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Nov 26, 2004

Citrus industry looks to better future

Story PictureAlone among Belize’s big three agricultural commodities, citrus does not depend on any special trade preferences from Europe. And while times are not particularly good in the industry, orange and grapefruit products remain the Belizean products most likely to survive in the coming dog-eat-dog era of globalisation. As farmers and factory personnel begin to process what should be the biggest crop in four years, News 5′s Janelle Chanona travelled south to see what the future holds for the nation’s most valuable fruit.

Janelle Chanona, Reporting
In the days when King Cane ruled the north, citrus was his queen in the south.

But today even though groves still claim most of the valleys in the Stann Creek District, years of high production costs, rock bottom prices and crushing debts for the industry, have taken their toll. Belize?s growers are living in interesting, but extremely vulnerable, times.

More than a thousand Belizeans have planted more than fifty thousand acres in citrus. Roughly half of those growers sell orange and grapefruit to the factory, but last year, the world market price for oranges dropped to a thirty year low and although grapefruit prices are up this year, the industry is still strapped for cash.

Things were supposed to change for the better in 1998 when the Commonwealth Development Corporation bought the two processing facilities, Citrus Products of Belize and Belize Food Products and merged them into one company, Del Oro Belize. But after spending three years and an estimated forty million U.S. dollars, CDC closed up shop. That?s when the Citrus Growers Association of Belize entered the picture, with the idea of making money where CDC had failed. According to Chief Executive Officer of the CGA, Bridget Cullerton, even though the move includes the assumption of forty million dollars of debt, there is no shortage of optimism in the industry is rejuvenated.

Bridget Cullerton, CEO, Citrus Growers Association
?A great deal has to do with the prospects we have. Now that the growers are owners of the factory, we are looking to not just continue to produce as we have traditionally concentrates, but looking at a lot more value added products. So our growers are seeing on the horizon the possibility of having what we referred to commonly as value added products as a part of the industry. ?

Because CGA is a non-profit organization functioning under the Citrus Processing and Production Act, the law had to be amended so the association could own the factories.

Bridget Cullerton
?We continue to be all that that law dictates as a non-profit. But as a non-profit we have by that same law, the ability to create a subsidiary, separate and distinct. That subsidiary has its own board of directors separately distinct. Now that that entity has bought the factory, the factory has its own board of directors with its name called Citrus Products of Belize Limited with its own board of directors.?

So on paper, CGA owns a hundred percent of the Investment Company Limited which in turn, owns ninety-nine point two percent of Del Oro, now called the Citrus Products of Belize Limited. Chairman of the CGA?s management committee, William Bowman says the arrangement has proved successful.

William Bowman, Chairman, Citrus Growers Association
?CGA owns CPBL so the growers make up CGA, but no one grower has a share in CPBL. They?re only part owner of CBPL because they are citrus growers registered with citrus growing association. So all growers own the association, but they don?t own any shares in CPBL.?

?We want to make sure that there is no micro-managing by CGA of CPBL because the bankers would not take kindly to that and we?ve had serious problems in being able tot manage the company properly. So I think that has worked well.?

But that creative structure of companies has left a sour taste in the mouths of some growers.

Denzil Jenkins, Director, CGA and ICL
?They?ve been using for instance the term, ?all ah we da one? and I?m saying that is intended to be like an opiate to put the growers to sleep.?

Denzil Jenkins is part of the CGA management committee, a director of ICL and has recently resigned from CPBL?s board. Jenkins maintains that because a small group of people sit on all three boards: the CGA, ICL and CPBL, the operation is contaminated.

Denzil Jenkins
?What this has led to is such conflict of interest, not just theoretical conflict of interest, but active conflict of interest, it is scandalous and I would go further and say that it has led to activities that border on being criminal.?

Henry Canton, CEO, Citrus Products of Belize Limited
?Anybody that intimates that there is a collusion, that?s not true. If you know the players and I don?t want to get into the personalities of the players, but if you know the players in this industry they are not going to forego a lot of what they consider their personal interest.?

Chief Executive Officer of CPBL, Henry Canton says the setup is unique but rooted in common sense.

Henry Canton, CEO, CPBL
?How can one have different people on all those boards? It makes no sense because they are all integrated and if you begin to think of a Citrus Growers Association with totally independent members, ICL with totally different members and CPBL board with totally different members, the cost of running that kind of a business, the cost of just trying putting people together to get the right decisions made, it just won?t make sense.?

?So yes there are people that are on CGA?a board, that are on ICL board, that are on CPBL?s board and in my mind and I might be wrong that is the best way of putting it together.?

As internal domestic conflicts continue, international market realities might also mean tough decisions for eighty-five percent of Belize?s citrus growers.

According to CGA?s statistics, of the five hundred and fifty-nine growers who deliver to the factories, four hundred and seventy-seven of them are considered small farmers. And as CEO Canton admits, ?small? does not fit into the big picture for citrus.

Henry Canton
?Globalization and free trade does not speak to the smaller farmer and that is a reality that all countries of the world are now beginning to realize. Unless we set a safety net system in agriculture where we can assist the smaller farmer, group the smaller farmer and treat them as a bigger unit, which is very difficult because farmers are farmers and farmers are independent people, they don?t like to be grouped collectively in most instances. If we aren?t successful in doing that, I think the smaller farmer will fall to the wayside.?

To offset the dynamic instability of the industry, Canton says CPBL is exploring its options in Central America with new ?valued-added? products, in order to take Belize?s citrus exports from commodity into more profitable niche markets.

Henry Canton
?If we can do the Central American deal and I?m fairly confident of that, it means that we could probably move a hundred percent of our orange products into the region which would give us a much higher price which will then be passed onto the grower and I then think the industry will be extremely sustainable. ?

Reporting for News 5, I am Janelle Chanona.

Industry experts believe that future growth in citrus production should be achieved through higher yields from existing acreage instead of large scale new planting.

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