Seprod share issue still not settled
COCONUT INDUSTRY interests are no doubt buoyed by Audley Shaw’s declaration that the Holness administration no longer wants to grab the millions of dollars earned by the Coconut Industry Board (CIB) from its 30 per cent ownership of food and commodities manufacturing and distribution company Seprod. They should nonetheless demand further and better particulars from Mr Shaw, the new agriculture and commerce minister, to determine exactly what he means.
For this newspaper is not clear that what Mr Shaw said translates to the Government dropping its pretence to ownership of the Seprod shares, as opposed to forgoing, for now, direct control of the dividends if the cash is put to projects to develop the industry. The two things are not the same.
There is a bit of history to this matter. Two years ago, Karl Samuda, Mr Shaw’s predecessor at the agriculture ministry, pressed the CIB, one of several commodity regulatory boards in place at the time, to sell 163.42 million shares in Seprod, which, in recent years, have returned nearly J$300 million annually.
At the time, the shares were worth approximately J$2 billion. Today, they are valued at nearly J$5.9 billion.
When Mr Samuda attempted his grab, he had, on the face of it, two significant motivations. One, which is still an issue, was that under its agreement with the International Monetary Fund, the Government is under significant pressure to tightly manage its fiscal accounts and to control its borrowing.
Two billion dollars, in the circumstance, would be a significant windfall flowing to the Consolidated Fund at a time when Mr Shaw, then the finance minister, was imposing J$17 billion in taxes to offset an income tax giveback, an election promise, whose financing the Jamaica Labour Party had miscalculated.
Further, the Seprod shares represent the lion’s share of the assets of the CIB, which is one of the commodity boards that will be eventually wound up, making way for the new agency into which the various commodity bodies will be enveloped. In fact, the CIB is the only one that is still operating independently, ahead of a transition. So, asserting, and taking ownership, of the shares, then, would make life that much easier when the receivers got around to the CIB.
UNIQUE FACTORS
There are, however, two factors that make the Coconut Industry Board different from the rest. While the CIB sometimes receives subventions and the administration names some of its directors, the law creating it also made it a membership body of around 8,000 coconut growers. These members also vote for the majority of governors. Additionally, in 1940, when Seprod was being formed by the CIB, coconut farmers contributed to its capital. In the 1980s, when the company was being divested, the earnings from the offer were for capital injections rather than as a flow to the Consolidated Fund.
That is part of the backdrop against which the CIB has resisted the share grab. Then last week, Mr Shaw talked about the use of the Seprod dividend.
He said at the St Mary Agri-Expo at Grays Inn: “... My objective is not to try to take away the money and put it into the Government’s revenue ... . The debate is not about whose is it ... . The real debate must be to take some of the money and help farmers get serious into coconut production all across the country ... . That must be the plan – not to take up some money to balance the Budget, while GraceKennedy has to go to Africa to get their coconut raw material because they can’t get it in Jamaica.”
Mr Shaw’s creditable change of heart now that he is no longer the finance minister doesn’t settle the question of who owns the shares and whether the Government still think it does, or that it has the right to at least 75 per cent.