Lack of raw materials leaves soya plant 'idle'

In Kayonza District, 75km east of Kigali, engines of the Rwf10 billion soya processing plant are starving. There’s not enough supply of raw material to keep them grinding and unless farmers grow more soya seeds, the future of this multi-billion franc investment is bleak. Mount Meru Soyco Ltd, located in Mukarange Sector, is a product of government’s efforts to promote agro-processing in order to reduce the country’s import bill. Currently, over 90 per cent of food oil consumed in Rwanda is imported and this plant in Kayonza holds hopes of reducing or even ending that dependency by locally producing edible oil from soya. The byproduct from the processed soya is not wasted but used to make soya-cake for animal feeds to provide stimulus to Rwanda’s burgeoning livestock industry. But for the plant to do this, 200 metric tonnes of soya are required per day to satisfy its installed production capacity but those quantities are currently unavailable which means the plant spends a good amount of time out of production. Scarcity Soya has two harvest seasons; the first one, from January to March, is currently ongoing while the second stretches from July to September. But these harvests are minimal as Saturday Times reporter observed when he visited the plant a few days ago. But with the scarcity, the plant manager says they’re collecting every soya grain available this harvest season; at most, about 6000mt will be collected. The plant manager, Manoj Kumar Srivastava, said he switches on the plant when he has enough supplies to work with and off if he can’t find 50mt, the minimum needed for a switch-on. These are headaches for Nick Barigye, the firm’s CEO, who was brought in August last year to lead the plant to breaking even. Barigye says the scarcity of soya can be attributed to the fact that, previously, there was no need for farmers to grow soya since there was no ready market for it. “With this plant, the farmers can be assured of ready market at competitive prices,” he said. He believes if at least 10, 000 hectares of land can be dedicated to soya farming, the plant can be assured of enough soya seeds to keep the engines running. Anxious investors Kenya Commercial Bank (KCB) Rwanda provided a $6 million loan as part of the $15 million initial capital to boost efforts of five investment companies that had mobilised $9 million. Construction of the plant started in early February 2012 and was completed in 2014. However, between April and September last year, the plant was quiet because there was no soya supplies to work with. In October, the plant was commissioned and production kicked off with 2,000 metric tonnes of soya imported from Uganda and DRC. However, since October last year, the plant has been struggling to keep up production as supplies are scanty. Although production has been lukewarm, the investors have the $6 million KCB loan to service and the loan has a repayment period of five years at an interest rate of 17 per cent, Saturday Times understands. Expensive product Star Goldy edible oil is the plant’s final product which comes in 20 and 10 litre jerrycans. However, prices of these products are still relatively high, according to Yvette Mukankusi, a shop owner at Kicukiro trading centre. She says the factory price for the 20 litre jerrycan is Rwf21,700 (VAT inclusive) while the smaller 10 litre jerrycan is sold to wholesale traders at Rwf10, 850. But Barigye explained that in the absence of soya, they have had to resort to using imported raw material such as crude palm oil from Malaysia and crude cottonseed and sunflower from Tanzania, which increases the cost price. With imported crude oil, it also means that while the plant can process edible oil, it can’t process soya cake for animal feeds which is a direct byproduct of Soya. The firm sells soya bean cake at Rwf495 per kilogramme, including VAT but this, Barigye says, affects the local market. Without VAT, soya cake would cost Rwf420/kg, which is more acceptable by local buyers. “Challenge is if they buy a kilogramme of soya cake at Rwf495 with VAT, it’s a burden to the farmers which they can’t transfer to the final consumer, because products from animals such as milk and eggs are VAT-free,” Barigye said. Currently, talks are ongoing to engage government to drop VAT on animal feeds but in the meantime, Mount Meru and other sector players are eying export market in the region. “We are looking at an annual turnover of $5.2 milion worth of export sales from soya cake and we have just sealed a big export deal to supply Kenya,” Barigye said. However, for that deal and others to be sustained, Mount Meru Soyco will need a steady supply of at least 10, 000mt of soya; but Barigye is upbeat, nonetheless, noting that ‘it’s possible to get the volumes from both local and regional purchases.’ Mobilizing farmers Last year, a high level meeting involving officials from the Ministry of Trade and Industry and that of Agriculture and the Eastern Province met and agreed to mobilise farmers to grow soya and secure the Mount Meru Soyco’s future. If the efforts pay off, about 400, 000 farmers stand to benefit in five years’ time; the biggest incentive is the attractive price of Rwf450 that the plant says it will pay for a kilogramme of local soya bean which is several times higher than what farmers are paid for maize and beans. Earlier efforts saw about 6,000 farmers embracing the new opportunity and they cultivated between 1,500 and 2,000 hectares of land of soya last year which they’re now harvesting. For the July harvest season, about 7,000 hectares of soya will reportedly be cultivated which is expected to yield more grain than the current harvest. The attractive price for soya, according to Barigye, is strictly reserved for local farmers not only to encourage them to grow soya but to also uplift their incomes, a major element in the firm’s social corporate responsibility. A clear cut arrangement was reached involving agents, farmers and the Agriculture ministry; where the ministry reportedly provides soya seeds and fertilisers at 70 per cent subsidised fee which the agro-dealers then sell to farmers at friendly prices. “But we also encourage farmers to inter-crop soya and other crops such as maize to diversify their incomes,” Barigye says.

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Lack of raw materials leaves soya plant 'idle'