The time for diversification in the sugar industry is way past

Dear Editor,

I would like to comment on Mr Donald Ramotar’s letter (‘There is no evidence of the “massive corruption” of which GuySuCo is being accused,’ Sunday Stabroek 1.2.09). Firstly, let me be clear that I like Donald Ramotar; I think he’s a decent man, and this should not be seen as a defence of Dr Joey Jagan (‘What is going on in the sugar industry?’ SN 24.1.09) and definitely not a criticism of Donald Ramotar.

Mr Ramotar mentioned a number of commentators in the press who have remarked on GuySuCo’s performance. I am one of those. I am glad that Mr Ramotar does not come out and say that there is no corruption in GuySuCo (‘the corporation’); he knows better. The problem with the corporation as I see it is its strategic direction. Too much emphasis is placed on ‘faith’ and ‘hope,’ a hope and a prayer, if you like.

When the Skeldon Project was being planned, the projected unit cost for the new factory was 11 cents. The Demerara estates were producing sugar at a unit cost of 17-18 cents. The world price was about 8 cents per pound. The management and board were hoping that the world price would rise to above 11 cents per pound and praying that this would happen before the preferential pricing the corporation received evaporated. In 2000, the world price of sugar actually dropped to less than 5 cents per pound. The business model does not work.

In the past few years, as we all know, the price of basic commodities skyrocketed and remained at lofty levels until the global recession that is now gripping the world. GuySuCo uses large quantities of steel and iron products for its punts, knives, and rollers, etc. These were no doubt out of reach for GuySuCo. The price and the needs of the Skeldon Project no doubt contributed to some of the neglect Mr Ramotar mentioned. The corporation also uses vast quantities of fertilizer, which has a price impact on cane cultivation and yield. It also uses large quantities of tyres for its trucks and tractors with a petroleum cost impact on price and purchasing ability.

The world price for sugar is today under 13 cents per pound. Can GuySuCo compete with Brazil, Australia, India, etc. I do not think so. It would be interesting for GuySuCo to publish its unit production cost for all estates when you factor in these and other financial burdens.

The time for diversification is way past. It should have started when the colonial masters left Guyana’s shores. All governments since then have failed the people in this respect.

It is one thing to say that you will not close any of the estates. It is quite another to close your eyes to the consequences of this demagoguery.

I would like to say that I hope and pray for a bright future for GuySuCo but I am not particularly religious. Hope and faith are not needed. Practical and skilful management and strong decisive leadership are.

Yours faithfully,
Omkar Suchit

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