Press Release: Local Sugar Price Increase Benefits Entire Industry’s Viability

8 December 2015

Today, BSI issued a revised cane price estimate to cane farmer associations for the 2015/16 crop. As a result of last week’s decision by the Government to raise the price of plantation white sugar, cane farmers were informed that the first cane payment will increase to $36.65 based on a revised first cane price estimate, which increased from $41.56 to 45.25.

This increase fully reflects the increase provided under the new Statutory Instrument giving it effect. Though it was less than expected by farmers as a result of the government decision not to extend the increase to brown sugar, and also because the benefit is spread over more tons of cane as a result of an increased expected crop this year than that envisaged in 2014 when the proposal was made by industry stakeholders to Government.

Nevertheless, the increase will be of great benefit to the industry, and signals the first time in almost 15 years (the last increase was January 2001) that the industry has seen an upward adjustment in prices despite significant market changes over the years. The proposal was rooted in the context of anticipated adverse developments in the EU Sugar market, which has historically been Belize’s traditional and most beneficial export market. The EU reforms will reduce the preferential value of that market considerably in the lead up to the lifting of current restrictions on EU beet production in 2017. The proposed increase in local sugar price was justified on the basis that the increased price will:

1. Recognize increased costs for cane growing, sugar manufacturing and transportation over the past 14 years.
2. Positively impact industry revenues and in particular result in an increase in the cane price paid to farmers.
3. Have a negligible impact on consumers, which based on sales data, would result in an incremental increase on average for a family of four of around $1.50 per week.
4. Eliminate the incentive for illegal cross-border trade in sugar given the material price differential between Belize and our neighboring countries. Belize has for decades had the lowest retail price for local sugar compared to Central America and Caribbean countries. This results in the need to be tightly controlling and policing sugar sales in the local market to avoid supply shortages to local consumers.

The sugar industry of Belize is challenged to remain viable in an environment of increasingly competitive external markets, particularly based on the EU reforms in 2017. Therefore, the local sugar price increase, though only partial at this time, is a critical step, that complements and supports the industry’s efforts to ensure long-term viability.

Posted on December 8, 2015 .