CargoRant Podcast on managing a banana farm during a pandemic with Rodrick Kutinyu.
Good morning everyone and thank you for joining us on this cargorant podcast and today we will be talking to Rodrick Kutinyu on managing a banana farm during a pandemic.
So please tell us where you trade to and how has the pandemic affected banana farming?
We are only two banana exports as our main crop and our main market is fiscally EU. That means, except your cases, 95% of our production goes to Europe and they may be 5% is done regionally with the main markets being Senegal in Benning. Obviously a little bit of local currency. Yeah, in terms of where I was we really took a huge note in probably every sector of my business.
If you look at it if you start from. The market itself, my oldest got dropped due to a couple of things. First, the market uncertainty. Secondly, even if we had contracted volumes, the people now had an excuse of pulling out of the contracts or requesting to alter the conditions of the contracts due to the fact that they were not also certain because of the low down in the shutdown though.
I know that all this. Fresh projects, business or the food industry based kind of did not really shut down in Europe because we could still send vessels. I mean, it still is in Cabo, but to just [00:01:00] the market, which has not depressed. So we lost market. Payment with the Catrin in terms of the fob or the CIF price dropped by almost 4 45 or so per cent.
And also the volumes in terms of what the market will take was reduced between 30 to maybe almost sometimes as much as 48%, something like that depends on which part. Because someone else saying, we work with it on a week to week basis, you know, like, okay, I’ll tell you now, probably on a Friday or Sunday, pick for me X, which will arrive in this week.
So there were no standards in terms of how you can really predict your volumes revenue. These were some of the challenges on the ground because, you know, I am slightly big labour in terms of my employees. Sort of sustain with the revenue that we’re getting. I had to look into it in too many and was one, it was the loss of revenue, loss of markets, depressing prices.
And then the table, the issue was because of COVID. I had to adjust staff requirements to create a limit of seven. And the movement of the people causes we don’t accommodate any employees on the farm. So we transport them from different locations. I think with the longest distance, almost about dedicated from the department.
So to increase the number of trucks. Yeah. Well, bosses, this calliper is we’ll use conventional buses, about 70, 80 seater buses. That’s our main fleet and maybe five buses, which are like a 35 seater company. So we cut the number of people, the bass by 50%, where if it’s a three by six, we used to, we cut it to two people.
we started by 50%, only 1%. Please implement social distancing. That helps also the number of people could retain because I put not retaining the same number of people with the same number of buses, they had buses. Some of the main impacts that we’ve had, obviously it changed our cash flow in terms of. We spend a lot of money, which has unbudgeted for in terms of safety implementations. Like what we start is from first thing in the driver, go to pick up the staff they use and sanitiser to give everybody we bought.
Each one now is a set of almost four pairs of masks. Okay. Which we gave to each of the employees. And then at the same time, we give each one, a tablet of soap on a weekly basis so that they can use it, wash their hands and everything. Cause we found it safer than for them to use. One site on the farm.
We thought it’s, even more, safer if each one kid is in their own bag or pocket, whatever it is. So that also changed in terms of our budgeting into was that as unplanned expenses that we had to go through we had to space them were to create more space for seating. We disinfect almost everything that a person uses on a daily basis with disinfected.
Buses with disinfectants in the morning and the evening anyway, where they sit, where they eat, where they take anything, we disinfect twice a day. So we have a team dedicated to that in terms of the way around spraying sanitisers. We bought the moment we had food, we have food, but now on the farm, as we entered the farm, we checked your temporary child with food, but we had to improve our clinic to create safety for the nest because you know, the challenge with COVID is you don’t know what an employee is that COVID-19 I in COVID or malaria or just a fever.
So we had to create a safety net for our medical staff on the farm to make sure. If an employee comes in, they’re not, well, maybe they have a fever or something, even if they. They have the right equipment, but they don’t treat them. They immediately refer them to the district hospital, which, where they set an agreement with them.
So we had to really invest a bit into making sure that our NES and the [00:05:00] assistants have the right equipment too, you know, getting the employees into the clinic and talk to them before they can move them. So all those things we had to. Implement. And that, that also costs us a lot of money. Actually. It’s costing us too much money because of sanitation use of sanitizing a mask.
So everything it’s regular, it’s not a once-off. It has to be done in some are, things are done daily. Some are weekly, some are monthly. Like the mask, you have to continuously change because they cannot use the same mask for the next six months. It’s until you have to replace other sets and you keep going, it’s all you.
And those are some of the implications of COVID in terms of. Supply in terms of inputs, we didn’t really. Feel a huge dip. Of course, there are slight delays here and there for sure. But to say, we really felt the gap to say, now we’re short of this particular product. Not really. There were some concessions to make between the suppliers and obviously ourselves, whether it was local or imported stuff from [00:06:00] South Africa, from Lebanon from Europe was we’re buying about three, four parts of the world, but there was a bit of a slowdown, but at least we still what the materials.
