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ASR/BSI Tackles Freight Debate
posted (August 14, 2018)

MacLachlan also took the opportunity to address the recent controversy that has taken root over the ocean freight costs that was quoted to the farmers to get their sugar exported to the European Union.

As viewers will remember, cane farmers were suggesting that the 11.4 million dollars for shipping costs that BSI/ASR was quoting in their financial report was misleading, since there is also a “Free Alongside Ship” line item on the breakdown of charges. That started to breed mistrust between some of the farmers and the millers, and there were those in the farming community who were going as far as to suggest that ASR/BSI is trying to take advantage of the farmers in the calculation of prices for sugar cane delivery.

In the most recent breakdown of costs that ASR/BSI sent to farmers, the company said that for the 95,000 tonnes of raw sugar that it sold to Tate and Lyle, there was an average “FAS” price of 526 dollars per tonne. The price breakdown also showed 11 million dollars that charged for ocean freight. The contention is that free alongside ship means that Tate and Lyle should have incurred that cost to get the sugar transported to them, but instead, that bill is being passed on to the farmers.

Here’s what the Vice-President of International Relations had to say on that topic today:

Mac MacLachlan - VP, Int’l Relations, ASR Group
"There is a cost to ship sugar from Belize to the EU market. It's an ocean freight cost with other cost associated with that. There is another cost which is getting the sugar from the hill mill on-board that ship and that as you know is a bit of a challenge for us in the absence of a decent port close enough with deep enough water to help us with proper loading rates. We have to barge that sugar 122 miles up the new river and down the coast in order to load ocean vessels - these are both charges to the industry. To try and argue there is no such thing as a freight charge is fanciful. Every sugar business in the world exports it sugar has to pay freight, of course it does, it can't get there unless it's paying the freight. So for many years, decades, we have given statements of the value of that freight and the value of local handling charges to get the sugar on-board the ship to cane farmer associations and we do that for reasons of transparency, so that everybody can see exactly what the costs are associated to exporting sugar. Not only do we do that, we share all the contracts that we have with the purchase of that sugar with cane farmer associations so that they can see what is clearly defined what the freight elements are and for the end of the crop we provide a statement of all of those cost that have has been audited for cane farmers associations."

"There is no secrecy here, there's no lack of transparency, this has been going on now for decades and I think that to try and pick elements of what is in essence an effort to be very transparent with farmers, it's very misleading as I say and I say one other thing on that and that's the commercial agreement which is the sale and purchase agreement we have with cane farmer associations for purchase of cane, which is the legal document on which the industry is built, has no reference at all to this free alongside ship statement that is being bandied about at the moment. That doesn't exist in the agreement that is simply a term that's trying to describe the value, not the price, the value of sugar minus the ocean freight and export cost, that's all it is. There is no secrecy, there's nothing that the farmer associations under that. In view of the conjecture that has been raised over this week, we have reached out, we're talking to farmer associations; they are our partners in this."

The millers say that they are trying to explore other options to move the sugar from Tower Hill to the Port of Belize, which would bring down the costs to transport the sugar. A new piece of equipment has been purchased

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