The 44-year old agreement that established Caribbean Agro Industries Ltd in Grenada will be among the topics under discussion when company officials meet with a Cabinet subcommittee appointed to investigate price increases for flour and animal feed.
“Under that agreement we cannot even import from the OECS,” Minister of Trade, Industry and Consumer Affairs Hon Alvin Da Breo told The Grenadian Voice on Wednesday.
Caribbean Agro, which is owned by the Chicago-based multinational corporation Archer Daniels Midland Company (ADM), first announced the price increases for Feb 03. The increases were postposed following a Feb 10 meeting with the Minister of Agriculture Hon Peter David and officials from the Ministry of Trade, Industry and Consumer Affairs; but were eventually implemented on Feb 15.
This forced local poultry producers to increase the per pound price for local fresh whole chicken from $5.50 to $6.75 and for a tray of 30 eggs from $20 to $23 to help cover their production costs.
In a GIS statement on Tuesday (March 02) Government said it had requested Caribbean Agro not to impose the price increase of these basic commodity items during the coronavirus pandemic, as this will “exacerbate the social and economic challenges confronting families, as many are already dealing with reduced income and loss of jobs because of the pandemic.”
“Government is therefore appalled by the decision to proceed with the implementation of the price hike, a move which will cause additional hardship for Grenadians at this time, and negatively affect the growth and development of the poultry sector.”
The Cabinet subcommittee, which comprises Minister Da Breo, Minister David, Minister of Foreign Affairs, International Business and CARICOM Affairs Hon Oliver Joseph, Minister of Education Hon Emmalin Pierre and Attorney General Dia Forrester, held one meeting and is expected to convene another with ADM Caribbean Agro within days.
Minister Da Breo said the company benefits from many concessions under the original agreement and is able to sell products to Saint Kitts, Saint Lucia and other Caribbean countries at prices lower than what consumers in Grenada pay. ADM also operates a flour mill Barbados, grain-trading joint ventures in the Dominican Republic, a bakery mix and rice mill in Jamaica and poultry feeds plant in Trinidad and Tobago.
Jason Phillip, president of the Grenada Association of Poultry Producers, told this newspaper that the decision by Cabinet “is clearly a step in the right direction” and he hopes the investigation by the subcommittee “will be swift and detailed.”
Phillip said the arrangements ADM has with government under the original agreement “enslave and shackle our livestock business development and growth to the profits of this global giant. We the farmers and general public now await anxiously optimistic that this monopoly will end.”
That agreement, a copy of which has been obtained by The Grenadian Voice, was signed on December 15, 1977. The terms saw the Grenada United Labour Party (GULP) Government agree not to impose any taxes on the company for 15 years, after which any new or increased taxes “will be added to the prices of the products of the (company) on a pro-rata basis.”
The agreement permits the company to import raw agricultural materials without government’s consent and prevents government from establishing another mill or allowing imports that compete with the company’s products.
“All equipment, tools, building materials, vehicles, raw materials used in the production of the products; parts, general supplies and all materials used for the construction, completion and operation at full capacity of the enterprise” are exempt from duties and taxes. Additionally, dividends paid to investors from the profits of the company are exempt from “all taxes, charges, levies or dues.”
Under Article 12, the government agrees to “protect Caribbean Agro Industries by disallowing all imports from any origin whatsoever, including but not limited to member countries of the Caribbean Common Market, CARICOM, in general, and the Eastern Caribbean Common Market, ECCM in particular, all of the products manufactured or to be manufactured, sold and distributed by Caribbean Agro Industries.” The only exception would be a case of emergency to which the government and the company agree in writing that imports are necessary.
While ADM Caribbean Agro and its shareholders have benefitted from the exemptions for more than 40 years, the company and government have yet to fulfil another part of the agreement to establish a vertically integrated poultry industry for the purpose of making Grenada self-sufficient in poultry meat and eggs.