Capitalising on Jamaica's export requirements
Experts encourage individuals to get involved
There has been an urgent call for Jamaica to reduce its current account deficit by increasing the number and value of exports relative to its imports through an export-led growth strategy. But within the eight priority areas identified by the National Export Strategy (NES) there exist viable business opportunities for the savvy investor to capitalise on.
The NES is developed to not only correct the shortfall in exports from Jamaica, but to make the country "a leading per capita export country known for its commitment to creativity, innovation and exceptional quality".
To achieve this, the NES focuses on the priority industries for which government and industry support is almost guaranteed. These include Information Communication Technology (ICT), Mining, Entertainment, Education, Coffee, Aquaculture, Agroprocessing (food and beverages) and Fashion, Jewellery and Accessories.
"We have identified a number of priority industries and we are working together, both public and private sector, to see how quickly together we can facilitate those action plans by implementing all the critical strategies that have been agreed by industry to move these sectors forward," Jean Smith, general manager of the Jamaica Exporters' Association (JEA) told Sunday Finance at a luncheon held to discuss the implications of Jamaica's agreement with the International Monetary Fund (IMF) on expanding Jamaica's exports.
Investments in these priority areas by individuals and local firms can therefore generate significant earnings and at the same time contribute to reducing the deficit. Sunday Finance will over the next several weeks look at how the investor can benefit from engaging in the NES, starting with the important agroprocessing industry.
The agroprocessing industry, which focuses on processing agricultural raw material into food and beverages, adds value to agricultural products and to employment opportunities within rural areas. Agroprocessing is especially important to the export sector because, where value is added to the products, they can attract a higher price. As a testament to the viability of the sector, exports in Jamaica's food products increased 43 per cent in the height of the economic downturn in 2008. The NES hopes to increase exports a further 15 per cent a year and introduce five new products to the export market by 2012. Ensuring that your business is producing at least one of these five new products is one way to generate income in an industry that was largely untouched by the economic downturn. Investors can enter the industry from the level of growers, buyers or processors.
According to data from the NES' agroprocessing strategy, food exports increased by 41.3 per cent to US$71.6 million in 2006, while sauces exports increased 11 per cent to US$ 8.8 million. The food exports was largely attributable to demand for natural beverages in the USA.
"Agroprocessing is one of those sectors that seem to be resilient despite all the constraints that we are contending with. When you look at the trade statistic, that sector continues to do well when many of the others have been impacted by the global financial situation and other constraints in the domestic market," Smith said.
Dr Audia Barnett, executive director of the Scientific Research Council (SRC), which is mandated to support the growth and development of the agro-industrial sector in Jamaica through "research, adaptation of available technologies, creation of new and appropriate technologies and the provision of training and technical assistance", said that agroprocessing is a "fantastic growth area" for investments. People will always need to eat, explained Barnett, which makes the sector one of the most sustainable, especially given its dynamism.
"It's a very exciting field and it has lots of prospects especially when you look at the changing needs of the consumers," she said, adding that consumers' changing concerns about health and the nutritional aspect of food can be addressed through the agroprocessing sector.
Barnett recommends that the investor who is interested in agroprocessing focuses on the priority crops and products that the Ministry of Agriculture has promoted under the NES. These include sauces, frozen foods, in particular ready to prepare meals, puree and baked goods, very exotic crops such as the sour sop, tubers such as the sweet potato, and fruits such as the June plum. She said products like the sweet potato can generate a range of value added products from drinks to snacks to cereals and desserts. There are also opportunities in the area of herbs and spices, going up the value chain to the processing of the scotch bonnett pepper into pepper mash, or plants such as wintergrass to extract essential oils, or dried herbs to make teas. However she advised that for the investor looking at the potential of earning money from the industry, commercial quantities are required.
"The important thing is to understand that you have the capacity to work with. It cannot be done in isolation it has to be done in conjunction with the Ministry," Barnett advised.
Formulations of numerous types of standardised products are available at the SRC, from which the investor can generate products for processing and distribution. In addition to the thousands of formulations available, the SRC also assists entrepreneurs in formulating and standardising recipes and offers a three month support programme to ensure that the product is properly utilised. The cost for the formulations begin at $25,000 and can increase according to the product and the exclusivity to the buyer.
There is also support from the JEA. Smith said that the body would continue to work with the priority industries, those that have been impacted by the global financial crisis, along with those like agroprocessing which have remained resilient.