Bello speaks against arbitrary raw material pricing by farmers

Michael Fagan

While local manufacturer Bello has announced an increase in the price that it will pay farmers for their produce, the company has spoken against arbitrary pricing on raw materials by farmers.

Managing Director of the company Michael Fagan told a press conference last week that while some farmers may want to charge exorbitant prices for their raw materials, they tend to expect a low-cost finished product on the shelves.

“So you cannot expect to sell, as a farmer, at $1 million a pound and expect me to be able to process that and get it to the market when you yourself, who is the market, is dictating what the price is. You the consumer is saying I’m prepared to pay this for the price so you can’t turn around as the primary producer just set an arbitrary price based on what? That’s what I’m asking,” he said.

“Sometimes there’s confusion on the price and farmers setting price and Bello is not paying as much as we’d like and so on. I mean, you have to look at your production inputs which we have helped in the past with. We have helped with fertilizer, we’ve helped with having our own specialists out in the field transportation,” he stated.

Fagan stressed that it is important to remember that consumers are the ones who determine the price of commodities.

“It is what the consumer will pay for the product at the supermarket. So the supermarket tells the distributor [I’m prepared to pay this for the product] and the distributor tells the manufacturer who is us, [this is what we are prepared to pay for the product],” he said.

“Generally speaking, we as manufacturers and agro processors, we have to tell the farmer this is what we’re willing to pay. It doesn’t work the other way around unless you’re selling a valuable commodity that is very rare that the primary producer is saying I have this and this is the price,” he told the press conference.

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10 Comments

  1. spyda
    November 13, 2010

    bello don’t want to pay bottom bello say plant peppers people plant peppers then they say we not buying this week maybe next week how is that good for farmers so they have to get it while they can don;t blame the farmers it’s bello

  2. Jim
    October 4, 2010

    I certainly argree with the. Last person goverment should help bello and it should be a huge factory using all products of Dominica but also pay Dominican good prizes
    I am feed up of hearing words such as 50 70 cents for Dominican. Products. I should be hearing 1 dollar and above farmers Stay on your course good job

  3. observer
    October 4, 2010

    Bello is a joke and needs to pay the farmers a fair price by now bellow should have grown to a level where they can max produce and create jobs for Dominica people instead of just growing fat with farmers money.

  4. Domnichey
    October 3, 2010

    Oh Dear !

    Where this Fagan guy come from? You would think that his parents would send him to the best University and Graduate school to exercise good succession planning. Well Mr. Fagan, try not to use buzz words that make you look like a total fool. The expression that the market determines the price takes many things into consideration. One the farmer has to factor all his related cost, fertilizer, labour etc to determine his price. It cannot be an arbitrary figure he dreams up over cacao tea. Bello has to factor its cost of production that includes the cost of the raw materials and all related production cost, direct or indirect to determine their cost of goods manufactured, factor their marketing and advertising cost to, their break even and their profit margin. Now that is where economics play. If the final cost of the product is high, then the market will only accept a price that it can bare. You now have to determine what your market is. If the farmer cannot afford to buy your product then why are you selling it to him? You now need to look at a market that can afford and is willing to buy your product. That is where export comes in. Now backtracking a bit. If you price is high then you need to also look at inefficiencies, production and factory utilization. Maybe you have too much administrative cost. Now in the past I know that Bello did a seed programme etc and I thought the aim of that was to promise a consistent supply of product. Is Quality and issue with the product? Then invest in quality of your raw material supply. Having done all this and guarantee the farmers a market, it is you Bello who is in a position to determine the price of the raw material with your investments and guarantees ok. If you need help with this give me an email address because I want a consultancy project.

  5. Patat
    October 3, 2010

    The time is right for farmers to pull their resources together and take control of the processing of their primary agricultural produce into the finished goods that consumers demand.

    For over fifty years farmers who have gone into farming as a business and have educated their children and built their homes are blessed with some retained earnings that their children are going to inherit.

