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Establishment of Producer Companies: Lessons from the Indian Experience

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Establishment of Producer Companies: Lessons from the Indian Experience

  1. The success of the FFS and other farmer organisations is hampered by the uncertainty over their status in law. As mentioned above, they are not bodies corporate. They are therefore unprotected by the law, limiting access to finance as well as their ability to engage in formal commercial activities. Current policies make it difficult to formally register farmers groups as anything but cooperatives or associations. When there are large numbers of individuals in an organisation, complications might exist in incorporating a company limited by shares.

  1. The experience of farmer based enterprises in India is instructive. The Indian Companies Act 1956, as amended by the Act of 2003, makes provision for a separate legal entity called Producer companies. These are mainly farmer based organisations, which are given legal status to operate as commercial entities. Producer companies are therefore bodies corporate. In the same way, in Sierra Leone, FFS and other informal FBOs could be constituted as Producer companies under the new draft Companies Act. Although the Companies Act is largely fully drafted, an amendment may be made to it and submitted to Parliament at the same time as the main Act, through a Notice of Amendment. Annex 1 provides an outline of the main provisions that could be incorporated into the Companies Act (as amended). In order to move this forward without delay, the Minister of Agriculture could table a Cabinet Paper on this, with a proposal for the drafting of the relevant sections to be attached as an amendment to the Companies Act.

Public-Private Partnerships for Investment in Agriculture

  1. There is now a general trend towards public-private partnerships in agriculture. This may be developed between public research institutes and agro-processing and other agricultural firms, or in the case where clustering is fostered, between government provision of physical infrastructure such as warehouses and storage facilities (on the one hand) and groups of small firms (on the other). Public-private partnerships could also take the form of cooperation between government and large firms in state plantation farming linked to factory production of agro-processed foods.

Key Issues and Policy Recommendations on Structures for Commercialising Agriculture

Issues: The major actors in agriculture development are donors or the government rather than the private sector, and the latter’s participation needs to be urgently increased at all levels: small, medium and large scale. The network of small farmers could be an effective vehicle for modernising agriculture in Sierra Leone and needs further definition and support to enable improved production and exports of quality agricultural products.

Policy Recommendations

  • The new SLIEPA should collaborate with the MAFFS and the MTI to produce selected investment and export development packages to attract domestic and foreign investors to agriculture.

  • Public-private partnerships in agriculture, particularly on infrastructure and research, should be encouraged through the use of fiscal and other instruments.

  • A new type of company called ‘Producer Company’ (specific to agriculture and similar fields) should be established through an amendment to the pending Companies Act, which should be drafted without delay. In this respect, the Minister of Agriculture should present a Cabinet Paper on this issue at the next available Cabinet meeting.

  • The Cooperative Societies Act 1977 should be reviewed and redrafted in accordance with the modern functions and roles of cooperative societies.


Land Tenure

  1. Sierra Leone has a land mass of which 850,000 hectares is arable; land in the provinces excluding the Western Area makes up over 90% of that land mass. However, land tenure in Sierra Leone is characterised by a dual ownership structure. The Western Area including the Freetown Peninsula is governed by an English system of land ownership which includes fee simple conveyances, mortgages and leases. Freetown and its environs was a Crown Colony. History shows that this area was bought by the British from King Naimbana in 1788 for the benefit of the free community of settlers, their heirs and successors (the Krios). The Krios settled in these areas and acquired ownership and possession of the purchased area. This was a large area and it follows that the areas unoccupied and uncultivated became or remained Crown land. Thus, land in these areas is either owned by individual families or is Crown land. Communally owned land does not exist in the Western Area.54

  1. Land in the rest of the country (i.e. the majority of the agricultural land) is held in communal ownership under customary tenure and is controlled by traditional rulers who administer it on behalf of their communities in accordance with customary principles and usage. Though there are minor differences among the various ethnic communities, the general trend is that land is considered a divine heritage, which the sprits of the departed ancestors expect to be preserved and handed down to future generations.55 The responsibility to ensure the preservation of the land and subsequent enjoyment by future generations therefore rests on the community as a whole. A community is, however, not a very well defined entity. It could range from a small family to an entire tribe. The absolute interest in land vests in families. In other words, it is the land-owning family, which deals in its land.56 The paramount chief is regarded as the custodian of the land on behalf of the entire Chiefdom but decisions regarding the land are the preserve of heads of the various land owning families. One very important consequence of the fact that the absolute interest in land is vested in the family is that it invests every member of the family with an inherent right to the occupation and use of any part of the family land. In areas where shifting cultivation is practiced for instance, except where the individual family member cultivates perennial crops, the land available for farming is shared by the family head at the beginning of each farming season to all family members.

  1. In terms of access to land for commercial use generally, the problem with the customary land law system in the Provinces is -:

  1. Identifying what the custom is

  2. Ascertaining who to talk to: whether it is paramount Chief, council of chiefs or family members

  3. Securing all the consents

  4. Assessing what actually has been transferred in terms of land area, etc.

  5. The absence of enforceable legal documents to back up a purchase or grant.

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