Sugar cane farmers have been dealt a crippling, and completely unexpected blow by Tate and Lyle sugars, a member of the ASR group. The terrible news came by letter dated August twenty-sixth – one day ago – and is broken down into bad news and worse news. First the bad news…the company informs the B.S.C.F.A. that it will be purchasing only ten thousand tons of sugar under the Fairtrade agreement. The letter cites market forecasts. For the sake of comparison, last crop Tate and Lyle purchased sixty-five thousand tons. Farmers, through the B.S.C.F.A., receive one hundred and twenty Belize dollars per ton of Fairtrade sugar…so do the math. Last year, farmers received seven point eight million…this year they’ll receive one point two million. As we said, the news is unexpected and the B.S.C.F.A. is reeling, and today Vice-Chairman of the Committee of Management Fred Ortega told us this position by the company will be disastrous for the association and disastrous for the industry.
Alfredo Ortega, Vice Chairman, Committee of Management
“In regards to the association it will really have a negative impact because that means that with this amount there will be a reduction in our staff, so that means that many people will have to go home and that means that they won’t have any job with the association anymore. In regards to the industry it really will create a situation in the industry because there will be a reduction in finances that have been used for industry development in regards to production and other situations within the industry so it will really create a negative impact to the association and also in the industry and by extension to the country of Belize. This is something that I cannot believe one hundred percent is because of the market. Because since we have been Fairtrade certified the least they have purchased from us, well sugar from Belize under the Fairtrade umbrella has been fifty-thousand tons. When we just started then the first two years, we sold all our sugar under the Fairtrade umbrella, and thereafter they certified Fiji and then Guyana and Jamaica, and that brought us a reduction in regards to the amount being bought from us, but there was an increase last year to sixty-five thousand tons, so coming onto this year to ten thousand tons is really something that is unbelievable, even though we know that the market plays an important role in this issue, but I think going way down to ten thousand tons is very low.”
New Schedule for Fairtrade Payments
That was the really bad news, but it gets worse. Traditionally farmers received payment for Fairtrade sugar when it was received by the company. But that’s not happening this time. The letter from Tate and Lyle informs the B.S.C.F.A. that payment will be made not when the sugar is received, but when the sugar is sold to customers in the E.U. That’s insult to injury where cane-farmers are concerned. The B.S.C.F.A. is withholding very point commentary until after a meeting to be held with branch chairmen in Orange Walk on Thursday, but Ortega did tell News Five that this new schedule of payment is another crippling blow to farmers.
Alfredo Ortega, Vice Chairman, Committee of Management, B.S.C.F.A.
“That is also another situation Mike because they have placed here that they will changing the payment scheme. Usually they paid us thirty days after the sugar had arrived at the port in the EU. Now in this letter they are saying that they will pay us based on sales after it is sold to the customers, so it will really harm the situation because it means that payments will be coming in one year, two years or three years after we have sent. So that will really have a negative impact on the whole situation of the Fairtrade certification.”
“Do you feel that this will destroy or at least seriously harm the relationship which has been fostered between the farmers and the mill?”
“Well I think that it will have an impact but as you know we need the mill and the mill needs our cane, so we have to see how we can cope but is really a slap in the face, this situation Mike…I don’t really want to go into further details on this thing because there are a lot of things that could be said but I will wait until after the meeting of tomorrow.”
News Five spoke to several major players in the industry today, and there is consensus that the ASR owned Tate and Lyle is punishing the farmers for their agitation and reluctance to accept B.S.I.’s bagasse payment proposal. News Five attempted to get comment from B.S.I. today, but were told that executives were busy in meetings.
Channel 5 <>P>
Tonight, there are concerns coming from cane farmers in the north following a letter from Tate and Lyle, the British company a major purchaser of Belizean sugar. According to the letter, in the next sugar crop, they stand to lose 83% of their revenue from that overseas sale.
Tate and Lyle wrote to the Cane Farmers Association two days ago informing them that starting with next year's crop, the company will only buy ten thousand tonnes of their sugar under the Fair Trade Agreement - usually they buy fifty to sixty thousand tonnes.
The reason put forward is that market forecasts for the sale of sugar are down, and that there is not the same type of demand as there was in the past. For the farmers it means that they stand to lose $5.7 million dollars. So, the association held an afternoon meeting with all of the 18 branch chairmen to inform them, and to seek their input on a course of action.
The Vice-Chairman of the Committee of Management of the cane farmers association explained to the awaiting media what this loss will mean for the cane farmers:
Alfredo Ortega - Vice-Chair, COM, BSCFA
"The letter we received from the very beginning is that they will be buying from us not less than 50,000 tons of sugar and at that time, as you know Belize was the first country that was certified for sugar or sugarcane and we were used as the pilot projects in the first year. For the first 2 years we manage to sell more than 70,000 tons - what we produced was sold and then they certified other countries like Fiji on which a reduction of sugar under fair trade umbrella from Belize came. But we were not less than 50,000 tons of sugar sold to them. Last year we received an additional letter that they will be buying 10,000 tons more, which took it to 60,000 tons and we have some visitors from the US that they compromise themselves to buy 5,000 tons of sugar. So that brought it up to 65,000 tons for this crop that just ended. This 10,000 really came to a surprise to us so immediately."
"It's a huge loss. Last year we got 6.9 million Belize dollars and it was only 60,000 tons that was sold. This year what have proposed to buy from us was 65,000 tons; 60,000 tons to the EU and 5,000 tons to the US, so that is what we will be getting this year. But for this upcoming crop the 2014/15 crop is where they are saying that they will only be buying as a minimum 10,000 tons, so it's a very huge reduction from 6.9 million to almost 1.2 million, the difference is very huge and it will definitely create problems within the organization."
"We were receiving in the vicinity of 6 million Belize on which that at least gives us an opportunity to cover and also to comply with the standards of flow. That money, a good portion of it is being use for us to comply with the flow standards because as you know they have some heavy standards that we have to comply with; the use of agrochemicals, environment, child labor and administration - many things that they have that we have to comply with and many of these funds is being use for us in compliance of these different programs and also these funds are used in granting help to the farmers in regards to agrochemicals and other programs that they put on board. Also we have social programs in which we have been helping the education sector, infrastructure and healthcare, medicines and so on. With this reduction it means that many of those programs that we were contemplating before, we won't be able to do so and that means that many of our staff at this point we will have to come to cut in regards to staff because of this situation."
It's tricky because Tate and Lyle is owned by American Sugar Refineries, which is the same company that owns BSI - and BSI is locked in a dispute with the cane farmers about a price for bagasse.
The suspicion is that this is some ploy to pressure the farmers into accepting the bagasse payment that BSI has proposed. As you may know, the farmers have firmly rejected that offer. The negotiations into the bagasse issue remains stalled, and so is the negotiation for the commercial agreement for next year's crop. This afternoon, we tried to get BSI, Chief Finance Officer, Belizario Carballo, for comment, but his secretary told us that he has been in meetings with visitors to the mill all day, and that he will be unavailable.
We'll keep trying for tomorrow's newscast.
Getting back to that letter, Tate and Lyle also informs the farmers that their payment schedule for their sugar will change. Instead of being pre-paid based on an estimation, the farmers be paid only after Tate and Lyle has sold all the sugar to their customers in the European Union.