AgroPark, another agri-investment platform, has left investors spoiling for a legal battle after it sent a letter informing them, for the second time, that payment of capital and accrued dividends will no longer be possible and will now be moved to 2021.
It is a similar challenge that has faced investors in other agro-investment firms like Thrive Agric and HO Corn. In the case of Thrive Agric which is also facing legal actions, the co-founder and CEO had to step down for an acting CEO to help sail the company through the turbulence.
Angry investors issue 5-day ultimatum to Thrive Agric as overdue payment hits N50m
In a letter dated September 17, 2020, and signed by Sola Olunowo, managing director of the company, AgroPark which claims it manages over 5,000 hectares of farmland across the country, blamed the lockdown occasioned by the COVID-19 pandemic, the cost of production, and off-takers struggling to attain market stability, as being responsible for the setback it has faced in fulfilling its obligations. According to the company, the cost of production was becoming unpredictable because of the constant use of petrol and diesel to power equipment for irrigation.
“In line with the new payment schedule, all efforts we have put into recovering from these difficult times, we are saddened by our inability to meet the payment obligation for September 15th, as stated in the payout schedule. We are working hard to increase sales and unlock some of the constraints we face and we truly hope that as demand returns, it will be reflected in your return on investment. The due returns as advised will be paid on or before 30th January 2021,” Olunowo noted.
But a coalition under the name of AP Concerned Subscribers are not having it.
How it started
Founded in 2017, AgroPark is a Lagos-based agro-investment firm that specialises in the production and processing of spices (turmeric, basil, lemongrass, pepper); poultry; and fishery. In July, the company said it was diversifying into staple crops like maize; sweet corn; soybeans; rice; and beans. Hence it has since cultivated 130 hectares of maize; 10 hectares of sweet corn; 40 hectares of rice; and 85 hectares of land was ready for second plowing for soybeans.
To fund its farming operations, AgroPark looks out for individuals with resources to buy into its farm investments. These investors provide funds to own the farms on a lease basis for a return that varies from 20 percent to 40 percent.
While the investors own the farms, AgroPark is the manager that ensures that money spent is returned in one piece. Returns are paid on a quarterly and yearly basis depending on the crop the investor subscribed for. A ten-year lease, for instance, gets quarterly remittance. In an interview with the Guardian, Olunowo said the longer an investor can wait the larger the return.
According to people who invested in the farms, AgroPark had faithfully paid on time until the first quarter of 2020.
“They gave a COVID-19 explanation that time, which was somewhat believable, so no hard feelings,” an investor who chose to remain anonymous told BusinessDay. “(I) talked to their rep who told me that they will switch my crop to maize and remittance was due in September, which the portal stated too. They also sent some emails communicating their stance.”
The squabbles and half-truths
The aggrieved investors are accusing AgroPark of not clearly communicating what has happened with their investment. Hence, in August the investors got together to form the AP Concerned Subscribers coalition.
At the behest of their legal advisers, the coalition issued a Letter of Demand rejecting explanations for negative remittances and the inability to pay remittances. They also demanded disclosure of a business structure and farm succession plan for clients’ farm lot.
As well as the immediate reversal of all negative remittance communicated to subscribers and payment of all accrued returns from April to August 2020.
AgroPark as a form of response chose a subtle offence. In a September letter addressed to a particular investor which BusinessDay saw, AgroPark accused the coalition of breaching its data privacy rules. According to the company, AP Concerned Subscribers allegedly collaborated with some members of staff to obtain the personal information of the investor.
But the coalition said that AgroPark’s letter was part of a grand plan to cover what the real problems are. It recalled meeting with the management of AgroPark in June requesting among other things clarification on non-payment of subscribers’ remittances and review the off-takers list and transactions made during the lockdown.
“Unlike Agropark, we have the requisite data confidentiality process to ensure that the integrity of your data is never compromised. We also plan to further engage Agropark on the level of their internal breaches so that we can understand what Agropark and the staff have done with our confidential data/information,” the coalition said in a letter.
Alleged recruitment sharp practices
In 2019, former staff of the company took to Nairaland to allege unhealthy recruitment practices by AgroPark.
A staff who identified herself as Adanna recalls how she was recruited alongside 9 employees as Agricultural Journalist graduate trainees. She took up the offer thinking by doing so she will gain an experience of a lifetime. The company even promised to train the new recruits, hence they sent them to a farm estate at Ijale Orile Abeokuta to gain firsthand experience in agriculture.
“So that when we write we write with passion,” Adanna said.
But the experience at the farm estate was different from what they were promised.
“On getting to the farm estate, we were turned to labourers. We started harvesting chili pepper, basil, and sweet basil. We even planted thyme on a very long bed. The food was wack and we never ate with meat or fish till we left the farm. Young Agriculture graduates are on the farm and they are being used for hard and cheap labour and they are paid 15k all in the name of graduate trainee,” Adanna said.
Another graduate trainee by the name of John Titus alleged he left an N25,000 only to be decided into taking N15,000 in the name of gaining experience.
“Thank God my former boss called me back after I left. Agro park claims they don’t use people but believe me when I shout ‘Cheap Labor’. There was a time we were even told to come on Sundays,” Titus said.
An investor who spoke to BusinessDay also on condition of anonymity accused the company of using a company is set up as the off-taker. In other words, the company not only controls the farms, it is also in charge of marketing the product. The investor has nearly N2 million locked up in two farms.
“No one really knows what they did with the Fennel or corn as they didn’t remit anything. This investment is somewhat different than Thriveagric in that the investors actually own the farm and paid upfront for a 10-year lease,” the investor said. (BusinessDay)