Ex­am­i­na­tion of a catas­tro­phe in Port­land

Jamaica Gleaner - - BUSINESS - Cedric Stephens

P AP­PEALS for help for flood­rav­aged farm­ers’ said the head­line of an ar­ti­cle pub­lished in this news­pa­per on Oc­to­ber 28.

Gareth Davis Jr wrote on the same sub­ject two days later. This one was more spe­cific. It was about a ba­nana farmer, Fred­er­icka Ap­pleby. Her farm is in the Rio Grande Val­ley, near the town of Wind­sor in Port­land. Three days of heavy rain­fall dec­i­mated some 700 fully grown ba­nana trees owned by Fred­er­ica Ap­pleby, a farmer at Wind­sor in the Rio Grande Val­ley of Port­land.

Ms Ap­pleby lost 4.5 acres of ba­nanas due to three days of rain that caused the Rio Grande to over­flow. The ba­nanas were close to har­vest­ing. The farmer suf­fered a sim­i­lar type of loss in April. Since Davis’ ar­ti­cle did not men­tion the word in­sur­ance, it will be as­sumed that Ms Ap­pleby’s losses were unin­sured.

How much did this par­tic­u­lar farmer lose due to two back-to­back losses that oc­curred within the space of six months? One agron­o­mist with 15 years’ ex­pe­ri­ence in the ba­nana-grow­ing in­dus­try es­ti­mates that the av­er­age cost of es­tab­lish­ing one acre of ba­nanas ranges from $100,000 to $400,000, de­pend­ing on the farm tech­niques that were be­ing prac­tised.

Ms Ap­pleby’s to­tal losses dur­ing this year would there­fore have amounted to be­tween a low of $900,000 to a high of $3.6 mil­lion. What­ever the ac­tual size of the to­tal loss suf­fered by Ms Ap­pleby, it will be a big blow for her.

She has been in­volved in ba­nana farm­ing for over 20 years. In the ab­sence of in­sur­ance pro­tec­tion, the farmer is quite pre­dictably “not sure that she will be able re­cover from the back-to-back losses that she suf­fered this year”.

There are many thou­sands of farm­ers across the is­land like Ms Ap­pleby. Their liveli­hoods are un­der threat by forces of man and na­ture. In­sur­ance com­pa­nies are in the busi­ness of help­ing com­pa­nies, other en­ti­ties

and in­di­vid­u­als to man­age risks. Can in­sur­ance be used as a tool for so­cial and eco­nomic for the hard-work­ing Ap­ple­bys across the is­land as a sub­sti­tute for ap­peals to help (which re­minds me so much of what is hap­pen­ing in Matthew-rav­aged Haiti)?


Ba­nana farm­ing is a high-risk busi­ness. En­ter­prises like East­ern Ba­nana Es­tates, St Mary Ba­nana Es­tates and Vic­to­ria Ba­nana are among some of the mega-farms that have fallen by the way­side over the last 30 years.

On the other hand, Ja­maica has had a very long his­tory in the grow­ing of ba­nanas. A Ba­nana In­sur­ance Act was passed over 70 years ago. The leg­is­la­tion ap­plied to “ba­nanas sold for the pur­pose of be­ing ex­ported and in re­spect of which a cess has been col­lected”.

The pro­tec­tion af­forded to grow­ers re­lated to “hur­ri­cane, tor­nado, cy­clone, whirl­wind, gale, or at­mo­spheric dis­tur­bance, whether sim­i­lar to the fore­go­ing or not, which the (Ba­nana) Board is sat­is­fied is likely to have caused ap­pre­cia­ble dam­age to any ba­nana cul­ti­va­tion.”

I re­call sit­ting in a meet­ing at the Ba­nana Board of­fices in Kingston Gar­dens many years ago along with pow­er­ful in­dus­try in­ter­ests. I rep­re­sented a firm of in­sur­ance bro­kers who bought rein­sur­ance in the Lon­don mar­ket to pro­tect the li­a­bil­i­ties of what was then called the li­a­bil­i­ties of the Wind­storm Fund.

