GuySuCo’s accounting loss is not the whole story

Dear Editor,

I refer to the letter captioned “This loss is unprecedented in GuySuCo’s history”, published in on October 26, 2026.^[1] The writer is entitled to question the Guyana Sugar Corporation’s 2025 results. However, I beg to differ with the premise of the letter, which treats GuySuCo as though it were a private company whose worth begins and ends with the bottom line of its income statement. That is a basic analytical error.

I have never shied away from GuySuCo’s financial difficulties. In my 2019 position paper on the social and economic impact of downsizing the sugar industry, I stated plainly that the corporation was in serious financial trouble. I also argued that a state-owned industry of this scale cannot be judged on one facet of profitability alone. That position holds today.

Consider what sits behind the loss. Employment costs account for about 77 per cent of total cost, supporting more than 8,000 employees and some 5,000 pensioners. Drainage and irrigation works cost about $2.6 billion, and those works protect adjoining villages, access dams and farmlands, not just cane fields.

It is therefore misleading to say that $16.9 billion could have built 1,924 homes. That money was not burned. Most of it was paid to Guyanese workers and spent in sugar communities.

The deeper point is that GuySuCo is not, and has never been, a purely commercial enterprise. Its sole shareholder is the State, and the State’s objective is not to maximise dividends but to maximise national welfare. The corporation carries public functions that no private sugar company would take on: drainage that protects whole communities, employment retained on social grounds, and a livelihood base in rural areas where alternatives remain scarce. Part of its accounting loss is, in effect, the price of these functions. A private investor would rightly look at the bottom line alone. The Government cannot, because it is the Government that ultimately bears the cost of unemployment, lost tax revenue and rural decline if the industry fails. The proper question, therefore, is not whether GuySuCo made a profit, but whether the economy is better or worse off with the industry operating than without it. Answering that question requires a different measure.

This is where the writer’s analysis falls short: accounting profit is not economic profit. Accounting profit records only what passes through GuySuCo’s books, at the prices the corporation pays. Economic profit goes further and charges for opportunity cost, that is, what the same labour, land and capital could produce elsewhere. For a state enterprise, the test is wider still. It must count the benefits that never reach the income statement, and it must recognise that much of what the books record as a cost to GuySuCo is income to the nation: wages earned by Guyanese families, taxes paid to the Treasury and payments to local suppliers. Development institutions routinely apply this logic, known as social cost-benefit analysis, to public investment.

By that measure, the case for keeping the industry running is clear. In my 2019 position paper, I estimated the full cost to the economy of shutting down the sugar industry: the wages lost to sugar families, the income tax and NIS contributions no longer paid, and sugar’s contribution to GDP. On my estimates, the social and economic cost of closure was about eight times higher than the cost of keeping the industry afloat, even at an accounting loss.

Put differently, every dollar the Treasury spends to keep GuySuCo running avoids roughly eight dollars in losses to sugar communities and the wider economy. That does not mean the industry should be kept as it is indefinitely. It means it must be sustained until it is gradually restructured and resized, and until investors come in to transform and make it more viable at scale.

Some will argue that the same labour and land could be put to better use elsewhere. In many sugar communities, that alternative does not yet exist on a scale that could replace what sugar provides. To be fair, that calculus is shifting. GuySuCo’s own annual report shows skilled workers leaving for oil and gas and other sectors, which raises the opportunity cost of labour, and that is precisely why mechanisation matters.

Then there is the multiplier effect. When a cane harvester at Albion or a factory hand at Blairmont is paid, that money goes to the village shop, the market vendor, the minibus operator, the hardware store and the hire car driver, who in turn pay wages and buy supplies. Part of it is saved, adding to the deposit base that commercial banks lend to businesses and households.

Applying a conservative, illustrative multiplier of 1.3 to 1.5, which allows for the high import leakage of a small open economy, the $22 billion employment bill supports somewhere in the region of $29 billion to $33 billion in economic activity, much of it concentrated in rural Berbice, Demerara and West Demerara. Take that away, and the village economies built around the estates will not simply adjust; they will contract.

We have seen this before. When Wales, Enmore, Rose Hall and Skeldon were closed between 2016 and 2018, some 7,000 workers were sent home. The cost of that decision never appeared on GuySuCo’s books; it was borne by families, village businesses and the wider economy.

The 22.8 per cent rise in costs must also be read in the context of operating conditions. The industry had only 39 opportunity days against an estimated 75, cane-harvester attendance averaged 48 per cent, and carry-over cane still bore the effects of the El Niño drought. It took 15.65 tonnes of cane to produce a tonne of sugar, against a budget of 12.84. The Minister has also acknowledged that keeping workers on at Enmore and Skeldon adds to production costs (Guyana Times, February 11, 2026).^[2] None of this excuses weak performance, but it shows where the turnaround must focus.

The Government is not ignoring this. During the 2026 Budget debate, Minister of Agriculture Zulfikar Mustapha presented a five-year strategic plan for GuySuCo (Guyana Chronicle, February 4, 2026; Kaieteur News, February 4, 2026).^[3] He reported that over 41 per cent of cultivation is already mechanised, with a move to between 50 and 60 per cent, and stated that “managers have to be more accountable now” (Department of Public Information, February 10, 2026; Guyana Times, February 11, 2026).^[4]

GuySuCo’s accounting loss is real, and accountability is warranted. But to reduce the debate to a single number, and then convert it into houses not built, is to measure a national industry with the wrong yardstick. The right test is the net economic return to Guyana, and whether the turnaround plan lowers the fiscal cost of each unit of social benefit, year after year. Simply put, GuySuCo must be judged on its economic profit, not on its accounting profit alone.

References

1. This loss is unprecedented in GuySuCo’s history ↩
2. Mechanisation will not cost jobs as GuySuCo targets profitability by 2030 - Mustaphaguyanatimesgy.com ↩
3. WIN demands accountability for billions spent on GuySuCokaieteurnewsonline.com ↩
4. GuySuCo targets 100,000 tonnes of sugar in 2026 – Department of Public Information, Guyanadpi.gov.gy ↩