Mr Avaala said their reluctance in extending credit to the sector was not the best, noting that they should rather look at the potential of the sector and support farmers.

In an interview after the 40th anniversary symposium of the company which processes oil palm fruits to produce palm oil and palm kernels in the Western Region, Mr Avaala said investment in agriculture and particularly plantation agriculture required ‘patient’ capital with a longer payback period.

“You need capital that is not like what the banks give where the next month they want to take their money back. With this agriculture, there has to be a moratorium of up to four years, that is when the seedling is now growing and will start yielding in the fourth year.

“Even that one, the yielding is not the biggest. It will be increasing over the period, so it makes sense to wait by way of moratorium before you start to expect the payback to start coming in. That type of capital must be unique and be designed for this particular purpose,” he indicated.

He said currently, the banks were not positioned for that kind of investments and the symposium was part of efforts to generate discussion and interest of banks to look at that aspect of financing going forward.

“That kind of money must come from a source willing to wait for the plantation to evolve to be able to pay back. It is development funding more than commercial. It is a balance between commercial and development funding and that is the type which is lacking,” he stated.

The theme for the symposium was “BOPP – An agri-business model for national agricultural revolution.”

Benso at 40

Mr Avaala said for the company to operate for 40 years and still be profitable meant that agriculture could be done sustainably in the country.

“The fact that after 40 years the business is still running tells you that there is a way to do agriculture and plantation agriculture in particular, and it will be profitable and socially responsible, environmentally and ecologically balanced, to make sure that our footprints do not bring negative impact on the communities and the land we operate on,” he mentioned.

He said after 40 years, the company was sustainably giving back to the surrounding communities through its smallholder scheme involving about 438 farmers.

“Every month, they have revenue they get from participating in this scheme. It is a very good wealth-creating and poverty reduction scheme that is benefiting our farmers,” he added.

The funding for the scheme, he said, came from the French Development Agency, routed through the Government of Ghana and the Agriculture Development Bank (ADB). The phase two of the project, he said, would begin five years from now.

Expansion

Mr Avaala said its biggest shareholder, Wilmar International, needed to have access to land to enable it to process more palm oil locally.

He noted that currently, the company was importing crude palm oil but it would be more profitable for the company to get everything from Ghana.

“They currently get only 10 per cent from us. We are importing crude palm oil into Ghana. The best will be for them to get all the 100 per cent from here, then they can save all the shipment cost and working capital.”

“If you can have it all here in Ghana, then it is a better business model. We are looking for more land to be able to expand to meet the requirements for their processing and production,” he said. 

Palm oil holds potential

The Deputy Minister of Agriculture, Mr William Agyepong Kwaitoo, indicated that palm oil holds great potential to become a major export commodity for the country.

He said financing agriculture would result in employment generation, food security and also bridge the demand gap that existed in the sector.