- PNCR
The People’s National Congress Reform Shadow Minister of Agriculture,
Anthony Vieira yesterday said that no strike by the Guyana Sugar
Corporation’s (GuySuCo) workers or teething problems in the start up of
the new Skeldon factory can be blamed for what appears to be one of the
biggest economic disasters in this country’s history in the making.
PNCR Shadow
Agriculture Minister Anthony Vieira
According to Vieira, it only gives the corporation an excuse to buy
time and seeks to cover up its mismanagement over the years.
Houston
Sugar Estate
He told a press conference yesterday that the fiasco that currently
engulfs the industry can be traced to some specific shortcomings. The
assumption that the now non-existent Sugar Protocol would remain in effect
indefinitely; the significant wage increases of the years while reducing
the labour force; changing weather patterns as well assuming that the
private farmers in Berbice would have cultivated the required amount by
now have been singled out..
According to Vieira, embedded in the company’s strategic plan for 1998
to 2008 was the wrong assumption by the Board of Directors for the company
where they sought to believe that the sugar protocols and the preferential
price for sugar could not be removed by the European Union.
Vieira posited yesterday that “this was the first mistake in the Skeldon
Sugar Expansion Project since it was based almost completely on this false
assumption, so whilst Trinidad and Jamaica and other ACP countries, which
read the situation right, were diversifying and minimising their sugar
industries, we were expanding ours with money we did not have.”
In the 2001 strategic review of the corporation, according to Vieira, it
noted that “the Sugar Protocol is of indefinite duration and cannot be
changed unilaterally and is likely to remain a secure access”.
The end of the Sugar Protocol governing the trade of sugar between the
African, Caribbean and Pacific Countries (ACP) that includes Guyana and
the European Union was announced in 2006 with a phase out period ending
2009.
The benefit to Guyana that the Sugar Protocol afforded was the
preferential pricing for sugar which has now been poised to be replaced by
the Economic Partnership Agreement, which allows for duty free quota free
access to the European market but void of the preferential prices.
The Caricom leaders have signaled that they will sign the EPA on October
15.
President Bharrat Jagdeo has long voiced his opposition for the EPA and in
the event that Guyana does not sign by November 1, all exports from Guyana
to Europe could be subjected to the Global System of Preferences, meaning
they will be facing tariffs.
In continuing his assessment of what he termed the failure of the
industry, Vieira said that another major problem that plagues the industry
is the fact that there were huge wage increases which were given to the
sugar workers between 1990 to 2006, “increases which GuySuCo could not
pay and be competitive in international markets, even with a preferential
price, and so they were forced to reduce the workforce by 10,000 workers
between 1998 – 2008. But in reducing the workforce so drastically and
rapidly, they in fact created a large-scale shortage of labour in the
industry which is plaguing them today. “What is incredible is that even
though they reduced the workforce from 28,000 in 1992 to around 14,000 now
with an estimated 4000 casual workers, the wage bill still keeps rising
drastically whilst the price of sugar is falling.”
He also elaborated on the supply aspect of the crisis, in that weather has
now been accepted as a huge hindrance to the expansion process which falls
in light of the fact that the mechanisation aspect of the expansion of the
cane cultivation now requires enough cane to supply the new 350-tonne per
hour factory with cane.
He noted that the current loading at Skeldon today is around 310
‘punts’ or around 1800 tonnes a day and the current Skeldon factory is
capable of grinding approximately 93 tonnes an hour and to grind
continuously it requires 2,232 tonnes a day.
The new factory at 350 tonnes an hour would require 8,400 tonnes a day but
last year, Skeldon Factory, according to GuySuCo’s figures, only ground
around 64 per cent of the available time during the two crop seasons.
Shortage of labour and bad weather preventing machines from reaping and
loading the canes were responsible for most of the stoppages.
“The bad weather has also hampered field expansion and planting…For
example this year Berbice was budgeted to plough 2500 acres and it only
ploughed around 700 acres.”
Mr Vieira said too that even if the factory had started on time, it would
have only been able to grind for some 20 weeks a year. He said that this
has left the PNCR baffled at the claim that the Skeldon factory will be
co-generating power, “because it will only be giving power for about 20
weeks a year.”
“Even Minister Robert Persaud and GuySuCo have now agreed that the
weather in Berbice is not allowing them to proceed with their expansion
plans; factories make sugar from sugar cane and so you have to supply it
with sugar cane but as of now there is not enough sugar cane for that new
factory to operate successfully.”
The Shadow Agriculture Minister added also that if the labour shortages
continued, coupled with high rainfall preventing the machines from
harvesting the canes, then there will not be a continuous grinding and as
a consequence there will be very little surplus power for supplying
electrical power to the consumers of the Guyana Power and Light (GPL).
Another area of supply that Vieira elaborated on was the fact that the
private cane farmers did not fulfill their commitment.
He noted that the idea was badly conceived in expecting that the farmers
in Berbice at Skeldon were capable of planting an area of 10,000 acres,
which is a size equal to the entire Skeldon cultivation prior to the
expansion.
He posited that it would not happen and, “because it will not happen and
because the price of sugar has been reduced due to the loss of the
European protocols…this entire project is looking more and more like the
biggest economic disaster this nation has ever experienced… Nearly
US$200M worth.”
According to Vieira, the farmers in Skeldon who were supposed to plant
nearly 10,000 acres have actually only planted less than 400 acres.
The Shadow Agriculture Minister did not stop there in his illustration of
why he believed that it would have failed, stating that there is evidence
that the other GuySuCo estates are being deprived of money to keep their
operations economical and competitive, and this was due to a starvation of
funds to the other estates through diversion of funds to complete this
expansion at Skeldon.
Vieira noted that in 2005, according to a GuySuCo report, there is the
evidence of starvation of funds in that when Albion asked for $529M to do
its capital works, it was only given $183M. Rose Hall asked for $414M and
was only given $193M, “and this starvation of funds to do capital works
to keep the industry competitive has been a hallmark of the industry for
the past five years, and we have paid the price”.
He also alluded to the fact that in 2007 the cost per pound figures for
the various estates was above the desired US12 cents that was necessary
for the commodity to be competitive.
He noted that the cost of production at the following estates:
Regarding the wages and salaries bill for the company, Vieira said that in
1990 the sugar industry wages was $980M but after contracting Booker Tate
to run the company, the sugar workers’ salaries were raised to $2.7B in
1991. In 1992 the sugar workers salaries were doubled again by Tate to
$4.8B. “After getting into power and not understanding that the sugar
workers’ salaries were already adjusted for the ERP, the PPP awarded
more increases which raised the sugar industry’s wage bill to $12
billion by 2000.”
This, Vieira said, in itself was a completely irresponsible act, in that a
previous chairman of the company told the party that in 2002 that
employment costs were now so high that the viability of the industry is
threatened, and it has not stopped this escalation of the cost of
employment.
The industry’s wage bill was $16.6B in 2006, some 63 percent of total
costs.
Friday, September 26,
2008
