Gikonko rice mill issues Rwf42 million dividends

Gikonko rice mill last week issued dividends to its shareholders after netting a profit of Rwf42m in 2008 from Rwf1.2m losses in the previous year. The mill, which is jointly owned by a union of nine cooperatives and ICM Rwanda Agribusiness—an Australian firm, managed to breakeven within three years of its operation in the hands of private investors. 
Hon. Agnes Kalibata (R) handsover a cheque to the Head of the Cooperatives that own shares in Gikonko rice factory.
Hon. Agnes Kalibata (R) handsover a cheque to the Head of the Cooperatives that own shares in Gikonko rice factory.

Gikonko rice mill last week issued dividends to its shareholders after netting a profit of Rwf42m in 2008 from Rwf1.2m losses in the previous year.

The mill, which is jointly owned by a union of nine cooperatives and ICM Rwanda Agribusiness—an Australian firm, managed to breakeven within three years of its operation in the hands of private investors.

ICM received Rwf25m while the cooperatives got Rwf17m. It was the first dividend declared by the mill following its privatization in 2006.

ICM invested Rwf159m to acquire 60 percent of Gikonko while cooperatives invested Rwf100m to attain 40 percent in the rice miller that is located in Huye district, Southern province.

“The buildings were there and that is the investment that government gave the cooperatives,” said Jean-Claveri Kayiranga, ICM Rwanda’s Country Director.

ICM has injected Rwf1b in Gikonko in a period of two months. The company had planned to use Rwf2billion.
The investments have helped to create jobs and generate revenue to the residents of Gikonko.

However, farmers say that they are still faced with limited water supply, mainly on Cyiri marshland that covers some 300 hectares. Only 250 hectares of the farm is cultivated while 50 hectares are redundant due to dryness.

Dr Agnes Kalibata, the Agriculture Minister said government is planning to put up a valley dam to ensure constant water supply in the area.

“Already the studies are complete. The farmers showed that they have an issue of water so the only way we can secure water in this place is to make sure that they have a dam,” she said, satating that come April 2010 the dam will start.

Kalibata, who visited the rice factory last week, told Business Times in a separate interview that: “You cannot have an investment like this, by farmers and you fail on your part to give them a dam so that they can optimize what they get out of the facility.”

Farmers also demand an increase in farm gate prices, saying that fertilizer costs have   increased to Rwf480 per Kg from Rwf410. 

The factory pays Rwf220 per Kg of paddy rice (unprocessed rice), Rwf40 higher than the Rwf180 farmers used to get before ICM came in.

“The issue really is not the actual farm gate price. The issue is the type of investment that ICM is putting in for farmers,” Kalibata said, stressing that the new investor supports farmers with agronomists, varieties of rice seeds, agronomic practices and in most cases loans to buy fertilizers before the planting season.

“That is very important in ensuring that production goes well so that they get a good yield,” she explained. 

The company has also put up an incentive where farmers that hit above the agreed amount of rice per unit production get Rwf20 more than the market price.

This year it issued bonuses on 3000 tonnes. The cooperatives generated an income of Rwf30m on top of the Rwf17m they received in form of dividends.

This has helped them to buy a tractor that facilitates transportation of their produce as well as setting up a co-operative bank that will act as savings vehicle while advancing various loan facilities to its members. 

“I don’t think that we can have it any better. What we have to do as government is to work with farmers, to have them understand what it means to work in partnership,” the Minister said.

The co-operatives will use the income earned from dividends to repay a government debt that was advanced to them while they were acquiring 40 percent shares in the factory. 

ICM also owns 60 percent in Rwamagana rice mill and is planning more rice investments with the intent of improving capacity in business management. It is also eyeing acquisitions in Bugarama and Kabuye rice mills.

The Rwamagana facility will be used to serve districts of Kirehe, Kayonza, and Ngoma in the Eastern Province.
Kayiranga said that the Australian firm is in the final stages of setting up modern rice farming in Muvumba that will act as  a demonstration centre for Rwanda.

The firm planns set up a food storage facility and also venture into animal feed manufacturing.

“When you have basic products like soybeans, blend from rice you only require a few proteins like fish and sugar to have good products for animal feeding,” the Country Director said.

This comes at a times Rwanda’s rice production covers less than 30 percent of the country’s total rice consumed, necessitating heavy rice imports.

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