With our ‘I’ for illegal PM in Beijing I suddenly had a flash of inspiration about the future of our doomed sugar industry.
FSC has been borrowing the money needed pay to cane farmers for their cane, even at the miserable price of $50 a tonne. At $80 a tonne this party is going to come to an end.
So what happens next? I had been wondering about the money paid out for land in Vanua Levu and plans for acquiring more in Viti Levu. Why would you do that if you knew the industry was doomed? Then suddenly the scales fell from my eyes.
On one of Bainimarama’s early trips to China he talked up the idea of Chinese investment in cassava for ethanol. This seemed to me to be just another piece of propaganda. Chinese would never invest in an ethanol plant based on cassava without huge tracts of land to go with it.
With this scenario the land acquired by FSC becomes a key asset for such an investment. Smallholder planters could supply some of the input to a big industrial ethanol plant, but no Chinese investor would want to rely on them. What they’d want is a ‘nucleus estate’ to provide the minimum input to keep an ethanol plant in business.
With a nucleus estate they could never face the threat of a strike from their input suppliers. (They don’t need to speak to the ghosts of the old CSR bosses to work this out.) They’d have their minimum input for plant viability and, with this, they could buy from their other suppliers at rock bottom prices because they’d have all the bargaining power.
Don’t expect ulukau Frank to work this out – all he’d worry about is the money upfront (for him). He’d never cotton on to the position it would put smallholder growers in. He’d think they have a market -what more could they want?
I might be imagining things, but one thing I’m sure of – at $80 a tonne FSC will go broke fast unless our mills suddenly start to produce a tonne of sugar with 8 tonnes of cane, and we know that’s not going to happen.