The following is from Burning Issues (FOROYAA Publication) Monday, 12 February
2001
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70.5 Million Owed to Government By Purchaser of Groundnuts
The Sale of GPMB in 1993 for D20 million to Alimenta which established the
GGC in the Gambia to purchase groundnuts made the groundnut trade a private
sector affair. The prices of groundnuts were to be determined by GGC. When
the AFPRC government took over in 1994, it proceeded to give the impression
that it can reverse what the PPP had done. It imposed certain conditions on
the GGC which did not materialise. Finally, in order to give the impression
that government was controlling prices of groundnuts, it started to announce
the price of groundnuts before any agreement was effected with GGC.
It is reported that when the GGC refused to meet the conditions imposed by
Government, agreements were made for government to subsidise the price of
nuts. The failure to meet the subsidies led to a friction. Government seized
the assets of the GGC. GGC resorted to arbitration. A vacuum was left for
the purchase of groundnuts during the 1999/2000 trade season. The result was
catastrophic on two sides. The companies which under took the responsibility
to purchase groundnuts received government guarantees. Furthermore, the
government had to either appear before an institution for arbitration or
settle its dispute with GGC outside.
Apparently, the companies which took the responsibility to purchase
groundnuts were not able to stand on their own with out the backing of the
government. This led to many claims that the companies had left the
government with financial liabilities amounting to millions of dalasis. This
is why Sidia Jatta raised the issue with the SoS for Agriculture. Asked
which companies were involved in the purchase of groundnuts during the
1999/2000 trade season. The SoS mentioned Farato Farms, New Dimensions
Limited and UTP/Tulior. Asked whether they owe government any money, the SoS
indicated that as at the end of December 2000, the total amount owed to
government by all three operator was 70.5 Million Dalasis.
Asked whether a mechanism is in place to recover the money, the SoS indicted
that they have entered an agreement with the European Union for certain
parts of the debt to be mitigated. According to him, the EU takes part in
dealing with certain parts of the debt and the operators will have to settle
the following liabilities, that is New Dimensions D1.28 Million, Farato
Farms D2.12 million and UTP/Tulor D8.34 million.
According to the SoS, the government has through the Department of State for
Justice put in place a mechanism to recover any outstanding amount.
Suffice it to say,, in his budget speech, the SoS for Finance and Economic
Affairs had indicated to the National Assembly that the government has
agreed to pay Alimenta/GGC a sum of $11.4 million dollars more than D170
million dalasis as compensation.
This confirms that the 1999/2000 trade season was a national disaster. The
farmers were subjected to credit buying. Many kept their crops only to have
them destroyed by pests. Many sold their nuts by cups to extortionists who
bought them at cut throats prices.
Government spoke about a private sector led trade but the three companies
had to depend on government to purchase the nuts. A large quantity had been
purchased but could not be exported. This has given rise to a liability of
D70.5 million. With $11.4 dollars million for the Alimenta fiasco it must
be admitted that government's handling of the groundnut subsector has been a
classic case of mismanagement.
Where do we go from here?
According to the SoS, the companies which are involved in the purchasing of
nuts during the 2000/2001 trade season are Hilo Trading Inc. and Premier
Agro oils. Up to 18 January 2001 Hilo trading Inc. has purchased 27, 000
metric tonnes while premier Agro oils is reported to have purchased 1, 500
metric tonnes; that a sum of 54.4 million dalasis had been spent to purchase
28, 500 metric tonnes of groundnuts.
According to the SoS, the total quantity of groundnut produced this year is
more than that of the previous trading season. This means that over 127, 000
tonnes of groundnuts had been produced. The trade season started on the 1st
December 2000. If the operators can buy only 28, 500 tones as of 18th
January, it stands to reason that about 100, 000 tonnes are yet to be
purchased. There is indication that Senegal started to purchase groundnuts
much later and the Gambians who initially took their nuts had to come back
with it. Apparently, purchasing has started and groundnuts are being taken
across the border for sale.
Even though the SoS claims that credit buying is not taking place because
monies are received in less than a month after crops are weighed, there is
indication of sitting for over a month before monies are received. It has
been made abundantly clear by the SoS that ''the rest of the crop will be
purchased through financing including inflows from exports by the operators.
''
Foroyaa will continue with its investigation. What appears to be the nature
of the trading season is the provision of funds by the Banks to operators to
purchase nuts at interval and the waiting by two banks for financial inflows
of what has been advanced before the disbursement of more funds. This must
undoubtedly lead to credit buying.
The assumption by the President of the Chairpersonship of the Task Force for
the revitalisation of the groundnut subsector has not led to the growth of
income of the farmer and the eradication of credit buying. What is clear is
that government is simply playing the game of chance. It has no control over
the marketing of groundnuts. This is why it did not announce the price for
groundnuts this year. It only has the privilege of being in touch with the
operators. It can have information in advance and exploit it politically if
the information it receives can bring joy to the people.
We need more than chance to revitalise the groundnut subsector. FOROYAA will
look into the shortcoming of the federation and identify the advocacy and
marketing role it can play to revitalise the groundnut subsector.
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