US firm 6th Grain demands N$13m for cancelled crop tender

United States tech firm 6th Grain Corporation is demanding N$13 million from the Namibian government following the cancellation of its crop-monitoring contract.

This demand follows the Cabinet’s decision to order the contract to be cancelled, saying the agreement did not meet the legal and procedural requirements applicable to contractual arrangements.

The company, through a demand letter dated 9 September drafted by lawyer firm Ileni Velikoshi Incorporated, cites compensation of the completion of the work and commercial as well as “severe reputational damage”.

The letter, which is addressed to the government through the Ministry of Agriculture, Fisheries, Water and Land Reform, gives the government until 25 September to settle the claim.

“Our client further records that the purported termination, together with the allegation that the agreement did not comply with the mandatory prerequisite legal requirements, notwithstanding that under our law no specific formalities are required for a remote sensing agricultural agreement, has caused and continues to cause reputational harm to our client.

“The allegation has adversely affected our client’s standing, credibility, and commercial relationships, and has exposed it to a loss of confidence among existing and prospective clients,” the law firm says.

The agreement, which was completed on 30 June, was intended to enhance agricultural decision-making in Namibia and to use satellite imagery and artificial intelligence to monitor Namibia’s production of key staple crops, including maize, mahangu, millet, sorghum and wheat.

The deal was supposed to cost about N$40 million, involving that 6th Grain would transfer all code, models, and knowledge to the ministry directly, and this would be fully owned by Namibia long after implementation.

According to 6th Grain, all sovereign agricultural and land-related data provided by the government would have remained the property of Namibia.

“While our client does not accept your contention that the agreement is void ab initio [from the start] and therefore unenforceable, it acknowledges your purported reliance on clause 13 of the agreement as the basis for termination.

“You are hereby placed on notice, however, that your decision to terminate the agreement more than one month later is not without legal or financial consequences being payment for services rendered and any contractual or otherwise recoverable losses,” Velikoshi says.

6th Grain is now demanding about 20% of the contract value, amounting to US$480 000 (about N$7.7million) for submitting the report.

The company further claims it had completed half of the development of the farmer survey, ground data collection and farmer registry software when the termination notice was issued.

It is demanding an additional US$125 000 (about N$2million), representing 50% of the development fee for a remote sensing engine and analytical modules deliverable.

The other claim includes US$250 000 (about N$4million) for alleged commercial and reputational damage.

Velikoshi says the payment is due by 25 September 2026 to avoid litigation.

Despite the demand, 6th Grain has left the door open for the government to reconsider the cancellation.

Velikoshi says his client (6th Grain) remains entirely open to rescinding these demands if the ministry officially reverses its termination and reinstates the partnership.

“If payment is not received within that period, our client reserves the right to institute proceedings without further notice,” the letter states.

Ministry spokesperson Romeo Muyunda told The Namibian yesterday that the ministry has not officially received the letter.

“We have not received the formal demand or request yet so we are unable to make any conclusions unless we receive such a letter we will have to study it and understand the content before we pronounce ourselves on any decision,” he said.

Muyunda previously told The Namibian that the decision to cancel the contract is intended to safeguard the interests of the state and to ensure that all contractual arrangements entered into on behalf of the government comply with applicable laws.

“The government has invoked the applicable termination provisions of the agreement and has issued a formal written notice of termination to 6th Grain Corporation,” Muyunda said.

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