Cane growers shortchanged
Pain and anger
by Prof. Biman Prasad, NFP Leader
Opinion piece published in the Fiji Times on:
Saturday 29th May 2021
Yesterday, the cane growers would have heard from the Prime Minister in Parliament whether or not they would receive $20 per tonne of cane as 4th payment to enable them prepare for the 2021 harvesting season due to start soon.
The PM would have responded to my End of Week Statement highlighting the plight of growers, for government to honour their commitment of a guaranteed price, why growers want $20 per tonne and the economic benefits of such a payout.
Unfortunately, early Friday morning, parliamentarians were notified of the cancellation of parliament sitting for yesterday as well as next week. That is another story. Therefore the case on behalf of growers could not be heard by parliament.
Palpable anger
At the outset, I must put on record the anger of cane growers following the announcement by the Sugar Industry Tribunal, Fiji Sugar Corporation, as well as the Permanent Secretary for Sugar of a sum of $10.31 per tonne as the 4th cane payment for 2020 harvesting and crushing season.
Their anger as palpable even though they were talking on the phone to me. And I understand their pain. Their hopes, wishes and aspirations of a meaningful payment was burnt to ashes.
Angry and thoroughly discontent and disenchanted growers are the very last thing this nation needs, especially at a time when government needs every fibre of the economic sector – the feasible ones and those having the ability to resuscitate the ailing economy – to be fully functional.
Especially a time when we are suffering from double jeopardy – economic decline and being ravaged by Covid-19 – a catastrophic situation.
For one and a half months, growers have been requesting government and the Fiji Sugar Corporation to ensure $20 per tonne as 4th cane payment.
Unacceptable
The payment is due before 31st May each year. It is the 4th payout of proceeds for crop harvested the previous season – which means it is made more than 11 months after the beginning of a harvesting and crushing season – in this case the 2020 season.
Not that it hasn’t happened before. It is in accordance with the Master Award. And growers know and understand this very well.
But at the same time they expect government and other sugar industry stakeholders to understand and appreciate the extreme difficulties the growers, their families, cane cutters, labourers – indeed 200,000 of Fiji’s population - directly or indirectly dependent on the sugar industry, are going through.
In this case, adding salt to injury, the payment wasn’t announced until 12 hours before it was going to be disbursed. On Friday, the bleak future of an industry was witnessed in municipalities in cane districts.
The last thing one wants to see is that growers, the most important stakeholders of an industry that has kept its head barely above the water despite not only a battering by Covid-19 but other natural disasters and man-made-made calamities, line up outside commercial banks waiting to see what they’ll get for their survival.
That is until the payout of delivery payment upon the harvesting and delivery of their crop to their respective mill in the 2021 season. This isn’t going to happen from end of July onwards – if the mills start on time.
This is unprecedented and not taken lightly by growers.
While FSC released a statement last evening saying the Corporation would not made any deductions from the sum of $10.31 per tonne payment – probably in the hope of appeasing growers – the permanent secretary for sugar told a news media that growers had to make arrangements with commercial financial institutions they have loans with – especially Fiji Development Bank and Sugar Cane Growers Fund (which rightly is growers own institution) not to make deductions.
This is unacceptable.
Not a hand-out
The figure of $20 per tonne of cane wasn’t plucked out of thin air. Growers knew that a sum of $25.30 was left to pay from the guaranteed price of $85 per tonne.
All they requested for was a $20 per tonne payment. Not to fill their pockets. Not as a greedy gesture. But to help them prepare of the 2021 harvesting season – dates for which have already been announced.
These preparations include getting their tractors and lorries mechanically ready and roadworthy, hiring of cane cutters and equipping them as well as stocking their food rations – and putting a seal to their readiness for harvesting by meeting and signing MOGA – Memorandum of Gang Agreement.
It is also to help them in planting of new crop. This is critically important due to the damage and devastation caused by Severe TC Yasa, TC Ana and flooding. We predict that last year’s crop of 1.73 million tonnes will dwindle down to less than 1.5 million tonnes or even lower due to the severe damage and destruction.
Unfortunately, the $10.31 per tonne is not going to help in the recovery of the industry in any way. If anything, it is a severe blow to growers and serves as a hammer-blow to any hopes of revival of an ailing industry that served as the backbone of Fiji’s economy for over 100 years – and still supports 200,000 people. This fact is well-known to government.
Growers want their just dues. They are not asking for a hand-out. While $85 a tonne may seem to be a very high sum for those not in the industry, it is very small given the high expenses of growers and I’ll explain why.
$20 makes economic sense
Let us look at the statistics. According to 2020 FSC Annual Report, there are 11,638 active growers. They produced an average of 143 tonnes of cane. The total cane production for 2020 was 1.73 million tonnes. Sugar production was a little over 152,000 tonnes at a high TCTS of 11.38 that the honourable Prime Minister tried to lecture us about on 31st August last year.
At $10.31 per tonne the total payout is $17.836 million.
At an average production of 143 tonnes, an average grower would receive $1,474.
However, at $20 per tonne, an average producing grower would receive $2,860. Based on last year’s crop of 1.73 million tonnes, this would pump $34.6 million into the economy – every cent of this sum will be spent locally.
It would act as an stimulus, spurring economic activity. No other industry is capable of doing this. That is why sugar and agriculture is so vitally important to be strengthened to serve as the foundation of our economy
A grower makes a meagre net profit for a business he or she gets fully paid for in 16 months. No other business can survive under this arrangement except growers given their resilience.
At a minimum production, harvesting and delivery of a tonne of cane of $60 – even with a payment of $85 per tonne – an average producing grower will earn a net income of $3,575 in a season paid over 16 months.
Even with all other subsidies, grants and guarantees, an average producing grower is in perpetual poverty. Even his or her gross income of a little over $12,000 for a season is $18,000 less than the tax threshold of $30,000 that applies to the working class.
These are basic and fundamental facts lost upon many, including some of our ill-informed legislators.
Pain is real
Today, we all should feel the pain that growers do. In Nadi and Lautoka they are in containment zones, struggling to support their family members who are jobless as a result of the pandemic. Similarly other Western districts as well as the Northern Division are already feeling the effects of border closures.
How does other industry stakeholders expect them to prepare for harvesting given their insurmountable problems? We should ask ourselves – can we survive on such paltry sum for a few months?
And we should not blame them if they are not ready for harvesting given their financial crisis.
That is why growers requested for a $20 per tonne payment to do best what they can only do – survive – and contribute towards the survival of the economy and the nation.
Surely, it is not too much to ask from a government that itself doesn’t know how to survive and needs budgetary support from foreign nations to stay afloat.
Especially a government that can provide a limitless loan guarantee of $455 million to Fiji Airways and a one year guarantee for a $170 million loan to be obtained by Fiji Development Bank.
So what is so hard in looking for funds to ensure growers receive not a handout but their just dues of $20 per tonne?