Questions emerge about transportation costs
On Wednesday, August 1, American Sugar Refinery (ASR) announced that cane farmers in the north would be getting their second payment for the 2017-2018 sugarcane crops. Farmers had already been given an initial payment of $36.02 per ton. ASR subsequently announced that the final price per ton of sugar cane for the season would be $45.47.
Depending on the quality of sugar cane delivered, farmers are now expecting to receive an additional $3.81 to $6.34 per ton of sugar cane that was delivered to the factory.
That payment by ASR, however, has been the subject of criticism from Hon. Jose Abelardo Mai, the Opposition People’s United Party (PUP) area representative for the Orange Walk South, who is considered to be the PUP’s shadow minister of agriculture and who is also a cane farmer.
In an interview this morning, we asked Hon. Mai why the payment to cane farmers is so low.
He said the problem is that ASR had announced to the farmers that their payment was $45.47 per ton after they had sold sugar to various customers in the USA and the European Union.
“Those sugars were sold under [the] FAS agreement”, Hon. Mai explained. “FAS means fee alongside ship. This means that the seller places the sugar alongside the ship. The responsibility of the seller ends there. The buyer, in this case, Tate and Lyle, had to pay all costs, which is ocean freight,” he explained.
Hon. Mai added, “The document states that the sugar was sold FAS. So why is it that the farmers and BSI have to pay 11 million dollars ocean freight?”
“It makes no sense, because you are saying that you are selling FAS; that means that the buyer is responsible for paying the freight. That is the main point of contention,” Hon. Mai said.
“Since the announcement last week, ASR has tried to explain the position, but they have not been successful in doing so. They have to come with a better response. If they say that it is a mistake, it shouldn’t have been FAS, it should have been CIF. Under CIF, the seller is the one who must bear all the cost of shipping all the way to Europe,” Hon. Mai continued.
Hon. Mai reasoned that if the 11 million dollars were not paid out, then the farmers would be getting $51 per ton.
“So while the price on the world market is depressed, the farmers could still be in business if ASR could just lower their ocean freight and lower the local handing cost, which is another 11.5 million dollars,” he stated.
We asked Hon. Mai how this situation could be resolved.
“Well, ASR has not yet fully explained why this is so. The easiest thing would have been to remove the term FAS and just substitute with CIF. But they have to show evidence why they are paying for cargo and justify why they are paying for it when they shouldn’t have to pay for it,” Hon. Mai disclosed.
Hon. Mai went on to explain that the sugar industry is regulated by the Sugar Industry Control Board. “They should have been the first to jump at this problem and try to solve it. That’s the government intervention. The associations would have to decide what they will do,” he said.
We asked Hon. Mai if the associations are gearing up their members for a special meeting to address the specific issue.
Hon. Mai said that the largest of the associations, the Belize Sugar Cane Farmers Association, which has about 4,000 members, is having a meeting today.
“But I am also aware that there is an agreement signed between ASR and the farmers, and I do not know the entire content of the agreement,” Hon. Mai revealed, “but it does state that the farmers and ASR would share the cost of ocean freight.”
Hon. Mai insisted that Tate and Lyle should bear the cost of the freight.
“ASR is a very big multinational and it is difficult to fight these big companies. Farmers have always suspected that they are being cheated, and as an area representative, I have to look out for my constituency,” Hon. Mai stressed.
“ASR has accused me of being mischievous, a one-man political show, but I am just asking them for clarity,” Hon. Mai said.Amandala