On tuesday our headlines exclaimed that
Skeldon is set to have a bumper crop in the second half of this year, using the
existing old Skeldon Factory. In view of their track record so far I doubt that
there will be anything bumper about it, but we will see.
Here is my summary of the predicament
which our sugar industry finds itself in today and the reasons why this is so.
I see it mainly as 5 massive failures
of judgement and performance which are combining to produce the disaster that
is yet to become fully understood.
the very beginning of the GuySuCo strategic plan 1998-2008, the Board of
the company wrongly assumed that the sugar protocols and the preferential
price for sugar could not be removed by the European Union; this was the
first mistake in the Skeldon Sugar Expansion Project since it was based almost
completely on this false assumption, so whilst Trinidad and Jamaica and
other ACP countries, who read the situation right, were diversifying and
minimising their sugar industries, we were expanding ours with money we
did not have.
second major problem in our sugar industry today were the huge wage
increases which were given to the sugar workers between 1990 to 2007,
increases which Guysuco could not pay and be competitive in international
markets, even with a preferential price and so they were forced to reduce
the workforce by 10,000 workers by 2008; but in reducing the workforce so
drastically and rapidly, they in fact created a large-scale shortage of
labour in the industry which is plaguing them today; what is incredible is
that even though they reduced the workforce from 28,000 in 1992 to around
14,000 now with an estimated 4000 casual workers, the wage bill still keeps
rising drastically whilst the price of sugar is falling.
- The third major problem is the changing
weather pattern in Berbice, which is now a huge hindrance to the expansion,
especially the mechanisation aspects of the expansion of the cane
cultivation necessary to supply the new 350 ton per hour factory with
cane, I don't think that people really understand what this bigger factory
means in real terms, so let me put it this way, the current loading at
Skeldon today is around 310 punts or around 1800 tons a day, the current
Skeldon factory can grind at around 93 tons an hour and to grind
continuously it requires 2232 tons a day! The new factory of 350 tons an
hour would require 8400 tons a day! Last year Skeldon Factory according to
GuySuCo's own figures, only ground around 64% of the time available to it
during the two crop seasons; shortage of labour and bad weather preventing
machines from reaping and loading the canes caused most of the stoppages. The
bad weather has also hampered field expansion and planting. For example
this year Berbice was budgeted to plough 2500 acres it only ploughed around
Even if that
factory had started on time it would only be able to grind around 20 weeks a
year. I am amused at this claim that the Skeldon factory will be co-generating
power, because I know that it will only be giving power for about 20 weeks a
year, and if the labour shortages continue with high rainfall preventing the
machines from harvesting the canes, it will not be a continuous grinding and as
a consequence there will be very little surplus power for supplying electrical
power to the consumers of GP&L.
- The forth major problem which was badly
conceived was in expecting that the farmers in Berbice at Skeldon were
capable of planting an area of 10,000 acres which is a size equal to the entire
Skeldon cultivation prior to the expansion. It will not happen. And
because it will not happen and because the price of sugar has been reduced
due to the loss of the European protocols, this entire project is looking
more and more like the biggest economic disaster this nation has ever experienced.
Nearly 200 million US dollars worth.
- There is also evidence that the other
GuySuCo estates, despite claims by GuySuCo, are being deprived of money to
keep their operations economical and competitive, and this is due to a
starvation of funds to the other estates due diversion of funds to complete
this expansion at Skeldon.
To support these 5 contentions I will now
give what evidence there is on each one of them which have led us to these
- In the 2001 Review of the GuySuCo's
1998-2008 Strategic Plan I saw the following and I quote it
"efficiencies have improved immensely and, although overall
employment has reduced from 28,000 to 18,000 the increased output means
that an annual employee productivity, measured in terms of tons sugar per
employee has improved from under 6 [tons per employee] to nearer 17 tonnes
[per employee] in 1999. The corporation intends to continue this
improvement in performance through the strategy outlined in the following
pages" clearly therefore they knowingly and deliberately reduced the
workforce by 10,000 employees.
- In the same 2001 strategic review of the
corporation on page 5 under EU market we see the following "the sugar
protocol is of indefinite duration and cannot be changed unilaterally and
is likely to remain a secure access" we also see this on the same page "the
assumption made in this review is that the SPS agreement will be renewed"
we all know now that this was absolute nonsense since the SPS has been
- Even Minister Robert Persaud and GuySuCo
have now agreed that the weather in Berbice is not allowing them to
proceed with their expansion plans; factories make sugar from sugar cane and
so you have to supply it with sugar cane but as of now there is not enough
sugar cane for that new factory to operate successfully.
- The farmers in Skeldon who were supposed
to plant nearly 10,000 acres have actually only planted less than 400
- In 2005 in one of the Guysuco reports I saw
the evidence of starvation of funds when Albion
for example asked for 529 million Guyana dollars to do its capital
works and was only given $183 million dollars, Rose Hall asked for $414
million and was only given 193 million Guyana dollars and this
starvation of funds to do capital works to keep the industry competitive
has been a hallmark of the industry for the past 5 years, and we have paid
the price; in 2007 these are the cost per pound figures for the various
estates, now remember that we were told that the industry would have to
produce at 12 cents a pound to be competitive; Skeldon 30 cents/lb, Albion
19 cents/lb, Rose Hall 19 cents/Lb., Blairmont 18 cents/Lb, Enmore 17 cents/Lb;
LBI 26 cents/Lb, Wales 23 cents/Lb; ICBU 41cents/Lb. contrary to all
projections by GuySuCo, Enmore, a Demerara estate, had the lowest cost per
ton in the industry.
The board of
directors "all political appointees" run GuySuCo as a political organization
for their supporters and not purely as a business. So no blame can be attached
to Booker Tate in this matter of the wages being so high. In 1990 the sugar
industry wages was 980 million but after the contracting of Booker Tate to run
the company and to counter the effects of Hoyte's Economic Recovery programme,
they raised the sugar workers salaries to 2.7 billion in 1991, a nearly three
hundred percent increase. In 1992 the sugar workers salaries was doubled again
by Tate to 4.8 billion dollars, after getting into power and not understanding
that the sugar worker's salaries were already adjusted for the ERP, the PPP
awarded more increases which raised the sugar industry's wage bill to 12
billion dollars by 2000, in itself a completely irresponsible act, the previous
chairman Odit told us in 2002 that employment costs were now so high that the
viability of the industry is threatened, and it has not stopped this escalation
of the cost of employment, the Industry's wage bill was16.6 billion dollars in
2006. Since 2001 the sugar industry's wage bill has amounted to over 63 percent
of total costs.
No strike by
the GuySuCo workers or a few teething problems in the start up of the new Skeldon
factory can be blamed for what appears to be one of the biggest economic
disasters in this country's history in the making, it only gives the
corporation an excuse, to buy time.