Columns

The coffee industry and its $60-m gift

Raulston
Nembhard

Wednesday, September 19, 2018

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Traditional crops in Jamaica, such as sugar, coffee and cocoa, have been undergoing scrutiny as they respond to market forces and other paradigm shifts in the global production and marketing of these commodities. The funeral oration for the sugar industry beckons, and now coffee is in the cross hairs. But there are important production variables in the production and marketing of sugar which do not necessarily affect coffee. Nonetheless, coffee is under pressure, especially where the marketing of the commodity is concerned.

Two years ago the coffee farmers earned as much as $12,000 dollars per box for coffee seeds. Today, it is $3,000 per box. The Coffee Growers Association which represents many small farmers has complained that the farmers are not being adequately compensated for their coffee. There is a complaint that the farmers have not been paid over $120 million that is owed to them by the big coffee growers.

It must be noted that the coffee industry has been privatised. The Government's holdings in Mavis Bank and the Wallenford Coffee Company have been sold to private interests — Michael Lee-Chin, co-chair of the Economic Growth Council, being the largest owner. His AIC International outfit purchased Wallenford for US$16 million in 2013. This included 5,000 acres of Blue Mountain coffee land. It was projected that US$23.15 million would have been pumped in over a four-year period to rehabilitate the farms, expand production, and promote viable markets for the commodity.

The bottom line is that the Government is no longer in the coffee business, except as a regulator and promulgator of policy directions as required. Small farmers in the industry are private operators who have to take their licks as any big operator. The truth, though, is that with the shifting paradigms in the marketing of coffee worldwide they are at a big disadvantage, which no doubt places them at the mercy of the big operators. If they want to retain any semblance of commercial viability they have to sell to the big operators.

Productivity levels in the industry have fallen because small farmers hardly have any incentive to produce. Apart from falling prices per box of coffee beans, their grievances are exacerbated by the importation of coffee products. They have urged the Government to impose a cess on such importation, but the Government has not moved with any alacrity in this direction. Governments do not relish imposing special taxation measures on any industry and the present Administration has to be careful not to inflame sensibilities in what is now a fragile industry.

But all is not well with coffee production in Jamaica. If the allegation of the coffee growers being owed over $120 million is correct, then this surely is a matter impatient of resolution. If there is merit in the claim then the question ought to be answered as to how much of this might be owed by Wallenford to these farmers. Wallenford is best able to answer this question and ought to do so in light of the farmers' concerns. If the answer is yes, but the amount is yet to be determined, one would get a clearer perspective on Lee-Chin's gift of $60 million to the small farmers.

He has made it clear, and the minister of agriculture and the executive director of the Economic Growth Council have affirmed it, that this is his own personal gift to the industry. It is out of the wellspring of his own generosity that the gift has been made as he has seen the distress that small coffee farmers have been enduring.

I am never one to frown on or begrudge anyone's generosity, and I certainly have no doubt that Lee-Chin means well by his generosity. But this kind of generosity, by itself, though a welcome financial relief to strapped farmers, cannot assuage the mounting problems to be addressed. It must not be seen as a tool to mollify the farmers into resiling from what may be their legitimate concerns about the industry. If money is owed to them, it certainly should not dwarf the urgency of this money being paid out to them.

Although the Government is not a player in the industry it cannot be unmindful of its role in guiding the industry to higher heights. Small farmers need help, and probably the best advantage lies in developing the mother farm concept where small farmers are coupled with big producers as satellites. Each would benefit from a better economy of scale. The days of a small farmer trying to go it on his own on a plot of land are over. This might be the saviour also for the sugar industry; although, as I noted in an earlier piece, greater synergies can be had for the country if those lands are diversified into other crops.

For coffee, integration with other global players in the industry, like Starbucks, would be a welcome development. So too would be the exploration of other markets outside of our traditional markets. For a brand with such potential as Blue Mountain Coffee it is pathetic the dismal returns that the country has put up with over the years. Even those who distort the brand seem to be doing better than us. It is time that all players in the industry, including the Government, wake up and smell the coffee.

Dr Raulston Nembhard is a priest and social commentator. Send comments to the Observer or stead6655@aol.com.

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