Keeping an Eye on the People’s Business: GCNA-GCA Administrative Amalgamation – A New Dawn?

Sandra Ferguson

by Sandra Ferguson

  1. Presentation by Minister of Agriculture:
    • Management Amalgamation:

In her presentation during the debate on Budget 2018, the Minister for Agriculture, Hon Yolande Bain-Horsford,[1],[2] noted the following:

  • Amalgamation of the GCNA-GCA Management: GCNA-GCA management amalgamation had resulted in administrative savings of $0.5 million.
    • Some persons who had been paying attention had noted that the GCNA appeared to be without a manager for an extended period and were advised by persons who should be ‘in the know’ that the GCA Manager was ‘keeping an eye on things.’ Why was there this ‘mystery’ about what should be a straightforward explanation? Were the farmers advised that this was a policy decision on the part of both Boards?
  • Amendment of the Nutmeg Ordinance Legislation: Amendments to the Nutmeg Ordinance are to be presented during the first quarter of 2018. Among other things, these amendments will provide for:
    • Liberalisation of Sector: Ways to LIBERALISE the sector
    • Ownership: Options to facilitate share ownership by farmers
    • Attracting Investors: Attraction of investors to the sector
    • Aging Farmers: How to deal with the issue of aging farmers.
  • Achievements of the GCNA:

In her presentation, the Hon Minister noted the following among the achievements of the GCNA in 2017:

  • Administrative savings of $500,000 — from April 2017 to present — with the ‘amalgamation of administration.’ Besides the Manger’s salary, what else accounts for savings in administrative costs?
  • Increased occupancy of its building on Kirani James Boulevard
  • Increased sales of nutmeg – 100% increase in shipments
  • Major reduction in operation costs – what are the elements of these operational costs?
  • Maintaining Advance Prices for Nutmegs and Mace

The GNCA’s financial year runs from July to June, and it was unclear as to whether the minister was reporting on the trading year ended 30 June 2017 or the calendar year 2017, since the information that she provided in respect of advance prices contradicts the information contained in the 2018 Budget Statement, Annex 1.

  • Production and Prices 2017:
  • Increased Production: According to Annex 1[3] of the 2018 Budget Statement, both the production of nutmegs and mace increased by 33.4% for the period January to September 2017 over the same period in 2016.
  • Decline in International Prices/Reduction in Advance Prices: However, international prices for nutmegs fell (by 60% from the prices paid in 2012) and this resulted in a 25% reduction on advance prices paid locally. International prices for mace have also fallen by 48% since 2013. Earlier this year, in March, the chairman of the association advised of a reduction in the advance prices for green nutmegs from $4 to $3[4].

One therefore wonders how this situation is impacting on the cash flow situation of the GCNA, its revenue and its ability to make payouts this year. But it may be that the fall in revenue as a result of the decline in international prices will be adequately countered by increased shipments and sales and rental income from its building(s).

  • Bonus Payments:

Normally, announcements of ‘bonus’ payments come from the ‘stewards’ of the association. It is announced at the general meetings. However, in her presentation, Minister Bain-Horsford also hinted that, this year the GCNA may be able to pay a bonus, having ‘climbed out’ of its reliance on its overdraft facility and having also been able to make a surplus of EC$1.2 million. This talk of bonus must sound like music to farmers’ ears. As the minister is fully aware, the only thing that matters to nutmeg farmers at this time of the year is bonus. Smart Politics!! And of course, it would hardly matter to most farmers, how this bonus would be financed? They have been ‘ketching hell all year.’ Time for a little relief and just before elections!!! Time will tell.

  • Abolishing Bonus Payments:

It is quite ironic to hear the Hon Minister hinting at the payment of a GCNA bonus this year. She could have gone on to advise that, if this bonus is paid, it will be the ‘last hurrah’ since the amendments will be abolishing the payment of bonus. The Hon Minister was quite definite in her time line re the amendments – first quarter of 2018. Will the amendments be tabled before elections? Or is she sure that she will be in office after elections to table the amendments?

  1. Liberalising the Nutmeg and Cocoa Sectors:

The Hon Minister referred to assistance from Compete Caribbean in revising the GCNA and GCA Ordinances. This has to be put in the context of the recently concluded Structural Adjustment Programme.

  • Structural Adjustment Programme:

As part of its Structural Adjustment Programme, the Government of Grenada, committed to the liberalisation of the nutmeg and cocoa sectors to encourage increased efficiency, and boost farmers’ incomes. It was categorised as a measure intended to ‘boost growth and social protection.’ The ultimate objective is to break the back of the GCNA and GCA as Grenada’s monopoly buyers and exporters of nutmegs and cocoa respectively.

