Screen_Shot_2014-06-27_at_6.29.45_PMThe north is only a few days away from witnessing the closure of the 2013/2014 crop season. July eight will mark the last day that cane will be delivered to the factory. By that time it is expected that the mill will have received 1.2 million tons of cane, that is, if weather permits.


But while its seems that the 2013/2014 crop will prove to be a good one despite the two months delay it experienced, one thing that will not be finalized before crop is over is the negotiations between the miller and the producer on the payment for bagasse.


As we’ve mentioned before, the Belize Sugar Cane Farmers Association is requesting a payment of ten dollars per ton of bagasse for cane farmers. But BSI/ASR is saying no way and has made a counteroffer of 51 cents. That’s not even close to what cane farmers are asking.


And that is where the negotiations stand today with none of the parties willing to budge. While we have heard from the BSCFA, it is only through press releases that BSI/ASR has defended its position, that is, until now.

The milling company has decided to take the bull by its horns and speak out putting behind the agreement made in the first place that none of the parties s involved would speak on the negotiations publicly.


Belizario Carballo- BSI/ASR Financial Director


“It is a complicated issue in terms of making a payment for bagasse, not least because, we will be the first country in the world to be making a payment for bagasse in the way it is being proposed her in Belize.  What has happened on the bagasse issue is that the BSCFA has made an initial proposal, they essentially presented to us, a calculation of how they come up with a ten dollars per ton of cane request, as part of our presentation addressed that proposal and shown how that proposal is unreasonable and not even a starting point for us because the ten dollars per ton of cane for the payment of bagasse amounts to 11.4 million dollars Belize and that essentially is 97% of Belcogen’s annual income total income, gross income, so clearly is a none start here and in the process we have requested from the BSFCA to clarify for us because in their proposal they are saying that their proposal considers Belcogen’s costs and also it states that it also takes into account the investment that have been made to bring about Belcogen which is a significant investment of 130 million dollars and that it also considers a return on that investment but in the figures and in the calculations we don’t see how those two items are taken into account of and so we have requested from them.”


But just how did the company come up with the 51 cents payment?

 

Belizario Carballo- BSI/ASR Financial Director


“BSI is buying cane from the farmer and with the cane come the fiber comes, the water comes, the mud comes and everything that comes with the cane including the sugar so that is a first point there that we are not negotiating a price for bagasse, we are negotiating simply a payment for bagasse, we are not buying bagasse, what comes with the cane as well if fiber and the fiber when the cane is processed through the mill what results is bagasse so bagasse is not what comes with the cane, bagasse is something that comes out after the processing of sugar cane once it goes through the mill and the sucrose is extracted what comes out is the bagasse and the bagasse includes about 48% of fiber but the fiber that comes with the cane is roughly between 15 to 16 % of the cane is fiber, so our proposal is based on trying to determine the percentage of fiber that comes with the cane that is used by Belcogen to generate electricity to be sold to BEL and that percentage we have determined it to be 29% in other words 29% of the total fiber that comes into the cane is used to generate electricity that is sold to the grid, the remaining 71% is used by BSI in its normal traditional functions producing sugars, and producing electricity and supplying the factory with steam and so between steam and electricity that is sued by the factory that utilizes the remaining 71% which what we have always been doing in the past and there is no issue there I think that the BSFCA accept that, the payment is only going to be based on that bit that is new which is selling electricity to BEL and so the exercise has involve quantifying how much fiber is sued to generate electricity to the grid, the other component of the proposal is how do we value that fiber having determined the amount and the volume of fiber that we will base a payment on, the other component is how do we value that fiber, and we have valued that fiber in reference to the cane price because the cane price is the only market price that exist for the cane we are trying to determine a value of something that comes with the cane and so the cane price is the basis for that, and so what we have done in our proposal is to take the cane price and we have been using the 2013 cane price as a basis and based on $74.00 a ton of cane we are saying what component of that cane is fiber and last year the percentage of fiber in the cane was 15.41% of the cane was fiber, so we are taking 15.41%  of that cane price and we come up with a price for fiber which is $11.43 now that $11.43 per ton of fiber is then applied to the quantity of fiber that is used to generate electricity to the grid and that calculation comes up to $550,000.00 and expressed as a percentage of cane comes up to fifty one cents per ton of cane, so we have come up with the proposal.”


The 51 cents is not a set price, says Carballo.

 

Belizario Carballo- BSI/ASR Financial Director


“Twenty nine percent of the electricity that is being considered, is 29% represents the percentage of fiber that is used to generate electricity that is sold to the grid so clearly that payment will become bigger as we get more cane, more cane will be more fiber and therefore the percentage will still be there and so in terms of a payment clearly we will be paying for more fiber and so yes the payment will get bigger as we produce more cane and so it is a formula that is being proposed, the fifty one cents in not fixed just a formula that will change overtime but what will change is the percentage of fiber in cane but the percentage of fiber that is used to generate  electricity won’t change that 29% is going to be locked in because it is a percentage that is now and it is going to be in the future but what will change is obviously when more cane is delivered the quantum will increase.”


Carmelita Perez – Reporter


“And then farmers can expect more cane than that fifty one cents?”


Belizario Carballo- BSI/ASR Financial Director


“Correct, and to be relative as part of the formula the quantum will go up if it is $550,000.00 based on 2013 crop it will differ from crop to crop and it is link to the amount of cane because we are paying for that 29% of fiber that comes with the cane and clearly the more cane there is the more fiber there will be and so the payment will changed on that.”


With Belgogen in place, the factory is able to mill more cane thus translating in a win, win situation.

 

Belizario Carballo- BSI/ASR Financial Director


“To determine the price for the payment of bagasse and when you consider Belcogen as a business four years into operation is till incurring losses and has not yet turn a profit, $550,000.00 sounds small for the farmers but for us is more than we could afford because we are incurring losses. Belcogne is already accruing benefits to farmers and this is because Belcogen has allowed us to be able to expand and to be able to add more equipment, to be able to achieve what we have achieved to date, in the past four five years BSI has invested 50 million dollars in its sugar mill besides the 130 million dollars in Belcogen investment and combined what we are seeing today that increase in grinding grid up to 7500 on average and an extraction rate up to 95% these include recoveries, what we have shown is that on a typical crop today we can produce 10,000 of sugar more than we would have been able to do before Belcogen so Belcogen has allowed us to be able to be more efficient to produce 10,000 tons more of sugar.  That amount of sugar more represents a value of 7 million dollars more to cane farmers in the form of the cane price, that flows directly to cane farmers so our investments have resulted in improved extraction, improved production capacity and rate and it is translating into directly into improve payments to cane farmers.”


The Belize Sugar Cane Farmers Association is yet to meet with its membership to discuss BSI’s proposal.

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