Agribusiness in Jamaica: A key sector for investment growth for island nation

Jamaica is looking outside the tourism industry for economic growth. Audley Shaw, Jamaica’s minister of industry, commerce, agriculture, and fisheries is emphatic:

“You don’t build the Jamaican economy by hiring Jamaicans to work as waiters and maids!”

Jamaica’s brand is tourism. Most Americans know Jamaica through reggae, film, and ads for Sandals Resorts. Says Shaw,

“Don’t get me wrong, Gordon” (Sandals founder and chairman Gordon Stewart) “has done an outstanding job of marketing his resorts and bringing tourists to Jamaica. The Sandals agent works with our farmers to produce ‘Irish’ potatoes and other produce for their resorts.”

But he wants more.

Adding value to tourism in Jamaica

“We need more linkages between tourism and local production. We want tourists who come here to consume products made in Jamaica, not imports.”

The tourist shops in Montego Bay and other Caribbean ports attract buyers with offers of duty-free luxury goods from Europe: clothing, liquor, watches, jewelry, and perfume. The brands they sell are Bulgari, Rolex, Patek Philippe, Ch, nel and Versace.

Even lower-price resort-wear manufacturing is outside the region. This practice destroying the local garment industry. Luxury goods are imported without duty then taken out of the country by visitors. Selling a bottle of Cointreau at a duty-free store does little for Jamaica.

Jamaican garment manufacturers may never lure tourist dollars away from Chanel, but Shaw’s vision includes producing all the foods served in resorts – from fruits, vegetables and fish to seasonings and bottled condiments – in Jamaica. He’d like also to provide everything from pharmaceuticals to dental care to surgery to attract medical tourism.

“We grow the finest peppers in the world,” he says with a smile, then adds, laughing, “and also the finest cannabis!”

Shaw made his remarks at the Jamaica Investment Forum, or JIF 2018. The

forum brought together government leaders, local business leaders, and investors from around the world. Forum speakers highlighted the enormous strides made by Jamaica in macroeconomic stabilization in the last few years, pointed to some challenges that remain, laid out solutions to overcome them, and emphasized the enormous potential for business growth and investment in Jamaica.

Key sector: Agribusiness in Jamaica

A large part of that potential is in agribusiness. Two firms – King Pepper, in Montego Bay, and GraceKennedy, in Kingston – illustrate both the potential and the problems facing agribusiness in Jamaica.

Andrew Wildish is the general manager of Grace Food Processors, the canning division of GK Foods & Services in Jamaica. GraceKennedy is the largest food distributor in the Caribbean, and four of its six plants are in Jamaica.

“Jamaica produces millions of pounds of peppers every year, but when they come to market at the same time, the price is depressed, and it isn’t feasible to ship the fresh produce to markets abroad. But we can buy farmers’ surpluses and stabilize the price, using them in our canned products and shipping those to markets in the U.S. and Europe.”

Feeding the diaspora

GK’s primary market abroad is the Jamaican diaspora; more Jamaicans and their first-generation offspring live abroad than in Jamaica, with large concentrations in New York, London, Toronto and Miami. GK sells them Jamaican catsup, juices, jerk sauces and more.

The beverages they offer during their plant tour are excellent. Especially delicious and refreshing is the sorrel-ginger juice, sadly unavailable in most of the U.S. Walsh says that their sauces will be coming soon to the American South, where tastes are more attuned to fiery peppers and Caribbean seasonings.

“Unfortunately, this plant can’t meet the demand. We have to expand, and we’re expanding.”

GK is in a position to do it. It has the financing, and it meets international standards of food safety management. The concern for safety is made clear before you enter the cannery: A long list of rules includes no shirts with buttons, no exposed fingernail polish, no active GI illness of any kind, the use of hair and face coverings, and hand washing. They not only understand the safety standards at GK; they have internalized them to a confidence-inspiring degree.

Small business faces challenges

King Pepper Products is a much smaller operation than GK. It produces the Eaton’s line of hot sauces, jams, jerk sauce and more.

“We produce 25 different products in our plant,” says Managing Director Christine Wong, “in a building that was originally a daycare facility. And that building is an obstacle to growth.”

King Pepper is able to produce two product runs per day. On the day of our visit, the air was fragrant with guava, allspice and peppers. “Today we’re bottling jerk sauce and guava jam.”

The concern with food safety and quality was apparent, from the small but neatly laid-out quality control lab to the obvious concern for cleanliness on the cannery floor. But missing was the extensive list of rules provided by GK. No one was checked for nail polish. 

“We aren’t certified in the ISO 22000 standards,” observed Wong. “We have a consultant who is helping us with that. It’s a cost, but it’s an essential cost if we want to enter the American market outside of niche markets.”

The cannery itself is a problem. It wasn’t built for its current use, and it would be ineffective to remodel it for proper placement of all equipment and facilities required by the standards.

Wong laid out her vision for a new facility. Asked whether that was a real plan or a dream, she admitted that it is more of a dream.

Wong’s vision for the firm, which was founded by her father, is clear. So is her understanding of the obstacles.

“We export 85 percent of our product, 60 percent of it to specialty markets in the U.S. We’d love to be carried by a large supermarket chain like Kroger, but we only produce a million jars per year. We can’t produce enough to be considered a serious supplier by them, and new markets require a third party, internationally recognized food safety certification. Cost-wise, this is difficult.”

According to Wong, a buyer will sometimes want their product air shipped and be willing to pay for it, but otherwise, they ship only when they can fill a cargo container for shipment through Kingston port.

Small firms create most of the new jobs in the U.S. economy. King Pepper is the quintessential small firm.

“We employ 60 people on site. Ninety percent of them are women, many of them single mothers. I’ve known many of them since I was a child.”

The business buys everything it can locally.

“We buy a million pounds of pepper and scallions every year, and mangoes, thyme and allspice. Some of our seasonings have to be imported, like garlic powder, and there’s no bottle manufacturer in Jamaica. We buy those from Egypt.”

A tale of two companies

King Pepper and GraceKennedy operate on different scales, but each buys Jamaican agricultural products as inputs to value-added products for export to growing markets, markets that demand Jamaican foods and flavors. That growing demand is more than either firm can now meet. GK is growing to meet that demand, while King Pepper is still looking for investors who will allow it to reach its potential.

Each will create new jobs and support other local businesses, rewarding investors and be benefiting to Jamaica.

Source: Communities Digital News

Published Date: June 21st, 2018