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THE CGA-MISMANAGED AND BANKRUPT By: Norris Hall The Citrus Growers Association of Belize (CGA) is being mismanaged and is bankrupt. Its Committee of Management is operating illegally by making decisions without consulting with its general membership. It has not held an Annual General Meeting since 2013. Its operations are shrouded in secrecy. There has not been a submitted audited financial report of the Association since 2011. There have not been any elections to annually rotate the CGA’s Director and there is a decision making disconnect between a 4 man Executive Committee and the other 5 members of the Committee. These are all in contravention of the Citrus Industry Act and the Policies & Rules of the Association. It is unable to service its local or its international debts. The Association is facing some serious financial woes. Its membership continues to dwindle as it is unable to provide support services to its members. It has made bad investments or has made good investments go bad. The Citrus Growers Association also continues to operate contrary to established rules and policies that should govern its operation. THE PROGNOSIS Citrus production is at an all-time low with the frightening prognosis that if farmers are unable to deliver the required minimum of citrus to keep the factories open, this could well be the death knell of the industry or at best that it would go comatose as late attempts, due to the lack of foresight, are being made to rehabilitate neglected citrus orchards and to diversify in the cultivation of pineapples and passion fruits. The latter is questionable as this requires stringent environmental conditions. There are also three other factors that are affecting the operation of the Citrus Growers’ Association: Its inability to repay a $10 million loan from the European Investment Bank for which, sources say, it is seeking a debt cancellation; a $1.5 million debt with Atlantic Bank to establish a failed citrus nursery at the Village of Red Bank in the Stann Creek District and other non-performing loans and loose management. The CGA is now trying to recover its losses from its investments of its “Plant World” nursery, by pushing the sale of citrus plants on farmers in an attempt to revive production, according to reliable sources. This could take a minimum of five years when the money it does not have could be used to clean and rehabilitate existing orchards. It has also been leaked that the CGA is trying to float a $6 million bond and spin off the “Plant World” investment. These could quickly become non-preforming junk bonds. It has become questionable how the CGA can continue its day-to-day administration when it is in such dire financial straits. It has been surmised that it may be diverting the contributions that citrus farmers are making to service the debts and using them for the day to day operation of the office. There are other
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THE BELIZE TIMES
unrevealed debts owing by the CGA for which there have been no accountability. This Association continues to apply in its operation, the unsustainable, tried and repeatedly failed practice of borrowing itself out of debt on the backs of the CGA membership. MORE BORROWING It is against this backdrop that the debt-ridden, mismanaged and unaccountable representative for citrus growers recently announced that it is begging the Social Security Investment Fund (SSIF) for yet another loan of $44 million as it digs itself into a quicksand of debt and continues to inadvertently contribute to the death of a more than sixty year old industry, that until recently made a significant contribution to the national economy. CGA says that the loan is needed to plant new groves, for which it intends to use $35 million while the other $5 million will be used for the cultivation of pineapples. It proposes to use growers’ land and its diminished shares in Citrus Products of Belize Ltd (CPBL) as collateral, although no consultation has been held with its members. It is not perceivable that the SSIF could possibly approve this loan application from the CGA without a proper due diligence of its operations, its level of management and its audited financials. RISK FOR FARMERS Another risk factor is the very poor state of the industry. Farmers will be asked to take considerable risks at this time. Their only hope is that the international price for citrus will remain stable for a long time. But this is a big “if” given the traditional roller coaster nature of the market. For the CGA this could however be its lifeblood as it will be collecting a 1.5% administration fee for the disbursement of this loan to farmers. But already there are indications that the SSIF may choose to disburse this loan, if approved, directly to citrus farmers. In 2014 the Barrow government had to rescue the CGA out of another debt crisis. The Prime Minister gave the nod to the SSIF to help them with a $9.5 million Debt for Equity swap loan to pay off an outstanding debt to SSB that the CGA had incurred over