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Devant moving to rein in TTABA
The T&T Agri-Business Association (TTABA) has incurred losses of $72.6 million between 2007 to June 2011. And now, Food Production Minister Devant Maharaj is moving to put a bridle on the organisation.
For the next fiscal year, Maharaj said, TTABA will receive less funding from the treasury for agriculture projects and developmental works, while more attention will be paid to State-owned National Agricultural Marketing and Development Corporation (Namdevco).
“I am viewing a new relationship with TTABA, whereby the treasury will fund them less in agriculture. If TTABA is to get any more government support we will have to agree to a certain arrangement. If they don’t agree they can choose to go along their merry way. There has been no checks and balances. It is indisputable that TTABA has not made money at all.”
Maharaj said TTABA was not accountable to the Government, which has been providing them with subventions because of its act. One of the proposals put forward, Maharaj said, was to restructure TTABA, on which legal advice had been sought. Asked if TTABA was a runaway horse, Maharaj said a bridle was never put on TTABA with the past administration.
Even though TTABA is a not-for-profit development company, Maharaj said, “That does not say they have to incur losses.” Maharaj said at the end of September the Government was no longer contractually obligated to TTABA.
“This puts the ministry in a position where we could utilise Namdevco to assert proper roles in the agriculture sector. More importantly...a lot of what TTABA has been allowed to do is the core functions of Namdevco, which over the last decade has been starved for funds and allowed to go into a state of atrophy.” He said while TTABA had a business plan, they were yet to set targets.
Selected managers paid more than $20,000 monthly
A report on the systems audit of TTABA done by the Ministry of Finance Investments Division Central Audit Committee dated November 2011, which the Sunday Guardian obtained, showed that TTABA had incurred $49.6 million in net losses in commercial operations with an additional $23 million spent on non-commercial activities.
This totalled $72.6 millions over four years. The lossess in commercial operations rose from $4.2 million in 2008 to $14.8 million in 2011. The report signed by senior audit analysts Samuel Deonarine and Himraj Singh also revealed:
• That while inventory records were maintained on TTABA’s Peach Tree records, a physical stock count at September 30, 2010 showed shortages in three commodities—448,840 pounds of cassava, 132,388 pounds of pommecythere and 271,737 pounds of pawpaw.
• Export sales amounted to less than $1 million over a five-year period
• In the financial year ended September 2010 (ie some six months following the above mentioned review period) net losses from commercial operations was the highest in the history of the National Agri-business Development Programme (NADP) as at that date. Same was quantified at $18.6 million for financial year 2010
• For the period 2006 to August 2011 salaries and wages were in excess of $34 million, which represented 28 per cent of subventions received during this period
• TTABA’s human resource policy and procedures had not been approved by its board
• No approvals by the CEO, no advertisement of positions, no reference checks, nor offers of employment existed with respect to 16 staff positions
• Several managers were hand selected to positions which carried salaries in excess of $20,000 monthly
• Transparency and equity appeared to have been very much absent, especially in the hiring of persons for the higher-paid positions
Negative profits in commodities
The report revealed that ten commodities yielded negative gross profits for 2010, among them sweet potato, pumpkin, onion puree, bhagi, cucumber, dasheen bush, lettuce, melongene and patchoi. When a year-end inventory reconciliation was made for this same period, it also unearthed that commodities such as plantain, bodi, ochro and tomatoes did not make a profit.
Also unearthed was another 16 commodities that yielded a profit in excess of $100 for the first nine months in 2011. “In the first nine months of the financial year 2011 (ie the period for which data was available) net losses from commercial operations amounted to a further $14.8 million,” the report stated.
Though TTABA had projected a 33.3 per cent of sales revenue on sweet potato fries, it sold fries to KFC/Prestige Holdings Ltd at $3 per pound, in spite of its estimate direct cost of production being $5.92 per pound.
Under the headline “Unprofitability of Point Lisas Processing Operations” it showed that while the yearly operating cost was $12 million per annum in the financial year 2010, the gross profit from all commodities produced at the plant (along with the gross profit from all commodities, excluding coconut water, produced at the Caroni Processing operations) was less than $.5 million.
With the exception of coconut water, the Caroni procession operations produces or is forecast to produce 17 products.
• Only four of these products are for general market/general institutional markets
• Two of these products are for specific customers other than “big business”
• Eleven of these products are for three “big business” enterprises operating in T&T, (Vemco, Chief Brand and R.H.S)
From April 28, 2011, to May 6, 2011 it was also discovered that over 2,068 pounds of tomatoes “were sold” to TTABA employees. It also showed a business deal with TTABA and one company Meico Ltd owned by Don Fletcher, who served as marketing manager of TTABA.
