PURE ECONOMICS
GuySuCo says proposed closure of Wales based on economic reasons
By Alva Solomon
MANAGEMENT of the Guyana Sugar Corporation (GuySuCo) will today engage the Guyana Agricultural and General Workers Union (GAWU) on the proposed closure of the Wales Estate.The meeting will also address such other issues as the movement of workers to the Uitvlugt Estate on the West Coast of Demerara.
Company Chief Executive Officer (CEO), Errol Hanoman told the Guyana Chronicle last evening at NCN’s studios that the sugar corporation will address matters which may arise, including severance payment and the absorption of the affected workers into the operations of the Uitvlugt Estate.
He said that GuySuCo would ideally like to have the matters underscored by February, when the first crop for 2016 commences.
JUST REASON
Hanoman, during an on-air interview on the closure of the Wales Sugar Estate, said there was a purely economic reason behind the decision.
While providing a picture of the industry, he said that for a number of years, limited resources were being spent on the industry, and that GuySuCo has been diverting resources into Wales even as the entity has been struggling to reach its target numbers. He said that the entity has lost credible suppliers due to its troubled state, adding that the Corporation owes the National Insurance Scheme (NIS), the Guyana Revenue Authority (GRA), as well as to its pension schemes.
This year, GuySuCo is looking at producing 240,000 tonnes of cane as its national target at a projected loss of $16B.
But why Wales?
According to Hanoman, there existed a number of problems at the estate, mainly regarding the estate’s factory and field infrastructure. He said that sadly, 60 % of the sluices and certain aspects of irrigation infrastructure are rundown, and that 75% of the bridges on the estate are in poor shape. Added to this, he said the factory is old, and the cultivation at the estate is also in poor condition.
Hanoman detailed that Wales has a cultivation scope of 3356 hectares, 2439 hectares of which are currently under cane. The remaining 917 hectares, he said, have been taken out of cane because of heavy weed infestation. “These areas are uneconomical to maintain,” he said by way of explaining why that particular decision was taken.
Of the 2439 hectares under cane, approximately 40% are highly infested with weeds. Hanoman said that the yield of some of these areas is as low as 15 tonnes of cane per hectare “when it should be higher.” He said that approximately 50% of the lands at Wales have to be re-tilled and replanted, and that approximately 40% of the irrigation system is clogged up. Cleaning this would require a large sum of money, he added.
“Were we to try to refurbish Wales Estate, finding that sort of money will again require us to divert sums from the other estates to bring Wales back,” Hanoman said frankly. He said that GuySuCo is trying to stop the practice of diverting key resources from the good performers to keep these afloat. “Wales was effectively bleeding the industry,” he posited.
OUTDATED
General Manager of Technical Services, Yusuf Abdul, said that the factory produces some 95 to 100 canes an hour, a figure he deems uneconomical. He, too, described the factory as old, saying that some equipment there are as old as 100 years. He said that the steam generation equipment at the factory, a main aspect of the operations, is also aged.
Raymond Sangster, General Manager of agricultural services, said that 9000 tonnes of sugar came from the Wales Estate last year, and this he noted gives an uneconomical picture of the estate. “When you look at agricultural cost at Wales, this is one of the highest cost estates in terms of agriculture, and this goes to the factory as well,” Sangster said.
As regards the workers, Hanoman said that the issue has to be examined in two aspects. He said that in the short term, GuySuCo is looking to improve the utilization of Uitvlugt Estate’s output. In the days ahead, workers will be identified for employment at Uitvlugt, while others will be made redundant.
“The important thing, though, is that we do not want to over-employ at Uitvlugt, which would create another cost problem there,” Hanoman said.
LOOKING AHEAD
While sensing sugar will not have a profitable future, Hanoman believes that opportunities in the form of non-sugar activities can be explored.
“We are optimistic that we can start that process at Wales…,” he said, adding that this year, GuySuCo will embark on some exploration of ideas in relation to non-sugar projects. He posits that by October 1 this year, GuySuCo will start, in commercial scale at least, one non-sugar activity at Wales, which the Corporation is sure will make a profit and create employment.
He said that once this is done successfully, the future of GuySuCo in one scenario can fit into sugar as a division, consolidating its position in the economy while a serious of non-sugar activities, which are profitable from the beginning, are carried out. “So, when you consolidate that business, what you end up with is a profitable enterprise,” Hanoman added.
Can similar closure action occur at other estates?
Hanoman said that in terms of efficiency, the East Demerara Estates of La Bonne Intention and Enmore can be made more operable, in which duplication practices are being examined. “We do believe that once we complete integration of LBI and Enmore, then we can make the East Demerara Estate a much more efficient estate,” he posited.
On Monday, the government announced the closure of the Wales Estate, citing significant losses which the facility was causing over the years. The government, in making the announcement, said that it is impossible to make sugar production at the estate viable, which is made further worse by the gloomy outlook for sugar prices for the foreseeable future.
