[Photo: File]

The Sugar Cane Growers Fund cannot currently lend directly to farmer cooperatives because of legal restrictions.

The Economic Affairs Standing Committee is urging the Fund to pursue an immediate amendment rather than wait years for the broader review of the legislation.

The issue came to a head during scrutiny of the Sugar Cane Growers Fund, after CEO Raj Sharma revealed that the Fund had received conflicting legal advice over whether it could lend directly to cooperatives.

Sharma told the committee the Fund had initially pursued the matter in 2018 and 2019, with legal advice indicating that loans to cooperatives could be allowed.

But a subsequent consultation with the Solicitor-General’s Office reached a different position.

“Technically, whatever it says, we can only give it to the registered cane growers. That is a limitation.So, if a farmer is an individual, we can give it to him. If he is a member of a cooperative, the cooperative is taken as a separate entity, which we could not.”

Committee Member Premilla Kumar questioned why cooperatives could not access Fund financing when the legislation itself allows the Fund to support commercial ventures that benefit the cane-growing industry.

She pointed specifically to mechanisation, arguing that cooperatives could use affordable financing to invest in harvesters and reduce their dependence on scarce labour.

Kumar warned against allowing the legislative review to become a lengthy process while farmers struggle to keep their operations viable.

Kumar said the committee had seen cases where farmer cooperatives borrowed from the Fiji Development Bank at interest rates of up to 15 per cent, yet managed to repay the loans.

She urged the Fund to pursue a limited amendment under parliamentary procedures while the broader review of the legislation continues.

The objective, she said, should be to get finance into farmers’ hands quickly so they can invest in harvesters and address the industry’s labour shortage.

Sharma said the Fund has already included cooperative lending in its proposed amendments and remains committed to the change.

He said the board and management fully support allowing cooperatives to borrow from the Fund.

Sharma also revealed that the issue had been raised through previous budget amendment processes, but the Solicitor-General had recommended that it be dealt with as part of the wider review because several other amendments were also being proposed.

He said the Fund would wait for feedback expected on Friday before making a submission to the ministry the following Monday.

The dispute over cooperative lending comes as the Fund itself faces growing risks in its loan portfolio.

Sharma said around 25 per cent of the portfolio involving growers producing between zero and 100 tonnes was considered high risk, while the age profile of farmers also presented a significant risk.

The Fund’s major loan account was at about seven per cent, up from the previous position, although Sharma said this remained a substantial improvement from the 25 percent recorded in 2018.

The Fund currently has about 4,032 growers and a loan portfolio of $42.734 million.

The Sugar Cane Growers Fund appeared before the committee to present its 2023 and 2024 annual reports.