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BSI/ASR and Cane Farmers Rumble Over Money

BSI/ASR and Cane Farmers Rumble Over Money
August 16
14:06 2018

Belize Sugar Industries/American Sugar Refineries (BSI/ASR), this week, announced a $40 million investment in the Tower Hill factory in Orange Walk to enhance capabilities and quality of production at the mill. However, farmers maintain that while the investment is good, an outstanding issue regarding a controversial ocean freight charge needs to be clarified and resolved, immediately.

Mac MacLachlan, ASR Vice President of International Relations, told the media this week that BSI is investing $40 million over the next year-and-a-half to enhance the mill’s capacity to produce direct consumption sugar.

“I think everybody’s aware that it’s a tough time to be in the sugar business right now. We have extremely low sugar prices and it’s important that we have the confidence and the faith to keep moving forward as an industry in order to provide greater efficiency in sugar production and also to continue to expand the amount of direct consumption food grade sugars we can produce at BSI which are added value products compared to raw sugar,” MacLachlan said.

The ability to produce more direct consumption grade sugar will command a better price on the international market, a fact both BSI and the farmers are pleased with. MacLachlan said most of the investment will go toward improving the factory’s production capacity resulting in a higher throughput of cane and more versatility in responding to market demands.

On the issue of ocean freight cost, however, farmers believe they aren’t being given a fair deal. Jose Abelardo Mai, PUP Orange Walk South area representative and a cane farmer himself, told the Reporter that the main point of contention involves the Free Alongside Ship (FAS) arrangement that BSI has with Tate and Lyle, the company that imports Belizean sugar. According to Mai, under the FAS, the importer is responsible to cover the cost of moving the sugar to its final destination. The problem, Mai says, is that on BSI’s net strict value sheet, there is an $11 million cost shared by BSI and the farmers – a cost which farmers believe should not be transferred to the farmers since BSI sells its sugar under an FAS arrangement.

Mai said there are other selling arrangements, however BSI/ASR has not provided any documentation to prove it is selling its sugar under any other arrangement.

McLachlan, in his interview with the press, explained that the $11 million cost covers barging the sugar up the New river to the Port of Belize for loading on to the ships. “To try and argue there is no such thing as a freight charge is fanciful. Every sugar business in the world that exports its sugar has to pay freight. Of course it does. It can’t get there unless it’s paying the freight,” he said. He added that BSI has reached out to the farmers and are trying to resolve the issue.

Mai, however, told the Reporter that barging the cane to the Belize Port is covered by a separate cost, called ‘Local Handling,’ which he says amounts to another $11.5 million. Mai said the general feeling among farmers is that BSI is not being straightforward with them. McLachlan, though, said: “There is no secrecy here, there’s no lack of transparency, this has been going on now for decades and I think that to try and pick elements of what is in essence an effort to be very transparent with farmers, it’s very misleading.”

Alfredo Ortega, Chairman of the Orange Walk branch of the Belize Sugar Cane Farmers Association (BSCFA), told the Reporter that the farmers have met with an attorney and are seeking a legal opinion on the matter before deciding how to proceed. He said farmers are unclear about the issue and are seeking a resolution to the matter as quickly as possible. Ortega also told the Reporter that to his knowledge, Santander, which produces sugar in western Belize, does not pay shipping costs similar to what the BSI farmers pay. The Reporter contacted Santander for clarification and a comparison. However, the company did not immediately respond to our request for comment.

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