GOB Ignoring Sugar Cane Crisis…

The 2009/2010 sugar cane crop finally started on Wednesday, December 16^th, the latest it has done so in history.  Nonetheless, the start of the harvest was surely a welcome relief to the more than 6,000 cane farmers and their families of the Corozal and Orange Walk Districts, who are heavily dependent on sugar for their only source of income.  But their future remains mired in an uncertainty that may bring the entire industry to its knees at a time when it is floundering as a result of the loss of its preferential market and the 36 percent cut in the European Union’s sugar price that will take effect this crop.

There are volatile issues, particularly the cane farmers’ demand for remuneration of the bagasse that will be generated from their delivered cane and used by the Belize Sugar Industries Limited at its cogeneration facility that is now online, that remain unresolved.  But if allowed to fester for long, these issues may disrupt this year’s crop more than the strike and the violent clashes with the country’s security forces over the sugar cane core sampler that led to the death of cane farmer Antanacio Gutierrez did to last year’s.  The shutdown of the industry in February 2009 resulted in millions of dollars in losses to the North’s economy.

The men and women who carry out the back breaking work of cane farming in the hot sun to eke out a living believe that it is only fair that they should be remunerated for the bagasse that will be burned not only to power the factory but to generate electricity, given that BSI expects to earn millions of dollars a year from its sale to the national grid.  Times are tough just now, and any extra revenue would supplement the cane farmers’ meager incomes and lessen the possibility that they would have to resort to illegal means, such as prostitution, to clothe, educate, feed, and shelter their families.

But once again BSI has taken an absurd position regarding the cane farmers’ wellbeing despite the likelihood that it will become awash in money from its sale of electricity to the Belize Electricity Limited.  Chief Executive Officer Joey Montalvo and Financial Director Belizario Carballo Junior are adamant that the cane farmers should only be remunerated for their cane and molasses and nothing else.  In their view, the bagasse would simply be industrial waste with little value were it not for BSI’s more than $125 million investment in the cogeneration facility.  Fair enough.  After all, it is BSI alone that is assuming the risk for this momentous investment.

Yet there is no evidence that BSI will be unable to meets its financial obligations to its creditors since it has a guaranteed market for all the electricity that it can generate.  BEL’s main supplier Mexico’s Comisión Federal de Electricidad can no longer provide the country with a fixed power supply, and is selling its available electricity at a much higher rate, leaving BEL to scurry around looking for alternative sources to fill our energy needs or else plunge us into darkness.  As a result, it appears that Montalvo and Carballo have forgotten that BSI would not have enough bagasse to make the cogeneration facility a viable undertaking and a potential gold mine were it not for the cane farmers’ cane.  Thus, their position is completely unreasonable.

Aside from the dispute over the remuneration for bagasse, BSI and the cane farmers remain at odds because each side blames the other for their troubles.  The cane farmers are angry because they were out of work since May and believed that the poor management of BSI and the factory not being up to par are to be blamed.  In addition, the long wait to harvest the crop caused a major financial setback for many cane farmers, who had no savings to tide them over. And the late start means that the cane’s sucrose content will be very low, resulting in cane farmers getting a reduced price for their deliveries and subsequently being unable to afford the high costs of inputs, such as fertilizers, and the high cost of fuel to haul their cane to the factory.

On the other hand, BSI blames the cane farmers for the industry’s present state.  Although the factory has the production capacity of 1.2 million tons, the 2008/2009 crop only produced about 918,000 of sugar, the lowest output in 20 years.  BSI claims that the cane farmers’ continuous failure to increase their productivity and the yield of their cane is responsible for the industry being unable to collect its projected revenues.  While the last crop’s low output did not result in fewer revenues because of the Euro’s strength against the United States Dollar, the 36 percent cut in price is expected to cost the industry $50 million in revenues this crop.

Another issue that could disrupt the industry’s operations pertains to the association that represents the cane farmers’ interests.  According to the 2001 Sugar Cane Act, the Belize Sugar   Cane Farmers’ Association is the only entity that can legally represent or negotiate on the cane farmers’ behalf. But the BSCFA has been wracked recently by accusations of mismanagement of funds that led to the termination of Chief Executive Officer Carlos Magaña and of political interference.  The meddling has apparently led some members of the Committee of Management to do the ruling area representatives’ bidding so that they may gain political mileage with their constituents, instead of acting in the cane farmers’ best interests.  This has resulted in the BSCFA’s hegemony being challenged in the Supreme Court of Belize by the United Cane Farmers’ Association that is based in Orange Walk Town.  And word is that a third association has been formed recently in Corozal Town by the prominent cane farmers, who were once backing the UCFA.

But it appears that the associations and their leaders are only battling over the control of the tens of millions of dollars of Fair Trade funds and the whopping $140 million dollars that will be made available to the cane farmers by the European Union to help them to improve their efficiency and productivity in light of the loss of the preferential market and the 36 percent cut in price.  The infighting, however, has led to a splinter among the ranks of the cane farmers, who are hedging their bets on those leaders, who they believe may provide them with the most perks out of the millions of dollars, instead of the leaders, who may overhaul the industry and in the process make the cane farmers more efficient and productive.

For the good of the industry these issues must be promptly resolved or else it will not be able to stay afloat much longer unless drastic measures that will not benefit the majority of the cane farmers are taken.  It goes without saying that its demise would be catastrophic.  Sugar is still the biggest foreign exchange earner of all the agricultural commodities, and it is unquestionably the largest employer of labor in the North, utilizing a wide range of expertise, from the low skilled cane cutters to the specialized scientists and engineers employed at BSI.  Indeed, the industry has played a significant role in our national development and it still has an important contribution to make.