Tuesday, December 14, 2010

The Belize sugar industry is viable with intervention of some kind.


Some interesting things came to my attention in an interview with BSI bigwigs on local TV media.

BSI the sugar factory is independent of the producers the cane farmers, who are organized by themselves into Associations. The BSI corporation is owned by shareholders. 81% of the shareholders are the employees of the factory. 9% by the Government of Belize and 10% was owned by Tate and Lyle, but was sold to a South African investor. Essentially the factory works on dividends for employees. Though for the last four years they have not paid any dividends due to declining cane quality and sugar content. There were some weather conditions accounting for some of that.

The sugar industry works by cane producer groups and the factory group and the buyers. Essentially the sugar industry in Belize would have collapsed as the small factory capacity had maxed out. The BSI executives say that now BELCOGEN the electrical power turbines are online, they will have the ability to increase the capacity of the factory to mill more sugar cane due to cheaper energy being available. They plan if all things go well, on expanding the capacity of the sugar factory. The problems are below.

The number of small cane farmers has increased, but the amount of sugar produced over the past four years has been dropping. Due to poor quality of cane and a chaotic uncontrolled delivery system to the factory.

Revenues from sugar are shared between the sugar cane farmers who get 65% and the factory who get 35%. There is plenty of auditing and safeguards involved in this process in a shared manner.

Belize production of sugar per hectare is the lowest in the region. Including Brazil, Guatemala and Guyana. Experts say that the farmers can produce 400% more sugar per hectare than tney are now doing. This would bring sugar production just level with surrounding sugar countries. The Agriculture Department Research people are responsible for building this increased production over the past ten years, but due to the bankruptcy disaster by the last government, the political FONSECA, MUSA and GODFREY debacle with trickle down economics foolishness, the Belize government was unable for the past ten years to fund the Agriculture Department. Indeed, the Agriculture College was forcibly closed and everything has been on standbye for the last eight years due to politically created financial difficulties with the government mismanagement. With the help of Taiwan, the Agriculture Department and also UNESCO or one of those UN FAO organizations the Agriculture Department is starting to function again, from the skeleton staff mode that it had for the last 10 years. The next project for the Agriculture Department is to start making small cane farmers increase their cane production by 400% to just meet production averages of surrounding countries. Where the government will find the money, or technical skills is not yet known?

The major problems facing the industry revenues, is cane quality, timely and regulated scheduled deliveries and less mud. In this regard, the ASSOCIATIONS of small farmers in the past have insisted that each cane farmer get paid the same as each other. Yet the cleanliness, the quality of cane and other field factors dictate that a lot of small cane farmers are producing and selling a lot of mud and poor quality cane and getting paid the same as good producers. There is no incentive and indeed a lot of unscrupulous small farmers are taking advantage of the situation. The equivalent in the lobster industry are producers who stuff the gut cavity of lobster tails to increase weight with meat that spoils the lobster packages. Cooperatives control their membership quality very carefully and penalize poor producers who are destroying the industry. There is no incentive to deliver proper cane in a timely manner as of yet. As the farmers are governed by votes in associations it has proved impossible to date, to refuse poor quality farmer truck loads, or pay according to quality. The membership insist all get treated equally even though what is being delivered in the cane trucks is not equal. Unless the Cane Associations find a way to govern themselves like fishing cooperatives as to quality of product, the bad farmers are going to break the industry.

The industry is viable. All the problems have been foreseen for ten years. The industry is not viable if the small cane farmers do not form something better than an Association, perhaps a corporation to govern themselves by rules of inspection, delivery, harvesting practise and control of mud and quality in general. Without that the sugar industry in Belize is going to be dead either the end of this year, or next year.

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