At the end of 2012, GuySuCo, as the prices for sugar went over US$700 per tonne, was offered a contract. However, according to union officials, the Corporation rejected the offer with the hope that the price would even increase more. Unfortunately, the prices started sliding. In 2013, GuySuCo reportedly was offered another contract, this time for US$500 per tonne. This again was rejected. “Because of that rejection in 2012 and that one in 2013, we estimate that almost $14B was lost to GuySuCo. The Board of Directors and management inexplicably took a decision not to go with the contract,” a senior union official said yesterday. The year 2014 ended with sugar being bought for US$350 per tonne.

Blunders upon blunders, by the Corrupt PPP/C, today leaves Guysuco in a very precarious position..........if these scumbags were making loss at $700 per ton of sugar, what makes them belief that at $350 dollars per ton, a turnaround of Guysuco will come about?

Quote "The union said that GuySuCo’s management has made a “fundamentally flawed”, “unprofessional economic” decision to reject the three year contract from Tate and Lyle, in late 2012. GuySuCo settled for a mere one year agreement “resulting in significant financial loss to the sugar corporation for 2013 to 2015 inclusive.”unquote

GuySuCo Board drives company further into the ground

- NAACIE joins calls for independent inquiry

The calls are mounting for an independent inquiry into the operations of the beleaguered Guyana Sugar Corporation (GuySuCo).

NAACIE’s General Secretary, Kenneth Josesph

Yesterday, the corporation’s second union, the National Association of Agricultural, Commercial and Industrial Employees (NAACIE), said that it can no longer tolerate the situation which has seen one bad decision after another by the board and management. “It is against that litany of poor Board level and management decisions and all their consequential woes for the sector that NAACIE throws its unstinted and categorical support for the call for an urgent Commission of Inquiry into Guyana’s besieged sugar industry, as mounted by the major union in the sector, the Guyana Agricultural and General Workers’ Union (GAWU).” The union, which represents mainly office workers at the corporation, said 2014 was the year with the second lowest production in the last 24 years. “Senseless pre-harvesting of pre-ripened cane causing poor quality production, also compromised quality and production potential of the 2015 first crop.” The union also criticised management saying that it made a “fundamentally flawed”, “unprofessional economic” decision to reject a three year contract from its European customer, Tate and Lyle, in late 2012. GuySuCo settled for a mere one year agreement “resulting in significant financial loss to the sugar corporation for 2013 to 2015 inclusive.” NAACIE is of the view that the industry is indeed besieged and under siege by the “atrocious decisions” by both the

Agri Minister, Dr. Leslie Ramsammy, and GuySuCo’s CEO, Dr. Raj Singh

Board of Directors and its management. NAACIE was also highly critical over the manner in which GuySuCo goes about planting canes. “There is woefully inadequate expert management monitoring of the husbandry in the fields. The results are poor plant nurturing, poor roads, poor punts maintenance all resulting in poor quality product.” The Board of Directors, led by former Education Minister, Shaik Baksh, was also not left out. “The Guysuco Board never by itself seems to enquire into its own stewardship. This is apparent from the repetitive policy and management blunders yearly. The sectors, employees, suppliers and our general population then feel the economic squeeze. How long must we merely mouth that sugar is too big to fail” NACCIE said that the annual cash injection from the national budget have failed to stop the haemorrhaging at GuySuCo. “The taxpayers are being exploited. A national expert, impartial inquiry must be mounted now. Not so much to cast blame now…but to rescue this vital industry which offers succor to thousands and to the nation’s life source…” Last year, the 16,000 worker industry, once the biggest in the country, barely scraped past its target of 216,000 tonnes. However, a drop in price on the world market by more than 50 percent in the last three years saw the industry’s cash takings taking a beating. As at June last year, the industry owed $58B to local and overseas banks and to suppliers. The latter has been demanding cash up front.

GuySuCo’s Chairman, Shaik Baksh

The industry has also been producing sugar at US$0.30-plus per pound, almost double for what it is selling for. A “shakeup” of the board saw its former Chairman, Dr. Raj Singh, being appointed the Chief Executive Officer, while Baksh was named the Chairman. The Opposition has called for GuySuCo to present a plan detailing how the industry’s fortunes will be reversed. However, GuySuCo has failed to do so. GuySuCo has been a touchy subject for both Government and the Opposition as a significant number of votes come from the industry.

