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Nov 11, 2015

EU Sugar Prices, Cause for Concern Up North

The 2015/2016 sugar crop is slated to start in the next fourteen days, but the news tonight is that while sugar prices on the world markets are good, prices in the European Union where Belize sells its sugar are not at its optimum. In fact, they have fallen considerably which means that locally, cane farmers are likely to fetch the lowest prices in years. The situation is causing unease in the north because the first payment of an estimated thirty-five dollars per ton is hardly enough to cover operational costs. News Five’s Isani Cayetano reports.

 

Isani Cayetano, Reporting

With the start of the annual sugar crop less than two and half weeks away, there is once again anxiety among farmers in the north.  Caneros are tonight seriously concerned that a sharp decline in the cost per ton of sugar on the European market will deeply affect their pockets here at home.  That is based on a suggested price from the EU.

 

Oscar Alonzo

Oscar Alonzo, Chief Executive Officer, B.S.C.F.A.

“When we looked at this estimate which is based on a cane price of about a little over forty-two dollars which will make the farmers receive about thirty-five dollars, or a little over thirty-five dollars as first cane payment we are a bit concerned.  This has been one of the lowest payments that the farmers have received at the beginning of a crop.  The last low payment we received was in 2009, 2010 but I think this payment reflects what was being received during the years 2000 to 2005.”

 

ASR/B.S.I.’s Chief Financial Officer, Belizario Carballo, says the marked decrease had been expected and, for the better part of two years, farmers were being informed of what was about to take place on the external market.

 

Belizario Carballo, Chief Financial Officer, ASR/B.S.I.

“As we have all been anticipating and as we have been communicating with farmers for some time now, at least the past eighteen months, the prices in the EU market which remains our main export market have fallen considerably.  In fact, the decline in prices started from earlier in 2015.  This year, we were protected from that decline in price because of the contract that we had with TLS (Tate & Lyle Sugars) which extended up to the 2015 crop and therefore expired with the end of the 2015 crop which provided for a minimum price of a hundred and twenty-five Euros.  The price in the market was trading close to a hundred Euros below that price but that price was the minimum price set under that contract and therefore we got that price and so were protected from the  decline in price.”

 

While the leadership of the Belize Sugar Cane Farmers Association acknowledges that there has indeed been a drop in the price of sugar exported to Europe, C.E.O. Oscar Alonzo maintains that the millers were a bit too moderate in formulating their starting point.

 

Oscar Alonzo

“Indeed the price has been falling, okay; however, we’re seeing that there are prospects of it being able to rebound alright.  And when we look at the average price for sugar in the EU market the last one that we saw for last month was bout three hundred and eighty-nine Euros per ton.  We do not think that B.S.I. has really taken into sufficient account these factors.  We have seen the assumptions that they have made relating to price, we feel that B.S.I. has, the assumptions they have taken are too conservative.  They could have been a bit more flexible to enable farmers to have a better price.”

 

The rationale, says Carballo, is based on a new agreement with British-based multinational agribusiness Tate & Lyle, which will see Belize being paid an average price going forward.

 

Belizario Carballo

Belizario Carballo

“We are now operating under a new contract with Tate and Lyle Sugars.  That new contract essentially provides for Belize to be paid the average price of what Tate & Lyle purchases sugar from, countries like Belize.  ACP countries that have preferential access into Europe, that can sell sugar into Europe without paying duty.  So whatever sugar Tate & Lyle purchases sugar for the 2015/2016 marketing year which extends from October 2015 to September 2016 we would be paid the average.”

 

That average, however, is inadequate since, according to Alonzo, the prescribed amount cannot suffice for the quantum of operation expenses.

 

Oscar Alonzo

“This price of thirty-five dollars will certainly impact the farmers drastically.  When you look at the high level of the cost of operations because of the high level of fuel, the high level of spare parts, the cost of spare parts, the high cost of manual labor, the high cost of machinery services, even right now the cost that the farmer has to bear in terms of his loan repayments and interest payments that he has with the banks right, where he had made investments to increase production in order to supply the factory.  Getting thirty-five dollars per ton will certainly put him very much against the wall.”

 

The sugar crop for 2015/2016 is set to commence on November thirtieth.  The thirty-five dollars per ton bargain forms part of the first payment for sugar cane farmers. Reporting for News Five, I am Isani Cayetano.

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