NFU seeks compensation, cash grant for
growers
[posted 1Nov 2010,1400]
The National Farmers Union is seeking
compensation for the massive losses suffered by the cane farmers as a result
of FSC's failure to crush cane efficiently at its four mills.
In a letter to Growers Council chief
executive officer, Sundresh Chetty, the NFU has also called for relief to be
granted through a cash grant for growers affected by the severe drought as
well as a crop rehabilitation programme.
In building a case for compensation, NFU
general secretary Mahendra Chaudhry said, "The cane growers have now
reached a point where they cannot be expected to increase production unless
compensated for the massive losses sustained by them because of the
negligence and inefficiency of the FSC".
The full NFU letter to the Council is
published below:
26 October 2010
Mr Sundresh Chetty
Chief Executive Officer
Sugar Cane Growers Council
2nd Floor Sugar Cane Growers Building
75 Drasa Ave
Lautoka
Dear Mr Chetty
re: Drought Relief and Crop
Rehabilitation Assistance to Cane Growers
I wish to express our concern at the
gravity of problems facing the sugar industry generally and the cane farmers
in particular.
As the largest cane growers organization
in the country, we have been inundated with questions about the industry.
Most of our members believe their future will be bleak should they continue
to rely on cane farming for their livelihood. Indeed, they have very good
reasons for saying so, as can be measured by the sharp decline of the
industry since 2006. The following statistics obtained from the annual
reports of the FSC should provide ample evidence of the seriousness of the
situation:
Season
Cane Crushed
Sugar Make TCTS
tonnes (m)
tonnes (000)
2006
3.23
310
10
2007
2.48
237
10
2008
2.32
208
11
2009
2.25
168
13.4
2010(est)
1.80
130
13.5
During the same period, revenue from sugar
has continued to decline for three reasons:
• Firstly, lower exports because of
reduced crop size and consequently lower sugar make.
• Secondly, reduction of 36% in the export
price paid by the EU.
• Thirdly, and connected to the first
reason, the high TCTS ratio resulting in wastage of cane in the inefficient
milling process.
Season
Revenue
Cane Price
EU Price
($m)
per tonne ($)
Reduction
2006
232
58.60
5%
2007
272
59.65
7%
2008
206
59.70
21%
2009
*204
*56.59
36%
(159)
*would have been 20%
less if not for devaluation
The forecast for the 2011 season remains
depressed because of the impact of the prolonged drought and the chronic
malfunctioning of the mills.
NFU officials have been engaged in the
past several weeks in carrying out a survey of the areas impacted by the
drought in the Western division. Our survey has convinced us that there is
an urgent need to provide assistance to the affected cane growers not only
for relief from the effects of the drought but also to provide support for a
cane rehabilitation programme.
We believe that farmers should be assisted
by way of a cash grant to compensate them for the loss suffered as a result
of the reduced crop size. Our assessment points to a crop reduction of
around 400,000 tonnes (from 2009) which equates to a net income loss of
around $8 million for the farmers.
This is further aggravated by the huge
wastage of cane in the milling process because of the high TCTS ratio of
around 13.5. The acceptable ratio should be around 8.5, but given that FSC
had stated 10.5 at the beginning of the season, we propose to strike an
average between the two at 9.5. On that basis, the farmer suffers a loss of
4 tonnes of cane for every tonne of sugar manufactured.
It follows, therefore, that 190,000 tonnes
of sugar should be made from a (reduced) crop size of around 1.8 million
tonnes. However, with TCTS at 13.5 the current estimate is that the sugar
make is unlikely to exceed 130,000 tonnes, but it may even be less given the
prevailing adverse conditions in the industry.
The shortfall of some 60,000 tonnes is
massive and approximates a loss to industry income of around $50 million at
the current export price of which $35 million will have to be borne by the
farmers.
You are aware that in the 2009 season
farmers incurred a loss of $70 million because of the negligence of the FSC.
In the past two seasons (2009/10) the TCTS has been extraordinarily high at
13.5 which is the main contributing factor for the losses.
The cane growers have now reached a point
where they cannot be expected to increase production unless compensated for
the massive losses sustained by them because of the negligence and
inefficiency of the FSC.
If the sugar cane crop size is to be
restored to around 4 million tonnes, then it is imperative that the farmers
must be paid a cane price that will give them a reasonable return on their
investment. For the 2009/2010 seasons they will not receive even the
declared forecast price of $61 and $45 per tonne, respectively.
In light of the forgoing we propose that
the Sugar Cane Growers Council seek a specific assistance package which
should comprise the following:
1. Cash grant for loss of production as a
consequence of the prolonged drought (State to pay)
2. Compensation for the losses suffered in
the 2009 and 2010 seasons because of gross inefficiencies in the milling
process (FSC to pay)
3. A crop rehabilitation programme similar
to the one instituted in 1998/1999 following the drought of 1998 (State to
pay)
Cash Grant
A formula for the payment of cash grant
was devised in 1998 and this could be relooked at by the Council. It is
suggested that the formula be appropriately revised to take account of the
prevailing conditions and then applied across the board.
Compensation of Losses
The Council will need to take advice on
this but we would suggest that the cane growers be compensated on the basis
of the wastage of cane in the inefficient milling process.
This works out at 42% ie; 13.5 – 9.5 = 4
which is 42% of 9.5.
Cane farmers should, therefore, be paid an
additional 42% of their gross proceeds for each of the years.
Crop Rehabilitation Assistance
Here again, the formula used in 1998/1999
could be relooked at and applied with adjustments where justified.
The above constitute our submission on the
subject of assistance to cane farmers for drought relief, compensations for
losses sustained in the 2009/2010 seasons, and a crop rehabilitation
programme.
We trust the Council will do the needful
to assist the cane growers at this most critical juncture in the history of
the industry.
Yours sincerely,
Mahendra P Chaudhry
General Secretary |