At the top of the news, we told you about the impending disruption to the start of the 2021/2021 Sugar Crop Season. That's because the Sugar Industries Control Board wants to ensure that none of the cane farmers are disenfranchised, especially those who make up the membership of the Belize Sugar Cane Farmers Association.
As we told you, there is a current impasse between the millers, BSI/ASR, and the BSCFA. So far, they have been unable to resolve their commercial disagreement, and now, their dispute has caused the SICB to refuse to give the necessary approvals for the start of the grinding season.
So, how did the industry end up to this point? Well, that's what our Daniel Ortiz attempted to put into context. Here's his brief history of the bitter dispute that has enveloped the sugar industry:
The leaderships reps. of both BSI/ASR and BSCFA are keenly aware of what is at stake, and the financial damage that they can inflict on each other, if they cannot reach an agreement before January 19, 2022.
That's when their current business contract ends, and the mill says that after that date, they cannot accept any more cane deliveries from BSCFA farmers. For multiple reasons, the buyers and sellers of cane need a signed agreement, which will include a clearly-defined payment structure for every quantity of cane delivered.
The stakes are high and the industry cannot afford another costly argument.
Andy Westby - Chairman, Committee of Management, BSCFA
"By the end of the expiration date, and we hold also the government because he made a commitment to help us to get that agreement in place so that we don't hamper the crop because there are over 1.3 million tonnes of cane. We don't want our cane farmers to get affected financially. So, we wish the crop to proceed on the 20th because we need to start delivering cane. We have over 200 thousand stand-over cane that needs to be in."
File: November 24, 2021
Malcolm "Mac" Maclachlan - VP, International Relations, ASR
"I think it's important that we don't let issues interrupt us in a sense of things that can really have a very adverse impact, both on the mill, and especially on the cane farmers. And sadly, we have lived that history in Belize a few times over issues regarding bagasse."
File: November 10, 2021
Hon. John Briceno - Prime Minister
"Well, I don't think that the government can go in and settle their differences. What we can do is act as the referee between both of them. I think both of them make valid points and it's just a matter of sitting down and having a conversation, not talking above each other, but with each other to try to come to a reasonable compromise. BSI understands that their investment is worth nothing without the farmers and the farmers also understand that their
investments are worth nothing without the sugar mill, so it is the farmers and BSI. They are connected at the hip, one can't live without the other. I do plan to meet with the associations sometime next week and I believe that we will be able to find a compromise and get the crop going. The important thing is that people need to work, the farmers want to deliver their cane and BSI needs to deliver as much sugar as they possibly can to be able to see to not only locally but to the Caribbean and to their customers."
But, that seems to be the extent of their shared ideas. After listening to the two sides present their views, they don't seem able to agree on a simple negotiation process. Depending on who's presenting their case, the other side is the intransigent business partner.
Oscar Alonzo - CEO, BSCFA
"Despite our efforts to repeatedly provide them with assurances of good faith to initiate negotiations, [they] have always sought to delay it and has only conceded now today to meet with us to begin to discuss one of the proposals. And that proposal has to do with the calculation of the price of sugar cane that they pay us."
File: December 8, 2021
Malcolm "Mac" McLachlan
"We do not appreciate the adversarial relationship which we have been in with that particular association for many years."
"We have a real strategy. We've invested 300 million dollars in Belize. We've made some fundamental improvements to the mill. We've increased the throughput of cane by 26%. We've increased the average milling rate by 37%. We've increased the average sugar that we produce by 46%. That's the basis on which farmers are paid, on sugar produced. And yet, every time, we end up talking about the future, talking about that strategy, talking about how it can benefit everybody, it seems that from one association, that the only real intent is how they can take more value from the mill, rather than looking at how, in fact, we can all work together to grow the pie."
Oscar Alonzo
"We have said that it is possible to sign an interim agreement for 1 year, if necessary, which would contain the existing terms of the current agreement, and continue negotiating an agreement for it to take effect in the following crop. It would be impractical for us to finalize the negotiation, especially in view that BSI had deliberately delayed this process of negotiation."
Malcolm "Mac" McLachlan
"We're not prepared to extend the existing agreement which expires on the 19th of January for 2 main reasons. 1 is, I don't think it's necessary. I think we'll be in a stronger position to agree on a new agreement before that time. We're committed to actively working on that, so I don't think it's necessary."
And even though the two sides have initiated talks in the hopes of decreasing the widening commercial rift, they can even agree on the proper course of action to do that. BSI wanted to start with the contentious net strip value dispute, but BSFCA is pushing for progress on all of their proposals, not just that one issue.
File: December 8, 2021
Shawn Chavarria - Director of Finance, BSI/ASR
"What, essentially, we've agreed to do is come up with a new cane payment structure on the basis of what BSCFA is proposing, to move away from the net strip value. So in a sense, this is the concept that they have presented. And so, what we're agreeing to is to discuss and agree [on] a new cane payment structure on their concept. So, it is, in a sense, negotiating or coming to an agreement on what they're proposing. We're doing that on the basis that we will be no worse off."
Malcolm "Mac" McLachlan
"And we're looking for a win-win in this outcome."
Oscar Alonzo
"We have not been able to provide those arguments to BSI because they do not want to even discuss it."
"They have been publicizing a great deal of declarations, pamphlets, informing about their decisions that they have been making, decisions that they say will improve the value of the sugar and molasses that they sell, increasing what they call the so-called pie. But, we have been saying that this pie, yes, is increasing, but it is not increasing in a manner from which the members, or the cane farmers, can benefit appropriately. The share that they're getting from the 65% is becoming smaller and smaller within that pie. While the balance of the revenue that is obtained from that accrues to BSI."
In fact, the press asked specifically about the possibility that the BSCFA would press for progress on all 5 of their suggested changes, and not just the payment structure.
File: December 8, 2021
Reporter
"Will you only be discussing the two points that you mentioned, which are, 1, when it comes to payment and what happens to the other proposals?"
Malcolm "Mac" Maclachlan
"We're very happy to reiterate our position on bagasse. That hasn't changed over the years. Although we agreed to pay a quantum for bagasse as a way of moving forward back in 2014, that issue keeps arising, and the arguments haven't changed."
Oscar Alonzo
"The other issue has to do with negotiating a better price for bagasse, which they said that they [are] not in a position and did not want to negotiate because they are not making any money with BELCOGEN. Even though, even though - we have seen that between 2009 to 2020, BELCOGEN has sold 710 million kilowatts of electricity to BEL at a value in excess of 146 million dollars."
"When we compare it to what they have actually paid us under the formula, between 2015 to 2020, we have only received a little over 3 million dollars."
We'll keep following this major story as it develops throughout the weekend.
