The experts say ‘A’ and the government says ‘B’

Jan 08, 2018 Features / Columnists, Peeping Tom

---

It is incomprehensible that any government would establish a Commission of Inquiry into the sugar industry and then act completely contrary to the recommendations and findings of that Commission.
Yet, this is precisely what the government did. The Commission of Inquiry did not recommend the closure of any estate.
The government, however has decided to close Wales, Skeldon and Rose Hall, the latter two having the greatest potential of increasing sugar production and reducing costs.
The Commission of Inquiry did not call for the downscaling of production. In fact, it emphasized the importance of keeping estates open to ensure economies of scale.
The Commission of Inquiry urged short–term financial support be provided, something that Guysuco said was needed until 2020 when the corporation was expected to break even.
The government’s plan is based almost totally on reducing the level of financial support to the corporation. This is why it has laid off more than 4,000 sugar workers and closed three estates.
The government has spent millions on having a Commission of Inquiry only to dismiss its principal recommendations.
Instead, the government has launched a vendetta against the sugar industry, along the stronghold of the main opposition the People’s Progressive Party. The plans announced by the government for the sugar industry are consistent with punishing sugar workers.
The only thing is that the collateral damage is going to hurt the entire economy. The government overlooked the possible effects of the downsizing of sugar on the distillers. Molasses, a byproduct of sugar production, is needed for distilling in the alcohol industry. The unavailability of molasses can result in the closure of distilleries and the loss of export markets which bring in precious foreign exchange earnings.
A few years ago, the Demerara Distillers Limited (DDL) faced a similar threat when the Jagdeo administration had plans to bring in a Trinidad investor to establish a distillery at Skeldon.
This would have threatened the supplies of molasses to the company. DDL therefore took the government to court and successfully obtained a declaration that the government was required to consult with the company before it undertook any plans to establish the new distillery since such plans could threaten the existence of DDL.
It is because of this action by DDL which placed a spoke in the wheel of the Jagdeo administration and that Leader of the Opposition had issues with Yesu Persaud the former Chairman of DDL.
DDL has a legal precedent requiring the government to consult with it should a situation arise which can threaten the national supply of molasses. It should have pressed that button earlier.
It only now seems to have awoken to the reality that the contraction of the sugar industry will lead to an acute shortage of molasses and therefore limit the expansion of the distilling industry.
The government did not seem to consider the adequacy of the supply of molasses when it decided to cap sugar production at a maximum of 150,000 tonnes. This cap is going to be insufficient to cater for domestic needs, especially in the context of the growth of alcohol production.
A major industry and foreign exchange earner is now in serious problems. It cannot plan for expanded production of distilled liquor unless it is guaranteed an adequate supply of molasses. And with sugar production for 2018 pegged at below 120,000 tonnes, enough molasses cannot be produced locally to satisfy domestic production.
DDL is now trying to salvage the situation through an expression of interest in operating the Enmore estate. But boat dun gone a falls. Sugar production is going to continue to collapse because the workers in the industry are reading the signals emanating from the government.
And those signals clearly suggest the demise of sugar. Sugar production will continue to fall because the workers know that the industry is on its death bed.
DDL, therefore, cannot save the industry. Nor can it ensure that it sources adequate amount of molasses locally for its needs.
All this could have been avoided if the government had acted in accordance with the report of the Commission of Inquiry into the sugar industry. That report called for the division of the industry into a number of subsidiary operations. One of the subsidiary operations recommended was molasses.
The COI went as far as urging that apart from maintaining the current sales of molasses, that the product be bottled in small containers and sold as a health product.
But for this to happen, all of the estates needed to be grinding and the industry had to avoid downsizing so as to maintain economies of scale.
The government, however, had other plans. Those plans now threaten the alcohol industry.

---

---