FOOD FOCUS
– A Stabroek Business Column dedicated to the ventilation of ideas pertaining to the current global food crisis and the response by Guyana and the Caribbean
Rowland Fletcher – Agronomist
The Guyana Citrus Project – Rationale for a citrus-based agro-industrial investment by the Trinidad &Tobago Citrus Growers Association.
The recent visit to Guyana by the directorate of the Cooperative Citrus Growers association of Trinidad and Tobago to finalize plans for a significant agro industrial investment in citrus and other agricultural commodities in the Intermediate Savannahs must be welcomed by local farmers and agricultural investors with interests in the Upper Berbice River sub-region, and even further a-field. This initiative may well be the long awaited opportunity on sustainable commercial savannah agriculture by a parent (corporate) company such as CCGA, supported by local agricultural investment and development interests.
Would this be another ephemeral savannah agricultural venture whose project proposal and business plans read impressively, reflecting positive indicators and healthy rates of return, but defying successful implementation? Probably not.
The Citrus Growers Association has had Guyana Intermediate Savannahs in their sights over the past eight years during which time the advantages and constraints were thoroughly analyzed, and investment options considered reviewed and revised. The previously overpowering constraints to savannah development such as distance from populated centers, lack of social and enabling industrialization amenities, and infertile soils, have now been mitigated by the changing international agribusiness landscape which requires CCGA to produce citrus fruit for their juice manufacturing process closer home, in order to avoid the high costs of importation from Belize. During this incubation period, Trinidad Citrus Growers were experiencing their own organizational hiccups, culminating in the recent restructuring of the CCGA and their affiliation with another beverage giant in T&T, which now provides the institutional capacity to competently execute and deliver on this major initiative.
The CCGA Vision: Their agro-industrial presence in Guyana and the savannahs offers an excellent agriculture diversification opportunity, not only for the commodity / enterprise package it promises to deliver, but also for the cross section of stakeholders it is expected to impact. This vision is based on mutually beneficial joint venture partnerships with savannah developers, interested investors and pioneering farmers, seeking opportunities which will allow them access to venture-financing, appropriate technology, agro-processing and marketing. As a precursor to its initiative, the CCGA has already established Citrus Company (Guyana) Inc. accordance with the Companies act of Guyana (1991) and will invite local entrepreneurs into joint venture partnership to facilitate its mandate. The CCGA in association with its local subsidiary plans to:
-Acquire land to permit the production of a minimum of 2000 ha of citrus and other fruits and companion cash crops in the Tacama Savannahs, and encourage local farmers to grow an additional 3000hectares for a 5000-hectare production module.
-Build a processing plant in the Linden sub-region, by year 5 of the project and establish the ancillary facilities to process and export its main output –frozen concentrate orange juice- (FCOJ) and other agricultural products.
-Through its regional and international contacts, arrange for marketing of surplus fresh fruit in the first five years of orchard production, prior to the processing unit being activated.
-Bring on board small farmers in the adjacent riverain districts of Upper Berbice and Upper Demerara, to produce crop for sale to the processing plant under an organized satellite- farming scheme.
-Support the establishment of a network for sustainable agricultural development of the Intermediate Savannahs and the Upper Berbice riverain districts based on farming association, appropriate field technology, environmental management, training, and social development.
At the end of the initial 10-year period it is envisaged that savannah farmers developers and investors would have collectively farmed in excess of 5000 ha with citrus and other recommended agricultural commodities, employing an integrated farming systems approach that would ensure environmental integrity and resource efficiency. Collectively the entire savannah investment would have exceeded US$25 million attracting an internal rate of return of at least 70% when the agro-processing operation is in full swing, by year 10 to 12. The range of products generated in addition to frozen citrus concentrate, would include pineapple and other fruit, hot pepper, grain legumes and livestock, supported with on farm by-products of citrus processing, and farm generated feed grains. Export markets would have been found for all these products.
Opportunities for Local Farmers: Local farmers and investors are expected to derive significant benefits from partnership and association in the venture in the same cooperative spirit that built and sustained the CCGA during its 75 years of operation. In addition to the 2000 hectares being sought by CCGA in the Tacama Savannahs, already established local savannah investors have committed to participation in the business venture as business partners or satellite farmers.
Beyond the savannahs there would be opportunities for small riverain farmers in the Upper Berbice and Demerara river districts, to re-embark on establishment of citrus orchards, which formed part of their farm enterprise portfolio in the past decades. A comprehensive and successfully executed plan could realize the following outputs and benefits 5 to 7 years after initiation:
-100 ha (240 acres) of new citrus orchards in the riverain communities producing fruit that will initially be marketed fresh to regional destinations, until the processing facility comes on stream.
-150 ha (360 acres) of citrus and other crops on lands of small farmers in the Wiruni savannahs.
-An increased level of commerce and agribusiness among communities on the riverain strip of the Berbice River.
-Stimulus to the livestock industry in the medium and long term through the availability of citrus pulp –livestock feed- from the processing plant. Also from the increased pasturage on lands subjected to recommended rotations and cover cropping.
-Regular or permanent employment to community stakeholders.
-Improved road and river transportation and communication systems.
