Salil Roy: “Thousands of planters have been driven out of business”

Salil Roy is the president of the Planters’ Reform Association, founded in 2005. He has been able to group nine active planters’ organisations under the Alliance of Sugarcane Planters in 2014 to advocate for his peers. The 15,000 or so members of those nine associations produce around a million tonnes of cane annually. News on Sunday sought the views of Salil Roy regarding measures for sugarcane planters announced by Minister of Agro-industry, Mahen Seeruttun.

Did you, as spokesperson of small cane planters, have discussions with the authorities on the issues facing the industry and small planters?

Since its inception in 2014, ASPA has been actively communicating with government and other authorities to further its members’ interests and the national interest at large. We had discussions with the Ministry of Finance on pre-Budget 2014-2015 proposals; the MCIA control and arbitration department concerning a memorandum on molasses, its price determination and payment mechanism; with LMC Consulting and BDO on a memorandum in the context of a study on the economic, social and environmental impact in Mauritius of abolition of internal quotas of sugar in the EU market; the Ministry of Agro-industry on comments on LMC-BDO report and various letters; the High Level Implementation Committee on LMC report on planters’ counter proposals; and the sending of various letters to the Prime Minister with comments on LMC-BDO report and on bagasse price for planters.

The Minister said that the number of small planters is down by 40% in spite of Rs 3 billion investment in the FORIP project. Your comments?

With all due respect to the Minister, the number of registered sugarcane planters has come down from 26,887 in 2005 to 14,922 in 2014, that is, a 45% reduction. FORIP’s objective was to cater for 12,000 hectares of planters’ lands, but it has to date achieved only 75% of this objective. The project may not be progressing as swiftly as it should, but correlating FORIP with the cane cultivation abandonment phenomenon is fundamentally wrong and misleading. The Minister is clearly missing the point, sugar cane cultivation is an economic activity which, like any other such activity, will peter out if returns are not sustainable. Successive governments have emphasized the urgency to increase planters’ revenue from, for example, bagasse and molasses without, however, doing anything to walk the talk. Despite the 36% sugar price cut, sugar still accounts for more than 90% of total planters’ cane revenue. Does it actually surprise anyone that thousands of planters have been driven out of business in recent years?

The Landell Mills Report advice is to maintain the Rs 2,000 grant per ton of sugar to all insured producers. The Minister says he will maintain this…

Now, this is frankly getting ridiculous! Such a decision is the prerogative of the Sugar Insurance Fund Board (SIFB) which operates under the aegis of the Ministry of Finance. How on earth can an Implementation Committee under the Ministry of Agro-industry decide on the principle of renewing this assistance? In any case, ASPA has made it abundantly clear that depleting the reserves of the SIFB would be dangerous and costly to the SIFB and the industry. Why pilfer the SIFB reserves when it would suffice to equitably redistribute the wealth created by the sugar cane industry to solve the revenue equation?

What are your views on the 15% levy on imported sugar? How will this help small planters?

We are all for this measure if it can help strengthen the Mauritius Sugar Syndicate’s grip on the local market. This measure will however be of no use to improve the competitiveness of our sugars on the international front, because our production costs, especially at factory and refinery levels, are still too high or over-inflated. Our excessive refining costs, for example, are excessive and must be adjusted downwards. This is where our service providers need to put a little bit of water in their wine for the benefit of all. The Minister appealed to the MSS and MCIA to bring reforms so as to be more performing and efficient… The MSS is the sole tried and trusted marketing instrument of the Mauritian sugarcane industry. Whereas some are using underhand tactics campaigning for its dismantlement, planters are of the view that the Syndicate’s mandate must be broadened to encompass all marketable products of the sugarcane industry. Offering a range of modern specialised services, MSS costs planters only a paltry Rs. 20 per cane ton, whereas a cane cutter does not cost less than Rs. 200 a ton. As for the MCIA, we are bitterly disappointed with the way it has abdicated of its basic responsibilities at a time when it should have been setting the pace for the rest of the industry. The MCIA has in recent times repeatedly failed to live up to its own commitments and planters’ expectations. It has been found wanting on several issues of key importance and has clearly shown itself to be incapable of responding to the ever-changing needs of the sugar cane industry. Of all stakeholders consulted during the LMC study, planters were the only ones who were against a further reduction of global cess, which funds the MCIA. We are now seriously starting to reconsider this.

Do you think it is a good idea to detach MSIRI from MCIA?

Such a move is tantamount to rolling back the clock. The MSIRI, like the rest of the MCIA, is cess-funded too and cannot be a State within the State. We totally agree that research is not a cost but an investment, but that does in no way mean it can be above transparency and accountability. From our point of view, this move has been orchestrated just to suit some people who are still nostalgic of a certain bygone era. This said, the MSIRI’s problem is not one of autonomy, but of funding. With the decrease in cess money, it is true that the MSIRI’s budget has been substantially reduced in recent years. But it is equally true that many local corporate groups are today growing cane and making sugar in Africa with locally developed and funded know-how, without contributing a single cent in return. They should be made to pay cess too.

It seems that sugar cane planters will get a better price for Bagasse...

The bagasse price hike announced by the Minister is only a temporary one, as it will be funded from a special CEB contribution for a few years only. It is obvious and most unfortunate that the Minister, his officers and the Implementation Committee members did not heed the Prime Minister’s advice when he stated, during a function at Mer Rouge earlier on this year, that he would do his utmost not to let the planters community down. Whereas our counterparts from Reunion Island receive about Rs. 1,500 per ton of bagasse and that local sugar factories sell bagasse to anthurium growers for not less than Rs. 2,000 a ton, our planters will, in the best of cases, only be receiving about Rs. 300 a ton. If the Minister thinks this is the kind of measure which will prevent planters abandoning cane cultivation, he is horribly mistaken. The Minister has let us down and he will have to take full responsibility for this.

While ethanol is still in the drawer?

Regarding ethanol produced from molasses, knowing the authorities’ liking for piecemeal action, we are not surprised that it has been royally left out of the measures announced the other day. This is yet another controversial issue on which we shall come back in due time. Just watch this space!

Why should CEB finance for Bagasse?

Indeed, why should consumers be financing the Bagasse Fund when it is the IPPs making a killing out of it? IPPs are sacred cows in this country; it is obviously far easier downing the Rawat empire than touching them! The electorate will no doubt appreciate this.

What about the increase of Rs 20 per litre of alcohol?

Let’s be honest: we will not spit on this increase. But at the same time, we would be hypocritical if we turned a blind eye to the fact that this additional contribution will adversely impact on bottlers’ competitiveness and profitability. Again, increasing such contribution is not the answer to the equitable revenue distribution of the industry. To put facts straight and get things right: You need to have balls! We would like to think this so-called Lepep Government has those.