Sat | Sep 21, 2019

Seprod, Red Stripe negotiating cassava partnership

Published:Wednesday | September 11, 2019 | 12:08 AM
Seprod Limited CEO Richard Pandohie.
Seprod Limited CEO Richard Pandohie.

Manufacturing and distribution conglomerate Seprod wants to start exporting gluten-free flour made from cassava by early 2020, but it’s riding on talks with brewery company Red Stripe Jamaica.

The talks are in the early stages and include a non-disclosure agreement, said Seprod CEO Richard Pandohie, but he said that the discussions broadly involve plant redesign, investment, and supply chains.

“We’re very confident that working with Red Stripe will mean that we have fantastic partners and we will come out with a winning project,” Pandohie said.

“The idea is to find markets and opportunities and capitalise on it with local products. We looked at Red Stripe and their cassava production, and we’ve been discussing a collaboration that will see greater synergies and better opportunities for our farmers,” he said.

Although Pandohie would not go into the details, it appears that the conglomerate, which recently pulled out of sugar manufacturing after $4 billion in losses over a decade, wants to use the sugar cane lands for cassava instead.

“We have to accept, as a country, that sugar is not going to be what it was, and we have to move to the next stage,” he told the Financial Gleaner following Seprod’s annual general meeting on Monday.

“What we want this project to do is something better than sugar. That commodity, for us, represented almost a time warp where we tried to produce a product with low productivity and absence of technology using the lowest level of labour, because we saw it as a way of mopping up low-skilled labour; as opposed to what we are trying to do now, and that is to use agro-processing, bringing our best minds to it, embrace technology, and drive productivity.”

Red Stripe in 2014 began using locally grown cassava as an input in replacement of high-maltose corn syrup, which it had to import. The beer maker uses the starch extracted from the cassava in its brewing process. The aim is to substitute up to 40 per cent of imported inputs with cassava.

The tuber is grown by the company on lands at Cheesefield and Bernard Lodge, both in St Catherine, and those farms are supplemented by contracted cassava farmers. That all amounts to more than 1,000 acres.

Supplying Red Stripe with cassava would allow the brewery to make use of unutilised capacity at its starch-extraction plant, while Seprod would have access to raw material to produce gluten-free flour, Pandohie said. He believes that another 2,000 acres of cassava would be required to meet local demand and export markets.

“The equipment that they have is not as fully utilised as it could be. This partnership will allow full utilisation. When you are in manufacturing, it is about sweating your assets because the cost of underutilized capacity is very expensive,” he said.

Efforts at comment from Red Stripe were unsuccessful.

In a previous interview, the Seprod CEO indicated that the company was positioning to expand distribution of flour into Europe through the partnership with Red Stripe.

neville.graham@gleanerjm.com