Guyana Sugar: Reopening sugar estates would be throwing money away – Dominic Gaskin

Dominic Gaskin

President Irfaan Ali recently announced that the new People’s Progressive Party Civic (PPP/C) administration has begun the process of reopening three of the four sugar estates that were shut down by the previous APNU+AFC coalition government.

Such a move would require a proper plan or else it would be an utter waste of taxpayers funds. That was the opinion shared by former Business Minister, Dominic Gaskin.

“If you reopen them without any sort of plan, that would be madness. It would be just throwing taxpayers money down the drain and putting at risk our future oil revenues,” he told Kaieteur News, during an exclusive interview.     

Gaskin was part of the last administration who took the decision to shut the Rose Hall, Wales, Skeldon and Enmore sugar factories when they took office in 2015.

The Skeldon factory, East Berbice.

Sustaining the seven estates at the time was putting a major dent in the treasury, they said, and later, those four estates were shut down and more than 7,000 workers were laid off.

The PPP/C vowed to resuscitate the sugar industry, providing hope for the thousands of workers who were left without jobs and struggled to maintain their families since the closures.

With President Ali’s announcement, that vow may soon become a reality, but according to the former Business Minister, a robust plan is needed as the sugar industry has many challenges.

“I’d love to see the plan, I’d love to get a better idea of how he expects to, where he intends to get the money to invest and what sort of investments he is likely to make into the estates and how he basically plans to reopen and resuscitate those estates. I would love to see a very comprehensive plan to do that and make is profitable, otherwise he is just throwing money away,” Gaskin said.

The sugar industry, Gaskin added, is not profitable. He asked: “…why would you want to reopen sugar estates that were not profitable when they were open.”

Instead of reopening the estates, the former Minister opined that focus should be placed on the three estates that are operable to turn them into profitable ventures.

“…Because, if you can’t make those three estates that are still open profitable, how are you going to make six sugar estates profitable, especially given the fact that the ones that were closed were the ones that were the least profitable of all…those were making more losses than the others.”

To make sugar profitable, Gaskin explained that a fairly comprehensive and long-term strategic plan is integral to restructure the industry to make it viable.

At this point, he added: “I really don’t see how he can do that.”

“It is easy to talk, talk is cheap, you know, if he has some great plan, to reopen the estates and make them profitable fine, I just know that it is a lot more, it is not just as easy as going out there and making statements.”

The promised reopening of the closed estates comes with the prospect of new jobs for the thousands of Guyanese who were plunged into unemployment, and that was the selling point for the PPP/C on the campaign trail.
However, Gaskin was of the view that simply reopening the estates to employ “does not make sense.”

“I am all for jobs,” he said “but the problem is why are you tying people down to an industry that is not profitable, an industry where in which we are competing with other international players making sugar much more efficiently than we are.”

Such a move, Gaskin said would not be “logical.”

Further, Gaskin stated what he would also like to see is a comprehensive plan for job creation in the communities where those estates were shut – jobs that see Guyanese being engaged in activities that are profitable, globally competitive and those that can create sustainable industries.

And such a plan should be made public, he continued, citing that it would take billions of taxpayer dollars to fund the reopening bill.

“If you are going to take the taxpayers money to reopen the estates, just to create jobs, then I think the taxpayers are entitled to understand at least what the plan is and how long is it going to take before they see a return on the money that is going to be invested in those estates.”

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Comments

  • Leslie Chin  On September 5, 2020 at 6:15 am

    Sugar is not being consumed as much as before for health reasons;instead it should be converted to alcohol to be used for fuel as is done in Brazil. Most of the fuel used in Brazil is alcohol based, even in North America it is a 5% blend with gasoline
    https://www.sciencedirect.com/topics/engineering/alcohol-based-fuel

  • collectingsunenergy  On September 5, 2020 at 7:07 am

    I agree that reopening unprofitable sugar estates just to provide jobs for sugar workers to produce sugar for export is not a good idea. Guyana sugar could never compete with nearby Brazil or Cuba on the international market. And producing sugar to create alcohol for fuel is not sensible, as Guyana’s oil could well be a source of cheaper gasoline.
    What could work is opening some estates to produce sugar for local consumption, molasses for the rum industry, bagasse to create local paper supplies, plus a mixture of cane tops and molasses to make cattle feed. The sugar, paper and cattle feed are all import substitution items that would save foreign currency.
    The estates have two valuable resources which are land and workers used to agricultural labour.. Use them. Some or alll of the sugar cane could be produced by cane farmers on contract with a guaranteed price that would give them a decent living. Those would be the same former sugar workers doing what they know on land from the former estates.
    Other land and other former sugar workers could be used for more food import substitution. Corn and soya, the main ingredients in animal feed can be grown locally. Chickpeas, onion, lentils, split peas, pigeon peas, pumpkin and tomatoes for ketchup, citrus to cut out imported juice, and a whole host of food items now being imported but capable of growing in a tropical climate can be attempted using former sugar workers and estate land. Sure there may have to be some subsidies and government technical assistance at first, but that’s way better than spending money on employing sugar workers to produce sugar for export at an economic loss.
    New things have to be tried.Same old, same old is not on the menu.

