Time to consider new type of sugar industry – Vieira

-says GuySuCo operating at loss of $16,705 per tonne

The Guyana Sugar Cor-poration (GuySuCo) is operating at a loss of $16,705 per tonne of sugar produced and the time has come to consider whether the industry can exist without remaining a national liability, according to former industry insider Tony Vieira.

GuySuCo has been unable to meet its targeted production over the past few years and after a  review of the corporation’s five-year Strategic Plan (2013-17), Vieira has concluded that GuySuCo is operating at a loss of $16,705 per tonne of sugar produced.

He compared GuySuCo’s wages to other industries such as bauxite and gold mining and concluded that “the sugar industry’s current wage bill is $19 billion for its 16,000 workers; the current price for sugar is 17.77 US cents a pound or G$35.54 i.e. G$71,080 per tonne. The labour cost to produce 218,000 tons [2012] production was 19 billion, i.e. 87,155 per tonne in labour costs alone, we are losing G$16,705 on every tonne we produce.”

“We have to sit down and discuss if these figures make sense and whether the sugar industry can exist without remaining a national liability, that diversification is necessary, and a phasing out of this expensive labour intensive industry for one which is less labour intensive and with better returns must be a better option, especially since we are dealing with workers who demand more and more, without having regard to the consequences that comes with this massive wage bill,” Vieira said.

“$19 billion divided by the 16,000 employees is 1,187,500 average earnings per GuySuCo employee. We are asking taxpayers who are earning between $200,000 to $400,000/month to subsidise this! It’s unfair and should be examined more closely by the opposition,” Vieira stated. He noted that sugar was valued at over US$132 million and was responsible for 9.5 percent of Guyana’s total exports valued at $1.40 billion, with a $19 billion wage bill per year while bauxite pays a fraction of that cost in wages and is valued at US$150 million and contributes 10.8% of exports.

When broken down further, average wages for GuySuCo employees sit at $98 000 monthly which is well above the minimum wage. With the cost of sugar not likely to surpass 20 US cents by 2020, GuySuCo needs to address value for money and cutting costs while increasing production.

Further, according to Vieira, mechanisation is not properly understood in Guyana and as a result, efforts have been poor and are only degrading the fields and the industry further.

“Converting the lands for mechanical harvesting is very poor, since in the process, they have exposed the acid and toxic sub-soils and leaving a soft area where the old drains used to be in which the harvesters keep sinking and have to be pulled out. Having already converted most of the English beds, this new plan seeks to rush into more conversions without the money or the equipment to either convert from the cambered bed layout to the layout necessary for mechanical harvesting and they don’t have the money to buy the mechanical harvesters either. So they are destroying the industry without fully understanding what they are doing, begging the question what is the point of converting and destroying thousands of acres which you can’t find the money to harvest mechanically,” Vieira said.

Vieira proposed that the industry needed to call back manual labour because Guyana’s soils have proven not capable for mechanisation. The current $19 billion that goes to wages will need to be even higher but while wages will increase, GuySuCo will not be spending billions to mechanise when that has proven not fruitful, he said. Vieira stated in relation to mechanisation that “if we are to pursue this disastrous road to bankruptcy, let’s at least state clearly that we do not have the managerial skills which can carry out an operation such as this, and what we intend to do to rectify that situation.”

Vieira had noted that the 2013-2017 Strategic Plan was devoid of any actual analysis on how GuySuCo will spend the $19 billion budgeted to revive the industry over five years by improving rehabilitation of factories and agriculture operations. “We would like to see a complete analysis of this $19 billion capital expenditure by subhead, since GuySuCo has not been very reliable in returning value for money in the past, therefore spending this very large amount to achieve the promised goals does not necessarily mean improved performance, so now they will have to tell us exactly how, and in what departments they will spend this money and to what end,” he said.

Vieira was extremely critical of GuySuCo’s proposed capital expenditure. He stated that to go from 203,000 tonnes of sugar to 350,000 tonnes by 2017 was impossible. He cited the fact that GuySuCo was projecting a 72 percent increase in performance in five years with little explanation of how this would happen.

 Mechanisation

On converting to mechanisation, Vieira said that the plan relies heavily on mechanisation of the fields but the average cost of a mechanical harvester is US$375,000.

He stated that 24-hour harvesting would require 9 800 tonnes of cane per day at Skeldon and if the factory was operating at maximum capacity, which GuySuCo’s strategic plan is banking on, that would mean 49 harvesters would be needed. Guyana currently has 10 mechanical harvesters for all eight estates which harvest from 150-200 tonnes per hour.

“If the harvester only reaps 200 tonnes a day, and I am using the maximum amount I have been given, they would require 49 Cameco/John Deere 3520 harvesters at Skeldon at US$375,000 each that would be $3.6 billion … but the harvesters do not load the canes, they cut and loaders load the canes so each harvester has to be accompanied by two loaders and two trailers this may effectively double the price to $7.2 billion to harvest the cane for Skeldon alone,” Vieira said.