BSI’s ten million dollar payment to cane farmers on hold

Heading north, it’s the time of year when cane farmers receive a second payment for cane deliveries or a bonus from the Belize Sugar Industries Limited (BSI). This year farmers are scheduled to get ten million dollars. But there is disquiet because the payments from BSI should be paid on November ninth, but those cheques will not be made. BSI is currently strapped and in the middle of a review being conducted by two international banks. BSI’s finance director Belizario Carballo, in a letter written to the chairman of the management committee of the Belize Cane Farmers Association, said that the delay is regrettable. Carballo explained the delay also highlights the increased financial risk attached to poor crop results and the need to implement necessary changes. In an interview via phone, Carballo said that they hope to have the ten million dollars by the end of next week.

Jose Sanchez
“How much money are we talking about?”

Via Phone: Belizario Carballo, Finance Director, B.S.I.
“It’s close to ten million Belize dollars in total. We have a method of payment to farmers where they get the first payment at the time of cane delivery, second payment five weeks after they get the crop ends and third or final payment the second Monday in November. That would have put it at this Monday, ninth of November when that payment was due. Unfortunately, we are not in a position to make that payment given that we have not yet finalized the renewal of our financing with ING and FCIB banks for us to make the financing arrangements, to make the payment on Monday. We have formally written the cane farmers association yesterday on this matter. We have indicated to them there were some previous difficulties, a potential delay. We have confirmed that position yesterday. We are still hopeful that we will be able to make the payments next week, but that is yet still subject to confirmation and that is not something we have full control over. We are subject currently to the approval and documentation process of two separate banks.”

Jose Sanchez
“Was this issue about the banking arrangements something that you anticipated or did it come as a surprise?”

Via Phone: Belizario Carballo
“No, it’s not a surprise at the same time it’s something that almost the same thing happened last year. We had a similar delay in payments because we had a delay in approval of our financing facility. Unfortunately, last year we were caught up with the financial crisis and the very difficult banking environment that emerged around October time. This year the conditions externally still prevailed. It’s still a very difficult banking environment and unfortunately we were all caught up in that in terms of the banks scrutinizing and their risks assessment and everything is increased. We are unfortunately currently subject to an annual review of our financing facility. So it means that every year we have to go through a process of approval.”

Carballo says the banking arrangement allows BSI to meet cane payments irrespective of sugar revenues. So even when revenue from exports aren’t received, BSI should in theory be able to pay farmers.

http://www.channel5belize.com/archive_detail_story.php?story_id=25772

Cane Farmers receive Final Payent

Cane Farmers today received their final payment for the 2009 crop. The payment which was to be received on November ninth was delayed by the Belize Sugar Industries Limited. According to BSI their new financing facility with ING and FCIB Banks was not fully in place and negotiations with their bankers have been increasingly difficult given the poor crop result for the past three crops. Today those payments were received. According to Financial Director at BSI Belizario Carballo, the final average cane price for the 2009 crop which is $67.14 per ton is record payment for the crop year.

Belizario Carballo; Financial Director, BSI

"It was in fact the last year of the higher EU prices before the full 36% price cut kicks in. In term of pricing of sugar that we sell to the EU market which still the only market we have beneficial access to. Next crop we do a significant reduction in prices. It is 335.2 Euros per metric ton. That is the new price level that any sales to the EU market will now attract. One of the benefits is that that price is going to be in place for the next few years; up to 2016. It provides us security of pricing up to that time. The other benefit is that under the EPA arrangement Belize can also benefit from additional market access into the EU. The additional market access provides us with a basis for planning against the adverse affects against the price cuts."

Chairman of the Management Committee of the Belize Sugar Cane Farmers Association, Eric Ek says the farmers received a good price for their crop this year because they have been doing their share of the work.

Eric Ek; Chairman of the Management Committee, Belize Sugar Cane Farmers Association

"Well I think that most of all it is the farmers that have given their effort. They have put all their effort into delivering good quality cane to the mill. I think that this is as a result of good organization on the part of the farmers who have been delivering good cane to the mill. That is why we have a good price this year. We have a good pay because of the work that farmers have put into the cane field. The association is going through a big reform whereby we are getting the team professional working for the PSCFA and we are going to get technical support to the farmer. I think that that is a huge step that we are going to start with so that farmers know exactly how to cultivate their cane so we can manage to get good prices even though we have the 36% cut for this coming crop. I think that it is just a start but in the near future I think that we are going to see the results of all the work that the PSCFA is doing to make a more viable industry for Belize."

After adjusting for payment already made, the third and final payment per ton of cane sold to BSI is $11.14 for Corozal and $11.54 for Orange Walk farmers.

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Cane farmers battle it out in court

Also in the Supreme Court, the case of the breakaway cane farming group, United Cane Farmers Association (U.C.F.A) came up before Justice Oswald Legall. That association is still seeking to find a way to legally move forward in an industry that has been dominated by the Belize Cane Farmers Association (B.C.F.A.). The solicitor general and Marcel Cardona appeared on behalf of B.C.F.A.; Young’s Law Firm for Belize Sugar Industries and Hubert Elrington appeared on the behalf of U.C.F.A. Elrington says that there has been enough adjournments and it’s time to get the industry reorganized and moving in the right direction.

Hubert Elrington, Attorney for U.C.F.A.
“The United Cane Farmers Association is saying there is enough adjournments and enough delays. We are asking the judge to grant us certain orders and declarations, which we will be doing this week right here. If we are able to obtain those orders and declarations, I think it will create a situation where all sides will have the time they need or they say they need to reorganize the industry. Everybody is saying, the other side is saying the law is in several respects, unconstitutional, it has to change. But so far we have not been able to come up with the formula to get the new law into place.”

Jose Sanchez
“These cane farmers need to work. How long will it be before United Cane Farmers actually do the work they set out to do?”

Hubert Elrington
“We are hoping that by once the orders are in place that we seeking, everybody will be able to work quite comfortably. And move and organize and do what they think is necessary. So we were really optimistic that this will produce the kind of breakthrough that will allow all parties to move forward.”

http://www.channel5belize.com/archive_detail_story.php?story_id=25808