“Cane growers feel completely misunderstood, downplayed and excluded”

Qs & As — Salil Roy – President of the Planters’
Reform Association

‘The core problem for our cane planters is more a matter of equitable wealth distribution than one of price, and nobody seems to be willing or able to tackle this’

 

Salil Roy is the President of the Planters’ Reform Association, one of the main drivers of the Alliance of Sugarcane Planters’ Associations (ASPA). He has also served as Chairperson of the Mauritius Cane Industry Authority, the first and only planter to have held this office.

In the interview that follows he expresses the concerns of the sugarcane planter community about what he terms the controversial recommendations relating to the Landell Mills Report on the Sugar Sector Reform. He deplores the indifferent attitude of the authorities to the precarious situation of the planters and their sustainability in the long term, and rises pertinent queries about the land conversion tax and other matters where the balance tilts in favour of the oligarchy rather than the small planters.

* The government has made public on 11 Dec 15 its agreement with the recommendations of the Implementation Committee on the Report of Landell Mills Commodities International Ltd (LMC) on the Sugar Sector Reforms. The recommendations, it says, will “ensure the future viability and sustainability of the sugar cane industry and that the cane growers obtain a reasonable and adequate income.” Are cane growers in the know about which recommendations will be implemented and how these will impact the viability and sustainability of the sugar cane industry?

What we know is that last December, seven months after a High Level Implementation Committee (HLIC) was set up to examine the LMC Report and initiate appropriate actions, Cabinet agreed to the recommendations of the said Committee. Until now, however, apart from the few measures announced by the Minister of Agro-Industry and Food Security during a press conference on the 14th of December 2015, we are totally in the dark regarding the implementation or not of the Report’s several other gravely controversial recommendations.

Interestingly, an official request for the detailed recommendations of the HLIC made one day after the Minister’s press conference, to the Ministry by the Alliance of Sugarcane Planters’ Associations (ASPA) has remained unanswered so far. For us, therefore, the Minister’s media stunt was nothing more than a classic case of putting the cart before the horse and it is not unreasonable to think that the measures announced will have very little meaningful impact as the core issues relating to our sugar cane industry’s global viability and sustainability have yet to be boldly addressed.

* What about the income of cane growers? What would be deemed to be “reasonable and adequate” in light of the new circumstances unfolding since the fall in sugar prices (from Rs 15 830/tonne in 2013 to Rs 12 400/tonne in 2014) and in the wake of the complete abolition of the sugar quota in 2017?

The phrasing of your question is deeply revealing in that the prices you refer to are essentially those of sugar, whereas planters also derive some revenue from molasses, bagasse and a contribution from distillers using molasses or cane juice to manufacture alcohol. However, these income streams pale in comparison to sugar and go blissfully unnoticed because of their sheer insignificance.

While we appreciate Minister Seeruttun’s timid efforts to increase the price of bagasse and the distillers’ contribution, we unfortunately cannot applaud him when he brandishes the figure of Rs. 17,554 per sugar ton to extol the supposedly positive impact of his measures on planters’ revenue and sustainability – because he knows full well that the net return, given that production costs are of at least Rs. 16,000 a ton, still falls considerably short of both farmers’ expectations and Alliance Lepep’s electoral promises.

The core problem for our cane planters is more a matter of equitable wealth distribution than one of price, and nobody seems to be willing or able to tackle this.

* The number of planters has come down from 26 257 in 2005 to 14 662 in 2015, and we had 260 ‘métayers’ last year, down from 630 in 2005. More are likely to move out from sugar cultivation unless “remedial measures are taken at the appropriate time”, conceded the Agriculture minister in his reply to a PNQ last April, and he listed out those measures, namely: amendments to be brought to the Sugar Insurance Act regarding allocations to planters, review of the contribution to the Cess Fund, as well as other measures relating to the production of ethanol, utilization of reserves accumulated at the level of the Sugar Insurance Fund, etc. Is the government walking its own talk?

How can Government do that when it is itself toddling? From what we have seen so far, we are not sure it has the means to fulfill its ambitions and ours as well.

You have to break some eggs to make an omelette, but this government appears to want to demonstrate just the opposite. The bagasse price problem is a case in point, with the distribution mechanism of the Bagasse Transfer Price Fund remaining untouched, despite the repeated calls from the planting community for the abolishment of the 50% share thereof unjustly accruing to the IPPs who incredibly continue being paid to use cane fiber that is not theirs.

We have reason to believe the government is being ill-advised and misled. It still has to establish a firm foothold in the planting community and the glaring disconnect is reflected in the policies it is trying to implement.

* There are certainly a number of constraining factors like labour shortage, disinterest of the younger generation, falling sugar prices, etc, but that 11 595 planters have moved out from sugar cultivation during a 10-year period (2005-15) could also suggest that remedial measures that had been taken during that period have not been convincing enough for the small planters community to preserve their “carreaux canne”. If the past is any indication of the effectiveness of these remedial measures, one cannot be too optimistic about the future, isn’t it?

The sugarcane planter is by nature resilient. He has for generations been farming cane and diligently contributing to the national economy, even if he has been consistently left stranded in the loss-making sugar industry instead of also benefiting from the remunerative revenue streams derived from the various ventures of the sugarcane industry cluster. Although his share of bagasse and molasses is used as feedstock by the highly profitable corporate sector energy producing power plants and distilleries, the sugarcane planter only receives paltry revenue in return.

To justify this blatant inequity, an often-stated fallacy in this context is that the sugarcane planters also derive dividends from the Sugar Investment Trust (SIT). In reality only 24 % of the shares of SIT have been acquired by some cane planters owing to the perception of poor return from the initial 20% SIT stake in the sugar mills in 1994. The unsold shares to sugar cane planters were taken up by the corporate sector which holds 35% with the employees holding 41%.