    Children of farmers , myself included , who have gone to university and have done business, finance, bio-chemistry, food sciences, engineering , and food processing just to name a few , let us make a bid to purchase Bello. If Bello refuses our offer, then let us associate with another manufacturer like Grace in Jamaica, or one from Hawaii that is already processing dasheen, and the other tropical foods that we grow in abundance in Dominica.

    That way we will and can ensure reasonable prices for us most of the time. Why? We will smartly determine the production levels from the primary to secondary stages. We will have our own produce chemist labs, hydroponics facility for growing vegetables, purchase lands in South America to grown rice and other crops and say good bye to Bello.

    Let us take the risks and enjoy the rewards of healthy returns. Stop making yourselves feel like slaves to Bello.

    The only reason Bello behaves that way is because many of our farmers leave from pay-check to pay-check and lack a savings discipline and worse of all effective strategic planning. To get to the promise land of prosperity you must make significant sacrifices. Tell yourself that you are in this business for the long haul and that you do not want your children and their great grand children to become slaves!!!!!!!!!

    Keep proper records and understand that the time has come to purchase inputs in bulk and by-pass the middle man who makes a profit on the inputs. There should be at least four farming co-operatives around Dominica – one in the North, South , East and West.

    Farmers need to practice effective time management to ensure a balance life style. So there can be time for farmers to attend training, meetings, visit the Doctor, time for exercise to improve muscle definition overall, and to read about the latest trends in farming and agro-processing. Farmers must take time out to READ.

    My last point to farmers and persons with money looking for a better rate of return than what the credit unions give right now is that you pay no (income) taxes on farming revenues. So what are you waiting for? Skerrit and Matthew Walter? Oh please!!!!!!!!!

  6. Banana Woman
    October 3, 2010

    Bello running one on the farmers, as usual. Come on Mr. Fagan, these poor farmers don’t need the business terms you learnt at school. All they want to hear is simple we will pay you for your produce, we will pay you a fair price for your hard sweat and labour. After all these years, farmers have been on the losing end of things, so I don’t think that they are going to say to Bello now, pay a million dollars for anything. Just give them what is FAIR what is RIGHT!!!!!!

  7. WELL
    October 3, 2010

    i think the farmers have to eat and pay bills..but i think is a level of greed on some of them..get rich quick…come on..we working together for to build our land..little by little

  8. BEST INTEREST
    October 3, 2010

    I think the two needs to meet half way. Mr. Fagan, it is always our thinking that you want to buy our produce for nothing and make a mint selling. If this is not the case, then we need to meet halfway.

  9. Jan Bors
    October 3, 2010

    My sympathies are with mr. Fagan.However, the uncertainties of raw-materuial costs can, tio a large extent, be mitigated by entering into contract farming whereby the farmer is paid a guaranteed price for a an agreed quantity oif produce over a fixed peruiod of time. I do take issue with him about his statement that the consumer determines the price. This does not strictly apply in markets like Dominica where products manufactured locally enjoy a hefty dose of protection through punative import duties on similar goods from outside our customs area. As a result Bello’s 85 ml. hot pepper sauce retailing locally at E.C.2.60, is on the shelf at the U.K. Walmart subsidiary Asda for as little as £.050 (E.C.$2.10) albeit under the “Dunns River” label, masquerading as a “Jamaican style” hot sauce- remember there is no duty on our products entering the UK but on the other hand their vat rate is 17.5% against our 15%.. When one realises that the same store sells a smaller (57 ml.) bottle of Tabasco hot pepper sauce at £1.32 Mr. Fagan is absolutely right in wanting to establish their own brand, especially in export markets. With our cost base it is not possible to compute in volume produce markets and we should aways strive to create an image of a premium product that demands a premium price in its own right! We should applaud mr. Fagan for his efforts.

  10. voir dire
    October 3, 2010

    While i agree with mr.Fagan,I think that Bello has been in the agro business for so long, arrangements between them,the farmers and other stake holders,particularly government should be well taken care of already.Bello should have expanded into a much larger entity than it is today.They need to invest in large scale production of raw materials or undertaking such large-scale production with local farmers.This would contribute to more reasonably priced raw materials,job creation and the local economy by extension.

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