BSCFA has called for equity and reason to protect sugar

The sugar industry remains at a critical crossroad. The future depends on the success of negotiations between the cane farmers and BSI/ASR. That’s why today, the Belize Sugar Cane Farmers’ Association hosted the media for a presentation on why they think a simple 60-40 split of all sugar proceeds will resolve much of the challenges, which currently plague the industry. Some of those issues, the association argues, stem from weaknesses found in how the Net Stripped Value of Sugar and Molasses — or the NSV — is calculated. Dale McDougall reports. 

The ABBA song says “Money, Money, Money is always sunny in the rich man’s world” …and for the Belize Sugar Cane Farmers Association the way the estimated Net Stripped Value of Sugar and Molasses is calculated is unfair and inequitable. This is the mechanism to determine the crop prices and payments. Chief Executive Officer of the association, Oscar Alonzo made the case that verification, explanation and justification of some of the hidden costs are absolutely essential. 

Oscar Alonzo, CEO, Belize Sugar Cane Farmers’ Association: “In that manner they have offered in my view a red herring in terms of saying that okay we will give you the right, we will include in the commercial agreement a clause that gives BSCFA the right to audit the figures that the auditors have audited in that NSV statement. But clearly in our view we have no objection to that but in order for that to really have meaning it means that you would have to first clarify the figures that are being audited by the auditor such as the manufacturing allowances, local handling. We’ll have to verify what is being used is really the true cost and then when the auditors audit what is actually calculated in each year regarding to those rates then we could then audit that figure.”

Alonzo added that because the association has had plenty doubt about the audited figures, there has been a decades-long skepticism in the relationship between the miller and the farmers.

Oscar Alonzo, CEO, Belize Sugar Cane Farmers’ Association: “This distrust has been there for decades. From the very moment when this NSV was first established that distrust was there and the farmers have been attempting to rectify that distrust since then and now as we have indicated we didn’t have the opportunity to try to question it until 2017 when we saw significant discrepancies in the values that they were presenting in the NSV and what is it that were being reflected in terms of what we were trying to analyze. And seeing that discrepancy then this is when we started to request okay why are these figures so ? What documentation is there to support it ?”

And one of the things they accuse BSI/ASR of doing is nickel-and-diming everything and sneaking in costs that they did not agree to. The chairman of the BSCFA’s finance committee, Javier Kemé explained the association’s position for a 60-40 split,  erases doubt and those fees such as terminal handling charges and throughput costs. 

Javier Kemé, Chairman, BSCFA Finance Committee: “This is where the foundation of our proposal to come up with a simpler formula, a transparent formula which will remove the distrust that there is in both sides. Up to last year when we got our last payment nothing was being said about an addition of any cost to this year’s model of payment. It wasn’t agreed by the BSCFA or I don’t know if the other associations agreed but on our side there wasn’t any agreement that those two line items were going to be included. When we got our first payment those two line items were inserted there.”

Kemé also underscored that an analysis of BSI’s figures, dating back to 2006, shows that there has been a steady loss of profits to the cane farmers and an increase in fees to BSI over the past 16 years. We asked him for his opinions on why it appears the scales are tipping against the farmer’s interests. 

Javier Kemé, Chairman, BSCFA Finance Committee: “The percentages was an average of 54% which was what the farmers were getting previous to 2018. On 2018 we saw a drastic drop in percentage which is an average of 48.5%. So this drop called our attention and we say well we have to find out where it is being accommodated. In the analysis we did we say that they are in fact getting 39% of the gross revenues. When you compound the 35% that they get on the net value and these percentages that was on the cost as services that they provide. So we say that the formula of 60/40 that we were bringing forward as the gross revenue split was a reasonable one and we expected the counterproposal on their side to be more on the area of the percentages of 60/40 being 59/41 or whatever.”

Kemé argues that if these longstanding issues of distrust and a lack of equity are not resolved, sugar’s future may not be so sweet in the long run.

Javier Kemé, Chairman, BSCFA Finance Committee: “The circumstances the cane farmer is living presently is a more critical one. Several years ago a bag of fertilizer could be purchased $15 per bag, the gallo of fuel was $6 dollars per gallon of diesel that’s what we majority use for our transportation of our cane. So all these costs have incremented over a hundred percent so this is a critical time when the farmer is seeing that if he doesn’t get the real value of it’s product then he’s facing really a fading out of the business of the industry.”

That’s something, most will agree the country simply can’t afford. For now, the two sides can only agree to negotiate. Dale McDougall, Love News.