The Tribune

• Entrepreneur 'not knocking' concept that's 'fantastic'

• But fears SPV structure going 'down wrong avenue'

• Concern it will undercut existing farmers on pricing

By NEIL HARTNELL

and FAY SIMMONS

Tribune Business Reporters

A Bahamian agriculture entrepreneur yesterday voiced concern that the Government “sees another cash cow it can milk” to the detriment of existing producers with its $15m egg self-sufficiency project.

Caron Shepherd, the Bahamas Agro Entrepreneurs Group’s president, hailed the Golden Yolk initiative as “a fantastic project” in concept but told Tribune Business that the Davis administration was heading down “the wrong avenue” with its execution plan.

She reiterated her fears that the project, as structured, will result in the Government becoming directly involved in egg production and competing against existing Bahamian farmers with the end result that it may undercut them on price and drive such producers out of business.

Clay Sweeting, minister of agriculture, marine resources and Family Island affairs, previously told this newspaper that the Golden Yolk initiative was not designed for the Government to take over domestic egg production. Instead, he argued that it would be a facilitator through providing the climate-smart grow houses for the egg-laying chickens, and would contract out the operation and management of such facilities to farmers from the private sector.

However, he subsequently said the Government’s participation would be channelled - via the Bahamas Agricultural and Industrial Corporation (BAIC) - through a special purpose vehicle (SPV) whose directors, governance terms and independence were not defined at the launch. The SPV’s role will be to acquire all eggs produced by the farmers from the grow houses, and then sell the produce on to local wholesalers, distributors and retailers.

Voicing concern over this structure, Ms Shepherd said: “Let me put it this way: The Government sees another cash cow that it can jump on the bandwagon and be able to milk. I spoke to the Prime Minister directly afterwards and said: ‘Why are you doing it this like this?’ He said: ‘What do you mean?’ I said: ‘Why not set it up to assist the existing farmers and let them do what they do?’

“He said: ‘We’re going to do that.’ I said: ‘In which way?’ He said: ‘We’re going to buy the eggs back from the farmers and sell the eggs.’ I said: ‘You mean the farmers will be working for the Government.’ He said: ‘No, no. The farmers will have their own entity, but they are going to need to pay the Government back for the facilities it provides, and after that they can do whatever it is, but not before they sell the eggs to the Government and the Government sells the eggs’.

“It doesn’t make any sense,” Ms Shepherd argued. “Why is the Government getting into egg production when we already have existing farmers producing eggs? It’s a matter of expanding their farms, and the Government putting in place policies to assist them. It’s a cash cow that the Government now sees it can milk.”

Based on Mr Sweeting’s description, the sale of eggs to the Government’s SPV by the farmers will help to repay the former’s initial investment in setting up the Golden Yolk initiative while still allowing the farmers to make a profit. “Upon production, the contracted farmer will sell all the eggs to the special purpose vehicle who will deduct the costs of the inputs and pay the profits to the farmer,” the minister explained.

The SPV will then sell the eggs to food wholesalers and retailers for consumer distribution. Some may view this structure as overly complex, and wonder why the Government simply does not lease the grow houses to the farmers on commercial rental terms. It also appears to add another intermediary, and its extra layer of costs, into the food supply chain.

However, others will likely argue that only the Government could provide the level of investment needed to stimulate domestic egg self-sufficiency given that no private sector investors have yet stepped forward to provide the capital required. And, as a result, it needs to recover and gain a return on its initial outlay.

Ms Shepherd, who said she told Mr Sweeting that she will “defend the farmers to the hilt”, queried why it seemed as if the Government - not the farmers - will hire the 90 persons it says are required to operate the grow houses. “The long and short of it is that they are putting facilities in place for the farmer to work for them,” she argued. “They’re going to hire people, which the farmers should be doing, and going to want to run these things and produce eggs...

“It’ll be like they have now with the Bahamas Agricultural and Marine Science Institute (BAMSI), which is selling lettuce and undercutting the farmers on the price of lettuce, which is sad. Overall, the concept [of Golden Yolk] is a noble one, but it does not impact the farmers the way it should. It’s a way for the Government to add stars to their crown but that doesn’t mean the stars are going to shine at the end of the day. It’s not benefiting agriculture directly through the farmers.”

Fearing that the Government will follow BAMSI’s lettuce example by undercutting established egg farmers with its Golden Yolk production, Ms Shepherd said: “It’s not the Government’s livelihood; it’s the farmers’ livelihood that the Government is getting into. The purpose of government is to put the policies in place, not getting into egg production or farming directly.

“I’m not knocking the project. It’s a fantastic project, but the avenue they are using for this is not the right avenue. It’s not the right direction they should be going in for agriculture or the farmers. The farmers are the persons in agriculture. They have the passion, they have the desire. They will be there through sunshine and rain. They have the stickability and wherewithal to make sure their chickens lay eggs.”

Ms Shepherd added that the Golden Yolk project may entice some farmers to abandon their existing fields, as she warned against contracting with “fly by night persons” with no agriculture experience to operate and manage the grow houses.

Daphne DeGregory Miaoulis, Abaco’s Chamber of Commerce president, also warned the Government against creating a situation where it competes directly against existing egg producers.

“I appreciate and I commend the Government for putting focus on growing agricultural opportunities. Ultimately, we can’t consider ourselves as an independent country if we can’t feed ourselves. We need to be able to feed ourselves first and foremost. So anything to encourage that, yes,” she said.

“But definitely government doesn’t need to be in competition. We just need to create the opportunities for local Bahamian owned-farms and farmers to maximise their economic potential. This special vehicle, which sounds sort of sketchy, does the Government own this 100 percent? Are aspects of this foreign-owned? Who’s going to monitor and maintain the health of these farms?

“We had chicken farms in the past and they shut them all down. Why didn’t it work in the past? What are they doing to ensure that we don’t have the same failures that caused the farms to close in the first place? Are they going to directly compete with the local small poultry farmers? Or are they going to also want to promote and sell their products as well? The first thought is that they are going to create a situation that wipes out the small guy,” Mrs DeGregory Miaoulis said.

“In agriculture, the actual grower is the one that will generate the least amount of income from the finished product. The wholesaler and the retailer will generally generate two to three times what the grower generates, although the grower takes all the risk, has all the labour and bears all the costs of production.”

Suggesting a slightly different approach, the Abaco Chamber president added: “They should create possibilities for private-owned enterprises and give them the encouragement to work with individual farms and be able to provide marketing and support if we’re growing a crop adequately to meet the demands of the marketplace.

“They should pull farmers together and provide a packing house that’s functional on each island, and provide proper transport that is affordable to get the product to market. If you took a poll, you’ll find that most Bahamians involved in agriculture are seniors. We need new and innovative farming methods and opportunities to attract young people.

“Farming doesn’t have to be dirty. It’s not about digging holes and getting dirt under your fingernails any more. There are modern, mechanised methods of farming that would attract young people. If not, we’re going have a gap where when the seniors can’t farm any more and we won’t have people who are willing to farm.”

The Golden Yolk project is expected to increase local egg production from about 700,000 to 28 million per year, construct 38 grow houses on 12 Family Islands, inject $2.3m into the economy annually and propel the country towards food security.