As we reported last night, all the major stakeholders in the sugar industry gathered yesterday in Orange Walk for a meeting convened by the Deputy Prime Minister.
The difficult topic was the way forward; how to proceed in first, assuring the long overdue third payment for farmers and second, assuring that the factory can open for the news season which starts on December sixth.
Progress and some soft commitments were made - but BSI needs a big money bailout before anything can be assured. And for that the company continues to look toward the Social Security Board.
The Social Security Board of Directors met late into last night to try and come up with a solution - but, as we understand it, collateral for the loan remains the central problem.
Government remains engaged and this evening Prime Minister Dean Barrow and Deputy Gaspar Vega were meeting with BSI executives in Orange Walk to try and find a way of effectively securing the proposed ten million dollar loan from Social Security. BSI Director Joey Montalvo said he expected a revised offer letter from Social Security. Experts agree though, that whatever is worked out - whether with Social Security or an external financing group - there will have to be performance targets - meaning that cane farmers will have to deliver a higher quality of cane into the factory. Montalvo says that was a deciding factor in why their financing arrangement with ING and First Caribbean was cancelled in September:
Joey Montalvo, BSI Director
"We have to focus on quality, the field side has to focus on quality, I know this a very sensitive thing for the field, I feel that perhaps all the blame at the feet field but that is not the case, the facts show that we always had a problem over the years with the quality of cane that comes in to the mill and that has resulted in 4 crops where we average below 90,000 tonnes, I think it's about 88,000 tonnes of sugar. Cane production has stagnated and quality has deteriorated tremendously and that has had an impact on BSI's cash flow, we've had to be seeking increases of our working capital facilities every year and the banks naturally have decided that they are not going to lend us any more money. We face the challenge of a crop in 2011, we have to show a good report card, when I say we, I'm talking about the industry and joint efforts. This has to be a national effort, we have to present credible plans, and we have to be committed. So in 2011, it might be our last opportunity because any new financiers will be very circumspect about what they do in terms on lending us any more money."
Of course, on the other side of that the Cane Farmers will tell you - accurately - that they produced a good crop last year - but a fair portion of it had to be left in the field because BSI could not get its act together at the factory; the plant repeatedly failed due to problems with the newly installed co-generation plant. Going into the figures, farmers say a little under 200 thousand tonnes were left in the field - and they say that total cane production exceeded 1 million tonnes.
