Gagan Gupta, Country Head, Olam: Interview

Interview: Gagan Gupta

How can public-private partnerships (PPPs) for agricultural development be strengthened?

GAGAN GUPTA: The framework for PPPs already exists in the country, so there is not really much to change on that front. It is more about encouraging private operators to invest in the sector. The rules regarding the respective roles of the government and private operators are very clear, and the government is aware of how partnerships have to be structured and executed. The real challenge is developing more PPPs in agriculture. We need to encourage more competition and foster the development of an agro-industry here. While Olam is the largest agriculture player in Gabon by far, we should not be the only one. We favour a strong, consolidated sector.

What impact has Programme GRAINE had thus far?

GUPTA: Programme GRAINE will undoubtedly have a social impact for the next five decades, as it helps to turn our non-agricultural economy into an agricultural one. It turns farmers into entrepreneurs and helps people settle and develop food production, with farmers to be provided with know-how that will foster rural development.

Programme GRAINE has been launched in two provinces so far, with around 4000 people already registered, and in March 2015 land titles were issued for 1458 ha. While it is usually impossible to get a land title in two years in Africa, it took only three months to distribute the land after the programme started in December 2014.

Although this was an initial success, it is important to maintain reasonable expectations, as things do not change overnight. In recent months, however, we have seen a nationwide uptick in interest in agricultural activities. The social infrastructure programme is also making progress, with plantation development, and water pumps in particular, having already started in some areas.

What is being done to improve the timber industry?

GUPTA: Although Gabon and Malaysia both have about 22m ha of forest, only 10,000 people work in Gabon’s timber industry, compared to 300,000 in Malaysia. Malaysia has clearly chosen to focus on processing. This shift has not been easy in Gabon, but we are already seeing more processing companies in operation. It will take about five to seven years to see the real benefit.

The free economic zone we built has also been quite successful, and we are now setting up a furniture cluster. Top designers will be available for investing companies, which will not have to pay rent – rather, it will be a pay-asyou-sell system. We are aiming to set up an African design institute geared towards tropical timber products. The idea is to develop a whole cluster that will promote local furniture manufacturing, with 30% of output destined for the local market and 70% for export.

How can agriculture be made more competitive?

GUPTA: Agriculture in Gabon, and export commodities in particular, has the potential to be competitive globally thanks to excellent climate conditions. While labour is expensive, the yield per hectare is much better than in other places. If you take the example of rubber, output varies from 2.6 to 3 tonnes per ha, compared to a global average of about 1.6-1.9 tonnes per ha. Production costs for palm oil are also very comparable to major producers like Malaysia or Indonesia. Furthermore, Gabon allows business to be conducted in an environmentally friendly and socially responsible manner. You can conserve large areas of land and have a significant social impact, as the country’s population is small. The land acquisition process is also very transparent by regional standards.

The small size of the domestic market is the main obstacle to competitiveness. There are not enough market players, and many inputs have to be imported as the demand is not sufficient to sustainably develop local content. For example, we import plastic bags because there is not enough demand for this kind of product. However, unlike most African countries, thanks to a clear legal and regulatory framework agricultural development in Gabon can be successful and is very attractive to investors.