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Mauritian Cane Industry – The Bitter Realities And The Challenges

We had in the past publicly denounced the opacity surrounding practically all the transactions related to the production of cane-sugar and its by-products, the secrecy around their sales and prices they fetched, and the foggy, mist-shrouded distribution of the money generated from the Cane Industry. Government has changed but, the situation, the opacity has remained the same, if not actually worsened.



Granted :



-- Sugar is no longer the economic pillar of old;
-- We are facing the total phasing-out of the Protocol of preferential pricing and quotas with the EU
-- The present quasi nil return on small planters’ investments is driving these planters to abandon their plantations
-- All these negatives are discouraging the new generation to take to plantation.



Although it is a known fact that Cane has obtained a new lease of life through its by-products, bagasses and molasses -- hugely needed to produce electricity and ethanol and other whisky and spirits, respectively – and through the transformation of its raw sugar into Refine and Special sugars.



The Sector



is being gnawed from within by the Oligarchy subtracting the better lands from sugar-cane and moving to high-value real-estate residential, business and commercial smart cities and shopping malls.

However, the ever-present incomprehensible opacity and the crying inequities in the distribution of overall revenue derived from the Cane Industry is the biggest enemy of the 17,000 small planters. Planters who, despite overwhelming odds, still harvest 35% of the total cane produced. In a sector where the sugar producing mills, the refineries, the PPP’s energy and Omnicane ethanol producing factories, the various distilleries are reported to cash around $300m in turnover annually.



Proceeds Sharing



Despite – or, one is inclined to say, because of -- the existence of the MSA (replaced since 2012 by the Mauritius Cane Industry Authority), the Chamber of Agriculture, the Sugar Syndicate, the MSIRI and other such Bodies and Institutions, it is totally unclear where the yearly proceeds of the Cane Industry end up – what percentage goes to Millers, Large Planter-Millers, Large State Holders, Medium Planters and, finally, to small planters.
Needless to say, nearly all the millions of EURO granted to planters as “accompagnement pour la diversification des leurs activites” – minus substantive “commissions” that went into the coffers/foreign bank accounts of the relative power-holding persons -- was diverted to fill the pockets of the Big Barons, of which a tiny fraction went finance their VRS scheme.

Transparency or Opacity

It would seem opacity is the maitre-mot . Transparency and Accountability appear to be completely alien terms within the Sugar Syndicate.



Composition of Board



The Board of the Mauritius Sugar Syndicate is composed of 20 members , 3 representatives of small planters and 3 from large planters – these 6 are chosen and nominated by the Minister of Agro-Industry – and 12 representatives of mills owners. These 12 were formerly delegated by the MSPA . But, now that the MSPA no longer exists, Heaven knows who delegates them to sit on the Board.
According to Regulations governing the Syndicate, each Board member – whether representing the small planters producing 35%, 25%, 5% or even less of sugar or representing big producers of 65%,75%, 95% or even more sugar – has the same and equal rights. Supposed to be operating as a syndicate, no one of its Board member is supposed to have superior rights than an other. That’s what it is supposed to be, on paper.
In reality, the Board is made to function as a private corporate company’s Board. The (illegal??) 12-members majority, representing the mills-owners, decides all. They override, overrule, crush and quash any voice that may request some light, some transparency on any matter, from the Rs100/ overtime-fee allowed to a peon to the Rs millions lavishly granted to some fortunate protégé. Opacity, Secrecy, Obscure Dealings... these are guiding principles of the Board. Transparency, Openness, Accountability are so much disdainful weakness fit only to be trampled down.



Examples :



-- Revenues figures from sales of Sugar, Refine and Special Sugar, Molasses and Bagasses are kept as closely guarded secrets, inaccessible to the first and
foremost owners of these products – the Planters.



