Latest sugar output figures depressing – Agri Minister

Amid a start-up fiasco with the new Skeldon sugar factory, Agriculture Minister Robert Persaud says that the latest industry output figures are depressing and the excuses being offered by GuySuCo are not good enough.

The non-commissioning of the new US$181 million Skeldon sugar factory which initially had been due to grind sugar for the first and second crops this year is seen as the major factor in the revision of this year’s sugar projection from an ambitious 350,000 tonnes to 285,000 tonnes. With the ongoing woes in the industry even this figure is not likely to be met.

The government in August announced that a review of the sugar industry would be commissioned for the period 1997-2008 in light of falling production. There have also been increasing questions about the stewardship of GuySuCo which has been under the management of Booker Tate since the early 1990s.

Though he did not give any figures, Minister Persaud told Stabroek News on Saturday that the excuse of industrial action including strikes could not account for the significant drop in production and the consequent loss of much needed revenue at a time when sugar prices are being slashed on the European market.

The new Skeldon factory, built by the CNTIC of China, has not been commissioned because of technical failures – not deemed to be major by the Guysuco administration but still important enough to delay production and cause the loss of substantial revenue for which liquidated damages in the sum of US$5 million could be imposed on the contractors.

Initially the Guyana Sugar Corporation (GuySuCo) had set a production target of 350,000 tonnes for 2008 on the expectation that the new Skeldon factory would have been up and running in time for the harvesting of the first crop earlier this year. When this was not achievable the figures were revised.

The Berbice estates, including Skeldon, were expected to account for 181,953 tonnes and the Demerara estates, 102,861 tonnes.

However, Guyana will meet its increased European Union (EU) quota of 173,000 tonnes gained through the withdrawal of other Caribbean suppliers but it would not be able to meet all of its commitments to its Caricom markets. Persaud bemoaned this saying that Guyana has the potential to supply the Caricom market and should have been doing so.

When asked about possible revenue losses as a result of the new factory problems Persaud and the Chief Executive of Guysuco, Nick Jackson both said that they could not quantify the amount as yet.

With the production figure falling short of the revised figure of 108,000 tonnes for the first crop by 5,000 tonnes, Guysuco said at the time that the reduced target was because of poor weather and strikes not directly related to the corporation.

At the start of August, 2008 the production target was already 13,000 tonnes behind the original estimate, which Guysuco said was due mainly to the inclement weather experienced in the early part of the harvesting of the crop and low turnout of harvesters on most estates.

One Guysuco source, however, told the Stabroek News that the problem was not in the harvesting but the problem was with the failure of the new Skeldon factory to grind the current crop. Guysuco has begun the move to mechanise harvesting. In addition Guysuco now has a fleet of loader machines to aid manual harvesting and boost production.

The problem is compounded by the fact that electric motors and other pieces of equipment and machinery which were removed from the old Skeldon sugar factory and placed in other factories have now been recalled to reassemble the old Skeldon factory. This is expected to have some impact on the production capacity of those factories but the source could not say what the impact would be like at this stage. The grinding capacity of the old Skeldon factory would also be far below that of the new factory.

Since the volume of cane at the Skeldon estate is much more than that of other factories on account of increased cultivation to meet the demands of the new factory, it is likely that if the new Skeldon factory is not commissioned by October month end that cane would be sent from Skeldon to the Albion and Blairmont factories for grinding and processing. The volume would also be limited.

Persaud told Stabroek News he believes that too many excuses were being made by the management of GuySuCo for the drop in production levels since the floods of 2005 when production dropped to 246,000 tonnes from a high of over 324,940 tonnes the previous year. In 2003 the production figure was 300,000 and in 2002 it was 330,000. For 2006 and 2007 the production has hovered at just over 250,000 tonnes.

He contended that strikes by the sugar workers could not account for the significant drop in the production levels and said that in his own opinion the management of the industry was also responsible for poor performance.

Only last month there were two strikes by GAWU which represents the majority of the sugar workers.

Persaud explained that by the management of the industry he was not only referring to the top level management but all managerial levels, including middle management.
He said that the latest production figure “was depressing” and a “very disturbing development” for the sector this year.

Flooding, weather-related problems and strikes were blamed for the decline in production over the past three years but Persaud said that the government was not quite convinced about this development because of the large sums of money the government has been putting into developing the industry.

Because of the drop in production in recent years, he said that the government is taking a number of actions, which he did not disclose, except to note the decision taken to conduct a production and financial review of the sugar industry from 1997 to 2008.

The Ministry of Agricul-ture is currently advertising for persons with the requisite qualification to conduct the review which will examine and comment on the historical performance of the corporation with particular reference to the period under review; assess the production projections consistent with Guysuco’s strategic development and investment plan; comment on the reasons for the shortfall in production and recommend appropriate corrective actions to be taken by the corporation to meet long term production forecasts.

The decline in the sugar industry comes at a time when the European Union has slashed the price of sugar from the African, Caribbean and Pacific (ACP) group of countries with the price of sugar this year to drop from the current figure of 474 euros per tonne to 409 euros per tonne next year, and this would be further reduced to 335 euros by 2010.

Guyana also has the opportunity to benefit from access to additional sugar exports to the EU.