Time to do what must be done at Caroni

June 29, 2002
By Bukka Rennie

A T&T banker will lend you $90,000 to $100,000 to establish a business, to purchase equipment and raw materials as capital outlay, and for recurrent expenditure he will establish for you a small overdraft but he will not lend you one dime for marketing of the product you manufacture. Not one dime. More than that, he will warn you not to utilise the overdraft for any marketing campaign.

So you ask the T&T banker if you are supposed to rent a factory shell, purchase equipment and raw materials, hire workers to produce and then sit down and admire the finished product?

At that point reference is drawn to the feasibility study that you presented in which you outlined prospective contracts and committed sources of sales. You argue then that these merely reflect the start-up position but that to expand and grow you need to market and market "smart", understanding clearly what your business competitors are doing.

The banker rejects all this and you are left marking time forever, going nowhere fast.

I have had first-hand knowledge of such the like. Underdevelopment is not about size, it is about such bank/financing mindset.

Take another example. You build huge, magnificent industrial plants without any built-in maintenance programme, so within a few years, the society stands by and watches everything deteriorate.

Underdevelopment is the cultural inability to comprehend process, the inability to comprehend the connectivity between implementation of sustainable development and maintenance, and in so doing the failure to write into every stage of development a schedule of obsolescence.

That is why Caroni today is a T&T cultural disaster.

We maintained, with great vigour and blindness, the colonial mindset of seeking forever preferential treatment and guaranteed markets rather than bursting away from the old structures. We stayed with the produce for export syndrome instead of linking sugar to domestic economic development and seeking new creative means of marketing. What are we to tell those human dinosaurs within the sugar industry who seem hell bent on fighting to preserve an entity that virtually died two centuries ago?

Since the 1846 Sugar Duties Act - passed by the British Parliament - removed guaranteed markets and preferred treatment for Caribbean cane sugar, the sugar industry in this region died. The Caribbean could not compete with the heavily subsidised beet sugar producers of Europe and Cuba that had the American market sowed up.

It was not in the interest of British colonialism to break up the sugar plantations, diversify the economy and in so doing transform Caribbean civilisation, so everything was left intact.

They - the British - did attempt in their own interest to rationalise the industry by way of concentration and centralisation of production units with the hope to improve output in terms of quantity and quality.

In 1900, in T&T alone, some 88 sugar factories were reduced to 39. Yet the problems persisted.

By 1928, again through the process of absorptions and amalgamations, there came to be only 12 factories. These 12 would have been Orange Grove, Caroni, Woodford Lodge, Waterloo, Brechin Castle, Esperanza, Forres Park, Reform, Craignish, Hindustan, Usine Ste Madeleine and Bronte.

Yet still in 1929, one commentator/analyst would have warned the planters: "...Sugar production in the colonies is more a political gamble than an economic proposition..."

In the late 1960s/early 1970s, some heed would be paid to the view that "sugar" was a "hot political potato" by the then owners of Orange Grove who fled selling out fully to the T&T Government and by Tate & Lyle, owners of Caroni Ltd, that had by then gobbled up the smaller outfits, and who would sell 51 per cent to the Government.

However, our nationalist leaders who led us to Independence in 1962, hampered by racial and political considerations and the fears of uncertainty expressed by some citizens, skirted the issue of breaking up the sugar plantation industry on the grounds that such action would not be in the interest of preserving jobs and the welfare of the 30,000 citizens who were then dependent on the industry as is.

By the time Tate & Lyle was prepared to negotiate its departure in 1975, Caribbean sugar was facing even greater jeopardy with the proposed entry of Britain into the EEC (now EU).

Interestingly, in 1973 Caroni Ltd (51 per cent T&T/49 per cent Tate & Lyle) took up a US$12 million loan from the World Bank to "...enable Caroni Ltd, the country's main sugar producer, to re-equip its factories, acquire transport, harvesting and field equipment, complete preparation of land for mechanical harvesting, and improve management and operations. (This project was supposed to have helped) ...restore the country's competitive position in the world sugar market ..."

That loan cost Caroni a total of US$21.9 million.

In regard to realising competitiveness on the world market, nothing could have been further from the truth. We were never interested in attempting to compete, satisfied with 84 per cent of our production being expended via the guarantees of the CSA (Commonwealth Sugar Agreement), 12 per cent via the US Sugar Quotas Act, and a mere four per cent on the world market via the ISA (International Sugar Agreement), where in fact we got top dollar.

The big joke was that we were getting $360 a ton on the US market as opposed to $293 via the CSA, and for unrefined sugar we got 13 cents a pound in the UK as opposed to 15 cents on the world market.

On the other hand, the harvesters could not work given the topography of the central areas where 75 per cent of the cultivation existed.

One would therefore be forced to suspect much of that World Bank loan, instead of being utilised to "realise competitiveness and mechanise the operations", went to financing Government's establishment of Caroni (1975) Ltd and financing Tate & Lyle's departure after which, ironically, Tate & Lyle was able to increase its activities in sugar refining, shipping, transporting and handling as well as molasses trading, thereby maximising its profitability despite relinquishing its areas of raw sugar production.

Had we the belly then to take the bull by the horns, we would not have had such a debacle on our hands and probably we would be at least $4.7 billion better off.

What is amazing is that the sugar workers union is annoyed that some attempt is about to be made to transform that industry beginning with a VSEP programme. The operative word in VSEP is "voluntary", which obviously is predicated on "free and open negotiations" involving all stakeholders.

We were saying all along that Panday's UNC had the moral authority to destroy the anachronistic sugar plantation industry and it was their historic mission not to leave office without spearheading the transformation. Instead they reversed the position and increased Caroni's indebtedness back to some $2.154 billion after the write-off of $2.6 billion in 1974.

Termination of employment, either voluntarily or otherwise, is nothing new to us.

When in the mid-sixties the downturn of the petroleum sector struck, thousands were thrown on the breadline and many had to seek their fortunes elsewhere or overseas.

When under the NAR the IMF stipulated that the Public Service had to be downsized because salaries and emoluments were consuming too much of the GNP, thousands again were thrown on the breadline. Many handed back keys to their homes to the mortgage companies and went abroad, while those who remained behind had to settle for reduced remuneration.

The same thing happened when the public transport system was re-organised and the trains went. So what if it is now sugar's turn?

Already due to modernisation of the economy, sugar workers' children and grandchildren have moved on beyond that archaic industry. The dependency factor is no longer a major consideration and the work force in sugar is an aged one.

Everyone knows what has to be done and how it is to be done with the least civil disruption. There have been numerous studies and plans proposed over the years - the Spence Report, the Seemungal Study, the Tripartite Agreement, etc, etc.

Be that as it may, the point is that there is the need now for somebody to summon the courage, the belly and the guts to do what has to be done. We talk too damn much in this country.