Contracts: Confidence and Commitment
A contract is a legally binding promise (written or oral) by one party to fulfil an obligation to another party in return for consideration.
At a very general level a contract between two companies has specific and implied terms and most often includes the base pay for goods and services. In most industries the contract terms are met with a high level of commitment - by both the supplier and the purchaser.
But not always.
As buyers/users position for 2023 and beyond, we thought it worth pointing out a troubling patterns that the user community is experiencing over the past few years with our competitors. Some sugar suppliers have decided that your business is a put option for them to execute. Should you be their best commercial option at the time of delivery and they have the sugar - you’ll get your sugar.
Of course, there are unexpected and uncontrollable natural disasters, that constitute force majeure. It would have been hard to imagine the unavoidable catastrophes, the hurricanes, that have disrupted the lives of people, farmers & companies operating in the Gulf area. However, more recently, other events that users are experiencing appear to be “man-made”.
These suppliers have rolled their dice on their customers’ futures trying to catalyze on higher prices in the process.
It is likely that many suppliers knew full well months ago that they may not be able to honor their contracts. Upon the realization that sugar supply was going to be limited, they did nothing to communicate that reality and offered no solution to mitigate the supply risk to their customers.
Why is it ALWAYS the customer that ends up making the calls for additional supply?
Rarely do we get calls from industry asking to help with supply. Why would a supplier ask for help when the world sugar price & tier II tax is substantially above their input costs? Because their desire to protect their bottom-line is worth more to them than your business.
Please keep things like history, honor, integrity, diversification of supply in mind, when you’re booking in 2023 and beyond. If you do, you won’t be calling around in the middle of 2023 looking for alternative supply.
Doing Sugar Right.