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DOWNSIZING WILL SAVE GUYSUCO

May 03, 2017 Editorial, Features / Columnists

For the past two years the nation had waited with bated breath, especially the sugar workers, to know the fate of GuySuCo. Their wait ended last month when President David Granger announced that his government will only preserve three of the six sugar estates—Albion, Blairmont and Uitvlugt. The announcement, which was made at the opening of the Region Five Expo and Trade Fair at Bath Settlement, West Coast Berbice, took many by surprise. While there are no plans for the other estates, it is expected that they would be either sold or shuttered.
Accusations from the opposition and the Guyana Agricultural and General Workers’ Union (GAWU) that the government will be closing down the sugar industry were rebutted by President Granger who said that his government “has no intention of shutting down the sugar industry” and stressed that “diversification is key to keeping it alive.We will do everything to keep GuySuCo alive… we want to save the sugar workers’ jobs”.
Unlike the last administration, which, because of votes, was not truthful to the sugar workers about the future of the sugar industry, this administration, regardless of political affiliation or votes, is under no illusion that the sugar industry can be saved without closing those sugar estates that are unprofitable. Its decision was supported by economists at home and abroad, that the downsizing of the sugar industry will make it more competitive, financially independent and sustainable, and will create more good-paying jobs as well as contribute to economic prosperity of the country.
However, many have argued that the closure of some sugar estates will create enormous economic burden on the workers who will directly be displaced within the industry, not to mention the financial strain on those individuals and businesses which are indirectly related to the industry.
The reality is that GuySuCo, which was the economic backbone of the country and was the main foreign currency earner, is insolvent, and has become a threat to the national treasury. Governments both past and present have bailed out the cash-strapped sugar industry with billions of dollars in subventions annually. From 2005 until its defeat in 2015, the PPP government has pumped more than $135B into GuySuCo in order to keep it afloat. And since taking office in 2015, this government has plugged $32B into the corporation. To make matters worse, GuySuCo continued to borrow, despite the fact that in 2016, it reported that it owed creditors more than $70B.
The losses by GuySuCo in recent years have been mounting due to high production costs, low production output, mismanagement, and in some cases, inclement weather conditions. However, the government was faced with the difficult choice to close some of the sugar estates. It is a very risky, and some would say, politically incorrect move, but the government was caught between a rock and a hard place. It had to do what is right for the country and the sugar workers.
Many felt that the government should be commended for making such a tough decision to close some of the estates, even though it is being fiercely criticized by the opposition which spent over US$200 million on the doomed Skeldon estate. It should be noted that the sugar industry in some Caribbean countries including Trinidad and Tobago, Barbados and Jamaica, have actually disappeared, due to the high cost of production and inaction on the part of those governments to streamline the industry as this government is currently doing.
Contrary to public perception, the government has recognized the importance of the sugar industry, which is the second largest employer in the country after the government with some 18,000 employees, but it had to act. GuySuCo had become a drag on the economy and the government could no longer allow it to bleed the treasury with an annual subsidy of billions. It was a tough but prudent decision, which in the end will save the industry.

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