SPF crisis threatens sugar industry

FAILURE by government to salvage the financially crippled South Pacific Fertilizers Limited will haunt the entire local sugar industry.

Chairman of the SPF board Surendra Sharma lamented yesterday that if nothing was done quickly the entire industry would be heading for troubled waters.

The SPF board met for a special crisis meeting in Lautoka on Thursday to discuss and deliberate on the company’s shaky position.

Sharma said the board agreed that the company was insolvent and unable to trade its way out of its financial predicament because of its poor financial accounts.

“The board agreed unanimously to seek urgent grants from the government to bail out the company whilst concurrently writing to the shareholders (FSC, SCGC, and SCGF) to consider the situation and mandate the board to either voluntarily wind up the company or inject more capital,” he said.

“With the cost of production, driven by uncontrollable imported raw material prices at around $1000 per tonne and PIB controlled sale price to farmers at $390 per tonne, the company has substantial accumulated losses and debt, and any further trading will simply exacerbate the losses and negative cash flow.”

He pointed out that the company would need at least an injection of $21 million in capital or subsidy per annum to continue its supply of 35,000 tonnes to cane farmers at a price of $390 per tonne.

“Repeated requests to the PIB for price increases by the management have met with no decisive responses.”

He added that the company owed its sole creditor the Sugar Cane Growers Fund approximately $15m and neither the suppliers nor other lending institutions are prepared to provide financial support.