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No extension to BSI-BSCFA Commercial Agreement yet signed

GeneralNo extension to BSI-BSCFA Commercial Agreement yet signed

Photo: Shawn Chavarria, Director of Finance, BSI

With less than a month before the proposed start of the sugar crop, the mill and the largest sugarcane farmers association still have not signed an extension to ensure a smooth and timely commencement of the season

by Marco Lopez

BELIZE CITY, Thurs. Nov. 23, 2023

The 2023/2024 sugar cane season is set to start within approximately three weeks. Despite this, an extension to the Commercial Agreement between the largest cane farmer association, the Belize Sugar Cane Farmers Association (BSCFA), and the mill, Belize Sugar Industries (BSI), has still not been finalized. This evening, the BSCFA in a press release called on the Government of Belize (GoB) to assist the parties once again in signing a one-year interim agreement. This will allow a smooth start to the season, and as the association emphasizes, “enable the Commission of Inquiry to undertake and complete its investigative work.”

This will, according to the BSCFA, provide “formidable information” for the negotiation of a “fair” commercial agreement.

In an interview on Wednesday, BSI Director of Finance, Shawn Chavarria said that a letter has been sent to the association with a proposal that they sign a four-year extension. This proposal is, however, a non-starter.

The statement from the BSCFA issued today explains that the proposal is “unfortunately, ‘the original addendum proposed by BSI in 2021.’ This addendum proposes a four-year agreement, payment of Fairtrade Premium by Tate & Lyle Sugars (TLS), and changes in the wording of certain costs to be deducted from the gross proceeds from the sale of sugar and molasses.”

It goes on to state, “BSI’s Addendum once more completely ignores matters of critical economic importance to BSCFA and cane farmers.”

The BSCFA has said on several occasions that a new, long-term Commercial Agreement would not be signed until the completion of the government-appointed Commission of Inquiry (COI) into the sugar industry. In its release today, the association reaffirmed its call, and expressed its confidence that “the results and recommendations of the Commission of Inquiry can serve as a basis for the negotiation of a fair commercial agreement and the modernization of the sugar industry.”

However, Shawn Chavarria, Director of Finance at BSI, echoed the mill’s claims that the commercial agreement in place is “one of the best in the world.” In his comments to the media this week via a Zoom conference, he said that the mill is confident that with their preparations, they will be ready to hit the ground running for the upcoming milling season. Based on a field assessment conducted by the company, BSI estimates that 1,050,000 tons of cane will be supplied this year – an increase of about 5% compared to last year’s numbers.

The industry is currently seeing the highest prices ever recorded in its 50-year history. With dryer El Nino-driven conditions expected this coming year, harvesting, transportation, and the mill, will benefit from what will probably be less muddy conditions.

The mill believes that the positive factors currently within the industry can be the foundation for improvement. However, the BSCFA is adamant that an assessment of the industry must take place before they make moves to finalize another long-term agreement.

This Commission of Inquiry is still in the pipeline, with its members and terms of reference currently being finalized. During an interview with Amandala last month, the Chairman of the Committee of Management of BSCFA, Alfred Ortega stated that the association would sign an extension of the current interim agreement that is in place to ensure the timely start of the crop.

The association proposes a one-year extension to the interim agreement that expired days ago on November 15, 2023.

“During 2021 and 2022 BSCFA engaged BSI in a process of negotiation and mediation to conclude a new commercial agreement, but to no avail,” the release said.

The issue of the commercial agreement and non-payment of Fairtrade Premiums has been tabled to a Ministerial Sub-Committee to address industry issues comprised of Ministers Kareem Musa, Jose Mai, and Oscar Mira. The sub-committee has had separate meetings with both BSCFA and BSI.

The mill believes that with the high global prices, it is time to enter into an extended agreement that will foster a greater sense of industry confidence and certainty. In addition to this, BSI has long felt that its facilities are underutilized, and with the increased cost of production, the matter of cane supply needs to be addressed. This year, the mill is providing services to help farmers replant and do maintenance to increase production, Chavarria claims.

The association, however, is focused on securing fair cane prices based on the verifiable cost of sugar milled and sold. Its release states, “Let us not be distracted by BSI’s repeated claims of investments nor the occurrence of a record cane price of sugar cane last crop due to the increased world market price of sugar.”

The Commission of Inquiry is geared toward modernizing the industry for the benefit of all stakeholders – an approach the mill believes is feasible and a far cry from its initial categorization of the proposed review of its financials/business practices as a “witch-hunt”.

With the last two sugar cane crop seasons starting after a significant delay, all parties – including the BSCFA, as expressed by Chairman Ortega in last month’s interview—are hoping to start on time.

While BSI believes a four-year extension agreement could be a good first step in rebuilding industry confidence, the BSCFA is steadfast that the Commission of Inquiry is pivotal in charting the path forward for the relationship between the entities.

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