Minimum price for cane farmers: Chaudhry

[posted 27 April 2005, 1900]

Growers must get a guaranteed minimum price for cane if they are to survive the withdrawal of EU subsidies, Opposition Leader Mahendra Chaudhry says.

The guaranteed price must be set at between $50-$55, he said.

Chaudhry who is also general secretary of the National Farmers Union, the largest cane growers association, is basing his demands on recent revelations by the Fiji Sugar Corporation that it may continue to make annual losses of around $13 million despite a mill upgrading programme at a cost of $86 million.

FSC's disclosure was made to the parliamentary AD Hoc Select Committee on Sugar Industry Reforms. The committee is studying the report and recommendations of a Sugar Technology Mission team from India which has recommended that the corporation undergo an $86 million investment programme to upgrade its mills.

But FSC chairman Reg McDonald said it was unlikely, despite the huge capital works investment, that FSC would make profit from its core business of sugar production. He said the projections used by the STM team on cane tonnage and sugar production, were unrealistic and may not be realised on the ground.

But FSC is hoping that its co-generation project would generate enough income to ensure an overall profit for the company.

Chaudhry's concern is that if FSC makes losses from its sugar production business, then cane farming would also be unprofitable for the growers.

Once the EU subsidy is withdrawn, cane price will fall from a current high of $55-$60 a tonne to $35-$40 a tonne. At this price, growers will make no profit after meeting costs, currently calculated at about $33 a tonne.

They would have to be assured a minimum guaranteed price of $55-$60 a tonne for cane cultivation to remain profitable, he said.