State paper on sugar industry’s future laid in National Assembly – Gov’t will not let industry die-Minister Holder

GINA, GUYANA, Monday, May 8, 2017

Minister of Agriculture, Noel Holder, today presented the state paper on the future of the sugar industry to the National Assembly.

The Minister read the document to the House and indicated that the government “will not allow GUYSUCO (Guyana Sugar Corporation) to die from preventable causes.”

“Preparation of the government’s position on the future of the sugar industry was a long and intense process,” Minister Holder reasoned. Ultimately, there will be a smaller sugar sector in the future, Minister Holder pointed out. The proposed course of action for the industry will see several estates being amalgamated.

Wales’ operations have already been merged with the Uitvlugt Estate and Albion will be joined with Rose Hall. GUYSUCO is expected to divest the Skeldon Estate and the Rose Hall factory will be closed.

The end result will see GUYSUCO consisting of three estates and sugar factories. The estates, complete with factories, would be Blairmont in the West Bank Berbice, Albion-Rose Hall in East Berbice and the Uitvlugt-Wales estate in West Demerara.

Additionally, sugar production will be contracted, Minister Holder noted. “The Government proposes that sugar production should be contracted to approximately 147,000 tonnes of sugar annually produced from Albion, Blairmont and Uitvlugt Estates,” Minister Holder explained.

This production would be enough to satisfy the domestic and foreign markets that provide preferential access to Guyana’s sugar.

“The Government of Guyana is cognisant of the invaluable contribution of the sugar industry over the years.  The government, however, cannot let GUYSUCO continue to utilise a business model that is based on waste, inefficiency and hopelessness, ultimately leading to its undoing,” Minister Holder said.

Minister Holder noted that these actions “will result in improving the relationship with some cane cutters, estate staff and about 1,710 private cane farmers.”

As the Minister read his presentation, questions from the Opposition side of the House of “what happens to the workers” were heard. Minister Holder noted that GUYSUCO will retain as many workers as needed for all operations on the merged estates/factories.

Divesting Skeldon

Meanwhile, the government is expected to invite expressions of interest for the divestment of the Skeldon Estate. Minister Holder noted that despite the “significant investment” that was made in the factory, “It has failed to achieve its potential thereby failing to generate returns on the investment.”

The Skeldon Sugar Modernisation Project has indebted the government to the tune of $29B, Minister Holder pointed out. “Funds generated from the divestment of Skeldon Estate will go towards reducing the corporation’s debt and supporting its capital programmes for both sugar and the diversification initiatives,” Minister Holder said.

GUYSUCO will have to make several adjustments to facilitate these moves which are aimed at making the enterprise more efficient. GUYSUCO “proposes to take account of the similar experience of other countries in proceeding with its actions.”

The state enterprise has been plagued with challenges to maintain production over the years. Production in 2016 fell by 18.7 percent and foreign exchange earned by the crop declined 15 percent.   This poor performance follows a pattern of inconsistent output in which the average annual output of sugar declined by 14 percent between 2006 and 2015.

GUYSUCO incurred a debt of more than G$82 billion by 2015.  This has resulted in numerous financial bail outs from the government.  Since 2015, the government subsidies to GUYSUCO were estimated to be $32B.

This state paper follows a process of overhauling the industry which included a Commission of Inquiry into GUYSUCO, the subsequent setting up of a special Task Force to look at options, on the way forward for the sugar company, and thereafter, presenting these options to the government.

 

By: Tiffny Rhodius