Aveyime rice factory abandoned over lack of funds [Video]

According to the Minister of Food and Agriculture, Dr. Owusu Afriyie-Akoto, since 2015, Ghana has been spending over a billion {dollars} to import rice into the nation.

However, business gamers say this determine might be an underestimation of the true image on the bottom.

The Deputy Minister for the sector, Robert Ahomka Lindsay talking at a Ghana-Vietnam commerce and funding promotion discussion board held in Accra final 12 months, stated Ghana imported rice value 1.1 billion {dollars} in 2017 alone; including that rice importation into the nation takes 82% of all imports into the nation.

Interestingly, though the nation spends such big quantities on rice importation into the nation, authorities continues to pay lip service to the native rice business which analysts say has an awesome potential.

Peasant and industrial rice farmers in addition to buyers within the nation, are sad with how successive governments have failed the sector.

Quality Grain Company, now Prarie Volta Limited, popularly known as the Aveyime rice farm has been left dormant.

It isn’t any secret nevertheless, that from the farm to the eating tables, Rice is a staple meals consumed internationally.

According to statistics, complete international consumption of milled rice amounted to roughly 477.77 million metric tons in 2016/2017 alone.

Countries reminiscent of Thailand, Vietnam, India, USA and Brazil, have turn out to be rich and meals ample by way of the industrial manufacturing of rice.

But Ghana’s story is completely different, because the sector is just about lifeless. One of such typical examples is the Aveyime Rice Farm.

Successive governments have for years tried to bridge the widening hole in rice imports by investing in industrial rice manufacturing, however all these efforts didn’t see the sunshine of day.

In an try and maintain the dream of commercialized rice manufacturing within the nation, the federal government of Ghana on 16th May 2007, signed a Memorandum of Understanding (MOU) with an American primarily based Investor, Prairie Texas Incorporated (PTI) to offer a framework for funding, administration and governance of rice manufacturing by way of the defunct Quality Grains Company Limited below a brand new identify, Prairie Volta Limited PVL.

According to the funding settlement, PTI owned an preliminary 70 % shares valued at 2.5 million Dollars ($2.5,000,000), whereas the federal government of Ghana by way of the Ministry of Food and Agriculture MoFA, owned 30 % shares additionally valued at One million {dollars} ($1,000,000) which was donated by way of the belongings of the defunct Quality Grains venture.

In addition to its fairness contribution, PTI was additional obliged per the settlement to safe from exterior sources all financing and capital wanted for growth works and providers of the venture estimated at Three Million US Dollars (US $ 3,000,000) on the time.

Moving ahead, Prairie Texas Incorporated PTI invested a million {dollars} ($1,000,000) money as its preliminary fairness contribution. However, in a bid to boost some extra capital for the venture, PTI offered 30 % of its 70 % shares to Development Finance and Holdings Limited (DFHL), a subsidiary of the Ghana Commercial Bank.

As a outcome of the transaction, a capital of $1,500,000 was realized from the sale of the 30% shares bringing the entire fairness contribution of PTI to 2.5 million {dollars}.

This transaction, nevertheless, modified the shareholding construction of the corporate with PTI holding 40% shares, DFHL of GCB additionally holding 30% shares and the federal government of Ghana by way of Ministry of Food and Agriculture additionally holding 30% shares.

With this association, the farm was opened to enterprise in 2009 to 2015 when operations got here to a halt.

According to the overseas buyers, this was in consequence of a number of elements which needed to do with finance.

According to the Finance Manager of Prarie Volta, Richard Amoasi, one of the elements needed to do with “government pegging the value of the asset at 8.2 million dollars when it was purchased by Prarie Volta. Meanwhile, these assets have been sitting down for ten years without usage.”

“The said amount was sitting on our balance sheet as a debt which was a major challenge which prevented the investors from securing any funds elsewhere in the world including the World Bank which was ready to provide us with some funding. One other challenge that worked against us had to do with land compensation. There were times we go to the farm to work and the chiefs prevented us because they have not been compensated.”

“The third challenge that also worked against us had to do with the interest rate at the time. The interest rate was so so high that it was not feasible to run a rice farm in Ghana with an interest rate of 37%. The fourth challenge had to do with the equipment as the equipment we inherited were old and outmoded and most of which had lied idle for long and looked rusty,” he lamented.

According to a board member representing PTI, Eric Addo Mensah, one key problem needed to do with the gear as the corporate needed to spend big sums of cash to make them usable.

“When we took over, the equipment had been lying down for over ten years so a number of them were faulty and no longer in production,” he stated.

According to Deputy MD of GCB Bank, Socrates Affram, who additionally doubles as a board member of PVL, he talked about multiplicity of challenges as elements that labored towards the corporate which largely needed to do with gear and finance.

But the Legal Director on the Ministry of Food and Agriculture, Seth Dumoga who was additionally a board member of the defunct PVL Company, the collapse of the venture was as a result of the investor, PTI failed to usher in the wanted capital to run the venture as anticipated.

“Prarie Texas had the management and they had to bring in the needed working capital but they run out of working capital to keep the project running and this has brought the project to a halt. The foreign partners were supposed to bring in three million dollars as working capital and they failed to bring in that money. So the company suffered from lack of working capital.”

However, Vandyke Mensah, the American primarily based Investor on his half accused Mr Dumoga and the Ministry of Food and Agriculture of missing the understanding of the venture almost about monetary points; a scenario he stated was one of the issues the venture suffered.

“I am surprised at Mr Dumoga’s claims as he has no clue what he was talking about. My partner and I spent about 1.5 million dollars on feasibility studies which include paying for agronomists, surveyors among others. The sad part of the whole transaction is that MOFA officials don’t seem to understand finance. The didn’t realise that when you represent your asset, it affects your balance sheet. That singular act by MOFA affected us and made it difficult to access external source of funding.”

“Apart from that, the equipment we inherited were all obselate and outmoded. The dryer, for instance, was not meant for rice and rather it was a corn dryer. All other equipment had not been put to use for over ten years.”

While the venture is struggling to search out its toes, GCB Bank has gone to courtroom to hunt an order to promote half of the belongings of the corporate to defray a 1.5 million {dollars} debt the corporate owed it.

Meanwhile the city people expect authorities to revamp the venture to allow them have entry to employment because the venture has the capability of using about 5 hundred direct staff and about two thousand oblique staff.

By: Elvis Washington | citinewsroom.com | Ghana

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