November 12,2016 Source

Dear Editor,

The Guyana Sugar Corporation Inc (GuySuCo) would like to respond to Mr Hydar Ally’s letter that was published in the Stabroek News on November 2 titled ‘The government should reconsider its position re the sugar industry’.

Mr Ally’s letter was lacking in terms of bringing a scientific perspective and positing an approach that would enable GuySuCo to become a resilient and sustainable business.  In his letter he urged the government not to downsize the sugar industry in the interest of the workers, the economy as a whole and for historical/sentimental reasons. His solution was for the government to continue to invest in the sugar industry to increase production and productivity, thereby reducing its unit cost and returning it to profitability. He further stated that it was the government’s responsibility to rescue the sugar industry. While Mr Ally’s letter mainly addressed the government, we wish to provide the following points of clarification.

First of all, the corporation wishes to remind Mr Ally that GuySuCo is a business, therefore any analysis, strategic thinking/planning or conversation on the entity, going forward, has to be around how to make it resilient, sustainable and profitable.

Many persons, who are a part of the conversation on GuySuCo, are still very much at the emotional level and are more engrossed with the sentiments of the sugar industry.  However, the challenges of GuySuCo cannot be addressed with emotion and sentiment only. The following are real facts about GuySuCo and areas that must be considered in re-organising the corporation.

GuySuCo’s current cost of production is around US 37 cents per pound while sugar prices are approximately US 20 cents per pound; this is an 85% disparity. Employment costs alone are in the region of US 21 cents per pound. Further, with the abolition of the European Union (EU) sugar quota on September 30, 2017, there may be a further decline in sugar prices widening this disparity.

In order to overcome this, not only would significant investment be required in the industry to increase productivity and production, but there would have to be a radical re-organization of its current structure.  The corporation cannot expect to continue to carry on business as usual and expect better results.

With the abolition of the EU sugar quota, Guyana would have to dispose of significant tonnages of sugar on the enlarged world market. The prices are uncertain and as such, the returns are uncertain. This in turn will affect the planning for and development of the country as a whole.

This brings us back to the same point that Mr Ally indirectly made of the time when sugar was profitable while the other sectors were not, viz, Guyana should not have all its eggs in one basket. GuySuCo being a single crop entity has placed the business and its stakeholders in an extremely vulnerable position.  Thus, the diversification concept is an approach being implemented in the business strategy of the corporation to ensure its resilience and to move towards a position of profitability.

The corporation, in its short, medium and long term strategic planning, has to build more predictability and a greater degree of certainty into the business – both the business of sugar and the business which includes diversification.

Sugar production is a very labour intensive process and therefore requires a large workforce, specifically for planting, crop husbandry, harvesting, and factory operations. Over the years, however, the corporation has been struggling with consistency in the workforce in these areas, particularly in agriculture operations. If a full complement of planters and crop husbandry workers do not turn out, this will affect the number of hectares being cultivated and maintained. On the other hand, if the harvesters do not turn out, this result in canes over maturing, staling if already burnt, carrying over to the next crop and ultimately, affecting sugar production.

Table 1 below represents the turnout of planters at five estates for the first and second crop in 2016 while Table 2 represents the turnout of harvesters at six estates for the first and second crop in 2016.

Table 1

Planters’ percentages for attendance for First and Second Crop 2016

Planters          Percentages

First Crop          64.27

Second crop          67.25

Table 2

Harvesters’ percentages for attendance for First and Second Crop 2016

Harvesters          Percentages

First crop          58.08

Second crop          60.59

The corporation has also found that during periods when there is a boom in the forestry or mining sectors, the attendance in the planting and harvesting areas declines significantly.

Another critical area in the conversation on re-organising the business of sugar is strike action and loss of man-days in the corporation.  During the past ten years, strike action ranged from 160 to 250 incidents per year.  Up to September 30, 2016 there were 112 strikes in the industry.

Over the period 2005 to 2015, the total man-days lost due to strikes were 813,437. In 2009, the highest number of lost man-days was recorded at 130,171, while the lowest was 32,064 in 2014.  As of September 30, 2016, the total man-days lost were 29,862.

Being a labour intensive corporation, over 150 strikes per year have, in no small measure, contributed to the decline of the corporation and have impacted significantly on its financial state.

The unions, especially the Guyana Agricultural and General Workers Union (GAWU), have been a contributory factor to the high number of strikes, loss of man-days and therefore to the non-profitability of the industry. Therefore moving forward any discussion with the unions must be on the premise of them evaluating their role as a stakeholder in contributing towards building resilience, sustainability and profitability into the business.

Downsizing the sugar industry, and complementing it with other viable agricultural projects, simply means that we are downsizing the source of the losses, reducing and eventually eliminating the dependency on the national treasury and sustaining employment, all for the benefit of national economy. This is indeed in line with the responsibility of the government.

While GuySuCo’s current circumstances present a real challenge, they also present a rare opportunity, that is, for a single industry to be the catalyst for changing the shape of the Guyanese economy. Currently the economy has a triangular shape – a small group at the top, the apex, a slightly larger group in the middle, and a huge group at the bottom.  The aspiration of the government is to grow that group in the middle, and if that happens, it will ultimately change the shape of the economy from triangular to a diamond shape. There would then be a small group at the crown or top, the largest group at the girdle or the widest part and a small group at the pavilion or the lower portion of the diamond-shaped economy.

The group at the top usually consists of people with power, wealth and status, the group in the middle consists of those with power, wealth or status while the group at the bottom consists of people with neither power, wealth nor status. GuySuCo has recognized that some of its employees are at the base of the triangle. Hence, the current economic situation has presented an opportunity to put more ownership and responsibility into the hands of persons at the base of the triangle by transforming them into entrepreneurs, etc.

Why would Mr Ally not be interested in supporting a programme that has the potential to move citizens from the base to a higher level that could change the shape of the economy as well as so many other aspects of the society?

I would like to conclude with two quotes: “Change is inevitable in a progressive country. Change is constant.” (Benjamin Disraeli, 1867) and “Progress is impossible without change, and those who cannot change their minds cannot change anything.” (George Bernard Shaw).

Yours faithfully,

Audreyanna Thomas

Senior Communications Officer

Communications Unit