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Apr 5, 2018

B.S.I. Cuts Estimate for Sugar Prices Due to Slumping Market

The 2017-2018 sugar cane season is winding down and targets are close to being met. But the worry for cane farmers tonight is whether they will see any profits. ASR/BSI announced last week that the third estimated average cane price for the 2018 crop is forty-one dollars and sixty-nine cents per ton of cane, a reduction of ninety-one cents. The producer says projected prices for raw sugar sold in the European Union and on the world market are going down, barely offset by improved prices for direct consumption sugar in the Union and raw sugar to the U.S. But ASR/B.S.I.’s relations manager Olivia Avilez says it was not unexpected in this first season after the E.U. preferential quota went out of existence. Nonetheless, she says the miller wants farmers to keep producing good quality sugar cane to create good sugar.

 

Olivia Avilez

Olivia Avilez, Cane Farmers Relations Manager, ASR/B.S.I.

“Post- E.U. sugar market regime changes from October 2017, it really is no surprise to us that we have sugar price drops, [a] sugar surplus in the world market, and we are now at this point where we have to be the bearers of bad news really, to the sugar cane farmers, which are our key suppliers, and to the nation at large, mainly because of the drop in sugar prices. The cane estimate is just an estimate. We issue monthly estimates for cane farmers. The first cane estimate comes out before the crop season, and then from that we pay farmers eighty-three percent of that first estimate, one week after they deliver their cane. After that, monthly, we issue estimates to update them based on the parameters we use to do cane price payments. The second payment is issued after the crop and then the third payment in November, after the crop; so this really is an update, not really the second or third payment.  We hope that some of the parameters that we use for cane pricing are actually better by the end. First of all, the cane quality is still important. Farmers and us need to ensure that quality cane is delivered and processed and at the end, sugar produced. At the current moment, the quality is estimated at nine point five tons cane to tons sugar, however we can do a little bit better and that contributes significantly to the cane price. Another contributor is the amount of direct consumption sugars we are able to produce. The company embarked on a project this year to produce more direct consumption sugars because they fetch a higher price – actually, forty-two percent higher than what we are selling raw sugar for. And that’s basically some of the changes we have to make as an industry. Raw sugar is no longer competitive. We can no longer rely primarily on raw sugar; we have to move to value-added products.”

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