Salada pays out millions in tax on imported green coffee beans


Salada pays out millions in tax on imported green coffee beans

Wednesday, August 14, 2019

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INSTANT coffee processor Salada Foods Group (SALFG) Chairman Partick Williams reported to stockholders that SALFG's profitability in the nine-month period ended June 30, 2019, continues to be impacted by the tax imposed on green coffee beans. It has already paid out $56 million to Jamaica Agricultural Commodities Regulatory Authority (JACRA) year to date.

“Prior year results, June 30, 2018, there was no cost impact attributable to the cess; profitability has been adversely affected as a result,” Williams stated on Thursday last (August 8) in the report posted on the Jamaica Stock Exchange website.

In 2018, JACRA stated that SALFG must commit in writing to increase to 30 per cent the local coffee content used in the production of instant coffee. Failure to do so will result in JACRA withholding any further approvals to SALFG to import coffee green beans used in manufacturing its instant coffee powder.

JACRA's demand was a result of a quota rule set in 2017 by the Ministry of Agriculture, stipulating that traders who import green coffee beans must include at least 20 per cent of local coffee in their formulations for processing and resale.

The Jamaica Information Services reported that the then minister of Industry, Commerce, Agriculture and Fisheries, Karl Samuda, said the move to impose a cess on green coffee beans imported into Jamaica will level the field for players in the local sector and provide resources to develop the industry.

SALFG's operating profit for the period under review amounted to $120.98 million, a decline of 27 per cent when compared to $164.90 million recorded the corresponding period last year, while gross margin decline by 11 per cent over prior year.

According to the chairman, SALFG's administrative expenses increased by $17.75 million to $107.31 million in the nine-month period due to salary, staff welfare and training expenses. In addition, selling and promotional expenses increased by $2.12 million.

However, despite these results, Williams stated that SALFG saw improvements in domestic sales coupled with stronger sales in export markets, as revenues grew by three per cent to $769.64 million when compared to $748.70 million recorded the corresponding period last year.

“The outlook for the remaining three months to year end remains favourable with the strengthening of our marketing efforts in both domestic and overseas markets,” Williams said.

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