STATEMENT BY THE MINISTRY OF AGRICULTURE FISHERIES AND FORESTRY ON THE MATTER OF THE PURCHASE OF FER

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STATEMENT ON THE PURCHASE OF FERTILIZER
FROM LOGISTICAL SUPPLY SOLUTIONS INC.
 

The Ministry of Agriculture, Fisheries and Forestry finds it necessary to issue a
statement on the purchase of fertilizer by the Ministry from Logistical Supply
Solutions Inc. in February and November 2007. Certain persons have seen it fit to
make allegations which are completely unfounded. They did so without first
making any inquiry of the Ministry of Agriculture in order to ascertain the facts.

The Main Allegations
A significant allegation was that the Ministry did not receive a portion of the
fertilizer which it had ordered and paid for. The allegation is patently false. The
other allegation is that the Ministry paid excessive prices. This allegation too is
false. The price paid by the Ministry was determined by (i) the quantity required;
(ii) the time required for shipment and (iii) the quality of the fertilizer ordered.
The Ministry also ordered organic fertilizer which is normally more expensive than
chemical fertilizer. Some Background Facts
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The circumstances which led to the order of fertilizer are straightforward.
This country faced a serious situation with escalating prices for essential and basic
foods and inputs. The Ministry of Agriculture, Fisheries & Forestry therefore took
a strategic decision, in the face of this imminent world crisis, to urgently boost
local agricultural food production in an effort to ensure that adequate food from
local agriculture would be available in sufficient quantities to counteract the
impending high cost of imported foods. To achieve this strategy, it was essential
to have, and soon, adequate supplies of inputs for use by farmers – both
commercial and subsistence farmers. This would ensure adequate production and
food security on island, and contribute to the sustainability of the all important
agricultural sector.

The First Order of Fertilizer

In furtherance of these production support programmes, the Ministry of
Agriculture, Fisheries & Forestry purchased a quantity of fertilizer from Logistical
Supply Solutions Inc. in February 2007. The first order of fertilizer was purchased
by way of an invoice No 0172 dated 8th February 2007.
The breakdown of the order for 3,225 bags of fertilizer was as follows:
1,000 bags NPK 16-8-24 (50 kg bags)
1,000 bags NPK 15-15-15 (50 kg bags)
1,000 bags Di Ammonium Phosphate (50kg bags)
225 bags Organic Fertilizer
The total cost of the fertilizer was US $110,012.50 or EC $299,006.86. This
shipment included organic fertilizer, which is more expensive than chemically
based fertilizer. Also, it should be observed that this first shipment was a relatively
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small consignment. As a result, the price per bag was higher than would be
expected with a much larger consignment such as the second shipment.
Payment was made to Andre Dopwell of Logistical Supply Solutions Inc on
12th February, 2007. All of the fertilizer ordered by the Ministry of Agriculture
was received in two shipments in May and July/August 2007.
This fertilizer was distributed by the Ministry to farmers free to support local crop
production, thereby meeting the important goal of the Ministry, and by extension
the Government of Dominica, to assist our farmers and alleviate the burden of high
priced agricultural inputs.

The Second Order of Fertilizer
A second order of fertilizer was placed with Logistical Supply Solutions Inc. in
November 2007 following the passage of Hurricane Dean (August 2007). It is
important that we recall the considerable damage to the agricultural sector caused
by Dean. This urgent order of inputs was intended specifically to support the rapid
rehabilitation of crops in the agricultural sector which were destroyed by the
Hurricane. The fertilizer was purchased based on Invoice No11142007 dated
14th November 2007.

The breakdown of the second order was for the following:
375 tons NPK 15-15-15
350 tons NPK 16-8-24
350 tons NPK 12-12-17
175 tons White Lime
The total cost of this order was US $612,805 or EC $1,664,929.90. Because of the
large quantities involved, the price per bag was less than in the first order.
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Payment was made to Andre Dopwell of Logistical Supply Solutions Inc. on
27th November 2007.
The Ministry requested that the fertilizer be shipped to Dominica in four (4)
shipments as follows:
– Shipment 1 – 375 tons, immediately upon payment
– Shipment 2 – 375 tons , two weeks following shipment 1
– Shipment 3 – 325 tons, three weeks following shipment 2
– Shipment 4 – 175 tons, three weeks following shipment 3

Due to production problems at the fertilizer plant, and the high demand for
fertilizer at that time, the fertilizer order was received in eight (8) shipments
totaling 1057 tons over a period of seven months. For the reasons set out below,
the amount ordered was reduced from 1250 tons to 1057 tons.

The Ministry of Agriculture communicated with Logistical Supply Solutions Inc.
consistently in order to ensure that the fertilizers would be made available to the
farmers in need promptly. Faxes were therefore sent to the company on the
following dates:
– December 12th 2007;
– January 29th 2008;
– February 18th 2008;
– February 29th 2008;
– April 4th 2008;
– June 20th 2008.

These faxes establish that the Ministry was intent on ensuring that the specific
instructions given to the Company were adhered to and that the delivery of the
inputs took place within the time agreed by the Parties.
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In response to the Ministry’s Fax dated January 29th 2008, Logistical Supply
Solutions Inc. informed the Ministry of Agriculture that a breakdown at the
fertilizer plant from which the fertilizer was being sourced, would cause delays in
the shipments resulting in increased costs.

The Company also communicated to the Ministry via Faxes dated March 3rd 2008
and May 19th 2008 that there was an increase in the world price for fertilizers and
that it was proving to be expensive and difficult to transport inputs into Dominica.
It is important to note that the Company’s statement made in relation to the
increase in world prices for fertilizers was totally justified by the fact that during
2008, fertilizer prices rose sharply as a result of the increased cost of petroleum
products, including fertilizers and increasing demand for some fertilizer
ingredients such as potash. In fact, global fertilizer prices rose by more than
200% in 2007/2008.

Consequently, the quantity of the fertilizer order was reduced by the Ministry from
the 1250 tons originally ordered to 1057 tons in order to take into account and
reflect the higher prices and costs. The reduced quantity of 1057 tons was received
by the Ministry. All of the fertilizer received was distributed free to farmers islandwide
for the purpose of replanting their crops destroyed by Hurricane Dean.
It should be therefore clear with the presentation of these facts, that the allegations
that the Ministry did not receive all of the fertilizer it requested and alleged
excessive prices in relation to the purchase of fertilizer by the Ministry are
completely without foundation.
26/06/09

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