Coffee crisis brewing
A legal battle is brewing between the Coffee Industry Board (CIB) and General Accident Insurance Company Jamaica Limited over the latter's alleged failure to pay compensation for an estimated US$3-million worth of coffee damaged by the September flooding of the CIB's Marcus Garvey Drive warehouse.
This has resulted in cash-strapped dealers being unable to buy beans in the usual amounts, triggering a setback for the 2016-17 crop.
Describing the resulting financial situation as a "serious crisis in the coffee industry", Norman Grant, CEO of the Mavis Bank Coffee Factory, on Wednesday called for urgent intervention by Karl Samuda, minister of industry, commerce, agriculture and fisheries, to save the industry.
"A lot of the players in the industry had their coffee there and were expecting to get that money to pay farmers and were just told about two days ago that the Coffee Industry Board did not have the proper insurance, which means that this money may not be paid to the coffee farmers and would also affect the companies' ability to pay for cherry coffee. So there could certainly be a legal battle between the insurance company and the Coffee Industry Board," Grant said on Wednesday.
"But, in the meantime, the Jamaica Coffee Exporters Association (JCEA), which is the group of players who buy coffee, has appealed to the minister and the Government to see if they could find a way to advance this money to the coffee farmers so that we can pay the farmers."
JCEA President Jason Sharp said the situation has resulted in "severe liquidity issues" for the companies usually engaged in buying coffee, who now find them themselves, unable to recoup any of the money spent on the previous crop.
"This is coffee that would have been purchased as cherry coffee. It would have been picked up from depots, it would have been pulped, it would have been transported to finishing factories. It would have been processed, picked and packaged for export and delivered to coffee board - all at the cost of the exporter. So the industry is now in a very severe state of influx and we're not being told clearly what the game plan is for payment for the coffee in question," he said.
AWAITING THE PLAN
Added Sharp, who is also managing director of Coffee Traders Ltd: "We have reached out to the minister. We are expecting that he will have in very short order a plan for how he is going to ensure that he protects the exporters and we are anxious to hear from him."
When The Gleaner contacted director of communications and public relations at the Ministry of Agriculture, Doreen O'Connor, she directed the newspaper to the CIB.
"It is best that you direct your queries on this matter to the Coffee Industry Board," she said in an emailed response.
Getting answers from the CIB was just as difficult, with a promise that the legal officer would respond still unfulfilled up to press time.
General Accident advised that the managing director Sharon Donaldson-Levine, the only person who could speak on the matter, was on an overseas business trip and would not be immediately available.
In the meantime, with coffee beans ripening, dealers who at this time of year are usually busy competing for business now find themselves united in frustration. This is because payment from sale of the coffee certified for export which was burnt on the instruction of and supervision of the Ministry of Health would have been received already. However, given the catastrophe of the flooding, they had expected that the compensation would already have been paid out, thereby providing the necessary working capital.
Grant, who is also president of the Jamaica Agricultural Society, was clear in what needs to be done.
"I think the quick fix is for the Government to find a way to advance some money, while the CIB, who really represents the Government and to whom we delivered that coffee - the traders delivered that coffee in good faith, for them to now raise that legal battle," he declared.
Given that the Coffee Industry Board Act dictates that exporters must submit their commodity to the CIB, which takes full control of the beans, subject to rigid regulatory standards before being certified for export, Sharp is adamant that someone should pay - not the farmers or dealers.
"We are required to submit the coffee to the Coffee Board and, therefore, it is their responsibility to make sure that they have our property under proper protection. So whether it is insured or not insured, as far as the exporters are concerned, they are liable. I think they (CIB) honestly were under the impression that the product was insured. There is no way they would have had this level of insurance that existed. We as exporters, that's not our job, and we sympathise. We work closely with the Coffee Board. They are our partners, but at the end of the day, somebody has to be held responsible for this coffee, and it cannot be the farmers of Jamaica."