AmbergrisCaye.com Home Forums Belize Life News Second Payment for Sugar Cane is Low

B.S.C.F.A. Says the Industry is in Crisis

The final price for sugar is in and the estimated value for the 2017-2018 crop is not sweet news for farmers who will be paid an estimated forty-five dollars and forty-seven cents per ton. That's the figure released today by American Sugar Refinery/Belize Sugar Industry to the three cane farmers' associations in the north. For the previous crop, farmers received approximately fifty-three dollars per ton of sugar cane taken to the mills. The new estimated price will now see farmers get a second payment of between three dollars and ninety cents and six dollars and thirty-four cents per ton when compared to last year when they received over eleven dollars. Back in April of this year, B.S.I. reps reported that the estimated average cane price for the 2018 crop is forty-one dollars and sixty-nine cents per ton of cane. While the estimation is slightly higher, the final price is not sitting well with farmers, who say that the value for the crop threatens their livelihoods and could force them to lock up shop and exit the industry. Belize Sugar Cane Farmers Association Branch Chair, Alfredo Ortega, explains.

On the Phone: Alfredo Ortega, Branch Chair, B.S.C.F.A., Orange Walk

Cash Crisis In Cane Country

Tonight, cane farmers in the north are saying that they’ve received “a terrible blow” with what is known as the “second payment” for sugar.  

As might have been expected, with world sugar prices crashing, the payment is very low - and farmers are saying they won’t be able to pay their loans, and may have to abandon the industry.

It’s a cane crisis all right - and today our colleagues at CTV-3 heard from both the millers and the producers - here’s what they had to say to each other about the prices and the future:…

Fred Ortega - Chairman, OW Branch, BSCFA
"This information came in yesterday, it came in with a lot of surprise because as you rightly said the lowest group is getting 3 dollars and 81 cents which is a test group of BSCFA group number 10 and the high is CGPBSI getting 6 dollars, a little bit over 6 dollars. On which it's very hard for us as farmers at this point in time because many things that happened, many farmers are in debt with a commercial bank and some of us is in debt with our own association in regards to herbicides and materials that we have gotten. So really what is coming on right now for the different test group as a second payment is really harmful, really hurtful to us as farmers and in many ways it’s very hard to accept on what is going on at this point in time."

Mac McLachlan - VP, Int'l Relations, ASR
"Well frankly I don't think it should be quite such a surprise. The sugar as we've been saying for a long time now is a global market, it relies on global pricing. Since October last year the preferences we use to enjoy in pricing in the European Union disappeared overnight due to changes in the EU regime; been talking about that now for the past 3 or 4 years, ever since that time was established, that timeline."

Reporter
"The reality of the situation is that when it comes to the price of sugar in the preferential market in the world market, it has seen a huge reduction due to the competition of beet sugar now. That is the defence they are going to be using of why we saw this huge reduction, it was expected. What do you think about that?"

Fred Ortega
"Yes that has a situation, we do know that has certain things to do with this but we don't believe that our sugar should go too low as is at this point in time. Why is it that we don't believe - because sugar from sugar cane is much better than sugar from beet."

Mac McLachlan
"Now what I can say is that due to prudence and investment we've made here that's moving as everybody knows towards higher added value products we are able to maintain a price that is higher than it would have been - if it was just based purely on raw sugar as it used to be the case."

Fred Ortega
"The time is calling now that a committee needs to be set where there is representation from BSI or ASR, from the production sector and also from government on which that should be named the marketing committee so that we have a committee and as farmers we can clearly see that negotiations are being done in a transparent way. At this point in time where it is, as is, we don't have any confidence that things are going that direction. So for us to survive and for this industry to really take the step that we are looking forward, there needs to be a really strong negotiation amongst ourselves, amongst the miller and the government included into this. So all 3 of us need to come together to a table and we look forward into how we can reduce cost in all angles possible in our side, the side of the millers and also how the government can help us in regards to the infrastructure, the roads, all the necessities needed for farmers that transport their material faster to the mill."

Mac McLachlan
"For me in the cane farm it's 2 things. One is reducing the cost of the production sugar but it’s also how to maximize the revenue that you get for your sugar cane by improving the productivity of land but on less land, so that you're putting in less inputs and receiving more revenue and those are the 2 keys to improving the financial position for cane farmers."

Fred Ortega
"What can be moved, what can be done because the way things are going, it is ditching out farmers out of the industry."

Mac McLachlan
"It’s not a pretty picture and we all accept that, it’s not a pretty picture for any sugar manufacturers in the world. We would say that no sugar manufacturers can produce sugar at the cost of the global pricing at the moment. I'm sure that industries are suffering all over the world and in times of adversity like this, I think it’s incumbent on all of us as an industry to look at how we can improve our efficiencies and improve our strategies so that we can survive these hard times in the knowledge that as a cyclical commodity market, prices will change in the future as they always do."

The Corozal Sugar Cane Producers Association sent out a release saying, quote, “most (farmers) could face losing their opportunity as a stakeholder of the industry…the present extremely low sugar cane price…could take them into the likely extinction and their livelihood destroyed as a farmer and as a stakeholder of the industry. 

Channel 7

Cane farmers Say Fine Print On Cane Price Breakdown Is Troubling

For a week now, we've been reporting on the fallout in the sugar industry after the very low second payment for the sugar crop came in.

And many are looking to ASR/BSI - because they suspect the multinational isn't being completely on the level in how it calculates the payment for sugar.

And, doubters have seized upon a shipping term - which they feel shows that ASR/BSI is shorting them. The term is FAS - it means "Free Alongside Ship"- and according to internet sources, that means the buyer is responsible for paying the ocean freight. The buyer in this case would be Tate and Lyle in the UK.

But, in their breakdown of costs that ASR/BSI sent to farmers, it says that for the 95,000 tonnes of raw sugar sold to Tate and Lyle, it has an average "FAS" price of 526 dollars per tonne.

But then, the price breakdown shows 11 million dollars charged for ocean freight. That's a huge red flag for some farmers- because right there in the report it says that it's an FAS price per tonne, which they take to mean, the buyer, Tate and Lyle should be paying the ocean freight.

It seems technical - but 11 million dollars is nothing to laugh at. Today, a senior representative in the ASR/BSI finance said it is all a misunderstanding. They say the raw sugar is sold under what is known as a CIF contract - meaning ASR/BSI has to pay Ocean freight. So why use the term "FAS"- which means just the opposite? The company rep said, quote, "it's a term we use too loosely - it's been there forever and ever - it hasn't been changed - we have to change it to better describe everything." End quote. He says the company simply uses the term to describe the build-up of all the costs that they have to pay out, from stevedoring, to freight.

Channel 7