Pandemic reprioritises Jampro FDI strategy - Agriculture moves to front burner over renewed fears around food security
Investment promotion agency Jampro has pushed agriculture to the top of its agenda as a first step in getting foreign direct investments, FDI, flowing back into Jamaica post COVID-19.
Over the past three years, Jampro has largely secured investments from investors looking to enter the business process outsourcing or tourism sectors. But with the onslaught of the COVID-19 pandemic, the focus has shifted to agriculture and logistics.
Jamaica buys around US$800 to US$1 billion of food from overseas markets annually, a bill the Government has attempted to wrangle down through import-substitution policies, with limited success.
Jampro’s current focus is not so much about buying less foreign goods, but finding ways to incentivise overseas companies to set up agribusiness operations in Jamaica.
Essentially, Jamaica would still be buying from foreign agricultural companies, but some of that business would be conducted in-country. And the agency is just as keen to identify local companies willing to invest in scalable agricultural businesses.
The shift in focus was dictated by the pandemic, which disrupted supply chains and exposed just how vulnerable import-dependent countries are if and when their foreign markets go into lockdown – as happened in countries around the world.
It demonstrated more starkly for Jamaica that its food and health security could easily be jeopardised in a period of crisis.
“The question of food security has really become more vivid in people’s minds. If international trade starts to shut down, then we have to eat what we grow, and that has created greater urgency for us to leverage our idle lands,” President of Jampro Diane Edwards told the Financial Gleaner.
The relaxing of non-tariff barriers, which includes quotas, sanctions, and levies, has also made it easier for agricultural producers to target markets previously deemed as impossible for export of the country’s goods.
Still, the crop volumes produced by Jamaica’s farmers fall short of what is needed to facilitate the type of scalable agricultural business that Jampro hopes to promote to regional and international markets.
To address that deficiency, the state agency has teamed with the Ministry of Industry, Commerce, Agriculture & Fisheries, MICAF, to create a National Agribusiness Council, and on Wednesday signed a memorandum of understanding with the Urban Development Corporation, UDC, which seeks to fast-track the process of identifying and facilitating the lease or acquisition of suitable agricultural lands by investors.
Jamaica has some 35 per cent of its agricultural lands laying idle.
“What we want to do now is to find properties in Jamaica, decide what those properties are suited for, and then go out and look for the right investor for that project,” said Edwards.
“It’s a different aspect to our matchmaking business which we were doing before. We didn’t have the packaged projects and properties to take to market,” she said.
Jampro’s direct targeting of investors for agricultural projects is part of a five-year plan to transform the plantation-based approach to agriculture to a modern agribusiness economy fit for the 21st century that Jampro and MICAF had developed even before the COVID-19 pandemic. It takes into consideration climate-smart agricultural solutions, irrigation systems and renewable energy to reduce the cost of energy to farmers.
The pandemic has made the programme more urgent, especially with double-digit declines in remittance inflows and the collapse of the tourism and travel markets, the top two earners of foreign exchange for Jamaica.
Economic forecasts for Jamaica projects that travel and tourism earnings will fall by two-thirds to US$995 million post-COVID from US$3.1 billion pre-COVID; and remittances, too, will decline to US$1.9 billion from US$2.3 billion.
As for foreign investment flows, the bullish projection for US$492 million of inflows for this fiscal year, ending March 2021, has been readjusted to about US$216 million. The new post-COVID projection lines up with the FDI flows seen by Jamaica in the past fiscal year, which was about US$219 million.
Jampro is now in discussions with prospective investors, mainly from the United States, in its search for fresh FDI flows.
“Up to three years ago, we were not finding investors really interested in agriculture, but over the last year we have seen people really starting to focus on the sector. So it is demand-driven; but it’s also driven by our vision for the economy,” Edwards said.
With social-distancing protocols on business travel expected to continue into next year, Jampro is looking to target investors with e-brochures and virtual tours of lands that will be up for grabs through the UDC, as well as other private property that landowners are putting on the market.
Edwards also noted that the downtime created by restrictions in travel has allowed the agency to improve on its “after-care services” to retain the business of international clients currently in Jamaica.
That has so far has included support for the umbrella group for the BPO sector, the Global Services Association of Jamaica, in its lobby to continue work-from-home arrangements; as well as assisting farmers to seek out new markets – whether regionally or locally – for their excess produce.