It is my recol­lec­tion that in­dus­try in­ter­ests strongly op­posed the ex­pen­di­ture of funds to buy the rein­sur­ance and con­tinue the long-stand­ing re­la­tion­ship with those en­ti­ties. In sub­se­quent years, the fund was vir­tu­ally wiped out due to a num­ber of hur­ri­canes.

Short-term con­sid­er­a­tions led to the non-pur­chase of rein­sur­ance which, in turn, caused the demise of the 70-year-old fund that was orig­i­nally set up to pro­tect small farm­ers like Ms Ap­pleby.

Ac­cord­ing to in­for­ma­tion pub­lished on the web­site of the Ba­nana Board, the Ja­maica Ba­nana In­dus­try’s Catas­tro­phe Fund was started in 2007. It was created through seed fund­ing from the Euro­pean Union Ba­nana Sup­port Pro­gramme. “The aim of this fund is to pro­vide as­sis­tance to com­mer­cial ba­nana and plan­tain grow­ers in or­der to fa­cil­i­tate rapid re­cov­ery of farms fol­low­ing wind­storms and other cat­a­strophic dam­age. The fund is gov­erned by pro­ce­dures out­lined in the Ja­maica Ba­nana In­dus­try’s Catas­tro­phe Fund’s Op­er­a­tion Man­ual.”

A catas­tro­phe is de­fined ac­cord­ing to the board, as “a great and sud­den dis­as­ter af­fect­ing a large num­ber of grow­ers in a wide ge­o­graphic area. This can take the form of high winds,

can take the form of high winds, flood, drought, or other stim­uli. For a catas­tro­phe to be de­clared, how­ever, there must be 50 per cent or more dam­age to reg­is­tered plant pro­duc­tion units (matts) in a given ge­o­graphic area.”

The fund is man­aged by the Ba­nana Board, steered by the Catas­tro­phe Fund Over­sight Com­mit­tee (CFOC), and guided by the Catas­tro­phe Fund op­er­a­tions man­ual. It is avail­able to all com­mer­cial ba­nana and plan­tain grow­ers.

To re­ceive ben­e­fits, grow­ers must vol­un­tar­ily reg­is­ter with the fund be­fore Jan­uary 31 each year. Grow­ers must pos­sess at least one acre of healthy ba­nanas or plan­tains with at least 500 mats to ben­e­fit. And par­tic­i­pants must make an­nual re­ports on ba­nana and plan­tain pro­duc­tion and sales.

Com­pen­sa­tion will be pro­vided in the form of ma­te­rial sup­plies. There is no fixed com­pen­sa­tion rate as the amount paid de­pends on the level of dam­age and the quan­tity of funds that are avail­able.


The fund, some­what like the typ­i­cal in­sur­ance con­tract, does not cover ev­ery­thing. Be­low are some of the ex­clu­sions:

Farm­ers who are not reg­is­tered un­der the fund or who had been dereg­is­tered;

Farms with sub­stan­dard hus­bandry or pro­duc­tion levels well be­low that ad­vo­cated by the Ba­nana Board;

Farm­ers who know­ingly sub­mit false or mis­lead­ing in­for­ma­tion; I Aban­doned farms; I Farms or parts thereof that are not in­tended for re­cov­ery; and

Farm­ers who en­gage in vi­o­lent ac­tiv­i­ties to ex­tort fi­nan­cial as­sets from the fund.

GK Gen­eral In­sur­ance Com­pany, ac­cord­ing to in­for­ma­tion on the web­site of the All-is­land Ba­nana Grow­ers As­so­ci­a­tion, of­fers Liveli­hood Pro­tec­tion in­sur­ance (LPP). This is de­scribed as a mi­cro-in­sur­ance that is not sec­tor spe­cific and “pro­vides a fall­back for per­sons whose in­comes are af­fected by ad­verse



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