According to press reports, employees of Belize Sugar Industries (BSI) have voted to accept a bid from American Sugar Refiners (ASR) to take a majority shareholding in the company. The proposed agreement involves ASR settling BSI’s external debt (US$6.2 million) and outstanding dividends to employees (US$5.2 million), investing US$40 million in factory modernisation and a further US$20 million in cane field development.
According to representatives of the Belize government, the deal will result in a ‘huge injection of resources into the industry’. However, Belize sugar farmers remain interested in taking a shareholding in BSI (see Agritrade article ‘Debate intensifies over expansion of Belize Sugar Industry share ownership’, 6 October 2011). The government remains open to this, offering to sell part of its remaining shareholding in BSI to sugar cane farmers collectively.
The deal with BSI is expected to be finalised on 30 June 2012.
ASR is the owner of Tate & Lyle’s sugar division, the purchaser and processors of raw cane sugar exported from Belize to the EU. Tate & Lyle also has an outstanding commitment to convert its entire direct consumption sugar range to fair-trade. Given the growing competition between Tate & Lyle and British Sugar on the UK fair-trade sugar market, it remains to be seen whether the purchase of shares in BSI by ASR will provide a boost to fair-trade certification in Belize. During discussions in 2011 with the Jamaican sugar sector, representatives of Tate and Lyle sugar had suggested that assistance could be given with fair-trade certification if a multi-annual marketing agreement were concluded (see Agritrade article ‘Tate & Lyle seeking long-term sugar supply arrangement’, 5 July 2011).
The decision by ASR to take shares in BSI can be seen in part as a response to British Sugar’s growing ownership interest in sugar milling operations in Southern Africa, in countries which are currently the main ACP sources of supply for fair-trade sugar (in both Malawi and Zambia, via the 51% stake in Illovo owned by British sugar’s parent company Associated British Foods).
The vertical integration of European sugar companies with sugar milling companies across the ACP raises important issues related to the transparency of the functioning of ACP–EU sugar supply chains. This may well be an issue to which the Belize Cane Farmers Association and the government of Belize need to pay close attention, as the last of the price guarantees for ACP raw sugar are phased out from 1 October 2012 and prices to be paid for ACP raw sugar will be determined by the functioning of market forces.