Red Stripe's Project Grow under pressure

Red Stripe's Project Grow under pressure

Red Stripe sounds warning bell on cassava project

BY DURRANT PATE
Observer business writer

Wednesday, November 27, 2019

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Red Stripe is sounding the warning bell regarding its Project Grow initiative for the cultivation of cassava to use as a substitute for imported high-maltose syrup in the production of its various brewed products.

The much-heralded economic and social project is in jeopardy, as in its current form the initiative is proving to be unsustainable due to the fact cassava is showing itself to be much more expensive as an input cost. This is contrary to Red Stripe's initial thought that using locally grown cassava as a substitute to imported maltose syrup would be a more affordable alternative, representing an import substitution initiative.

This apparent miscalculation is now costing millions to the local brewer, which is now sounding the warning bell that in its current form the initiative is unsustainable and needs help from the Government and other partners to make Project Grow viable.

In spite of the challenges being faced with the Project Grow initiative, Red Stripe is adamant that it is not giving up on the corporate social responsibility programme it initiated in 2017.

RED STRIPE IS NOT GIVING UP ON CASSAVA

Speaking at the Jamaica Observer Monday Exchange, Red Stripe Managing Director Luis Prata and Head of Corporate Affairs Diane Ashton-Smith made it clear that the company is not backing away from its Project Grow initiative.

Prata conceded that Red Stripe's initial estimate that locally grown cassava would be a cheaper alternative to imported maltose syrup has not materialised.

As a result, the company is now engaged in serious discussions on the way forward with a number of options now on the table.

“It's not about ending the project, as I have said before, but it's about who else would go into cassava with us, what other incentives could there be for us to be pushing for it (Project Grow initiative) and what is the right size of this project — that is the discussion on the table but none of the options is to end this project,” declared Prata.

He said Red Stripe is looking for partnerships as well as training for the contract farmers who grow cassava for Red Stripe. According to Prata, “it's not like we are sitting and watching things happen, so we are also investing in our own farms; very high-end technical farms. I think we are more sophiscated with a great deal of knowledge that we can share with other farmers so they can benefit from our research and development, making ourselves more competitive.”

For her part, Ashton-Smith admitted that it is costing more to use cassava than the imported syrup. She also admitted that Red Stripe does import a small quantity of maltose syrup for use in its brewed products, but it's looking at other cheaper substitutes.

The Red Stripe head of corporate affairs posited, “cassava is not something we are going to be coming out of and so we are looking at ways and means of ensuring that we can operate in a viable way, but there are other things.”

She pointed out that currently Red Stripe's use of cassava is 15 per cent when it should be around 40 per cent, adding that the company is looking at increasing productivity as well as seeking out partnerships to ensure that the company can get cassava at a cost that makes it a viable option.

State minister for Industry, Commerce, Agriculture and Fisheries Floyd Green, who also spoke at the Monday Exchange, committed to meet with Red Stripe to get first-hand information regarding the challenges with the Project Grow initiative.

“We need to have a sit-down and look at what is driving the cost of production, in other words see how we can develop a regime beyond production incentives,” Green emphasised.

POSSIBLE HELP FOR CASSAVA

He cited the possibility of the provision of seedlings and fertilisers as done to assist targeted crops such as Irish potatoes and onions being extended to cassava farmers. “We need to take a detailed look at what is driving up the cost of production. Is it the acreage is too small? Is it that the farmers are too inefficient and need strengthening?”

Minister Green questioned whether there needs to be extension services to farmers and whether there needs to be a special pool of agricultural officers to work with cassava farmers.

He underscored the importance of Red Stripe's Project Grow initiative saying all interested parties such as Red Stripe, Rural Agricultural Development Authority have to get it right.


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