Saving the sugar industry

  • 13th April 2012
  • 2012
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Damage to the industry inflicted by the
current administration in the past three
years is far in excess of any devastation
suffered through the recent floods.

There is much talk about the form and level of assistance to be extended to cane growers in the aftermath of the recent spate of flood damage.

However, there is a need to look at the bigger picture as far as the current dismal state of the sugar industry is concerned.

It is being conveniently forgotten that sugar has faced a worrying decline for some time now and this has already crippled the farmers financially. Damage to the industry inflicted by the current administration in the past three years is far in excess of any devastation suffered through the recent floods.

Compare the estimated $37million loss in sugar revenue attributed to the recent floods with the $100 million a year the industry has been losing in the last three years due to FSC’s mismanagement and milling inefficiencies – a cumulative loss of $300 million in three years of which $210 million has been borne by the growers and $70m by the miller.

Figures taken from FSC annual reports depict this sharp decline: We last crushed over 3 million tonnes of cane in the 2005 season with sugar make at 310,000 tonnes at a TCTS ratio of 10:1. This TCTS ratio of 10:1 was maintained up to the 2007 season but began sliding from 2008 as indicated below:

2008 – 11.2

2009 – 13.0

2010 – 14.0

2011 – 13.5

Production has declined sharply with figures for the 2011 season showing:

Cane crushed – 2.1m tonnes

Sugar make – 165,000 tonnes

Average TCTS – 13.5:1

This means an extra 3.5 tonnes of cane were used to make a tonne of sugar – a sign of gross milling inefficiency.

The price for a tonne of cane has also dropped dramatically in the last three years from $61.65 in 2008 to $49.16 in 2011 (despite the devaluation of the dollar in April 2009), pointing clearly to the fact that the fall in price is directly related to the worsening TCTS ratio at the mills.

Production costs are high at about $45 a tonne – this includes cost of cultivation, harvesting and transportation to the mills. It does not include land rent, debt servicing (industry loans) and the cost of family labour.

So, confidence and morale is already very low in the cane farming community. Sugar cane farming as a source of livelihood has become unprofitable and farmers are either opting out to short-term cash crops or simply abandoning their farms. This is happening at an alarming rate in Seaqaqa.

Viewed against the huge losses suffered since 2009, for many farmers the devastation of crops and property suffered in the recent floods may be the straw that broke the camel’s back. Any talk of reviving the industry from its slow death will be meaningless unless substantial State assistance is provided to restore the confidence and morale of cane farmers. Unless this is done as a matter of urgency, there is little hope of saving the industry.

What form should State assistance take?

1) As a result of the losses already suffered in the past three years, through no fault of theirs, cane farmers are in NO position to take out any more loans to rehabilitate their farms. What they need is Government grants for the next 2-3 years to set them back on their feet financially;

These grants should cover the cost of fertilizer, seed cane, weedicides and land preparation. This was done after the severe drought of 1997/98 when $42m was pumped into the industry for crop rehabilitation including a cash grant to affected farmers – the result was a 4 million tonne crop in the 1999 season.

It is to be noted that the industry has,regrettably, lost approximately $400 million worth of assistance from the European Union because of the December 2006 takeover by the Army and the refusal of the regime to hold elections in 2009 as agreed with the EU in April 2007.

2) Land rent – Government should pay rent for all leases – State, freehold and native- for the next 2-3 years

3) Farmers must be guaranteed a minimum price of at least $75 per tonne of cane if they are to be lured back to assist with the rehabilitation and growth process so vital to save the industry from extinction.

4) The regime should keep its hands off the industry – it has interfered and put its own people, who are incompetent, at the helm of the FSC and the sugar ministry. Their only contribution to the industry has been to drag it down.

The farmers have a 70% stake in the industry but have been completely marginalized. Their institutions, the Sugar Cane Growers Council (SCGC), the Sugar Commission of Fiji (SCOF)and the Fiji Sugar Marketing Company(FSM) were arbitrarily disbanded by the regime. Farmers have been bullied by the FSC and the military with the express approval of the regime. All this must be reversed. The SCGC, SCOF and FSM must be reinstated to hold FSC accountable.

Enough is Enough

Growers have had enough and are not likely to incur further losses to keep the industry alive at their own expense. If the State wants to restore the industry to its former dominant position in Fiji’s economy then it will have to cough out a lot of money; it will have to learn to respect the farmers and understand their feelings and aspirations.