…concerned about closure of sugar estates

THE Private Sector Commission (PSC) and its affiliates said they are concerned about government’s plans to close some estates as part of its overall reform programme to make the struggling sugar industry here more viable.

In a statement issued on Monday, the PSC and its affiliates: Georgetown Chamber of Commerce & Industry (GCCI), the Upper Corentyne Chamber of Commerce and Industry, the Linden Chamber of Industry, Commerce and Development, the Region Three Chamber of Commerce and Industry, the Central Corentyne Chamber of Commerce and the Berbice Chamber of Commerce and Development Association, all urged government to “hold its hand” on the approach.

Government only recently unveiled its State Paper on sugar, noting that the industry here lies in a smaller sector, with reduced losses and cash deficits, but coupled with a separate and profitable diversified enterprise, which would ensure a viable future. Agriculture Minister, Noel Holder, said the ‘State Paper on the Future of the Sugar Industry’, will focus on the poorly-performing estates and have them shift from sugar to diversification.

“The proposed courses of action are to amalgamate [merge] Wales Estate with Uitvlugt Estate and reassign its cane to the Uitvlugt factory, since the estate is operating at 50 percent capacity. Sixty percent of its drainage and irrigation infrastructure is in a dilapidated condition. The corporation furthermore seeks to divest itself of the Skeldon Estate. The estates of Albion and Rose Hall are to be amalgamated and the factory at Rose Hall is to be closed.”

Holder said GuySuCo would then consist of three estates and three sugar factories. The estates would be Blairmont on the West Bank Berbice, Albion-Rose Hall in East Berbice and the Uitvlugt-Wales estate in West Demerara. The three estates will be complete with factories and will have cane supplied from all five locations. By virtue of the amalgamation, the Enmore, East Coast Demerara (ECD) and Rose Hall, Berbice factories will be closed by year-end. In the case of Enmore, that factory will be closed at the end of the year when all cane would have been harvested and the East Coast Estates would be earmarked for diversification.

“The process will result in improving the relationship with some cane cutters, estate staff and about 1,710 private cane farmers. These adjustments mean that GuySuCo would be scaled-down into a more efficient entity that focuses on producing sugar to satisfy the domestic and foreign markets that provide preferential access to our sugar. This entails taking advantage of the opportunity to merge better performing lands to operate factories more efficiently,” Holder said.

But even as there will be a major restructuring of the industry, GuySuCo is required to retain many of its workers for all operations on the merged estates or factories and those employees are to receive leased lands from the sugar company to engage in crops to be decided by both GuySuCo and the Ministry of Agriculture. Additionally, the Minister said GuySuCo plans, apart from restructuring the estates and factories, to transfer to the state charges for the drainage and irrigation and health services that it provides to the communities, and around the estates.

Foreign exchange However, the private sector bodies said Guysuco came into being as a state-owned entity in 1976, when it was nationalised. They said the industry has continued to play a significant role in the overall economy of Guyana. “The industry remains the largest employer other than Government and the main foreign currency earner. Guysuco’s role has expanded to include providing Drainage and Irrigation for many communities and other sectors, as well as providing community health services,” the statement issued by the PSC said.

The private sector acknowledged that in recent years the corporation has delivered financial losses and has become dependent on Government/taxpayers subvention to enable continued operation, saying that many factors have been attributed to the declining performance of the industry, not the least of which was the loss of the preferential pricing of the lucrative EU market. There is the view that these could be addressed to turn around the industry, the private sector said.

However, in recognition of the critical importance of the sugar industry, the private sector observed that the government-initiated Commission of Enquiry (COI) did not recommend closure of any estate but, on the contrary, recommended divestment into private hands (See Volume 1 of COI page 36, section 7, sub-section 1, 11,111,1V).

Additionally, it said Guysuco’s audited financial statements for the year 2015 revealed that more than G$10.0B would be removed from private employment income should Government proceed with the closure of estates. This, in turn, would have a direct negative effect on consumer spending in the communities which, directly or indirectly, depend upon income from sugar. Such a decline in consumer spending would also have a diminishing impact upon all commerce with concomitant negative spin-off effects on the economy as a whole.

According to the private sector, Guysuco is a major earner of foreign exchange. “Closure of any estate would, therefore, severely impact upon the availability of foreign exchange and increase the price at which it is sold.”

The PSC contends that the restoration of Guyana’s economy is inevitably, and intimately, linked to the future of sugar. “It would be sad to lose the sugar industry and realise five years later that this would have been a success story. We must learn from the history of the scrapping of the railway, which would have opened up our country to development. Our members are located across the length and breadth of Guyana and the survival of their businesses depends upon a public that spends on goods and services. Most income generation is derived from employment and when this is reduced significantly it affects the entire chain, from manufacturing and importation to household consumption. The private sector calls on Government to hold its hand on the current approach towards closure of estates. The private sector stands ready to place its considerable experience at the disposal of and to work with Government to explore all possible options to avert closure.”