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Sugar nearing showdown

HeadlineSugar nearing showdown

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SICB appointed as licensor for sugar exports/imports; BSI/ASR objects

BSI released a statement shortly after the announcement, calling the appointment “retrograde, unnecessary, burdensome and discriminatory.” They plan to challenge the new regulations in SI 62.

by Marco Lopez 

BELIZE CITY, Wed. May 17, 2023

Statutory Instrument (SI) No. 62 of 2023 empowers the Sugar Industry Control Board (SICB) to act as the licensor for all sugar imports and exports in Belize. The regulations were gazetted yesterday, May 16, after a meeting was held to review and approve them. Belize Sugar Industries Limited (BSI), however, in a release following the announcement, objected to the new regulations and threatened to challenge its validity and ultimately this appointment. While Minister of Agriculture Hon. Jose Mai has indicated that the purpose of the legislation is to “operationalize” the Sugar Industry Act. BSI’s Director of Finance, Shawn Chavarria, in an interview on Wednesday afternoon said it is “completely unnecessary” and “disproportionate.”

BSI stated in the release that they wrote to Minister of Agriculture Hon. Jose Mai to express their discontent. They believe the new regulations—which empower the SICB to determine whether those wanting to acquire licenses have a business in good standing, and if those licenses should be issued annually—give the SICB “inordinate and disproportionate power to interfere with the routine operations of a private sector business.” Chavarria has expressed his belief that the government is using this legislation to force the company to collect and pay Fairtrade premiums (the payment of which is currently issued by Tate and Lyle Sugars (T.L.S.)) to sugar cane farmers. According to Chavarria, the buyers of the Fairtrade sugar are responsible for paying premiums to the farmers – not BSI. He noted that the payment has always been made by T.L.S. and that this new regulation will now be used to compel them to assume responsibility for that process as part of their operations.
“It’s more to do with getting into the private commercial affairs of BSI and in particular, I think, this was signalled already that government wants to find a way to get the Fairtrade funds paid to the BSCFA. And, in a sense, this is an attempt to do that – to force an SI to collect and receive Fairtrade premiums because that is a specific clause in the legislation. And we have tried to point out that it is not going to work because at the end of the day, BSI is not the party that pays the premium. It is the buyer of the sugar, who markets and sells Fairtrade sugar ultimately in these markets, that pays the premium. And so, the legislation cannot compel third party organizations to do something that is not part of their business practice,” Chavarria explained.

As noted earlier, the regulations, which are to go to the House of Representatives on Friday, empower the SICB to determine whether those wanting to acquire licenses, such as ASR/BSI, have a business in good standing, and if those licenses should be issued annually. Section 22 of SI 62 also obliges exporters of sugar to disclose to the SICB and the sugar cane associations or the growers that supply them with sugar cane “all copies of the contracts between the licensee and its buyers.” Additionally, Section 23 gives the licensor authority to request additional information from any other government body or department when considering the granting of a license. BSI, whose operation has always been centered on sugar exports, sees these new regulations as additional red tape which makes it possible for the government and other entities to pry into the commercial dealings of the private company and also creates yet another licensing requirement for BSI.

“Recently, the SICB compelled us to apply for a manufacturer’s license, and now we see this new legislation for us to be licensed to be an exporter. So, for us, it seems that there’s a standard for BSI, but not a same one for other companies. And so, I think the response would be, why is it that BSI is so regulated, whereas other businesses have less of this bureaucracy and red tape for doing business,” Chavarria pointed out.

The company calls this requirement “unduly intrusive, unreasonable, disproportionate, and harmful to BSI’s commercial interests.” They add that for those reasons the company is considering its options in regard to challenging the validity of the new regulations. When interviewed this afternoon, Chavarria said, “Given the extent in which we believe this interferes with our commercial business and confidentiality of it, that’s something that we are seriously taking onboard, whether to proceed with challenging this legislation. We did indicate to the ministry that would be something we would consider as well. So, at the moment that’s certainly a live matter.”

The sugar industry has been politically charged and volatile for decades – with the largest sugar cane farmers association, the Belize Sugar Cane Farmers Association (BSCFA) having been locked in a protracted battle with BSI over the terms of a new commercial agreement that is to be negotiated between the two entities. While the two entities have had discussions and exchanged proposals on multiple occasions, no concrete resolution on outstanding matters has been reached. The milling company is now calling the new regulations in SI 62 a “colorable device to pry into the commercial affairs of BSI.” 

