Co-chair of the Economic Programme Oversight Committee (EPOC), Richard Byles, has scoffed at Minister Karl Samuda’s call for banks to offer four per cent loans to agriculture workers in order to boost growth in the sagging sector.

“Where am I supposed to find that money? That’s all I will say,” Byles stated in response to questions about the minister of industry, commerce, agriculture and fisheries’ plea to have single-digit interest rates for the agriculture industry.

Byles was speaking at a press briefing at Sagicor Life Jamaica in New Kingston, where he released the 40th communiqué of the non-public sector members of EPOC yesterday.

Whilst Byles did not state a figure that the financial institutions could lend that is lower than the current rates being offered, he explained that banks are also borrowers of money, incurring administrative costs including depositing cash at the Bank of Jamaica at zero earnings and purchasing Government securities at fairly low yields of five to six per cent.

“Before they have made any real money yet, somewhere in the region of 26 cents of every dollar sits at the BOJ. Then the banks have risks: they will always expect that loans will go badly and that affects how loans are priced,” said Byles, who is also president and CEO of the Sagicor Group.

“When you do all of that arithmetic, banks, by the way, are the most heavily taxed at 33 per cent and they have to pay asset tax, way above what the normal companies pay. When you have taxation, what you get ultimately is a raw cost of bonds which a bank gives you when you put your $100 in their hands, and what they have to lend at in order to cover all of those expenses and give their shareholders a decent return.

“And it’s not that decent either when you look at the returns on equity across the large banks compared with other entities,” he continued. “So to say at what rate we would lend to the agriculture sector, you have to look at all these issues. And it is the same things you have to address to get the rates to small and medium enterprises down.”

But Minister Samuda is adamant that agriculture cannot thrive on an interest rate that exceeds four per cent, noting that this sector is one of the most challenging because of its dependence on favourable weather conditions.

“So in terms of risk-taking, farmers of this country take the greatest risk everyday of life,” Samuda stated recently.

It is a point with which Byles agreed, but he also noted that the sector’s risk is also high for the financial institutions.

“We have to find some other ways to make the agriculture sector work. It can’t be that if we don’t have good weather conditions that the sector suffers; that is high risk for the banks,” he said.

Jamaica’s agriculture sector currently accounts for 20.9 per cent of GDP and is also a source of livelihood for 43.5 per cent of the rural population.

For the three months ending June, the Planning Institute of Jamaica reported a seven per cent increase in agriculture, forestry and fisheries, which reflected favourable weather conditions relative to the corresponding period in 2015.