…says billions being pumped into industry with little return
(Kaieteur News) – Former Minister of Finance under the APNU+AFC Government, Winston Jordan, has said the PPP Government may eventually have to make the “politically painful” decision to close the sugar industry, as billions of dollars are being poured into an industry that remains uncompetitive, producing little in return.
Speaking during an interview on Sources on Sunday, Jordan said sugar has survived mainly because of subsidies and favourable international prices, particularly the prices Guyana once received from the European market.
“At this stage, when they are not competitive, neither sugar nor rice has ever been competitive without a secured international market or high prices,” Jordan told the host.
Former Minister of Finance, Winston Jordan
He said without those conditions, the sugar industry has always depended on subsidies, including support for drainage and irrigation and income from farmers.
“In the case of sugar, it was the European price that kept sugar going. Without the European price, we should have been out of the business of sugar a long time ago,” he said.
According to Jordan, the preferential European price also created a dependency that allowed critical assets to remain underutilised or misallocated for a long time.
He said the industry is now struggling with the consequences of trying to move away from subsidies and become competitive, which he believes will be difficult to achieve under the present situation.
The former minister said the PPP Government is very reluctant to take the politically difficult step of further reducing the size of the industry, despite the amount of money being spent on it.
“Sooner than later, as we can see already with the massive resources that sugar has got without any return, a decision is going to have to be made, politically painful as it would be,” he stated.
He pointed out the APNU+AFC Government’s approach to the industry, which he said was based on a plan to reduce its size while attempting to make the remaining operations competitive.
He said the coalition government had undertaken work indicating that the industry could be right sized within about five years by concentrating production on the three most productive estates and targeting annual production of about 150,000 tonnes of sugar.
That plan involved closing or reducing operations at some estates, resulting in job losses.
However, Jordan rejected the contention that all workers who were retrenched wanted to remain in the industry.
He said many older workers had reached a point where the severance package they received was more valuable to them than remaining in jobs they had held for decades.
“If you were 18, 20, 21, and you’re going to lose a job there’s a different story than somebody who’s 55, 60,” he said. He added that many of those workers were already approaching retirement.
According to Jordan, the coalition’s plan could have placed the industry on a more sustainable path had the government not been pressured to reopen estates.
He said the reopening of estates has resulted in significant amounts of money being spent without an increase in production.
“Look what is happening there. Tremendous money is being pumped into it. Right now, the government is afraid to do the right thing. This is a close-back and really get the others going.”
Jordan further criticised the current level of spending on sugar, nothing else…than it is a waste of public resources.
“Luckily they got money to waste because we didn’t have that money to waste at that time,” he stated.
He said the production figures demonstrate the problem, pointing out that despite the significant resources being allocated to the industry, production remains well below the levels targeted under the coalition’s plan.
Jordan noted that the latest production figure noted in the finance ministry’s half year report was only a half-year figure and could increase slightly by year-end. However, he maintained that the final output is unlikely to match the levels achieved by the coalition between 2015 and 2019/2020, despite the current government having significantly more resources available to invest in the industry.
The former finance minister said the figures should be examined alongside the amount of money being spent on sugar.
Source: Kaieteur News
