The sugar prices continue to be at the top of issues that concern the northern part of the country. Today we had the opportunity to speak one on one with the Chief Financial Officer at BSI/ASR Belizario Carballo who explained that new contract with Tate and Lyle is not protecting the industry from the impacts of low market prices on the EU market. Carballo says that the contract that ended in the last crop, there was an established minimum price of 425 euros and although the EU market price was trading close to one hundred euros below that, Belize was still receiving that full payment and thus shielded from the impact in the last sugar crop. But this is Not so this year.
“The new contract that we have in place from the 2016 crop onward is based on the average price that Tate & Lyle sugars purchases sugar from ACPC’s countries like Belize that have preferential assessing to the EU market which means that we can export sugar into the European market without paying duty so the average of the purchases of Tate & Lyle sugars have in the marketing area in the EU which begins from October 2015 to September 2016 during that time the purchases for that period of time we will be paid an average so in that sense it is a fair price but what that means is that we are now, that price is now linked to the market price and as I said before the market price in the European market has fallen, we expect to see a little upturn for next crop but with tis crop it is this lower prices that we are still seeing.”
This is only the beginning however, as prices will continue to shift into 2017 as restrictions on beet production on the EU market will be lifted and prices will keep falling. We have heard of the drastic impact this will have on farmers but what of the millers? Carballo says it will be just as significant as it is to farmers and undoubtedly the economy.
“It is one that will be very difficult to manage and I think that this year we will all be in a very difficult situation both farmers at the lower prices and ourselves because the farmer price is indicative of 65% of the revenue pool and if the 65% is low clearly our 35% will also be lower and so we are all have to find ways in which we can survive and pull through, that is why we have been speaking for some time now about the need for a strategic development plan because that plan will allow us to collectively come together and determine what all of us will do because it is not sufficient for the farmers to do something independent of the others or that we do something independent of the others, this industry is a tripartite arrangement; farmers, miller and government and so it is important that three of us get together and see how can we move forward and expand and develop this industry because the bottom line is how we become more competitive, how can we produce sugar at a lower cost because if the prices in the market are falling we are being forced to reduce our cost and so we have to do that collectively.”
Carballo says that work has begun on the Strategic Development Plan which will look at addressing the pressing issues of the industry holistically.
“Now we have done some work to determine what it would mean in terms of investments that will need to be made in the plant both at the power plant and at the sugar mill and as well in terms of sugar logistics because if we are going to have more sugar we have to find ways of upgrading the way how we currently handle and move sugar from the factory to ship, currently the system is very slow, it is very costly and it is inefficient and this year we produce 142,000 tons of sugar which was a record in terms of sugar production for us and we are still moving sugar just today this morning the final ship for the 2015 crop sailed it tells you how slow and how costly the moving sugar is and clearly if we are to expand production we have to address that constraint so we have to invest and similarly there has to be investments on the farmers side for building that efficiency in the production and the delivery of cane so the strategic development plan is a comprehensive plan it has to address how we as an industry move from 1.5 to 1.8 million tons of cane and which stakeholder will do what, what will be the responsibilities and roles of each individual stakeholder but more than coming up with the plan we are looking at the commitment of the stakeholders to deliver on what is their role and responsibilities to play because it is only on that basis that we will have what we call investor confidence in other word the confidence on those who will invest because it will require significant investments just on the factory side to make that step from 1.3 to 1.8 million tons of cane will require 200 million dollars investment, that is investment in the power plant and the mill to expand capacity as well as in logistics.”
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