Fiji Sugar Cor­poration Elaborates On The Forecast Price

The Sugar Industry Tribunal Master Award places an ob­ligation on Fiji Sugar Cor­poration to inform the Tribunal of its estimates on which the forecast cane price for the coming season is to be based.

Once completed and Tribunal con­firmation obtained, the forecast price per tonne of cane is required to be published prior to the com­mencement of each season.

In estimating the forecast price, FSC is required to allow for a mar­gin of error of 15 per cent to take into account possible adverse fluc­tuations in exchange rates, freight rates, world prices and other per­tinent variables on which the fore­cast price is based.

The Master Award further pre­scribes that a first payment of 60 per cent of the forecast price be made within five weeks of delivery of cane by a grower to FSC for the season.

This delivery payment is normally paid by FSC within three weeks of cane delivered by growers during the season, earlier than required by the Master Award.

World sugar price

The world sugar price has experi­enced extreme volatility in the last twelve months, and year on year has dropped by nearly 20 per cent due to large production surpluses that have arisen in major sugar pro­ducing nations such as India, Thai­land and Brazil.

The price that Fiji receives for its bulk sugar exports is thus impacted by these global market conditions.

Accordingly, current spot and fu­tures prices are used in the calcula­tion of the forecast cane price for the season ahead, which as directed by the Master Award, includes a 15 per cent contingency for adverse fluctuations in market conditions.

The result for the 2019 season is a forecast cane price of $55.69 per tonne, compared to $66.08 forecast for the 2018 season, a reduction largely driven by lower global sugar pricing.

The significance and foresight of the Government’s setting of a Guar­anteed Cane Price of $85 per tonne of cane in the current situation cannot be ignored.

The very purpose of this guaran­teed cane price is to create stability and certainty for cane farmers and shield them from the adverse mar­ket conditions prevailing in world commodity markets.

Not withstanding the current fore­cast cane price, set in terms of the Master Award, cane farmers can look forward to the certainty of a guaranteed cane price of $85 per tonne for 2019.

Fourth payment

The fourth cane payment for the 2018 season, will be announced by FSC shortly.

This payment will include the next tranche of the $85 per tonne guar­anteed cane price for the 2018 sea­son, and will greatly assist farmers in their preparations for the 2019 harvest.

Feedback: maraia.vula@fijisun.com.fj