SUNBIZ

First Sugar Shipment Bound For China In September

The Fiji Sugar Corporation (FSC) will export its first shipment of 33,000 tonnes of sugar to China in September this year with this market probably being the best news since
23 Jun 2018 10:00
First Sugar Shipment Bound For China In September
Fiji Sugar Corporation’s chief executive officer Graham Clarke

The Fiji Sugar Corporation (FSC) will export its first shipment of 33,000 tonnes of sugar to China in September this year with this market probably being the best news since the demise of Fiji’s preferential market in Europe.

FSC, led by chairman Vishnu Mohan, chief executive officer Graham Clarke and chief operating officer Navin Chandra and their team have been able to secure preferential market access into China which would give Fiji a premium price above the current world market price.

Mr Clarke said with the present sugar price in a ‘depressed’ state and this was good news for Fiji as the returns from this premium price would benefit the country and its sugar cane farmers.

“We are still negotiating the premium so we still don’t have any value at this stage but it’s a good premium above the world market,” Mr Clarke said.

Mr Clarke said FSC hoped to send two more shipments to China towards the end of the year.

In Mr Clarke’s eyes, there is hope on the horizon of an increase in exports because of major players having reduced supplies.

He used the example of Brazil, where a lot of sugar cane farmers were now looking at supplying sugar cane for the production of ethanol and jet fuel.

This year FSC is looking at producing 200,000 tonnes of sugar and are optimistic that this would get higher considering the amount of new cane planted, Mr Clarke said.

Mr Clarke said Fiji sugar is “well liked” and the marketing approach they have now developed, which has progressed a long way since last year, was to break it down into key segments.

 

Local Market

Mr Clarke said the local market was important of all as they believed Fiji sugar should be available for all in all outlets and towns.

“We are now going to use a new marketing approach beginning from this crop where we will reach out to the market in a more effective way that we have done before,” Mr Clarke said.

“Historically we have been reactive where if the people wanted sugar they came to us but we believe we will be able to get a wider distribution by taking sugar to them.

“We have much more interest from other sections like the hospitality sector and small retailers who previously bought from third parties instead of buying from us.

“This will be good for them because they will get better deal and the sale reach will be better for us.”

 

Pacific Islands Market

Mr Clarke added: “We managed to re-establish ourselves in the Pacific market last season and we will continue this season.

“We have already had discussions with some of the bigger buyers in the region.”

Mr Clarke said some major retailers and wholesalers like Punjas who he said will buy from FSC and include that in their network across the region.

He said they were also looking to supply a big bakery out of Samoa.

“We will try and get to most of the island countries as we can and get Fiji brand sugar to them as was in the past,” Mr Clarke said.

“The good thing for us it’s nearby so we will not be spending on freight costs for long distance markets.”

For Fiji and the Pacific markets, Mr Clarke said this represented around 25 per cent of sugar sales.

“It’s a smaller proportion but in this case small is important to us,” he said.

“It is important because if we can consolidate this market then we should be able to build when going forward.”

This 25 per cent sales was a definite positive for FSC as this was a significant increase of between 10 – 15 per cent from sales in previous years.

 

Australian and New Zealand Markets

These markets have suddenly woken up to Fiji sugar and Mr Clark said they have been getting a number of enquiries from Fiji’s two big Pacific neighbours.

“A lot of Fijian nationals living there have their own stores and are wanting Fiji’s sugar to be on the shelves in their outlets,” he said.

“All of them would love to have Fijian sugar as it would remind them of home.

“There are issues like Australia who is a big sugar producer itself will prove to be competitive for Fiji.

“In particular, the brand ‘Fiji’ will stand out, and particularly in New Zealand.

“We see New Zealand as being more excited to buying Fiji sugar than the Australians.”

Fiji sugar will be boosted in New Zealand when it will be part of an Auckland food show in a couple of weeks where will be showcased.

“Previously we had a small amount of sugar going there but now with the packed sugar in one, two and four kilograms Fiji sugar packs,” Mr Clarke said.

“Hopefully we will receive a reasonably good price for that.”

