Banner Year for Sugar Production
The sugar crop got off to a rocky start but it is surely ending on a sweet note. This season, sugar production peaked to over one hundred and forty tones. The other good news is that there is also a record second payment which will have farmers fetch over twenty-one cents per ton of sugar as final payment. There are many good reasons for the bumper year, but weather conditions helped along the way. News Five’s Isani Cayetano reports.
Isani Cayetano, Reporting
A banner year for sugar production, despite getting off to a rocky start earlier in the season due to a deadlock in negotiations between cane farmers and millers over the proceeds of bagasse. That’s the state of the industry in very few words. While the present situation remains stable, there is much to look forward to at the end of the 2014/2015 crop. After all, it has been a record spell for everyone involved.
Belizario Carballo, Chief Financial Officer, ASR/B.S.I.
“Indeed it was a very good crop, a record in many respects; one, in terms of sugar produced. A hundred and forty-two thousand tons of sugar which was above the previous record of a hundred and twenty-five [thousand tons]. So that was, I think, the highlight of the crop and although we could not perhaps mill all the cane that would have probably been available because of the late start, we still were able to grind more or less the same amount of cane that we did last year.”
The bumper crop, according to Ezequiel Cansino, Chairman of the Belize Sugar Cane Farmers Association, is primarily attributable to good weather. Notwithstanding suitable climactic conditions, farmers were unable to harvest all of what was planted.
Ezequiel Cansino, Chairman, B.S.C.F.A.
“At least eighty percent will be delivered of our production based on the estimation that we were given in November. Well, we had good weather which allowed us to have good quality cane. Also, the efforts of the cane farmers who did their best on the quality system which they managed the harvesting much better and we got or we ended up with good quality cane this year.”
The value of the overall yield will see farmers benefiting from better prices on the foreign market.
“We also had a year of good prices, you could say, in terms of the contracts we had signed. Unfortunately those contracts expire this year in terms of the price itself, the prices that were fixed for this crop. Beyond this crop we will be more exposed to the EU market price which have fallen considerably from the prices that we had previously contracted at. So this crop, in a sense, is the last crop at those contracted prices that were above current market prices in Europe and we also had an opportunity this year to sell to the U.S.A. market. We also had the opportunity to sell direct consumption sugars into Europe as bagged sugar.”
Payments to farmers will be defrayed in three tranches, the second installment to be disbursed next Wednesday.
“On the second payment which will be given on the twelfth, Wednesday, we are seeing that the test groups will be getting a good second payment but it is not necessarily what we were expecting. We were expecting at least two more dollars. But anyway, it is very good and I believe that the first test group which is the highest in quality will be getting about twenty-three dollars, if I’m not mistaken. The lowest one will be receiving, I think, eighteen dollars and it’s very good for the cane farmers even though it would be much, much better if we would have delivered all our cane.”
“This year, the cane price estimate for second payment is seventy dollars and forty-five cents which is an improvement over last year’s final price of sixty-seven dollars and fifty-two cents. If we would have started earlier we’d have had an opportunity to have a more regular season and it’s hard to say what would have been the effects of having done that in terms of the quality of cane in the field, what we would have received at the mill. Certainly, in terms of quantity, we would have been able to mill more cane because this crop we went for twenty-four weeks which was similar to last year of twenty-four weeks.”
Cansino agrees that had they begun harvesting earlier farmers would be realizing greater profits from their production.
“If we would have started the crop in December we would have delivered more cane and maybe yes, we would have cane left in the field but it would be much less than what we have right now.”
“Now I understand that [Sugar Industry Research & Development Institute] has commenced a survey to determine more or less how many acres of cane remain.”
“Yes, today they started to survey and verify the cane fields that were reported that were left and maybe by two months let’s say we’d have an exact number of how much production was left in the cane fields.”
That estimate would give farmers an idea of how much additional revenue could have been generated from their cane fields. Reporting for News Five, I am Isani Cayetano.
Are Caneros Prepared for Changes in Sugar Prices Come 2016 Season?
While cane farmers are enjoying the fruits of their labor for a bumper crop this season, come 2016 things will get a lot tougher, as sugar exported to the international market won’t be sold at preferential prices. It is a significant change that the Belize Sugar Cane Farmer Association is bracing for and projections for the next crop are fairly high in order to meet the demand for sugar and maintain competitive prices. According to Chairman Ezequiel Cansino, a system will be implemented to deal with the transition from Fairtrade prices.
Ezequiel Cansino, Chairman, B.S.C.F.A.
“We are expecting from the cane farmers for next crop good quality cane…of course we will keep with that. And we hope that we start as cane farmers try to do our best to lower our costs because it will definitely…everybody is predicting that we will have a huge reduction of the price. But if we do keep our quality and start to implement practices to increment the yields of acre, I think that we will survive this…the hard times that is coming in the future.”
“Mister Cansino is there anything else that you may want to mention that I am overlooking in this interview?”
