Posted: Tuesday, December 21, 2021. 2:41 pm CST.
By Aaron Humes: After hearing from both sides between Thursday and Monday, it seems clear the Belize Sugar Cane Farmers Association and Belize Sugar Industries Limited/American Sugar Refining (BSI/ASR) are well and truly far apart, despite both sides insisting they can hammer out an agreement to replace the one which expires in January.
Even the length of the new agreement is in dispute: the BSCFA is asking for three years to give more opportunity for discussion; BSI/ASR prefers seven years for stability.
On the issue of payment and its calculation, BSI/ASR has agreed to move away from Net Stripped Value (NSV) on sales of sugar in the United States and CARICOM and remove added costs from sugar sold in the European Union (EU) but said those sugars would be treated as raw.
But the BSCFA wants a 60/40 ratio for all sales and the other costs removed.
The farmers argue that for some time they have been unable to meet their costs, but Maclachlan told us they should look inward at addressing such issues as the efficiency of plantation and production.
And the bagasse payment which we will cover separately is the BSCFA’s cut of a product which BSI insists has no value according to Belize Electricity Limited (BEL), but which has allegedly made them $143 million over the last decade from sales by the Belize Cogeneration Electric Project (BELCOGEN); BSI for its part says the project, which the BSCFA had not initially been interested in years ago when discussing how to get rid of the flammable waste, has been a loss to them.
As summarized by Mac Maclachlan, BSI/ASR vice president of international relations: “We’re trying to meet their demands of greater transparency in the agreement, but it’s becoming very clear to us that – in fact, it was stated to us quite clearly that what BSCFA wants is more money from the mill, and at a time when the mill’s invested heavily in the value-added product, in a port facility in Big Creek that’s going to reduce the cost of freight, the farmers will share that advantage. There’s nothing to give, and that’s why it’s very difficult for us now to consider anything like an interim agreement because there would be absolutely no point. That would simply be pushing this whole issue down the track to ruin another crop.”
Shawn Chavarria, Director of Finance, BSI/ASR, added, “It was very clear that BSCFA had misunderstood what we would have presented at that meeting, and in fact, the proposal was in line with their objective of removing a lot of these costs, which cause contention, and moving to gross value. But, what became very clear was that they had a pre-determined outcome, which was to get us to sign an interim, or else they would not start the crop.”
And Maclachlan notes that with their hundreds of millions invested, the value-share agreement is, according to him, one of the most generous in the region. It provides not only a value for sugar, but also molasses, and we also pay for bagasse, which virtually nobody else does.” BSI/ASR has long-term debt of US$120 million which it is struggling to repay.
Nonetheless, both sides remain committed to reaching an agreement sooner rather than later.
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