Guyana: Privatisation and Closures as GuySuCo moves forward?

Wales Sugar Estate Closed

On 18 January, the Ministry of Agriculture in charge of the Guyana Sugar Corporation (GuySuCo) announced that the Wales Sugar Estate, in West Demerara, will be closed at the end of the second crop of 2016. The Ministry said Wales is a poor and run-down estate, with an old factory whose rehabilitation requires major investments, and its cane fields, roads and bridges are in very poor conditions. Among GuySuCo estates, it added, Wales is “by far the estate in poorest shape”.

There will be no further land preparation or cane planting in Wales and, as the 2016 harvest progresses, lands will be retired and put to other uses. Farmers, who deliver cane to Wales, will see their cane diverted to Uitvlugt in 2017; while employees, if vacancies are available, would be transferred to Uitvlugt as well or will be made redundant.

The announcement said that the decision of closing Wales “has nothing to do with the recommendations of the Commission Of Inquiry (COI) into the sugar industry.”

The Commission of Inquiry into GuySuCo

Last July, the government appointed a Commission on Inquiry (COI) to chart the “way forward” for Guyana’s sugar industry. The Commission was to look at different aspects: from Factory and Farm operations, to Human Resources, Markets, and Economic and Financial situation.[1]

The Commissioners submitted their report to government on December 30, which describes a chaotic industry. As a Commissioner wrote:  “All Guysuco’s financial ratios are extremely discouraging. They show a corporation that is insolvent, and illiquid, making huge losses, and surviving only because of government bailouts.”(First draft of the Finances and Economics Report, p. 9)

A reading of the reports leads to one concept: mismanagement covering a broad range of ailments: from miscalculating investment decisions to abandoning “well-established” agricultural practices, to poor human resources management, influence of politics, among several other aspects. Some examples given by the reports: the Skeldon project, which at a cost of USD 165 million was meant to be the linchpin of GuySuCo recovery, has never performed as planned, since its opening in 2009; and, also worrying, increasing government financial to Skeldon while other estates were starved for capital.

The report on agriculture says that “estates and support staff (are) falling short of fundamental agronomic and agriculture management standards, including quality of tillage, time of planting, shortage of inputs, chronic weed competition and in too many cases, harvesting canes out of season.” (Agriculture Report, p. 2) The factories report describes how, for instance, mechanical cane loading creates still-to-be-resolved problems because factories are not equipped to remove the increased amount of extraneous matter and mud they receive, which have subsequent problems in the crushing of cane, the processing of juices, and steam generation.

The Way Forward according to the Commission of Inquiry of GuySuCo

The Commission summarises their recommendations as follows:

  1. Privatization to be completed within three years.
  2. Divesting all assets associated with GuySuCo.
  3. Rehabilitate assets to make the Corporation attractive to investors.
  4. No closure of any estate.
  5. Timely governmental financial support.
  6. Implementing recommendations by the COI (Commission of Inquiry) on reducing costs. (COI Vol. I, p. 36-37)

The recommendations are different aspects of what the government should do  to make GuySuCo attractive to investors, and also includes  breaking up GuySuCo in smaller operations to be run by a holding company. The odd recommendation is not to close any estate. Given that the reports, as a unit, describe an appalling situation in many estates, it would have been a logical conclusion to recommend their closure.The reports’ bottom line is summarised in the Finance and Economy report: By 2020, “A decisive shift to private ownership and control of the assets now employed in sugar production has to be an essential element of any long-term resolution of the present paradoxical (government bailouts) situation.” (p. 23)

The Workers and their Union

GuySuCo with some 17,000 employees is a big fish in the small Guyanese economy pool. The overwhelming majority of workers are affiliated to the Guyana Agriculture and General Workers Union (GAWU) because, historically, agricultural workers constitute the bulk of sugar employment and the union traces its history of struggle back to Booker’s Guyana.  When discussing the future of the Corporation (and sugar in general) an impartial examination is required. While this task escapes the scope of this commentary, it is relevant to highlight three statements, among several, made by the Commission regarding workers and labour environment:

