Belize’s sugar exports netted the country $30 million less in 2010—a year of major upheaval in the industry—than it did the year before, and indications are that the Belize economy lost millions in production and export earnings in the period spanning December 2013-January 2014, when the start of the crop year was delayed by almost two months.
The country is grappling with a similar situation this year. In fact, the 2012/2013 sugarcane season was the last crop year to start early. It began on November 28, and according to information published by the Central Bank of Belize, deliveries up to the end of December 2012 were 40.2% higher than those of the corresponding period of the previous crop year. That crop year ended with Belize garnering $107. 4 million in sugar receipts from the export market.
We were unable to get more current data on annual export earnings for sugar from our data sources. However, we were able to glean some information from monthly economic reports published by the Central Bank of Belize.
These reports indicate that export receipts for December 2013 and January 2014 were nil because Belize could not export any sugar for those months.
Meanwhile, earnings were down roughly 55% for the first two months of 2014, when compared with the same period the year before. According to the official data, while Belize earned $17.3 million between January and February 2013, it earned a mere $7.8 million from January to February 2014, when the crop started late.
Today, we could not get any official data on projected losses due to current delays in the start of the 2014-2015 crop, but it is clear that if the current situation persists, Belize could be reporting nil export earnings up to the end of January 2015, as it has for the past month, December 2014.
We contacted the Central Bank to find out the extent of the country’s economic loss due to the delay in the sugar crop—the opening of which has been stalled for the past 5 weeks due to an impasse between farmers, under the umbrella of the Belize Sugar Cane Farmers’ Association, and the miller, the Belize Sugar Industry (BSI), a subsidiary of American Sugar Refining (ASR)—but they told us that the question is a tough one to answer.
In a reply to our question this evening, Central Bank Governor Glenford Ysaguirre said that there are many factors that can affect sugarcane production and quality, and hence determine what Belize actually earns from the domestic export.
Belize does earn substantial foreign exchange from sugar, but Ysaguire explained that foreign exchange losses would depend on the amount of sugar that would not be ground because of the late start to the crop. This, he said, would depend on the length of the grinding season. However, the length of the grinding season is dependent on the weather and the amount of sugarcane in the fields.
According to the Governor, the Sugarcane Production Committee estimates 1.4 million long tons of sugarcane for the crop year, but BSI estimates 1.1 million long tons.
“There is also a question about whether BSI has the existing capacity to grind 1.4 million tons of sugarcane, as it is unknown if BSI/ASR did any material factory expansion to accommodate a larger crop,” he explained.
Artemio Osorio, Budget Director in the Ministry of Finance, said that the impacts of the delay on government revenues are not as substantial as the impacts on Belize’s balance of payments position. He indicated, though, that the delay would erode government’s foreign reserves, but added that reserves netted from the sale of Venezuelan fuel under the PetroCaribe initiative would help to buttress Belize’s economic stance.
According to Osorio, the cañeros mostly don’t pay income tax and BSI, under its new ownership, has been granted a range of tax-exemptions.
Ysaguirre said that export tax on sugar is BZ$11 per ton and this goes to fund the Sugarcane Industry Control Board, but the government doesn’t really get any other direct receipts.
Amandala had a chance to review aggregate sugar export data since 1980, and the accompanying graph shows the years when earnings were high and the years when earnings dipped. Our summary below focuses on the most recent years:
The Central Bank’s economic report said that the 2013/2014 crop year, one of those low years, commenced on 24 January 2014, approximately two months after the customary start date of operations.
It noted that incessant rainfall had prevented harvesting and damaged delivery roads. At the same time, farmers and the factory remained at loggerheads over bagasse payments, which, after extensive negotiations, are enshrined in the new draft contract which the company wants the farmers to sign in order for the new crop year to commence.
“For the 2013/2014 crop year, the Sugarcane Farmers Association determinedly pushed the issue of payment for bagasse and threatened that deliveries to the processor would only commence after agreement on payment was reached. With adverse weather pushing the opening of the crop into January, both parties eventually agreed that the bagasse negotiations should not cause additional delay to the harvest,” the Central Bank report noted.
“Consequently, with only eight days of operations in January, deliveries for the crop year were down to just 54,726 long tons versus 386,132 long tons in the comparable period of last year [2012/2013],” said the report, adding that the low production was exacerbated by lower sugar quality caused by the rains.
“During the month, there were no exports of sugar and molasses due to insufficient export volume,” the Central Bank report said.
In January 2012, Belize’s sugar exports netted the economy $8.4 million, but that figure fell to $1.3 million in January 2013 – a decline of over 80%.
For the years 2012-2013, the country’s annual export earnings from sugar stood at $107.5 million, up from $90 million in 2011 and $59 million in 2010, when the industry faced substantial delays due to problems with bringing the bagasse cogeneration facility online at BSI. Although BSI had promised to catch up on milling, the delay meant a loss in cane quality and lower production of sugar from the cane supply.
Cane farmers had claimed a loss in January 2010 of roughly $4 million. In late 2010, the Government had to disburse a $10 million bailout loan to BSI in order for the company to meet third payment obligations to cane farmers.
The 19% dip in sugar receipts in 2008 were due to major flooding, which affected cane quality and production.
