The General Agriculture Workers Union (GAWU) of the Trade Union Congress (TUC) has appealed to the government to take immediate steps to ban the export of raw rubber (cup lumps) materials to save the rubber industry and the loss of jobs.
“We don’t even have enough, why do we export? We must first produce to feed ourselves, the industry, before we think of exporting the excess, if any,” Edward T. Kareweh, General Secretary of GAWU, said.
He appealed during a tour with the media at the plantation site at the Ghana Rubber Estate Limited (GREL) following the destruction of about 40 hectares of rubber plantation at Abura in the Western Region. He explained that government policy on the rubber industry, for instance, allows for side buyers to openly purchase rubber cup lumps and export them without paying taxes. Cup lumps are coagulated latex which are processed as raw materials to feed the factories.
According to him, over 4, 000 direct jobs and 50,000 indirect jobs are at stake if the rubber industry, most particularly GREL, goes down.
“The appeal by GAWU comes at a time when GREL is struggling to find raw materials to feed its second rubber processing factory which was constructed at a cost €25milion. The factory was opened in 2020 and it’s under the 1D1F initiative. GREL says it needs 113 tonnages of cup lump materials to process at this second factory alone daily. However, due to the shortage of cup lump materials, it intermittently shuts down to go and search for raw material,” Mr. Kerewah added.
Sampson Boafo, Factory Production Manager at GREL, explained to the media that the factory has been shut down because there are no raw materials. “This is the second time we have shut down because of a lack of raw materials”. The processing capacity of the factory, he indicated, is 113 tonnes daily, and “we are likely to close down again next week. It is very difficult to gather 113 tonnes of raw materials because of the infiltration of side buyers in the rubber market”. He pointed out that this has become a worry and a cost to the company because apart from the monthly salary and benefits, workers will lose other allowances which they enjoy when the factories are in full operation.
Furthermore, the machines are at risk of getting rusty if not fully utilised. The current situation facing GREL is likely to affect the loan facility that the company took to establish the second factory if steps are not taken immediately by state authorities to ban the exportation of raw rubber. “It is as a result of this that GAWU is appealing to the government to regulate the rubber industry, most especially by immediately taking steps to ban the purchase and export of cup lumps materials,” he stressed.
The General Secretary of GAWU continued that the capacity of rubber producers in Ghana stood at 100,000, but they can produce 140,000.
“What it means is that Ghana can still expand its rubber plantation to get more rubber to meet the gap. We should be importing to feed our industry,” he added. He also noted that what has accounted for the gap is that government policy appeared to be destroying the industry because anybody can come and buy rubber cup lumps and export. He said GREL supports the farmers to grow rubber and at the same time pays workers, adding: “here is a company that creates direct employment of 4,000 and indirect employment of 50,000 through the outgrower project; GAWU is concerned because the company has invested so much in its latest processing factory”.
With the temporary closure of the factory, what it means to GAWU is that “jobs and revenue are at stake and the entire country suffers,” he added.
He mentioned that the government recently raised US$200m from the World Bank to support tree crop sector. “So, if on one hand you can go and take a loan to support the growth and growing of trees, and on another hand, you sit aloof and allow those trees that already exist to be destroyed, then you deny the country revenue and creation of jobs”.
Potential impacts
With what is happening, GREL has the risk of losing European and North American markets; In case of no-ban of rubber cup lumps and maintenance of the exports, Ghana will lose all the European markets; and in no time, all the North American markets. The only remaining market will be China or India, with very high discounts.
Economic and social consequences: The disruption of GREL’s operations and potential shutdown could have broader economic and social consequences, such as job losses (4,000 direct and 3,500 indirect). Also, reduced incomes and limited community development initiatives can negatively impact the livelihoods of more than 70,000 individuals dependent on GREL’s operations.
Loss of revenue: The failure of beneficiary farmers under the Rubber Outgrower Plantation Project (ROPP) to fulfil their loan repayment obligations by diverting their farm produce to exporters poses a significant financial risk to the key stakeholders involved, including the Financial Operators (ADB and NIB), Ghana Revenue Authority (GRA), and the processor (GREL) with its recently established new factory. The potential revenue loss for these entities is estimated at €139.6million. Additionally, if GREL’s plantations continue to be subject to destruction and there is a lack of enforcement in banning the export of cup lumps, the company will face challenges in meeting its statutory obligations, such as paying taxes and dividends to the GoG and shoring up foreign inflows into the country. It is crucial to emphasise that the GoG holds a significant stake of 26.75 percent in GREL, and any shortfall in the company’s financial health can directly impact its ability to fulfil its commitments to the government.
