Coffee dealers get $300-m emergency funding
THE Ministry of Agriculture yesterday announced an emergency loan facility to cash-strapped coffee dealers valued at $310.5 million in order to cover working capital requirements and avoid disruptions in the export of the luxury crop.
The loan, however, was secured utilising government property as collateral.
The loan will provide cash flow to the dealers as they await payment for coffee sold to Japan, which buys some 90 per cent of the island’s coffee. Previously, the coffee dealers received advanced payments from Japanese importers of Jamaica Blue Mountain Coffee, but following the economic downturn in 2008, that all but stopped.
“Over the years, this advance payment has served as critical working capital support to local dealers and has prevented them from having to upfront funds to purchase the coffee and await payment months later when the green beans were exported,” said agriculture minister Christopher Tufton yesterday at the ministry’s Hope Road office in Kingston.
Tufton explained that conventional loans would have taken too long to secure for the dealers and as such an emergency facility was needed. The loan will be offered through the coffee regulator the Coffee Industry Board (CIB) — via the EX-IM Bank and Development Bank of Jamaica (DBJ).
Interestingly, the agriculture ministry will secure the loan by using its “property at Amity Hall in St Catherine as collateral”. The ministry added that it would monitor the disbursement of funds and repayment.
“The CIB will be strengthened to monitor the operations to ensure that the loan is repaid in a timely fashion and that the funds are not diverted to meet other company obligations,” he added.
Coffee export sales declined by 58 per cent — or US$10 million ($856 million) — January to June, and this has affected the financing of the crop.
The ongoing recession in Japan has resulted in the reduced pace of purchases and also the reduction in the price at which it is sold. The decline comes amidst promotions by US-based Starbucks and also in China with Hangzhou City Coffee and Western Cuisine Association.
