Did the New Payment Scheme Provide Enough Incentives for Belizean Sugar Cane Farmers to Improve Product Quality?
Date Issued
2009
Date
2009
Author(s)
Wagner, Jason Alron
Abstract
ABSTRACTn December 2008 sugar cane quality assessment by core sampling was introduced to determine the payment of cane delivered to the Belize Sugar Industries Limited. This scheme was implemented to address the issue of poor cane quality which had persisted in the sugar industry over the past decade as a result of the traditional method of cane payment that was based on quantity. linear payment scheme was adopted to determine payment to farmers based on the reconciled relative factor of their sugar cane. This new method to determine cane payment referred to as the Core Sampling Payment Scheme was rejected by the cane farmers on the ninth week after its implementation and was subsequently abandoned. Innovation and policy changes are critical to Belize’s sugar industry especially since the industry needs to adapt to the erosion in preferential prices afforded by the European Union for its sugar exports. But policy changes are not easily accepted especially if farmers perceive that they are not provided with the appropriate payment incentives to improve their product quality. If farmers are not convinced of the fairness in payments from a system based on quantity to a new payment method based on quality to compensate them for their increase in effort utilization to improve product quality, then they will fail to embrace the implementation of this new payment scheme.his paper presents a generalized economic model to represent the relationship between farmer’s effort and cane quality under a payment system based on quantity. It expresses the changes in effort utilization and the profit maximization decision of the farmer that will occur from one payment scheme based on quantity to one on quality, and the impact of improved cane quality on the Belize Sugar Industries Limited cost of production. n reality it is difficult to implement a new payment scheme based on quality to replace a system on quantity because of the complexities involved to equitably determine and quantify the appropriate factors and variables to serve as the basis to determine the distribution of payments. Moreover there is also the resistance on the part of farmers who are unprepared to improve the quality of their cane without the help from their Farmers Association or from the industry itself. ince under the new payment scheme the Belize Sugar Industries Limited payment for sugar cane was the same as that under the traditional scheme, our analysis revealed that a possible approach to provide incentives for the majority of cane farmers to improve product quality was for the Belize Sugar Industries Limited to study the relationship between farmer’s effort and cane quality improvement and its impact on their cost of processing sugar, and share the gains that they would realize as a result of improved cane quality with the cane farmers. Otherwise only the farmers would incur the burden of improving their cane quality, while BSIL benefited from their efforts.
Subjects
Belize Sugar Industries Limited (BSIL)
Core Sampling Payment Scheme
Farmers Effort
Sugar Cane Quality
Type
thesis
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