Dear Editor,
Among the many issues confronting the Guyana Government, few are more pressing than the need to resolve the future of the Guyana Sugar Corporation (GuySuCo). Resolution of this matter demands that Government take a fresh look and be prepared to try new approaches that match the challenges facing the sugar industry. Decisions regarding the future of GuySuCo will directly impact the lives of thousands in Berbice and Demerara communities and have implications for fiscal management, agricultural policies countrywide, models of public/private sector partnership and environmental management. Increased revenue from oil can make a big difference by expanding the policy options available to the Government.
The position of GuySuCo at this time (based on available data) is one of declining output and efficiencies. Sugar production declined from 331 thousand metric tons in 2002 to 184 thousand in 2016. Falling production has drastically slashed revenue resulting in annual losses that reached $17 billion (US$85 million) in 2014. By all indications, these losses have continued to escalate and are now much higher than the 2014 level. Declining output has been accompanied by continuous losses and escalating debt, resulting in large injections from the Government being constantly required to keep operating. Maintenance and investment have been under-resourced, contributing to declining efficiency and performance. The situation is clearly unsustainable. It calls for resolution, and soon.
Public attention at this time is focused on the question of reopening the estates that the previous Govern-ment closed. The new Government has committed to reopening three of the four sugar estates that were closed, Skeldon, Rose Hall and Enmore. It has decided that Wales cannot be saved. What is at stake are the broader questions of whether the Government will 1) continue to prop up the sugar industry with public funds, 2) privatize (assuming that interested investors on acceptable terms can be found), or 3) embark on a process toward the eventual closure of the industry altogether.
The Commission of Inquiry appointed in 2015 to investigate the industry recommended privatization. Bharrat Jagdeo, then Leader of the Opposition, is reported in 2016 to have rejected the idea of privatization as potentially a strategic mistake, arguing that not only does the industry sustain thousands of families through employment, but it also provides drainage and irrigation for East Coast, Demerara. Privatizing the industry would, he argued, jeopardize the continued provision of employment and critical services. This is a flawed argument because to the extent that the Government has to keep bailing GuySuCo out financially, it is the Government, and not GuySuCo, that is standing the cost of the drainage and irrigation and other services. Transferring these costs from GuySuCo’s balance sheet to the Government accounts where they belong could possibly make a significant difference to the company’s profitability.
I am no sugar expert, but my instincts tell me that after hundreds of years producing sugar, the future of GuySuCo is not to be taken lightly. It would appear to me that the highly diversified range of products from sugar production, among them raw and packaged sugar, rum, ethanol, energy, and molasses, must surely offer viable options worth exploring. Why, there may even be opportunities as a tourist attraction with organized tours of sugar and rum factories one day when we have enough tourists. And strategic rationalization of the number of factories for scale of production and efficiency has to be a part of any plan going forward. Maximizing employment and the economic prospects of communities need not mean reopening all of the closed estates.
But there is also a wider context for consideration of the future of sugar in Guyana. With GuySuCo being the largest landowner and agricultural enterprise in the country, the decisions must be consistent with the goal of sustainable agriculture, in income, quality-of-life and environmental terms. Decisions must observe the need to preserve the land and take account of environmental impacts while generating livelihoods. Diversification is a buzz word these days that is more easily said than done, but this is an inescapable element of a sustainable agriculture strategy.
Restructuring the sugar industry is a massive undertaking given the way it is embedded in Guyanese history and society. Even though an objective is to achieve efficiencies and viability, it is inevitable that transitioning to a different model will bring increased short-term costs for long-term gain. This is one example where increased revenues from the oil industry can help to lay the basis for a more diversified economy.
Yours faithfully,
Desmond Thomas
