– practical solutions for rescuing the industry (Part 1)

By Imran Khan, Director of Public Information
IN 2011, the PPP administration, in its attempt to rationalize the operations of GuySuCo’s East Demerara estates, closed its factory at La Bonne Intention (LBI) estate due to inadequate cane supply, low worker turnout, poor factory performance, and escalating operating costs. Sugar production was concentrated at Enmore estate, but the agricultural operations remained at LBI.

This situation is not dissimilar to GuySuCo’s present attempt to rationalize the operations of its West Demerara estates. The parlous state of the sugar industry is common knowledge. The new Board of Directors and the Interim Management Committee, appointed in July and June respectively, were charged with bringing to bear a greater level of discipline on the financial operations of the business. The team confirmed the Government’s worst fears — that the plight of the industry was indeed dire.

It was felt for many years — moreso over the past 10 years — that the Corporation was diverting scarce resources from the estates to assist with the financing of the new Skeldon project.

Additionally, the Corporation was denying funding to the highly productive estates as it propped up the poorly performing ones. The result was a general decline in performance, production and finances across the industry.

The practice of diverting scarce funds from the good estates to keep the poor performers in operation can no longer be tolerated, as the survivability of these estates could not now be guaranteed.

Wales is by far the estate in poorest shape. The details of its performance include:-
o 60% of its Drainage and Irrigation infrastructure is dilapidated
o 75% of the bridges are in poor shape
o The cultivation is also in poor condition
o The factory is old and in need of major investment.

The Ministry of Agriculture has acknowledged that the investment required to refurbish Wales Estate is significant, and the finances are regrettably not available.
Diverting funds from the other estates to keep Wales afloat would seriously jeopardize the future of those estates. This cannot be allowed to happen.

The truth is that it is impossible to make sugar production at Wales viable. This is worsened by the unfavourable outlook for sugar prices on the world market for the foreseeable future. In addition, Wales Estate is projected to make a loss of between Gy1.6 and $1.9 BILLION DOLLARS for this year. This, coupled with the extent of refurbishment needed, renders this estate prohibitively costly to maintain.

The following decisions about the future of the Wales Estate are necessary at this time:
* o The Wales Factory will continue to operate throughout 2016, milling both the estate’s and farmers’ canes
* o Land preparation and planting at Wales Estate will be discontinued
* o Harvested land would be retired and held for diversification ventures
* o With effect from 2017, farmers’ canes will be milled at the Uitvlugt factory
* o As far as possible, Wales Estate workers will be absorbed by Uitvlugt Estate.