Agriculture gets a financial beating
THERE IS an increasing need to invest in the agricultural industry due to changes in people’s dietary preferences as they try to take a healthier approach to eating. Agricultural investment is also relevant due to rising local and global population rates. The Jamaican population has increased from 1.62 million people in 1962 to close to three million today. The population in the United States of America (USA), for example, has grown from 75 million in 1900 to 307 million people presently.
According to World Bank estimates, the demand for food will increase by 70 per cent by 2050, which will require at least US$80 billion worth of investment to meet the demand. Most of this is expected to be generated from the private sector, not the Government. While agriculture productivity has been increasing in the USA and other developed countries, agriculture productivity has been declining in Jamaica due to lack of research, development and implementation of new techniques and strategies on a widespread basis. This, to some extent, has been due to lack of funding in some regard. The private sector, especially in developing countries, has been less than willing to lend to the productive sector, especially the farming sector, due to the high level of risk and uncertainty surrounding output crop yield and revenue generation.
Banks and financial institutions over the last two decade’s have reduced the amount they lend for productive purposes gradually year to year and have increase the amount they lend for consumption purposes, mainly because the funds lent for consumption loans (car and mortgages) are backed by the person’s salary. Meanwhile, the uncertainty surrounding doing business in Jamaica, especially farming, has prevented the industry from expanding and securing itself to be viable to consistently attract funding. According to the World Bank, the banking sector in developing countries has lent less to the agricultural sector than the agricultural sector’s share of GDP.