Sugar sector procurement woes sign of mismanagement – Irfaan Ali

Agriculture sector decline

…rising costs a major disincentive for local producers

The troubles documented in the sugar industry relating to procurement is a strong indicator of incompetence in the management of the restructured Guyana Sugar Corporation (GuySuCo).
This is according to economist and People’s Progressive Party (PPP) Presidential Candidate Irfaan Ali, who cited what the 2019 Finance Ministry’s mid-year report had to say about GuySuCo.
“The poor performance of sugar subsector was due to the late delivery in materials and extended maintenance of equipment that delayed production. This caused sugar production output to reach its lowest level of 33,531 metric tonnes during the first half of 2019,” Ali said in a statement.
“Compared with the first six months of 2014, this represented a 159 per cent decline in sugar production. According to the half-year report, production for the remainder of the year and 2020 is likely to be affected by delays in procurement; a manifestation of mismanagement”.
Ali went on to project that based on the current trend, the sugar subsector is now projected to grow by 2.3 per cent during 2019, instead of 15.6 per cent. He noted that as a consequence, export revenue from sugar is expected to continue its downward trend.
Revenue from the export of this commodity, he added, contracted from US$34.4 million during the first half of 2014, to US$12 million during the corresponding period in 2019. The projected export revenue of US$29.4 million for the entire 2019, which is 15 per cent less than the half-year amount for 2014, was adjusted downwards to US$25 million as a result of gross mismanagement.
According to the 2019 mid-year report, GuySuCo fell short of its production target for first crop by one per cent. Its output reached 33,531 tonnes of sugar, but the Corporation was hampered by delays in the start of production.
“There were delays in the start of production that were due to the late delivery of materials for critical repairs to boilers in all factories, as well as extended equipment maintenance at the Uitvlugt factory. Thus, the commencement of cane harvesting was pushed to late February,” the report stated.
“However, once harvesting began, industry yields were higher than the same period last year, by 1.4 per cent, with considerable gains being made at Uitvlugt. There were also noticeable improvements in the recovery of sugar at both the Uitvlugt and Blairmont estates. The Corporation estimates that production for the second crop will be 73,516 metric tonnes, resulting in a growth rate of 2.3 per cent in 2019, down from the 15.6 per cent forecasted at the time of the Budget,” it added.
The report also said that GuySuCo completed its first round of cane assessment for the 2019 second crop; this assessment found that the canes were relatively well grown and are developing in favourable conditions.
“However, it is noted that delays in the procurement of inputs, including fertilizers and spare parts, could affect production for the remainder of 2019, as well as 2020,” the mid-year report added.
Back in 2017, Government had announced plans to close the Enmore and Rose Hall Sugar Estates, sell the Skeldon Sugar Factory, reduce the annual production of sugar, and take on the responsibility of managing the drainage and irrigation services offered by GuySuCo.
Subsequently, thousands of workers were retrenched and Government set up the Special Purpose Unit (SPU) under the National Industrial and Commercial Investment Limited (NICIL) to take over the divestment of GuySuCo’s assets that were earmarked for sale.
It has been a tempestuous relationship, however, with GuySuCo and SPU engaging in several public spats over the latter’s approach to management. SPU has also been accused by the Corporation of leaving them in the dark about much of its actions and transactions it enters into.

Local producers
The mid-year report also found that the livestock subsector, despite recording growth in 2018, is estimated to have contracted by 8.1 per cent in the first half of 2019. While there were some gains in beef and pork production, a number of other sub sectors took hits.
“This was as a result of a decline in broiler meat production and, to a lesser extent, milk production, which fell by 8.2 per cent and 1.6 per cent, respectively. The contraction in the former was due to a supply imbalance of a large producer, who reduced output so as to run down stocks”.
“Subsequently, there has been a shortage in the supply of chicken on the local market, and efforts to address this have been hampered by poor hatchability of eggs and the stunted growth of chickens,” the report added.
Ali noted that contractions in the livestock subsector have affected the entire population. He pointed out, however, that the mid-year report failed to highlight one of the major factors for the declining production in chicken. According to Ali, this factor is the rising costs that are a major disincentive to local producers.
“Meanwhile, the fishing subsector suffered a major setback from decline in shrimp production and industrial finfish production. Based on the performance of the livestock subsector during the first half, this sector is now forecasted to register growth of 0.7 per cent instead of 2.3 per cent for 2019,” the Presidential Candidate also said.
Ali also noted that based on the statistics and the Balance of Payment figures generated by the Bank of Guyana, export earnings have been revised downwards for the primary commodities. All signs, he said, of a struggling economy.