Dollar drop cushions manure price rise

April 22, 2009 02:41:11 PM

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Sugar cane farmers around Fiji will soon be paying $31.50 per bag of locally blended cane fertiliser sold by South Pacific Fertilizer Ltd (SPF).

This equates to a 61 per cent increase from the current price of $19.50 per bag.

This follows yesterday’s Cabinet decision, allowing Government to subsidise a necessary price increase in the cost of fertiliser sold by SPF.

Sugar Commission of Fiji chairman John May hailed this move.

May had made a subsidy submission during a meeting between SPF shareholders and Government two weeks ago.

“I welcome Cabinet’s decision to increase the price of fertilisers from $19.50 to $45.59 per bag and that $14.09 of this increase will be met by Government. $12.00 per bag of the increase will be met by growers who will now be paying $31.50 per bag from the $19.50 per bag they currently pay,” May said.

He said the increase in cost for farmers would be softened by the now devalued Fiji dollar, “which, on current estimates, should increase the price of cane for 2009 by around $10.00 per tonne of cane.”

“This results from the fact that revenue for sales to the EU (European Union) is paid for sugar in Euros, that molasses exports are sold on the basis of US$ per tonne, and the 20 per cent devaluation will be reflected in increased earnings from export sales of sugar and molasses,” May said.

“The recommended application for fertiliser is 15 bags per hectare.  Therefore, the increase in cost for fertiliser application for growers on this basis is $180.00 per hectare for fertilisers.

“Against this, for growers who yield around 50 tonnes of cane per hectare, the increased price for cane at $10.00 would be $500.00 per hectare of additional income, which more than covers the price increase of fertilisers to growers, plus the cost of inputs that may increase due to the devaluation,” he added. 

SPF’s financial woes have been blamed on a stagnant retail price of fertiliser, with SPF absorbing dramatic increases in the costs of raw material over the last five years.

The fertiliser company is owned by the majority Government-owned Fiji Sugar Corporation Ltd (FSC), Sugar Cane Growers Council (SCGC) and the Sugar Cane Growers Fund (SCGF).
 
SPF, now technically insolvent, had been kept afloat through loans, mostly from the SCGF, to which it owed $14 million. 

The Government’s subsidy comes with a condition that SPF be restructured, with the SCGF loans be converted to equity.

May, who is also SCGF chairman, said Government’s assistance would enable SCGF to bridge the financing requirements of SPF to ensure raw materials are imported, blended and distributed to suit growers’ requirements during the coming harvesting season.