Long be­fore Trinidad and To­ba­go be­came an in­de­pen­dent na­tion, a group of co­conut farm­ers had al­ready joined forces to build a man­u­fac­tur­ing busi­ness that would even­tu­al­ly grow in­to one of the coun­try’s long­stand­ing pro­duc­ers of food, per­son­al care and house­hold prod­ucts.

As the coun­try marks its 64th year of In­de­pen­dence to­mor­row, CGA, for­mer­ly the Co­conut Grow­ers As­so­ci­a­tion, is look­ing back on al­most nine decades of evo­lu­tion, from crush­ing co­pra in­to co­conut oil to man­u­fac­tur­ing mar­garines, in­dus­tri­al fats, liq­uid short­en­ings, soaps and a grow­ing range of skin­care prod­ucts for the lo­cal and in­ter­na­tion­al mar­kets.

CEO of CGA, Gabrielle Agos­ti­ni, speak­ing to the Sun­day Busi­ness Guardian last Fri­day, de­scribed a com­pa­ny that has changed sig­nif­i­cant­ly since its for­ma­tion in 1937, while re­main­ing root­ed in man­u­fac­tur­ing and in­creas­ing­ly fo­cused on ex­ports.

The com­pa­ny was es­tab­lished when co­conut farm­ers from T&T came to­geth­er to build a fac­to­ry at Laven­tille, where they could process co­pra, the dried meat of the co­conut, in­to val­ue-added prod­ucts.

CGA ini­tial­ly fo­cused on co­conut oil, but its prod­uct port­fo­lio ex­pand­ed as the busi­ness de­vel­oped.

“From 1937, we orig­i­nal­ly start­ed with just co­conut oil, but then by the 40s we start­ed do­ing dif­fer­ent blends of oils,” Agos­ti­ni ex­plained.

Those liq­uid short­en­ings, made from blends in­clud­ing soy­bean, canola and palm oils, be­came part of CGA’s sup­ply to the food-ser­vice in­dus­try. Mar­garine fol­lowed, with brands in­clud­ing Marigold and French Maid, while the com­pa­ny en­tered soap man­u­fac­tur­ing in the 1950s.

That ex­pan­sion laid the foun­da­tion for the busi­ness that ex­ists to­day.

She said CGA now op­er­ates across five prin­ci­pal prod­uct ar­eas, with co­conut oils re­main­ing its largest cat­e­go­ry. Mar­garines and in­dus­tri­al fats form an­oth­er sig­nif­i­cant part of the busi­ness, in­clud­ing prod­ucts sup­plied to bak­eries across the coun­try.

Agos­ti­ni said CGA sup­plies at least 70 per cent of the bak­ing in­dus­try with large fats used in prod­ucts such as bread and cakes.

Liq­uid short­en­ings are an­oth­er ma­jor in­dus­tri­al line, sup­ply­ing oils and blends to fast-food restau­rants and oth­er food-ser­vice busi­ness­es.

The com­pa­ny al­so man­u­fac­tures laun­dry and bath soaps and, more re­cent­ly, has moved in­to skin­care through its Ce­dros Bay range, which in­cludes lo­tions, lip balms and cleansers.

Every­thing is man­u­fac­tured lo­cal­ly at CGA’s Laven­tille fa­cil­i­ty.

From lo­cal roots

to ex­ports

The com­pa­ny’s trans­for­ma­tion from a farm­ers’ as­so­ci­a­tion in­to a lim­it­ed li­a­bil­i­ty com­pa­ny mir­rors some of the broad­er changes in T&T’s man­u­fac­tur­ing sec­tor.

By the 1960s, CGA had al­ready es­tab­lished most of its ma­jor prod­uct cat­e­gories. Dur­ing the 1970s, the com­pa­ny be­gan ex­port­ing, even­tu­al­ly ex­pand­ing its reach to about 13 or 14 mar­kets.

The Caribbean re­mains the core ex­port re­gion, with some sales in­to the Unit­ed States. Ja­maica has emerged as one of CGA’s largest mar­kets, par­tic­u­lar­ly for co­conut oil, with the com­pa­ny car­ry­ing about five brands there.

Agos­ti­ni cred­it­ed the Caribbean Com­mu­ni­ty, trade mis­sions and sup­port from gov­ern­ment min­istries with help­ing CGA gain ac­cess to new mar­kets.

The com­pa­ny has al­so been recog­nised by the Trinidad and To­ba­go Man­u­fac­tur­ers’ As­so­ci­a­tion (TTMA) for ar­eas in­clud­ing growth, ex­ports, lead­er­ship and en­vi­ron­men­tal ini­tia­tives.

