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Government takes a closer look at Caribbean Agro Industries Ltd

As the Ministry of Trade intervened to prevent price increases for flour and feed produced by the sole mill in Grenada, the government is taking a closer look at Caribbean Agro Industries Ltd.

Minister of Trade, Industry and Consumer Affairs Hon Alvin Da Breo told The Grenadian Voice on Tuesday that upon learning of the company’s intentions the government promptly advised Caribbean Agro there is a procedure for increasing the price of controlled products, which include flour and feed, and that the company should submit details outlining why the increase is required.

In a January 29 letter to the permanent secretary in the Ministry of Trade, Jacinta Joseph, local manager of Caribbean Agro, Gilbert Spooner, informed that with effect on February 3 the price of poultry feed would increase by 6%, pig feed by 12% and all other feeds by 16%; additionally bakery flour would increase by 10% and counter flour by 12%.

Minister Da Breo said once a reply from Caribbean Agro is forthcoming, the information will be sent to Cabinet for consideration.

“We want to see first if we can work nicely with the company before taking any drastic action,” he said, adding that the Ministry previously held a meeting with Caribbean Agro to discuss several issues. The meeting, which took place in December, addressed the monopoly the company has in Grenada and the prices in Grenada compared to Trinidad and Tobago, among other concerns. He said the company indicated inland freight costs in Grenada are higher because of the mill’s location in Mount Gay, whereas in Trinidad the mill is closer to a port.

Minister Da Breo has requested a legal review of the 1977 agreement that established Caribbean Agro and which gave the company several advantages, including tax exemptions and a monopoly. The 44-year long monopoly, with its origins in the agreement between the Grenada United Labour Party government and a company called Continental Group, has remained. Foreign ownership of Caribbean Agro has also remained, while mergers and take-overs in the global grain business transpired during the past four decades.

Caribbean Agro is now a subsidiary of multinational Archer Daniels Midland (ADM). The Chicago-based conglomerate has 345 food and feed processing operations in 200 countries.

Jason Phillip, President of the Grenada Association of Poultry Producers (GAPP), who was copied the letter and immediately called on the Ministry of Trade to intervene, said response from farmers having to face higher feed prices “was one of total desperation and complete panic.” He said farmers must be consulted before any price increases are contemplated, as they are dealing with reduced demand and high production costs in this coronavirus pandemic.

Poultry farmers “have not received a dime in any form of assistance,” Phillip added.

When visiting Caribbean Agro on Wednesday morning, he found no price increases and subsequently sent a message to GAPP members that he was “advised that the management has instructed that all prices remain as per previously posted until further notice.”

ADM, in its January 29 letter, cited reasons for the increases as soaring grain prices, declining production in grain growing countries “coupled with generally high levels of demand, particularly by China as it now seeks to rebuild its hog herd…” However, Phillip points out that the company will make millions selling feed to China.

“It’s a matter of the parent company selling to its subsidiaries,” he told this newspaper.

Three days prior to sending the letter, parent company ADM publicly announced the financial results for the quarter and fiscal year ending December 31, 2020. Chief executive officer Juan Luciano said he expects global demand for ADM’s agriculture and oilseeds services “to remain strong. China should continue to be a significant buyer.”

He also announced a quarterly dividend increase of 2.8%, noting that “this dividend will be our 357th consecutive quarterly payment, an uninterrupted record of 89 years.”

ADM recorded net sales of $65 billion (US) in 2019.

Phillip and Senator Roderick St Clair, who represents farmers in the Upper House, called a press briefing on Monday (Feb 01) to address the implications of the unilateral move by ADM to implement the price increases. Both agreed it is time to look at the original agreement and make changes for the benefit of farmers and Grenada. Senator St Clair had made a similar call on January 27 during his contribution to the debate on the settlement paid to WRB Enterprises to repurchase majority shares in the Grenada Electricity Services Limited (GRENLEC). Referring to the 80-year monopoly GRENLEC would have had, if the 1994 agreement remained; he turned his final point to farmers.

“Our poultry farmers, our livestock farmers are up in their neck with 60% the cost of feed in their production costs… so we’re not even talking about electricity, which is another cost for them,” he said, then referred to “another foreign company too” from which “we need to unshackle.” With support voiced by Senator Christopher De Allie, who represents the private sector, Senator St Clair concluded “so I would just leave it there, I trust, so we can take that up as our next challenge.”

Phillip said farmers face several obstacles in accessing feed from other Caribbean territories at reasonable rates, including those where ADM operates; the only alternative is for government “to take the fight from the farmers to the company. We cannot do this alone and we are now directly calling on our leadership to step up and step forward and help protect farmers.”

ADM operates Master Mix Feeds in Trinidad. Caribbean Agro supplies these feeds to farmers in Grenada, Saint Lucia, Dominica, Antigua and Barbuda and St. Kitts/Nevis. The multinational also operates a joint venture between ADM Barbados Mills Ltd and Roberts Manufacturing Co. Ltd.

 

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