  • Amendments to GCNA and GCA Ordinances:

The IMF 6th review report of May 2017 noted that the authorities were taking action to pass ‘amendments to liberalise slightly the monopoly marketing boards for nutmeg and cocoa’ and ‘encourages the government to continue in that direction.’ Based on statements of the Hon Minister during the recent budget debate, the amendments will be brought to Parliament in the first quarter of 2018.

Among the amendments proposed to the GCNA Ordinance are the following:

  • Enable Joint Venture Arrangements: A new provision has been inserted to enable the association to enter into joint venture agreement with any member of the private sector.
  • Members to Own Shares: There is a new provision which requires members to subscribe to shares, thus becoming shareholders. An amendment provides for the following category of shares – ordinary shares (at-risk shares), preference shares and investment shares. The issuance of shares is also intended to be a means of raising capital for the GCNA.
  • Amendment 52(A), Granting of Permits to Other Persons/Entity to Purchase Nutmegs: A new section, 52(A) with provisions which obliges the GCNA to grant a permit to a person or entity wishing to purchase nutmegs, except where the board is of the opinion that the granting of such permit is detrimental to the nutmeg industry. The board can impose a fee for granting the permit.
  • Repeal of Provisions for ‘Bonus’ Payments: The section which provides for ‘bonus’ payments – Sections 63(5) – has been repealed.

Queries:

  • Allocation of Shares: How shares will be allocated? Will it be on ability to buy shares or on the basis of production or on the basis of sales to the association?
  • Entitlements and Obligations of each category of shareholder: What will be the entitlements and obligations of the owners of the various categories of shares?
  • Duration of/Withdrawal of Permit to Purchase: Are there are provisions for the withdrawal of the permit or for the duration of the permit?
  • Insertion of Loophole? Does the insertion 52(A) re granting of permits insert a loophole which enables would be buyers to get around the issue of GCNA being the sole purchaser of nutmegs? It must be remembered that the reason for the GCNA being the sole purchaser was, among other things, to protect the price paid to farmer. While farmers may be induced by private entities through an initially higher price, there is no guarantee that this would continue.
  1. Government Guaranteed Debt:

One must bear in mind that the GCNA must have a huge monthly obligation to the bank in respect of the GCNA Complex. It is worthy of note that the GCNA has apparently obtained some relief from the monthly onerous servicing of this debt since the government has taken over the debt of both the GCA and the GCNA in respect of loans guaranteed to the Republic Bank. Based on information extracted from the Estimates of Revenue and Expenditure over the period 2013 – 2018, the following is the debt taken over by the Government of Grenada in respect of both associations:

  • Grenada Cocoa Association: In 2015, the balance of $347,205 at 9% interest, was absorbed into the public debt. It was restructured into a private placement, ie bonds.
  • Grenada Co-operative Nutmeg Association: In 2016, the loan balance of $838,323 at interest rate of 8.5%, was also restructured into a private placement, ie bonds.
  1. Attracting Investors:

According to the Hon Minister, the purpose of the amendments is also to attract investors to the sector. In this regard, it is useful to be aware of the following developments which may have implications for the nutmeg and cocoa sectors;

  • Blue Growth and Climate Smart Agriculture:

In April 2014 in the Netherlands, the Rt Hon Prime Minister signed 2 Memoranda of Understanding with the Dutch Government.

  • Funding of EC$5 Million: Under the MOU arrangements, the Netherlands is providing EC$5 million to Grenada and the Netherlands will also work with Grenada to attract a further $5 million from the Dutch private sector banks and businesses.
    • This seems to be clearly about attracting the interest of private investors in the sector.
  • International Spice Institute: The co-operation agreement envisages the establishment of an International Spice Institute, to be co-located in Grenada and the Netherlands and also the establishment of a Blue Growth and Ocean Governance Institute. The institutes will help Grenada grow its economy through more value-added agri-business projects and through the development of an ocean-based economy.
    • Value-added agri-businesses also speaks to the issue of investment in the sector.
  • Chimera, the GCNA, My Caribbean and Embassy of Grenada to the Russian Federation:
    • Chimera:

For some time now, the grapevine had it that the GCNA was conducting business with a company called Chimera, registered in the Netherlands, re the marketing of its nutmegs in Europe. It was also alleged that the GCNA was conducting business notwithstanding its exclusive marketing contract with another company also located in the Netherlands, which had also extended a significant ‘helping hand’ to the association during the post-Ivan period.

This company, Chimera, was also one of the sponsors of the recent Russia/Eurasia Caribbean Conference[5] held in Grenada, from 1-3 November. One, Olinga Mitchell[6], is the Managing Partner of Chimera International. According to its website[7], Chimera focusses on delivering high quality, difficult to procure spices, herbs and organic products from the Caribbean region. It lists nutmegs and cocoa as the major products distributed by the company. There seemed to be some photos on the site featuring operations at the Gouyave processing station.