Its strat­e­gy has in­creas­ing­ly in­cor­po­rat­ed nat­ur­al and plant-based prod­ucts, with the com­pa­ny seek­ing to po­si­tion it­self as a more nat­ur­al and ve­g­an-ori­ent­ed man­u­fac­tur­er.

That in­ter­na­tion­al fo­cus has be­come in­creas­ing­ly im­por­tant as the do­mes­tic mar­ket faces lim­i­ta­tions.

For CGA, ex­port­ing is not sim­ply about ex­pand­ing sales. It is al­so part of the so­lu­tion to the for­eign ex­change con­straints that have af­fect­ed man­u­fac­tur­ers over the past sev­er­al years.

The com­pa­ny im­ports some raw ma­te­ri­als and pack­ag­ing be­cause the re­gion­al sup­ply base is not suf­fi­cient­ly broad. Ac­cess to for­eign ex­change there­fore di­rect­ly af­fects its abil­i­ty to man­u­fac­ture.

Agos­ti­ni said the sit­u­a­tion be­came par­tic­u­lar­ly dif­fi­cult af­ter the for­eign ex­change fa­cil­i­ty op­er­at­ed through the Ex­im­bank was sus­pend­ed in Ju­ly last year. The fa­cil­i­ty re­sumed in March this year, leav­ing man­u­fac­tur­ers with­out ac­cess for rough­ly eight to nine months.

“Every time you ask them for US dol­lars, we used to get it from them; they’re like, you have Ex­im­Bank,” she lament­ed, re­fer­ring to com­mer­cial banks.

The re­liance on Ex­im­Bank has cre­at­ed a dif­fi­cult plan­ning en­vi­ron­ment for man­u­fac­tur­ers be­cause al­lo­ca­tions are lim­it­ed and com­pa­nies can­not al­ways pre­dict how much for­eign ex­change they will re­ceive.

CGA has had to re­peat­ed­ly re­duce its pur­chas­es of raw ma­te­ri­als to match the amount of for­eign ex­change it can ac­cess.

“We’ve all ad­just­ed our plans even though they were set since last year,” Agos­ti­ni said. “We’ve had to keep cut­ting and cut­ting the ma­te­ri­als that we’re pur­chas­ing every month to match what­ev­er Ex­im­Bank is able to of­fer us.”

The dis­rup­tion has al­so af­fect­ed re­la­tion­ships with over­seas sup­pli­ers. Some sup­pli­ers have con­tin­ued work­ing with CGA, but oth­ers have im­posed lim­its on the quan­ti­ties it can pur­chase each month.

Agos­ti­ni said the sit­u­a­tion is par­tic­u­lar­ly frus­trat­ing be­cause the com­pa­ny is it­self an ex­porter and there­fore gen­er­ates for­eign ex­change.

She wants the Ex­im­bank fa­cil­i­ty to be placed on a more sus­tain­able foot­ing, with man­u­fac­tur­ers giv­en greater cer­tain­ty about their al­lo­ca­tions.

“We want to have a two to five year plan,” she said, ar­gu­ing that man­u­fac­tur­ers need to know what lev­el of for­eign ex­change they can ex­pect so they can plan pro­duc­tion and pur­chas­ing.

She al­so be­lieves the re­cent im­prove­ment in for­eign ex­change avail­abil­i­ty may not be per­ma­nent.

The com­pa­ny’s ex­pe­ri­ence re­flects a wider con­cern among man­u­fac­tur­ers that short-term re­lief does not pro­vide the cer­tain­ty re­quired to make in­vest­ment and pro­duc­tion de­ci­sions.

VAT, costs and

the road ahead

For­eign ex­change is not CGA’s on­ly chal­lenge.

The com­pa­ny has al­so been grap­pling with VAT re­funds, ris­ing util­i­ty costs, raw-ma­te­r­i­al con­straints and what Agos­ti­ni sees as out­dat­ed leg­is­la­tion and re­gion­al trade rules.

VAT re­funds have been a long­stand­ing is­sue for the com­pa­ny. Agos­ti­ni in­di­cat­ed the prob­lem has ex­ist­ed for much of her time at CGA, which stretch­es back about a decade, and she be­lieves it has been af­fect­ing man­u­fac­tur­ers for 15 to 20 years.

The prob­lem is par­tic­u­lar­ly acute when man­u­fac­tur­ers pay VAT on raw ma­te­ri­als but can­not charge VAT on some fin­ished prod­ucts be­cause of gov­ern­ment poli­cies cov­er­ing cer­tain goods, in­clud­ing prod­ucts sold through the gro­cery sec­tor.

