Performance Assessment of Agro-Industries in SSA - Thesis Proposal Example

Performance Assessment of Agro-Industries in SSA (Case Study the Cameroon Development Corporation in Cameroon) Agro-based industries from the backbone of internal food supply chain and the export economy, in many sub-Saharan African countries like Cameroon, Kenya, Ethiopia, Nigeria etc. The performance and operations of these industries are largely controlled by the state. This paper analyses the importance of such industries and their positive and the negative impacts on the living standards of the people working there, the environment and the general economy of the country. It explores the Cameroon Development Corporation or CDC’s performance over a certain period and interviews hundreds of its workers and general public regarding the company. Our research shows CDC’s performance is generally good through not exceptional and is vital of the steady lives of thousands of people working there. Introduction The economic growth of Sub-Saharan African countries depends largely on their oil, mineral wealth and agricultural products. Being one of the driest areas in the world, the SSA countries depend upon their agro-industry for food commodities largely. There are many foreign as well as domestic agro companies present in these countries. According to UNIDO - United Nations Industrial Development Organization, their main aim is to "focus on increasing agro-industrial value added and employment along the entire agribusiness value chain in agriculture, industry and services". However, the impacts of these agricultural development companies which operate more or less like corporate conglomerates are highly debated. Environmentalists strongly argue, these companies are depleting the fertility of the soil in these areas by forcing the farmers to grow cash crops continuously. On the other hand, these companies are highly responsible for providing a steady employment to most of the citizens in the rural areas of the SSA countries. The salary provided by them serves as a backbone for many Sub-Saharan countries economy. These companies help in improving the infrastructure of these nations to a great extent and help in improvement of various industries related to agriculture. Industrialization is generally looked upon as a major rival for agriculture. But, agriculture also serves as a main source for related industries in small economies prevalent among the SSA countries. The term Agro-Industries originated before a few years referring to industries which linked agriculture and its supporting activities together. These industries deal with packaging and processing of agricultural goods, modernization of agricultural practices and efficient marketing of the finished agricultural goods. Agro-industries impact on open and closed Economies The Sub-Saharan African countries have two types of economies, namely small open economies and small closed economies. Agriculture, agro-processing industry as well as the manufacturing companies, all three sectors play a major role in small open economies. The agriculture productions and the processing industries work together. The value or the gain generated by agriculture is proportional to the profits generated by the agro-industries in the small open economies. The closed economies operate in a different way. Agriculture and manufacture are linked closely in these industries. The unskilled labours working in the fields tend to work in the manufacturing industries when there is a downfall in the industry. Hence the price of the agro-products and the manufacturing industry in the closed markets depend upon each other endogenously. Agriculture actually promotes the growth of the industrial sector in small open economies. However, it is not the case in closed economies. The industries in closed economies boost only when there is no agricultural work as the same unskilled labour force is used for both the industries. Rationale of the Study Agriculture related with industry serves as a competitive business structure. Oil, mineral resources and agriculture are the major pillars of the Sub-Saharan Africa’s economy. Cameroon is situated in the Gulf of Guinea in between Nigeria, Congo and many other countries. It is a fertile country with three rivers, Benue, Nyong and Sanaga passing through it. Nearly 60% of the active population in Cameroon is employed in some sort of agro based industry (Agribusiness for Africas Prosperity, 2012). 