$50m rescue plan for the sugar industry
Opinion by Professor Biman Prasad , NFP Leader
The Fiji Times. Saturday, July 16, 2016
AT 12.45pm on Thursday, July 7, the FijiFirst Government effectively buried all hopes of rescuing the sugar industry from its death throes.
The Government used its majority in Parliament to defeat a motion during the debate on the 2016-2017 Budget.
The motion sought a package of $50 million per year for the next three years that would have resuscitated the industry and helped restore it to its glory days.
The NFP moved the motion because shock therapy is now needed for the sugar industry.
Funds for this specific purpose could have been diverted from the Fiji Roads Authority allocation of almost $528m. FRA has been allocated hundreds of millions of dollars in the past four national budgets. It will continue to receive the largest chunk of future The Government failed to answer questions on this issue raised by honourable Prem Singh last week.
Mr Singh wanted Government to inform Parliament how much of these hundreds of millions of dollar allocations have been used for actual construction — roads, bridges and jetties; and how much of it has been spent on management and technical expertise.
The NFP motion was, is and will be extremely relevant. During his budget reply on July 5, Mr Singh laid out the painful reality in Parliament: “The industry’s best hope of recovery 10 years ago, was derailed by the December 2006 coup. The military government sacrificed the injection of a $350 million grant to the industry by the European Union.
Had this materialised, Fiji from 2011 onwards would have been producing a minimum of 4,000,000 tonnes of cane and 400,000 tonnes of sugar, using more efficient methods than we are using now.
Sugar is a “lifeblood” industry. It is far too important for it to be allowed to die. But this Government, instead of providing any practical solutions, has been adopting a firefighting approach which, like most fires witnessed in the country in the past two years, have ended up destroying the properties meant to be protected.
Mr Singh pointed out that in 2006, when the industry structure was intact and we had input of politicians in the industry, there were 18,636 active growers who produced 3.226 million tonnes of cane.
The four mills produced a total of 310,140 tonnes of sugar at a TCTS of 10.4.
In 2015, after the military regime and FijiFirst Government have been in charge of the industry for nine years, the number of active growers had fallen to 12,872. They produced 1.84 million tonnes of cane. The four mills produced 221,934 tonnes of sugar at a TCTS ratio of 8.3.
So, Mr Singh pointed out, “it is clear where the fault lies. Not with the politicians, but squarely with this Government, which has politicised the industry like never before. People who cannot tell the root of a cane plant from its top are tasked with making decisions to the detriment of the growers and the industry as a whole.”
Against such a bleak backdrop, an allocation of $50m per year for the next three years remains the only hope for our canegrowers and the entire industry.
Because without canegrowers, there is no Fiji Sugar Corporation or the industry. This is a fundamental fact seemingly ignored by the FijiFirst Government.
We even outlined how the $50m could be used. With the cost of producing, harvesting and delivery of one tonne of cane averaging $45-$50 and with the price averaging $75 per tonne, some 9200 growers who produce less than the average 150 tonnes of cane earn a net income of $4500 in a season.
This income, in annual terms, is less than the (ridiculously low) $2.32 per hour minimum wage. That is why growers are in debt in perpetuity.
The forecast price this season is $65.69 per tonne of cane. Forecast price is discounted by 15 per cent —so the projected final price would be $75.
With the devastating effects of Severe TC Winston, growers in the affected areas of Viti Levu will receive depleted incomes because of crop damage.
It is therefore absolutely necessary to provide growers a minimum guaranteed price of around $90 per tonne to instil confidence in them to boost production. With the abolition of European Union sugar production quotas on September 30, 2017, our industry will be doomed unless cane production is significantly boosted.
Even if we were to produce 2,000,000 tonnes of cane for each of the next three years, $30 million will be needed each year to guarantee a price of $90 per tonne. The remainder of the $20 million can be used for cane planting programs and be provided as premiums to landowners to renew land leases of arable sugarcane land.
Government must realise its reforms are unworkable. Its plans and reforms for the industry have been an exercise in futility, driving growers out of cane farming and making the FSC technically insolvent because the four mills do not crush sufficient cane to remain profitable.
Instead of real and practical solutions, Government is now taking growers out of the frying pan and throwing them into the fire through the proposed Reform of the Sugarcane Industry and Sugar Cane Growers Fund (Amendment) Bills.
Growers have sent out a loud and clear message —enact these two Bills and Government will kill the sugar industry.
I believe growers refuse to be subjugated to FSC and Government any more. They want to control their own destiny by demanding the withdrawal of these two draconian Bills as well as the democratisation of the Sugar Cane Growers Council that will restore their rights and role as the largest and most important stakeholders in the industry.
It is still not too late for this Government to reconsider our proposal that was flatly rejected last week.
A kind and caring government, which FijiFirst professes to be, will gladly embrace any realistic and constructive solution proposed by anyone, even the Opposition, to fix problems that it has failed to resolve for 10 years.
It is simple — $50 million per year for the next three years will instil confidence in our growers, boost production, contribute towards our economic growth and boost the livelihood of some 200,000 people directly and indirectly dependent on the sugar industry.
There is no other alternative.