Already reeling from a factory fiasco and slumping production, GuySuCo yesterday came under further pressure when the government issued a statement decrying the corporation’s poor output and ordering immediate steps to arrest the decline.
The statement came on the heels of criticism of GuySuCo that had come in recent weeks from the Alliance For Change (AFC), the People’s National Congress Reform, Agriculture Minister Robert Persaud and the main sugar union GAWU.
While recognizing that there are excellent opportunities for sugar at the moment, the statement also warned that there are also “devastating pitfalls”. It added “production targets for the past several years are constantly being reduced and the litany of reasons (has) become wider, more all-embracing and repetitive”.
Recognising this, the statement said that Cabinet has recently mandated the start of a process to gain an independent financial and production review of the sugar industry. “These reviews are not intended as a prelude to the closure of any estate and in no way prevent short term interventions designed to improve sugar production”. The ministry then announced that the deadline for submissions for this process has been extended by three weeks. The original deadline was September 30.
The statement also revealed that Minister Persaud has written to the GuySuCo Chief Executive Nick Jackson, the Chairman Ronald Alli and the board noting the failure to meet production targets and making several recommendations for immediate interventions which the corporation and board are acting on.
Tomorrow, Persaud will spearhead a special board meeting on further measures to improve production. All general managers of estates and key staffers will attend the two-day gathering at La Bonne Intention.
The much vaunted Skeldon US$181M expansion project has hit a major hurdle after the factory experienced start-up problems. The old factory had to be hastily re-assembled but its capacity is far below the new factory’s and it means that the industry will likely not meet its annual production target.
GAWU flays gov’t
Meanwhile, the Guyana Agricultural & General Workers Union (GAWU) yesterday said that it is “bewildered” that the government has sent out requests for tenders for a production and financial review of the Guyana sugar industry and called it a “waste of money, time and effort.”
According to a GAWU press release, such an exercise would allow the current mismanagement of the industry to be extended for a longer period, instead of taking a decisive and immediate step to halt the further decline of the industry.
GAWU said that, “Consultants have been too many in Guyana. A consultancy report on the sugar industry, we are sure, will be impregnated from what has been learnt by the consultants speaking to stakeholders in the industry after which a cleverly-worded report would be produced. The report will then be studied by the government, then released to the stakeholders and action/s taken based on its recommendations.”
The union further argued that it could take many months to have the costly process completed. The tenders were sent out on August 22, 2008.
However, the union said, “there might be one likely satisfaction arising out of the exercise – a submission for the less productive estate/s for closure, albeit that the poor well-being of the estate/s is as a direct result of poor management; purposeful action of neglect to pave the way for closure.”
In that light, GAWU expressed the view that the study could justify the call for the closure of estates.
GAWU contended that climate change, industrial action and worker-absenteeism are the reasons given repeatedly for the woes facing the industry over the past three years, but work stoppages and absenteeism are not new phenomena.
The union said that, “against similar situations, the industry produced an average of 320,000 tonnes in the years 2002-2004; (while) the average has slumped to 257,000 tonnes in the years 2005-2007.
The decline in field production has led naturally to the decline of the financial fortunes of the industry, GAWU contended, adding that this year there is simply not enough cane in the fields to produce 260,000 tonnes of sugar.
Earlier this year, GAWU said, it was understood that a senior Booker-Tate official, among others, had submitted a report that stated the industry’s production would be about 285,000 tonnes of sugar.
The quantity of canes required to produce the estimated target has never existed and in fact the corporation’s production this year will be inclusive of 14,000 tonnes of sugar not reaped in 2007 and 6,000 tonnes sugar from ‘brought forward’ canes due to be reaped in 2009. Therefore, GAWU said, the actual quantity of canes for this year is expected to yield no more than 240,000 tonnes of sugar. And if this prediction holds, it will be the lowest production of the corporation since the industry’s recovery started in 1992 with a production of 243,010 tonnes.