the years but was unable to debt service. The net result of this swap was that SSB took 10 percent of the BCGAICL (a wholly owned CGA investment company) shares in CPBL thus reducing BCGAICL from a Majority Shareholder to a Minority Shareholder. SSIF, with the government’s support also restructured a $15 million debt that CPBL owed to the then FCIB. Additionally, GOB on-lent to CPBL an additional $4.0 million dollars as a short loan to assist the company in paying citrus growers for fruit the company owed them; all in its attempt to assist in restructuring the citrus industry. In the mumble jumble of unrevealed and unaudited figures, it is not clear how another loan of 1.5 million dollars from the Atlantic Bank was spent, or if this was also a full part of the CGA’s “Plant World” nursery investment in Red Bank. THE CGA continues to lose both its members and their confidence. From
2016
a membership of over one thousand, there are now less than 300 full members, most of them small farmers. The big growers have formed their own association –Belize Citrus Mutual. They make up slightly more than 15 percent of citrus growers and produce more than 50 percent of the citrus crop, with CPBL groves contributing as much as 20% of the industry’s total citrus production. CITRUS REBOUNDED AND THEN…. After a weak period due to the lack of investments, citrus began to rebound, first with the acquisition of the processing plants by Del Oro and the Citrus Growers Association through a loan from the European Investment Bank. In 2007 citrus production had a bumper crop of 7.5 million boxes with projected growth. New investments by Banks Holdings Ltd. of Barbados of $25 million into CPBL were expected to add new impetus to the industry, until members of the CGA began to sow seeds of discord with the new foreign investors and the management of CPBL. As a result, growth within the industry was hindered. Production again began to decline because of the discord and entry of new exotic diseases…all this when the pundits forecasted stable and strong world market prices. Today production is at a low of 3.1 million boxes (orange and grapefruit combined), and marginally lower than the minimum 3.5 million boxes throughput requirement needed for the processors to operate profitably. With lower production the cost of processing will increase. This will affect the prices paid to farmers. With a drop in production from 7 million to 3 million boxes of citrus and a rapidly declining membership, the Citrus Growers Association is now hardly relevant to the industry. More and more farmers having lost confidence are abandoning their farms and there are thousands of acres of groves that should be rehabilitated as a first priority with the
assistance of a viable CGA. Back in 1998 when CDC’s Del Oro decided to invest in the citrus industry of Belize, it acquired both Citrus Products of Belize Limited and Belize Food Products Limited and owned 99 percent of the shares in these two companies. Shortly thereafter, Del Oro divested of these assets valued at $100 million dollars to the CGA for the sum of $USD2.00 and debt. In 2006, through CGA’s investment company, BCGAICL sold 46.5 percent of the shares to Banks Holdings Ltd leaving the CGA’s company holding 52 percent shares in CPBL. In 2014, CGA’s company lost 10% more of its shares to SSB (GOB controlled) in a debt for equity swap and for the first time became a 41% minority shareholder in CPBL. To compound that picture is the fact that the CGA still owes EIB money for its purchase of 10% of those CPBL shares. The lack of annual dividends from CPBL has made this a non performing asset and may result in a further loss of CGA’s shareholdings to EIB if it is unable to pay off this debt. In all these transactions, the members of the Citrus Growers Association never received any meaningful economic benefits as “owners” of these shares who are mostly small farmers. The citrus industry in Belize is once again wobbling; its future now totally dependent on prudent fiscal management of the CGA, proven agronomic programmes and a comprehensive restructuring of the citrus industry. Sure as hell, as a result of the lack of leadership, vision and bad management, the CGA has become a debt ridden, loan driven liability for the citrus industry. The CGA’s management failed to heed the proverbial message of “cut coat to suit cloth” given the shifting dynamics occurring within the citrus industry and the way it borrowed and spent growers’ monies
PUP NOTICE The People’s United Party informs all supporters in the Cayo Central Constituency that nominations are now being accepted for positions on the Constituency Executive Committee. Positions for which nominations are being accepted ARE: 1. Chairperson 2. Deputy-Chairperson 3. Secretary 4. Treasurer 5. Assistant Treasurer 6. Campaign Manager 7. Deputy Campaign Manager 8. Communications Director 9. Logistics Coordinator The Closing Date for nominations for those interested in any position on the Cayo Central Executive Committee is December 9, 2016 at 4:00 p.m. The Convention Date will be 8 January, 2017.