Reopening of estates not an option

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THE PPP recently introduced its election manifesto to the public at a media briefing and the party made some outlandish promises. The one that immediately jumps out is the promise to reopen the sugar estates that were closed as a result of the reforms implemented by the current government.

This announcement has caused much comment among those with knowledge of the industry. The truth of the matter is that reopening those estates makes absolutely no economic sense —there is a general consensus on that. Yet the PPP insists on making the promise. It is, therefore, clear that that party is still wedded to its traditional view that the sugar industry is a political football to be kicked around to suit its whims and fancies.
Manifestos are meant to give the electorate an idea of what a party or coalition intends to do if and when it assumes power. Since parties generally find it difficult to meet their promises once in government, the electorate pays little attention to manifestos. Yet, manifestos have remained an integral part of the electoral process. In recent times, parties have even included promises of what they would do in the first 100 days in office.

In the final analysis, even if people pay little attention to the details in the various manifestos, there has been a growing interest in the parties’ positions on selective issues. One recalls for instance that the current coalition rose to power partly on its promise to tackle corruption, initiate constitutional reform and reform the sugar industry. While there is divided opinion on the outcomes of government efforts in the sugar industry, there can hardly be any doubt that unlike the PPP, the coalition has treated the matter primarily as an economic issue. In other words, it addressed the economic viability of the industry in light of all the prevailing factors.

If truth be told, the coalition’s actions in relation to the sugar industry represent the single boldest policy initiative in recent times. Faced with an industry that was heavily subsidised by the government, the previous administration stubbornly refused to take measures to correct the situation. Because the PPP has traditionally drawn most of its electoral support from sugar workers, that party in and out of government has been reluctant to confront the question of the industry’s viability in the face of global and local changes.
Every sugar-producing country in the Anglophone Caribbean has had to face that reality. Some, like St Kitts-Nevis have diversified out of sugar while others have made the necessary adjustments to ensure the industry’s viability. This has invariably meant downsizing or “rightsizing.” Guyana is the only country in the Region that did not bite the bullet. In fact, under the PPP, the industry became more dependent on government subsidies than at any time in its modern life. The PPP was less interested in the economics of the industry; for that party, it was first and foremost a political matter.

The coalition government therefore inherited an industry in disarray. To its credit, it followed through on its manifesto promise and tackled the matter with a sense of urgency. The state of the industry in 2015 is worth reviewing. Production was at its lowest. In 2013, for example, production had fallen to 186, 807 tons—the lowest in 22 years. This was way below Guysuco’s minimum production rate of 232, 000 tons that was needed to meet its local and international commitments. This was part of a trend that had taken root under the PPP government as far back as 2005 and was confirmed by the report of a Commission of Inquiry set up by the coalition government in 2015.

According to the report “From the years 2008 unto 2014, annual sugar production continued to be under 230,000 mt with its revenue base declining from G$32.l bn in 2008 to G$23.2 bn in 2014. Not surprisingly, for the said period there were losses each year and this loss position worsened from G$5.2 bn in 2008 to that of G$17.4 bn in 2014. That unacceptable level of performance required government’s intervention by way of subsidies in the years 2011 to 2014.”

This huge subsidy to Guysuco under the PPP was grounded more in politics than economics—the PPP was more concerned with retaining the political loyalty of the sugar workers than about the economic health of the industry and well-being of the workers. While the industry was sliding down the road of destruction, GAWU and the PPP kept making unreasonable demands for increased wages. Between 2010 and 2014, for example, employment costs rose by 43% or 6.3 billion dollars, even as the industry was posting huge losses. Since Guysuco could not afford this bill, it had to depend on government subsidisation. In other words, the PPP was undermining the profitability of the industry and ultimately destroying it for political reasons.

It is against this background that Guyanese must reject the latest attempt at deception by the PPP . In the first instance, the promised reopening of the estates makes no economic sense. The country simply cannot revert to subsidising the industry at the rate that such a move would entail. Second, we ought to move on from the overt and covert politicisation of the industry—it is a recipe for underdevelopment. The coalition has pointed the industry away from party politics and has put it on a better economic footing. Finally, the PPP has become an intentional victim of its own dirty propaganda. After spending the better part of three years telling sugar workers that reforming of the industry is part of a grand scheme by the government to victimise them, the PPP has to come up with some solution. Sadly, reopening the estates is not an option; it is not in the interest of the industry, its workers and the country at large.