'Middle ground’ bid in Fiji’s SPF battle

Fiji Sugar Commission chairman John May has given the interim government a submission he hopes will reconcile the opposing views of two shareholders on the future of the financially troubled South Pacific Fertilizers Ltd (SPF).

Without revealing details of his submission at the Friday meeting he chaired between State officials and executives of the Fiji Sugar Corporation (FSC) and the Sugar Cane Growers Council (SCGC), the SPF’s two warring shareholders, May said the need for a much debated fertiliser price increase “meant someone would have to come up with the finance to revive SPF”.

The sole supplier of locally blended cane fertiliser to Fiji’s cane farmers, the SPF is owned by the FSC (40 percent), SCGC (40 percent) and the Sugar Cane Growers Fund (20 percent).

Its financial problems cast a shadow over Fiji’s sugar industry in recent weeks with the SCGC opposing the FSC’s proposal to pass on all of a 250 percent increase in fertiliser retail prices to cane farmers, especially after farmers were subject last month to a two third deduction from their most recent cane proceeds towards a $6.56 million Growers Fund loan to the SPF last year.

May said that there had to be a fertiliser price increase was one of three points considered at the Friday meeting with the other two points being that there had to a more careful sourcing of fertiliser input and that all parties needed to work together to get fertiliser out to farmers for the 2009 planting season.

SCGC chairman Surendra Sharma said he got the impression at Friday's meeting the interim government was “indeed sincere about trying to intervene quickly to solve the problem and indeed may find a viable solution. I am guessing that this could take the form of an injection of a subsidy for 2009 worth as much as $9 million or a combination of a subsidy of $4 million and a directive as majority owner of FSC to split the difference in fertiliser cost as an industry cost to be shared 70 percent by the grower and 30percent by the miller.”

Sharma said that at the meeting he rejected the FSC position to let farmers bear the entire price increase because doing so would put a large number of farmers into virtual destitution and would be the first real nail in the coffin to bury the industry.

He said the bulk of farmers would not be able to afford to fertilise their cane crops if there was a sudden 250 percent price increase, which he said could lead to a substantial decline in next year`s cane production.

Sharma resigned from the SPF chairmanship last week within several few weeks of taking up the position, after FSC CEO Deo Saran labeled him a lobbyist for farmers over his position.

“It was not the fault of farmers that incremental price increases did not take place since 2005,” said Sharma.

“Had this been done farmers would have made their own adjustments/decisions as to the purchase and application of fertiliser. I maintained that farmers were completely unaware that raw material prices were moving up sharply and that the company was artificially keeping the price low, as noble the intentions may have been,” he said.

May said the intention now was to get the company up and running so it could provide fertiliser to farmers and be able to commercially survive on its own. That would mean diversifying and more importantly, carefully sourcing fertiliser input for the local blend of cane fertiliser.

“SPFL currently sources its raw materials – phosphate, potash, etc – from around the world, from Russia, Christmas Islands, etc. It brings these into Fiji and blends these to suit the local soil conditions. So this sourcing will now need to be carefully carried out so that we can get the cheapest sources possible,” said May, who was today appointed consultant to the SPF at a shareholders’ meeting.

source: Fijilive