“Well we have been saying that this year is a record one, but history and cane farmers have been telling me that in the seventies there was at least two years that these prices came—and I think it is more than this that we are receiving today. But from then until now, we have been doing better every year and I hope that by keeping our best practices of harvesting and the good quality, we will be able to mitigate the reduction of the price for this…at least for the coming years.”
Farmers to receive $25 mil in record sugar payment
Belizario Carballo, Chief Financial Officer of the Belize Sugar Industries (BSI), has indicated to Amandala that this year has proven to be “a record for as long as we have been in the sugar business…” in more ways than one.
BSI is projecting that roughly BZ$25 million will be paid out to cañeros next week, based on a total crop value of an estimated BZ$82 million and a record second payment, adding to the gains they will receive for a better-quality cane crop this year.
Carballo confirmed that not only is there going to be a record second payment for sugar, but the industry also produced a record amount of sugar—shattering the record 125,000 set in 1997. Last year, 123,000 tons of sugar was produced.
According to Carballo, there are about roughly 27,000 tons of bulk sugar and 10,000 tons of bagged sugar in storage, as well as roughly 10,000 tons of molasses in the store.
Farmers, who receive payments in three installments, get 65% of what is termed the net strip value, which is derived from a formula that considers the expenses incurred in the production, distribution and sale of sugar on both the local and export markets.
Carballo said that BSI had a contract for sale of sugar to the EU which had prices locked in for three years at a minimum of 425 euros, but prices are now trading on the EU open market at 100 euros lower today.
“For some time, we struggled with cane supply being down, and it was a bit of ups and downs. This year, we really had a good combination of cane quality [as well],” he said, adding that it had also reached a record of 8.35, which is the amount of cane it took to make one ton of sugar – much more efficient than the tons cane per tons sugar (TCTS) of 9.66 reported for the previous crop year.
Carballo told us that despite the late start in the crop year, which commenced late in January for a second consecutive year, they have milled almost the same amount of sugar as last year, minus about 60,000 tons.
This year, BSI milled 1,186,000 tons of cane. Carballo explained that the first payment for the cane delivered is made during the week of delivery, and that payment was roughly 80% of first estimated price ($53.55) or $42.84. Since the new price is quoted at $70.45, farmers should receive what amounts to 91% of that, or roughly $64 per ton of cane. They received $42.84 at first delivery, and the balance due, on average, is $21.27. The remainder to make up 100% of payments is due in the first week in November.
While the average second payment to be issued next week amounts to $21.27, farmers, who were assigned to 19 test groups, will receive varying payments based on the quality of the cane delivered.
This means that farmers belonging to the newly formed Progressive Sugar Cane Producers Association (PSCPA), from the areas of Patchakan Village and Louisville in the Corozal District, and San Lazaro and Douglas Villages in Orange Walk, will receive the highest payment at $23.41. The lowest second payment to farmers will be $19.23 per ton of cane delivered.
In addition to receiving payment for sugar, farmers will also receive payment for bagasse, under the co-generation franchise operated by BSI.
Those payments, said Carballo, are also expected to be higher than the $597,000 paid to farmers last year.
However, the Chief Financial Officer cautioned that beyond this crop, the industry will become more exposed to world market prices, which are already showing a dip of about 30%, signaling that there are going to be some financial challenges on the road ahead.
“It is not as if everything is nice and rosy in sugar land,” Carballo said.
Carballo noted that the landscape of the sugar market has been changing and a price fall-off is anticipated next year.
Currently, the vast majority of Belize’s sugar export goes to the EU, although some is sold to the US market.
“Generally, we sell wherever we can get the best price. [The EU] has traditionally been the place where we get the best price but that might change,” he said, adding that the EU, nonetheless, is likely to continue to offer some premium for Belize sugar.
According to Carballo, market changes were anticipated for October 1, 2017, when EU beet production restrictions are due to be lifted, triggering an increase in production of sugar derived from beet in that jurisdiction – which would, in turn, have an adverse impact on market prices. However, he noted that price changes anticipated then are already coming on the horizon, perhaps due simply to supply and demand factors.
The industry urgently needs to craft a strategic development plan, but they are behind time, Carballo said.
The development of that plan rests in the hands of a multi-sectoral, industry-led committee, dubbed the Strategic Development Plan Steering Committee, which met last week. That group, said Carballo, is headed by Jose Alpuche, the chief executive officer in the Ministry of Agriculture.
Although farmers were calling for a further extension in the crop beyond Sunday, July 12, Carballo said that BSI could not extend the season any further because it must undertake factory maintenance and complete $7 million worth of capital projects before the new crop year—which he hopes will begin on time this December.
He said that there are 4 projects planned for the coming months: the installation of (1) a new cane dumper, which would bolster its offloading facility to move cane from the delivery trucks; (2) a new cane yard control cabin, to improve the feeding of cane into the mill from the offloading points; (3) two additional cane juice heaters, which will add clarification capacity to the mill; and (4) a new bagging line to enhance their ability to bag more sugar in 25 or 50-kg bags.