Category Archives: Parliament Motion

MOTION ON DAIRY INDUSTRY

11AM -FRIDAY MARCH 24 2017 – PARLIAMENT OF FIJI

BY NFP LEADER

HON PROFESSOR BIMAN PRASAD

Attached is a Motion  by the NFP Leader Hon Professor Biman Prasad for Parliamentary today(Friday) to agree on a rehabilitation package to ensure the vibrancy and vitality of the Dairy Industry. 

 
Professor Prasad pointed out that Dairy Farmers were requesting for higher prices of raw milk. At the same time Fiji Dairy Ltd, the suppliers of  processed milk are enjoying 32% duty concession-er zero duty on imported milk products, therefore have no incentive to help and grow the local dairy industry. 
 
The Government opposed the Motion through contribution to the Debate by Minister for Economy and Minister for Agriculture. 
 
The Motion was defeated 27 (NO) to 15 (YES) with Government voting against it. 

 

Madam Speaker

I move –

 

“That this Parliament agrees that in light of the struggling dairy industry and worsening plight of dairy farmers, an extensive rehabilitation package be implemented for the vibrancy and vitality of the Dairy Industry and dairy farmers”.

Madam Speaker, the plight of the dairy industry and dairy farmers is an example of another Government reform or policy that has failed to meet its objective.

The reality of our dairy industry is excruciatingly painful. An average of Eighty million litres of milk  is consumed each year. Our dairy industry is producing less than  ten million litres of milk annually. This means that 70 million litres of milk either liquid or in powdered form is imported. This means we are producing only twelve and a half percent of Fiji’s total milk consumption while eighty seven and a half percent is imported.

Madam Speaker, what does this mean for our dairy industry, dairy farmers and the monopolistic Fiji Dairy Limited? Does it mean that it is making a loss or is technical insolvent? Are our dairy farmers struggling to survive?

The latter, that is dairy farmers, are genuinely struggling to earn a decent livelihood. But  Fiji Dairy Limited continues to  be a healthy profitable entity – thanks to the 32%  duty concession  or zero duty it enjoys for milk imports. On the other hand Madam Speaker, An import duty of 32% is placed on all importers. But this particular company gets a zero duty to import cream/milk and sell them to consumers at a price which many are not able to afford, makes the argument by government to protect the local dairy industry pretty hollow.

This favored company, which has got zero duty has no incentive to promote the local industry when it can continue to rake in millions of dollars by simply importing.  This too is at the expense of the ordinary consumers who are paying high prices for milk and milk products. It is a matter of wonderment that government while giving millions of dollars to this private company, is ensuring that the same company maximizes its profits when it is the sole provider of milk to our class one students. And while this company makes exorbitant profit each year, the dairy farmers are suffering with low milk price and rising cost of feed for cows. Farmers are paid price per litre of milk in three grades – premium, first and second. The highest price is 94 cents per litre, which is less than the cost of producing one litre of milk. The average price paid to farmers is 80 cents per litre. And four cents per litre  is  the surcharge for transportation of milk to chilling centres.

Madam Speaker, the rot of the industry started with the promulgation of what was then known as the Dairy Restructure Decree 2010, now known as an Act like other Decrees and promulgations without bringing them to Parliament for ratification. We all know that a consultant, who happened to be a partner of an Accounting Firm was hired to  carry out the  restructure of what was  then known as Rewa Dairy or Fiji Co-operative Dairy Company Limited.

Madam Speaker, the Decree’s main intention was to transfer from FCDCL to Fiji Dairy Limited, all interests for separating milk supply from milk processing. And like other Decrees Madam Speaker, this Decree cannot be challenged in a Court of Law. A draconian and regressive piece of legislation like this is now known as an Act, portraying to the world that we as parliamentarians passed this legislation, which has become a noose around the necks of dairy farmers in terms of them being milked dry by this company.

Madam Speaker in July 2016, FCDCL CEO revealed a huge decline in milk production – in an interview with the Fiji Times published on 23rd July 2016. He revealed that in the first quarter of 2015, dairy farmers were supplying 26,000 litres of milk daily to the factory compared to 19,000 litres in 2016. The reduction by 7,000 litres means in 2016 FCDCL farmers would have supplied only a little over 6.9 million litres of milk. This is a significant reduction of almost 27%. But Fiji Dairy Limited is not complaining because it enjoys zero duty on milk imports. And we have fair idea of why they are silent while the dairy industry and plight of farmers is worsening by the day.

