Questions over the future of the sugar industry

[posted 8 March 2005,15.30]

Millions of dollars are being pumped in to reform the sugar industry but there are still serious doubts whether the industry will be able to survive once preferential prices paid by the EU for Fiji sugar is withdrawn.

And Leader of the Opposition Mahendra Chaudhry has warned that cane farmers are in for huge losses, as the situation stands.

Fresh fears on the continued viability of the industry surfaced after an announcement by the Fiji Sugar Corporation, at the ad hoc Sugar Select Committee meeting in Parliament yesterday (Monday), that it will continue to make annual losses of around $13 million, despite all the upgrade, once the EU subsidy starts phasing out from 2006.

Mr. Chaudhry said this raised serious concerns about the financial security of the cane farmer: "If it is not profitable for FSC, it will definitely not be profitable for the cane farmer."

Mr. Chaudhry said the Indian Sugar Technical Mission had forecast a continued loss situation for FSC even after all the upgrading. But there was a huge gap between the loss figure of $0.5 million predicted by the technical team and the annual loss of around $13 million forecast by FSC.

"It is expected that the Co-generation project will make profits to ensure FSC's viability. But the fact still remains that FSC's core activity of sugar making will no longer be profitable.

"Besides, cane farmers are not likely to benefit from the co-generation project. This puts serious doubts on the entire reform project and the question of whether it is worthwhile pumping close to $90 million into a restructure exercise if the industry is to continue to run at a loss," Mr. Chaudhry said.

"The focus now shifts on to whether cane farming will bring any returns to the farmer particularly with the added financial burden placed on him by the reform programme.

"Under the industry reforms, the farmer will be required to plough out the ratoon every five years. This means that every year he will have to keep planting new cane on 20% of his farm.

"It will cost him about $700 an acre to plant the new cane. But he will receive no income from it for that year," Mr. Chaudhry said.

To top it all, government's insistence on scrapping ALTA and placing all native agricultural leases under NLTA will make cane farming even more unattractive to tenant farmers.

"NLTA is not the answer to the current crisis over land leases," Mr. Chaudhry warned.