BSI not bending on issue of paying farmers for bagasse

B.S.I. will not bend or bow where the issue of paying farmers for bagasse is concerned. That is the position coming out of a press conference hosted by B.S.I. and A.S.R. this morning in Belize City. On Sunday in Corozal, cane farmers unanimously voted to suspend delivery of cane to the factory whenever the season opens. They want a share of the profits from the sale of energy from bagasse, and say they will not join the queue at B.S.I. until an agreement is reached. The press briefing this morning didn’t provide a resolution to the issue, but B.S.I. is making its stance public, and making sure that everyone is aware of the wide repercussions from a delay of the crop season. Mike Rudon was at the briefing this morning and has the story.

Mike Rudon, Reporting

Cane farmers from northern Belize drew their line in the sand on Sunday in Corozal, and this morning BSI and its majority shareholder, ASR, drew theirs. While those lines aren’t yet penned in indelible ink, they may as well be, since both sides aren’t budging from the stances they have taken. For cane-farmers the issue is simple – they deliver the cane which ends up as bagasse. BSI makes money off that bagasse. So cane farmers want a piece of the pie. For BSI the issue is also simple – they invested the time and money to bake that pie so they want it all.

Ricardo Lima, Vice President, ASR

Ricardo Lima

“The issue here is that we don’t feel that since the farmers had no risk, did not put any money into Belcogen, have not invested into Belcogen – the product of electricity which is a result of the one hundred and thirty million dollar Belize investment by BSI should not go to anybody else but BSI. That’s just pure business fairness, and that’s what we call it.”

So with that position out front and center, BSI is now trying to get past an impasse which shows no signs of breaking down. The situation is actually dire, since a delay in crop, or worse, no crop at all, would have dire repercussions for BSI, farmers, the industry and the country.

Ricardo Lima

“If crop is delayed or if there is no crop the price is huge for many, many people. There are thirty-five thousand Belizeans who depend on this industry in the northern region – I repeat…thirty-five thousand people. That’s 10% of the Belizean population – it’s a huge impact. A delayed crop will also send a wrong message to our customers in Europe – basically that neither BSI or Belize is a reliable source of sugar supply – sugar is sold on future contract deliveries, and if deliveries are not met, again customers will be very, very upset, and that has a price. It will impact the farmers ultimately. If Fairtrade sugar – the sixty-five thousand tons of sugar earmarked for this crop are not met, the Fairtrade market will have to go elsewhere.”

Belizario Carballo

Belizario Carballo, Chief Financial Officer, BSI

“There is cane right now on the ground that is ready for harvest, and therefore delaying the crop will affect in particular those farmers, because not all farmers are ready to start the crop, so not all farmers are equally affected, but those farmers who are ready who have cane ready to start the crop, and have mature cane that is ready for deliveries – those are the farmers who would particularly be hurt by any delay of the crop.”

Ricardo Lima

“Cane is a perishable item as we all know. Cane has to be harvested in specific windows and cycles. It also has to be replanted within the proper cycle. If there is a delay in crop – one, two three months – or no crop, you can imagine the impact of next year’s crop. There will be stand-over cane. Stand-over cane dries up, dehydrates, there is little sugar coming out…it’s only going to be fiber basically a year from now, the cane that is not ground. It’s a ripple effect. I want to make sure that you all understand that this is a serious problem not to be taken lightly.”

Belizario Carballo

“The impact is not just on BSI or the farmers. It is really, as was made mention at the end of the press statement, it is really the wider macroeconomic impact on Belize that is really of concern. There’s also the banking situation. Farmers are committed to the banks. The banking situation will have an effect on that as well. So it is really that broader picture. As it is the country will be impacted because the inflows of sugar money will be delayed.”

If it looks like representatives from BSI and ASR are taking the situation very seriously, they are. Even a delay of a few weeks will result in a loss of millions of dollars.

Joey Montalvo

Joey Montalvo, C.E.O., BSI

“In six weeks in the last three crops, farmers delivered an average of about 180,000 tons of cane. If you take that average and say that that is what we would lose in six weeks – I’m just putting it in perspective, what can be done in six weeks from the time that the crop starts – at the price that we have gone out as the first estimated price for the 2014 crop – you’re looking at close to eight million dollars in terms of what comes into the economy.”

Against the backdrop of that tremendous potential loss of revenue, BSI says that there is no justification in a delay to the crop season, and no need for threats or intimidation.

Ricardo Lima

“Going back to the table and negotiations is the way to go. We can reach an agreement on the commercial agreement, and continue to disagree on the bagasse and agree to disagree on the bagasse as we have mentioned, and they continue the avenue of the courts and there will be a crop. I think that’s the prudent thing to do, I think it’s the logical thing to do, it’s the business-like thing to do and it’s the humane thing to do for thirty-five thousand family members out there.”

No doubt the BSCFA is fully aware of all those repercussions, and are still holding on to their hard line, as is BSI. So realistically, what can be expected in the weeks ahead?

Joey Montalvo

“I would only hope that within the ranks of the members themselves that they would realize that there’s a much bigger thing at stake than just the expectation of a bagasse payment which is in dispute. And that there is an opportunity to discuss how that may be approached and in the event that we are not able to reach an agreement we might be able to take it further, and all that without prejudice.”

Ricardo Lima

“What we hope happens in the next few weeks is that common sense and good intent takes over. And what we hope is that deliveries take place. And what we hope is that a crop starts as soon as possible, as soon as weather allows it. That’s what we hope, and that’s what we’re trying to work towards. We’re ready to continue working towards that goal, and that’s what we’re hoping for. What’s going to happen? I don’t know what’s going to happen, because there are two parties here, and as the saying goes, it takes two to tango.”

The BSCFA has stated that it is not interested in dancing a tango with BSI, but in reaching a serious and beneficial agreement on bagasse. Mike Rudon reporting for News Five.

Carballo says first payment this year was estimated at a record forty-three dollars per ton.