Meanwhile, GAWU asserted that for a production-oriented industry, an enquiry regarding the production and financial review will be “time-wasting and a mis-spending of dollars.”
The union maintained that the “reasons for the poor production performance of the industry are there for all to see, even the myopic bystanders.”
According to GAWU, suitable growing canes do not dominate the fields and poor husbandry results in sparseness of growing canes, poor cane stalks, etc, as is evident on the East Demerara estates and some others.
GAWU concluded with a plea to “let us save the industry from further decline. The time for action is now. Let our Guyanese fully manage this lynchpin industry, lest it crumbles more, not only to the peril of the main stakeholders – the workers – but also to the nation.”
Last week, the PNCR said five “massive failures of judgement and performance” in the sugar industry are combining to produce what appears to be one of the biggest economic disasters in this country’s history.
In a statement read at its weekly press briefing, the main opposition party said that neither the strikes by sugar workers nor the teething problems in the start up of the new US$181 million Skeldon factory could be blamed for the industry’s current predicament.
Nor can any blame be attached to Booker Tate on the matter of high wages, it contended, adding that the blame game gives the sugar corporation an excuse to buy time.
The PNCR statement was read by MP Anthony Vieira at Congress Place.
The first failure, the party said, was that GuySuCo’s strategic plan wrongly assumed that the European Union (EU) could not remove the sugar protocols and the preferential price of sugar. The second major problem, the PNCR said, was that huge wage increases were given to sugar workers, forcing a reduction of the labour force, as the corporation could not sustain it. The other three issues were changing weather patterns, which hindered the expansion of cane cultivation; private cane farmers not getting on board as expected; and GuySuCo depriving other estates of funding to complete the Skeldon expansion and modernization programme.
The GuySuCo 1998-2008 strategic plan, the statement said, expanded the industry “with money we did not have” while Trinidad and Tobago, Jamaica and other African, Caribbean and Pacific (ACP) countries were diversifying and minimising their sugar industries.
The party quoted the plan as stating, “The sugar protocol is of indefinite duration and cannot be changed unilaterally and is likely to remain a secure access… The assumption made in this review is that the SPS (Special Preferential Sugar) agreement will be renewed.” The EU has since unilaterally and controversially repudiated the Sugar Protocol, which gave ACP countries sugar markets at preferential prices. It ends on September 30, 2009.
Following this, GuySuCo Chief Executive Jackson said in a letter to Stabroek News in response to Vieira that
“1. The Board’s assumption that the sugar protocols and the preferential price for sugar could not be removed by the EU and proceeding to expand while other countries were diversifying:
]It was indeed the anticipation of changing arrangements for the trade in sugar with the EU that guided the 1998 Strategic Plan and the subsequent revisions in order to secure a competitive industry. Our strategic thinking is enshrined in the Guyana National Action Plan which was viewed by the EU as one of the best plans within the ACP countries for the modernization and ongoing operation of a viable sugarcane industry.
The main pillars of the Strategic Plans are:
* adding value to our core product (retail packaging of branded sugars, refined sugar),
*expanding in cost competitive geographical areas (Berbice), and
*diversification into new sugar based products (cogeneration, ethanol/distillery).
Supplying the Caricom market with brown and refined sugar is a definite element of business going forward in so far that other countries (Trinidad, Barbados and St Kitts) were far less competitive than Guyana and our exports to Caricom were expanding each year (1,750 in 1992 to 91,000 in 2003). Our recent production shortfalls and consequent reduced exports to Caricom confirmed that our policy has been correct. Every country is anxiously awaiting our return to their markets, a reflection of our high quality products and excellent service. In a few years, ‘Demerara Gold’ has found itself on the shelves of supermarkets throughout the Caribbean and is a source of pride to the many Guyanese residing in these countries. And within the next two years, we will expand our branded sugars production more than five-fold with the commissioning of the Enmore Packaging Plant.
