The sugar industry needs private-sector led diversification

Dear Editor,


With a debt overhang of over $90B and a cost of production more than double the world market price of sugar, there is absolutely no future viability for sugar production in its current form in Guyana. Any cost-saving initiative is limited as its direct labour cost exceeds the world market price of sugar.

Even with preferential prices from Caricom countries which attract 40% tariffs, our cost of production still exceeds the selling price of sugar.

The debt overhang shows clearly that the previous PPP administration had effectively closed GuySuCo because the corporation is turning in no contribution from its sale of sugar ‎to cover even its interest cost, and certainly has no reserves to make capital payments.

A combination of poor investments in the case of the Skeldon Sugar Factory, corruption by officials in cases like the Enmore Packaging Plant and the procurement of pumps, political direction with square pegs in round holes through political appointments, and a depletion of skills in plant husbandry and all technical areas, are among the failures of the leaders of the former administration, in addition to their acute display of incompetence and deception.

The workers and their families within the sugar belt fell for this massive deception in returning the PPP repeatedly to office until it destroyed this once highly profitable business to the point of no turnaround.

The unions both GAWU and NAACIE are equally responsible in terms of their complicity with the previous administration and their failure to condemn the open misuse of GuySuCo’s cash resources on unprofitable investments, the selection of contractors, and political appointments. It is for the workers now in their own interest to demand changes in the leadership of both GAWU and NAACIE.

The current APNU+AFC administration is now saddled with the almost impossible task of protecting jobs in an industry that would need a continuous bailout which our economy cannot afford.

As a first step the interim management must request creditors of the $90B in loans to take a deep ‘haircut’‎ in bringing the corporation’s loans to a more manageable level, as GuySuCo is unable to make any repayment from its cash flows.

This should be followed by a private sector led five-year diversification plan to increase the value added from sugar, but most importantly to gradually diversify away from sugar which would transfer some of its current workers to higher paying jobs in the process. A number of diversification options are available, but would require the political will and leadership to address a highly sensitive matter.

Perhaps such diversification should start with the higher cost of Demerara Sugar Estates.


Yours faithfully,
Robert Badal

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