Because Madam Speaker, the company will enjoy the zero duty on imports for 10 years. Other importers are subjected to a 32% duty on all milk products except ghee which I  am told is 15%. Perhaps the Minister for Economy and the Minister for Agriculture can either confirm or deny this – I am told that apart from the white packet Rewa Life, butter, yoghurt and a few flavoured milk brands, others are imported by Fiji Dairy Limited. The blue packet Rewa Life, Devondale and Dawn brands are all imported. So there is no incentive for Fiji Dairy to develop the local industry when it can maximize its profits through imports that are zero-rated.

Madam Speaker, FCDCL, during its Annual General Meeting last year proposed that it have its own processing facility because Milk Supply Agreement with Fiji Dairy Limited was questionable. The AGM also heard that the price of a litre of raw milk should be $1.25 from an average of 82 cents.

Madam Speaker, the plight of sugar cane turned dairy farmers in Vatukoula was highlighted recently by The Fiji Times in a series of reports. Despite the series of articles, no response has been forthcoming from the Dairy Company and the Ministry of Agriculture.

“Dairy farmers struggle to survive” was an article on Saturday 4th March. Madam Speaker  this picture tells us the painful reality of the plight of dairy farmers. A Vatukoula farmer Hirdesh Nand shows cans of milk rejected by the company, causing them more losses in addition to the low  price paid for raw milk.

Mr Prasad said the company doesn’t even call them the same day to tell the milk has been rejected but return the cans  full of milk the next day. He said if the company tells him what is wrong  with how he manages his dairy cows or with production of the milk, he can take remedial action but this is not the case.

Madam Speaker, another article in The Fiji Times on 6th March “Dairy cow shortage hits farmers, firm”, quotes FCDCL CEO as saying the number of cows has reduced significantly since 2015. He says the outbreak of Bovine Tuberculosis or Bovine TB in 2015 and 2016  shrunk the stock by 22 to 23 percent. He said it was difficult to import farm animals from neighbouring countries because of disease issues. There is no response in this article or in its aftermath from the Agriculture Ministry to say what is it doing to alleviate this problem.

Madam Speaker on 15th March The Fiji Times  reported that the Agriculture Ministry remained tightlipped on how it was going to help the affected Vatukoula Dairy farmers who had called for increase to price of raw milk, solutions to transportation issues and rejection of fresh milk by the buyers.

FCDCL CEO is also quoted here as saying that the price of  a litre of raw milk  had decreased from $1 in 2012 to 80 cents. This is following the restructure of the company when Fiji Dairy became the supplier.  This is confirmed by one of the directors of FCDCL.

The price before was $1 VEP or VAT Exclusive while the  lower price of 80 cents is VAT inclusive. There we ask why a corporate giant is allowed to profiteer at the expense of farmers and taxpayers?

Madam Speaker, we fear the dairy industry and the plight of farmers will be the same as that of our cane growers if Government does not review its policies and adopts and implements an  extensive rehabilitation package to prevent the industry from collapse.

We urge the government to immediately review this policy. And the first thing it should do is to bring to Parliament and review the Dairy Industry Restructure Decree of 2010. For it to be considered an Act, it must be fully scrutinised by Parliament to see  how and why this particularly company has been given concessions and zero duty to maximize profits at the expense of dairy farmers, the taxpayers and consumers of Fiji. Instead of reviving the dairy industry, these measures have and are leading it  on a path to destruction.

Madam Speaker, if Government is serious about helping dairy farmers and the the dairy industry, we would suggest that it should be through direct support to the farmers in improving their pastures, breeding, infrastructure and close extension and advisory support to the farmers.  The supplementary feed for dairy cows should also be subsidized.

And most importantly the price of  raw milk should be increased to $1.25 per litre and the grading system scrapped.

Madam Speaker, Protecting one company to promote local dairy industry by assisting their imports, has been a colossal failure as I pointed out in this Parliament in December 2014. Import substitution policy is an age-old policy which has failed elsewhere, it has previously failed in Fiji and there is no doubt that it will fail in this case. The losers will be ordinary consumers and dairy farmers in this country.

