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Sugar Production vs Profitability
At the end of 2010, we were heartened when the Minister of Agriculture, Robert Persaud, informed the National Assembly that 2011 would be a “landmark” year for the sugar industry. Alluding to the massive investments and support the government had poured into the industry, in addition to the turnaround blueprint that had been crafted, he announced a production target of 300,000 tonnes for 2011.
Against the 2010 background of the lowest production in two decades this would have been a remarkable achievement for the troubled but still key industry for Guyana.
A month later, the then Head of the EU in Guyana, Geert Heikens opined that in his estimation, the Guyana Sugar Corporation had set too ambitious a target for the year. Since the EU was the largest and most profitable market for GuySuCo’s production and was providing funding for the revamping of the industry through budgetary support, one would have thought he had some legitimate interest in the matter.
Not so claimed Minister Persaud: “The number set by GUYSUCO would have been based on a realistic assessment. I, myself, would have questioned the number, but they assured that based on the carry over which was about 40,000 tonnes and the work they would have done would make it possible.” He suggested that Heikens would be better served if he confined his attention to ensuring the EU kept its commitments to the industry rather than speculating on its targets.
All of this might have been dismissed as idle byplay were it not for the production figures that emerged when the first crop drew to a close. The target for this crop had been set at 138,000 tons and even though it has been extended beyond twenty weeks – possibly the longest first crop in history – the production near the end of the crop was only 104,622 tonnes.
What is very troubling is that even though Minister Persaud was assured that 40,000 tonnes was being carried over; the crop was extended and workers from other estates chipped in the target will still be short by some 30,000 tonnes. Something had to be radically wrong with the planning unit of GuySuCo to be so far off target.
The nation could not keep blaming the rains: even though we had some unseasonable rains, the generally much heavier precipitation in May 2011 never materialised.
It should have been evident for several years now – but for sure ever since 2010 – that the shortage of cane harvesters is now a systemic one. As we have said, before, the government is now a victim of its own propaganda. With alternative employment opportunities available, especially in the booming building sector, we predict that it is unlikely the trend will ever be reversed. Yet the management of GuySuCo kept insisting that the 300,000 tonnes target for 2011 would be reached.
Today we know that it never was reached. Instead it got worse in each succeeding year since then and keeps getting worse. There was a slight upturn last year.
One concern we have is whether the EU budgetary support is linked to continued unrealistic and unreachable target. If this is so then we might lose “corn and husk” as we did in 2010: no EU support and no income from the missing production. The other concern we have is the cost of production as GuySuCo pulls out all the stops to reach the “landmark” target.
Even though the total cane expansion for the Skeldon Modernisation was never reached it still exceeds the capacity of the “boilerless” plant. The other factories have all been operating on a stop-go basis due to intermittent supply of canes: this has to make the fixed costs astronomical. Thirdly, the costs of transporting the workers from as far away as Blairmont to Enmore and LBI to Wales etc. have to be adding up. What is GuySuCo trying to prove?
And we now know that the Skeldon factory is grossly inefficient, using twice as much cane as the others to produce the same ton of sugar.
When the call went out for Guyana to get out of sugar the government looked at its political fate and stayed. Today it is flogging a dead horse.
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