Fri | Aug 18, 2017

Coffee crisis worsens

Published:Tuesday | December 13, 2016 | 12:00 AMChristopher Serju

The Coffee Industry Board (CIB) now finds itself in further hot water with coffee dealers who lost an estimated US$3 million worth of export-quality beans stored in its Marcus Garvey Drive warehouse which were damaged and contaminated by flood waters in September.

Four months later, other entities such as Jamaica Cane Products Sales Limited (JCPS), which was forced to destroy damaged stock not lost in the flooding by order of the Public Health Department, have begun to receive compensation, but not the coffee dealers whose beans were stored in the nearby CIB warehouse.

"We got half the insurance and we are looking to get the rest anytime now," Karl James, chairman of JCPS, told The Gleaner last week. "We are insured with Lloyds of London through Gerald Mair, and the value of the loss was J$25 million. We got half of it already because they saw the reasons for it, and all of that you know, so they didn't have too many questions to ask."

 

Buildings flooded

 

A number of buildings were flooded, with extensive damage to equipment, while a number of workers were at risk of injury from the rising waters, attributed to an extensive road rehabilitation project being undertaken by China Harbour Engineering Company, as well as clogged gullies and drains.

"Apparently, the water backed up from the new place that they are building, the new bridge that is being built, just west of the entrance to the sugar warehouse. That's where the water backed up and then smashed down the perimeter wall that we have and flooded the warehouse," James told The Gleaner shortly afterwards. The bridge in question is located along a gully that runs between the property of the sugar warehouse and the Fisheries Division of the agriculture ministry, which also suffered great damage and losses.

However, coffee dealers have not been given a timeline as to when they will be paid the US$3 million for the coffee that was insured with General Accident Insurance Company Jamaica Limited.

"The Coffee Board has insurance policies with General Accident. That is a statement of fact, and General Accident will honour the terms and conditions of its policies and it will make payments, fair, objective just like we do with care for all other insured. When you buy your insurance policy, it is a promise and we honour that promise, unequivocally. Certainly, at General Accident, we pride ourselves on standing behind that promise," Sharon Donaldson-Levine, the insurance company's general manager, told The Gleaner.

Pressed on the reasons for the delay in honouring the claims, Donaldson Levine, however declined to share that information.

"This is an ongoing issue, so it would be very difficult for me, while the claims adjustment is going on, to provide any fine details about the policy terms and conditions. It's very, very difficult, because that would not be fair to the insured."

The standoff between the General Accident and the CIB has led to speculation by industry stakeholders that a major difference in interpretation over the terms and conditions under which the commodity was insured is the major sticking point, and there is fear that Coffee Industry Board is the party in the wrong.

Subsequent action by the CIB has further fuelled trepidation among coffee farmers, dealers and players that the 2016-2017 could be in jeopardy, as a result of its failure to properly understand the terms and conditions under which it insured the beans.

This includes the failure of CIB executive to speak on the matter generally, and specifically, about a J$100-million interim payment it has reportedly offered the dealers. The Gleaner has learnt that the dealers are especially incensed by the request that they accept the money as a zero-rated loan. Under the Coffee Industry Board Act, dealers are obligated to submit their beans to the Coffee Industry Board in its capacity as the regulator agency. If the coffee submitted is deemed unfit, it then becomes the responsibility of the dealers to come and collect the rejected commodity, at their cost.

Where the coffee is inspected and certified to be export ready, it then becomes the property of the CIB, which now becomes legally responsible for it. But the company is keeping its cards very close its chest.

"We're still in dialogue with our parent ministry and, as such, I would not be able to speak on the matter because we have a number of issues currently being resolved. So I definitely would not be able to speak with you on this matter," Steve Robinson, director general of the CIB, curtly informed The Gleaner last Friday.

Meanwhile, Sylburn Thomas, chairman of the CIB, who last Monday promised an update on the matter following a recommendation to Cabinet for interim funding by Agriculture Minister Karl Samuda, has not answered any calls from The Gleaner since.

Yesterday, the minister advised that the matter was getting his personal attention and that he would be making a statement on the matter this week.

"We recognise how very critical this particular sector of agriculture is to the growth agenda, and we know that there are thousands of persons engaged in it as farmers and, of course, going through the value chain, through to the processors. Therefore, anything that would disrupt the continued development of this industry is something that we will do everything in our powers to avoid."

christopher.serju@gleanerjm.com