Dear Editor,
The report emanating from the GuySuCo Commission of Inquiry (CoI), and which was recently tabled in parliament clearly suggests that privatisation is the way to go. Many will know that several attempts at privatization have been tried before, using different approaches. Still, some may want to ask why then did we ever nationalize sugar, if we are now forced to reverse that decision in order to save the industry from ultimately collapsing.
I recall an agricultural economist stating that during the 1970s, Guyana had made two calamitous decisions that would be regretted shortly after, and these were the scrapping of the railway and the nationalization of sugar production. The negative impact on agriculture was huge, to say the least.
In Western societies, a vibrant, competitive private sector is seen as the key to creating wealth and driving socio-economic development, with government’s role in such an economic model, being mainly as a facilitator. Against this background, I want to make a comparison of Guyana’s two key agricultural industries – rice and sugar – to illustrate the difference in progress that were made over the years.
The rice and sugar industries in Guyana can be considered as having been taken on two completely different development pathways. The production of rice is a private-sector driven industry with a minimum of state intervention, whereas the sugar industry is largely state-owned, and with a very minor role for actors in the private sector. One can say that the rice industry has mastered the production side of the equation, but has faltered on the marketing side. Conversely, the sugar industry has consistently been unable to achieve production targets (with the exception of 2015 which was helped by favourable weather) and market quotas, and has not made a profit for the past decade, even though it enjoyed a lengthy period of preferential prices in the past, and heavy subsidization by the government which owns it.
Over the past thirty years, the rice industry has evolved to become modernised, very productive, efficient and responsive to opportunities. In that time, it has more than tripled the annual output of the mid-1980s. In 1984, Guyana produced 180,000 tonnes of rice, and in 2014 production reached an all-time high of 633,000 tonnes. The roles of government agencies involved in the rice industry are restricted to the provision of technical services, some amount of marketing support and overseeing the efficient and effective use of state-owned arable lands.
During that 30-year period, rice farmers were encouraged to be innovative, and they took that seriously. For example, in the past 20 years alone, we have moved from a state of bagging paddy in jute bags at the field site and storing at home until a miller is willing to accept, to a situation where grain carts are loaded alongside the harvester and delivered to the mill on the same day. In that transformation alone, there was a tremendous amount of cost savings. I only mentioned this one aspect of innovation as an indication of the power of free enterprise and healthy competition.
On the other hand, the sugar industry is essentially a monopoly that is operated by the state, with a minimal (though expanding) role for private farmers. Unfortunately, the local sugar industry has been unable to enjoy any of the advantages associated with monopolies elsewhere.
When comparing the divergent paths taken by the rice and sugar industries, their fortunes (and misfortunes), and where they are likely poised to go, one has to question whether the sugar industry would have fared better than it has, had genuine attempts at divestment been made earlier. Or if nationalization had not been done at all.
We are now at the crossroads of deciding where we want to take the sugar industry. At the outset of the GuySuCo CoI, persons were encouraged to drop emotional ties to the industry, and to take a hard look at what has to be done to keep the industry alive without making it a burden on the rest of the country. Quick privatization has been recommended by the CoI, but what exactly do we mean by ‘privatization’?
The word ‘privatization’ connotes a wide range of options, one of which is ‘limited divestment’, an option we should explore in fairness to all Guyanese. A prominent legal mind a few days ago commented that whatever form of privatization is chosen, we the descendants of slaves and indentured labourers must have first ‘lien’. I think that gentleman’s opinion resonates with the emotions of most, if not all, Guyanese.
Too much sacrifice was made for the sugar industry, for us to ever truly sever those emotional ties. In view of the historic importance of sugar in our society, any thought of allowing the vast wealth that this industry represents, to be passed to another’s hands should be handled cautiously.
I return to the concept of limited divestment, and to my comparison of rice and sugar. It is my humble belief that if private farmers, including growers’ cooperatives are given the chance – and supported ‒ to incrementally take over the cultivation of sugarcane, this form of privatization will be welcomed by all stakeholders.
If the performance of the rice industry in private hands is anything to go by, why then can we not trust the private sector to do the same with sugar? How insurmountable are the challenges affecting a transition to privatized sugarcane farming? For one thing, this process of privatizing sugarcane production was started a while ago, in small pockets of the West Demerara and East Corentyne districts, and to date is actually bearing some indisputably good results.
If we should choose this option of allowing our farmers to take the lead, the overarching role of the entity, GuySuCo, then becomes one of a facilitator of that process of domestic, limited privatization, a so far undeniably viable way to go.
Yours faithfully,
Khemraj Tulsie
