Thursday, January 9, 2014

Disaster awaits the 2014 groundnut season

The regime of Yaya Jammeh has announced that it is withdrawing its partnership arrangement with Agribusiness Services and Producers Association (ASPA) which means that the association will no longer purchase the groundnut crop on behalf of government.  That function now goes to the Gambia Groundnut Corporation (GGC), a government entity that owns the groundnut plant as well as transportation facilities and storage facilities nationalized from Alimenta in 1999.

Government tried to privatize GGC in 2005/2006 but failed when only one bidder showed interest.  Why? Because it is not a viable operation to generate enough interest even locally.  The only response to the invitation to bid came from one local firm with no experience in groundnut marketing.  Foreign firms were equally disinterested because the manner in which government ended up with the Denton Bridge facility is still in their minds, when a government agent and supporter entered the facility, brandishing a pistol to seize it from the rightful and legal owner - the Swiss-based grain company named Alimenta. 

In 2005, the regulations and marketing left the defunct GAMCO - predecessor to GGC - as the sole operator for the processing and marketing of groundnuts.  GAMCO lacked capital and lacked marketing experience as well.  When the groundnut export market collapsed in 2005, and exports brought in only $2 million as compared to $16.9 million in 2004, GAMCO went under.  Government re-opened the export market to multiple operators, including ASPA.  GGC was also allowed to export groundnuts, expanding their role from being exclusively involved in the processing, transporting and storing to include exporting. 

Now that ASPA has been kicked out of purchasing groundnuts, GGC's role has been further expanded to including buying groundnuts.  The agency now appears to be the sole buyer of the farmers produce which immediately raises the question of capacity.  Does GGC have the capacity to buy, process, transport, store and export this year's entire groundnut crop.  The announcement is imprecise enough to allow for speculation as to the role, if any, of ASPA, now their partnership with government has been withdrawn. 

If there's one single factor that has contributed to the economic problems facing The Gambia is Yaya Jammeh's mishandling of the agriculture sector in general, and the groundnut sub-sector in particular.  The 2014 season is another disaster waiting to happen because of Jammeh's insistence on interfering at every turn, instead of allowing the private sector to operate freely.  This was a sector that, barring drought and other natural phenomenon, worked reasonably well as a reliable supplier of foreign exchange to the economy.  

We would have liked Yaya Jammeh to heed the words of General Colin Powell "you break it, you own it', but unfortunately, Jammeh is not in the habit of owning up to anything.  In fact, as if he's sense the impending disaster, he's already warned project managers in the agriculture sector that he's ready to fire and/or imprison anyone he deemed to be wanting in managing their respective projects.  For Jammeh, the problem is always lies somewhere else.