GuySuCo – The way forward

Jul 02, 2017 APNU Column, Features / Columnists

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A key component of GuySuCo’s diversification initiatives is the transitioning of redundant employees into independent, sustainable farmers.

GuySuCo will surrender land for lease to employees for them to engage in agricultural production. Their efforts would be supported by the resources that exist under the “Green Economy” and “Regional Food Self-Sufficiency” drive.

The operational model proposed is for lands to be leased to employees to farm as out growers and provide raw produce to processing plants and other markets. The main benefits of this model are as follows: (i) The social and economic upgrade of the employees into independent farmers; (ii) the lower operational costs achieved by private farmers versus the high overheads of the corporation (iii) Elimination of an adverse industrial relations climate.

GuySuCo is currently in talks with the European Union (EU) to access technical assistance for a study on the transitioning of its employees into farmers. Once finalized, it is forecast for this study to commence by mid-year and conclude by October 2017.

The objectives of the study are to determine the best operational model for transitioning redundant employees into independent, self-sufficient, sustainable, successful farmers. This would include, but is not limited to, identifying the most economic operating unit, business structure, resources required, sources of finance, training required etc. This study would be done initially at Wales Estate and the operational model determined would be replicated at the other estates earmarked for diversification.

CO-GENERATION

The Corporation is exploring the feasibility of expanding co-generation at Albion and Uitvlugt Estates to deliver power to the National Grid and generate value addition for the industry. Danish Energy Management A/S has been contracted to conduct this study which commenced in November 2016.

The overall objectives of the study are to create a value added product for the sugar industry while also contributing to the security of clean and cost effective energy production in Guyana, reducing the dependence on expensive, imported fossil fuels, also resulting in the saving of foreign exchange.

The study will evaluate the feasibility of the two options of constructing modern co-generation factories on Greenfield sites at Albion and Uitvlugt or upgrading the current factories to deliver power to the National Grid. The final report should have already been delivered to GuySuCo at the end of May 2017.

DIVERSIFICATION

Diversification would result in reducing the existing Corporation’s dependence on the national treasury and eventually eliminating the need for subsidies from 2020 onwards.  With regards to the diversification of the poorer performing estates, Rose Hall, East Demerara and Wales, the diversification Task Force’s report highlighted the alternative feasible agriculture ventures for diversification.

Sugar employees will be absorbed in the divestment initiatives and redundant employees will be encouraged to lease lands and contribute to the diversification initiatives and become independent sustainable farmers.

Skeldon Estate will be divested. Significant investment was made in the new Skeldon factory which to date has experienced numerous technical issues and has failed to achieve its potential, thereby not generating any returns on the investment. The Corporation does not have the resources required to correct the technical issues and owes in excess of G$29Billion in loans due to the Skeldon project.

Divestment of Skeldon Estate may result in investors with the required funding and technical expertise to sustain cane farming, securing employment and markets for the private cane farmers.

Funds generated from the divestment of Skeldon Estate will go to reducing the Corporation’s debt and supporting its capital programmes for both sugar and the diversification initiatives.

With the closure of Wales Estate, approximately 60 percent of farmers’ canes traditionally supplied to Wales factory will be available to Uitvlugt factory – these cane farmers are actually closer to Uitvlugt than Wales. The majority of farmers affected by the closure of Wales (mostly small farmers) have undertaken to piggy-back on any diversification plans for Wales found feasible by GuySuCo. Furthermore, some of these farmers have taken up land at Uitvlugt.

Following GuySuCo’s proposals, Cabinet requested a detailed evaluation of the diversification options that were undertaken by a specially commissioned Task Force.

The Task Force submitted its report in October 2016 and recommended the following feasible diversification options:

• Livestock – inclusive of beef and dairy cattle, pigs and small ruminants.
• Value added processing – juice and milk plants
• Ducks
• Apiculture (commercial scale Bee Keeping)
• Aquaculture
• Fruit crops (orchards)
• Other high value crops – rambuttan, acai berry inter alia
• Grains and legumes
• Seed production/aromatic rice

Beef Cattle – This would entail farmers rearing and selling their animals to a processing plant for processing and marketing. There is a significant demand (130,000 lbs imported annually) for fresh and frozen cuts of beef locally and regionally.

Dairy Cattle – The development of the dairy cattle venture would eventually support the milk processing plant. This would entail farmers rearing dairy cattle/cows and providing the milk to the processing plant.

Satellite farms will target youth and women; the financing arrangements structured towards reducing barriers to entry for these traditionally resource-poor cohorts.

Pigs – This operating model is similar to beef cattle, with the project requiring 100 boars and 2500 sows producing 13 piglets per sow totaling, 32,500 piglets per year.

There is a significant market for fresh and frozen pork and pork products both locally and in the region. This has the potential of generating G$1.2 Billion per year in revenues.

Milk Processing Plant – A milk processing plant can be a very lucrative option because of the captive market of the school-feeding programme which feeds approximately 47,000 children daily, also the prisons and the military.

Ducks – This model is similar to beef cattle, with the project requiring the rearing of 100,000 ducks per month. The estimated cost of investment is G$2Billion which includes a building and is expected to generate G$3.7 Billion in annual profits from year one.

Aquaculture – The feasibility study into this project is complete and there are numerous competitive advantages for Aquaculture as a key diversification venture and as a business opportunity for GuySuCo, in the short, medium and long term. The main products considered in this study were Tilapia and shrimp.

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