Thursday, September 25, 2008


The Tuesday September 23rd Stabroek News 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 there is doubt that there will be anything bumper about it, but we will see.

Here is a summary of the predicament which our sugar industry finds itself in today and the reasons why this is so.

The People’s National Congress Reform – One Guyana (PNCR-1G) sees it mainly as five (5) massive failures of judgement and performance which are combining to produce the disaster that is yet to become fully understood.

1. In the very beginning of the Guyana Sugar Corporation (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, which read the situation right, were diversifying and minimising their sugar industries, we were expanding ours with money we did not have.

2. The second major problem in our sugar industry today were the huge wage increases which were given to the sugar workers between 1990 to 2006, 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 between 1998 - 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.

3. 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 at 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 700 acres.

Even if that factory had started on time it would only be able to grind around 20 weeks a year. The PNCR-1G is amused at this claim that the Skeldon factory will be co-generating power, because 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 the Guyana Power and Light (GPL).

4. 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.

5. 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 five (5) contentions we will now give what evidence there is on each one of them which have led us to these conclusions.

1. In the 2001 Review of the GUYSUCO 1998-2008 Strategic Plan we the PNCR-1G noted the following as stated: "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.

2. 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” which we all know now that this was absolute nonsense since the SPS has been withdrawn.

3. 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.

4. The farmers in Skeldon who were supposed to plant nearly 10,000 acres have actually only planted less than 400 acres.

5. In 2005 in one of the GUYSUCO reports we 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” runs 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 were 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.

People’s National Congress Reform

Congress Place, Sophia

Georgetown, Guyana

Thursday 25 September 2008.

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