Vishnu Bisram presents contrasting visions of future of sugar industry

Jul 01, 2021 Letters

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DEAR EDITOR,

In a wide-ranging interview on Globespan Television in February 2021, the GUYSUCO CEO Sasenaraine Singh, speaking on the topic titled “GUYSUCO and the Future of Sugar”, articulated a vision for the sugar industry which represented a paradigm shift in the approach to sugar production at GUYSUCO. The CEO responded to a question on production (at 8:38 min in YouTube video), “…in the older days GUYSUCO had a business model bigger is better, rubbish. Bigger is better selling US$300 per MT when your cost of production is closer to US$600 per MT doesn’t make any economic sense, it does not take the industry to viability.” The CEO further said “…the new GUYSUCO will be focused on 100,000 – 150,000 MT, the days of 300,000 MT is gone…”.
The production goal described by GUYSUCO CEO seemed very similar to the coalition government’s sugar production target for the downsized sugar company. 100,000 – 150,000 MT per year of sugar production does not require seven sugar estates for this level of production. Many governments in the Caribbean closed underperforming sugar estates to focus on their better-performing estates when European price supports ended. Unfortunately, sugar estates in the Caribbean continue to be closed as continued financial losses are too large to sustain.
The GUYSUCO CEO defined how success in the sugar industry should be measured, i.e. financial viability. GUYSUCO’s key tactic to achieving financial viability centered around improving sales margins by selling more packaged sugar and less bulk sugar, which is produced at negative margin. The jury is out whether this tactic will be successful; the CEO could not predict when the company will be profitable when asked by the moderator.
Alternatively, there are individuals who hold the view GUYSUCO should continue 300,000 MT per annual sugar production even with appreciable financial losses for many years if not decades. Financial viability of the industry is not a priority for these individuals. They attack others who believe financial viability should be an important measure in business operations. Such attacks are irrational in this global market environment. As an example, in recent days Vishnu Bisram accused Clive Thomas of championing the closing of underperforming sugar estates. By his own admission, Bisram was not present in any meetings with Clive Thomas that discussed the closing of sugar estates. Bisram tells us to trust his reporting of meetings he did not attend but in a letter of 26th June, not to trust Tascuma Ogunseye’s account of a meeting Ogunseye supposedly did not attend.
Bisram is a proponent of distributing or leasing land to the local workers who will grow sugarcane and provide the cane to second party owned factories for processing and marketing sugar. Bisram wrote that,with local workers responsible for growing sugarcane, efficiencies will be realized magically. Bisram cited India as an example of how this system works. Barbados would be one country that downsized its sugar industry which has a system with local farmers growing sugarcane for privately owned factories.
Bisram does not understand why India has a viable sugar industry and the coalition government was correct to reject his proposal. India, US and the majority of sugar-producing countries cannot produce sugar below the world market price. However, countries with large internal sugar demand protect their markets from cheap imported sugar, selling their citizens locally produced sugar above the world market selling price which allows their sugar industry to be financially viable. India sells 80% of the country’s sugar production internally at prices that are profitable. The remaining 20% of sugar is exported at a loss and the government subsidizes farmers and millers. In November 2020, Bloomberg News reported that the Indian Government was encouraging its citizens to consume more sugar to reduce/end sugar exports in order to eliminate government sugar subsidizes.
Guyana has a very low internal sugar demand. The internal sugar market is 22,000 MT annually; 12,500 MT of sugar is sold at improved pricing in the US protected market. 89% of 300,000 MT annual production will be exposed to the world market price requiring appreciable government subsidizes. In reality at this production level, shutting GUYSUCO down and paying all the workers to stay home would still leave money to fund valuable projects.
In closing, Bisram presented two versions of who would own the factories that will be supplied sugar cane by local farmers. His first version he wrote “the government or GUYSUCO or private investors” as likely owners. In the second version five days later, Bisram wrote private investors would own the factories and he added that government investment in the estates would be minimal for` maintaining canals and irrigation. These are not trivial differences in presenting his plan to previous government officials, how can this narrative change in five days.

Yours truly,
D. C. Daly

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