Belize Sugar Industries Ltd v Attorney General of Belize
| Jurisdiction | Belize |
| Judge | Goonetilleke, J. |
| Judgment Date | 29 February 2024 |
| Docket Number | CLAIM No. CV 322 of 2023 |
| Court | Supreme Court (Belize) |
IN THE MATTER OF an Application under Section 20 of the Belize Constitution
AND
IN THE MATTER OF Sections 3(c), 6, 9, 15, 16 and 68 of the Belize Constitution
AND
IN THE MATTER OF Sugar Industry (License to Import/Export Sugar) Regulations 2023
CLAIM No. CV 322 of 2023
IN THE SENIOR COURTS OF BELIZE
IN THE HIGH COURT OF BELIZE
Godfrey Smith S.C. with him Hector Guerra, Attorney at Law, for the claimants
Douglas Mendez S.C. with him Jerome Rajcoomar, Attorney at Law, and Alea Gomez, Crown Counsel, for the defendants
This is an Application filed by the claimants by way of originating motion dated 29 th May 2023, challenging the vires of the Sugar Industry (License to Import/ Export Sugar) Regulations 2023 (the regulations), which were made under Section 73 of the Sugar Industry Act and published in the Gazette on the 16 th May 2023. More particularly, the claimants seek orders from court declaring regulations 3 (4), 5(1) (b), 5(2) (a) and (b), 11, 16 (1) (a) and (b), 16(3), 21(b), 22 and 24 as unconstitutional, null and void.
The 1 st claimant, Belize Sugar Industries Ltd. (BSI) is a company registered under the Companies Act of Belize, in the business of manufacturing sugar mainly for export, by farming, buying and processing sugarcane from farmers in Orange Walk, Belize. The 2 nd claimant, Corozal Sugar Cane Producers is Sugar Cane Farmers' Association registered as a body corporate under the Companies Act.
The 1 st respondent is the Attorney General of Belize (AG), who is the principle legal adviser to the Government of Belize against whom proceedings against the State must be instituted. The 2 nd respondent is the Minister of Agriculture, who approved the regulations under Section 73 of the Sugar Industry Act. The 3 rd respondent is the Sugar Industry Control Board (SCIB) which under section 73 of the Sugar Industry Act, made the regulations for the approval of the Minister. The 4 th Respondent, Controller of Supplies, is responsible for issuing permits for the export of sugar under the regulations.
For the reasons set out herein below, I hold that regulations 5(1) (a), 5 (2), 16, 21 (1) (b) and 22 of the regulations are unconstitutional, null and void.
The growing of sugar cane and processing of sugar is an important export industry in Belize. In the Northern region, the industry provides direct employment to approximately five thousand (5,000) registered farmers and accounts for about 14% of the Gross Domestic Product (GDP). According to the affidavit of Porfirio Marcus Osorio, the Chairman of the SCIB, the earnings from the sugar industry in 2021 amounted to approximately 128 Million Belize Dollars ($128, 000,000) which is about 27 % of total agricultural exports.
There are two sugar mills in Belize. BSI's mill being the oldest and the only mill in the Northern Province. While BSI grows some sugar cane on its own, the bulk of the sugar cane processed at the BSI mill is produced by independent farmers, who through their associations, sell the sugar cane to BSI. The relationship between the farmers and the mill owners is a symbiotic one; the mill owners cannot produce the sugar without the cane the farmers supply and the farmers would be at a loss to sell their cane if BSI did not buy it from them. There have been and continue to be disputes between BSI and the farmer associations in regard to the sale and purchase of sugar cane. There are presently four (4) farmer associations in Belize, with Belize Sugar Cane Farmers' Association (BCSFA) being the oldest and largest association.
The sugar cane that is processed, is exported by BSI to overseas buyers. Chief among BSI's buyers is Tate and Lyle Sugars (TLS) of London, an internationally reputed sugar company. Sugar that is produced in terms of Fairtrade Trader Standards and Guidelines and certified as such by Fairtrade International (FTI), an international non-governmental organization, obtains higher prices at market. The premiums received for Fairtrade sugar are required by FTI to be passed on to the farmers for their benefit; for investment in their business and the community. This may be done by one of two methods: The buyer of Fairtrade sugar (Fairtrade payer) could directly make payments to the farmers by entering into contracts with the farmers’ associations to pay Fairtrade premiums. Alternatively, the buyer could send the money for the Fairtrade premiums to the sugar mill or exporter in Belize who then acts as a conduit or ‘conveyor’ of the money to the farmers. The Fairtrade premiums are paid separately and at a later point in time, in addition to the price the farmers receive for the sugar cane when the cane is sold to the mill.
