Page 32 - IB Jan 2018

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Advertorial Islands Business

Fiji’s bittersweet Bank financed the installation of new
machinery at the Labasa mill.
“These banking relations are examples
of institutions who have confidence in
sugar FSC going forward and support FSC’s
strategic plans with solid facilities,” said
the FSC chairman.
In order to reduce its debt, FSC is talk-
ing with the Fiji Government to consider
industry and implement the conversion of current
government loans of US$84.19 million
to shares in FSC, and for government to
also buy out the minority shares.
The sugar industry reform bill, that
was introduced in early 2017, tried to
give effect to the Fijian government hav-
ing total control of FSC but it met such
furious opposition from both farmers
By Anish chand hundred thousand Fijians still survive and industry stakeholders that the bill
on the industry and any collapse of FSC remains on hold at parliamentary select
THERE is a new crew onboard which will will be chaotic and that’s why the state committee level. The bill’s intention was
try to sail Fiji’s sugar industry to better annually guarantees loans averaging to rescue FSC by turning the loans and
days. But with the same age-old equip- US$58.06 million for FSC so that the mills guarantees by government into state
ment and archaic farming methods, will can run and the proceeds of sugar sold equity. Government currently has 68%
the industry be saved by the millions of overseas can be paid back to the farmers. shares in FSC. Minority shareholders
dollars now being poured into Fiji Sugar In May 2017, that loan guarantee was own 32%. Government wanted to take
Corporation’s coffers? US$97.74 million, which has allowed over all shares and compensate other
We have heard so many times that the the new management at FSC to develop shareholders by paying them the value
industry is at a crossroad and in trouble. a 5-year reform plan. of the share price of FSC once the bill
These are attributed to dwindling cane “We are in the process of formulat- was passed.
production, milling and transportation ing concrete plans including financing Additionally, the bill also would have
inefficiencies and cash flow problems arrangements to refurbish and upgrade reformed the Sugar Cane Growers Coun-
within FSC. the mills; to further mechanise harvesting cil, the Sugar Tribunal and the Master
In its 2017 annual report, FSC auditors and to improve cane transport by refur- Award. But after series of public consul-
bluntly stated: “The financial statements bishing the long neglected rail network tations, and based on huge opposition,
indicate the existence of a material un- system complemented by the manufac- that bill remains a bill.
certainty that cast significant doubt about ture of new cage bins for rail cartage of “The Prime Minister has repeatedly
the Corporation’s ability to continue as cane,” said FSC chairman Vishnu Mohan. rejected calls for a bi-partisan approach
a going concern.” The Corporation has FSC’s main aim right now is to get the to find solutions to revive the industry
been incurring significant losses during farmers back in their farms and increase through a parliamentary select committee
recent years. For the year ending 31 May cane production in the next 5 years. And on sugar. Such a committee has always
2017, FSC incurred an operating loss of FSC’s aim is to heavily mechanise the been in existence throughout our history
USD19.2m and net loss of USD21.8m. industry so that farmers spend less in of parliamentary democracy but is sorely
The Corporation is also not generating cane production. absent this time around,” said Bala Dass
adequate cash flows to meet all its com- “FSC will commence the ordering of the Fiji Cane Growers Association.
mitments and obligations as and when and purchase of mechanical harvesters, Fiji has 12872 registered growers and
they fall due, said the auditors. With tractors and implements; and also new 70 per cent of these only produce 150
net liabilities at US$105m, FSC annually trucks. These will be deployed by FSC to tonnes of cane. For these 9000 farmers,
needs a government loan guarantee to help farmers reduce costs of producing their net income at US$21.29 by 150
borrow heavily so that its mills can con- cane,” said Mohan. tonnes is US$3,193.50 in a season. This
tinue to breath and the sugar industry Currently a farmer spends about is US$10,963.39 below the Fijian tax
stays alive. US$21.29 to produce one tonne of cane threshold of US$14,156.89.
The socioeconomic benefits and the and FSC wants this reduced by half. In “No other commercial business can
political fortunes of the industry have essence, the financial institutions which survive on this,” says Dass. And no
strong links. For example, when FSC continue to provide money to FSC despite matter how much money is pumped into
closed one of its mills in Fiji’s western its bankrupt state are the real people the industry, a climatic catastrophe like
division, the backlash was such that keeping the industry alive. The 2017 an- Tropical Cyclone Winston will bring the
two political parties announced that they nual report reveals EXIM Bank of India industry back on its knee, if it wasn’t
would build a new mill to replace the old has provided loans for capital projects, standing already.
should they form the new government ANZ Bank took care of FSC’s working r achandftv@gmail.com
after the 2018 general election. Two capital needs and the Fiji Development

32 Islands Business, January 2018