So it was just a delay but at least we continued, so basically this is where we are. And fortunately, as of now, because, we check, we sort of clean our employees on it at least once a week, every employee has cleaned a minimum of once a week. Anyone with any deviation of any of the symptoms of Covid is immediately pledged to the district hospital. That’s what we do because we don’t have the testing capacity and we don’t have enough testing. Keeps it still very expensive here. But the district hospital is that the kits are made and I never went to them.
And that’s now also is a lot of downtime in terms of the employees because what is happening is you have people, what we’ve encouraged on the employees is that if you are sick, let’s say you wake up and you have a fever.
Yeah. Everything. Call send a message, go to the hospital first and advise us of what is the status. So you have two issues. Some will be genuine that they’ll tell you that they’re not well, one day I wake up I guess the one who comes to work, I’ll tell you, you know, I have a fever, so it’s a very tricky thing.
And so it’s impacted in terms of your productivity. Cause right now I think I’m running it an absenteeism rate of between seven to 10% on a daily basis. Because of those factors. So that may they add an additional buffer almost another 6%. This is not employees to always question the fluctuation in terms of absenteeism.
So you don’t have a choice because you can’t open it up. If you open it. And then everybody comes, we don’t have the capacity of ending anything. Then you expose your know your stuff. So you’re better off with that mode than the other mode of saying, it’s a must. You must come.
And I also say to employees, as long as it’s genuine, you go to a clinic and you bring a note and it’s a [00:08:00] medical practitioner. Clinics will pay you for the date. Cause that’s the sensitivity that I created. Otherwise, if I told them that I will not pay you if you don’t come to work but at the same time if we are sick, don’t come to work, they’ll always come to work, whether they’re sick or not.
And some will not even tell you that I have symptoms, which might be related to COVID, but lately, the problem is its racism. So my body is also a challenge in some of the symptoms of malaria are the same symptoms of COVID. So it’s a very tricky situation for us, especially with new stuff. That’s on the labour side.
So we suffered the double whammy as our state’s input. I will. Okay. If yes, that’s in additional unplanned budgets, which was like the contingent budget. We had to put in, secondly, the absenteeism is very high, so that also creates a bit of delay in terms of what production and withdrawal processes. And then at the end of the day, also other expenses like pleasing your transport [00:09:00] slowness in the market.
And now what has happened in Europe now is that as soon as they are coming out of the car so they flop down, eh, I mean, I see it in France, Belgium all over like yourselves. Maybe you’re starting to relax more things, slightly open up. Some institutions of lending are opening up, but then the summer season kicks in.
So all of you guys also take advantage of that and take a break. So also that doesn’t help the banana business because when we thought we’ll probably start to get some more. Eh, most of the guys are taking advantage and taking a bit of a break for everybody I’m sure was willing to go out. So that changes again, the dynamics.
And hopefully, by August, we start picking up. So in a nutshell, I would say, this is the challenge that we’ve had when it comes to shipping. Most of the shipping lines that we’ve been working with, or that we’re working with. Try it, for example, I’ll give you the apple Lloyds. They really tried to create a system that is quite effective.
What did they do? They’re very skeletal stuff. Like maybe one or two people in the office from probably a component of maybe 40 or so people. And then everybody was working at home online, but they were very efficient. I think. They went through a period of training and understanding and how to, to get into managing that.
And in between those coming in, have some conference calls with us to see how are we doing and what implications the new argument is having on our operations. So they were always in touch with customers, which, which helped quite a lot, but clearance also in Europe at some stage in the early days the shutdown in the lockdowns in, in, in, in Europe, we had some delays in the clearing.
When it arrives, it was not moving as fast as it normally does. So the delays were extended by maybe two or three days, two, three days. Let’s say from the time it arrives, even if the client is maybe three, three days in the port of arrival, you add another two or three days or so, because either, you know, there’s not enough staff in the port, or it was just one of those things in Europe, in all the ports, especially with we use.
And also I would just see that it was the same. Vis-a-vis that Senegal found the same thing. Some of our clients were in Benin kumbaya road. We found the same thing as well because of the border closure and everything though. There’s the famous because it’s a combo, but they faced similar challenges with freight sea or anything like that.
Okay. So from what you say the impact of coronavirus or COVID-19 on your patients has been, has been significant, but not severe.
It is very significant but not severe I can say that. Yes, it was why significant in the sense that we lost quite a lot of revenue and everything. But not severe I totally agree with that. Except if you want to look at the people that have cancelled their shipment.
During this period did you experience any fluctuation in the model of cargo damage that you experienced in, transit? So was there any increment in cargo damage in transit owing to delays or anything?
