National milk supply increases after reforms

The Permanent Secretary for Industry, Trade and Tourism says that national milk supply has increased after reforms were carried out in the Rewa Corporative Dairy Company Limited.

Shaheen Ali told the Public Accounts Committee that the western division is also contributing to the supply after the setting up of the chilling centers.

Ali says dairy farmers were getting 55 cents per litre before the reform however this year Fiji Dairy Limited has paid out one dollar per litre.

Ali says the Dairy company had done a strategic planning exercise in 2009.

He added that before the reforms, the company had huge problems.

He says its net asset position as at 31st December 2010 was negative 4.7 million dollars and it had also accumulated a debt of 18 million dollars which later increased to 22 million dollars and there was unexplained debtors of 4 million dollars that had to be written off to clean up the balance sheet.

According to Ali the reform was done mainly to increase production.

Member Balmindar Singh asked Ali about the sale of Rewa Dairy and whether the due diligence process was carried out.

Ali explained that 16 companies showed their interest in buying the company however Southern Cross Foods Limited was one of the two short-listed companies.

Their offer was far greater than others.

They had also agreed to government=s condition of increasing production and supply by also going into dairy farming and establishing chilling centres.

Government shares in Rewa Corporative Dairy Company Limited was sold for 27 million dollars to Southern Cross Foods Limited.

Member Aseri Radrodro asked how the ministry monitors the reform.

Ali replied that they are having consultations with the company.

Balmindar Singh also highlighted that dairy farmers were also charged VAT for raw milk.

Ali says the matter has been resolved and VAT is being refunded for bigger scale farmers and small scale farmers are exempted from paying VAT.

He also asked Singh to check whether farmers are still charged VAT.