20.2% of GDP is earned from the agro-industries. However, most of the poor people still live in the rural areas. There are several agro-based industries situated in the rural areas of Cameroon. But, the percentage of poor people living below poverty has increased from 82% to 87% in the past decade. The poor people are mainly restricted to the rural areas. These companies continue to show good profits, but the overall living standard in the area they are situated continues to dwindle. Examining the hidden factors and evaluating the performance of some major agro-industries in the area will help us evaluate the impacts of these companies in a detailed manner. Cameroon was selected for the research due to the following reasons. It is a vast country with widespread agricultural lands. Nearly 19% of Cameroons 475,000 Km 2 areas is agricultural land. 77% of the country is forest. The country produces various farm products like cocoa, coffee, rubber and wood. Agro-industries related directly to agriculture like wood export, tea export flourish in the country. Cameroon is one among worlds top tropical wood exporters. The lumber industry contributes to nearly 7.4% of Cameroons total GDP. Nearly 120000 metric tons of cocoa is exported annually. Tons and tons of bananas are also transported every year (Bhattacharya, 2010). Cameroon has a much steadier government than its neighbouring countries. Its infrastructure is good with numerous financial institutions and banks. The government of Cameroon works along with the IMF and the World Bank to alleviate poverty and face the many other challenges prevalent in the underdeveloped countries. The Cameroon development Corporation, one of the major agro-industries in Sub-Saharan Africa is based in Cameroon. Case study on Cameroon Development Corporation Cameroon Development Corporation (CDC) originated in 1947. The company’s sole aim was to improve the infrastructure of the nation and create employment to as many people as possible and thereby improve their lifestyle. CDC serves as one of the most important agro-industrial company in Cameroon till date employing over 15,700 people. It is the second largest company in terms of employee number in the country. The government of Cameroon granted nearly 98,000 hectares of land to the company initially. Most of it is used for plantation. Others are used to build factories and processing units. CDCs main products are rubber, palm oil, banana and many other cash crops. The history of CDC in the post-colonial era had been studied by many experts. The Fako and Meme regions in the South of Cameroon where CDCs estates are located have seen massive development compared to other areas of the countries in the past. However, its success cannot be attributed to CDC alone as the European settlements there also contributed to this development. This fertile region was first controlled by the Germans till 1914. Then it came under the control of British forces. After the independence of the country in 1961, Cameroon state government announced it as an independent corporation, though most of the activities of the company are controlled by the state. The British people originally formed the corporation because they neither trusted the regional farmers nor the indigenous people claiming the land. They wanted to make maximum use of the 10,000 hectare fertile land in the area, just like Germans. They were not ready to trust the foreign companies too. So, they initiated CDC. The performance of the corporation had been satisfactory right from the beginning. But, the change of management after independence paved way for major labour upsurge in the 60s and again in the 70s. The state government interfered in the company affairs and the President took over most of the land assigned and bought the situation under control (Konings, 1993). The state government did not give importance to managing the human capacity well. They stressed on pressing the problem as soon as possible instead of lending an empathetic ear to the labour problems. The state of small stakeholders got affected severely in the 70s due to CDCs performance. However, the management strategies have changed a lot since then. The employees of CDC generally feel they are well taken care of in the modern times. With the demand of agricultural workers and manual labourers increasing day by day CDC does its best to retain the young employees and give them a good environment to work. The company management still follows age old practices when it comes to administration, but the changing times have influenced its performance tremendously. New marketing strategies and the innovative modernization in the food processing category enables the company to gain a competitive edge over others easily (Hawkins et al, 2011). Research Methodology Nearly 150 people were interviewed for the study. The views of 100 people whose experience and views which were reliable were shortlisted. 10 people not connected with CDC were interviewed to know their general opinion on the company. 5 people’s opinions were taken into account. Among the rest 95, 30 people were low level agricultural workers working in the field directly, 30 were from management side and the rest was the middle men working in processing factories and other fields of CDC. The survey was framed using various forms of direct and indirect questions initially. But, it was reformed excluding all measurement scales and descriptive questions to include only yes or no questions and direct questions because most of the employees did not have the interest or knowledge to fill in complex survey forms. The volunteers approached the workers in their break and after working hours and explained each question to small groups. The participants were asked to mark down their views on the survey under direct supervision. The survey results were fed on the spreadsheet program directly. The results and the graphs were correlated later. Results Obtained Human Capacity Building Most of the