Tony Vieira's Comments
18 October 2017

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Sugar Industry
(Aired 21 August 2001)

Recently GUYSUCO issued a press release telling us that the sugar industry's wage bill, now around 12 billion, was too high. It accounted for 56% of their total revenue. After seeing this GUYSUCO call for help, I studied their annual reports for 1997, 1998 & 1999, and frankly they leave me with some questions.

   Our sugar industry reaped the following tonnage of canes from 1986 to 1999: 86- 3.4M tons, 87 3.1 M tons, 88-2.5 M tons, 89-2.5M tons, 90-2M tons, 91-2.7 M tons, 92-3.M tons, 93-3.2M tons, 94-3.1M tons, 95-3M tons, 96-3.2M tons, 97-3.million tons. 98-3M tons, 99, 3.6 million tons, But During this same period the industry increased the acreage under cane from 36,000 hectares to 46,000, Where is the extra cane from the 10,000-hectare expansion? we should be producing about 4 million tons of cane/year, apart from 1999 during the period 1986 to 1998 the highest tonnage of cane we reaped in our industry was in 1986. It is very strange, It means that the industry increased its acreage from 36,000 hectares to 46,000 hectares in the last 10 years a significant 28 % increase, with no significant improvement on the total amount of CANE produced, which stays at around 3 Million tons per year. Our SUGAR production has however been improving 86-245 thousand tons, 87-221,000, 88-168,000, 89-165,000, 90-130,000, 91-160,000, 92-243,000, 93-243,000, 94-253,000, 95-250,000, 96-280,000, 97-276,000, 98- 253,000, 99- 321,000. This was a direct result of improved factory efficiency under Booker Tate and the use of chemical ripeners and NOT the grinding of more canes which seem to be stuck at just around 3 million tons per year.

  Now I come to the most worrying thing about the Guysuco situation, The 1997-99 Annual reports states clearly that the workforce, which was 24,463 in 1994, had dwindled to 18,873, in 1999, but the wage bill increased from 4.8 billion to over 12 billion during this same period BUT they are producing and reaping almost EXACTLY the same amount of CANES. Now remember that the biggest expense is REAPING, TRANSPORTING, AND MILLING the canes.

    Ladies and gentlemen The more we increase their salaries, the less workers we find in the industry, this is VERY strange? ARE we financing a Diaspora among our sugar workers? Have our sugar workers taken the huge salary increases between 1994 to 1998 and emigrated or backtracked? Now remember that I have no evidence that this is what has happened, but the Guysuco's own figures support this speculation. More and more pay does not chase away workers. It attracts them. in 1997 the workforce was 19,287 compared to 20,492 in 1996. A reduction of almost 6% in that one YEAR in 1998 it had dropped to 18,873, It is clear that there is a serious labor shortage looming ominously in this industry which seems incapable of reaping or producing more than about 3 million tons of cane per annum notwithstanding increasing its acreage by more than 28 percent since 1986.

    In the 1998 annual report the chairman of Guysuco tells us and I quote him, "It has been asserted that the sugar workers are badly paid, even that a significant number of sugar workers live in absolute poverty, this is far from the truth, in 1998 "he says" the AVERAGE salary of a sugar worker was 500,000 G dollars per year", ladies and gentlemen this is absolutely true but nevertheless the wage bill in 1999 was 12.3 billion an average earning per worker of $653 thousand G dollars per year, and these earnings do not include medical services, subsidized housing, sugar industry welfare fund benefits etc., in 1998 the sugar industry KNEW that its employment cost were 54 % of its total operating costs, but nevertheless continued to offer wage increases so that in a recent press release they are now telling us that employment costs are 56% and it is unacceptably high. That it should be 25%.

    To put this more in perspective for you Let us look at materials costs during the period 1991 to 1999, in 1991 with the Guyana dollar exchange rate set at 120-1 to the US, the total materials cost to GUYSUCO was 6.1 billion or 50 million US.... In 1999 with an exchange rate of 181-1 the total materials cost was 10 billion or 55 million US. Incredibly it has remained unchanged in 8 operating years, it is an astonishing achievement. DURING this same period however, wages in the industry rose from 2.7 billion to 12.3 billion TO a workforce that was 25,000 in 1991 and is now only 18,800.

    I have discovered in perusing the 97-98-99 reports WHAT Booker Tate get for running this industry for us, they have a fixed management fee of 390 thousand pounds sterling per year...., their local expenses [I presume that this means Housing, transportation, cars, electrical costs, domestics and security services, gardeners, passage and holiday benefits etc.] amounts to around 215 million per year, in 1998 the sugar industry did not do well, ONLY 254 thousand tons was produced, so Tate's PRODUCTION RELATED INCENTIVE FEE was nil, but in 1999 when the sugar industry had a bumper crop of 321 thousand tons the highest total sugar produced since 1978 they got an incentive fee of 271 million, at the 1999 selling price of sugar, that is equivalent in cost to around 4500 tons of sugar. 

   So Tate gets a flat fee of 390 thousand pounds per year and their local expenses costs the corporation around 215-240 million/year and they only get incentives when the industry makes high production. The rest of the sugar employees get over 12 BILLION.

   What is also interesting is that Tate through many subsidiaries in Europe buys our local sugar, 160 thousand tons in 1998 and 178 thousand tons in 1999 i.e. they are helping us to market this sugar. More than half is bought by Tate and Lyle.

  This is the sort of management contract I like to see ladies and gentlemen, they make more when they run the industry efficiently and produce more, if they do not then they do not get the incentive, and their subsidiaries buy a substantial portion of the sugar we produce. And they have done well for us by improving factory efficiency from around 87% to 91% and putting the industry in a situation where they have decreased the amount of cane required to make a ton of sugar from over 15 to under 11. Tate is taking 4.5 tons of cane less to make a ton of sugar than in the pre Tate era, nearly 30% less, it is an impressive achievement. Would you like to run our power and light for us Mr. Webb???

    We are therefore left with this one dilemma, during the period 1991-1999 we illadvisedly increased the sugar workers pay by an amount that we cannot now afford to pay. The politics of the sugar industry are well known and I do not have to spell it out for you.

 WHAT is the ANSWER? I frankly don't know, but this much is sure, the sugar workers must now be made to understand that they are presently very highly paid, to the extent that the industry cannot afford it and they must endeavor to make the industry more efficient, simple things can improve the efficiency of the industry, cutting the canes lower to the ground for example. A cane stalk is usually about 7 ft long, if you leave 6 inches in the ground because you did not cut it properly, that is 7 percent, we reap about 3 million tons per year, 7 percent is two hundred and ten thousand tons of cane per year, it can make a HUGE difference. This can be translated to 23 thousand tons of sugar per year, that is about what we consume locally per year AT the SUBSIDISED PRICE.

   The only sour note in all of the Guyauco accounts is that two of its directors sitting on the board of GUYSUCO are selling materials and services to the corporation. I think that this should STOP. No director of any State Corporation should abuse his position as the representatives of the citizens of this country on that board, by doing business with it. It is called conflict of interest.

     The Guysuco wage price is too high, we can't take it back now, but its workers have to do a better job for us, to improve our yields and our productivity, if not we all perish, the faith of this country is in their hands.