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Offload loss-making sections of Guysuco, Private Sector Commission tells Commission of Inquiry

The GuySuco Commission of Inquiry in session on Monday, August 3, 2015 at the Ministry of Agriculture.

The Private Sector Commission (PSC) on Monday recommended that the Guyana Sugar Corporation (GuySuco) get rid of loss-making sections if it wants to remain in the business of sugar production, but disagreed with wholesale privatization of the industry.

Delivering a presentation to the Commission of Inquiry into GuySuco’s operations and future, PSC Chairman Norman Mc Lean said “they will have to consider breaking it up and removing unprofitable units or organisations.”

“Some recommendations would be to continue the rationalization and decommissioning of non-productive or non-viable factories and units and so attempt to consolidate and hopefully strengthen existing units of production,” he told the Commission under the chairmanship of former Agriculture Minister Vibert Parvatan.

GuySuco currently produces the sweetener at 40 US cents per pound and sells it at about 16 US cents per pound.

He highlighted that one of the major problems facing estates such as Uitvlugt and the more than US$200 million Skeldon Sugar Factory is insufficient cane to feed the mills because few acres have been planted.

Overall, sugar production has slumped from 8.40 tonnes per hectare in the British colonial days to 5.81 in the 1990s, 4.71 in the 1980s and 5.91 in 2000.  In real terms, the Corporation produced 216,000 tonnes in 2014, down from a high of between 320,000 and 324,000 between 1999 and 204.

Against the background of labour costs being more than 64 percent of revenue and a shortage of labour due to the offspring of sugar estate workers now entering the professions rather than the fields, the PSC boss said authorities would have to find the right mix between labour and machines. He also observed that mechanization means more soil in the clarifiers.

Mc Lean questioned the wisdom of encouraging private cane farmers without falling into the trap of being unable to pay farmers , almost identical to the plight facing rice farmers.

Other recommendations by the PSC include addressing the issue of leadership, setting goals, monitoring performance and a management system that would help with either the existing management or privatization of the industry

The PSC also recommended the use of the Kaizen System, a Japanese method that seeks to produce more from less through a system of continuous improvement. “This encourages the establishment of small units to rethink the processes even at the lowest level and impacts on the whole system.

It is built up by multiple teams which impact on improving what is being done and so creates a multiplier by generating more growth without spending more money,” said Mc Lean who notes that the Kaizen System has been used by the Canadian gold mining company, Cambior, at its operations in Guyana and Suriname.

Another constraint that faces not only GuySuco but other exporters and importers is the shallowness of the Demerara River that prevents large cargo ships from entering and leaving Port Georgetown with the maximum allowable weight.  The result, he said, is that exporters have to pay for ‘dead weight’.

The Commission Chairman said regardless of the model that is chosen, GuySuco would need money as well as reducing cost of operations by improving management and supervision.

While the two sugar unions- Guyana Agricultural and General Workers Union (GAWU) and the National Association of Agricultural Commercial and Industrial Employees (NAACIE)- are opposed to privatisation because of its negative impact during British colonial rule, Parvatan urged the unions to have an open mind.

“What I am saying at all levels including here are all option remaining available if we are to get to divestment that would be the last option. Initially we are looking at ways and means correcting it. That is a challenge the union have identified the shortcoming in management, unions have pointed out dome malpractices which reflect a lack of supervision a lack of commitment and bad attitudes,” he said.

The unions and GuySuco have traded several reasons for low production over the years. They include bad weather, low worker turnout, poor management and industrial action.

One of GuySuco’s largest buyer in Europe, the United Kingdom-headquartered, Tate and Lyle Sugars, has shied away from committing to invest in the local industry because of the bleak outlook for the global sugar industry especially in light of the deregulation of beet sugar production in 2017.

Tate and Lyle Sugars’ executives have, however, told the Commission of Inquiry that they would be willing to offer technical advice to make GuySuco cost-effective and competitive.