Tony Vieira's Comments
18 October 2017

Updates!

Receive email notices when a commentary is uploaded. Join our mailing list.

E-Mail Address:

View Article

Budget 2009
(Aired 18 February 2009)

Considering that there were no pre-budget consultations with any trade union, The Chamber of Commerce, the Guyana Manufacturers association, any political opposition parties or the economic services committee of parliament, the minister still named his budget, working together, reinforcing resilience. I don't know who the Minister is working together with, but it certainly is not with this opposition.

 

In the minister's speech it became clear that this was the usual Bigger than last year's budget and I did not see anything in it for Hydropower or for the road to Brazil both of which I consider vital to our economy. After all our President declared last year that the Brazilian connection was so important to us that he was putting the then Minister of Housing permanently in Brazil to facilitate the process of development. Perhaps he was sent there for another reason.

 

  Our local debt has grown from less than 20 billion to nearly 80 billion now and our foreign debt is again climbing making our total debt nearly 1.3 billion US. And what do we have to show for all of this? Do we have hydro power to fuel our industries? No we don't! Do we have a road to Brazil and all the development that it can bring? No we don't!, Do we have a thriving sugar industry as promised by this administration after spending nearly 130 million US so far? No we don't!

 

    What do we have? We may have one of the biggest drug fuelled economies in the Caribbean, we certainly have the biggest white elephant stadium in the Caribbean and apparently everyone, except the minister, understands that Carifesta yielded this nation nothing and the World Cup fiasco left numerous bankrupted people in its wake more than any other single national enterprise in our history.    

 

     This Sir, is a very poor budget according to all sources and it has diminished you in the eyes of those in our society who understand these matters and who have some respect for you.

 

   I am not going to make any further general statements about this budget it has already received enough condemnation in the media and here in this house. And so I will concentrate on the agricultural area which is my brief.

 

   To establish the dire on going consequences of one bad action in government I will give an example of an action which has caused us untold misery over the past 4 years.

 

    After coming to power in 1992 the PPP experienced very low rainfall since in the period 1992 to 2003 we were in the el nino cycle of years which yielded low levels of rainfall, but in 2004 we entered the la Nina years which typically yield high levels of rainfall, I have been aware of this cycle of 8-12 high rainfall years alternating with 8-12 low rainfall years since I joined the sugar industry in 1965 and could look at the historical rainfall record dating back nearly 100 years at Versailles. We of course did not know about the el Nino and la Nina phenomena, we just knew that there were wet cycle of years alternating with very dry cycles and that we had to be prepared for it. For example as recorded at Houston estate in the eleven year period 1966 and 1976 average rainfall was 132.45 inches per annum, with the years 1967, 1970, 1971 and 1976 yielding annual rainfalls higher than 140 inches.

 

   From 1992 to 2003 the average rainfall, being el Nino years, was around 75 inches, and some genius took that to be our traditional historical rainfall pattern and not only did they neglect the entire national drainage system, they ill advisedly allowed settlement and crop cultivation along the banks of the Mahaica River since in the el Nino years the rainfall was so low that it was never necessary to relieve the high Lama conservancy level through the sluices provided for that purpose at Maduni and at Lama at the south eastern end of the conservancy, and so since they allowed settlement along the Mahaica which disallowed blowing the excess Lama water to the Atlantic ocean and since they allowed the mouth of the Mahaica river to become so silted up that it virtually became dysfunctional, not only did they cause untold misery and even death along the lower east coast in 2005, 2006 and 2008, but to rectify this problem caused by not understanding the consequences of their actions, in this very budget there is a 2.8 billion dollar provision to build a new relief trench to discharge the Lama high level to the Atlantic through Hope village. Before we pass this provision I would advise a bipartisan committee be formed to discuss the repercussions of doing this and also to re-examine the cost of de-silting the Mahaica river mouth as a cost effective measure, since I believe that these Maduni and Lama relief structures in the conservancy worked in the past and should be allowed to work again rather than building something entirely new. This same lack of foresight and investigation into what is our traditional rainfall is what will also ultimately make the Skeldon project fail.

 

   We were born in this country to find our homes built off the ground on stilts since our ancestors decided that it was impossible to build and maintain a drainage system capable of draining the intensity of rainfall we can get occasionally in this country, but the government keeps peddling these Nancy stories that we are faced with climate change which is causing these problems, as far as drainage is concerned and since our ancestors designed a system to take off one and a half inches of rainfall every 24 hours, if the rain falls in a well distributed manner we are capable of draining 45 inches a month in non housing areas and 60 inches a month in housing areas.