  1. Field workers earned a comparatively more money than employees in other areas of GuySuCo and in other Guyanese economic sectors.[2]
  2. Notwithstanding the alleged relative better conditions, there’s a high level of absenteeism coupled with poor management of Human Resources, which includes inefficient ways to resolve disputesthat are entangled with obsolete practices, unpractical ways to qualify for benefits (that foster absenteeism), and old practices that fuel “whimsical” strikes.
  3. And it follows with an indictment on GAWU: that the union is insensitive “to the realities of the sugar industry, especially its deteriorating financial position and other challenges.”(COI Vol. I, p. 22)

The first statement requires a serious discussion. In a letter to a Guyanese paper, Nowrang Persaud, in charge of the Human Resources and Industrial Relations report, explained the basis for the statement: The annual gross salaries “earned by time workers,… (is compared) with the 2014 Annual Gross Earnings of various categories of piece workers who typically work less than a full year, given the in-crop and out-of-crops realities of GuySuCo field operations.” [3] However, it is not advisable to compare the (monetary) end results of different ways to remunerate work: some employees are paid on a time basis (probable a typical 9-to-5 day on a year-round employment); while others are paid on piece-rate: e.g. the more cane you cut, the more money you make.

However, at the root of the issue is mismanagement or, at least, the lack of a modern method to measure and remunerate agricultural work. It would seem that poor human resources management compounds poor agricultural practices, fuelling unstable industrial relations. This is the context where the so-called “whimsical” strikes take place, with the report suggesting that they have become the “traditional” way to resolve disputes. It’s a management issue.

To compound the third point: the reports reproduce an ideological stance that sees a strong union as a weakness for the sector. The same statement appeared in the “Strengths, Weaknesses, Opportunities and Threats” (SWOT) analysis of the National Sugar Strategy of 2006.[4]   This ideological position, which pulls the rug from underneath the Social Dialogue concept promoted by the International Labour Organisation (ILO), became more conflictive due to a misunderstanding. When talking about the closure of the Corporation’s Management Training Centre, the Commissioners said: “… it would appear that the employer (GuySuCo) is funding training through the union representing the employees…” (COI Vol. I, p. 28). These are union training programs, attended by union members on a paid-leave, that follow the collective bargaining agreement… and it is a common practice around the globe![5]

A personal anecdote

Mismanagement is a cause and a result of a vicious circle that usually leads to the debacle of any enterprise – private or public. The writer has an anecdote. After spending some 10 hours observing the work of cane cutters in one Guyanese estate, he run into a gathering of some managerial staff – on the evening of the same day -, who were enjoying some drinks at a rum shop near the estate. When asked about his opinion on the field work, he answered with a question to the group’s senior person:  When was the last time he had been to visit the cane fields in  the estate? A hesitant man responded: “… ten years ago.”[6]

Notes:

[1] Reports from the Commission of Inquiry available at http://agriculture.gov.gy/commission-of-inquiry-into-guysuco/

[2] “The actual annual gross earnings of these workers compare quite favourably with counterparts in the rest of the industry and the country who, incidentally, work substantially more days and longer hours in the course of the year than cane-cutters.” (Human Resources and Industrial Relations Report, p. 8)

[3]  See: “Questions about the credibility of earnings in GuySuCo’s CoI report” at http://www.guyanatimesgy.com/2016/01/13/questions-about-the-credibility-of-earnings-in-guysucos-coi-report/

[4] In relation to trade unions, the “Sugar Action Plan” said: “With a large labour force and well established unions that defend the interests of their members, the industry is often challenged to strike a balance between maintaining a productive and cost effective workforce and acceding to the demands of the workers.” Guyana, National Action Plan on Accompanying Measures for Sugar Protocol Countries Affected by the reform of the EU Sugar Regime. 16 March 2006, p. 22. The Sugar Plan was a supporting document to access European Union multimillion Euro financing.

[5] Some Guyanese media made even more poignant comments. See “GAWU pocketed millions to train sugar workers” at http://guyanachronicle.com/gawu-pocketed-millions-to-train-sugar-workers/

[6] Old sugar hands in a country the writer knows well were proud of a traditional (re)training on the job method by which companies hired recently university graduates and then rotate them through most (if not all) managerial positions. Later on, the staff were acquainted with what the business of growing cane and manufacturing and selling sugar was about.

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