Banks need to rethink support for agricultureThursday, December 30, 2021
We would not be surprised to learn that Mr Gassan Azan's phone has been ringing off the hook since yesterday morning when the Business Observer reported his comments that banks are paying lip service to the agriculture industry.
Readers will recall that Mr Azan and his partners ventured into the agriculture sector in 2019 with Jamagro Tech Farms, in Lakes Pen, St Catherine — an $11-billion state-of-the-art agricultural development on 400 acres of land scheduled to be rolled out over several phases.
The project includes 25 acres of greenhouses, 50 acres of orchards and open fields in the first instance. When it is up and running the project will essentially enhance Jamaica's involvement in the global ready meals market, which was estimated at US$219.69 billion in 2018.
We remember being told by experts in this sector that the rapidly expanding food packaging industry, as well as growing demand for minimally processed and additive-free food products with extended shelf life are driving the growth of the ready meals market.
Mr Azan's Jamagro Tech Farms will also function as a mother farm through the development of a network of certified small farmers who will be contracted to produce according to the highest marketplace standards.
The construction phase of the greenhouses created just about 130 jobs and, as the project now stands, more than 100 people have been employed on the farm, which is growing a range of produce.
Mr Azan, who is a director of this newspaper, was reported as saying that the farm is already supplying produce to local supermarkets and, by mid-2022, hotels will be included among its clients. He also said he and his partners hope to begin exporting to the United States by the middle of next year.
That this project will be of immense benefit to its partners, employees, small farmers, consumers, and Jamaica in general is without doubt. Imagine, then, our amazement at Mr Azan's revelation that he has not been able to secure investment funding from local banks for the project.
“Not one dollar has been loaned to this project by the banks,” Mr Azan told the Jamaica Observer last week. “We've had the hardest time and none of them would lend to this project. We tried every bank, so we funded it ourselves.”
That funding, he said, so far amounts to US$7 million — the equivalent to 10 per cent of the total cost of the project.
Whether he will get the additional funding to take the project to full production is left to be seen. However, it should not have to require a newspaper story for this type and scale of investment to get attention from financial institutions.
Given Mr Azan's experience with the banks we can only imagine how many small farmers have had a similar experience, grown frustrated, and quit altogether.
In fact, yesterday's Business Observer story gave some hint of that, as it reported Bank of Jamaica data showing that, up to the end of October, total loans and advances from commercial banks to the agricultural sector were valued at $15.4 billion, but that was just 1.5 per cent of the total loan portfolio of the banks.
As Mr Azan pointed out, banks view agriculture “as extremely high risk”, but his point that if the sector is not funded it will “go nowhere” is potent and demands a rethink from the banks, especially if we are serious about reducing the island's food import bill which last year amounted to US$900 million with 32 per cent of those imports coming from the United States.