That cre­ates a cash-flow bur­den for man­u­fac­tur­ers, who ef­fec­tive­ly have mon­ey tied up in the tax sys­tem while con­tin­u­ing to fi­nance pro­duc­tion.

“The VAT re­fund side, we need a prop­er so­lu­tion to that is­sue,” Agos­ti­ni said.

The is­sue has re­peat­ed­ly been raised by the TTMA in bud­get dis­cus­sions, she added, in­clud­ing dur­ing her time as a board mem­ber.

Util­i­ty costs have

added an­oth­er

lay­er of pres­sure

Agos­ti­ni said CGA ben­e­fit­ed his­tor­i­cal­ly from rel­a­tive­ly low gas, elec­tric­i­ty and wa­ter costs, which helped make T&T com­pet­i­tive with­in Cari­com.

But ris­ing costs have erod­ed some of that ad­van­tage.

She cit­ed a 78 per cent in­crease in CGA’s NGC rates and a dou­bling of its wa­ter costs as sig­nif­i­cant pres­sures on the busi­ness this year.

For man­u­fac­tur­ers, she ar­gued, util­i­ties are not a pe­riph­er­al ex­pense. Man­u­fac­tur­ing op­er­a­tions con­sume sub­stan­tial­ly more util­i­ties than many oth­er busi­ness­es, mak­ing changes to those costs im­me­di­ate­ly vis­i­ble in pro­duc­tion ex­pens­es.

Agos­ti­ni al­so wants greater in­cen­tives for man­u­fac­tur­ers to in­vest in ma­chin­ery and au­toma­tion.

She point­ed to an ex­ist­ing in­cen­tive that pro­vides $50,000 for new equip­ment, but ar­gued that the amount is in­ad­e­quate for mod­ern man­u­fac­tur­ing.

“$50,000 can­not re­al­is­ti­cal­ly pur­chase much of the ma­chin­ery need­ed to im­prove pro­duc­tion.”

CGA has al­ready in­vest­ed in tech­nol­o­gy and au­toma­tion, mov­ing away from the more labour-in­ten­sive man­u­fac­tur­ing process­es of pre­vi­ous decades.

The plant re­mains se­mi-au­to­mat­ed, how­ev­er, with work­ers still re­quired along its pro­duc­tion lines.

The shift has al­lowed CGA to in­crease out­put while re­tain­ing a sig­nif­i­cant work­force.

To­day, she not­ed the com­pa­ny em­ploys about 220 per­ma­nent work­ers and an­oth­er 40 tem­po­rary em­ploy­ees, putting its over­all work­force at rough­ly 260.

Agos­ti­ni es­ti­mates that the com­pa­ny em­ployed few­er than 70 peo­ple in its ear­li­er years. When she joined about 10 years ago, the work­force was around 170, mean­ing the com­pa­ny has added at least 50 per­ma­nent em­ploy­ees dur­ing that pe­ri­od.

Many of those work­ers come from Trinidad and To­ba­go, in­clud­ing peo­ple from the com­mu­ni­ties sur­round­ing the Laven­tille plant.

Agos­ti­ni al­so point­ed to changes in the skills of the work­force. Em­ploy­ees who might once have re­mained in en­try-lev­el po­si­tions through­out their ca­reers now have greater op­por­tu­ni­ties for train­ing and ad­vance­ment.

That de­vel­op­ment, she be­lieves, has strength­ened the fac­to­ry by im­prov­ing the skills avail­able with­in the or­gan­i­sa­tion.

Yet the com­pa­ny con­tin­ues to face dif­fi­cul­ties ob­tain­ing suit­able raw ma­te­ri­als with­in Cari­com.

She does not see man­u­fac­tur­ing growth as some­thing busi­ness­es can achieve alone, par­tic­u­lar­ly when pol­i­cy, tax­a­tion, for­eign ex­change, util­i­ties and trade rules all in­flu­ence the sec­tor’s com­pet­i­tive­ness.

Her vi­sion for CGA is to con­tin­ue build­ing its brands for in­ter­na­tion­al mar­kets while ex­pand­ing the com­pa­ny’s man­u­fac­tur­ing ca­pa­bil­i­ties at home.

“We have a lot of great prod­ucts that we sell and can be sold in in­ter­na­tion­al mar­kets,” she said.

What man­u­fac­tur­ers need, she ex­plained, is greater gov­ern­ment sup­port through poli­cies that ad­dress for­eign ex­change, VAT re­funds and in­vest­ment in­cen­tives.

The goal is not sim­ply to pro­tect ex­ist­ing man­u­fac­tur­ers but to en­able them to grow.

“My In­de­pen­dence wish is that we can do it to­geth­er if we work to­geth­er,” Agos­ti­ni added.