2 weeks ago
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Smarting from a possible quarter-billion dollars in losses on its farm operations, distribution and manufacturing conglomerate Seprod is in search of a economical solution for feeding the cows at its dairy farm, and nourish its bottom line.
CEO Richard Pandohie said farm losses, challenges at subsidiary AS Bryden Group, which itself suffered from a temporary downturn at the newly acquired Caribbean Producers Jamaica Limited, all conspired to shave Seprod’s profits, despite healthy top-line growth, which was 27 per cent for the third quarter ended September and 16 per cent for the nine-month span.
Regarding operations at the company’s Serge Island Farms in St Thomas, Pandohie said the operations were impacted by non-stop rain, compounded by myriad issues with the dairy farm.
He is projecting that Seprod will lose about $260 million this year on the dairy farm operation, saying some of the fallout relates to feed costs and nutrition issues.
Since exiting sugar production, the company has been using unreaped sugar cane as cattle fodder with limited success, given the inadequacy of nutrition from that source, Pandohie said.
“That wasn’t sustainable. We made some mistakes in the dairy business. We have to put our hands up for that, and we’re moving fast to correct that now. A big part of that was nutritional. We deviated from a proper nutritional plan,” he said in an interview with the Financial Gleaner, while referencing a major feed project at the farm.
“A big part of the project right now is building out the pastures in Golden Grove to become the feed operation,” he added.
The project is part of sustainability efforts of a group called the CPSO, or Caribbean Private Sector Organisation. The group has a seat at Caricom’s table, with Pandohie acting as mentor. He says one of their tasks is to reduce the import bill in the Caribbean by 25 to 30 per cent and increase food security for the region.
A team out of Hyderabad, India, will be coming to Jamaica to plant a protein-rich cereal grass called sorghum at Golden Grove. The grass will be used as a part of the project to improve food security for animals and, ultimately, people in the region, Pandohie said.
“We had pitched to them that to increase food security for people, we had to increase food security for animals, the protein part. So, Seprod has put itself forward and has been accepted as a private sector anchor for this project,” he said.
Seprod is also working with the College of Agriculture, Science and Education, CASE, to further boost the feed project. The idea, said the Seprod CEO, is to execute the project in such a way as to benefit all of Jamaica.
“Although it’s a Seprod-driven thing, it’s also good for Jamaica. The one thing that’s beating us in Jamaica right now is the cost of feed for the agricultural animals. It’s really an issue,” Pandohie said.
“We won’t have the biggest animals or the massive farms, but we have to play to the lowest cost structure by growing as much of our own feed as possible,” he added.
Higher expenses
Farm losses aside, Seprod is reporting third-quarter revenues of $35.1 billion, an increase of $7.35 billion, which was 27 per cent over the corresponding period in 2023. Net profit amounted to $828 million, a decrease of $154 million, or 16 per cent, over the similar period in 2023. However, the previous year’s resulted were fattened by one-off, or non-recurring, gains of $363 million on net profit and $442 million on other comprehensive income in respect of the restructuring of Trinidad & Tobago-based AS Bryden’s post-employment medical plan.
“We were never ever going to deliver last year’s performance, especially out of Trinidad. We knew that,” Pandohie said.
The real crunch in the current period related to higher expenses for financing, as Seprod had to buy hard currency at a higher rate.
In July 2024, A.S. Bryden & Sons Holdings Limited, also referred to as AS Bryden Group, acquired 44.8 per cent of the share capital of food trader and purveyor Caribbean Producers (Jamaica) Limited. CPJ’s results have since been consolidated into Seprod’s financials.
Pandohie said the July-September period was a “really tough three months in CPJ”, adding that the team “definitely didn’t deliver the numbers that” were hoped for, which in turn impacted Seprod’s business. CPJ’s primary market is the tourism sector.
“The whole industry didn’t deliver in Jamaica in terms of tourism. Right after the storm, we had the travel advisory and then, what I’ve been told by officials in the tourism business who are much more experienced than I am, which seems to be the case, is that whenever you have US election, there’s a pullback in visitors until after the election,” Pandohie opined. The advisory against travel to Jamaica emanated from the United States, which is Jamaica’s largest source of tourist visitors.
However, there are now signs of a reboot, leading to Seprod forecasting a strong fourth quarter.
“November was a good month, and December is tracking to be a really good month when you look at bookings in the hotels. So, it seems as if the relevant experts are right,” Pandohie added.
The early hiccup at CPJ notwithstanding, Pandohie said the acquisition was “an excellent purchase”, and an important component of the Seprod Group’s regional growth strategy. CPJ also expanded Seprod’s trading footprint in the tourism market, making it a serious contender in that space.
“Seprod was not strong in that sector. We were doing okay, we were growing, but not where we were supposed to be. So, the move [to buy CPJ] was an excellent move,” he said.
“Did we hit a little bump? Absolutely, but growth is not linear, and the recovery is already happening there ...,” he added.
Seprod Group now manages a more diversified portfolio, Pandohie added, with 48 per cent of company earnings emanating from outside of Jamaica.
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