Latest update December 29th, 2024 3:10 AM
Dec 20, 2016 Features / Columnists, Peeping Tom
The Guyana Sugar Corporation Inc. (GuySuCo) seems to have an obsession with Mr. Hydar Ally, former Central Committee member of the People’s Progressive Party. It seems that every time Mr. Ally writes about the state of the sugar industry, the criticism affects the local sugar barons so much that they feel compelled to respond.
There would be nothing wrong with this approach – after all the sugar company does have the right to respond to criticism – except for two reasons. The first is that the sugar company does not spend as much time responding to other critics of the sugar company as it does to Hydar Ally, who was once associated with the Human Resources Department of the sugar company. The second thing is that the responses to Ally make highly contestable claims.
Its latest missive issued under the name of its senior communications officer Ms. Audreyanna Thomas, it was claimed that the Desmond Hoyte government brought in Booker Tate to reposition GuySuCo for possible privatization.
This is a confusing statement. The mere bringing in of Booker Tate represented an act of privatization, not a repositioning of the company for privatization. The Hoyte administration privatized the management of the sugar company.
The contract with Booker Tate had nothing to do with preparing for possible privatization. One assumes that when GuySuCo now says “possible privatization” it means outright sale or divestment. No such plans for ever concocted.
Booker Tate was brought for two reasons. It was brought in because of the need to manage the company and secondly, as Hasyln Parris once explained, because of the linkages that Booker Tate had with the markets in which sugar was sold. If the company which manages your industry is also an interested party in the companies to whom you sell, then you have a good chance that the sugar you produce will be sold.
The second contestable claim made by GuySuCo was that the Guyanese economy was regulated by the International Monetary Fund with the support of the then Guyana government. It may have been a condition of negotiations with both the IMF and World Bank that the management of sugar be privatized but it certainly cannot be the case where the Guyanese economy was regulated, as claimed by GuySuCo, by the IMF with the support of the government of the day.
The related claim about the IMF approving a 75% increase in salaries did not state over which period this happened and which categories of workers benefitted. So the public is left with the impression that sugar workers benefitted appreciably from wage increases because of Booker Tate’s involvement.
Along the same vein it can be argued that sugar production peaked after Booker Tate took over. But that would be removing from consideration the fact that the decline in 1989, which saw sugar production collapse, had to do with the struggle of the workers for better wages. In fact all sectors of the economy suffered when the ERP was launched.
It is not true that GuySuCo’s infrastructure is much better in 1990 than it is today. The declining productivity in that earlier period had to do, in part, with the poor infrastructure, including problems in maintaining factory equipment.
The problem with GuySuCo is three-fold. The company has never recovered from the more than 30% cut in prices paid for sugar by Europe. Few companies in the world can remain viable when their main market cuts prices by that amount.
The problem was recognized. Two logical choices faced the government. It had the option of closing the industry down because of the cuts in prices and the fact the quotas were expected to eventually disappear. That choice would have created economic and social turmoil in Guyana. Thousands of Guyanese would have been put on the breadline. But the economy would have also been hurt.
It seems that the glittering of gold and its assumption as the major industry in Guyana has blinded people, including the present government, to the fact that even though GuySuCo is loss-making, it is still a significant foreign exchange earner. If you close the industry down you will save having to bail out the industry but the social costs and the economic costs associated with the loss of foreign exchange earnings will hurt you more than the 12 billion dollar annual subvention which now has to be paid.
Two billion dollars, for example, is small sum to pay to save jobs at Wales. The reorganization of Wales will require investments that are multiple times that two billion in order to address the social and economic effects of the closure of the estate. It therefore makes economic sense to keep the loss-making industry afloat rather than close it down. But those obsessed with seeing the end of the sugar industry are not going to be open to that sort of thinking.
The second problem was the need to reduce costs as part of the restructuring of the industry. The new factory at Skeldon was part of the plan to cut costs. There are problems with the factory but even if the factory was up and running there would not have been sufficient canes because the private cane farmers simply did not deliver. They will contend, with some justification, that it was the factory which forced them under, but the fact is that they were never going to be in a position to supply adequate canes for that factory.
The third factor which has led to the problems of the sugar industry is that development in other sectors of the economy meant that sugar workers were no longer attracted to the industry. Cane cutting is hard work. Those who do this work do not want it for their children. Cane harvesters have found work in other areas of the economy. There is a shortage of labour in the industry. The situation is not likely to get worse.
The solution was mechanization of harvesting. But apart from the technical problems there was the problem of money for the investment needed.
The debate on sugar should continue in the newspapers. That debate is not likely to take place within the management and boardroom of GuySuCo. The sugar company seems to have decided, given the nature of its responses to Hydar Ally, that the days of sugar are numbered.
Dec 29, 2024
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