SAVING WALES …aquaculture, dairy business, other crops for Wales

By Tajeram Mohabir

THE Wales Sugar Factory is set to be converted into a dairy/livestock business, and feasibility studies will soon commence in the areas of aquaculture and other crops as Government looks to return the estate to profitability.Agriculture Minister Noel Holder explained that the aim of these measures is to cushion the impact of the closure of the factory and simultaneously aid the economic viability of the estate, which has been projected to make a loss of some $1.6B this year.

Making his contribution to the budget debates on Wednesday, the Agriculture Minister said that from preliminary indications, professionally undertaken aquaculture would be a major profit-generator, providing reasonable employment.

Minister Holder also informed the House that work already done has indicated that a number of well-known crops can be successfully grown on the Wales soil. “Profitability and employment are key criteria,” he said, contending that the Opposition’s attack on the closure of the Wales Estate Factory is pure political rhetoric.

Also as part of the restructuring, an all-weather road will be developed connecting the Wales farmers to the Uitvlugt factory.
Farmers who currently rely on punt transport would have their lands replaced with cane lands that are more conducive to road transport, but ancestral lands will be retained by the farmers/community.

MINIMISE REDUNDANCIES
Minister Holder also indicated that GuySuCo has commenced discussions with workers at Wales, offering them alternative employment at Wales and at Uitvlugt in a bid to minimise the anticipated redundancies.

“It is expected that the number of redundancies at the end of the year would be lower than anticipated as the non-sugar activities would require skilled and unskilled labour; and vacancies arising at Uitvlugt in the course of the year will only be filled by workers from Wales. Workers would be encouraged to become farmers with extension services provided by GuySuCo,” the Agriculture Minister said.

But PPP Member of Parliament (MP) and veteran trade unionist Komal Chand contended that the planned feasibility studies on aquaculture and other crops for the Wales Estate is an arbitrary move as he passionately urged the Government to reconsider closing the factory. The closure, he stressed, will affect some 2500 workers directly and thousands more indirectly, bringing much

Don’t close Wales: PPP MP Komal Chand addressing the House on Wednesday

hardship to residents of the community.

Minister Holder, who spoke earlier, however disagreed with this contention. To much approval from members of the Government’s side of the House, he said the Ministry of Agriculture is committed to the 1700 workers and 774 private farmers from Wales. Mr Chand, who is also President of the Guyana Agricultural and General Workers Union (GAWU), informed the House that the Opposition finds it difficult to comprehend the move by Government to close the Wales Factory, as this was not recommended by the Commission of Inquiry into the sugar industry.

Further to this, he said the problems of poor drainage and the rundown state of the Wales Factory have been overstated, pointing out that vital components of the factory have, in recent years, been replaced.

He also claimed that sugar workers are being discriminated against, pointing out that though GuySuCo surpassed its production target in 2015, sugar workers did not, for the first time in 35 years, receive their Annual Production Incentive (API).

A CHALLENGE
Added to this, the PPP MP said the $9B allocated for the sugar industry this year are $3B less than what the Government had promised. This, Mr Chand contended, would negatively affect the Government’s plans to modernise and return the sugar industry to profitability.

Minister Holder, however, maintained that the Government is committed to securing the future of the 17,000 people employed in the sugar industry and their dependents. “This cannot be done by sustaining the industry in its present shape. To maintain the status quo would spell disaster for the industry and its employees sooner than most people think. The future lies in an industry that is more than sugar. The financial woes of sugar are so grave, the needs of the economy are so great, that the transformation of sugar cannot be done gradually. Time is of the essence; the process has to start immediately; and while there will be some initial redundancies, opportunities for reemployment will be created in a relatively short period of time.

“Some current workers may find themselves becoming entrepreneurs in the near future. Wales Estate is the beginning of this process. The attitude of the Opposition and GAWU is difficult to understand. They had 23 years to reverse the fortunes of the estates, but did nothing except take them further into depression. To date, neither has offered an alternative sensible constructive solution,” the Minister contended.
RESISTING CHANGE
All stakeholders, the Minister said, must appreciate that it cannot be business as usual for the sugar industry. He stressed that to resist change is wanting to see the demise of this industry. The $9B allocated to GuySuCo this year, he said, will be used towards assisting the industry in its recovery and modernisation programme, and for budgetary support to the Corporation.

The Coalition Government has made major changes in the management of the sugar industry since assuming power. After years of failing to reach its production target, GuySuCo achieved its target in 2015. “This must be attributed to the implementation of good management measures. These are the positive signs of recovery the APNU+AFC promised the people of Guyana. Mr Speaker, for the past two decades, GuySuCo’s former Board and the past regime were warned that the sugar industry needed to address its cost structure if it is to survive and be viable. Sadly, these warnings were ignored by the Board and Government. The culture of cutting the industry’s capital expenditure and different kinds of bailouts were instead preferred. Such bailouts included the Government obtaining lands from GuySuCo and only paying for some of it; subventions from the Ministry of Finance; and latterly (in 2015), the very unusual act of disposing of the Skeldon Cogeneration Plant to the GPL/SEI.

“In the absence of any programme to rationalise the Corporation’s debt structure, these knee-jerk actions served as mere palliatives as the sugar industry’s financial deficit escalated at an alarming rate.”

RE-ORGANISED
“It cannot be business as usual,” Minister Holder said, stressing that the industry has to be re-organised, costs re-engineered, and operating deficits have to be reduced.

This year will see a marked decline in the cost of production at the East Demerara Estates, as the proper integration of LBI and Enmore is completed. A concerted effort is being made to reinforce the technical skill levels with the assistance of very experienced former technical staff of GuySuCo, and the sale of lands which are considered surplus to the industry’s requirements will recommence, with the proceeds applied to reducing the Corporation’s indebtedness to the banking system.

The Skeldon Cogeneration Plant, Minister Holder also announced, will be returned to GuySuCo, and an increase in the tariff per KWh negotiated. Other plans for the industry this year include the recovery of cost of services to third parties, including drainage and irrigation; an increase in value-added production at the Blairmont and Enmore factories; and each sugar estate will continue to keep its expenditure — yields, recoveries and other related indicators — under the microscope to ensure production and unit costs are significantly improved.

In Budget 2016, some $400M have been allocated to the Sugar Industry Mechanisation Project, which, among other things, deals with the purchase of machinery and equipment for semi-mechanical planting, mechanical harvesting and land preparation.

“From all the data we have seen, it is unlikely that the sugar business would become profitable in the foreseeable future. It is our hope that GuySuCo would not be about sugar only, but a business in which sugar is but one activity. And while sugar may be making losses, albeit at a much reduced level, the other activities (co-generation, other non-sugar crops, other forms of diversification) would be so profitable that when their results are consolidated with that of sugar, the business would show a profit and become cash positive.

“The Board and management feel that this is possible. Let us all work with them and make it happen,” Minister Holder urged members of the Opposition.

Sugar production for 2016 is projected to be at 242,287 tonnes, a five per cent increase over the 2015 production.