According to Dr Clive Thomas the sugar industry is sitting on an economic time bomb − how true is this?
Amazingly, while forward strides have been made in the rice industry, backward strides have occurred in the sugar industry. Anyone looking at the sugar industry with the hope of bringing it back to viability, should have uppermost in their mind a number for the cost of production, enabling them to be competitive internationally.
It will not make sense to close down the whole industry, as there are lots of valuable assets in terms of factories, cultivation equipment, packaging plant, etc, and many people are presently dependent on same. Serious consideration must be given to this and a menu of activities investigated, for example, the utilisation of some acreage for other purposes; the closing down of factories; the privatising of part of their assets; introducing an agricultural diversification project; and making land available to the present workers.
As has been said, we can be the bread basket of the Caribbean.
I have observed that the government is injecting $3.8 billion, about US$19 million into the industry, with a promise of $16 billion total. The Private Sector Commission (PSC) has up to now, after many attempts, not been able to get a copy of the Master Plan to turn the industry around. I have no idea what is in there, but one must be careful in injecting money. Obviously, this amount is with the blessings of the interim management team of Mr Errol Hanoman and Mr Paul Bhim, both very honourable gentlemen, but I do not envy them in this job. The big question is what is supposed to be the outcome of this injection?
Surely, all Guyanese expect that the sugar industry will be brought back to an even keel and there will be business as usual. But very soon another injection will be needed and then another… This is not like the rice industry, where money is being injected for products in storage waiting to be marketed, and the money returned. There is a big unknown here.
Before nationalisation, the sugar industry was very efficient and benefited from the Sugar Protocol which was pegged to the EU sugar industry, and as such, enjoyed good prices. After nationalisation, the sugar industry started to slide downwards, and with the termination of the Sugar Protocol, there was a rapid decline in efficiency. A shortage of cash and the migration of senior managers occurred, a combination to kill any business.
The size and complexity of producing sugar does not help. The process from the laboratory, to the fields, to harvesting, to transporting the cane, to grinding and producing a quality product, to shipping, is an integrated one, and if any part is broken at any stage, then there are serious problems.
These interruptions seem to be a way of life, resulting in more frustration for an already poorly motivated work force which is poorly compensated. At present, there is supposedly a shortage of labour in the sugar industry, due mainly to the fact that the present workers as mentioned, are not motivated. To solve this problem, they are busy converting fields to facilitate mechanical harvesting. It is a good concept, but has not been well thought out, as our soil type is not very favourable for using the heavy machines acquired in the wet conditions.
The yield per acre is down, because of poor husbandry practices and poor varieties. The cane which sometimes is not harvested on time because of shortage of labour, does not arrive at the factory in time owing to the poor condition of the haulage tractors, the punts, the shallow canals and the dams, resulting in down time which is expensive. Owing to poor maintenance and a shortage of parts, the factories do not always perform efficiently, which results in poor conversion of cane to sugar.
It is the norm for any board of directors to be knowledgeable about the business and to be able to lay out policies and evaluate at the end of the day. Sad to say, it is not surprising that the sugar industry is in such bad state, when most of the directors did not know anything about the industry. Hopefully, the new board, if GuySuCo is allowed to continue, will be knowledgeable about the industry and help senior management to achieve their objective.
There was money from the European Union after the Sugar Protocol was terminated, as compensation for those countries which were affected. This was to alleviate any hardship that resulted. Unfortunately, this money was put into the Consolidated Fund like that from the rice industry, and not used to bring down the cost of production.
Monies which are available for support should be monitored closely. As far as I am aware, two sums made available by the Department for International Development (DFID) have resulted in zero gain to Guyana. Maybe the British High Commissioner should look into this.
The packaging facility which was built at a high cost to enable them to add value, has not been performing efficiently for many reasons. The amount spent on the Skeldon Factory, about US$200,000,000 equal to G$40 billion, could have done wonders for the sugar industry, that is, rehabilitate the whole industry.
I am convinced that GuySuCo does not have the wherewithal to manage the entire sugar industry, but it is imperative that the sugar industry is not allowed to die. A cocktail of activities is recommended: encourage the private cane farmers involved in cultivating their personal land; GuySuCo has recently allocated some of their land to private farmers and this should be continued. An agricultural diversification project should be considered, as in the rice industry, whereby land is allocated to GuySuCo workers and private individuals, with three clusters, namely, fruit and vegetables, livestock and aquaculture. Some acreage for rice and soya bean (for oil, animal feed and milk) production can even be considered as these areas have the necessary drainage and irrigation systems.
It is imperative that government agencies like the National Agricultural Research and Extension Institute (NAREI), the Guyana Livestock Development Authority (GLDA), the New Guyana Marketing Corporation (NGMC) and Satyadeo Fish Stations are totally on board.
It should be observed the Indian High Commissioner is volunteering to turn around the sugar industry, an offer that should be taken with both hands. It is true the industry was once successful within the Sugar Protocol, but what will it cost to return it to that state, since there is no Sugar Protocol and GuySuCo does not have that amount of money available? But he should consider whether all those sugar factories in India are owned by the government; whether the terrain in India is similar to that of Guyana, with lots of canals and below sea level; whether the mode of transportation from field to factory is similar to that of Guyana; whether India is dependent on the world market to get rid of their excess production and what percentage this represents of their production. In addition, is the soil type similar to that in Guyana lending itself easily to mechanisation? Is there a readily available labour force? Is the level of technology in India as low as that in Guyana?