I Commend the Motion

NFP Leader Dairy Industry Motion

 

Petition for RA Cane cutters and growers kicked out by PM

PETITION BY CANE GROWERS OF RAKIRAKI
PENANG MILL AND SUGAR INDUSTRY ISSUES
PRESENTED BY NFP WHIP HON PREM SINGH
PARLIAMENT OF FIJI

9.30AM –THURSDAY 23 MARCH 2017

Attached is a Motion  by the NFP Whip Honourable Prem Singh for Parliamentary today (Thursday) to agree on a petition signed by 303 registered cane growers of Rakiraki representing the four cane growing sectors of the Penang Mill District.

 
The major concern of the farmers was whether the Penang Mill will be repaired and reopened for crushing this year (2017) as the closure of the mill is causing them severe losses and other problems which they have listed in the petition.
 
The Government opposed the Motion through contribution to the Debate by Prime Minister & Minister for Sugar Honourable Josaia Bainimarama.
 
The Motion was defeated 26 (NO) to 16 (YES) with Government voting against it. 

Madam Speaker

I move that pursuant to Standing Order 37(5), this petition be referred to the relevant parliamentary standing committee (in this case the standing committee on economic affairs) under which the subject matter falls;

Madam Speaker, a total of 303 registered cane growers from the  total number of growers in the Penang Mill Area’s four sectors, producing sugarcane and whose livelihood is dependent on the vitality of the industry and the operation of the country’s oldest sugar mill – Penang – have signed this petition. They have provided their farm numbers and the harvesting gangs they belong to. The petition is dated 15th March and it was brought by
representatives of growers and handed to me on 18th March. The fact that in less than 72 hours over 300 growers have signed the petition illustrates the gravity of their situation. The growers have basically exhausted all avenues to ensure that their grievances are heard. They approached me to table their petition in Parliament in the genuine hope that we as legislators of the Highest Court of the Land, hear and deal with their concerns  with the sincerity and seriousness it deserves.

Madam Speaker, 13 months after Severe Tropical Cyclone Winston wreaked havoc, the Penang Mill, the lifeblood of the economy of Rakiraki that was destroyed by TC Winston, is now a relic, cannibalized by its owners – the Fiji Sugar Corporation.
Many a Minister and senior official from Government, including the Honourable Prime Minister himself, have visited Ra and met the growers over the past 13 months. But the once grand old mill, established in 1878, continues to remain in a state of disrepair, and a daily reminder of the tragedy being faced by growers of Ra and the sugar industry generally. As a result Madam Speaker, the economy of Rakiraki is taking a battering, even 13 months after TC Winston’s destructive winds passed over Ra. To make matters worse, recovery after Winston has been slow and the district and town itself has been affected by flooding seven times since December 2016. And amidst this, growers are being basically kicked from pillar to post.

Madam Speaker after Winston Government and FSC decided not to repair and reopen the mill and initially the then FSC Executive  Chairman announced plans to replace Penang with a new syrup mill to be ready for operation in 2017. But this remains a piped dream. Even the then Executive Chairman has exited FSC.

As the growers state in their petition Madam Speaker, last year the Honourable Prime Minister also held consultations with growers. This was more than two weeks after the 2016-17 Budget debate after we pointed out that FSC was stripping the mill, taking parts away to other mills and had even shipped locomotives to Labasa.

On 23rd July 2016, the Prime Minister stated at Penang Sangam School in his meeting with growers that, apart from allocating two million dollars for transportation of cane to Rarawai mill in Ba, Government was assessing the future of the mill. Honourable Prime Minister said and I quote, “We are currently  assessing whether Penang Mill should be rebuilt as a syrup mill or the full sugar mill that it was before the cyclone. Many sugar producing countries have smaller mills that produce only syrup. It reduces the time it takes for crushing and the syrup is taken to a bigger mill where it is crystalised into sugar”. “We have been given some assistance by the Indian Government to assess the best course of action and we will be making a  decision on Penang in the next two months.

 

But whichever way we go – a full mill or a syrup mill – it will not affect your ability to supply cane. And the work will commence immediately when the assessment is completed”. – Unquote

Madam Speaker, the two month timeframe came and went in September 2016. Till now there has been no word from
Government as to what is the future of the mill. The 2017 harvesting and crushing season is three months away and growers are naturally worried that just as last season, they will be forced to transport their crop to Rarawai.