  • Linda  On September 5, 2020 at 7:16 am

    Utter nonsense………throwing pearls to swine. That money can be put to better use…i.e. investing in a new public hospital and ensuring that the Guyanese people have access to medicine. That is just a political move to appease the PPP supporters who lost their jobs when the sugar estates had to close.

  • guyaneseonline  On September 5, 2020 at 9:56 am

    President Ali vows to rebuild, strengthen and reorganise sugar industry in comprehensive way

    September 4, 2020 – Department of Public Information (DPI)

    His Excellency Dr. Mohamed Irfaan Ali has affirmed his Government’s commitment to ensuring the survival of the sugar industry by implementing a comprehensive strategy.

    “The approach to the sugar industry is one in which we have to bring back three of the estates into operation; this would require capital investment, field investment and infrastructure investment. Even if the ultimate goal is to have a right business mix whether it is a public-private partnership or private investment in these estates, the asset and the industry itself must be of concern and be optimised to realise the full value and potential,” President Ali said.

    The Head of State noted that the survival of the sugar industry depends heavily on Government intervention at this time. He also reminded that the former Administration failed to conduct a socio-economic study on the viability of the industry before closing the estates.

    “When we are talking about the sugar industry, we are not talking about the financial viability alone. We have to look at the economic and social impact of the industry and the communities. We have seen the tremendous impact on the communities in which these estates were closed,” the President said.

    In this regard, the Head of State said his Administration has commenced a review of how the G$30 billion syndicated bond, which was acquired by the Coalition Government to keep the Guyana Sugar Corporation (GuySuCo) afloat, was utilised.

    “We must recall that a bond of G$30 billion was raised specifically for the sugar sector. We are now in the process of assessing how these resources were spent but surely, from what we have seen so far, there was inefficient use of the resources in relation to the sugar industry itself,” he said.

    President Ali also said the assets of the Wales Estate were completely dismantled and taken away. Given this reality, his Administration is discussing the creation of a Development Authority which would become a business incubation and support model.

    “This will include the workers who lost their jobs in creating a modular investment programme to support new industries, agro-industries, new areas of agriculture development and sustainable livelihoods,” President Ali assured.

    This he said would be subject to a special investment incentive and regime that will stimulate investors’ interest and create a pull factor for capital. The Head of State reminded that his Government remains committed to the re-opening of the estates and assured that it will take the necessary steps, make the necessary interventions and earmark resources aimed at reviving the industry and putting the people back to work.

    “Surely this would require support from the treasury, but when one examines the wider ranging impact of this support on community life, agriculture, drainage and irrigation, economic and social impact, it is clear that the budgetary support from the treasury would have a deeper impact on overall health of your economy and the communities,” President Ali noted.

    The President used the opportunity, when he visited the communities across several villages in Region six (East Berbice-Corentyne area) on Tuesday, to reassure that the residents who rely on the production of sugar for jobs will soon find themselves back at work. He also assured the residents of Wales that despite the state of the Estate, they will also be afforded employment opportunities and will not be left out of future revitalisation plans.

  • Lall Hardeen  On September 5, 2020 at 11:13 am

    I do not disagree with Mr. Gaskin. My hope is that instead of ploughing monies into a failing plant/ plants/industry, ther is the need to evaluate the cost vs the net rate of return inclusive of the socioeconomic impact of the communities that were affected. If the socioeconomic impact alleviates poverty, the short-term answer is yes and put a plan in place to wean and transition those affected to other more profitable ventures. Government should provide short-term solutions/support to those communities affected as well as plan for the eventual inevitable. The communities must be made aware of that eventuality so the affected is given a chance to move on with the knowledge that some things don’t last forever since they are not good for the country as a whole.
    The world needs more cheaper foods and for those that have the wherewithal, give them a chance to produce on the same lands that will not be cultivated any more for the purposes of producing sugar.

    • Curtis  On September 5, 2020 at 11:32 am

      Couldn’t agree more Lall Hardeen….especially with regard to allowing people to plant on the lands that are no longer being used for sugar cane to earn them an income, and I mean that land should be given to ALL Guyanese not just PPP supporters as was done during the PPP governance over the 23 year period. That would bein keeping with the campaign promise by Ali that the PPP government would be one of inclusiveness.

  • brandli62  On September 7, 2020 at 3:01 pm

    I could not agree more with Dominic Gaskin’s statements regarding the reopening of sugar estates that have been found in the past not to be profitable. If you were to reopen the estates, you’ll need to do FIRST a through analysis to identify the reasons for a lack of profitability. Second, you will have to come up with a strategy that would make them more profitable. Profitability means that you can compete with your product on the world market. Essentially this means you are producing at costs that you can compete. While I am not an agricultural expert, it seems to me that this can only be achieved by streamlining of land use (e.g. combining small plots of land for sugar cane cultivation into larger ones, which can be managed more economically), mechanisation (e.g. employing state of the art machinery) to harvest and process sugar cane, and efficient sugar mills to produce high-quality sugar. Such a strategy will requires significant investments in capital and will also provide less jobs than reopening in the sugar estates. However, the only way to provide long-term job security to agricultural workers in the sugar industry is produce a product that can compete on the world market. Alternatively, the government should identify agricultural products where Guyana can be competitive and assist the unemployed work force in transitioning to these new products. Anything strategy that is not based on understanding the market, will lead to a soviet-style planned economy. And we have seen where that has taken the Soviet Union……

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