The $6.5m SPFL bailout

[25 March 2009,1630]   

The Interim Government and the sugar industry had to step in and bail out the South Pacific Fertiliser Ltd in 2008, to maintain the price of  fertilizer at $19.50 a bag for cane farmers.  

 “Otherwise, farmers would have been forced to pay more than $50 a bag for fertilizers. The whole deal was struck in favour of cane farmers so that they could continue to access fertilizer at affordable costs,” said Lekh Ram Vayeshnoi, acting secretary general of the Fiji Labour Party.

Farmers should note that it was under Mr Chaudhry’s stewardship that they received a $2.5 million assistance from the government – something that had never happened before.

 Likewise, never before had the Fiji Sugar Corporation made such a substantial contribution of 30% to the industry.

 “I ask FCGA secretary Bala Dass to tell the farmers whether it is better to accept a deal whereby FSC subsidises the cost of fertilizer to farmers by 30% or whether he would prefer that the SPFL be wound up and farmers be forced to pay $80 for a 40kg bag (at current prices) for fertilizer from outside sources?” Mr Vayeshnoi asked.

 Mr Vayeshnoi said the decision to bail out the fertilizer company was taken in full consultation with all stakeholders in the sugar industry including SCOF, FSC and SCGC. 

 Fiji Cane Growers Association directors on the SCGC board voted in favour of the move. In fact, it was FCGA’s Tavua director Umesh Prasad who moved that the industry financially assist the SPFL to keep it afloat.

“FCGA should stop trying to hoodwink cane farmers for cheap short term political expediency and honestly weigh the cost to farmers should the SPFL cease operating,” he said.

 Mr Vayeshnoi said if Bala Dass had any criticism it should be directed at the former FCGA secretary Jaganath Sami who was chairman of SPFL in 2004 when his board made a decision to sell fertilizers to farmers at a loss.

 Because of this board decision, by 2007 the company had run itself into a very critical financial position and would have collapsed had it not been bailed out by the Interim Government and the sugar industry in 2008.

 It is clear that SPFL can no longer continue to absorb the rising costs of fertilizer. Farmers will have to come to terms with increases in fertilizer prices and other costs from time to time just as they did with fuel increases last year.

 “Farmers remember that Mr Chaudhry and the NFU have always worked for the best interest of cane farmers. Dont forget it was the Peoples Coalition Government that gave farmers the $42m Crop Rehabilitation Programme (CRP) grant in 1999/2000,” Mr Vayeshnoi said.