Cañeros to sign “with a heavy heart”
Certain observers of the current sugar industry conflict between the Belize Sugar Cane Farmers Association (BSCFA) and the Belize Sugar Industries (BSI), which is owned by American Sugar Refineries (ASR), the largest sugar refining company on the planet, have classified the latest developments within the industry as a “dark day” for the local cane farmers, since many have buckled under pressure due to correct circumstances, and have decided to disregard their aspirations for a better deal, and to sign a new commercial compromise agreement that they recently chose to bypass at a BSCFA Special General Membership meeting only a week ago, on Sunday, January 4.
The situation has reached the point where even a legal battle has now ensued between the Government of Belize (GOB), which is also a part shareholder in the industry, and members of the association who believe that the state-run Sugar Industry Control Board (SICB) has the power to open the sugarcane crop season in the absence of a signed agreement between the growers and the millers.
Since Prime Minister Dean Barrow, at a press conference last Thursday, appeared to be washing his hands of the BSCFA when he announced that he would support a move by large growers to form their own association to bypass that entity, there is word that the many cañeros, who all have different commitments to meet, are on the verge of caving in to the conditions of the agreement, and signing with the multinational to start delivering their cane in order to preserve their jeopardized livelihoods.
Amandala spoke with PUP Orange Walk South area representative, Hon. Jose Abelardo Mai, who is also a cane farmer, at a PUP press conference which was called to address the sugar dispute today, and he told us that with no viable alternative in sight at this time, the farmers are now compelled to bite the proverbial bullet, but with “heavy hearts” and many reservations.
He said, “It is with a very heavy heart that you go and sign your name. As a matter of fact, I almost signed yesterday, but after doing some reflection, I said, ‘No, I will sign, but after I have made my statement very clear – I am unhappy’, and I share this feeling with many farmers, and if we have to sign, it is with a heavy heart that we have to sign.
“I don’t see the signing process being complete by five days, and I don’t see the crop starting within the next ten days even if the weather improves. I don’t know what the future holds for us – I wish that we could at some point continue the negotiations to see if the farmers can derive their equitable benefits, but it is difficult to say at this point.
“I think the important thing right now is to start the crop and to allow the farmers to deliver their cane. There is 1.4 million tons of cane [in the fields] and I don’t see how it can be delivered given the short time [that we have to deliver] and the time we have wasted.”
On Friday, we reported that the BSCFA Committee of Management had called an emergency meeting with its 18 branch directors so as to have them take a survey of their members to discern whether the cañeros want to go ahead and sign the agreement in the face of their apparently insurmountable challenges.
While we note that no signing has taken place as yet, earlier today, BSCFA CoM Chairman, Ezequiel Cansino, said that they were awaiting the reports from the branches in order to get a consensus as to where the general membership stands, and late this evening, Orange Walk branch chairman, Alfredo Ortega, informed us that there will be yet another meeting tomorrow, Tuesday, at 9:00 a.m. at the BSCFA’s headquarters in Orange Walk, to review the results and make a final decision in regards to the signing of the disputed new commercial agreement.
In related news, we understand that starting today, the BSCFA has initiated the disbursement of the $4 million in Fairtrade funds, via cheques, to the different branches in accordance with a controversial resolution that was passed at the January 4 Special General Meeting where a majority of the general assembly voted to apportion among themselves monies that had been allocated for other initiatives, in contravention of Fairtrade regulations.
The move, which was borne out of desperation on the part of the farmers, most of whom are suffering heavily financially, will certainly come back to haunt the reeling association, which may not only face possible suspension or decertification from the European-based welfare program due to the unsanctioned use of the funds, but might also face the risk of a complete collapse due to bankruptcy.
(The Following is the submitted view of Mr. David Madrid, former CEO of the Belize Sugar Cane Farmers Association (BSCFA) on the current impasse in the Sugar Industry) :
The situation with BSCFA/ASR BSI started back in 2010. That's when negotiations started. Looking back, I was the CEO of the BSCFA. Mr. Ortega was the most influential Director, bar none. He personally convinced the directors to give then Oscar Alonzo $ 20,000.00 to negotiate the commercial contract along with the bagasse. At that time, I submitted the 2010 budget for administrative/operational in the amount of $760,00.00, accepted by the farmers.
The 2013/14 budget in the amount of $2,600,000.00 also was approved of. Mr. Alonzo took the money and never did any type of negotiations. Mr. Ortega pushed for the termination of myself and I took the BSCFA to Court where only Mr. Ortega and one other Director testified against me. The Supreme Court found that I was an excellent CEO and in fact the COM was mad with me because I did not allow any type of dishonest activities.
That brings us to Fair Trade. Even with the embezzlement of over $70,000.00, child labor in the fields and other violations, the administration has approved two disbursements of $6,500,000.00 directly to farmers, in clear violation of Fair-Trade. The directors and Administration new this would be a major compliance issue with fair trade and would lead to decertification of funds. Remember that fair-trade has dispersed $55,000,000.00 to the BSCFA and thus to the economy of the North. It's not just the farmers who will be hurt with the decertification but the entire north.
Now this brings me to the political interference. The most important part of negotiations should be the fact that it does not affect the farmers from starting the crop. Negotiations have to take place during off season and have to be completed before crop. As I see it, you cannot penalize the farmers based on a few PUP radicals. Crop needs to start; that's the bottom line.
The PUPs are actually conducting themselves in bad faith. At this time it is very clear to me that the interest of farmers is not paramount. The entire North is affected. This is very clear to all. The contract needs to either be signed or groups must commit themselves to delivery. The BSCFA does not need a special meeting anymore, because fair trade is done with the BSCFA. Therefore you have the authority to sign and would probably save the BSCFA from self-destruction. It's time for cool heads to take over.