SPF insolvent, sugar farmers lose $15m

HE country's only fertilizer company has plunged into insolvency taking with it $15 million of funds belonging to sugarcane farmers.

Stakeholders claim the loss to farmers could be higher and are calling for heads to roll and an independent inquiry conducted into the financial mess South Pacific Fertilizer is in.

The Sugar Cane Growers Fund was the company's sole creditor and no supplier or lending institution is willing to provide any finance to SPF. The company will now wait for the shareholders -- Fiji Sugar Corporation, Sugar Cane Growers Council and the SCGF -- to made a decision on whether to bail out or wind up operations.

A meeting of the Lautoka-based company on Thursday agreed the company was insolvent and "unable to trade its way out of its financial predicament". Board chairman and outgoing SCGC chief executive officer Surendra Sharma said the company will at the minimum require a capital injection or subsidy of around $21 million per year. This amount would enable the company to supply 35,000 tonnes of fertilizer to cane farmers at a price of $390 per tonne, he added.

"With the cost of production, driven by uncontrolled imported raw materials at around $1000 per tonne and Price and Incomes Board controlled sale prices 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," Mr Sharma said.

"The board agreed unanimously to seek urgent grants from the Government to bail out the company while concurrently writing to the shareholders to consider the situation and mandate the board to either voluntarily wind up the company or inject more capital."

Mr Sharma said the board noted the crucial role of fertilizer to cane production and how the sugar industry could be compromised if a solution was not found.