Finding a buyer for the troubled Guyana Sugar Corporation (GuySuCo) is the most viable option for government, according to veteran businessman Yesu Persaud.
“In my opinion, if we can find a buyer who’s willing to take on those debts… because you have substantial assets—the land and factories etc—take it over at a price, of course, that has to be negotiated, then I think there could be a future,” Persaud said after a meeting with the members of the Commission of Inquiry into the sugar industry yesterday.
“I told them it is either two things: you either revise what you have, it is going to be more costly because you have to go and borrow, borrowing is a very expensive; or, one of the things you could look at, find a buyer and that may be possible,” he added.
According to Persaud, while local banks have been “very generous” in granting loans to GuySuCo, internationally GuySuCo’s high cost of production ensured that loans are given with high interest rates. The corporation is, therefore, faced with billions in debt and high interest rates should it look to loans to assist with debt payments.
Persaud said that due to the $60B debt being carried by the sugar corporation, it is more likely that there would have to be a move toward full privatisation as opposed to divestment and partial privatisation of the state company.
He also pointed out that sugar production has fallen far below a profitable margin. For the first crop, it took approximately 13 tonnes of cane to produce one tonne of sugar.
Persaud stated that for GuySuCo to turn a profit, that figure would have to drastically change to approximately five tonnes of cane per tonne of sugar.
At the same time, he added that the high cost of production coupled with Europe’s emerging beet sugar market essentially meant that the sugar industry’s largest buyers were effectively gone. “We can’t compete with beet sugar, so you can say that we have lost the European market,” he stated.
“When you’re a price taker, you have to take the market as it is. So overall it is not an easy task,” he added. GuySuCo’s cost of production is roughly US$0.40 per pound of sugar, while it sells to Tate and Lyle, the company’s largest European buyer, at US$0.16. World market prices have dropped to as low as US$0.13 per pound since July of last year.
Persaud added that any potential buyers of the corporation will need to be prepared to look at a complete overhaul or rehabilitation. “The future of the industry depends on your ability to rehabilitate it. So, [if] you are going to buy it, you gotta be prepared to rehabilitate it because remember you have the areas of land, you have to check what you can do with that land, it need not be sugar it could be anything, any other commodity,” he said.
With the large debt and the current state of the fields, which have produced low yields due to poor cane quality, Stabroek News asked Persaud if he thought finding a buyer was very plausible. He admitted that it would be difficult but pointed out that the corporation’s lands were vast and other commodities could utilise the vast allocations. He cited fish farming as one example.
Persaud noted that currently Berbice estates Albion, Rose Hall and Blairmont are viable and continually make production targets. However, he said the additional five estates were non-viable, including the Skeldon estate, with its troubled US$200M factory.
President of the Guyana Agricultural and General Workers’ Union (GAWU) Komal Chand has long advocated for serious investigations to be made into the state of the fields and to ensure that good husbandry practices are being followed through on. Chand has said that the cane yields have severely declined, which has resulted in GuySuCo being unable to have an annual portion of land resting or under flood fallowing. He has said that GuySuCo needed to do a comprehensive survey of the fields and that the plan had to take this into consideration. Representatives of GAWU and the other major union in the industry, the National Association of Agricultural, Commercial and Industrial Employees are expected to resume making presentations to the commission on the current state of the industry on Saturday.