workers did not have any major cliché with the management. But, reported the working environment was not very transparent and very controlled. According to our survey, most workers do not have any idea about alternate farming methods. They are quite satisfied by the way CDC operates. They do not have any relevant knowledge about the high competition in the market for the company too. They lack knowledge about the company history as well as the foresight about its immense competition. They are of a general opinion that everything is going fine. It is the duty of the CDC to keep up the hopes of thousands of its workers without letting them down. From employee and public perspective CDC should improve in terms of financial management and speed up its general management process. Evaluating its performance in general for the past few years, the company had shown constant growth in the past 5 years. It had created a positive outlook for most of the employees. CDC is not likely to face any major problems from its workers in the near future. Poverty Alleviation and Livelihood of Rural population CDC provides direct and indirect employment to several people. The parents of many first generation school goers in the country worked for the CDC. The money given as salary to the employees certainly helped in improving their life standards and educating their children in particular. The educated second generation took up work as factory workers and middlemen while a small percentage of them who were graduates made it up to management level. The recession of 2008 hit the Cameroon agro-industries also severely as it depended upon exports to a substantial amount (Dasgupta, 2006). The recent increase in the number of poor people in the rural areas was a direct impact of the global recession. Nearly 8 out of the 12 major agro based industries laid off many of its workers at the period increasing the number of poor people in the rural areas substantially. But, the situation changed in 2010 and many of the workers were hired back. In fact there is a severe shortage for agricultural labours these days and they are paid quite well. CDC has contributed a lot to the development of the rural livelihood by improving the infrastructure of the area with schools, good roads, electricity and hospitals. Impacts on Economy Economic growth of a region depends upon a combination of various opportunities to earn. Good political and industrial policies are the backbone of such high opportunities. The interference of the state in CDCs performance has proven both beneficial and harmful to the company. The strict rules of the government slow down the operations of the CDC. But, this constant intervention gives a job security and keeps the administration of the company in check without any major corruption complaints or misuse of power. CDC has showed profits continuously for the past 2 years starting 2010. Though it was hit badly by the recession, it made up for the losses in the following years. It is a general practice for CDC workers to get retirement in the middle age and start their own company which provides supporting service for CDC like fishing industry, livestock development etc (Cotula et al., 2009). Land Conflicts, Social, Cultural and Ecological Sustainability CDC had been engaged in continuous deforestation right from the time it was established. This poses a great threat to the ecological sustainability of the area in general. The inception of CDC itself saw massive protests as it did not allow the traditional Bakweri tribes and the indigenous people to use the land as per their traditional farming practices. The indigenous way of farming which was ecologically sustainable is nearly abolished from the area completely. This has influenced the social and cultural life of the tribes in a substantial way. Everybody dresses and acts like the westerners these days. The traditions and the rituals associated with the land have been lost completely (Brenton, Hoppe & Newframer, 2008). Standard of living The standard of living and general health among CDC workers is near satisfactory. Their living standard is neither poor not better compared to the various other companies employees. But, the general environment working environment and the salary standards are acceptable by the employees. Waste Disposal CDC has faced various charges regarding its waste disposal management. The company has cleared nearly thousands of hectares of forests for tea estates and other rubber plantations. The wastages from the rubber plantations pose an enormous threat to the ecology of the country. Similarly the high water consumption of the tea and the coffee crops pose a great challenge to the ground water level in the area. The enormous expansion of tea and coffee estates has wiped off many species of fauna and flora in the area. There are no proper waste disposal measures in any of the CDC factories acceptable to IMF standard. The government of Cameroon has assured the authorities they will look into the issue in the 2001 meeting. But, very little have been done to resolve the issue. Most of the workers are unaware of the drastic effects this continuous waste dumping might cause (Kouassi et al, 2007). The general public is aware