Engage our farmers; provide better creditFriday, October 22, 2021
Among our most consistent calls at the Jamaica Agricultural Society has been the call for improved credit facilities to our agricultural producers. Against that backdrop, we note the recent announcement of the one per cent increase in key policy rate by the Bank of Jamaica, juxtaposed with the passage of the Agricultural Loan Societies and Approved Organizations Act by the Lower House — the latter development which moves the positions of the Agricultural Credit Board to the registrar of co-operative societies. Coincidentally, the Jamaica Agricultural Society will transition into a cooperative as well.
These two signal developments really highlight the need for a designated, specially designed, revolving credit scheme for the agricultural sector similar to what obtains for merchants and other private sector operators in the small and medium enterprise segment.
We reiterate the call, supported at the ministerial level, for an Agricultural Development Fund to enable technology-driven improvements and to provide for micro and small agricultural producers to improve yield and quality, and to venture into value-added production.
Special funds have been developed for various subsectors and have created opportunity and growth for the entire economy; for example, the National Housing Trust (NHT) is the hub of housing development in Jamaica, National Health Fund (NHF) has been working wonders for the health sector, and the Tourism Enhancement Fund (TEF) is assisting with the growth and development of tourism in Jamaica. The Agricultural Development Fund would be a game changer for the agricultural sector.
As noted by the former agriculture minister, one cannot build a business without access to capital, and 90 per cent of the big businesses are built on borrowed capital. Following on Floyd Green's pronouncements, if more of our farmers and producers are able to access credit sufficient to capitalise their businesses, then the resulting improvement in production, earning, and profit to the agricultural sector will redound to the benefit of the economy as a whole.
As it now stands, farmers are forced to contend with input costs that have been pushed up by the effects of the pandemic, coupled with the depreciation of the local currency while many of these needed inputs are imported. Further, the lingering supply chain issues affecting trade and commerce globally will be felt here also at a very critical time of the year.
We understand that it is an ongoing process to streamline the public agricultural credit mechanism and overhaul the operations of the PC Banks. Given that conditionality, we are further calling on all financial sector stakeholders to reach out more directly to the agricultural sector, as a more inclusive approach is required of our commercial banks and would pay dividends to all sectors. With proper credit, farmers will not only be able to acquire better equipment, make hires where necessary, and increase production, they can build the income positions and creditworthiness that can spur more joint ventures, open new markets, and attract even more investment from local and overseas interests.
We take note also of another legislative development, the passing of the Micro Credit Act 2021, to more effectively regulate micro-financing institutions and therefore to encourage the provision of loans to the sector at more manageable rates. This should also outlaw the kinds of intimidatory practices that have dogged that subsector. There has continually been talk of the need of agro producers to formalise their enterprises — and we support this — but we remain firmly of the belief that there is both sufficient opportunity for private credit, and sufficient scope for the public sector finance mechanisms to reach out to farmers and engage them in completing the requirements as they grow.
Like any other venture, farming is fraught with risk and, even more than many, it is subject to many conditionalities. But, rather than shun our vital producers, it would serve the interests of all if we were to face the challenges directly, increase the dialogue and genuine collaboration, and innovate to provide our farmers with the leg up that they need in order to continue meeting the ever-increasing needs of the populace.
Lenworth Fulton is president of the Jamaica Agricultural Society.