OPINION: Sugar cannot be analysed only in terms of cost-benefit, but also on its economic and social impacts


By Dr Tara Singh

Guyana’s Minister of Agriculture, Hon Zulfikar Mustapha, recently announced the reopening of three sugar estates: Enmore, Rose Hall and Skeldon, that were closed, along with Wales, by the PNCR Government within one year of their accession to power in May 2015; despite the Government’s CoI recommending that no estate should be closed, and that a 3-year turnaround period should be allowed. Prior to that, the PNCR pronounced, at their 2015 elections’ rallies, that “sugar is too big to fail,” and that they would give sugar workers a 20% pay rise. Instead, they sent sugar workers into shock, dismay, depression, and impoverishment.

The Minister knows that sugar, unlike other industries, is the foundation and unifying force of history, culture, social forces (health, sports), and physical networks (drainage, irrigation, access roads) that combine to constitute the life blood of sugar estate communities. Therefore, sugar cannot be analysed only in terms of cost-benefit, but also on its economic and social impacts. To destroy sugar is to also destroy those communities.

The Minister also knows that sugar had contributed over Gy$92 billion in sugar tax levy, which was spent to prop up other sectors of the economy.

The massive social upheaval in sugar estate communities has been illustrated by the following findings of the International Labour Organization (ILO) in their Economic and Social Impact Study (ESIS). The ILO reported that sugar workers’ income fell by 64% because of the estates’ closure, while 62% of sugar workers children’s education had been compromised. Much more troubling is that 81% of those workers had not been able to find full-time jobs.

At Wales, for example, 3 years after that estate’s closure, 60% of workers had remained unemployed. The ESIS was supposed to be conducted by the Government prior to the estates’ closure, but that Government was determined to bring those communities to their knees.

The Minister says the reopening measure is in keeping with the PPPC’s election promise. His enthusiasm at the revival of the 3 sugar estates (Enmore, Rose Hall and Skeldon) is shared by most Guyanese. In one conversation chain in the social media (Facebook) on this subject, 82 (96.4%) of the 85 viewers expressed their support for this measure. Their positive responses ranged from “bravo” to “awesome” and from “super” to “great”.

Inspired by this level of support, and that from other sources, the Minister has reconstituted the GuySuCo Board and brought into it a wealth of experience and professionalism. The CEO, Sase Singh, is a well-known financial analyst. The Chair of GuySuCo, Mr Pravinchandra Dave, is a well-established banker.

These appointments and related measures do not, in any way, minimise the formidable challenges that lie ahead. The GuySuCo Board and the CEO are faced with a Herculean task, and the Guyanese public expect them to perform at a high level of competence to justify the Government’s faith in them, as well as to justify the level of resources injected into those estates.

The General Managers of the 3 sugar estates are: Aaron Dookie (Rose Hall), Vishnu Panday (Skeldon) and Subby Rampertab (Enmore). They will oversee the implementation plan. The Government has allocated Gy$5 billion in the emergency budget to activate the rehabilitation/revival process. The initial cost in 2020-2021 is estimated at Gy$11.4 billion or US$85 million. This expenditure will be split between the field and factory as follows: Gy$3.9 billion for field operations and Gy$7.5 billion for factory rehabilitation.

It is projected that by 2025, the combined production of sugar on the 3 estates would be 156,000 tons. An estimated 4,523 workers are expected to be hired, with 442 to be hired by December 2020. The sugar estates would not be able to rehire all of the dismissed 7,000 workers for the following reasons: (i) some of them would have gotten jobs elsewhere; (ii) increasing mechanisation would replace many jobs; (iii) and cost efficiency would also reduce labour force size.

Value-added products include co-generation, molasses, cane juice, and refined sugar. Diversification could include soya, corn, industrial hemp, coconut, and dairy farm products; but these crops will happen after the sugar industry has been consolidated and put on a strong economic foundation.

Peasant cane farming is also integral to the revival plan. It is expected, for example, that 32% of the cane produced at Skeldon would be by private farmers.

It is projected that both Enmore and Rose Hall would start production in the second crop of 2022. For Skeldon, sugar production is scheduled for the second crop of 2023.

Critics have been arguing that revival of the 3 sugar estates is not a financially sound venture. They note how Uitvlugt, Albion and Blairmont sugar estates are running at heavy losses, to such an extent that GuySuCo owes over Gy$3 billion to creditors, excluding the amount owed to the Guyana Revenue Authority (GRA). The Cash in Bank is a mere Gy$122 million; and by the end of 2020, Guyana would have produced, for the first time in 80 years, less than 100,000 tons of sugar. Not to forget the other woes that afflict the industry: Guyana is now importing a by-product of sugar, molasses.

Much of the rapid decline in sugar production over the past 5 years has been due to closure of sugar estates, inexperienced management, poor Government policies, and high cost of production. However, this is a subject for another time.

These negative developments cause critics to question the justification for reopening the 3 closed sugar estates. Some critics have even called for the abandonment of sugar and replacing it with industries such as aquaculture, dairy and coconut farming. Such ideas on alternatives are plentiful, but which one will work is uncertain. In regard to aquaculture, for example, ‘wild’, not ‘farmed’, fish is what consumers want; a position driven by health safety considerations.

The PPPC, which is intimately connected with the sugar industry, believes that it could overcome the hurdles that plague the industry and nurse it back to good financial health within 4-5 years. The Government believes there will always be a demand for cane sugar, especially one of its by-products: refined white sugar, despite competition from beet, corn syrup and artificial sweeteners. The demand for refined sugar in the Caribbean alone, according to one expert, is about 226,000 tons per annum.

There is a bright future for sugar, but we need to support the workers and management in this thrust to restore the sweetness to sugar; elevate it to an important foreign exchange earner; and re-establish it as a unfying force within sugar communities and beyond.