One man’s thrash, is another man’s treasure; this saying has been seen played out for several weeks now on local media as we have been closely following the developments of the bagasse dispute that BSCFA (Belize Sugar Cane Farmers Association) has been fruitlessly trying to resolve with BSI (Belize Sugar Industry). BSCFA officials were on this morning’s Rise and Shine Show to discuss this very same issue. Mr. Ramon Cervantes, Treasurer of the Finance Committee for BSCFA, related to us the measures the BSCFA has unanimously decided to take.
Mr. Ramon Cervantes- Treasurer of the Financial Committee
“Last week, we had a meeting on Saturday 2nd…the BSCFA had its meeting and it was unanimously approved by the Orange Walk Division that we want payment from the bagasse (the time is now) and frankly if there is no signing of this commercial agreement…no finalization of it, then we won’t begin crop…we won’t begin deliveries and there will be no signing of the agreement if we don’t get a payment of the bagasse”.
But in what position is the BSCFA to demand payment for the bagasse which at first glance appears to be mere waste?
Mr. Oscar Alonso- CEO of Belize Sugar Cane Farmers Association
“Sugar cane is the product. They buy products of sugar, molasses and bagasse. Right now, we are getting paid for sugar and molasses, but we are not getting paid for bagasse…and this is the basis why we are claiming to be paid. It is based on the 2002 Memorandum of Agreement. It says, “Belize Sugar Cane Farmers Association and Belize Sugar Industries Limited agree that the sharing of revenue arising from the sale of any product not covered in their present agreement will be subject to future discussions and the sharing of revenue will be based on the results of those discussions”.
Well according to BSCFA executives, the sugarcane bagasse has never been total waste since BSI has always used 50% of the bagasse to generate its own electricity. Only recently that it has been recognized in the commercial market through BELCOGEN has it become the subject of much debate. CEO of BSCFA, Mr. Oscar Alonso, explains the binding contract that makes a bi-product, such as sugarcane bagasse, a subject for negotiation between the two parties.
Mr. Oscar Alonso: “When ASR, even from the moment they were doing their due diligence to buy over BSI, we had a meeting with them together with government and other officials in May of last year and we clearly pointed out to them that the existing agreement provides for negotiations for the payment of bagasse. They not even put the puss in a bag”.
Mr. Louis Wade: “So, when they buy the company, they also bought it with the agreement as it is and everything”.
Mr. Oscar Alonso: “Right, as it is. They acknowledged that they will respect whatever it is”.
Mr. Louis Wade: “And you guys reminded them before the sale?”
Mr. Oscar Alonso: “It was pointed out but now they are saying NO, we won’t pay you; we won’t even negotiate. And here it clearly states; this is what they paid for. They were misinformed by the executives of the BSI, well, that’s their problem”.
Mr. Ramon Cervantes, explained why BSCFA fervently refutes one of BSI’s main arguments. According the BSCFA, BSI is of the opinion that sugarcane bagasse is a waste product, hence when they buy the sugarcane from the cane farmers, it is already property of BSI. But BSCFA is saying that this is not so, since BSCFA and BSI operate within a partnership.
Mr. Ramon Cervantes: “We are not two independent parties that buy and sell to and from each other. We operate like a partnership where the farmers deliver the cane, and BSI is the processor extracts the by-products and then we have a revenue sharing agreement; that is how we get paid. If there was a cut and dry, buying and selling, for example like when you go to the store and buy a soft drink or a chips or something, in that case, the seller usually sets the price. So, when we get paid, Louis, is not on a price that we ask for a ton of cane. It is based on really what estimates BSI gives us and we accept it and we might question their figures but we have no power to add it if their figures are right of not right”.
Nevertheless, BSI sent out a press releasing earlier today, letting their side of the story known. According to such press release, they are of the opinion that parties and stakeholders should communicate this issue in a peaceful and professional manner rather than “…by back and forth through the media.” The press release stated that there is no legal obligation on the part of the Company to share any of the proceeds of sale of electricity to BEL. BSI went on to say that the cane which is purchased and delivered to the sugar mill includes of sugar, water, fiber (bagasse), mud and etc. According to the press release, all of these become BSI’s property, responsibility and risk. The press release stated that for the past 30 years prior to 2010. BSI dealt with the disposal of the bagasse at a substantial amount- BZ$20 million- without any contributions from BSCFA. The BELCOGEN project possessed a capital investment of BZ$130 million, which is today one of the largest private sector investments in the history of Belize. Again, BSI stated that BSCFA contributed nothing to this major investment. The press release stated that, “It is not reasonable or just for BSCFA to expect a return where it has made no investment. The press release closed off by saying that it has issued a letter to BSCFA in which they suggested a date for a meeting to advance discussion which were “Separate from the bagasse issue.”