Crisis in the sugar industry:
Rarawai Mill to close?

[posted 15 July 2010,1400]

The sugar industry is facing its worst crisis in its 130 year history with the Rarawai Mill likely to close down by the end of the week.

It is now clearly a question of survival… whether the industry lives or dies within the next 12-24 months is the question being asked by cane farmers, mill workers, lorry operators, and the people generally.

None of the four sugar mills is performing to industry standards, with Rarawai and Labasa being the worst. A decision to shut down the Rarawai Mill is likely to be taken by Friday and comes in the wake of the mill being unable to convert cane juice into sugar.

FSC sources have disclosed that cane from Tavua will be crushed at the Penang Mill while cane from Ba will be sent to the Lautoka Mill.

The situation at Labasa is also highly critical. The mill has been plagued with mechanical problems ever since the start of the season. Growers and lorry operators there have given notice of discontinuing with the harvesting and transporting of cane to the mill unless the situation improves by Friday.

The farmers and lorry operators all over cannot be blamed for venting their anger. Last season the farmers suffered losses running into millions of dollars because of milling problems brought about by negligence, incompetence and indifference on FSC’s part.

In just three short years (2007-2010), the industry has been reduced to less than half its size. The crop estimate for this year is a mere 1.9 million tonnes. Compare this with 4 million plus tonnes we used to harvest not too long ago.

In 2006, 3.2 million tonnes of cane was milled, producing 310,000 tonnes of sugar on a TCTS ratio of 10:1. By the 2009 season, the crop had dropped to just above 2 million tonnes with 168,000 tonnes of sugar manufactured on a TCTS of 13.5:1.

Meantime, cane crush and sugar make statistics for this season are not being released to cane farmers organisations. FSC is hiding these figures to cover up its own incompetence and negligence which will eventually cost the industry losses running into tens of millions. Cane farmers, of course, will bear 70% of the losses.

Cane price for the season, as a result, may not even reach the already low forecast price of $45 per tonne.

The end result of all this will be to drive farmers away from cane farming as they diversify into cash crops which will, at least, assure them cash incomes at regular intervals.

Cane farming under prevailing conditions will not be a paying proposition for the farmer unless the price per tonne of cane is around $75 or more. Currently, cultivation, ratoon maintenance, harvesting and transporting costs average at around $45 per tonne. Add to this land rental and other incidentals, and the cost to him per tonne of cane would be around $55.

Just how hopeless the milling situation is can be gathered from the fact that the first export shipment for this season will not leave our shores until the middle of August. We have never been so late in despatching our export sugar.

“Yes, but we have no sugar,” is the message that FSC chairman Gautam Ramswarup, CEO Deo Saran, Permanent Secretary Lt-Col Manasa Vaniqi and SCGC CEO Sundressan Pillay will be conveying to our buyers Tate & Lyle who have warned FSC over its persistent failure in the last three years to meet its contractual obligation to supply 250,000 tonnes of sugar annually.

Cane farmers are questioning why was it necessary for these four to go at the expense of around $150,000 from industry funds when just a single representative could have conveyed the hopelessness of the situation here. Or better still, a teleconference would have done the job at minimal expense.

For FSC executives to travel around the globe in luxury on a worthless jaunt while “Rome burns”, speaks much of the current culture prevailing in the industry.