Let the public judge! - Banana Board stands on its record
This following is a response from interim chairman of the Banana Board, Donovan Stanberry, to the column written by A.C. Countz titled 'Grant-funded Banana Board lacks vitality'. The statement is partially edited.
The Banana Board is a public body created under the Banana Board Act of 1953. Consistent with the requirements of the act and the Public Management and Accountability Act, the Banana Board has had its annual reports tabled in Parliament on time since 1953 to 2012.
This year, however, the Board is determined to clear the issues related to the constant qualification of its accounts, due to matters related to outstanding loans of $42.9 million.
The records of the Banana Board show no documentation regarding agreements, access to or payments for these special loans. The only records are those placed by the external auditors in the audited financial statements.
The Board and external auditors, during recent years, have written repeatedly to the Ministry of Agriculture and Fisheries (MOAF) and the Ministry of Finance, but has received no response to clarify the matter.
The loans, which dated as far back as 1983, appeared to have been paid off. It would also seem that the loan transaction was entered into by the Ministry of Finance and on-lent to the Banana Board. From all indications, this loan would have been repaid by the Government, but we can only have these removed from the books on specific written instructions from the Ministry of Finance.
We are determined that for the 2013 report, this will be cleared and hence the delay in completing the audited accounts.
SURPLUS AND GRANT FUNDING
The Banana Board has complied with other fiduciary responsibilities and has consistently paid over all statutory payments. An examination of accounts payable will reveal this. Therefore, it is inconceivable that the Board should be chastised because its balance sheet shows a surplus of $18m in 2012, which is due to good stewardship and prudent management.
The European Union grant funds are not used to pay the general manager or the core human resource staff of the Board.
To imply that the EU provided the Board with a grant to make a profit is very defamatory.
The Banana Board meticulously carried out all of its obligations to provide technical and operational services to the target group using EU funding, and implemented the contracts very successfully.
The Banana Board's Technical Services Contract was executed in the period December 1, 2009 to July 31, 2011 and the Banana Board Grant Contract for Technical Services was implemented from December 17, 2010 to January 15, 2013. The EU provided instalments of pre-financing that were used over precise periods. EU grant funds will be seen on the balance sheet at the end of Banana Board's statutory reporting period, but it will be used after that for project activities which were not completed within the statutory reporting period.
Clearly, the project periods do not end at the same time as the organisation's financial year. Further, projects are allowed up to six months to make accrued expenditure.
The Board provides a very detailed financial report to EU, which is supported by an expenditure verification report from KPMG.
The EU paid interim and final payments on the contracts only upon detailed scrutiny of expenditure, narrative report and monitoring by the Project Management Unit representing the Government of Jamaica.
PRODUCTION AND SUPPLY
Banana exports fell by 21 per cent and overall production from 47,000 tonnes in 2012 to 37,000 tonnes in 2013 because of the damage from Hurricane Sandy, which occurred in October 2012. Tropical Storm Nicole in 2010 and Hurricane Sandy in 2012 had set back increased production which was being targeted by deliberate strategies being implemented since 2009.
Based on the 35 per cent damage to existing areas in production by Hurricane Sandy, there was a projection that there would be at least a 33 per cent reduction in banana production in 2013, if there were no support interventions to help to rehabilitate the industry.
The MOAF accessed a loan of $100m from the Development Bank of Jamaica and also provided $13.5m to reduce the prevailing loan interest rate from 8.5 per cent to 5 per cent.
The farmers were targeted to supply participating chips manufacturers with fruits at a price of $15 per pound. In return, the chips factories would reduce importation of chips by 25 per cent of the previous year's volume.
However, the farmers and the chips factories could not agree on a price. Without a dedicated and approved market for the fruit (crop lien) many farmers were unable to access the loan as they had no other collateral.
Subsequently, the project was redirected to farmers wanting to supply other markets but with collateral, resulting only in $33.3m of loan being disbursed.
The Banana Industry Insurance Fund was instituted by the Banana Insurance Act 1956. The fund was promulgated specifically to support farms exporting to the United Kingdom, who had suffered storm damage but had supplied export
volumes in the calendar year prior to the year of damage.
With the suspension of exports to the UK since 2008, the fund has been depleted and became inactive. Nonetheless, it cannot be wound up by the Board but by Parliament.
It would be ill-advised to repeal the Banana Industry Insurance Act on account of the cessation of the exports in 2008 as this would have signalled that the Government and the industry no longer have an interest in the export trade.
In 2013, therefore, the Board established a committee, including an actuary, crop insurance specialist, representatives of the All Island Banana Growers Association (AIBGA), Jamaica Producers Group and two members of the board of directors.
This committee has been charged with finding new ways of funding insurance for the sector, to include not only export bananas but also produce for the local market. The deliberations of the committee will inform appropriate amendment to the act.
Another commitment of the current board of directors of the Banana Board is to increase efficiencies in the management of its properties, including the Banana Industry Building in Kingston.
Properties are leased to lessees at market rates, with the exception of the AIBGA and the canteen concessionaire, who had pre-existing agreements.
The Banana Industry Building houses the Banana Board's corporate offices, the research department laboratories, offices and chemical stores, which are used to carry out sampling and testing required for international standards of farm operations.
The Board occupies approximately 15 per cent of floor space in the building; the remaining 85 per cent is leased by the Board to several businesses. The AIBGA and the canteen have cumulative occupancy of approximately 10 per cent of the total floor space.
The building earns revenue of up to $7m yearly, resulting in an increase from a loss of $1.29m in 2009 to a surplus of $10m in 2012. This is being achieved with good stewardship. Upon what basis does Mr Countz conclude that the building should be sold?
And by what standard is the Banana Board being judged as lacking vitality?
Let the public judge!
Through the efforts of the Banana Board, the Moko disease has been eradicated from eastern Jamaica and curtailed in St James to less than five per cent of farmers being affected. In this regard, the Board is the envy of the Caribbean.
Through the efforts of the Banana Board, the Black Sigatoka is being managed with a greater level of efficiency than obtains in Central America
The Board continues to provide quality extension services to the banana industry, which helps to maintain a high standard of exports, as well as quality produce for the local market.
The Board has pioneered the introduction of high-yielding disease-resistant varieties, which are in great demand for value-added production and superior green fruit quality.
The Board is providing leadership in obtaining Global Good Agricultural Practices (Global GAP) and Fair Trade certification for export banana farmers.
And, the Board facilitated the reintroduction of export to the British market in 2014, having pioneered export to the region and to Canada since 2011.