House green lights $2B subsidy for GuySuCo

Oct 28, 2016 News

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…to meet billion-dollar wage bill, pay creditors
By Kiana Wilburg

Despite benefitting from $9B at the start of the year, only to deliver a disappointing performance in less than eight months, the sugar industry is poised to receive yet another billion-dollar bailout.

Last night, members of the National Assembly approved some $2B for the Guyana Sugar Corporation (GuySuCo). The state-owned entity had initially stated that it desperately needed $3.5B. Kaieteur News understands that the approved subsidy is what the Government can afford at this time.
The bailout was supported during the consideration of Financial Paper No. 3/2016 – Supplementary Estimates (Current and Capital) totaling $9,518,122,347. This paper was presented to the House by Finance Minister, Winston Jordan.
Minister of Agriculture, Noel Holder fielded questions on the sugar sector from the PPP. He was asked by Opposition Member, Irfaan Ali what provision was made in the said subsidy for wage increases and incentives for the sugar workers. Ali also asked if subsequent to the El Niño effect on the sugar industry, if the production target for the sector was revised.
Holder said that the target was indeed amended. He said that the target came down by 194,000 tonnes, which it is still hoping to achieve by the end of the year.
The Parliamentarian said that this $2B subsidy is to help meet routine expenditure and it is in relation to the second crop for the sector. The Agriculture Minister said that these sums are required to pay wages in the sum of $1.2B; fuel costing $160M, fertilizers pegged at $464M and $176M for creditors.
Holder was also asked by the Opposition to give a breakdown of the monies going towards wages. He said that the $1.2B is going to workers in both the factories and field. He undertook to provide further information in this regard in a week’s time. The Opposition accepted this.
The allocated sum subsequently received the support of the members of the House.
According to statistics from the Ministry of Finance for the first half of the year, the Guyana Sugar Corporation recorded an operating surplus of $2.9 billion, down from an operating surplus of $3.0 billion for the same period last year. This surplus, it said, was inflated by a $9 billion transfer from the Central Government to finance operations.
Without this transfer, the Ministry of Finance noted that GuySuCo’s true position would be a deficit of $6 billion.
In the future, the Finance Ministry said that all Central Government transfers will be shown as financing, instead of being included as part of revenues.
Furthermore, it was noted that by the end of the first half of this year, GuySuCo’s production was 56,645 tonnes. This was recorded as a reduction of 23,624 tonnes from the budgeted 80,269 tonnes and also down from 2015’s half-year production of 81,143 tonnes.
The Ministry of Finance said that this shortfall was reflected in a decline in export sales, from a budgeted amount of 58,272 tonnes to an actual of 49,278 tonnes, compared with 77,000 tonnes realized in the same period last year.
It noted that the El Niño weather phenomenon, which resulted in stunted cane growth and a decline in cane yields from 57.45 tonnes cane per hectare (tc/ha) in the first crop of 2015 to 45.2 tc/ha in 2016, as well as delays in tillage, planting, and crop husbandry operations, were some of the factors that contributed to this state of affairs.
Significantly, the Ministry of Finance said that sales to Caricom and the European Union (EU), of bagged sugar, as well as sales to Caricom of Packaged Gold sugar, were the most affected.
It said that the industry continues to be plagued by many problems, including an increase in the prices of several inputs such as fertilizers, and these have had a negative effect on the company’s ability to realize sufficient cash to cover its operating costs.
The Ministry stated, “GuySuCo has taken several steps to address some of its challenges, including negotiating with Tate and Lyle for better prices for sales to the EU market; pursuing studies to inform diversification into areas such as other crops, fruits, aquaculture, rice, dairy and livestock to reduce dependence on sugar; and rationalizing its operations for increased efficiency and productivity.”
Additionally, various stakeholders within the industry recently gathered for an important meeting which saw discussions on the worrying financial future of the sugar industry.
The stakeholders included a high level team from GuySuCo as well as representatives from the Guyana Agricultural and General Workers Union, the National Association of Agricultural, Commercial and Industrial Employees and the Guyana Labour Union.
Kaieteur News understands that a comprehensive presentation was done by the GuySuCo team, where the 47 representatives were provided with production and financial data from 2010 to year 2025.
The information presented indicated a very discouraging future for the sugar industry, where the Corporation is projecting losses of approximately $14.195 Billion in 2016 and further losses of $13.758 Billion in 2017.
The Unions’ representatives were encouraged to submit their thoughts on how the industry could secure the future well-being of the approximately 17,000 employees and their families, as well as ensuring the profitability of the business.
It was subsequently agreed that a team comprising representatives from the three Unions would meet with a team from GuySuCo to get a deeper appreciation of the financial and other data which were provided.

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