I think with like two to three shipments in the early days, that’s because of delays in clearing about three or four shipments, I would say were sort of affected quite a lot. We had driven, but we ended up settling for something with the buyer.
Due to the fact that, for example, what happened is from the shipping lines, because they lost a lot of business in terms of confirmed volumes, either incoming or outgoing. So what they would end up doing is I think when, for a period of almost six weeks or seven weeks, where they’ll tell you that, look, we have a vessel coming in say on a Tuesday, but not guaranteed.
You’d say why? And they’ll tell you, look, it depends on what amount of cargo will be confirmed because people are booking, but at some stage there, a lot of cancellations. So to also mitigate the cost in terms of managing their [00:13:00] costs and everything. They had to skip some vessels I know apart, right?
When for almost six, seven weeks, almost in a similar situation where you either, I agree. Okay. There’s a way there’s a service X. And then at the end of the day, they tell you with no service for the next 10 days. Cause we don’t have enough volume. So they’ve been stealing from Europe or from wherever it is or from South Africa.
So you have to, we have to roll in consolidate volume into. Maybe 10 days, 14 days late out of days later. And that’s really affected us because once you start making, affecting the promised vessel arrival, you know, so you’re trying to meet you get closer. So once you start baking, it’s not something that’s, you know, a farm is not a machine in a frankly way.
You wake up and then you just switch it off and then it’s okay. Do you understand what I mean? There are processes that you still have to. So make sure that you cycle, so you’ve got a bit of cycling those processes in terms of the picking and then just plugging in your containers. So number one, it increases your plugin charges.
Yeah. But a container that was supposed to sell in say four or five days, it’s rolled over another four or five days. So if the 10 days of the plugin in the pot, that’s number one, number two, you’ve got delayed that I’ve lost with your clients. And then the challenge is quality to the issues. So with quite a few shipments, I think about.
In a space of seven weeks old for shipments in the space of seven weeks. Well, we had some damage though. It was not safe. Yeah. The clients told us that they can actually manage it, but it was, there are some damages, but at the same time, the shipping line communicated to say, we are not setting, not because we don’t want to, but I cannot continue to sell with one.
Because that tech would probably sail with, you know, so this way, the challenge is that with it. So for sure, yes, we hit that, but I would say probably. End of June, beginning of July, that sort of changed. So may April, May and early June. Yeah. We had a huge challenge with that. And then as you get to towards the end of [00:15:00] June, that changed both MSC, which I use for my original, my kids and upper grades, which I use for the European.
Okay. So just, if we can stay a little bit more on the issues of delays or perhaps temperature fluctuations in transit that could result in damage to cargo what is your approach, in your company? So the following questions we would play on the risk metrics. Arrangements that you have within your company to ensure that you’re protecting yourselves against this damage or demonstrate it to your cargo in transit, but also what is your opinion about insurance up taking in Africa for food exporters?
I would say, you know, we. If I look at Ghana, I don’t know, probably the company with a better stand on that. We have tried to go the insurance route. I’ll be honest as a company. But we really haven’t had probably the favourable rates may be favourable in us as a company. So insurance uptake in terms of African companies. So I can probably speak for one or two banana mango producers that I know to say the uptake is very, very low.
People take chances in terms of saying, okay, I’ll ship it and I’ll fight it out with the shipping line. If anything goes wrong. So there’s not a lot of uptakes it’s something that is very important to do. But at the same time, I think because people are trying to avoid costs.
People are trying to ensure that they don’t, it doesn’t build on your unit cost in terms of your box or your unit cost. They’re trying to avoid that quite a lot. So the uptake is very slow, but as I’ve seen it in a lot of companies that I’ve dealt with in Africa, I mean, from my time in Mozambique, Africa Tanzania.
All that and now in Ghana. I don’t see it being something that is South African. Yes. I don’t want to deny their fights strongly. And some of the people who are using cargo by plane are quite strong on [00:17:00] that. But in terms of the guys who are using ships, especially some of the banana producers, medium to small, to medium lives, small to medium-sized businesses like ourselves.
People kind of like to take a chance. And I know that a lot of mango producers that I know in Ghana, it’s quite a big industry and a few other pineapple guys. They’re probably in the same, eh, people always want to take chances then to really take their time and say look my cargo is insured I can do 1, 2, 3, 4.
It’s not really there. Maybe the big players, like the company for Tia and all that. Yes, those are the guys. Probably they can leverage in terms of volume to push probably for better rates and everything like their recoveries are quite high. So this is what I can say. Of course, like in Mozambique, we use the Aion.
I remember my, my experience and Mozambique. We used it. Yeah. I think in Kenya, we used another company. I don’t remember what has the name here? We tried, we have done a bit with a Lebanese company and we tried also the routes that you referred [00:18:00] to us, the South African guys, but that never went through because everybody started analyzing the numbers.
