Economy Headline — 29 August 2014 — by Kareem Clarke
55,000-ton bomb dropped on cañeros!

ORANGE WALK–On Tuesday of this week, Tate and Lyle Sugars, a member of the American Sugar Refineries (ASR) group, dropped a bombshell on local cañeros when they announced, in a letter to the farmers, that there might be a drastic cut to the Belize sugar quota that sells under the Fair-Trade logo, and thus, the 18 directors of the Belize Sugar Cane Farmers’ Association (BSCFA) met this afternoon in Orange Walk to discuss the crippling issue.

Sugar quota slashed from 65,000 to 10,000 tons!

Apart from market forecasts which are cited in Tate and Lyle’s letter, which was sent from their headquarters in London, the BSCFA was informed that the purchase of sugar for the 2014/2015 crop would be 10,000 tons, 55 thousand tons less than last year, while the premium price, which is US$60, will be paid after the product has been sold to consumers as Fair-Trade sugar.

While things might be looking even worse for the BSCFA, who are still at odds with Belize Sugar Industries (BSI)/ASR over the bagasse issue, Alfredo Ortega, the spokesperson for BSCFA’s Committee of Management, which has been unpleasantly surprised by the revelation, is convinced that the reason for the decrease has nothing to do with market vulnerability.

After the meeting today, Ortega said: “It is something that will harm us and we will be sending a letter to them. We will be analyzing this situation very closely, and we want to know if it is really the market out there that is causing this situation, or if it is another thing, so we will be analyzing this situation and looking forward to sending a letter to FLO-CERT [the inspection and certification body for label Fair-Trade], and Tate and Lyle again to see what is the market situation with this, because the letter that they sent is not so clear. They are saying that the market situation is the problem, but it takes us into a bad situation right now because it just came as a surprise.”

According to Ortega, this position by the company will be disastrous for both the association and the industry, especially in terms of losses when compared to last year.

“It is a huge loss. Last year we got $6.9 million BZD, and it was only 60,000 tons that were sold. This year what they had proposed to buy from us was 65,000, 60 to the EU, and 5,000 to the US. So, that is what we will be getting this year, but for this upcoming crop, the 2014-2015 crop, they are saying that they will only be buying a minimum of 10,000 [tons]. So, it is a very huge reduction from $6.9 to almost $1.2 million; the difference is very huge and it will definitely create problems within the organization”, he declared.

The association considered the letter as dismal, and while it leaves a window of opportunity that more than 10,000 tons of sugar may be bought if the sale projections improve, the farmers remain skeptical.

“I think the window of opportunity is very limited because they are the one that pays; they are the ones that make the decisions, so what we have to do is really to dialogue and negotiate and let them know what negative impact this will have in our farmers and also to the industry of Belize”, Ortega told reporters.

He also outlined how the severe blow will have a rippling effect on the association, the cane farmers and the industry itself.

“That money is used to comply with the FLOCERT standards because they have some heavy standards that we have to comply with, [such as] the use of agro chemicals, the environment, child labor and administration and, many of these funds are used in granting help to the farmers in regards to agro chemicals and other programs. Also, we have social programs in which we have been helping the education sector, infrastructure and healthcare, so with this reduction, many of the programs that we were contemplating before, we won’t be able to do, and that [also] means that many of our staff will have to be cut because of this situation”, explained Ortega.

Ortega told the media that Tate & Lyle’s grim letter notified BSCFA that the payment plan for sugar cane will change.

BSCFA currently receives payment 30 days after the sugar arrives in London, but as of 2015, the payment will not be made until all the sugar has been sold.

The reduction in the sugar quota is one thing, but the question is, can farmers and, by extension, the country, afford this kind of change in the schedule of payment for sugar?

According to the letter, the farmers will not be paid the premium price of US$60 per ton of sugar until the sales have been made, a policy which is effective immediately.

The reduction in sugar quota, it said, is as a result of market vulnerability. It was signed by Simmon Gibbons, Senior Vice President of International Operations, who reportedly said that the company will endeavor to increase the volume, should sales of Fair-trade prove to be higher than previous forecasts.

The drastic changes will certainly have a negative impact on both the cañeros and the entire nation, since the reduction in income from sugar is estimated to be from around BZ$6.9M to about BZ$1.2M per annum.

The Belize Sugar Cane Farmers’ Association believes that the projected reduction in quota might be some sort of punishment to cañeros because of the bagasse proposal that has not been accepted by the farmers.

As a result, Ortega mentioned that they will be seeking the advice of other countries that are also FLOCERT-certified to see how best they can deal with the situation and hopefully find a way out of it after careful analysis.

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