 

   In 2005 as recorded at Houston 131.69 inches of rain fell, in 2006 113.20 inches of rain fell in 2007 109.33 inches fell and in 2008 129.34 inches fell; now Mr. Speaker remember that in 1967, 70, 71 & 76 more than 140 inches of rain fell in each of those years so what happened to the system of drainage which was existent then?

 

    The only time since 1992 when the rain fell with an intensity which had the potential to cause massive flooding was on the 14,15,16,17 &18 of January 2005 when 26 inches of rain fell on those five days!

 

    The supporters of this opposition have had to pay for these lapses with their taxes! And in addition the supporters of this opposition must now pay to bail out the sugar industry from the ill advised actions and disastrous investment by this administration at Skeldon! The supporters of this opposition also had to pay their taxes when in the year 2007 alone a total tax concession of 80 billion dollars was given in this country [this was an amount which was greater than the actual tax collected from the poor working people and struggling businesses in this nation] Their leaders had no say in who were getting these tax concession and why!

 

    This has been a hallmark of the PPP's stewardship in this nation, look after the people who voted for them and forget everyone else, they for example refused to support Bauxite from the consolidated fund, but this budget and last year's budget are allocating funds to support the sugar industry from the consolidated fund to the tune of several billion dollars.

 

 But people who voted for the PPP died on the East Coast in this country in 2005 and in 2006 and again in 2008 victims of their own short-sightedness and prejudice in how they voted which served them not at all. Bad governance has consequences for everyone Mr Speaker, it does not discriminate along racial or political lines. We have to remember that.

 

  1.   Sugar: last year we produced 226,267 tons of sugar, it was the lowest production recorded in the industry since 1991 and Skeldon was not the sole reason why this was so despite what the minister says, all estates performed badly The accumulated result of a systematic starvation of funds to the rest of the estates to finance this white elephant at Skeldon is taking its toll on the industry, along with shortage of labour, late application of fertilizers, poor husbandry and bad drainage and contrary to what the minister said in his presentation Skeldon has not co-produced one kilowatt of electricity as yet, they have in fact not even burnt one pound of bagasse in the 4 commissioning trials so far .....yes Mr. Speaker 4 times they tried to commission this new factory without success and in those 4 trials so far to commission the factory they are using heavy fuel to generate power for grinding, the minister should be informed that co generation means that, in the process of burning bagasse from the cane they are grinding to generate power for the running of the factory, the entity is expected to produce a surplus of electrical power which will be fed into the national grid, therefore any power produced at Skeldon by any fuel other than bagasse does not mean co-generation. I hope that this was an honest mistake and not an attempt at deception.

The Skeldon Expansion:

I see the failure of the Skeldon project as a five part saga as follows

1. In 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 modernisation 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.  

  1. The second major problem in our sugar industry today were the huge wage increases which were given to the sugar workers between 1999 to 2007, increases which Guysuco could not afford to 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 remarkable 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. There has just been too much political interference in the industry for it to survive. As a result of this political interference the sugar industry's wage bill now amounts to 63 % of total cost..... In the period 1994 to 1999 when the labour cost of the industry was hovering at around 42-45% of total costs the industry made some profits but when the labour cost began to approach 65% of total costs around 2001 onwards, the corporation ran into major problems. I noted with some amusement that the GAWU union has been saying that this 63% of total cost was applicable in the 1970's its true Mr. Speaker, but the comparison is invalid since at that time mechanisation of sugar was not as widespread as it is now. Today our competitors are using very little manual labour in their sugar industries and to compete, we have to do better.
  1. The third major problem is the changing weather pattern into the wetter cycle of years 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! That is a lot of cane per day Mr. Speaker and no one, even GuySuco knows where it will come from.

 

  1.  The forth major problem in conception was in expecting that the farmers in Berbice at Skeldon were capable of planting an area of 10,000 acres which is an area the size equal to the entire Skeldon cultivation prior to the expansion.  It cannot be done! especially since this farmer expansion would have to be laid out for mechanised harvesting.

 

  1. There is also evidence that the other GuySuCo estates, despite denials by the corporation, are being deprived of money to keep their operations economical and competitive, and this is due to a starvation of capital funds as a result of diversion of funds to complete this expansion at Skeldon. For example at the beginning of 2008 the estates advanced their capital budget requirements for an amount of 5.569 billion dollars to do their capital works, it was slashed by 129% to 2.425 billion by GuySuCo. The previous years also disclosed this irresponsible slashing of the capital requirements for the rest of the industry to fuel this expansion at Skeldon. In 2007 Albion asked for 528.6 million Guyana dollars to do its capital works and was only given $183.2 million dollars! And Rose Hall asked for $413.6 million and was only given 193.4 million Guyana dollars!   