“On the other hand Don Fletcher/Meico Ltd purchases from TTABA pommecythere puree, from which a form of pommecythere juice is produced and sold. In spite of TTABA not producing juice for sale, the purchase of bottles for juice bottling/pommecythere included:
• 10,200 bottles requisition dated 10/02/2011
• 3,000 bottles requisition dated 6/04/2011
It also showed that over a three-day period TTABA purchased from PSC Nitrogen 2,500 pounds of tomatoes at $3 per pound, and sold it to Kashmeed Mohammed, who is not a TTABA registered/contracted farmer for the same price. The report stated that TTABA:
• Failed miserably in increasing local food crop and livestock production to any quantity in the vicinity of 300,000 tonnes
• Failed to achieve its mandate relative to export earning from the sector approaching a $900 million mark
• Was no way close to achieving its mandate of increasing direct employment in the agri-business sector by 42,000 persons
TTABA-report inflammatory, prejudicial
In defending its position, TTABA compiled a report to counteract the auditors’ findings, which was leaked to the Sunday Guardian. “The auditors unfortunately, essentially abandoned their stated objectives (assessment of policies, processes, procedures and supporting systems and instead sought to assess the success or failure of the NADP.
Perhaps, consistent with their training as accountants, they used the single and somewhat irrelevant criterion of “net profit” of this developmental programme as the basis for declaring that TTABA “has failed miserably and has totally failed” to achieve its mandate,” the report explained.
TTABA was also of the view that an impartial and informed reader will find that the language used by the auditors throughout their report was not consistent with “professional audit language” but was quite “inflammatory and prejudicial.” This misleading report, TTABA stated, may influence the Government to make an incorrect policy decision on NADP, which could have very long negative impact on the sector.
The majority of the issues raised by the analysts, the report stated, were “unfounded and inaccurate.” With regards to the $72.6 million losses, the report explained that the auditors made no specific comments on these findings, “but we conclude that these are to be seen as criticisms based on the tone of the report.”
TTABA, the report noted, took a decision to take a “commercial approach” to the implementation of the NADP in order to foster a “business oriented implementation climate” to generate direct revenue and to become sustainable in the medium to long term, depending on the success of the new value-added products developed.
TTABA felt they should be commended for taking “a commercial approach” to the NADP. Regarding the selling of sweet potato fries to KFC at $3.00 per pound, TTABA said this was misleading in one aspect and patently inaccurate in others. In response to the sale of produce to TTABA employees, TTABA said there was nothing irregular about this.
TTABA also insisted that there was nothing irregular with their dealings with Meico. ”We assume that they are suggesting that TTABA has held back on putting its own juice on the market in order to facilitate Fletcher. If this is their intent, then their suggestion is completely baseless.”
Stewart : Politics at play
CEO of TTABA Vassel Stewart, in defence of his organisation, yesterday described the report as biased and inconsistent with the objectives of its developmental programme, which was never established on profitability. “The auditors that they sent in were the wrong auditors. They painted TTABA in a bad light deliberately and on ignorance as well.” Of the two auditors, Stewart said, only one signed the report.
“Furthermore they never discussed the report’s findings with us.” Stewart said, “Maharaj has made it clear that he would not fund the organisation unless he is able to control it...unless he can appoint the board of directors, chairman and CEO.” This, Stewart said, was relayed to TTABA’s chairman in a letter.
“He (Maharaj) has taken a particular hostile approach to myself.” In addition to this, Stewart said, Maharaj has refused to attend meetings of the board. Admitting that TTABA was established under the former People’s National Movement government, Stewart when questioned if politics was at play replied “absolutely. He (without calling names) has made it clear...he has said that I am a PNM appointee. It has been made an issue.”
Stewart said he heard that people have been offered positions as directors on TTABA’s board, which cannot be done, since directors are appointed by the membership and not the Government. TTABA receives subventions from the Government to implement programmes.
Stewart believes TTABA was not being treated fairly by Maharaj. Stewart said he believed that Maharaj has a certain degree of discomfort with the organisation and was being ill-advised.
Piggott: Stop playing politics
Unaware of the report, former agriculture minister Arnold Piggott said TTABA was established to make a shift from subsistence to entrepreneurial agriculture. “The idea was to get people to move towards agro processing and agribusiness. Our plan was for the farmer to graduate from subsistence farming to processing. And TTABA would have been the model towards achieving that.”
Piggott said TTABA and Namdevco operate differently. “We really have to stop playing the politics in agriculture.”
TTABA was established in May 2006 by private sector agribusiness stakeholders with the Government’s support to accelerate national economic and social development through the sustainable expansion of the agribusiness sector.
The company is not owned by private shareholders but by its current 33-member associations drawn from every level of the agribusiness sector and cannot disburse dividends/profits to individual members but must reinvest its profits to further its objective of actively leading the development and expansion of the agribusiness sector in T&T. Representatives from the Ministry of Food Production, the ADB and the THA also sit on the board.
Committed to the growth and sustainability of T&T’s agricultural sector by the offering of agribusiness and marketing solutions through commercial partnerships and linkages with key stakeholders, in order to produce high quality primary and value-added food products at fair and competitive prices to targeted markets.
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