of the issue but ignorant of the grave dangers the accumulating waste might create in the future. Recommendations for CDC CDC Corporation is doing fine at the moment because of its trusted workers. However, it should revise its methods substantially if it is planning to meet the ever increasing competition in the market effectively and continue to make profit. The government should stop controlling the operations of the company too much and take effective steps to promote agribusiness as a means of wealth creation (Mhlanga, 2010). They should encourage the domestic companies coming forward to set up supporting industries of CDC. Cameroon Development Corporation should aim in utilizing these companies’ help instead of looking into foreign institutions. CDC should aim in developing its technical infrastructure and implementing new modern means of management which increase the speed of administration processes (Kessous, 2008). The company should have long term goals and back up plans to sell their goods or preserve them properly in case of another recession or sudden unexpected cancelation of export orders. They should aim in satisfying the domestic market first rather than depending completely on exports. This can only be done if they revert back to planting traditional food crops rather than cash crops alone. Improving their technology will help them manage their wastes ecologically. Conclusion The assessment on a major agro-industrial company CDC in Cameroon proves, the company is lacking behind in innovative measures in terms of management and technology. Its operation is fine compared to other industries in the country. But, it should enhance its performance to maintain its standard in a global level. The impact of agro-industries on the economy and the various other sectors is drastic. There are both positive and negative effects on the ecology. But, these companies are necessary for the steady economic growth of the country and to keep the unemployment in check. The government should come up with more innovative measures and finance small agro-industries to use modern technologies to limit their negative effects. References 1. “Agribusiness for Africas Prosperity”. United Nations Industrial Development Organization. April 2012. 27the January 2013. 2. Bhattacharya, Rudrani. “Agro-Industry, Inequality and Sectoral Growth”. Indian Statistical Institute. New Delhi. 2010. 27th January 2013. http://www.isid.ac.in/~planning/Rudrani.pdf 3. Brenton, P., M. Hoppe, & R. Newfarmer. “Economic Partnership Agreements and the Export Competitiveness of Africa”. Policy Research Working Paper. Washington D.C: 2008. 4. Cotula, L., S. Vermeulen, R. Leonard and J. Keeley. “Land grab or development opportunity?: Agricultural investment and international land deals in Africa”. International Institute for Environment and Development (IIED) with FAO and IFAD. London: 2009. 5. Dasgupta, S. & A. Singh. “Manufacturing, Services and Premature Deindustrialization in Developing Countries: A Kaldorian Analysis”. Centre for Business Research Working Paper. University of Cambridge, June 2006. 6. Hawkins, A, M., Roepstorff, T.M, Kormawa, P, M., & Yumkella, K.K. “Agribusiness for Africas Prosperity”. UNIDO. 2011. 27th January 2013. 7. Konings, Piet. “Labour Resistance in Cameroon”. Library of Congress. 1993. 27 January 2013. 8. Kouassi, A., Akpapuna, J., & Soededje, H.“Cameroon”. 2007. 27the January 2013. http://fic.wharton.upenn.edu/fic/africa/Cameroon%20Final.pdf 9. Kessous, J. C. and C.P. Ekoka, “Status and diagnostic industry and services sector”. Report submitted to Ministry of Economy, Planning and Regional Development. 2008. 10. Mhlanga, Nomathemba. “Private Sector Agribusiness Investment in Sub-Saharan Africa”. Food and Agriculture Organization of the United Nations. 2010. 27the January 2013. Survey Questionnaire Name Age Designation Salary Educational status Number of years working 1. Are you a member of the workers union? Yes No 2. Are you aware of the basic labour rights and company policies? No Sufficient Knowledge Modest Knowledge 3. Are you satisfied with the management of the company? Yes No Neither Satisfied nor dissatisfied 4. Do you know the history of CDC? Yes No Slightly 5. Are you aware of the labour resistances which took place in the company before a few decades? Yes No 6. If yes what is your view about it? ------------------------- 7. Are you satisfied with your salary and the benefits received from the company? Yes No Could Improve 8. How do your rate CDC’s performance in general? Good Bad Satisfactory Lots to improve 9. Do think too much state interference is hindering CDC’s progress? Yes No No Opinion 10. Are you satisfied with the roles labour unions play in the company? Yes No 11. Do you think an alternate way of agriculture will help? Yes No No Opinion 12. Do you think the company’s current management will help it run profitably for the next decade? Yes No Not Sure 13. What do you think should be changed in the company to improve it? --------------- 14. How do you rate the internal environment in the organization? Good Satisfactory Should improve a lot 15. Do you think CDC faces great competition in the market? High competition Modest competition No competition Read More