SIGNED and sealed, the sale and purchase agreement of Fiji Dairy Ltd was signed yesterday with the participation of the Prime Minister and Minister for Finance, Commodore Voreqe Bainimarama.
Southern Cross Foods Ltd (SC Foods), a subsidiary of the CJ Patel Group, now takes over the dairy company with the responsibility of lifting the industry in the coming years.
"This is the culmination of a long process undertaken by my government to revitalise and modernise the dairy industry in Fiji," Commodore Bainimarama said.
"The industry has been riddled with problems as such mismanagement, corruption, inefficiency, and outdated infrastructure and technology.
"Now with the participation of the private sector, in this case SC Foods, we will, through various initiatives by them and concomitant incentives by government, focus on increasing local production and capacity.
"SC Foods shares government's vision to encourage domestic milk production and work toward self-sufficiency in order to reduce Fiji's reliance on imported dairy products.
"At the moment the industry is meeting less than 15 per cent of Fiji's liquid milk demand of 70-80 million litres per annum."
There are conditions of the sale, which include that FDL, under SC Foods, would at least for the next 10 years, purchase all the milk produced by Fiji Cooperative Dairy Company Ltd (FCDCL); that FCDCL would in turn sell all its milk to FDL.
The 20 per cent Class B shares in FDL held by the farmers will not be diluted and that concessionary duty rates would be provided to FDL to ensure growth in local production.
SC Foods, in purchasing FDL, would take over the company's liabilities, at $17 million.
On top of taking over the debt of FDL, SC Foods would pay a minimum of $10 million for the purchase of the shares from government.
Furthermore, as part of the conditions subsequent, SC Foods will by December 31 commence work on a 350 acre dairy farm in Waidina involving a minimum of 150 cows.
It would also, within four months of settlement, install two chilling centres in the Western Division and within three years upgrade and modernise the plant and machinery at the existing factory.
These conditions subsequent will need to be carried out to the reasonable satisfaction of government.
As part of the Sale and Purchase Agreement, the government has obtained a guarantee of $2million from SC Foods and its directors in their personal right, which will be recovered by government in the event the conditions subsequent are not met.
The expected date of settlement of the sale is 30 August 2012.