The growers want to know whether any assessment was done. If yes, what is the out come? If no, why not? And what has happened to the assistance provided by the Indian Government? Was it financial assistance or technical expertise? And if hasn’t been used for Penang, then where has it been channeled?

Madam Speaker, growers suffered losses due to cartage of the harvested sugarcane to Rarawai mill in Ba. Last week the new  Chief Executive Officer of FSC Mr Graham Clarke revealed that 35% of crop was lost during transfer from the Penang mill yard to Rarawai.

The Fiji Times reported Mr Clarke on Thursday 16 March as saying that handling of cane firstly at Penang – where it as stockpiled – and re-handling of cane at Rarawai resulted in the loss in tonnage.

Madam Speaker a total of 92,000 tonnes of cane was harvested in the Penang Mill Area last year. If 35% was lost in transfer then this was equivalent to 32,200 tonnes. In monetary terms with three cane payments so far totaling $61.84, this amounts to a loss of almost two million dollars.

This is as a result of the non operation of the Penang Mill. It is a  direct loss suffered not only by cane growers but the economy of Rakiraki as a whole.

Madam Speaker the growers clearly say in the petition that if the mill is not operational this year, then many growers will exit the industry from next year. We cannot afford this. 2016 will be yet another season of poor cane price. Growers were  expecting more than $13 per tonne as the third cane payment but their expectations have been dashed with the announcement of $9.28 per tonne.
The decision by FSC to bring forward the payment by more than a week from the end of this month is of no consolation to them Madam Speaker. $61.84 has been paid so far and growers will be highly fortunate if they receive ten to twelve dollars more in the fourth and final payments this year for 2016. The price of a tonne of cane for last
year will definitely not exceed $73 unless Government intervenes and tops up the payment by more than $7 per tonne to ensure growers receive over $80 per tonne.

And tragically Madam Speaker, deductions from the proceeds of the third cane payment for fertilizer and other expenses have left many growers, particularly those producing an average of 150 tonnes of cane with no income at all. How are they expected to survive until the next payment towards the end of May, without getting into further debt because they will have to borrow to sustain their livelihood?

Madam Speaker, the plight of growers, particularly in Ra has been worsened by the fact that no special payment was advanced this year. The Honourable Prime Minister told Parliament no request was made to him but FSC and the Permanent Secretary for Sugar are reported by both daily newspapers as telling growers in Ra that FSC did not have any money to advance a special payment because the Corporation had made a huge loss.

We can also confirm that a request was made on 6th January for a special payment but nothing eventuated. This fact, Madam Speaker is well known to growers in Ra and indeed elsewhere in Ba and Tavua where the meetings were held by FSC.

Madam Speaker, the depletion of income of growers means a loss to the economy as a whole because every single cent paid earned from the industry circulates in our local economy in the cane belts.  And Rakiraki is no exception.

The closure of the mill and the perception that it will remain closed, the effects of TC Winston and flooding has broken their backs. They are disenchanted and the last thing they need is for us legislators to ignore their plight. We have seen that transfer of their crop to Rarawai has resulted in major losses and this is not viable.
We believe Madam Speaker that the Penang Mill, before it was cannibalized and stripped by the FSC, would have been definitely repaired at a far cheaper cost than what was spent to transport cane and the value of losses incurred in doing so – which was at least four million dollars.

In addition growers who had lorries and wanted to transport their own crop were also paid cartage but at a rate $3 less than what operators hired by FSC received. And this rate was only implemented following the intervention of the Permanent Secretary for Sugar as earlier growers were offered a rate more than $12 less than what FSC hired operators were getting.

Furthermore, payments were made for machinery hired to load cane into trucks at the Penang Mill. We believe this was a rate of $120 an hour.

Therefore we are altogether looking at five million dollars, which in the view of both growers and ourselves, would have been more  than sufficient to fix the mill.

Therefore the closure of the Penang Mill was either simply a case of bad economics or a deliberate decision by Government and the FSC , Madam Speaker.

It is still not too late to salvage the situation. On behalf of growers, I plead with all Honourable Members, particularly the Government side to view the plight of growers from at least a humanitarian point
of view.

Let us refer this petition to the relevant standing committee and then formulate outcomes from the work of the committee for the betterment of growers and Ra as a whole.

Let us strive towards positively impacting their lives and the local economy of Ra.

I commend the petition

(Hon. Prem Singh)NFP Whip Petition on Penang Mill March 2017