The president should revisit the feasibility test conducted to rehabilitate 5,000 Ha of land at Skeldon Estate

The first thought that came to my mind when I read in the press on Sunday of President Ali disclosing (last Saturday) that his government plans to cultivate 5,000 Ha of lands at Skeldon Estate, was any proper analysis done to embark on this project? These lands, according to the President, “will be mechanized” and that the Guyana Sugar Corporation (GuySuCo) “has already sourced new varieties of sugarcane to be planted there”. There was no mention as to where the canes from this 5,000 Ha would be processed. Will the new factory that was decommissioned almost seven years ago be recommissioned or will the old factory be reactivated? If neither would be done, then automatically the canes will have to be transported by road to Albion factory, located approximately 35 miles to the west of Skeldon.

Editor, it would not be economically feasible to recommission the new factory since the capacity of this factory is almost 3 times the canes that would be generated from 5,000 Ha, and would be highly underutilized, and to reactivate the old would be akin to building a brandnew factory, the same size of the old. History would then be repeated, discarding the old for a new, and going back for the old. In these circumstances, therefore, taking the canes to Albion is the only option.

Let us test the feasibility of this project, taking into consideration that the canes will be transported to Albion. Firstly, the cultivation has been neglected for almost seven years as such the current state would be like a mini jungle. To clear the trees, till to a mechanized layout and canes planted in the same mechanized format, it would cost approximately G$2.5 million per Ha, and for 5,000 Ha, this cost would be approximately G$12.5 billion. Let us amortize the G$12.5 billion over 5 years (plants + 4th ratoon), the recoverable cost per year would be $2.5 billion.

To execute all agronomic and cultural activities (nutrition and plant protection), and harvest mechanically, it would cost approximately $500,000 per Ha, and for 5,000 Ha, the total cost would be G$2.5 billion. So far, the cost is G$5.0 billion per year. This cost does not include the cost of “sourcing new varieties of sugarcane”. Assume the average yield from planting to 4th ratoons, with good cultivation practices, would be 70 tonnes cane per Ha, the 5,000 Ha would yield 350,000 tonnes of cane each year. These canes would be transported by road from the cultivation site to Albion factory. Assume that the laden weight for each lorry would be 20 tonnes and cost per tonne would be $5,000, it would take 17,500 trips by road, and the total transportation cost would be G$1.75 billion. So far, the cost is G$6.75 billion.

It would take approximately 2,200 hours to process 350,000 tonnes of cane at Albion with an overhead processing cost of approximately $50,000 per hour and which would produce almost 30,000 tonnes sugar (350,000/12.00 tonnes cane per tonne sugar). The processing cost would be $110 million. The total cost would be G$6.85 billion per year, and the sugar produced 30,000 tonnes. The current world market price for sugar is US$0.21 per lb. or US$462.00 or G$100,000 per tonnes for bulk sugar. At this price, the revenue would be G$3.0 billion.

Taking local sales + Caribbean markets at premium price for packaged sugar, the selling price on these markets would be approximately G$160,000 per tonne times 30,000 tonnes = $4.8 billion. Relate this revenue to the total expenses of G$6.85 billion and the estimated loss to this 5,000 ha at Skeldon would be approximately $2.0 billion per year. Editor, the President may wish to ask his sugar and agriculture advisors what feasibility test they conducted to advise him to embark on a project to rehabilitate 5,000 Ha of land at Skeldon Estate.