      The Skeldon project is a disaster for this nation and to build it they have butchered the rest of the industry which are now showing the signs of ware, for example in 2008 when the world market price for sugar was hovering around 14 cents a pound our estates performed as follows; Skeldon 39 cents a pound; Albion 20 cents a pound; Rosehall 22 cents a pound; Blairmont 23 cents a pound; Enmore 22 cents a pound; LBI 36 cents a pound; Wales 25 cents a pound; and Uitvlught 37 cents a pound; these are ridiculously high figures Mr. Speaker totally uncompetitive on the world markets; and at the end of September this year when the final 21% subsidy is removed from our Sugar at the European Union the consequences will become clearer GuySuCo's annual losses can become tens of billions of dollars a year instead of the billions of dollars losses being experienced now. Between the years 2001-2006 they made a loss of 6.577 billion dollars. We have not seen the 2007 or 2008 reports so we don't know how much they lost in those two years.

 

   As a result of the removal of the subsidy by the European Union, the EU has begun to pay those countries they have been subsidizing compensation for the loss of the subsidies and Guyana has begun to receive its share, incredibly Mr. Speaker this government has not found it necessary to pay the local cane farmers their share of this compensation, they have not even released it to GuySuCo, it is being held in the central Bank for beefing up the national drainage system and other central Government projects. This compensation is not for the government of Guyana to disburse in this fashion, it is for GuySuCo and all cane farmers who will lose income as a result of the withdrawal of the subsidy by the European Union, Trinidad has already paid their farmers so one can legitimately ask why have the Guyana cane farmers not been paid their share of this compensation. We have already received 8 billion G dollars in compensation from the EU and I understand that the total compensation for Guyana will be 120 million Euros, Mr. Speaker 120 million euros is 33 billion Guyana dollars around 10 percent of which belongs to our farmers that amounts to 3.36 billion Guyana dollars that money should be paid as compensation to the Guyana cane farmers.

 

 I think that they deserve it and I truly believe that it is the intention of the compensation philosophy of the European Union that they get it.

 

   Rice fared little better then sugar in 2008 since of the 329,574 tons of rice produced only around 193,000 tons were actually exported, the world market price for rice was very unsure in 2008 for example in September 2008 at the beginning of the second crop the world market price for rice was around $900 US per ton but after buying the paddy from the farmers at the inflated price of nearly 8000 Guyana dollars per bag, the world market price for rice fell to 510 US per ton, as a result many farmers have not been paid and some estimates tells me that several hundred thousand bags of paddy are stock piled all across the nation un-milled since there are no realistic markets for it given the price at which the paddy was bought; this has left the millers in a very embarrassing financial situation across the nation.

 

   This government which has left the farmers high and dry are now boasting about increased productions without telling us how badly the farmers have lost economically as a result of the lack of proper marketing mechanisms for the Guyana rice in 2008. There is no doubt that given this small world market price of $510 US extant at this time that the coming crops in 2009 will be affected, it is why the budget visualises a reduction in rice production this year. Our Minister of Agriculture told the farmers in May/June 2008 that his prognosis was that grains will be in short supply in the world and on that advice the farmers planted a large acreage for the second crop 2008, but after reaping commenced in September 2008 the high price only lasted around 6 weeks and began to drop from $900 US a ton to US$510/ton which is what the price is now, as a result any paddy reaped this year will probably only be bought for 2500-3500 per bag. This will certainly affect the annual production of rice in 2009, we have to wait and see.

 

    It is a very sad story Mr. Speaker a story of the blind leading the blind; of people who don't understand the international dynamics of markets, prognosticating and misleading people into investing in bankruptcy.  

 

   Throughout the year lack of support to the rice farmers hampered progress fertilizers especially Triple Super Phosphate and Urea were in short supply and were delivered after the optimum time for the applications to be best practice.

 

 

  Fisheries: I have been warning about piracy of our fishing grounds by Venezuelan and other fishing vessels especially when our producers were voluntarily parking their boats to allow the grounds to be repopulated, I warned that we do not have a marine biologist and that the sector was being neglected, I warned about this in my 2007 and again in my 2008 budget speeches which I made in this house, well the consequences have materialised and the sector is in trouble since as the minister has rightly said the fishing grounds have been depleted and it will affect production this year.

 

  As far as other crops are concerned I do not expect to see any improvement over 2007 when the production in every cash crop showed signs of dropping alarmingly due to flooding and bad support management, but undaunted the minister continues to visit farmers decimated by flooding and other disasters and his only compensation is to give them a few seeds.

 

    In summary one has to say that this is a very bleak picture for these main pillars of our economy, and being forced to sit here and listen to people who tell us that we imported 1800 trucks without understanding that trucks in this context may be the ford F150 and other pickups which are identified as such by our licensing people, is really sad, and shows that there is not much hope for any realistic solutions to our problems.