The performance and returns from SIT have been poor. It is therefore imperative that the unrealized commitment agreed since December 2007 of a 35% shareholding of current planters and workers in the sugar cane sector be implemented forthwith, through a new investment vehicle holding stock in the more viable and remunerative sugarcane cluster industries of the future. This means in electricity producing power plants, rum distilleries, ethanol production plants and other viable streams of activities using the by-products of the cane or cane biomass as feedstock and not in the sugar industry refineries which are un-competitive, beleaguered by un-remunerative prices, a weak Euro, difficult and unpredictable market conditions.

The SIT model has not worked. The sugar cane planters and workers should therefore be allowed to redeem their SIT shares and if they so wish be allowed to consolidate them in the new investment vehicle. Just as is the case presently for the corporate sector, the 35% investment should therefore provide, after generations of diligent commitment to the sugar industry, a remunerative legacy for the future to the sugar cane planters and employees, the other historical stakeholders of the sugar industry.

Another measure which would also provide a lasting legacy to sugar cane planters for their long standing contribution to the sugar sector is to exempt their largely small sugar cane land holdings from the payment of the land conversion tax. Given that the core sugar activity looks increasingly unviable and sugarcane planters are incurring losses, they are legitimately looking at options of realizing maximum revenue or value from their land assets.

Against the backdrop of falling revenue from sugar, the corporate sector is already doing that on a large scale with the construction of commercial centres, business parks, offices, residential developments, education campuses, smart cities and other projects on lands which were under cane cultivation. The corporate sector has through the provisions of the various VRS schemes, the measures contained in the Blue Print as well as the Illovo Deal obtained tax exemption from the payment of the land conversion tax applicable at a rate Rs 3.5 million per hectare on a total of some 7,500 acres of their land assets. This provides a significant land conversion tax exempt land bank for diverse commercial, residential, business and other lucrative projects.

It is therefore time to allow the sugarcane planting community in deference to its contribution for generations to the national economy to also realize its land assets by exempting planters from the payment of land conversion tax. This will allow a large number of the entrepreneurial planting community and in particular the smaller ones to realize their land assets in the best possible conditions and where possible tap investment opportunities in the various emerging sectors opened up by government and in the market.

The structure and concentration of land ownership in the country which requires urgent reform is one of the major constraints of inclusive development and a true democratization of the economy, so as to enable mainstream Mauritius to take advantage of the opportunities in the emerging sectors and poles of development opened by government.

The past cannot be rewritten, but the future is in our hands.

* The trade-unionists in the sugar sector, who have come together as a common front, the Joint Negotiating Panel, have been more outspoken – and even outright vociferous – in their stand against the choice of Landell Mills Consultancy International for the sugar sector reform exercise, accusing the Consultants of being “défenseurs de la Mauritius Sugar Producers Association” and alleging that their report would have been « taillé sur mesure pour satisfaire l’agenda de certaines personnes”… But it would seem they have made their voices heard since the Minister has given assurance that Landell Mills’ recommendations pertaining to workers that are perceived as “rétrogrades” would not be implemented. There is a lesson there, isn’t it?

We have to commend the workers’ spirit of unity and solidarity that forced the Minister to backpedal on those specific recommendations. For too long, politicians and others have thrived on the lack of unity between planters’ organizations.

The “morcellement syndrome” is a well-known feature of our landscape, but we are trying to turn things around slowly. For the first time in Mauritian history, nine registered planters’ organizations have come together as a common front, the Alliance of Sugarcane Planters’ Associations (ASPA), in defence of the historical sugarcane planting community.

ASPA’s arrival on the scene hasn’t gone unnoticed and we are comfortable living with the feeling that for many we are too hot a potato to handle.

* With the MSPA disbanded and the future of the Mauritius Sugar Syndicate being left hanging in the air, one cannot really be too optimistic about the future. We have not heard enough from cane growers about these two issues. Why is that so?

Any informed observer will tell you that the MSPA has now subtly reincarnated into a new avatar: Business Mauritius. A quick look at BM’s bureau composition will easily confirm this. It will extremely interesting to see what Minister Seeruttun does in response to this much-publicised disbandment; will he kindly show the door to all those ex-MSPA members he appointed on key decision platforms of the sugarcane industry with the same alacrity as he removed planters’ representatives from various boards when he took office?

As regards the MSS, let there be no doubt: it is not at the dawn of its centenary that it will have to shut up shop. We agree on the imperative of reforming the MSS, particularly with the view to broadening its mandate and giving it the necessary organisational structure and means to deal with global challenges and meet if not exceed its members’ expectations.

* There is so much that a government can do but not more for any stakeholder, but one would at least expect that it assumes its role of arbiter in the interest of the common good. Are cane growers satisfied that they are getting a fair and just treatment from the authorities?

We feel completely misunderstood, downplayed and excluded. Reform and transformation of the sugar industry into a sugarcane cluster have been achieved largely at planters’ expense. Successive governments have failed to deliver on their promises, because they have all been doing the same things over and over again and expecting different results.

The sugarcane industry is basically a self-sustaining one. We are not asking for charity but for justice.

 

* Published in print edition on 15 January 2016

Tags:Act Cess Fund Alliance Lepep, Alliance of Sugarcane Planters’ Associations, Association Landell Mills Consultancy, Bagasse Transfer Price Fund IPPs, Deal Sugar Investment Trust, International VRS Scheme Illovo, Mauritius Sugar Producers, Mauritius Sugar Syndicate, Planters' Reform Association Business Mauritius, Salil Roy, Sugar Insurance