Coffee quota rule, JACRA cess up for review
AMID ONGOING complaints that new coffee rules have been harmful to business, the ministry overseeing agriculture says it is weighing adjustments to the quota rule for Jamaican coffee to give processors flexibility as market conditions change.
The Ministry of Industry, Commerce, Agriculture & Fisheries, is also reporting that an assessment of the new commodities regulator and its funding mechanisms has been completed.
But permanent secretary Donovan Stanberry says its content will not be revealed until the minister peruses the report on the Jamaica Agricultural Commodities Regulatory Authority (JACRA), which began operating in January.
“The minister commissioned a report to look at the whole thing – how have we progressed so far, what needs to be changed, what needs to remain,” said Stanberry. “I just got the report on Friday. When the minister gets it, an official response will be made.”
The report was done by “a working group of internal stakeholders” and contained feedback from industry members. JACRA’s remit covers six commodities, including coffee.
As for the coffee quota rule that all coffee blended locally must contain at least 20 per cent Jamaican beans, the requirement is hurting processors in the face of a shortage of green beans, locally.
The measure had been imposed to alleviate adverse market conditions faced by Jamaican farmers of high mountain coffee.
“What happened two years ago was that people had the high mountain coffee with few or no buyers. Wallenford had stopped buying. The only person that was buying high mountain coffee was Minott based in Manchester. There was this build-up that could not be sold. That is why that 20 per cent rule was instituted to absorb that coffee,” said Stanberry.
However, companies like Salada now say the quota rule is hurting their production schedules for processed coffee as there is now a shortage of Jamaican beans.
The prospect for changes to the rule was discussed at a meeting last week with Minister Audley Shaw, who took over the industry and agriculture portfolio in April.
“I don’t know that any policy is carved in stone forever. It would be foolhardy to keep a policy where the condition no longer exists for it to make sense,” said Stanberry.
“If the situation has changed, if people are squealing now, it means that the policy has worked. We have mopped up the excess and we might look at relaxing it.
“What happened two years ago was that people had the high mountain coffee with few or no buyers. Wallenford had stopped buying. The only person that was buying high mountain coffee was Minott based in Manchester. There was this build-up that could not be sold. That is why that 20 per cent rule was instituted to absorb that coffee.”
SALES TO FOREIGN MARKET
Jamaica earned US$27.6 million in fiscal 2016-17 from coffee exports, but this was principally from the sale of Blue Mountain Coffee. Business operators in the sector have been making the case that rather than forcing local processors to buy Jamaican beans, which is among the most expensive internationally, the policymakers should be encouraging sales to foreign markets, in order to grow export earnings.
Stanberry noted that both the coffee and cocoa sectors need to be developed, and that the work to be done by JACRA could be complementary to this goal.
Commenting on JACRA’s administrative bill of $10 million monthly, which is financed by a cess on the commodities it regulates, the ministry official said that those who refer to the operation as a “pointless bureaucracy” are forgetting the roles played by the former coffee board and the cocoa board from which the new authority was created.
“The point was to amalgamate the two and gain some efficiencies. I never heard anyone say that the coffee board or the cocoa board were pointless when they existed,” he charged.
“What JACRA has done is to amalgamate that, plus the regulatory function of the coconut board and the Export Division, and we are gaining efficiencies. JACRA is not collecting the cess to feed a bureaucracy. Several ministers over the two administrations have made it plain that the rationale for the cess is to discourage the huge volume of imports, the proceeds for which will be used to develop a programme to expand coffee and cocoa production, and spices in this country.”
Stanberry said the cess would also finance the development of nurseries to provide seedlings for cocoa and coffee, as well as area-wide pest control programmes.