A farmer is staring at a lifetime opportunity to fulfill a business deal in China go up in smoke after failing to secure credit with local banks.
Dieudonne Twahirwa’s $500 million deal to supply Chinese firm GK International Enterprises Ltd with chilli is in jeopardy after he failed to get financing for his annual export target of 10,000 metric tonnes.
In the deal, Mr Twahirwa, who owns Gashora farms, committed himself to supply GK with up to 50,000 metric tonnes in five years.
“In the contract I was supposed to supply 10,000 metric tonnes, but we have now settled for 5,000 tonnes in the June to July harvest season,” he said. To produce the 5,000 tonnes of chilli, Mr Twahirwa secured a $1million loan from BRD.
His efforts to get more funds have been unsuccessful, with some banks telling him that his business was “profitable but not bankable.”
“I would have wanted to even start with exporting 20,000 metric tonnes, but it is not possible. Some banks wanted guarantees that I couldn’t get.”
According to Mr Twahirwa, GK Internationalhas been getting up to 40,000 tonnes from India every year, but they cut on these quantities to accommodate chilli from Rwanda.
According to National Agricultural Export Board (NAEB) communications head Pie Ntwari, given the low chilli production levels in Rwanda, they engaged the Ministries of Commerce and Finance to help Mr Twahirwa tap into the regional supply chain to satisfy the market so he can re-export.
“The quantities needed to supply his client according to the contract cannot be obtained locally, even if we do our best, that is why we saw re-export as the easy option,” he said.
Mr Ntwari said chilli production is hampered by limited land for commercial farming. “Most of the chilli farmers we have here are not doing it on a commercial basis, we are currently helping them with inputs and seeds, as well as negotiating on their behalf to get more arable land” he said.
Between January and November 2018, Rwanda exported 484,045kg of chilli, generating $548,221.
Between January and November 2019, the country exported 805,530kgs, generating $1,471,662, according to data from NAEB.
The key export markets include United Arab Emirates, UK, India and China. Efforts to get a comment on the issue from the Ministry of Trade and Industry were futile by press time.
Gashora farms is working with other chilli farmers country wide to produce the needed quantities, and for it to produce the 5,000 metric tonnes, they have earmarked 1,000 hectares of land to grow the chilli in the February season.
The other challenge is the high cost of storage facilities in terms of cold rooms and warehouses, which he needs if he is to deliver the expected quality.