Dear Editor,
Let us say it is a foregone conclusion that sugar production would come to an end at Wales – no more soil preparation and planting of cane; factory would be closed.
It is a decision that makes good economic sense. Gokarran Sukhdeo, a prize-winning author and trained economist, writes that Wales must be closed “because it is uneconomical to operate without a perpetual government subsidy. It costs in excess of 42 cents to produce a pound of sugar which can only sell for 16 cents. So the more sugar we produce the deeper we get into debt”. Simple words but explicit enough to convey the stark reality of sugar economics.
GuySuCo for all practical purposes is insolvent today, but not bankrupt. The only reason it is not bankrupt is because government wisely chooses to subsidize the company, essentially covering all its losses. And, why does government do this? It is because of the social and economic costs to society – unemployment, rise of crime and drugs, the need to maintain drainage and irrigation of the lands, etc. The social costs and harm done to society (if we can quantify it in dollars) are often much greater than the dollar amount of subsidies. The subsidies are a small price to pay.
But this subsidy cost is borne by all taxpayers only in the short run (five years) or until such time as government can complete the transition to a new economic way of life for all the directly affected workers. Listening to Opposition Leader Bharrat Jagdeo, you get the impression that the subsidization of GuySuCo must be a permanent burden for all the taxpayers. He does not even acknowledge the simple fact that at some point the underperforming estates must be closed or transitioned to a new crop. He does not even acknowledge that subsidization of a major industry cannot go on forever lest it bankrupts the whole nation. GuySuCo is running mounting losses each year and already saddled with a debt burden of US$410 million.
The future prospects are even worse. There is no chance of GuySuCo turning a profit any time soon, and therefore no chance of it ever being in a position to service its debt. And this debt should not be serviced with funds from the national treasury.
Although GuySuCo has already been subsidized for five or more years, both the previous and current governments have not spoken a word, much less begun to talk about the transition to new crops. This is the main reason why the current government will lose the public relations battle with the public. The sugar workers at Wales are in limbo. Being told they will get jobs at Uitvlugt several miles away and the private cane farmers must pay to transport their cane to Uitvlugt are not realistic.
Wales must be transformed into a new economic enterprise. Minister Holder, himself an economist, offered one criterion as to what that might be. He said, we do not need another Banks DIH that does not export and earn foreign exchange, nor a real estate developer that builds houses for the local market. We need to use these lands to produce a product that can be exported and earn foreign exchange.
Here is an extract from Mr Sukhdeo’s letter that also offers an idea of that new enterprise: “The biggest disaster to happen was when hundreds of farmers, and Wales Estate itself, ploughed down their coffee, cocoa, breadfruit, pineapple and citrus trees to plant sugar cane when sugar prices peaked in the mid-sixties. Wales Estate was producing and exporting cocoa”. The soil at Wales once produced bountiful crops – all exportable.
Year 2016 would see the government subsidizing GuySuco to the tune of US$60 million, approximately US$10 million of this sum would be going to bailout Wales. I say US$10 million can be better utilized to build a canning factory to produce canned fruits and vegetables for the export market. Sell or lease the lands to the retrenched workers – let them grow alternative crops for export.
Today, from my perch in New York I watched YouTube films of Wales workers protesting outside the parliament, and read of Jagdeo’s stump speeches urging on the workers to protest. I have trouble fathoming why it is so difficult for reasonable people to accept that a transition from sugar to other crops must begin now.
Yours faithfully,
Mike Persaud
