GAWU urges gov’t to retool GuySuCo to diversify output, cut costs

–opposes more estate closures, Skeldon divestment

The Guyana Agricultural and General Workers’ Union (GAWU) has urged government to consider modernizing GuySuCo to diversify the output from cane harvesting and cut costs, while continuing to object to the closure of any more estates.

GAWU, which is the largest sugar workers union, has also stressed that the Skeldon Estate remains key to safeguarding the industry, which it says can be viable once more with government support to correct shortcomings and initiate a modernization programme.

“We wish to point out that Government support in GuySuCo’s context is not unique. In fact our research advises us that all sugar industries throughout the world, in one way or another, benefit from some form of State support,” GAWU said as it sought to address criticisms of the continued bailout of the ailing industry in its 12page presentation to government on the future of the Guyana Sugar Corporation Inc (GuySuCo).

The presentation, which was submitted on Friday, was in response to the proposals received from government.

GAWU’s proposals were adopted by the National Association of Agricultural, Commercial and Industrial Employees (NAACIE).

During a stakeholder consultation on the industry on Friday, Public Security Minister Khemraj Ramjattan assured that the document will be taken to Cabinet for examination and deliberation, according to a Ministry of the Presidency statement. “Your view is an extremely important view and now that we have gotten it, we will move on from here,” he was quoted as saying.

According to GAWU, the options presented to government by GuySuCo– retaining the status-quo, complete privatization, and estate closure and transition into non-sugar ventures–reflect a lack of interest in the industry and its employees.

As a result, it suggested a fourth option that it said would both safeguard the industry and protect the wellbeing of thousands who are dependent on its operations.

“Sustainability of the industry, we believe, rests with a paradigm shift from an inefficient producer of raw bulk sugar to an efficient producer of direct consumption sugars and other products,” it said, while adding that a multipronged approach to reduce costs and enhance revenue is crucial.

With regard to reducing costs, GAWU suggested that there be a comprehensive review of various activities from tillage to sugar to molasses delivery with a view to identifying inefficiencies, wastage and to come up with innovative ways to enhance the work of the entire production chain.

It said investments in factories could yield a lowering of the energy cost, which accounts for 8% of total overall costs, while services departments could offer their services to the open market for fees, thereby offsetting operating costs. It also said resumption of best agricultural practices and mechanization of operations could also aid in steering the corporation towards being efficient and costeffective.

To increase revenues, GAWU proposed sugar diversification, while noting the successes of other countries in this regard.

“Our union strongly subscribes to the position that the industry needs to transform itself from being a “sugar” to “sugar cane” industry,” it said, while noting that the entire plant could be used to widen the range of products, thereby adding a number of profitable revenue streams.

However, it stressed that the main contributor to added-value to support the industry in the long term would be co-generation. It said the lone co-generation plant at Skeldon, despite shortcomings, has great value. It noted that Skeldon Energy Incorporated recently advised that it recorded some US$45 million ($9.45 billion) in energy sales to Guyana Power and Light Inc and Skeldon Estate. It said the investment in co-generation plants could therefore prove lucrative where feasible.

It also suggested production of bulk alcohol, refined white sugar, direct consumption brown sugar and dark brown sugar, molasses, fuel alcohol and other commodities, such as animal feed, pharmaceuticals and paper.

Despite these proposals, GAWU acknowledged that the availability of finance to fund capital works is crucial and pointed out that GuySuCo has advised that some $45 billion is needed for capital expenditure in the period leading up to 2020. It called the figure “heavily exaggerated” and suggested that based on careful examination it is actually $13.7 billion that would be needed for critical factory and agricultural spending. The union further noted that GuySuCo has indicated that it may sell lands for $35.9 billion between 2017 and 2020. “Such sums, together with some support from the government, would allow the corporation to settle its short-term indebtedness, finance its critical capital expenditure, and increase working capital. The income realized on this front can also partially assist in the financing of the modernization programme along the lines we have suggested,” it said, while adding that the programme it is suggesting could also be funded with the injection of private capital through joint venture projects as well as concessional loans.

Strongly opposed

The Wales Estate has been closed and the opposition last week said the closure of the Rose Hall and Enmore sugar factories and several cultivations by the end of this year has been proposed by the government.

GAWU addressed the closure of the Rose Hall and East Demerara Estates, saying that it remains “strongly opposed to the closure of any estate especially in the absence of any considered study to address the ramifications of such a decision.”

