PRODUCERS of the ‘Jamaica Gold’ sugar brand secured J$2.8 billion in financing from three structured notes arranged through Scotia Investments Jamaica Ltd to assist with sugar-cane reaping.

The deal gives a glimpse into the volume of cash required to finance the island’s most valuable crop. What’s more, these short-term notes were sourced locally rather than the traditional route through an overseas bank, according to Major Hugh Blake deputy general manager at Jamaica Cane Products Sales Ltd (JCPS) an agency that markets local sugar including the Jamaica Gold brand.

“The loans provided working capital financing to reap the crop,” added Blake in a Jamaica Observer interview on Wednesday.

The short-term notes include US$7.3 million, J$1 billion, and J$957 million each secured sequentially in the final quarter of 2014.

“Every year we need financing to take off the crop. You have to pay the estate before you sell the sugar. You have to pay the manufacturers to keep the process going before you send off your first shipment of sugar. So you need interim financing,” he explained.

The JCPS operates as an agency of the Sugar Industry Authority with private sector ownership from cane farmers and manufacturers that include Worthy Park, Appelton, Golden Grove and Everglades. The Chinese-owned Pan Caribbean Sugar Company is not included in the ownership of JCPS, Blake said.

He explained that in previous years these loans were secured through the Canada-based Bank of Nova Scotia due to the relatively large loan size.

“One of the things is that it is quite a significant sum of money and there are some restrictions on what some of the local banks are able to lend. BNS Canada was able to handle that without much issue. We basically opened it up to all the banks and BNS Canada was the one that was able to provide the loans,” he contextualised, but added a proviso that the genesis of these overseas loans predated his appointment.

This time around, however, BNS Canada redirected JCPS to the bank’s local subsidiary Scotiabank and in turn to Scotia Investments, Blake recalled. The interest rate on these notes range between 3.0 to 4.0 per cent.

“We always try to secure the best for Jamaica and for our manufacturers, so we wouldn’t want to get expensive money,” he added.

The sugar deal represented more than half the $5 billion in bond/note arrangements closed by the capital markets unit within Scotia Investments in 2014.

Blake indicated that despite drought conditions, sugar yields remain similar to last year. The island produced some 149,100 tonnes of sugar for the first seven months of 2014, latest Bank of Jamaica data indicates.