According to the material placed before this court and submissions of counsel, though sugar may be produced as Fairtrade eligible sugar at the point of harvest and processing, such sugar becomes Fairtrade sugar only if labelled as such at the point of sale in the market. In other words, not all sugar produced in terms of the Fairtrade Trader Standards and Guidelines will reach the market as Fairtrade sugar. This is because there is a limited quantity of demand for Fairtrade sugar, due to its higher price. Supply of Fairtrade eligible sugar is greater than the demand for it; only about 30% of Fairtrade eligible sugar receive premiums for it. Once the requirement in the market for Fairtrade sugar is met by the international wholesaler, the balance sugar, even though it has be produced in terms of the Fairtrade Trader Standards and Guidelines, would nevertheless be sold as regular sugar and would not receive a premium price.
For sugar to be considered as Fairtrade sugar, the farmer associations, the mill, the seller and the marketer must all be certified as Fairtrade eligible by FTI, which monitors or audits the process globally.
Prior to the impugned regulations, the international buyers entered into contracts with the mills in Belize (mainly BSI) to buy processed sugar. The international buyers also entered into separate contracts with the farmers' associations to pay Fairtrade premiums directly to them. In regard to BSI, the 1 st Claimant, TLS was the main international buyer. TLS contracted separately with the farmer association, BSCFA and other associations to pay Fairtrade premiums.
At a recent point in time, prior to the issuance of the impugned regulations, the relationship between TLS and BSCFA broke down and as a result, the contract for payment of Fairtrade premiums to BCSFA by TLS was not renewed. This has caused anxiety among the farmers of BSCFA, the largest farmers' association in Belize. Both TLS and BSCFA are not parties to this Claim. From the pleadings and documents before this court, it is apparent that though they receive no premiums, BSCFA has doubts about whether the sugar produced from sugar cane supplied by them is sold at market as Fairtrade sugar. BSCFA does not receive Fairtrade premiums because they do not have a renewed contract with TLS for payment of the premiums.
The Claimants in their pleadings and their counsel in his submissions stated that BSI consolidates the sugar produced from the sugar cane of all sources including from BSCFA. BSI states however, that there is a record of the quantity of sugar produced from each of the suppliers including that of BSCFA. It was also submitted that as all the sugar produced is not sold as Fairtrade sugar it was possible to exclude the quantity produced by BCSFA in distributing the premiums to other associations. BSCFA was excluded as they do not have a contract for payment of premiums. Thus, for example, it could be possible for three suppliers of sugar cane; one having a Fairtrade premium contract with TLS supplying 10% of the product, the other also having a Fairtrade premium contract with TLS supplying 30% of the product and the third not having a Fairtrade premium contract supplying 60% of the product. All these supplies would be consolidated when the final sugar is produced and sold. In an instance for example where only 40% or less of the consolidated sugar was labelled and sold as Fairtrade sugar, the first two suppliers (whose supply would aggregate to 40 %), would receive the premium as they had Fairtrade premium contracts with the international buyer. In an instance where less than 40% of the Fairtrade eligible sugar was sold as Fairtrade sugar, the suppliers having contracts with TLS would be paid the premiums allocated in proportion to their supply. The process by which calculation and allocation of premiums is done when sugar is consolidated in such manner is known as ‘Mass Balance’ according to the Fairtrade Trader Standard (FTS) 1 published by FTI.
The mass balance process was disputed by the respondents who argued that it was impossible once the sugar was consolidated, to state that there was no part of the sugar produced as a result of BSCFA's supply that was sold as Fairtrade sugar in the market. The respondents also submitted that the figures presented by the claimant were not accurate and that more quantity of sugar had been sold as Fairtrade sugar than premiums received.
The premiums at present are paid by TLS and other international buyers directly to the farmers in Belize. As these international buyers could decide not to enter into such...
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