7 News Belize

Finally! Sweetness & Light In Sugar Industry (For Now)
posted (November 23, 2010)
There will be a special house meeting on Thursday - special because it is not on a Friday and even more special because for once we expect that there will be agreement on both sides of the floor. The special sitting is being convened to approve a 10 million dollar bailout loan from government to BSI.

As we've been reporting, BSI does not have money to pay farmers the overdue third payment and, more worryingly, the sugar processing company does not have money to start the next season on December sixth. That puts the entire industry in peril because without a bailout the biggest employer in the north could go under - leaving six thousand farmers without a livelihood and their families without daily bread.

With stakes like that - the only remarkable thing is how long government took to "come up" - and front taxpayers' money to bail out the troubled industry.

But as it turns out it wasn't that simple - there's quite a chasm between the farmers and the factory owners - and to save the industry, they both had to get on the same page.

To that end, meetings were held all of yesterday in Orange Walk as Deputy Prime Minister, Gaspar Vega, The Minister of Agriculture Rene Montero and Senior Government Advisor Sir Manuel Esquivel thrashed out the roadblock issues with both sides.

They continued this morning in Belmopan with Prime Minister Dean Barrow and at a few minutes to twelve the big announcement was made:

Jules Vasquez Reporting
After two days of meetings - in Orange Walk involving the PM, DPM, Minister of Agriculture and senior advisor with Ministerial rank Sir Manuel Esquivel.

PM Dean Barrow
"A few minutes ago we reach agreement on a memorandum of understanding that is to be sign by the BSCFA. BSI, SICB (Sugar Industry Control Board) and the government of Belize."

Today all stake holders in the sugar industry jointly signed - while many others looked on - showing an unprecedented spirit of partnership borne out of nothing less than collective desperation.

PM Dean Barrow
"The sugar industry has to be preserved and the government recognizes that it together with BSI and the BSCFA needed to do whatever was necessary to ensure that preservation. To have allowed this thing to collapse just like that was a decision that no compassionate government could contemplate that no Prime Minister who has blood running through his veins, who is a Belizean could allow to happen."

And it is an expensive decision: The MOU commits the government to give a 10 million dollar bailout loan to the industry and BSI, the Cane Farmers Association and the Sugar Industry Control Board commit to improving standards and having a near record year of production.

PM Dean Barrow
"We also have an obligation to the public to ensure that this is not going to be money simply thrown away, thus it was critical that we agree with BSI and with the BSCFA, a way forward we are all aware of the problems that we've had in the past. It was critical that we agree a way forward that would ensure the viability not just of the next crop but of the industry for the future."

And that future will require improving standards - which we've heard before - but today there was the genuine commitment to reform that can only come from an industry which has been given a reprieve from a death sentence:

Alfredo Ortega, Chairman, BSCFA Committee of Management
"We are committed to work very closely with the SAPC and the SICB and BSI to reform within the industry. It is time for us in a no turn back point; if we do that we are killing our self as an industry. We need the commitment of all farmers that we will be geared to work for the betterment of quality of sugar. Yes in the past we have had huge amount of problems as the Prime Minister well said but it is time for us to join hands and to move this industry forward, we cannot continue walking in separate directions. We will be ensuring that there will be strict control in burning of cane, there will be strict control in the cutting system of cane and there will be strict control in the loading of cane. This will reduce the amount of mud that has been taken to the factory and we are serious in this area because we are committed to move this industry forward."

Joey Montalvo, Managing Director, BSI
"It is unthinkable that we could even countenance the thought of having a poor crop next year because that will certainly be detrimental to securing the future of the sugar industry because we have to go beyond this crop, this crop as I said could be our last but we do not certainly intend it for it to be our last crop. I am encourage by Mr. Ortega's comments that there is that resolve and determination to act on what we are going to put our signatures that our word is effectively our bond."

PM Dean Barrow
"What is beyond doubt is that we now have a historic partnership that has been forge this morning. What is beyond doubt is that certainly at the level of the directors and at the level of the directors of the BSCFA and the directors of BSI and the management of BSI, there is a mutual resolve to go forward on the basis of respect and an absolute determination to preserve the industry. All of you know that there is a history of dispute and misunderstanding between BSI and BSCFA, I think it is remarkable that in 2 days we have been able to reach an understanding which I hope and pray will hold. If it doesn't hold that 10 million dollars of tax payers money down the drain. It is also the destruction of the lively hood of 6,000 cane farmers and their families so it must hold."

And while all sides mean well, don't even mention the core sampler:

Hugo Patt, Chairman Sugar Industry Control Board
"Core Sampler certainly is not the word that we want to use today, certainly we want to introduce a system of quality by payment base on groups so core sampler is not option right now."

And while both sides could laugh about that - everyone knows that nothing is promised in their future:

PM Dean Barrow
"Even with this temporary bailout that the government is contributing to, the future of the industry is far from assured."

There are a number of important footnotes to that story. First: the MOU was forged with consultation of 17 of the 18 directors form the Belize Sugar Cane Farmers Association. The Association is tasked with taking the message of improved quality cane to all its branches starting today.

Apart from the third payment with interest - the Prime Minister has also committed to assisting the Cane Farmers Associaiton with an additional one million dollars in support.

As for the ten million dollar loan from government, the money will be raised through a treasury note. The loan will be on the same commercial terms as the previous financial arrangement from ING and First Caribbean which was cancelled in December. To ensure oversight of BSI's affairs, Sir Manuel Esquivel will be placed on the BSI board - making it two Government of Belize directors who will have veto power over the company's spending.

Of course, that is only half of the 20 million dollars in working capital that BSI needs to move forward. The other ten is coming through its principal trading partner, Tate and Lyle which will make the funds available through what's called a pre-financing arrangement.

So, the House meets to consider it on Thursday, the Senate on Friday and the money should be drawn down on Monday, meaning farmers will get their third payment plus interest next week. The factory has pushed back the date for the startup of the season by ne week - so it will now open on December 13th….

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