It quoted the report of the government’s Commission of Inquiry (CoI) into GuySuCo, which also said that closure without a plan and adequate notice “has serious consequences, not only for the employees and private farmers but for the communities as well”.

The union stated that these justifications are further heightened as the alternative ventures recommended for the already closed Wales Estate remain at a standstill and thousands are affected. “Moreover, so far, while closure is actively recommended no study has been conducted at the concerned estates to determine the consequences of closure and the possible ventures to come on stream, if any. Wales provides a yardstick of what to expect. We are still awaiting a holistic position on production, markets and sales, costs, distribution and other important factors related to Wales currently,” GAWU said.

As it relates to Skeldon, which may be put up for sale, GAWU urged that its proposals be positively considered.

A Memorandum of Understanding (MoU) was signed with a Trinidadbased company last December to look at the possibility of setting up a sugarcane processing facility at the Skeldon Estate. Srinathji Ispat Limited, an Indian company, has also expressed interest in taking over the entire estate following a visit here last month.

GAWU said that despite the shortcomings at Skeldon, over the years GuySuCo has been steadily seeking to correct the defects and improvements in its performance have been seen. “It was, therefore, not surprising that ready interest has been expressed by private investors who have surmised obviously that it can be made profitable in a short period with some tweaking,” it noted.

“The willingness and conclusions of the investors, in our view, undermines the credibility of the assertions made by the Corporation regarding the estate. We believe Skeldon holds great potential and can make a big impact in safeguarding the industry as a whole,” it further said.

Last November, Chairman of the GuySuCo Board Dr Clive Thomas announced that the deplorable state of the Skeldon Estate and the expenses it is incurring have pushed the Board to look at the options of either selling or diversifying it.

Addressing the proposed privatization of Skeldon specifically and privatization in general, GAWU warned against it, while saying that it does not guarantee or assure that cane cultivation and sugar processing will continue to take place or that the thousands of workers will have their gains respected or have an improvement in working conditions and lives.

Challenges not insurmountable

GAWU acknowledged that in recent years challenges have plagued the industry but noted that this is not the first time that this has occurred. “Like in the past we believe that today’s challenges are not insurmountable,” it said as it argued that the industry’s main constraint concerns its agricultural performance.

“In recent times, we have seen a decline in sugar production, a reduction of productivity, and consequently higher unit costs. We find it strange that GuySuCo has been cultivating canes for such a long period but has been unable to come to grips with its agricultural problems,” it added, while noting that principles which are known to yield success must be pursued.

GAWU suggested that research be furthered with a view to improving existing practices towards increasing cane yields and sucrose content and reducing costs.

It was stated that the managerial team has been “solely lacking and has shown an inability to grasp with the problems which have been plaguing the industry.”

“A key ingredient to the industry’s success is a strong, capable, committed and motivated management,” GAWU argued, while adding that GuySuCo already has many of the elements critical to its success but lacks the “glue (the management)” to hold it together.

“The GAWU believes that challenges will be ever present in sugar but our timely and correct response can help to assuage and avert any serious consequences...like in the past, through our combined efforts, the ingenuity of its people, and the dedication of its workers can rise above the challenges and demonstrate its resilience as it has done time and again,” the union said.

Offering its position on proposed non-sugar diversification, the union said that the risk of the failure of any reactivation of GuySuCo Other Crops Division will be shifted from the Corporation to the farmers.

“This shifts the inherent risks of these ventures from GuySuCo to the many poor worker-farmers. This, we think, is a massive challenge and a culture shock for many workers who will be pushed to become farmers and the promise of a future filled with real uncertainties and poor prospects for success,” the union said, before adding that no study or examination has been concluded to determine all the necessary arrangements including plot size, crop mix and land suitability.

“Our union having reviewed the documentation provided is not convinced that the possibilities recommended are the best approach to take in the context of GuySuCo… At this time, it is our belief that more detailed studies and examinations are required to clearly establish that proposed nonsugar ventures are viable businesses as an alternative to sugar and will not contribute to unemployment. To close sugar estates and to venture into activities where there is still a great degree of uncertainty is not, in our opinion, a wise policy decision,” GAWU told government.

It also argued for a socio-economic study to be done before any action on the future of the industry, while noting that decisions cannot be made in a slipshod manner as the consequences and repercussions “can be serious, if not disastrous” for the nation.