Agriculture ministry puts out feeler on cocoa assets sale
THE MINISTRY of Agriculture and Fisheries, MOAF, has put out feelers on the divestment of commercial assets owned by the Cocoa Industry Board, CIB, seven years after an initial attempt by the Jamaican Government to offload the assets.
In a public notice on Sunday, the MOAF has called for interested parties to submit documentation around “their specific interest” in assets and lands owned by the CIB, in an attempt to test the market’s appetite.
CIB’s assets have been advertised on the market twice since the Government settled on the route to privatisation of the commercial side of the cocoa operations in 2014, underpinned by the wider objective of growing output and exports of the bean.
The cocoa industry was one of two industries that Government wanted to reduce its commercial involvement in, the other being coffee, which it successfully exited in 2013 following a year of talks with Michael Lee-Chin’s Portland Holdings Inc for the acquisition of Wallenford Coffee Company.
But after failed attempts by divestment agent Development Bank of Jamaica to similarly offload the cocoa assets, the MOAF is hopeful that a market-sounding exercise ahead of a third call for bidders might be the answer to bringing investors to the table.
“In support of successfully divesting the assets, the MOAF is undertaking a preliminary market-sounding exercise and requests interested investors write to MOAF’s permanent secretary,” the ministry said in its published notice.
“Note that this is not an invitation to prequalify or bid on the opportunity but a request for expressions of interest to assess market interest in the commercial assets of the CIB,” it said.
Efforts to get the MOAF to comment on what comes after it sounds out the market, were unsuccessful. For now, interested parties are being asked to submit their contact details, brief company background and their specific interest in the opportunity by noon of March 29. Those who participate, will be asked to complete a market survey by April 6.
The request for expression of interest comes four years after negotiations for sale of the cocoa assets to Wallenford Limited failed to reach a deal and were terminated.
Wallenford Limited, which is owned by Portland Holdings Inc, was selected as the preferred bidder from among three companies that had expressed an interest in acquiring the commercial assets of the Cocoa Board back in September 2014. But after nearly two years of talks, the parties pulled out of negotiations, at which time Lee-Chin told the Financial Gleaner that Wallenford already had its hands full with the ailing Wallenford Coffee Company acquired from the Government in 2013, and was not interested in taking on another ‘turnaround’ type business.
CIB has control of 71 acres i n cocoa fermenting facilities and cocoa farm across the parishes of Clarendon, St Mary and Hanover. Nearly half of that acreage is taken up by cocoa fermenting plants at Morgan’s Valley, Clarendon; Richmond, St Mary; and Haughton Court, Hanover; while another 40 acres is being used for the cocoa farm in Montrose, St Mary.
Jamaica is one of the eight exclusive producers of fine or flavoured cocoa, but over the years, cocoa production has declined from troubles of the frosty pod disease, hurricanes, poor price pass-through to farmers and high production costs.
Annual cocoa production i n Jamaica fluctuates between 500 to 900 metric tonnes, but the country has the capacity to produce as much as 2,500 metric tonnes. The demand for Jamaican cocoa continues to exceed supply both locally and internationally, with United Kingdom being one of the main export markets.
The trading of cocoa is governed by the Jamaica Agricultural Commodities Regulatory Authority.