And then as soon as the numbers are like that, people will try to outweigh one over the other, which is always not the best way to do it.
So in the absence of insurance to protect yourselves from the eventualities of maritime transport, how are you guys protecting yourselves now from time? Say, for example, your cargo shipped to Europe, arrives with damages. What are the steps you take?
Okay, what we normally do is we work with the client, which is a buyer. What I do from the farm site is recording. We do what we call a container 360 inspection.
We check our container upon arrival on the farm. Is the vent setting, the temperature correct and if the content is clean and the age of the container as well. We take that into consideration because my SOP is now I don’t take any units, which is below seven years, which is above seven years old. So I try to do that.
That sort of helped me in the last couple of years to just help with poor container performance. So then we have a checklist which we do with the driver in the quality control team. They do that. So if the container is accepted, they ran it for say 30 minutes to an hour, just to check everything’s running.
It’s cooling. It’s pulling down a temporary channel, then it’s loaded. Then from the day when it goes into the port or the container before the vessel, Once, as soon as it goes in, it’s checked in, it’s received plant in the temperature that I was quoted, the tenant supply temperature and everything is, everything is checked.
And then we start getting all the data. Okay. However, prior to that, we also put the temperature recorder inside the container one container, a sensitive temperature device, which is a course temperature. So we usually give it a start delay of about 30 minutes from the time that you close the container to the time that it starts recording, then it’s the containers going in so that the recording of the data.
And then at the end of the day once you, once it’s in the C I C Y or it’s in the port, we get the data on a daily basis of maybe two to three readings, but they have temporary checks. And upon the vessel sailing, we’ve closed the container in terms of the Ghana side of the details. So when the vessel arrives or before the container even sails we’ll know its performance.
Let’s say it stays in the port for four days. We’ll know from day one to day three, day four, whether there’s a drop in temperature, whether it knows the content is performing in a consistent manner in terms of how it should be from 24 48, 72 hours. And if it’s performing, we normally allow the cargo to go in the event that the cargo is delayed and there are other issues that happen along the way.
Maybe the container is damaged or it’s just down or everything. What we require from our buyers they download the data from the temperature log upon opening the container and they give us an assessment what is the quality of the fruit at arrival? If there’s any damage to the fruit, then they do the QC.
They give us detailed reports of how much cargo is damage and what could be the possible causes of the cargo damage based on their experience so they’ll say the problem is due to temperature or delays in vessel arrival. The fruit was supposed to arrive at 21 days, but it’s only arrived at day 30, which is probably one of the factors that increase the risk of fruit ripening.
So when that happens, we then eventually put together all the data. And send the notification report to the shipping line, say, look, based on what happens, the cargo was delayed, and this is what happened in terms of the arrival quality. And in some instances, if the vessel we know is delayed and it’s delayed, way in advance but will only affect based on ETD or ETA that were given with the vessel.
We always give them a claim notification and potential loss claim notification. Prior to saying, look, you promised as the vessel is going to call in, say on the 10th, and we started picking based on what you told us, but now the vessel only called in on the 18th and they didn’t notify us. We have a seven-day delay or eight-day delay in the port, we have a potential for cargo damage upon arrival.
notifying you that in the event that this happens, this is what will happen. So we normally send them a letter prior to that. I touched bookings and communication, all emails, everything including changes in their bookings if they were there and everything.
So that is evidence enough to build up, to say, look, this is the trail of information in terms of what to communicate and not transplant. Then that gives us the basis for us to probably raise a claim. If it’s very delayed, let’s say 35 to 86. Well, something like that already. It’s arrival, we notify the client and then the client can pause for a drink.
With the shipping line, the clients, and then they do that with an independent survey company to check the cargo arrival I’m in cargo quality condition and arrival. And then if the condition is bad, the independence of it gives a detailed report, whether good or bad they give a detailed report. And then from there, it’s part of the evidence that we have to substantiate the claim.
Some of the surveyors will tell you that they believe it’s. The fruit itself, but there was nothing wrong with the transit time. Someone would tell you definitely was wrong with the temperature or the container performance. So always the, with different reports, but these are all the this is all part of the data we build up to be able to push for our claim.
And then we eventually push the claim through yourselves. We’ll specialize in that, in a new build that evidence. We send this to we, we do it directly ourselves as a team to try and push directly by talking to the principals of the shipping line if it’s possible. So those are the tools we’ll take, but the success rate with the vent is through yourselves.
I think the success rate is higher than what we’ve tried to do as individuals now, probably in the last two, three years.
You can listen to this record later or share it with a friend on Amazon. Thank you very much, Rodrick. I really appreciate your time.