What the sugar industry needs is a higher level of efficiency

Dear Editor, I cannot disagree more with Mr Errol Hanoman, CEO of the Guyana Sugar Corporation when he reportedly said (Stabroek News, December 15) that the way forward for sugar is a scaling down of production and a significant level of diversification.

This view is consistent with the current APNU+AFC administration which has already signalled its intention to close a number of grinding estates such as Wales and LBI. In fact, Wales factory is already scheduled for closure early next year which means that all canes, including those of private farmers, will have to be transported to Uitvlugt at a much higher cost for processing.

What the industry needs in my view is a much higher level of efficiency both at the management and technical levels. There is need for recapitalization to improve factory efficiency, better husbandry practices, elimination of waste and other leakages and by no means least, better remuneration for workers, in particular field and factory workers.

I recall in the early 1990s when the industry was performing at an all-time low in terms of production targets, a management contract was entered into between the Government of Guyana and Booker Tate with a view to salvaging the ailing industry. So bad was the situation then that sugar had to be imported from Guatemala for local consumption in order to satisfy the overseas market.

It did not take long before the new Booker Tate management reversed the decline of the industry and returned it to profitability. This turnaround of the industry resulted from a number of strategic interventions, the most significant of which was an immediate doubling of wages and salaries. One consequence of that measure was that it attracted hundreds of sugar workers back to the industry, particularly field and factory workers. Other interventions included the planting of new canes as opposed to multiple low-yielding ratoon cane, recapitalization and modernization of derelict factories and investments in research and development to ensure maximum sucrose content of cane yields.

The result was a better ratio of tonnes cane as a ratio of tonnes sugar (TC/TS), much higher cane yields in terms of tonnes cane per acre (TC/A) and better sucrose extraction due to higher levels of factory efficiency.

The challenge facing the industry cannot be solved by scaling down on production, but by a reduction of unit production cost so as to become more competitive on the world market. It is only through higher production that unit cost will be lowered by way of what economists refer to as economies of scale. This is all the more necessary in light of the removal of price subsidies by the European Union under the Lomé Convention. That development, unfortunate as it is from a marketing perspective, should not be seen as a disincentive to produce sugar, but rather to come up with new and creative production and marketing strategies based on an overarching framework of expanded production at lower unit cost.

As it relates to the diversification of sugar, this has been tried in the past with devastating results. Rice and aquaculture are no substitute for cane in terms of employment opportunities and foreign exchange generation, both of which are indispensable for the continued viability of the industry and the economy as a whole.

Scaling back on sugar production could potentially put the economy at risk not to mention the lives and livelihoods of the thousands who depend on the industry for a living.

Yours faithfully, Hydar Ally