-- Huge sums are deducted at source (i.e at MSS level, without the least knowledge of the planters) to :



a) pay princely monthly salaries to its personnel;

b) pay the total salaries of all personnel of the Refineries; pay for the maintenance and wear and tear of all machineries and equipment of these
Refineries;

c) pay millions to these Refiners for the running of their mills, even to some dormant not functioning ones;

d) lapidate hundreds of millions through incompetency, inefficiency or plain criminal complicity of its Officers in carrying out their duties, for which they are
already drawing princely salaries. The Omnicane v/s Medine contract case, in which MSS was only a witness, and ending up by the Syndicate paying
Medine, is an example. Another is where a respected firm was contracted to carryout an enquire and submit a Report within 3 months of the contracting
date. Fee agreed upon was Rs1.6m. A 2-pages draft of the Report (not the Report itself) was circulated (among Board Members) after 18 months. The fee
claimed had climbed to Rs6.3m. Without any explanation or justification as to lateness or to over-charge. The MSS has approved the payment.

e) One of the Refineries made a request for an additional of some hundreds of tons of raw sugar. Sugar which was not immediately available in our stock of
local production. MSS took upon itself to import the quantity so requested. When the MSS invokes all sorts of market prices and overhead expenses
pretext to limit payment to planters to Rs16,000/ton, the FOB price paid to foreign supplier was a cool Rs17,000/ton. Add to this the freight and
insurance charges , you’ll have an idea of an able and competent administration as exampled by the Mauritius Sugar Syndicate.



Processing Fee to Millers



Formerly there were more than a score of mills throughout the Country. The crushing processes were comparatively crude or rustic. It was calculated that the cost, including administrative costs, to grind the canes of planters was equivalent to 25% of the sugar obtained from these canes. Later, when the number of sugar-factories in operation was reduced to around a dozen, the percentage too was reduced to 22%.
Today the mills have been further merged into 3 units. The millers have accaparated or been granted the EU funds to upgrade and modernize their equipment, their factory processes and bagasse usage to produce steam and electricity. Efficiency in the grinding processes has greatly improved. Management and administrative costs have been very greatly diminished. Yet the 22% cut is still imposed on the planters.



Bagasse



Until lately, planters were not paid for the bagasse used by the factories to produce steam and in-house electricity. Now they are getting some Rs6/ for the bagasse resulting from each 6 tons of their canes grinded. On top of the 22% of their sugar granted as processing fees, the planters “offer” more or less gratis to the millers fuel to produce energy to run their mills. Surplus bagasse are directed to IPP units, burnt and electricity so produced are sold to the grids of Central Electricity Board. When the planter obtains a meager average of less than Rs24/ ton of his bagasse , the miller-IPP derives some Rs625/ out of it. The contracts with the CEB are so tailored, fait en beton armee , that the IPPs are able to hold ransom the CEB, the consumers and the Country at large. No only that, the millers, planter-millers cum the IPPs also enjoy, over and above, 50% of the Bagasse Transfer Price Fund. The small planters, on the other hand, with their 35% bagasse input end up with a paltry 4 to 5 % of the BTPF



Molasses



Planters receive Rs3.000/ton of molasses (until recently, it was Rs2,200/ton) when local market and export sales average Rs7,000/ton. That is the millers are, without the least effort, bagging Rs4,000/ for each ton of molasses belonging to the small planters.


Conclusion ?



If we want a responsible Cane Industry playing fully its national and social role in a modern Mauritius clamoring for more economic and social empowerment, it is time to introduce and implement new legislations to induce less institutionalized opacity, greater equity and transparency in all its departments. The gross totality of the proceeds from
sugar and by-products
electricity and biomass
benefits from massive land conversions to industrial, trading and commercial uses
EU-Sugar Adaptation Plan funds subtly diverted.



has been expertly directed to the coffers of a privileged few, to the detriment of the whole Country. Some of the industry’s more cunning players, having obtained their shares from this “illegal” hording, have simply removed themselves from group of Sugar Producers, and thus shrug-freed themselves from any possible linking commitments.



We urgently need (in conclusion ?) to

a) Correct the scandalous imbalances and anomalies relating to the planter’s share in the proceeds resulting from sales of sugar in all form, molasses and
bagasse

b) The IPP contracts be re-engineered for the good of the consumer, the citizen, the whole Country than that of some abusive exploiters from a
particular sectorial group.

c) Inculcate (or even, hammer down) a new sentiment, a new way of thinking in all stakeholders, especially among the traditional old-school oligarchy.

 



Jagdish Seebaruth
230 59734860

Tags:Mauritian Cane Industry – The Bitter Realities And The Challenges
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