GuySuCo should be privatized as per the CoI recommendations

Dear Editor,

It is my belief that there should be a clear line of demarcation between playing politics and doing what is best for our country. It is my humble opinion that some politicians feel that the elections campaign is a ceaseless journey from one general election to the next. Such an approach will never be fruitful for our country and its people. After the results have been announced the focus should be social and economic development. Nothing else matters.

The decline of the sugar industry should be placed squarely on the shoulders of previous governments who have grossly mismanaged the industry and subjected it to massive corruption and cronyism. This can be seen from the persons selected at the highest level, and even some managers at the individual estate level. These negatives have indeed filtered right down to low level management. Theft, squandermania, mismanagement, cronyism and poor investment decisions or no capital investments characterized and pervaded the entire sugar industry. Things were bound to fall apart, and they did.

Moreover, the EU price cuts were known long before 2006 so these should not be used to mask the ineptitude of the previous administration, and its so called plan to ‘turnaround’ the industry did in fact worked ‒ it turned it the other way around! The EU gave the previous administration $34.8 billion which should have been used to upgrade and restructure the industry, but it must be agreed that this money was not spent usefully. The Skeldon Modernization Project was the death knell of the industry; not only did it bankrupt it, but nothing ever worked ‒ from the factory to the fields ‒ and it starved the other estates of much needed capital injections. The downfall of the Wales Estate is a prime example. The estates had to practise ‘voodoo crop husbandry’ which caused a massive decline in the yield per hectare. The canes simply got fewer and fewer. This was a direct result of not applying the correct amount of fertilizers on a timely basis and the same with the application of weedicides and pesticides. The commission highlighted over 31 problems which would have contributed to this decline.

There has been an increasing decline in production and productivity, and this was reflected in the increasing losses from $2.3 billion in 2009 to over $16 billion per annum in 2016. This has forced the previous government and this one to inject billions of tax dollars with no solution in sight (more than $60 billion to date, including $32 billion by this government). But the opportunity costs forbid such subsidies. The money could have been used more profitably in other sectors. However, this does not mean closure of the estates. The Commission of Inquiry had made it pellucid that “the Sugar Industry should not be a liability to the State. It needs to re-establish itself as a significant and positive contributor to national development.”

Yet the industry continues to be a liability. Let us look at the Skeldon Estate. During a live TV programme on NCN with the Agriculture Minister and myself I had mentioned that it is estimated that approximately $3 billion has been spent on this estate alone for the past two years to keep it afloat. This is in excess of US$15 million. Despite this massive injection of cash the estate continues to crumble.

Is it time to take the fatalistic attitude and conclude that sugar is no longer profitable? My answer is simple. Sugar is profitable and can be profitable if it is placed in the right hands. It will not be wrong to say that since nationalization in 1976 the industry has been on a gradual decline only buffered by a preferential EU market. Therefore, we must heed the recommendations made by the CoI. It says that “the CoI has deemed that a continued state-run GuySuCo in its present form/structure is strategically unacceptable. It would be an inefficient financial and economic decision. A decisive shift to private ownership and control of the assets now employed in sugar production has to be an essential element of any long-term resolution of the present paradoxical situation.”

The CoI also quoted the Caricom’s Council for Trade and Economic Development which concluded that “Agriculture needs to be treated as a business and not a social welfare project.” This is quite applicable to GuySuCo when the massive bailouts are considered. The CoI further added that “business is better run by businessmen as opposed to politicians. Whenever the lines are crossed between managerial prerogatives and political intervention the results are negative. History has proven that it is difficult for politicians to resist temptations to intervene on behalf of their constituents which are more often than not at odds with good business practices.”

Therefore, GuySuCo must be privatized, and the Skeldon Estate should be used as a privatization model in this process. GAWU’s empty rhetoric should not even be considered since they have no solutions to GuySuCo’s myriad problems. They can only do what they do best, and that is complain, criticize and protest. GAWU is more interested in self-preservation. Privatization of Skeldon will not only save the economy $1.5 billion per year but it will ensure the survival of the estate along with its labour force. If this was done at Wales Estate then many jobs would have been saved and many controversies avoided.

Moreover, if local investors with the necessary skills and expertise are given an opportunity to take over the estate then not only jobs will be saved (the top executives will continue to be Guyanese) but much needed foreign exchange will flow into the economy thus maintaining the stability of the US dollar. Therefore, our local investors must be given priority and special concessions if needs be.

It must be noted also that around the world sugar is profitable simply because it is in private hands. For instance, India, Thailand, with Jamaica being a prime example within Caricom. The Jamaica Minister of Industry, Commerce, Agriculture and Fisheries stated in January this year that sugar will contribute more than US$80 million. When it was in government’s control it was a struggling sector making huge losses, but since privatization the industry’s fortunes have changed significantly.

In conclusion, GuySuCo should be fully privatized as per the CoI recommendations, and Skeldon should be earmarked for suitable local investors and thereafter used as a model for the privatization of the remaining estates.

 

Yours faithfully,

Gobin Harbhajan

Regional Democratic Councillor

(APNU+AFC)

Former Member of the Board of

Directors (Skeldon Energy Inc)

 

 

Around the Web

Comments