There is a real possibility that banana farmers, operating under the Fairtrade brand, could rise financially stronger from the ashes of WinFresh’s financial collapse.
However, as of today, things are not looking all that bright as the National Fair Trade Organization Saint Lucia Inc. (NFTOSL) is in need of some cash to pay farmers this week since monies for fruit exported have yet to come in.
WinFresh, the Windward Islands based company which primary activity was the sale and marketing of Fairtrade bananas originating from the four Windward Islands, went into administration last year leaving the NFTOSL holding an empty bag.
“For 22 weeks we did not receive any money from WinFresh for fruit exported. We were promised payment by WinFresh’s management which never came, only to find out later that the exporter, WinFresh, was experiencing major financial challenges,” said Eustace Monrose, Chairman of the NFTOSL.
He said that in the absence of payments from WinFresh, the NFTOSL used up all its resources, including reserves, to pay farmers on a weekly basis.
Staring financial collapse in the face the NFTOSL approached government, which is a main shareholder of WinFresh and has two directors on WinFresh’s Board of Directors, to get WinFresh to remit the monies owed to the NFTOSL.
According to Monrose “WinFresh owed NFTOSL in excess of eight million dollars,” however after NFTO accounts department netted out with WinFresh, the current balance owed to the NFTO stood at EC$919,000.00. He said the NFTOSL was slapped with large quality claims.
“Government responded to the cries of the farmers and facilitated an advance of EC$1,000,000 in the first instance and EC$1.4 million the second time around,” Monrose said, explaining that government made the point that the sum advanced was paid on behalf of WinFresh which will be recovered from WinFresh.
Monrose said that the NFTOSL “was in a reasonably good financial position prior to WinFresh’s financial problems, and that the “NFTO had a current asset of EC$1 million on a fixed deposit and had sufficient cash flow to operate without an overdraft facility.”
“It was the demise of WinFresh that spilled over to NFTOSL compromising NFTOSL cash flow since WinFresh was unable to pay NFTOSL for bananas exported,” Monrose said.
He said WinFresh went down suddenly leaving NFTOSL on its own “in the middle of the ocean” and that it required strong leadership at the time to prevent the total demise of the banana trade. Further, strategic thinking had to be employed at the time because one could not tell the farmer that his fruit could not be exported.
Although farmers have yet to be paid for their fruits this week things could be looking up for them. As explained by an optimistic Monrose, the NFTOSL, as a private limited company, embarked on strategic decisions taken by its Board of Directors, which resulted in a relationship being forged with Sustainable Agricultural Supplies for continuity of trade.
“A contract for the remaining four months was signed between the two parties. During that time we studied the mechanics of the trade, established contacts with the supermarkets and ripeners and have been able to secure contracts with the supermarkets,” Monrose said, an initiative which government supported.
However at the end of last month (December) the contract was not renewed but the two parties had a cordial meeting prior to the end of the contract to impart the information of the non-renewal of the contract.
Monrose said farmers were paid on a temporary overdraft last week, however they were not paid this week.
“We definitely need this bridging finance to carry out the operations until the money from the supermarkets in the UK kicks in,” Monrose said, adding that the NFTOSL is collaborating with government to ensure that the farmers business remains viable.