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BSI gives cañeros ultimatum Company says farmers have up to August 1st to decide

By Benjamin Flowers
Staff Reporter

The Belize Sugar Cane Farmers Association has two weeks to accept the formula proposed by Belize Sugar Industries for bagasse remuneration before the offer expires, announced Chief Financial Officer for BSI, Belizario Carballo Jr.

BSI wrote to the cane farmers this week informing them that the formula, which will result in an immediate payment of about $550,000, will be taken off the table at 5 p.m. on August 1.
“BSI is prepared to make the payment now. However, after the first [of August] we cannot say what will happen. What we do know is that the offer will not be on the table after that point,” Carballo said.

The Formula
BSI, principally owned by American Sugar Refineries, proposed a formula where the framers would be paid based on the value of the fiber in the cane used to generate the electricity that Belcogen sells to Belize Electricity Limited.

The formula considers the total amount of cane milled, total fiber extracted from it (15.41 percent) , and the percentage of that fiber which is used to generate power for sale (29 percent of the total amount of fiber).

In the model proposed the fiber was valued at 15.41 percent of the price per ton of cane for 2013 ($74.20), making it $11.43 per ton ,f fiber. BSI then took the quantity of fiber used for sales, (48,176 tons) and multiplied it by the $11.43 per ton, to arrive at a payment value of $550,652.

Carballo said that BSI offered the formula to the cane farmers on March 25 but they did not accept. However, with the end of the interim agreement between BSI and the BSCFA on July 8, the end of the 2013-2014, crop, BSI says that it is extending the offer in good faith.

The rationale
The sugar company maintains that it is offering a fair deal to the farmers, and based its stance on three key points:
1) The level of investment the company made in Belcogen;
2) The fact that Belcogen is operating at a loss for its first four years of operation;
3) Belcogen’s existence has brought tangible benefits to the farmers.

BSI also maintains its position that bagasse is a waste product resulting from the milling process.
The company has invested some $130 million into the Belcogen project, making it one of the largest private sector investment in the country. Carballo explained that until the company sees some returns on investments, it is not in a financial position to exceed what it is offering the farmers.

When the company prepared the business model for Belcogen, the projections were that it would supply 20 percent of BEL’s power. However, BSI says it has only been able to supply 15 percent because of low quality cane.

The BEL annual report puts Belcogens supply about at just over 8 percent, which Carballo explained happened because there was no production in the later months of last year due to a delay in the start of the crop.

Belcogen’s existence, according to BSI, has allowed the factory to invest in expansion, making it able to mill 10,000 tons of cane ,more than in previous years. BSI said that the farmers receive 65 percent of the benefits of that increase, which has a cash value of $7 million dollars per annum.

The BSCFA has been negotiating for a bagasse payment of $3 to $10 per ton of cane. BSI maintains that at $10 a ton, the farmers would be requesting 97 percent of Belcogen’s gross revenue of $11.4 million.

The BSCFA has said that it will take BSI’s proposal to its members at a general meeting this Sunday.

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