 

East Asian Markets

There is a reasonably good demand for Fiji sugar from markets in this region.

“We still have interest from people who would use large amounts of sugar for manufacturing and food processing and this would be packed in 25kg bags and into containers,” Mr Clarke said.

He said the markets for these large shipments would be Korea and Taiwan, where a trial for Fiji sugar was done last year and since then a market has been established.

“There is a pretty good demand from the Far East Asian market for bag sugar,” he said.

“Because of the depressed world sugar prices right now, we will not get a return as we would have wanted as we got last year.

“We would like to keep a foot in the door there so when the price does go up again we have a market there and can earn a decent price.”

 

European Markets

Historically, the bulk of Fiji’s sugar, which is around 120,000 – 140,000 tonnes, was shipped to European markets in the last 10 years.

That meant four to five shipments to these markets with each shipment carrying 30,000 tonnes.

“The market access arrangements Fiji previously had in the European markets has now changed and we will only supply Europe if it makes sense,” Mr Clarke said.

“From a market point of view, there is not much opportunity for bulk raw sugar in Europe but it is interesting that the European buyers are still in touch with us.

“What they like about Fiji is that we can offer fair trade sugar.

“Fair trade sugar is quite interesting and we tried to get it back on the map last year.”

“We used to sell a lot of fair trade sugar and it fell in a heap.

“That brought $3.5 million in premiums and that went directly to the growers associations.

“What’s interesting is that some buyers in Europe are still keen to purchase Fiji sugar and pay a premium fair trade.

“So we don’t want to rule Europe out as we want to keep them there.”

 

Asian Markets

This market is the new market FSC is exploring and early indications are that this could prove to be one of the more important buyers in the not too distant future.

“This is where our real focus is and we have established close contacts with buyers in South Korea, Japan, Hong Kong and mainland China,” he said.

“There are going to be important markets for us going forward.

“The Japanese market is interesting because they really like Fiji sugar and they are close buy and do not have to order large consignments and store.

“They can take sugar as they need from Fiji whenever they want.”

Mr Clarke said this deal for Japan would probably eventuate in 2019 as “the Japanese usually commit their contracts long periods in advance.

There is potential for Fiji sugar in Hong Kong and with a fair trade price.

Mr Clarke said FSC hoped to get a trial consignment sent to Hong Kog later this year and was looking at 2019 as when commitment should kick in.

“Getting a one kilogram pack sugar onto a shelf in Hong Kong is not easy because you are competing against other brands who have been there for a long time,” he said.

“We think we have found that route to the market shelf and it is looking good.”

The mainland Chinese market is probably the main one for FSC as this is being seeing as a very large market.

“It’s one that is still growing and we have had discussions with four different buyers throughout this year.”

 

United States Market

“We still have a small shipment going to the US where we supply at around August or September every year.

“It’s only about 10,000 tonnes but it is high value sugar so we will continue to supply this.”

Mr Clarke said because of some suppliers not be able to fulfil their quotas, their markets are – re-allocated to other suppliers and this is where Fiji could come in.

“Because of our position of having a surplus of bulk sugar, we are always able to pick up on extra tonnage from the US that may come our way.”

“We will be selling sugar to a refinery on the US West Coast so that freight is a lot easier.”

 

World Market Price

The world market price for sugar was depressed at present at around US$0.13 (FJ$0.27) per pound, as compared to a more stable price of US$0.18 (FJ$0.38) per pound a year ago.

Mr Clarke said this was because of increased productions in India, Thailand and because of that big surplus of sugar on the world market, the price has been depressed.

As for Brazil, who dominated the free trade sugar around the world, they have become less of a factor recently because of the problems and loss of productions and factory closures, Mr Clarke said.

“Now the next generation of bio-fuel is coming up and a lot of sugar cane growers in Brazil would be opting to supply this sector,” he added.

Mr Clarke said jet fuel was presently being produced in Brazil from cane juice.

All in all, the future may look a lot sweeter now for Fijian sugar.

Feedback:  charles.chambers@fijisun.com.fj


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