Skeldon  Estate woes force discussions

“I believe within another year or so, Skeldon will be blasting!”- Armogan

By Leon Suseran

Region Six Chairman, Mr. David Armogan, is confident that the malfunctioning Skeldon Sugar Estate will become more viable in a year or so. Armogan recently stated that from his interactions with officials at that estate, and from information provided, there is going to be a turn- around of fortunes at the problematic sugar factory located at Skeldon, Corentyne. The Chairman noted that the factory had “major problems” when it started over a year ago, “but the problems have become fewer and fewer.”

Region Six Chairman, David Armogan

The Skeldon situation has continued to be an embarrassment for the continuous administrations of the ruling party. The US$200M project, which included the factory and expansion of cane fields, was hailed as a saviour for the industry. However, the Chinese-built factory has been a drag on the entire industry, with costs of production way above that of the other six estates in Berbice and Demerara. Former President Bharrat Jagdeo had vowed to personally see that Skeldon’s fortunes turn around, but there has been silence in his corner for one of his babies. Among some of the biggest problems for the new factory is the punt dumper which takes the cane into the factory. It has been faulty from the start, despite over $1B spent by Government to fix that and some other issues. Another problem is that the capacity of the factory requires lots of canes, something that cannot be supplied at the moment. For hours on end, workers say, the factory would stand idle waiting on cane, an intolerable situation. However, Armogan credited the last performance in the crop for Skeldon Estate “as the best” it has ever been, since its inception. Recently, the factory recorded one of the worst performances of the four Berbice estates during the last crop. Skeldon, the newest factory in the country which was only commissioned in 2009, fell behind the target by 5,449 tonnes, closing with 21,813 tonnes for the second crop.

Troubled Skeldon Factory

According to figures provided, the factory also for the second crop, required an alarming 26.9 tonnes of cane to produce one tonne of sugar, more than double the industry average which stood at 12.9 tonnes of cane to one tonne of sugar. But Armogan is positive about a more successful sugar industry in the not-too-distant future. He said that the Tonne/Cane per Tonne/Sugar (TCTS) tapered off during the last crop to 14.5. Also, despite the controversial manager at Skeldon Estate, Armogan credited Devendra Kumar for doing a good job, “in bringing back the efficiencies that were lost…I think he paid attention to where the excesses were and where he could have pulled back by cutting finances and so. “He did that and managed to bring down the cost of production at that estate in a big way because of the measures that were implemented by this Manager when he went to Skeldon Estate.” The official admitted that he would be kept abreast on the situation at Skeldon and other Berbice Estates from time to time, “to find out how they are going…we have a very close relationship.” The first blow He alluded that prior to 2011, the European Markets indicated to Guyana that they would no longer be giving a guaranteed price for sugar in Guyana or in the Caribbean, “and they want us to work with the open market system— whatever was the world market price for sugar, that was what we were going to get.” Armogan described that situation as “the first blow” to the sugar industry.  Since then, the price for sugar, he added, has reduced by more than a third. “Even though, at that point, we were producing at a break- even…when the one-third drop in price, as a result of the actions of the European Union (EU), [it] virtually put the sugar industry on its backfoot.” He added that one of the ways the government thought to fight the drop in the prices of sugar, was to modernize and increase efficiency within the sugar industry, reducing the cost of production, “because once prices start to go down, your only option is to start reducing your costs.” Thus, the Skeldon Sugar Factory was constructed and everyone thought that with its high production, the situation would become normal again, “and  hopefully the whole industry, with a buffer from Skeldon, would have been able to reduce the cost of producing sugar, to somewhere at a break- even…” At the moment, the cost is more than seven US cents per pound of sugar, more than what is being collected on prices. Works going on to fix Skeldon Armogan admitted that the factory “encountered problems from day one, and work is still going on at the Skeldon Factory to make sure we can bring it up to that level of efficiency whereby we can reduce the cost of producing a pound of sugar.” He said that currently, both local and foreign engineers are working assiduously to bring the factory up to an acceptable level of standards.  They are working on mechanical equipment to ensure the estate becomes more profitable in the near future. “I believe within another year or so, Skeldon will be blasting and once Skeldon gets blasting, the sugar industry is going to come up back again!” “Not too far from now, Skeldon is going to be what we want it to be!” He does not believe monies are being wasted to fix the Skeldon Estate and even believes the project itself was “beautifully conceived and I think it was a project that had its merits.” “We didn’t get the efficiencies right and that’s what we are working on today.” Sugar levy The official noted that it was the sugar levy that kept the industry going for many, many years, even when the other sectors were not doing well. Armogan said that Guyanese need to understand the true importance of sugar in people’s daily lives and for the economy and do all that can be done, “to help sugar get back on its feet.” “Sugar used to buffer the Guyanese economy— when Cheddi {Jagan} took over in 1992, one of the first things he said was that he would remove the sugar levy, and when he came into Government, he realized that if you take that levy off, the country (would) go into bankruptcy and he couldn’t do it!” The Regional Chairman said that the persons and groups who peddle the ideas of wanting to close down the sugar industry, “do not know the history of sugar in this country and they don’t understand what they are talking about; because our history in Guyana is intricately intertwined with the history of sugar plantation in Guyana— it’s in our blood!” The Chairman also mentioned that the other factories in Berbice are doing quite well. Albion Estate, he said, has produced more than 5,000 tonnes above their targets, while Rose Hall produced 2,000 above its targets. “Once Skeldon begins to pick up its true capacity, we are moving!”

