Our kindly dictator announced a final payment to cane farmers that will bring their final payment to $80 a tonne of cane. So if we produced 2 million tonnes of cane that gives a total pay-out of $160 million.
This is very impressive, except for one thing. It sounds like more than FSC has been getting for sales of sugar. FSC does not have $160 million to hand out unless they’ve borrowed it.
The 2011 Annual Report for FSC reveals that in 2011 FSC’s total revenue for sales of sugar and molasses was $141.4 million. It cost FSC $173.7 million to produce this sugar, and that was with a cane price of only $54 a tonne.
The 2011 Annual Report shows that FSC had total debts of $249.4 million, most of them short-term borrowings.
The $80 cane price will be funded from borrowings, so what’s the bet that Bainimarama has been borrowing from the FNPF to pay cane growers so that industry doesn’t collapse until he has managed to have himself ‘democratically’ elected.
In 2009 and 2010 FSC borrowed about $80 million a year and repaid about $30 million, adding $50 million a year in debt. With a cane price of $80 a tonne the debt mountain will be sky high. Only borrowings from FNPF are keeping FSC afloat. We can be sure that commercial banks are not lending to a corporation in such a disastrous financial situation.
This cannot go on. Bainimarama will keep it going only long enough to cement himself in power. He will then pull the plug and FSC will crash to a halt.
$80 a tonne will not make farmers wealthy but it will keep them going and give them false hope long enough for Bainimarama and his Minister for Election Rigging to steal an election.