The new sugar plan

The long-awaited strategic plan for the Guyana Sugar Corporation for 2013-2017 is now in circulation. Coming so late in year one of a five-year plan makes a mockery of its utility in planning for 2013 but this is the least of its problems.

What is astounding about the rendering of this plan is its almost nonchalant acceptance that the much-vaunted blueprint of 2009 had failed miserably and that the sugar corporation is now in worse shape. It would be truly irresponsible for GuySuCo to embark on a new plan without first dissecting minutely the reasons why the previous blueprint failed so disastrously. There is no such examination of the failings of the previous plan save for some glancing remarks about weather, financing etc.  Moreover, though the plan is silent on its authorship, it is more than likely that some of the same persons at the level of the board and within the corporation who were responsible for the 2009 blueprint were also involved in the preparation of the new plan. This would render this new plan suspect and not a credible basis for addressing the chronic and deep-seated problems of the industry.

Even if its prescriptions and prognoses may not be credible, what is undeniable are the facts admitted by the corporation. The five-year-old troubled Skeldon factory easily becomes a metaphor for the major problems facing the industry. What the government of former President Jagdeo had sold to the public as securing the future of the sugar industry is now an elephantine burden on it and an enormous drain on the economy. The US$110M Skeldon sugar factory was meant to produce 110,000 tonnes of sugar per annum. Five years after its shaky and uncertain commissioning it is only projected to produce 39,883 tonnes this year.  By comparison, the aging Albion factory is projected to produce 46,444 tonnes this year with nowhere near the Skeldon investment.

The Skeldon factory clearly has intractable problems which were in evidence from its inception. Yet, nowhere in the new report is there any consideration of what the liability of the Chinese contractor, CNTIC, should be in this matter. Indeed, no doubt as a result of the growing ascendancy of the influence of Beijing and its companies here, the corporation, and by association the Guyana Government seem to have completely absolved CNTIC of any culpability. So much so that a South African company has been hired to conduct a range of remedial works at a so far unpublicized additional sum and which works have not been problem free and are not expected to be completed until sometime next year.

Even then, the new plan says that the factory which was rated to grind cane at 350 tonnes per hour would only be capable of delivering a maximum of 250 tonnes per hour from the present 185 tonnes per hour. What a scandal. In other jurisdictions ministers and entire governments would be gone for results like this. Who is to be held accountable for accepting delivery of the factory from CNTIC when it was incapable of achieving the rated capacity? The industry and the government have been duped and the taxpayer is now saddled with bailing out this project. What is even more troubling is the likelihood that these problems with the factory will continue and there is no guarantee that throughput will edge up to the promised 250 tonnes on the completion of the remedial work by the South African company.

This must be one of the reasons why the new plan has chopped the projected annual output of the 2009 blueprint from 450,000 tonnes to 350,000 tonnes which will no doubt still take a lot of doing to achieve. Isn’t the drastic reduction by 100,000 tonnes the clearest admission that the 2009 blueprint was unhinged from reality and that the industry is in a crisis of huge dimensions?  When GuySuCo was last in this perilous condition in 1990, the wheels had already been set in motion for the involvement of Booker Tate in reviving the fortunes of the industry which it duly did. By contrast there is no such promise of a major initiative to recalibrate the prospects for the industry and determine what is the best size and orientation for it. It seems as if both the government and the industry are marking time. How can that be an answer to its evident problems and the clear drain on resources?

By its own admission the industry has acknowledged whopping losses over the last four years. Where is this going to be financed from and is the corporation financially viable at all? Not having thus far publicly released the plan, the government and its senior spokesmen have been exceedingly quiet about sugar as if there is the risk of some dread disclosure.

There are many other quandaries which the industry has found itself in. Its value added installations, Enmore in particular, are vastly underutilized because of low sugar production, meeting this year’s EU quota will pose a major challenge, mechanization of fields has left key cultivations at the mercy of the volatile weather and there is a genuine shortage of labourers who have migrated to other areas or away from the country. This is not even taking account of what will happen post-2017 when duty-free to the EU from Guyana will be at an end and the corporation will have to scrounge for markets.

Leadership at the level of the board and the corporation is also an unresolved issue. The corporation needs effective stewardship and management if it is to have a chance of recovery. Thus far, the government seems unwilling to search for experienced candidates.

The main sugar union GAWU and other industry watchers are of the opinion that the poor upkeep of GuySuCo’s fields is a key reason why production has been so anaemic. The plan does identify improvements in this respect but one wonders how the public could be convinced of the effectiveness of these measures after so many years of failure and neglect. Serious money is being pumped into this problem-plagued industry but there is no accountability for the quality of its management and its dismal output.

Given the recalcitrance of the government in presenting full information on troubled areas like sugar and opening up itself to scrutiny, it will likely fall to the opposition to press for a clear vision for the sugar industry, whether it can survive in its present configuration and what to do about the Skeldon factory. The opposition should lose no time in seeking to have an emergency debate in parliament on sugar and having the Economic Services Committee place it at the top of its agenda and invite experts to testify. One of the topics for discussion should be what became of the money from the European Union as accompanying measures to the reform of the EU sugar regime.

The grave state of the sugar industry requires urgent, concerted effort by all stakeholders to fashion a way forward. It will be a suitable test of whether in this new session of Parliament the government is prepared to admit to the state of this historically vital industry and work with the opposition on the way forward.

 

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