize, store, transport and distribute the product at a price below what the market was willing to pay.
Then there were the tilapia ponds that were constructed on many of the estates. It was found by Booker Tate in 1990 to be uneconomical because clearly Guysuco did not have the talent to aggressively market and improve the product quality to compete both nationally and internationally.  It is quite fool hard to want to try a failed strategy again in 2014 when Guysuco does not have the talent to execute these ambitions; it is like giving a fisherman a pig pen and saying you are now a swine farmer. No we cannot!
I have now read the 2013-2017 Strategy Plan for Guysuco (so called Turnaround Plan) and while the document does have much merit, there are some elementary yet fundamental flaws in the document. It should be updated forthwith.
First off, the vision of the plan clearly cannot be reconciled with the mission which does not have a clear enough commitment on the financing, who are the identifiable skilled personnel responsible for the implementation of the plan, a very poorly constructed SWOT analysis and a missing sensitivity analysis. Already in 2013, the plan is off-course but yet we continue to talk in the Plan of a 350,000 tonnes production by 2017.  Clearly not possible!
All energies should be focused on taking Guysuco to its vision (half a million tonnes of sugar). The mission on the other hand has to be more realistic since clearly by 2017, Guysuco will not be producing 350,000 tonnes.  Many of the projections are clearly off target and not grounded in reality.  If the foundation of the plan is not grounded in reality, how can it illustrate with confidence how much and how it plans to increase sales of packaged Demerara Gold, reduce the cost of production and return the corporation to profitability.  What is really missing from the document is who will be held responsible for each targeted activity to produce the desired outcome.
I want to know who is the Field Manager at each estate and his experience at enhancing field productivity, I want to measure what each Factory Manager and Field Manager are being held to and if they fail to deliver on the targets what will be the consequences.  Are they getting all the resources needed to do their jobs?  If there is no accountability clause in the Plan, then it is only fit for a country club.
Then, I am not sure if these figures in this Strategy can stand up to scrutiny. In 2013,  we had an abysmal performance of 186,807 tonnes (a 23-year low), yet the Strategy talks about a 2013 production of 203,191 tonnes and a 2014 production of 250,986?  This is comical at best! Are Guysuco fortunes a fairy tale for them to continue to mislead the nation like this?  Yet the Board members were returned by President Donald Ramotar to continue to serve their diet of foolishness for another term but this time with a most unsuitable and incompetent new CEO Mr. Raj Singh.
Based on my discussion with some senior people in the industry who “live for sugar and will die for sugar”, the industry cannot produce at best more than 235,000 tonnes in 2014?  So how come these “sugar-experts” arrived at 250,986 tonnes? The buck on this one stops at the President Ramotar’s desk and he will be answerable if Guysuco does not meet its performance targets in 2014 because he is the one who appointed Mr. Raj Singh.
I also observed that this entire 2013-2017 Strategy is contingent upon the Skeldon Sugar Factory moving its production from 34,000 tonnes in 2013 to 52,780 in 2014.  Now we are really living in Alice in Wonderland on this one if we think this is possible.  In light of the Skeldon Factory been down-rated from a 350 tonnes of cane per hour to 250 tonnes, the Strategy continues to speak of a production rating of 300 tonnes of cane per hour at that Factory.
I have to recognize the excellent work done by the South African firm, Bosch Engineering at a cost of close to US$2 million.  These critical refurbishment works have put that Factory on a trajectory to meet a production capacity of 250 tonnes of cane per hours but there is still much work and testing to be done. Only until the second crop of 2014 is completed, will we know with greater certainty the capacity of this reconfigured factory.
I will stop here for now but I shall return with my thought on the following later:
1.     The community cost being absorbed by Guysuco at close to G$700 million a year;
2.     Some ideas on the mechanization process;
3.     The yield issues on the cane lands;
4.     Other cost cutting ideas;
5.     My thoughts on the SWAT analysis in the Strategy.
Sase  Singh

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