IN Jamaica’s public debate on climate change and financial risk, attention usually centres on tourism, infrastructure and housing. Bank of Jamaica (BOJ) data, however, point to a quieter but revealing pressure point: Agriculture may not threaten banking-system stability, but it is where climate and price shocks tend to show up quickly in borrowers’ ability to repay.

The central bank’s long-run non-performing loan (NPL) series, covering March 1999 to December 2016, shows agricultural bad loans rising and falling in sharp swings around a relatively low base. A newer loan-stock series from 2017 to 2025 indicates that while farm lending has grown, it has expanded far more slowly than credit to the rest of the economy.

Taken together, the figures position agriculture as a credit-risk margin: too small to move the financial system on its own, but too volatile and strategically important to ignore.

In absolute terms, agricultural NPLs have rarely dominated the BOJ’s bad-debt tables. Between 1999 and 2016, they averaged about $310 million, compared with tens of billions for total NPLs. But those averages mask large swings.

At the end of 2000, agricultural NPLs stood at roughly $343 million, about six per cent of the system total. By December 2007, they had fallen to around $136 million, or two per cent. In late 2010, following the global financial crisis, they were about $249 million, barely one per cent of total bad loans.

Then, by March 2012, agricultural NPLs surged to roughly $982 million — more than three times their long-run median — even as total system NPLs peaked at just over $31 billion.

For a sector with modest outstanding loan volumes, an almost fourfold jump over a short period is significant. It is consistent with the exposure of farm borrowers to shocks largely beyond their control: extreme weather, pests, commodity-price swings and rising input costs. When those shocks occur, arrears can build quickly, and thin margins and limited collateral narrow the range of restructuring options available to banks.

More recent BOJ data show that credit growth has differed sharply across sectors. Between March 2017 and November 2025, total loans by deposit-taking institutions rose from about $659 billion to roughly $1.60 trillion, an increase of more than 140 per cent. Agricultural loans, by contrast, grew by about 85 per cent, from $8.6 billion to $15.9 billion.

Over the same period, lending to households rose by about 155 per cent, residential mortgages by more than 230 per cent, and credit to distribution by roughly 156 per cent. As a result, agricultural lending has grown at only about three-fifths the pace of the wider system, steadily shrinking its share of bank portfolios.

The BOJ data do not link NPL movements to specific droughts or storms, nor do they distinguish among farm types. Even so, the pattern is in line with a sector characterised by volatile cash flows, correlated shocks and underdeveloped insurance and risk-sharing mechanisms — factors that typically raise default risk during stress periods.

From a financial-stability perspective, agricultural NPLs remain marginal compared with construction, tourism or household credit. From a climate and development perspective, however, they are more informative. They show where shocks land first, how quickly they translate into arrears, and how cautiously the banking system tends to respond.

For now, the numbers suggest a cautious equilibrium: Banks are willing to expand farm lending, but not nearly as fast as they grow exposure to households, mortgages and distribution. Unless that balance shifts, agriculture’s role in the loan book will remain small, even as its importance to climate resilience, food security and rural livelihoods continues to rise.

The challenge for policymakers is not to push banks into unpriced risk, but to build the risk-sharing frameworks — from guarantees to climate-linked finance — that could make agricultural credit expansion more commercially viable over time.