“2. Labour Reduction and Wage Bill
We challenge the PNCR to provide evidence of forced reduction of the workforce by GuySuCo. In fact, the opposite is true; low worker turnout is a major challenge we face. Wage increases are a function of inflation and while the corporation’s financial status has been crippled by the production decline, we have to offer competitive wages to secure the workforce. We are significantly affected by the migration of labour to the regional territories and North America and we have recognized that each new generation is less inclined to seek jobs that are highly labour intensive. Hence we are embarking in a major way on mechanization and improving the skill levels of our labour force to support our modernization projects.
“3. Changing weather patterns
The size of the factory was determined by the required cane cultivation and will benefit from economies of scale. The cultivation has been expanded by three times the size of the original cultivation and the new factory has four times the capacity of the old factory. This will ensure that it can grind at 350 tonnes/hour, a rate that is consistent with the flow of canes from mechanized harvesting.
The factory at full capacity will grind for 25 weeks to take off the planned 1.1million tonnes of cane (350tc/hr x 22hr/day x 6 days x 25 weeks = 1.15million tonnes of cane).
It was never envisaged that year-round grinding was necessary to boost the energy supply to the national grid. The plant is designed for handling bagasse at any time. Surplus bagasse will be stored during the cropping period to be reclaimed during the out of crop.
Opportunity days have been a problem for the industry in the very recent past and Skeldon has been no different. The weather conditions have been such that we have three of the top five wettest years since 1990 as indicated in the table below.
Rank Year Rainfall (mm)
1 2007 20,432
2 1990 20,409
3 2005 19,875
4 2000 18,785
5 2006 18,290
19 1997 11,159
20 2001 11,004
Skeldon has been very hard hit. Opportunity days have reduced from 120 to 60 with the climatic changes. We are left with little choice but to accelerate the mechanization programme so that the crop can be taken off in as short time as possible
4. Private farmers at Skeldon
The private farmers at Skeldon have so far planted 1,030 acres of land. They are planning to plant a further 1,235 acres giving a total of 2,265 acres under cane by the end of this year. The Link Canal is in place, the farmers have gone to the commercial banks to secure $1.6 billion of funding and they are planting cane.
Whilst they have gotten off to a slower start than we would have liked, they are now moving quickly to take advantage of the new factory.
5. Starving estates of capital to fund Skeldon
We are quite taken aback by the assertions on the management of our financial resources. We run a business and we have to make timely decisions when we encounter factors beyond our control. Since the great floods in 2005, we have continued to suffer from severe and unusual weather (as shown above) which continues to affect our production and has consequently reduced our revenues.
Other factors have also put pressure on our cash management, such as rising fuel and freight costs, while the price of fertilizers which are essential in agriculture, have in some cases gone up three fold.
In addition, the funding of Skeldon from GuySuCo cash flows was higher than anticipated due to lower than budgeted income from land sales arising from depressed land market in Guyana.
Rising costs of material inputs led to an increase in the project costs from US$168M to US$181M which had to be funded from GuySuCo operating cash.
Prior to this, AFC Chairman Khemraj Ramjattan had said at a press conference that the overused excuses of weather and industrial action by sugar workers were grand misrepresentations to hide the troubles brewing in the industry.
The AFC said that at recent meetings between the AFC leadership and sugar workers in the Corentyne, many workers complained that their cane was not properly weighed on the scales at the factory. They said they wanted similar scales to those used when the canes are cut. They complained about a shortage of water while cutting cane in the hot sun; that only one pair of boots was given to a worker when in the past they obtained two pairs; and only a favoured few got long boots, gloves and cloaks.
They also complained about insanitary state of the base of the punts, which included a stench and worms.
The workers claim they make known their grievances to the GAWU representatives but get nowhere leading to frustration.
The AFC said the workers have concluded that there now exists an incestuous relationship between the management of GuySuCo and the union and would soon request that GuySuCo cease the deduction of union dues of $650 from their wages.
The party said it supports the workers demand for a 14.75% increase in wages and welcomes the setting up of an arbitration tribunal to resolve the impasse.
