“It is time to take an objective and dispassionate look at the future of the Fiji Sugar Corporation and the sugar industry in Fiji,” says Mahendra Chaudhry, General Secretary National Farmers Union: FSC AGM.
Fiji Sugar Corporation has announced a massive $80 million loss for the 2019 financial year, up from $24 million in 2018.
Its accumulated losses have escalated from $264m in 2018 to $344m at the close of the 2019 financial year. The Corporation’s debt situation is critical. Its total borrowings increased to $412m from $360m last year. Unable to meet its commitments on time, the Corporation has had to reschedule a number of its debts.
Its liabilities exceed its assets by $322m.
Speaking at the Corporation’s annual general meeting in Lautoka today, NFU general secretary, Mahendra Chaudhry questioned whether faced with the current situation, FSC and the sugar industry had a future.
“It is time to take an objective and dispassionate look at the future of the Fiji Sugar Corporation and the sugar industry in Fiji,” Mr Chaudhry said.
He said a critical look at FSC’s performance over a 5-year period showed a deepening crisis.
He pointed out that although FSC had deployed $136m over the 5-year period in capital works to upgrade the mills, its mill performance had deteriorated sharply during this time.
- TCTS had worsened from 8.1 in 2014 to 10.6 in 2018;
- the combined average crushing rate at the mills fell by 20% from 853 tonnes per hour in 2014 to 674 tonnes per hour in 2018 – a decline of 180 tonnes per hour.
In 2014, the Corporation had made 227,000 tonnes sugar from 1.8m tonnes of cane crushed. In 2018, it made 160,000 tonnes sugar from 1.7 m tonnes of cane.
Mr Chaudhry said there was little point in getting growers to plant more cane when the mills did not have the capacity to crush the current crop, extending the crush much beyond the optimum crush period.
He said FSC had referred to five different Strategic Plans over this 5-year period. But with the exception of one in early 2016, FSC has not disclosed targets set under these plans.
“How can its executives be held accountable unless we know what targets had been set and whether they had been achieved?” he asked.
The minimum guaranteed price for sugar was only up to 2020. What would happen after 2020, he asked?
Mr Chaudhry questioned the FSC Board’s decision to agree to pay the $48m shortfall between the actual cane price for the 2018 season and the government guaranteed minimum price of $85 per tonne, knowing full well that the Corporation did not have the capability to do so.
“The decision by the Fiji First government to give growers a minimum guaranteed price of $85 per tonne was a political decision made just before the 2018 general elections to buy the votes of cane farmers who constitute a sizeable vote bank.
“The Board knew full well that FSC was already deeply in debt and was in no position to take on this huge obligation which would commit the Corporation to a further debt of around $50m.
“The Corporation was under no obligation to even consider any proposition outside the Master Award.”
“Yet it agreed to this preposterous deal, and in doing so failed in its fiduciary duty to the Corporation.
“It was the question of ethics, integrity and their fiduciary duty to the Corporation that should have guided the conduct of the Board in the matter,” Mr Chaudhry said.
He said although growers deserved a fair cane price, the responsibility for that lay with the government of the day, not with FSC.
“It is the responsibility of the government of the day to make due provision for it through the normal Budgetary process.
“There have been previous occasions when the government has used FSC to make payments outside the Master Award at some considerable expense to the Corporation because these obligations had to be met with borrowed funds. Such practice must be resisted, in the interests of the Corporation, and not condoned.
And I am also reminded at this point of the Abdul Khan investigation. It is four years since I levelled accusations against him for swindling FSC and provided necessary documents as proof to the Prime Minister’s Office.
Why has this man not yet faced the brunt of the law for his actions? In fact, instead of being sacked, he was allowed an honourable discharge pleading health reasons.
Mr Chaudhry said there was too much government interference in the running of FSC and the sugar industry. Yet government had failed to bring the industry around.
“It has destroyed the tripartite factor which existed in the past. The PM’s Office and the Sugar Ministry now run the show, making unilateral decisions on what should be done. But it is obvious they are out of their depths.
“Our findings show a deteriorating situation all round. Yet it is business as usual for the powers that be. They are either incapable of, or refuse to, think outside the box to see what other options are available or what other measures ought to be adopted to save the industry.
“Growers have been pushed into a corner, completely marginalized.
“I state, quite categorically, unless the tripartite spirit is brought back into the industry and there is sincere consultations with all stakeholders on the way forward, this industry is not going to survive.”
No of active growers 12,681 11,902 – 779
Cane crushed 1.83mT 1.7mT – 132,000T
Sugar Make 227,000 160,000 – 67,000 T
TCTS 8.1 10.6 – 2.5
Area under cane 41,959ha 37,105ha – 4854ha