February 8, 2016 Source

Diversification at the Wales sugar estate will entail land for displaced workers to engage in cane and other types of farming according to GuySuCo Chairman Dr Clive Thomas who yesterday defended the plan to close the estate noting that the industry was producing the sweetener at 45 US cents per pound while being paid a third of that.

“…as Chairman of GuySuCo I state, without qualification that, in the case of the intended Wales estate closure, the GuySuCo Board and its management team have exercised `their bounden duty’ and responsibility to secure a better future for the industry, without any outside instruction or direction, whatsoever. In deciding to close the Wales estate in 2017, our aim is to promote the greater long-term good of the entire workforce, the industry, and all its stakeholders, taking into account fully, the “dire straits”, in which GuySuCo has found itself in during recent decades,” Thomas wrote in his Sunday Stabroek column yesterday.

Government last month announced its intention to close the Wales Sugar Estate, the first major decision it has taken on the beleaguered industry which has seen slumping production over the last decade and swingeing debt. Opposition leader Bharrat Jagdeo had accused GuySuCo’s Board and management of being “mere tools” to carry out the intentions of government which, according to him, was to commence the closure of sugar estates starting with Wales.

Workers have protested the decision to close the estate though government has said that plans are in the pipeline to cushion the impact of the closure of the Wales estate and factory. However, to date, it has not outlined in great detail what the plans are and Thomas elaborated a bit more yesterday and said these will be rolled out later this year.

“…the closure of Wales is immediately linked to the commencement of diversification programmes envisaged to begin in October coming this year. Some of these programmes involve lands for workers to engage in peasant cane farming and lands for their farming other crops as well. There are also programmes to seek to determine the commercial feasibility of alcohol production and aquaculture by GuySuCo at Wales,” he said.

According to the Guysuco chairman, the expectation is that farmers’ cane from Wales will be taken to Uitvlugt. “And already the mapping of transport for the canes is underway; engagement with potential cane farmers has started; and logistics are being developed. Discussions are also afoot to see how many workers (and where) can be absorbed at Uitvlugt,” he added.

Thomas said that the GuySuCo Board and management team are fully committed to their responsibility to lead in the reshaping of GuySuCo and the sugar industry. “Further, in so doing, they will undertake the fullest effort to ensure that such reshaping does not disproportionately heap burdens primarily on the poor and the powerless, thereby deliberately leaving them behind. All are committed to avoid the uncaring fallout, which has traditionally haunted industrial/organizational reshaping in Guyana,” he declared.

Thomas emphasised that the shuttering of the estate next year is for the greater good and said that the corporation is in “dire straits.” He pointed out that GuySuCo’s unit cost of production last year was above US45 cents/lb while the raw sugar price it obtained that year averaged less than one-third of its unit cost of production.

Accumulated debt

He also noted that GuySuCo’s accumulated debt in 2015 was over $80 billion. In effect the company was bankrupt; dependent on government bailouts and handouts; and businesses did not want to have commercial dealings with it, as these were considered too risky, he declared.

Thomas said, on top of its financial situation, GuySuCo’s total employment cost last year alone was equal to its sales revenue. “The survival of the entire sugar industry became dependent on: the speedy rationalization of its cost structure (including lowering unit cost); the introduction of value-added activities; the refurbishing of the better performing estates; as well as timely selective diversification into profitable alternatives designed to improve its product mix and to secure better prices,” he said.

The GuySuCo chairman declared that it would be no surprise therefore for readers to note that banks and financial institutions had become unwilling to provide loans to GuySuCo, without cast-iron guarantees; suppliers had become unwilling to supply goods and services on ordinary commercial credit terms; and even international institutions were reluctant to provide project soft loans/grants to GuySuCo because of doubts about its viability and survival.

“As matters stand, different estates are in different states of disrepair. Rather than spread limited resources too thinly over all estates, the board and the management team have sought to make those limited resources much more efficient in their use, hence the decision on Wales. Relatively, Wales is hopelessly rundown; and, if its situation is to be corrected, it would absorb large amounts of GuySuCo’s resources. Projected expenditure to keep it operational, yet still not returning it to profitability, is of the order of G$2 billion, so serious is its run-down state,” he asserted.

Thomas pointed to the report of the Commission of Inquiry into the sugar sector which said that cultivation at Wales is poor and the factory is so old that it is in need of substantial investment to recondition/refurbish it. Furthermore, about three-quarters of the bridges in the community are in a dangerous state and just short of two-thirds of its drainage and irrigation infrastructure can be considered as run down. “The CoI also recognized that, in order to keep Wales going, it would mean significant diversion of GuySuCo’s resources to support income generation in a location which has no realizable prospect of being self-sustaining or turning a profit,” he recalled.

The GuySuCo chairman also revealed that representatives of the main sugar workers union, GAWU, were absent from Board meetings where the issue of closing the estate was discussed.

“It would have been most desirable if they were there, to share their views on this matter. For the record though, it should be stated that the closure of Wales was specified in GuySuCo’s Interim Management Committee’s submission, for discussion, to the deliberations of the Commission of Inquiry into the Sugar Industry (CoI). GAWU was represented on that body and participated fully,” he said.