The context of this four part series will be done based on my reading of the Inter-American Development Bank (IDB) Report of July 2017 titled “Analysis of Agricultural Policy in Jamaica”.
In my previous article I opined that the lack of structured, flexible agricultural loans is one of the problems affecting agricultural productivity within the Livestock sub-sector. The conclusion was mad e by comparing the loan incubation periods in Jamaica (roughly three to six months) to the countries of India and Australia (2-3 years) for livestock projects.
In this article, we will discuss some possible reasons for the failure of small and medium size farmers growing to full commercial operations.
The IDB report highlights:
1. Only 18 % of the Jamaica population is employed in agricultural based employment, however 46 % of the population lives in rural areas.
2. Poultry production has been up 9% from 2014 and consistently rising.
3. Traditional crop exports have consistently declined, in contrast to non-traditional crop exports which have increased by 8% between 2008 to 2012.
4. Productivity in the agricultural sector is low but improving.
5. Development Bank Loans at 10% are used up mainly by the poultry sub-sector and agro processing.
The following questions must, therefore, be asked:
1. How does a developing country with 46 % of its population living in rural areas have only 18 % of its people engaged in agricultural production, given the high import food bill and the lack of jobs?
2. Why is the poultry sector eating up the majority of DBJ 10% loans?
Follow the money
Without having the actual figures, but based on my knowledge and information gained over the years, I know that majority of the DBJ monies are being absorbed by large commercial poultry farms that are collateralized and guaranteed by the two large agribusiness groups on the island.
This is by no means an attack on the growing commercial poultry industry. In fact all other sectors within agriculture should look at the poultry sector as a model to follow en route to commercialization.
However, it should be hypothesized that the sector is no longer at the developmental stage.
Development funds for development
More low interest loan capital needs to go to small independent farmers in subsectors of agriculture that are still in the developmental stage. If we are serious about food security and increasing employment in rural areas then instruments should be put in place by the Development Bank of Jamaica to allow access to more low interest loans for proven small farmers without collateral, and who don’t have the privilege of having big business guarantors.
Honestly, I feel that the development money for agriculture is being hijacked by big business. Our once booming sector was driven by small and medium size farmers has been suffering from a lack of capital injection, because the system is blocking them from the finances needed to be more productive. It’s no wonder traditional exports are down and such small portions of our rural population are engaged in agricultural activities as a means of employment.
The People’s Cooperative Bank (PC Bank), which was a solid defender for the subsistence farmers, is now the first point of rejection. The agriculture board which decides the policies of the bank seems out of touch with the realities of running a small farm business. They seem only interested in short term crop production (peppers, tomatoes, cabbage, etc), while leaving the pimento trees to become fire wood for jerk pork. They are only interested in six weeks chicken, while, goats and sheep are stolen because farmers cannot build proper housing.
Productivity in the sector is improving, because of the sheer determination of our farmers to provide food for the nation, despite the unfriendly economic conditions.
Let’s say thanks to the fulltime engineers and police officers, who take out loans against their salaries to plant crops on five-acre lots and to the bar owner who uses the round robin money to support the 12 cows shared between herself and her boyfriend. People like these are the driving force for the increased productivity in the sector.
The redemption strategy is not simple but necessary. It should be a mix of general support services such as farm road improvement and other necessary infrastructure developments and revisit of some direct support (resembling subsidies) that can force “production for production sake”.
The production for production sake concept will have to apply to long term traditional produce such as coffee, cocoa, beef, cattle, etc, which will need large intakes of capital without immediate returns, but is the key to sustainable agricultural production in the country.
Finally, with the growth of non-traditional agriculture providing us with an avenue to earn more without using up large land space by applying appropriate technology such as hydroponics and shade house farming, the opportunity exists for us to venture into the production of ornamental flowers, roses, garnish vegetables, which incongruously trending upwards in the recent years based on export numbers.
The recent ban on beef imports from Brazil presents an opportunity for us as a nation to not only look at our beef sector, but also to analyse the status of our livestock industry (all forms of protein). The industry with the exception of poultry farming, which is heavily supported by government policy, is underperforming.
Jamaica’s production of beef, mutton, chevron (goat meat), fresh water fish and other meats have been relatively miniscule in relation to its potential and past history. The reasons for the levels of production are varied, with some caused by circumstances beyond our control. However, a major portion has to do with poor policy from government and private interest.
In the early 2000s the term ‘food security’ was bantered around in the global economy. This caused Jamaica to be a beneficiary of significant international funding through the European Union, United Nations FAO and other agencies that pumped money in projects , such as the goat commercialization project and sheep commercialization project and many others. Even though, these programmes sparked interest and introduced best practises along with training for our farmers, the intended end game of having buoyant and fast developing livestock sector has not been fulfilled. The hard fact is that Jamaica remains heavily dependent on meat imports to fulfil the demand of the household, restaurants and tourism sector. This not only poses a threat to our food security but pressures the exchange rate.
Many will suggest that with praedial larceny being such a big deterrent in livestock production, why argue for heavier investment in the sector. From my point of view, the biggest deterrent for livestock farmers investing and increasing production is not praedial larceny, but instead lack of suitable financing.
Speaking as a livestock farmer myself, the sector’s slow pace of expansion has little to do with lack of markets, because even before animals are mature buyers begin to make inquiries. The lack of adequate low interest and well structured financing is a main deterrent; for example the average farmer in Jamaica has to sell significant portions of his or her herd to reinvest in farm infrastructure and breeding stock animals. The truth facing us is that not even the designated Agricultural Bank (Peoples Cooperative Bank) knows how to finance livestock development. Small livestock such as goats and sheep takes eight months to a year before they’re market ready. If a farmer should take a basic farm loan he would have made three to four quarterly payments before one animal is sold. This situation doesn’t encourage production. The structure of a basic livestock agricultural loan should be single digit with a two-year moratorium before quarterly payments are due. This will give farmers enough time to grow and develop their herds and not be forced into unnecessary sales.
Improved Animal Genetics
The beef cattle, meat goats and sheep herds from observation have declined in quality because of lack of genetic diversity. For instance, speak to any cattle farmer and they will tell you that the size of the animal breeds have declined over the decades. Concerted effort is needed from the authorities and farmers’ groups to import and develop more quality breeding stock animals that will be used to improve production and meat quality.
The livestock industry has skilled and ready farmers, who have benefited from training and technical assistance from agencies such as Caribbean Agricultural Research and Development Institute (CARDI) and the Rural Agricultural Development Agency (RADA).
The stage is set for us to raise production levels and reduce imports. In my opinion there is no need for grants and handouts, access to reasonable credit arrangements is the lacking element.