Cane farmers have long requested full disclosure of the company’s financials, largely in their quest to confirm that their demand for a larger share of revenues is reasonable. The data delivered by BSI so far has been insufficient, according to the association and Minister Mai. In early March of this year, the Government of Belize decided to approve the convening of a Commission of Inquiry to identify weaknesses within the sugar industry and to draft more modern legislation for the industry. BSI/ASR’s Director of Finance, Shawn Chavarria, went on the record in 2022 to say, however, that a Commission of Inquiry would not solve the dispute with the BSCFA. 

Minister Mai was of the view, though, that the exercise will be beneficial to the wider sugar industry in Belize, and could likely serve as a catalyst for its modernization. 

During an interview with local media in March following a presentation by both parties, Mai said, ”We all listened to the presentation intensely. In my view, it leaves more questions than answers, especially when it comes to the figures, because information is at our fingertips now, so you can do enough research and you can make comparisons. But that is why I am even more convinced that the only way to solve this problem, it is a holistic commission of inquiry that will begin from the field and end all the way up to the market destination. It cannot be an investigation to investigate ASR/BSI – that is not the objective of the commission of inquiry. It is to analyze and identify areas along the entire chain so that we can have a modern sugar industry act; we can have updated agreements that reflect today’s marketing and today’s costs.” 

In an interview today, Minister Mai said that the government will proceed with its decision despite the objection from BSI. The purpose of the move, he said, is to operationalize the Sugar Industry Act, and he went on to note that he is not surprised by the objection from the company. He said that he believes the crux of their objection is the provision which requires disclosure.

“The SI simply is asking for disclosure – a disclosure that they fail to give the cane farmers. When the BSCFA asked them – how much sugar was sold as Fairtrade premium, even though the FLOCERT manual says that BSI should disclose to the farmers twice per year how much Fairtrade sugar was sold, they refused to disclose to the farmers. The only regulations that protect the farmers from actions like what BSI did, Tate and Lyle did – is this regulation,” Minister Mai explained.

He further said that the farmers have evidence that Fairtrade sugar was sold in 2022 by the company, but farmers have received no payment as yet for that sale.

Mai says that the bottom line is that if Fairtrade sugar is sold, then disclosure MUST take place to ensure a fair payment for farmers. According to Mai, during the talks earlier this year with the company, they complained of too much ministerial oversight, and as a result, the government decided to delegate the licensing responsibility to the SICB. Mai believes this protects both the wages of the farmer and the company from unethical practices. Above all, this move would protect the reputation of the sugar industry in Belize, Mai said. The farmers of BSCFA are reportedly discussing the possible submission of a complaint to Amnesty International – a global movement of more than 10 million people who campaign to end abuses of human rights.

If the farmers decided to go through with their complaint, it would likely cause a black eye for the company, the country, and the sugar industry in Belize as a whole.

“This regulation protects them, and it protects the farmers. Why it protects them? It protects them from doing unethical things. You can’t take my sugar, sell it, and nuh pay me fi it. That is unethical, weh you call it? Now, if we continue to do this like this, we end up in the bad books,” Minister Mai remarked.

The new regulations, as mentioned previously, go to the House of Representatives on Friday. The United Democratic Party, in a press release issued yesterday, stated that they do not think the new regulations are a “healthy move for the stability of the sugar industry.”

The release calls the move “arbitrary and dictatorial,” adding that it is not within the norms of the sugar industry. The party has thus demanded a reversal of the decision, adding that “failure to cease this ill-advised course of action will only cause colossal damage to the sugar industry.”

A legal challenge to this appointment of SICB as licensor of sugar imports and exports by BSI would likely be by way of judicial review and may lock the entities in dispute. 

(AMANDALA Ed. Note:  Frederick Douglas – “Power concedes nothing without a demand.” Under pressure from the BSCFA, Government has decided to exercise its authority under our Constitution to challenge the power of the giant ASR/BSI in defense of the country’s cane farmers and to safeguard the viability of the sugar industry in Belize. The bottom line is that, there cannot be “Fairtrade” without “Disclosure.”)  

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