BSI wants to amend 2015 Cane Purchase agreement

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Updated: July 19, 2017

As we have reported before, the BSI/ASR is propoing to produce more direct consumption sugar, a project that it assures is the best possible option for the long term viability of the sugar industry. But as it proposes the project, it is also proposing to amend the 2015 Cane Purchase agreement that was signed with sugar cane farmers. That proposal follows the factory’s plan to invest 22 million dollars over the next 18 months to increase production of value-added, direct consumption sugar. Currently BSI produces 30,000 metric tons per year and if that investment is made, it will see an increase of 20,000 metric tons. According to BSI, this sugar receives a higher price compared to raw sugar and opens market opportunities. BSI says that based on the sixty five – thirty five value share of revenue, farmers will be making about two dollars more per ton of cane. However, before investing, BSI needs assurance that cane supply will not be interrupted over the next four years. BSI has therefore proposed to amend the 2015 cane purchase agreement to remove the opt-out clause allowing either side to terminate the agreement after 19 January 2018, to eliminate other uncertainties, and allow the contract to run for its full term until 2022. BSI is also asking that the payment formula for bagasse remain as they are. BSI adds that while the agreement has worked well, it needs improvement to secure the industry’s way forward, since the industry faces the termination of preferential prices on the EU market in October of 2017. World prices for raw sugar have also dropped by over 40 percent since last year, the factory points out in its release. So far, the Corozal Sugar Cane Producers Association (CSCPA), the Progressive Sugar Cane Producers Association (PSCPA) and the Government of Belize are on board, but the Belize Sugar Cane Farmers Association has not agreed to support the proposal. According to BSI the BSCFA is asking for a comprehensive revision of the contract and the payment for bagasse. The company says any re-negotiation of these changes would lead the industry into a further period of stalemate and uncertainty. According to BSI, the BSCFA’s position prompted the need to issue the release today. When Love News spoke with CEO of the BSCFA, Oscar Alonzo, he had indicated that the only reason they are asking for the agreement to be revised is because BSI was the first to propose the conditions aforementioned. Alonzo says the membership of the association are all for any project that will see an increased production at the mill and which will reflect an increase in revenue for farmers.