The country continues to watch closely what the cane farmers will decide to do when they are briefed by their representatives on the proposal from the factory owners, BSI/ASR, on the payment for bagasse. But even though the deadline for a signed agreement has come and gone, BSI is still trying negotiate with the farmers in good faith.
In a letter from Belizario Carballo, the Chief Finance Officer of BSI, which is addressed to the Committee of Management of the Belize Sugar Cane Farmers Association (BSCFA), he writes that the factory owners want to end the discussion on a payment for bagasse positively even though the deadline has passed.
As we reported in our last issue of the paper, BSI’s offer on the table right now for a payment for bagasse is 51 cents per tonne of sugar delivered. The cane farmers association is not prepared to accept an offer which is less than $4 per tonne.
In the letter, Carballo notes the big difference in the two offers but urges the association to remind the farmers that the offer takes into consideration 3 things. First, BSI made the biggest investment in the country’s private sector of $130 Million to establish the Belcogen Power Plant. The shareholders who made that investment have yet to see a return on that major financial risk that they’ve taken. Secondly, Carballo reminds that Belcogen has been operating at loses for the past few years. And finally, that BSI has made investments in Belcogen, which has allowed the mill to increase its productivity. The mill can now recover up to 10,000 tonnes of sugar more than it would have without Belcogen, which is an added benefit of 7 million dollars per year more to the farmers. That’s a substantial benefit and more money in the pockets of the farmer.
Next, the factory owners remind BSCFA that they developed and presented an offer for payment of bagasse on a sound methodology which seeks to value the quantity of fiber in the cane which is used to generate electricity, which is then sold to BEL. The factory owners continue to believe that this is a fair offer which the cane farmers should consider accepting.
Trying to act in good faith BSI informs the cane farmers association that though the time for negotiations has passed, their offer of 51 cents as payment for bagasse will remain on the table until August 1 at 5 p.m. The factory owner also offered that if the proposal is accepted within that period, whenever the new agreement is actually signed, they are willing to make a bagasse payment which is retroactive to the 2013/2014 crop.
Carballo closes that letter by reminding the cane farmers that they are valued partners in the sugar industry, and they want to work out a commercial agreement for the 2014/2015 crop, so that when it arrives, there are no disagreements about money.
Again, it’s important to note that although the farmers are looking at 51 cents as a cheap payment for bagasse, when they would prefer nothing less than $4, that 51 cents represents $550,000 as an additional cost to Belcogen for the bagasse project, when the company hasn’t recouped it’s $130 Million dollars initial investment.
