IS IT WORTH SAVING THE SUGAR INDUSTRY?

Aug 16, 2015 Editorial, Features / Columnists

Since taking office, it has not been easy for the Granger/Nagamootoo-led government to deal with the mess it inherited from the last government, but it has made good strides in stabilizing the economy, renewed hope and confidence in the people and restored dignity, integrity and good governance to the nation. The budget has all the ingredients needed to transform the economy and reduce poverty among the poor and the working class. However, transforming the economy depends on the efficiency of enterprises, rather than on the fiat of bureaucrats. But there is still a way to go and much work remains to be done before any transformation takes place. The sugar industry is one sector where much work remains to be done. But pouring billions of dollars of the taxpayers’ money into the sugar industry which faces an uncertain future does not make any sense. It seems that there are no specific plans or strategies to turn the industry around.
The government is fully aware that the survival of the sugar industry depends on billions of dollars of the taxpayers’ money or the closing of some of the unprofitable sugar estates. Stakeholders, especially the sugar workers, should be informed of the solutions. The problem with GUYSUCO is not only that it needs subsidies from the government to survive, but it has racked up some G$90 billion in losses and immediately upon taking office, the APNU+AFC administration had to give some $3.8B to GuySuCo to pay the workers for three months and this year’s budget saw a further allocation of $8.2B for a total of $12 billion. For the government to say that it will not allow the industry to sink means that it is prepared to spend hundreds of billions to bail it out. But to what end. The fact is the multi-billion White Elephant Skeldon Sugar Factor is sucking the Treasury dry.
The sugar industry is in dire need of restructuring and it must be done by the present government. The cold, hard truth is bailing it out is very risky for the government and not bailing it out is also very risky because of the serious political consequences. It is going to be a struggle but either way the government will have to decide sooner rather than later the kind of risk it is willing to take. It should not and cannot continue to saddle the nation by pouring billions of dollars of the taxpayers’ money into the failed and bankrupt sugar industry for pure political expediency. It must extricate itself. Committing billions of dollars of the taxpayers’ money every year to the sugar industry could take years to recoup, if it could be recuperated. There are doubts about the sugar industry which many believe is in the Intensive Care Unit (ICU). Instead of talking about the exploration of ethanol, the government should move swiftly to upgrade and equip the White Elephant Skeldon sugar factory to produce ethanol, alcohol, molasses and bagasse at a much lower cost than sugar.
While in office, the PPP made the unwise decision to subsidize GUYSUCO indefinitely because of votes. The present government, while in opposition, knew about the financial problems of GUYSUCO, and should have had its plans ready to implement upon taking office. It did not happen. Rather, as reported in the daily newspapers, the government has transferredG$8.2 billion from the Treasury to upkeep GUYSUCO and will continue to do so. But the question is: How much longer should the taxpayers absorb losses of that magnitude to save the sugar industry just for votes?
A rethink of this policy is urgently needed with a focus on the present poor health of the sugar industry. Hence the candid views of experts, economists, agriculturists and sugar workers must be made known publicly on this important economic, financial and national issue. There is need to look at the underlying factors that led to the failure of the sugar industry and their ramifications on the country’s finances. The bottom line is, as tough as things are in the sugar industry, which is the second largest employer (over 16,000 personnel) in the country after the government, there has to be a trade-off that should benefit GUYSUCO, the APNU+AFC government and the country as a whole. But there should no longer be any free ride.

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IS IT WORTH SAVING THE SUGAR INDUSTRY?

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