Sugar Industry Not Impacted by COVID-19: Sharma
The COVID-19 pandemic has not had an impact on the sugar industry. Sugar Cane Growers Fund chief executive officer Raj Sharma made this comment during an interview with SunBiz.
The fund has close to 11,300 productive farmers that harvested sugarcane last year.
From Government’s perspective, he said they have noticed how much the sugar industry has contributed to the economy.
“In saying that apart from the many challenges faced by the industry the Government has invested a lot into the industry,” said Mr Sharma.
Mr Sharma said the sugar industry was a tough but lucrative industry.
He said recently he has noticed an increased interest from the working class enquiring more about how to get involved in the sugar industry.
The key function of the fund is to provide loans to sugarcane growers in the hope to help increase productivity.
Below are excerpts of an interview with Mr Sharma:
Are you finding the reasons you are lending have changed in the last year compared to previous?
If you look at the 10 years records – highest loan of $10.151 million given last year, despite unfavourable economic conditions.
It is how we have deepened the relationship with the growers and without over burdening them have assisted in the best possible ways for various purposes.
Post COVID-19 farmers have realised fall back, some working class also have opted to buy cane farms.
Loans from 1997 to 2019 were written off were valued at $1.6 million. that
How do you measure the effects/results of the lending?
Any lending irrespective we look at the doctrine of lending – safety, need and profitability.
Safety of principal: The first and foremost principle of lending is to ensure the safety of the funds lent and then profitability from profit earning institutions together with marketability or liquidity: Liquidity of loans is another principle of sound lending.
The term liquidity of loan indicates quick realisation of loans from the borrowers. Sometimes this is difficult to find.
Purpose of the loan: Before granting loans, examine the purpose for which the loan is demanded. If the loan is granted for productive purposes, thereby the borrower will make much profit and he will be able to pay back the loan.
In no case, loan is granted for unproductive purposes.
Diversification: The element of risk in relation to loans cannot be eliminated, it can only be reduced. Risks of lending can be reduced by diversifying the loans so small loans to the sugar cane farmers.
We must ensure that basic principles are followed and must ensure where possible funds are released progressively for the desired purpose against inspection.
The fact is that it is a Trust Fund, and we must ensure that it is used for the right purpose in accordance with the Sugar Cane Growers Fund Act.
Are your lending rates comparable to any other banks?
We are most competitive with rates to around 30 to 60 per cent of what banks charge – Our rates at present are approximately three to six per cent compared to banks above 10 per cent. Our fees are very competitive.
What is the approximate value of total loans currently?
As of last month March 31, we have 11248 accounts valued at $28789 million.
Any issues with repayments?
Yes, we are faced with challenges of non-productive farmers and default loans, but we continue to assist and help them, rearrange payment most important for us is to sit down and realise the challenges and that is how we have managed the arrears. Some have genuine issues of lease expiry, high cost of production or shortage of manpower but some have ability to pay and or work on the farm but ignore the obligation.
In those cases we look for legal means of recovery, but we continue to look at that as the last option. The Sugar Cane Growers Fund is also debt free.