By Timothy Naivaluwaqa
10 May 2008
The Fiji Sugar Corporation has sealed a $1 billion deal for the supply of raw sugar as preferential imports to the European Union market over the next seven years.
The contract for the supply of 300,000 tonnes of sugar per annum has been sealed with the corporation’s traditional EU market buyer, Tate & Lyle.
Tate & Lyle is the largest cane sugar refiner in the EU and a leading trader in molasses and world market sugars. Tate & Lyle has been trading with FSC since the inception of the African-Caribbean Pacific-EU Sugar Protocol in 1975.
The contract secured by FSC is part of the Economic Partnership Agreements (EPAs) between the European Union and ACP States under the union’s sugar regime reform that would supersede the sugar protocol from October next year.
Sugar and Finance Minister Mahendra Chaudhry expressed his appreciation on the conclusion of negotiations, saying the contract that would continue until September 30, 2015 would be worth more than $425 million.
Mr Chaudhry said the industry was very fortunate that FSC had well-established and strong commercial links with Tate & Lyle.
Mr Chaudhry stressed the challenges arising from fundamental changes under the EU sugar regime reforms and the trading arrangements under the EPAs.
He said the EPAs required the sugar industry to seek long-term commercial arrangements that would contribute positively to the industry’s continued viability and sustainability.
Mr Chaudhry said the current sugar industry reforms and the on-going mill upgrade program would ensure that Fiji was able to take full advantage of the additional market access opportunities for sugar in the EU as well as benefit under its long-term contract with Tate & Lyle.
However, Mr Chaudhry called for the full participation of all stakeholders to ensure the industry fulfilled its quota and quality requirements under the new season.
"The new agreement contains stringent requirements in terms of quality and shipment schedules and can only be realised with the full and active participation of all concerned," said Mr Chaudhry.
"The onus is now on all industry stakeholders to actively play their respective roles in enabling us to honour FSC’s full commitments under the agreement.
"The EU preferential price is expected to remain attractive, despite reductions totaling 36 per cent by 2009, provided we are able to achieve efficiency and productivity gains, both in the field and the factory. Attempts to contact FSC acting chief executive, Deo Saran yesterday were unsuccessful.
However, in an earlier interview, Mr Saran said the industry was expected to earn about $209 million from the sugar produced over the new season under the current preferential prices.
Mr Saran said the industry would import a total of 45,000 tonnes of sugar to fulfill the domestic and regional demands.
"The first few exports would be sold at $980 per tonne while exports at the end of the year and beginning of next year would be sold at $872 per tonne," he said.
"We expect to earn $209 million from our total exports to the EU," said Mr Saran.
"We are going to import 45,000 tonnes of sugar. 13,000 tonnes will be used for the regional market while 32,000 tonnes will be locally," he said.
Mr Saran defended the decision to import sugar, saying it would be significantly cheap for the industry to import.
Sugar Cane Growers Council chairman Jain Kumar has welcomed the announcement and guaranteed they would be able to supply the 300,000 tonnes required under the contract.
Last season, the industry was forced to import sugar from India so it could fulfill its export quota because it had produced less than 300,000 tonnes. Mr Kumar said there were incentives in place to encourage farmers to boost productivity over the new season that begins next month.
He said they were monitoring mill performance very closely.