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Third estimated cane payment dip as EU and global market prices plunge

The third estimated cane payment has been issued to cane farmers and the numbers are much lower than last year, but BSI representatives say it was no surprise. That is because industry stakeholders have been bracing for the drop particularly the EU preferential prices. Cane estimates are issued on a monthly basis to sugar cane farmers during the crop to share updates on the sugar markets. The first estimate that was issued before the start of crop was reflective of the prices on the EU market which was at US $355 per ton of sugar. The updates, or estimates, that followed reflect the reducing prices of sugar, and on the EU market alone, that now stands at around US $332.50 per ton of sugar. This and global market prices which has also remained weak since falling last year, have pushed the third estimated cane price down to forty-one dollars and sixty-nine cents. Cane Farmers Relations Manager at the Belize Sugar Industry, Olivia Avilez told us more about the current situation faced by the industry in Belize.

Olivia Avilez, Cane Farmers Relations Manager, Belize Sugar Industry:“This is something that we had anticipated would happen after October 27 the volatile sugar prices that we would experience. Important to note is that in the world market the highest per ton basis of sugar was at 21 cents a pound in January 2017 and now at March 2018 the price of sugar per pound is $12.41 so that really represents a 70% drop, again this is our exposure to the volatility that we now face in post EU regulatory changes. Usually the parameters for a cane price estimate is based on the sugars that we are able to sell; raw sugar, direct consumption sugar and these other types that we produce plantation wide but also on quality. In our first estimate we did it showed a quality factor of 9.5 tons cane to tons sugar witching at this time that remains the same mainly because that is updated at the end of the crop. Also we have other updating to do in terms of shipping rates and types of sugars that we sell and the prices that these fetch. But that all is updated more or less at the end of the crop because we need to ensure that those numbers are correct by the end.”

Avilez adds that stakeholders in the industry, anticipating the lowered prices, have been working towards improving efficiencies to boost the industry’s competitiveness on the sugar markets.

Olivia Avilez, Cane Farmers Relations Manager, Belize Sugar Industry:“We are definitely concerned about that. One of the things that BSI has been doing since three years ago is to inform and to ensure that they have the information that we have as well. We  were anticipating the falling prices and one of the things that we were looking at it how to reduce harvesting cost for example. BSI has not embarked into the second year of a mechanical harvesting project which has managed to lower $6-$7 per ton cane for those participating farmers – so we have to find ways in which we can reduce our production costs that is one way. Definitely one of the things that farmers are doing is to increase their productivity. So also we have done information sessions for them. Before the start of the crop we had one of the market experts to share some of that information, we’ve had meetings with them regularly to share how the prices are moving and at the end of the day we are in this together no ?”

BSI also continues to meet with representatives of other sugar producing countries in the Caribbean to work towards improving the industry to suit the sugar markets. A report published today in Reuters indicate that analysts expect the global sugar market to remain in surplus for at least two seasons and possibly longer following a sharp rise in production particularly in India and Thailand.Other reports indicate that the International Sugar Organization has also provisionally suggested a surplus which would be expected to continue to press down on the world price. Projections on the EU side also suggest that the EU would remain in surplus in 2018/19. That then means that EU prices would likely need to be somewhere above the world market price and below the price at which raw sugar from elsewhere could be imported and refined in order to balance the market.