Challenges Facing the Industry in 2016

by Mac McLachlan - ASR Group’s Vice President of International Relations

As we approach the start of crop, farmers and miller alike have prepared the best they can to make it a successful year. But some challenges are beyond the control of either. First, the European Sugar market has deteriorated dramatically. Sugar prices fell by an unprecedented amount in the first half of 2015, as the market prepares for the changes in 2017 when beet sugar manufacturers will be allowed to produce as much sugar as they please. This will drive the price down further. No one can predict the market exactly – and it has proven over the years to be cyclical, meaning it goes up and down. For now, we are in a low point, which will make 2016 a difficult year for everyone in the cane sugar industry. The weather has also been unkind. With rainfall at half its average in the crucial months for cane cultivation, farmers are anticipating a significant decline in cane yields. We have a lot of stand over cane to crush this year, so the overall picture might not look so bad. But it is likely that from the excellent cane quality and record TCTS levels achieved last year, there is likely to be a decline in sucrose
content and cane quality. So a further blow. But there are things that are within our control.

Stakeholders need to accelerate the pace for concluding a Strategic Development Plan (SDP) with the objective of making the industry sustainable and profitable in the long term. Those involved in the SDP process have met a number of times, and working groups have reported many ideas. The SDP steering committee will shortly be presented with a log frame setting out the phases needed to achieve this. These are: improved cane productivity – more tons per acre, increasing farmers’ incomes even as cane prices fall, matching mill capacity; reduced costs of harvesting and delivery through more efficient use of cane trucks and field equipment; how the cane delivery process can encourage increased efficiencies to reduce costs to farmers; encouraging a shift to mechanised harvesting where this makes sense; agro-finance suited to cane farmers’ needs; improvements to the factory-to-ship logistics process; how to get the right investment climate to encourage mill expansion and thereby reduce production costs making Belizean sugar more competitive to face the new market challenges. To help support this process, we now have the EU-funded Sugar Industry Management Information System (SIMIS) almost operational. Farmers have co-operated exceptionally well to ensure details of farm sizes, crop estimates and other important crop details are computerized, ensuring fairness and transparency in crop management. This is an invaluable tool for SCPC and SICB to plan more efficiently.

For farmers it guarantees fairness and transparency. For the mill it provides clarity on crop estimates to help plan the milling process. The Inter-American Development Bank has also come to help us. It has approved a project which will provide independent, highly-trained extension officers to provide technical support to farmers to help improve productivity. Independent means that though they will be based at SIRDI, as the technical arm of the industry, they will work directly with farmers, and not get diverted to other matters. Associations will all have a place on the steering committee for this project, to ensure it meets farmers’ needs. Working together, industry stakeholders can make this a long term, sustainable and profitable business. But this will require everyone to play their part: farmers to improve productivity, the government to support farmers and the mill to make the investments both need to make, industry institutions to strive for greater efficiency, and the financial and development sectors to continue to support industry stakeholders in this process.

Posted on June 12, 2017 .