Guysuco outlines some cost cutting measures

Last Updated on Friday, 11 July 2014, 23:25 by GxMedia

The cash-strapped Guyana Sugar Corporation (Guysuco) plans to cut its operational costs by, among other measures, using bio-fertilizer and leasing more lands to private cane farmers, Chief Executive Officer Dr. Raj Singh told a bipartisan House Committee on Economic Services.

“No matter what we do in terms of increasing the production, if we don’t look at reducing our cost of production we will be in the same place ten years from now,” he told the committee hearing that was chaired by A Partnership of National Unity’s (APNU), Carl Greenidge.

The corporation wants to reduce the cost of producing sugar from US 34 cents per pound now to US 27 cents per pound by 2017 in keeping with the entity’s 2014 – 2017 Strategic Plan

Singh announced that if at the end of the one-year pilot project, the cane is grown properly and its sucrose content increases the corporation would invest in a US$2.5 million bio-fertilizer plant to grow the tissue culture locally. The corporation plans to mix the bio-fertilizer with filter-mud and apply that to 50 hectares on each estate.

General Manager of Agricultural Services at Guysuco, Raymond Sangster said the mixture would release nitrogen that is trapped in the soil and make it available to the plant and break down the filter mud, resulting in more nitrogen being produced.  If successful, he said the Guysuco could halve its mineral fertilizer bill.  “When you look at the cost, if it is successful, you could literally bring down the cost of mineral fertilizer by almost fifty percent,” he said.  

Sangster said Guysuco has ensured that the bio-fertilizer that has been imported is similar to that being used on sugarcane farms in India where the climate is somewhat similar to Guyana’s. Officials said bio-fertilization is not new as it is being used extensively in a number of countries including the United States (US).

The Committee members, who participated in the hearing, were  parliamentarians Agriculture Minister Dr. Leslie Ramsammy,  Gail Teixeira, Manzoor Nadir and Dharamkumar Seeraj (government) as well as Khemraj Ramjattan (Alliance For Change), Ernest Elliott, Desmond Trotman and Sydney Allicock (APNU).

Mechanization and Supervision

With just about 50 percent of Guysuco’s field workers reporting for duty because many of them have gone into construction, mining and farming; the corporation’s officials disclosed that they are placing a lot of emphasis on mechanization. The CEO said Guysuco needs GUY$6 billion over the next four years after which “there will be a huge reduction in our harvesting cost.” “There is a huge cost and an upfront cost to mechanization but I think it is worth it,” he said. Singh added that fully mechanized harvesting would cost US$1,062 per ton compared to US$4,723 per ton.

Due to the constraints of mechanically harvesting canes during wet weather,  he said Guysuco has bought one whole-stick harvester for US$110 thousand to run a pilot project at Skeldon Estate. The whole-stick harvester is drawn by a tractor, cuts the cane and dumps it into a trailer for transportation to the punts. “If this works, I think we have an alternative. This is a light machine. Even in some rainy conditions. Even in some wet conditions, you can still use it. It’s drawn by a small tractor. It will not be compacting the soil to the level of the larger (harverster),” he said.

He released figures showing that 30 percent or 14,000 hectares are machine-ready. The corporation hopes to increase that by another 8,000 hectares by 2017 to maintain a balance between mechanization and labour. Part of the reason, he said, was because the machines do not perform efficiently in the muddy cane fields during wet weather.  At the same time, he pointed out that mechanized harvesters rake in 600 tons per day compared to 2.5 tons by manual labour.

The Guysuco boss also announced that a special supervisory team was being set up to monitor and ensure that successfully proven planting and harvesting standards are implemented. “In 2014, the managers and supervisors are going to be held to a higher level of accountability in this organization,” he said. Singh said unit on Quality Control and Work Standards Unit of the Agricultural Services Department would have to certify every field in accordance with the standards.

 Leasing of Lands

Another cost-cutting measure, the CEO said was the ongoing leasing of lands to private cane farmers. He said the Wales model of leasing lands was being replicated at Uitvulgt, West Coast Demerara. The CEO said that after several years of low production, figures show that additional cane was being supplied to the Uitvlugt factory. He said land-leasing was providing more jobs and earnings, making the private farmers see the cultivation as their private investment and reducing Guysuco’s spending. “That releases us of investing some of our capital for conversion, for cultivation for harvesting. That is now becoming a cost to the private farmers,” he said.

Singh also expected that private farmers at Uitvlugt would follow in the foot-steps of their colleagues at Wales who have formed cooperatives that abide by governance, accountability and transparency rules that have seen them earning an additional US$42 per ton under a Fair Trade system.

Guysuco last year earned US$116 million from its low production. The corporation hopes to produce 219,000 tons of the sweetener this year.