Representatives of the parent companies of American Sugar Refiners (ASR) – Florida Crystals Corporation, with 64% ownership, and the Sugar Cane Growers Cooperative of Florida of Belle Grade, with 36% ownership – have spoken about the motivation behind ASR’s recent acquisition of a majority shareholding in Belize Sugar Industries (BSI). Reported in the Florida press, Gaston Centens, Vice President of Florida Crystals, maintained that ‘the Fair Trade component of the acquisition was important’. Barbara Miedema, speaking on behalf of the Cooperative, noted ‘Belize is a key supplier for our European holdings.’ Another news service reported that the BSI sugar mill crushed ‘more than 1 million tons of sugar cane and produced 114,000 tons of sugar in its most recent crop’, and that ‘BSI also processes the cane of 6,000 independent growers, who farm roughly 55,000 acres,’ all of which qualify for Fairtrade certification.
In 2012, ASR bought Tate and Lyle’s European sugar division which operates sugar refineries in London (UK) and Lisbon (Portugal). ASR stated at the time that it was ‘good to have synergies to be able to have some control over your supply from field to factory to the supply chain’.
According to a Florid Crystals spokesperson, ASR plans to use its technical expertise to help BSI ‘become more efficient and produce more sugar and to help the independent growers produce more cane’.
The Palm Beach Post reports that ASR is now ‘the world’s largest cane sugar refining company, producing 6.5 million tons of sugar a year’. Within the ACP, in addition to Belize, Florida Crystals operates a sugar mill in the Dominican Republic.
In October 2012, Tate & Lyle Sugars announced a new partnership with the firm IMCD Benelux (a food ingredients buyer and distributor serving European food manufacturers) to supply Fairtrade-certified sugar. This comes after difficulties reported by by European manufacturers in sourcing supplies for growing Fairtrade food product markets.
While the purchase of a majority shareholding in BSI by ASR needs to be seen in the context of the 2008 decision of Tate & Lyle to progressively convert its entire range of direct consumption sugars to Fairtrade-certified, it also needs to be seen in the light of wider developments. The most significant of these was the purchase by Associated British Foods (the owners of Tate & Lyle’s main UK rival, British Sugar) of a 51% shareholding in Illovo. This gave indirect control of supplies of fair-trade sugar from Malawi and Zambia to Tate & Lyle’s main UK market competitor (as Illovo owns 100% of the Malawian sugar sector and 95% of the Zambian sugar sector).
With supplies of Mauritian certified fair-trade sugar linked into the marketing arrangement with Nordzucker (see Agritrade special report ‘ Corporate restructuring in the EU sugar sector: Implications for the ACP’, May 2010), Chinese-owned companies taking a direct role in marketing of Jamaican sugar (see Agritrade article ‘ New marketing agency agreement signed with PCSC in Jamaica’, 18 June 2012), and sugar supplies from Fiji falling (see Agritrade Executive Brief ‘ Sugar sector’, June 2012), securing control over supplies of sugar ‘from field to factory to refiner’ would appear to have been essential for the fulfilment of Tate & Lyle’s fair-trade sugar strategy.
The recent high prices that traditional EU refiners needed to pay in 2012 to secure supplies of raw cane sugar will have provided a further incentive to consolidate control over supplies of raw cane sugar to Tate & Lyle Sugar’s EU refineries (see Agritrade article ‘ USDA highlights impact of sugar price volatility on ACP exporters and tr...’, 25 November 2012).
The involvement of the world’s largest cane sugar refiner ASR in the supply of fair-trade sugar from Belize to the EU market could well raise ethical questions for the EU fair-trade movement. This is particularly the case in an era of heightened price volatility and the emergence of intra-corporate trading of fair-trade sugar, where basic price formation will be less transparent than in the past.
Similar issues arise along the fair-trade supply chains from Malawi and Zambia, given Associated British Foods’ indirect corporate involvement at all stages of the supply chain from the estate/millers through the trading company to European refiners/marketers.
Increasingly, issues related to the internal process of price formation and basic returns to sugar cane farmers per tonne of sugar cane delivered to millers are likely to take on greater economic significance than the simple question of the fair-trade premium.