Economic benefits to farming communities: Economic benefits to participating communities would be significant. Near estimates will have to await an ex- ante socio economic analysis of the target areas, however, at best, it is estimated that the economies of households in the Upper Berbice River could virtually double from this initiative by the fifth year of the development. The presence of the agro-investor, growing and processing citrus and other products would also spread economic benefits beyond the Upper Berbice River communities to adjacent communities of Ituni, Aroaima, Kwakwani, Linden and even as far removed as the Soesdyke Linden Highway.
The Linden Factor: The location of a multi-enterprise agro-processing processing plant in Linden would automatically spark the interest of farmers in the Upper Demerara River and Soesdyke Linden highway, in production and supply of fruit to the plant. This could spawn positive socio economic benefits, and a boost in the agricultural fortunes of those farming communities. A detailed survey and evaluation would be necessary to provide empirical projections. This survey will quantify the existing acreages of citrus orchards in the outlying farming areas around Linden, and along the Soesdyke Linden highway, which might qualify as feed stock suppliers for the processing plant. One can also anticipate interest from citrus farmers, further removed from the Linden centre, but who may want to take advantage of better road conditions and acceptable prevailing prices to dispose of their crop in bulk. If this opportunity were to be pursued, it might be possible to commence the processing of fruit even earlier (by one or two years), since these more remote orchards (in West Demerara, East Essequibo, and Pomeroon) are already in full production. Another probable benefit of locating the processing plant in Linden would be that of accelerating the pace of development of the project, simply because important peripheral support mechanisms to both production and infrastructure development (electrical power, pure water supply, technical human resource) would be more readily accessible thus freeing up the CCGA planning and execution machinery to focus on other vital activities such as orchard establishment and fruit production.
A Solid Foundation: The CCGA / CCGI Guyana proposal is built on four main pillars.
-Firstly: the necessity for CCGA as a business entity to seek viable alternatives to increase and expand its market share of the industry in the competitive global environment, and to continue facilitating its shareholders with satisfactory investment returns.
-Secondly: the recognition by CCGA of an opportunity to capitalize on innovative technological approaches to commercial agriculture in the Savannahs, in an integrated farming systems context. This strategy has been successfully applied in commercial farming in the Brazilian and Colombian savannahs where large-scale production of fruits, grain crops and livestock is practiced.
-Thirdly: the expectation that a venture of such a magnitude would stimulate a concerted effort by savannah agricultural developers, farmers Government regulatory agencies, and service providers to combine efforts and resources for the collective benefit of all stakeholders. Herein lies the philosophy and success of satellite farming schemes and growers associations, with which CCGA is well acquainted and will actively promote.
-Fourthly: that the spin off benefits of the proposed production system would stimulate the development of secondary agricultural industries in livestock and other crops that would add sustainability and economic viability to savannah agricultural investment.
Joint Venture Prospects: there do exist savannah agricultural leaseholders that are likely to become joint venture partners in a CCGA citrus industry initiative. An opinion survey of the current leaseholders and agricultural developers yielded the following information.
General attitude to and receptivity of the concept of a savannah based Guyana citrus industry: Positive and enthusiastic in the majority of cases
Preferred level of involvement and participation in the venture: All respondents were interested in producing citrus fruit on their farms for sale to the CCGI processing plant. This of course would be conditional on pricing arrangements and the cost effectiveness of their farm operations. The majority of the savannah developers are not in a position to offer substantial liquidity as equity in any joint venture affiliation. Suggestions of equity contributions in the form of services, land infrastructure and equipment have been made.
Satellite farming scheme participation: This was unanimously acclaimed, and considered necessary for participation of local farmers.
Employment of integrated production systems: Actively involved farmers have recognized the need for a farming systems approach to agribusiness ventures in the savannahs environment. They anticipate that ancillary crops and enterprises would have equal support in a satellite-farming scheme. In practical terms this means that commercial production and marketing systems would have to be developed for the selected commodities, including Minica 4 red peas, pineapple, hot pepper and sorrel, cucurbits and livestock feed grains.
Guyana Offerings: A spirit of reciprocity will dominate the savannah agricultural investment plans of CCGA. Land is perhaps the most desirable element available to the CCGA in a Guyana citrus project. The vast expanse of brown sand soils in the Intermediate savannahs considered ideal for citrus, will form the base of the agro industrial thrust. But even more significant is the favorable geographical juxtaposition of the two countries, which would permit a two to three-day shipping round trip for delivery of farm and manufactured products and outputs, as opposed to the 30 to 45 days which obtains with shipments of citrus concentrate from Belize. Such an advantage would convert to a 30% to 35% cost reduction in Citrus Grower’s operational bottom line. Indeed significant!
Current Project Activity: Plans for the establishment of citrus nurseries to provide the estimated one million virus-free citrus plants, which will be the foundation of the production orchards, are well underway. Consultations are in progress with Government regulatory bodies on Plant Quarantine issues and a local citrus budwood certification programme. Nursery infrastructure work has also commenced at one location in the Tacama Savannahs.
In a subsequent article we will consider the implications and challenges of generating one million budded, virus free citrus plants over a 5 to 6 year period, to satisfy the planting requirement needs of CCGA and farmers participating in the Guyana Citrus Project.
