Business

'Allow more coffee import, but not instant' — Salada

Wednesday, February 26, 2014    

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THE call to widen the importation of coffee should exclude instant coffee, argues Salada Foods, the largest local processor of instant coffee.

The company insisted that it can fill local orders of the ready to drink instant coffee.

"We are not in agreement with the widespread importation of primarily instant coffee. We are able to supply the entire demand in Jamaica now," indicated managing director, Julian Rodney, at the Salada annual general meeting at the Pegasus Hotel in Kingston on Monday.

Government will consider widening imports amidst the onset of a dip in local coffee production to 20 year lows. Salada acknowleged that supply of coffee beans (for brewing) would pose a challenge.

"There is some issues to availablily for green beans — that is beans produced in Jamaica. So a number of players have had to import," Rodney added in response to a Jamaica Observer query at the efficient meeting attended by less than 20 shareholders and lasted some 45 minutes. "But I would not be in agreement with the additional importation of finished instant product. It would be detremental to the current players in the market and Salada being the main player of instant coffee."

Stakeholders process cheaper imported beans in order to fill the demand of the local and hospitality sector. Secondly, foreign and local entities import branded instant coffee products to retail in supermarkets or at dispensers.

The Coffee Industry Board of Jamaica (CIB) indicated earlier this month that more entities are requesting to import coffee based on the dip in production. The legal importation of coffee requires approval from the Minister of Agriculture Roger Clarke upon the recommendation of CIB.

Salada earned $500 million from local sales led by its instant coffee product. Another $129 million was earned from export sales, which actually doubled year-on-year led by ginger and coffee.

"We continue to drive our export channel with coffee and ginger tea," said Rodney. "Right now we are extremely competitive with our ginger tea. It is a strong product with competitiors coming out of Singapore and Thailand. We have now improved our overall competitiveness from a pricepoint in all markets including North America and I expect continued sales."

Salada earned $86 million for its year ending September 2013 or 40 per cent lower due to the weak economy and a change of distributors, management indicated.

Chairman John Bell indicated that sales should increase in the ensuing year based on the recent change of distributor to Lasco Distributors.

The 2013/14 coffee crop is forecast to drop 40 per cent when compared with the current year, according to John Minott, president of the Jamaica Coffee Growers Association, (JCGA) at the Coffee Industry Stakeholders Retreat two weekends ago at the Jamaica Conference Centre in Kingston.

Minott blamed the drop in production on the effects of rust disease along with hurricanes and the abandonment of farms. Minott at the retreat told Minister of Agriculture Roger Clarke and experts that an importation window should occur in order to enable replanting.

Coffee imports totalled some US$1.78 million in 2012 up some 23 per cent since 2008, according to data from the International Trade Centre (ITC) a joint agency of the World Trade Organisation and the United Nations.

Concurrently, exports dipped by double-digit levels to some US$17.3 million in 2012, according to the latest Bank of Jamaica data. The crop traditionally earned about US$25 million annually up to the onset of the financial crisis.

"It's a troubling situation," said Minott who is also general manager at large processor Jamaica Standard Products -- producer of Wallenford Blue.

Jamaica Blue Mountain and Jamaica High Mountain coffee production is expected to dip towards 130,000 boxes and 31,000 boxes respectively for the ensuing 2013/14 crop, according to Minott.

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