Sugar Production vs Profitability

At the end of 2010, we were heartened when the Minister of Agriculture informed the National Assembly that 2011 would be a “landmark” year for the sugar industry. Alluding to the massive investments and support that the government had poured into the industry, in addition to the turnaround blueprint that had been crafted, he announced a production target of 300,000 tonnes for 2011. Against the 2010 background of the lowest production in two decades this would have been a remarkable achievement for the troubled but still key industry for Guyana. A month later, the then Head of the EU in Guyana, Geert Heikens, opined that in his estimation, the Guyana Sugar Corporation had set too ambitious a target for the year. Since the EU was the largest and most profitable market for GuySuCo’s production and was providing funding for the revamping of the industry through budgetary support, one would have thought he had some legitimate interest in the matter. Not so claimed the then Agriculture Minister, Robert Persaud: “The number set by GUYSUCO would have been based on a realistic assessment. I, myself, would have questioned the number, but they assured that based on the carry over which was about 40,000 tonnes and the work they would have done would make it possible.” He suggested that Heikens would be better served if he confined his attention to ensuring the EU kept its commitments to the industry rather than speculating on its targets. All of this might have been dismissed as idle byplay were it not for the production figures that have emerged since then. The targets have grown smaller and smaller. The target for this crop has not been set even. By this time last year it was known. In 2011 the first crop was identified as possibly the longest first crop in history.  It ended at 114,000 tons. What is very troubling is that even though Minister Persaud was assured that 40,000 tonnes was being carried over; the crop was extended and workers from other estates chipped in, but the target was still short by some 30,000 tonnes. The situation has not changed, crops have grown progressively smaller.  A few years ago the experts concluded that something had to be radically wrong with the planning unit of GuySuCo to be so far off target. Today the authorities are still to come to grips with the reality that sugar could be dying. We cannot keep blaming the rains: even though we had some unseasonable rains, the generally much heavier precipitation in May never materialised. It should have been evident for several years now – but for sure after last year – that the shortage of cane harvesters is now a systemic one. One concern we have is whether the EU budgetary support is linked to what is obviously an unrealistic and unreachable target. If this is so then we might lose “corn and husk” as we did last year: no EU support and no income from the missing production. The other concern we have is the cost of production as GuySuCo pulls out all the stops to reach the “landmark” target. The cist of production is way above the world market price for sugar. In addition, because of the recent proroguing of parliament and certain challenges, the European Union opted to withhold its budget support. The result is more suffering for GuySuCo. Even though the total cane expansion for the Skeldon Modernisation was never reached it still exceeds the capacity of the “boilerless” plant. What is the fate of the excess cane for the last few crops? While we might be recovering the costs of fixing the boilers etc. from the Chinese, what about the higher costs of the sugar produced? The other factories have all been operating on a stop-go basis due to intermittent supply of canes: this has to make the fixed costs astronomical. The costs of transporting the workers from as far away as Blairmont to Enmore and LBI to Wales etc. has to be adding up. What is GuySuCo trying to prove?

the new government will rescue the sugar estate