  • My Caribbean:

Other sponsors of the Russia/Eurasia Caribbean Conference included: Embassy of Grenada to the Russian Federation; My Caribbean; Star Development; Century 21; Global Petroleum Group; Sandals; Ministry of Foreign Affairs of the Russian Federation; Skolkovo; Hermes Bank; the Gorchabov Fund.

Among the partners listed by the My Caribbean website [8]are Chimera and GCNA. In addition, Mr Olinga Mitchell, Chimera’s Managing Partner, is also a director of My Caribbean.

  • My Caribbean and the Embassy of Grenada to the Russian Federation:

In April 2017, Grenada established the Embassy of Grenada to the Russian Federation and one Oleg Firer was designated Grenada’s Ambassador. It is unclear how Firer became a Grenadian citizen. By virtue of being ambassador, he is, obviously, the holder of a Grenadian diplomatic passport. One could speculate that he may be a citizen by investment.

Under the supervision of the Embassy of Grenada, My Caribbean was set up with offices in Grenada and Russia. According to its website, My Caribbean is a trade centre ‘established to promote bilateral trade between the Caribbean, Russian and Eurasian markets. The main idea of the center is to bring together the efforts of all export-oriented producers with a focus on the most efficient and wide integration into the new foreign markets.’ It is trading in a wide variety of food products from all over the Caribbean.

According to its website, My Caribbean Partner Programme allows qualified partners to distribute our selected products and services to both commercial and public-sector clients.’ (my emphasis). Besides, Chimera and GCNA, other listed partners include: Pure Grenada, Star Capital, http://www.starcapitalfund.com/ and JAMAICA http://www.visitjamaica.com/

Besides Mitchell, other directors of My Caribbean are: H E Oleg Firer, Advisor, Director; Pavel Krotov, General Director; Kemal Nicholson, Director; First Secretary of Grenada Embassy to Russian Federation.

It would seem reasonable to ask how come this ‘partnership’ between GCNA and Chimera and My Caribbean was not reported on by Minister Bain-Horsford as part of the achievements of 2017?

  • Star Capital:

Star Capital is another of the partners of My Caribbean and Grenada’s Ambassador to the Russian Federation, H E Oleg Firer is identified as the Managing Partner and Chairman. According to its website, Star Capital is ‘a private investment and advisory firm focused on transforming high potential companies into definitive market leaders. Through a combination of capital and operational expertise, we help our companies deliver innovative offerings for high growth markets…’ Among its services are services re real estate transactions to persons interested in purchasing property under the citizenship by investment programme.

It is useful to recall that the agricultural sector is a priority sector approved for the citizenship by investment programme and it is now reasonable to conclude that there may be significant Russian interests in the nutmeg sector. Indeed, this news item, ‘From tourism to high technology: Grenada and Russia have something to share with each other[9] hints at Russian enthusiasm for nutmegs since the 1980s>. It also mentions that relations are developing in the fields of agriculture and technology.

  1. New Dawn for Nutmeg and Cocoa Farmers/Grenada?

It seems reasonable to ask what is going on within the nation’s nutmeg and cocoa sectors? How come it is the minister announcing the ‘amalgamation of management’? The nutmeg and cocoa sectors form a most significant part of Grenada plc. Has any part of these sectors of Grenada plc been already been sold or promised to ‘investors’?

Besides the amendments, what other announcements/developments can be expected in the first quarter of 2018?

  • Are there any other agreements/undertakings by the associations or the Government of Grenada that are yet to be disclosed?
  • Who is/are the buyer(s) lining up to be granted permits to purchase nutmegs directly from farmers?
  • Are there any ‘investors’ already expressing interest in purchasing GCNA shares?
  • Can we the shareholders of Grenada plc have some more information on the ‘International Spice Institute to be CO-LOCATED in Grenada and the Netherlands?
  • We also want to know about Chimera. Besides, Mitchell, who are the other partners in Chimera?

Will the amendments herald a NEW DAWN for nutmeg and cocoa farmers and the country in general? Grenada will soon welcome the first quarter of 2018! No doubt, much will be revealed in the fullness of time!

[1] accessed at http://gbn.gd/en/gbnnews/1/6618/Good-Tidings-For-Nutmeg-Farmers.htm?ls-art0=40

[2] accessed at http://gbn.gd/en/gbnnews/1/6618/Good-Tidings-For-Nutmeg-Farmers.htm?ls-art0=40#comments

[3] 2017 Economic Review and Medium-Term Outlook, Table 1

[4] Accessed on 16/12/17 at http://www.nowgrenada.com/2017/03/farmers-receiving-less-green-nutmeg/

[5] http://dawn.gd/

[6] Son of the Rt. Hon Prime Minister, Dr. Keith Mitchell

[7] http://chimera-spice.nl/main.html

[8]

[9] http://grenadaembassy.ru/2017/11/05/from-tourism-to-high-technology-grenada-and-russia-have-something-to-share-with-each-other/

Article Footer 468x60

Facebook Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Posts