Let’s not have any confusion; the sugar industry is being destroyed!

Mar 18, 2014 Letters

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DEAR EDITOR,
There has been a lot of confusion and misrepresentation regarding remarks made at an APNU press briefing on Tuesday 11th March 2014. I was asked to offer some comments about Clement Rohee’s accusation that the international community had destroyed the sugar industry by removing the preferential price of sugar to the ACP countries.
In my comments I informed the media operatives who were there that the dire situation in which GuySuCo finds itself was due entirely to the incompetence of the PPP Board of Directors and GuySuCo, and not due to the opposition, the international community or the weather, which has been the spurious claims of the PPP in order to hide their incompetence in destroying the sugar industry. And let’s not have any confusion, it is being destroyed!
I alerted the media to the fact that there were numerous aspects of the Skeldon Project, i.e. shortage of labour, clumsy mechanisation, poor overall management and the absence of a viable Board of directors who are acting in total secrecy.
It was certainly not an advisable plan to be expanding the Guyana industry, which was not and could never be a viable competitor, at a time when everyone else in the ACP was downgrading theirs, in view of the withdrawals of the EU subsidies. It was a stupid, incompetent and illiterate thing to do and we are paying the price now.
As if to reinforce my contention, Dr Clive Thomas’ exposition of costs published in the Stabroek News of Sunday 16th March 2012 tells us that in 2012 we produced sugar at 36 cents a pound when the world market price in March 2014 is 17.25 cents a pound. The Minister now tells us that by 2017 we will be producing sugar at competitive prices. He does not say how.
The most important defect of the plan is the inability to supply the new factory with 8400 tons of cane per day, instead of the 2200 tons per day which was what the old Skeldon factory required, without establishing that it can be done.
Also they never established that mechanical harvesting was feasible in Guyana given our low-lying, badly drained soils and heavy rainfall. So even if they had built a perfectly good working factory, they have never resolved the other problems, even today. It was also always questionable whether the farmers at Skeldon had the capacity to plough, plant and harvest 10,000 acres in 5 years, which was equivalent to the acreage of Skeldon in 2004.
I also dealt with the deprivation of the EU Developmental funds, which the government took into the central government coffers, instead of giving it to the sugar industry to modify or to diversify the industry to make it more competitive.
It is my opinion that:
1. This money was kept locked up in central government by the PPP executive to deny the workers of the industry any share of it, since the management was telling the workers that they had no money for wage increases, as the industry was uneconomical and was making huge losses; and
2. That they would have had to pay out 9-10% of this money to the cane farmers who were also affected by the drop in price and were entitled to their share of the compensation, but were not offered the relief of the developmental funds to make themselves more efficient producers; which I still think that they are entitled to. At all times we have to remember that Donald Ramotar, now president, was sitting on that Board of directors and said and did nothing.
But in depriving the Industry of these badly needed funds, we see in a GuySuCo document called “Revised Commentary on Capital Budget 2008” [two years after the compensation to enhance the efficiency of the corporation had started to flow from the European Union] the following: “the limited availability of funds in 2007 saw the factory investments limited to less than G$350 million instead of the $G1.35 Billion requested; and in 2008 the factories asked for 5.6 billion to do their capital works but were only given 2.34 billion, less than half what they needed”.
The Board of GuySuCo then noted in their summary of the 2008 capital cuts that “this starvation of funds will significantly restrict management’s ability to achieve their objectives outlined in the GuySuCo strategy plans”. There were substantial amounts of compensation paid to Guyana starting from 2006, and between 2006 and 2012 the total amount paid was 24.7 billion Guyana dollars, but GuySuCo got none of it. To date 140 million Euros [G$38.9 billion] have been given to Guyana and neither the corporation or their workers or the farmers got any of it. My calculation is that, the cane farmers who are leaderless, are owed somewhere in the vicinity of 3 billion dollars in compensation and have been denied it.
The government at the time, when pressed, told us in the Kaieteur News that the money was going to be used to establish low-cost housing and sea defences. Nevertheless, in 2014, the sea defences are no better than they were in 2006.
Another betrayal of the sugar workers is contained in a Review of the 1998 to 2008 strategic plan, in which I saw what follows and I reported it in a commentary I did since 2007.
The Review is clear: to overcome the consequences of raising the sugar workers’ salaries after coming to power in 1992, the PPP government, unable to pay the 12 billion dollar wage bill that resulted, decided around 1995 to reduce the workforce to 18,000 workers. Let me repeat this, they decided to reduce the workforce from 28,000 to 18,000 a reduction of 35.7%!
I know this, since in the 2001 Review of the Strategic Plan I saw the following and I quote it “efficiencies have improved immensely and, although overall employment has reduced from 28,000 to 18,000 the increased output means that an annual employee productivity, measured in terms of tons sugar per employee has improved from under 6 [tonnes per employee] to nearer 17 tonnes [per employee] in 1999. The corporation intends to continue this improvement in performance through the strategy outlined in the following pages.”
Not one cent in compensation has ever been given to the workers, who were forced to leave the industry. Sure, the PPP loves the sugar workers and have their interest at heart at all times.
The PPP cannot complain now that they have a shortage of labour. They deliberately created it. Also they were very free in giving huge raises in pay to the workers after coming to power, but subsequently, by their own admission, the increases in the sugar wage bill were too great to be sustained.
This country has workers other than the sugar workers living in it; and it is unfair for them to be subsidising, with their taxes, hand-outs from the budget to bolster the sugar industry, which now finds itself in a dire situation.
It was at this point that I stopped my presentation. I cannot say that this is verbatim what I said, but I was not told that I would be asked to speak, so I had no prepared speech and spoke from my considerable knowledge of the industry. But with some additional and relevant observations, the above was the essence of what I said.
After my presentation, some of the concerned media workers, including those from Stabroek and Kaieteur News, who understood from my presentation the dire state the corporation was in, asked me what the alternative was if sugar failed; and I said that it was my opinion that the industry may have to diversify – possibly to ethanol production and to Aquaculture. That was all!
At no time did I or anyone else from APNU call for a closure of the sugar industry. I don’t have to. It is closing itself. It was the PPP, using its Chronicle newspaper, which has deliberately misrepresented this situation with scare tactics to bolster its sagging popularity; and which is lying to the public and has everyone, including the cane farmers, in a full-blown panic.
The quality of our cane is very poor; Skeldon for example in 2012 took 16.29 tons of cane to make a ton of sugar. In circumstances like this if we diversify to ethanol production, the industry may fare better economically, since it takes one ton of cane to produce 10 gallons of Ethanol, regardless of the quality of the cane. I fail to see how this will affect cane farmers adversely, since the quality of their cane would no longer be an issue. So instead of wasting time, money and power trying to produce sugar and buying expensive equipment to produce special sugars, why don’t we look into the production of ethanol?
The Minister of Agriculture is supposed to be a biochemist. I am forced to ask where exactly he received his qualifications, if he does not know that ethanol is made from sugar cane. And the cane farmers should understand that the 10 gallons of ethanol is produced from the cane regardless of their juice purity, ensuring that they are given a more equitable price when the estate tells them that their juice is bad and gives them 20 tons of cane to make a ton of sugar. So something has to be done and quickly, since I do believe that most of the road to disaster has already been traversed.
Nevertheless, I cannot agree that every person in this country should be required to pay for the mistakes the PPP has made in the sugar industry, simply because it is from there that it garners its support. If we are spending this money to make the industry more efficient then I would have no objection, but to keep subsidizing the industry simply to cover losses indefinitely, could not be a viable policy, even for the PPP.
Tony Vieira

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