Sabrina Gordon, Business Reporter
Red Stripe Jamaica and Jamaica Producers Group (JPG) are partnering on a project to explore the financial feasibility of local cassava as input for brewing beer.
The partnership seeks to leverage JPG's agricultural expertise.
The company already farms cassava and other crops as raw material for its snack operation, but the feasibility study to be undertaken by the companies will determine whether cassava can be grown in the quantities and quality required for beer-making.
Red Stripe aims to replace 30 per cent of imported inputs with cheaper, locally grown cassava.
"We have a 50/50 joint arrangement to conduct the study. The dollar amount is confidential between the two parties, however, there will be a starter fund available for the joint venture to use," said Marguerite Cremin, head of corporate relations at Red Stripe.
Cassava is to replace barley and corn syrup imported from the United States.
"Both Red Stripe and JP see this as good for business and good for Jamaica to use cassava-based starch input for Red Stripe brewed products," said Jeffrey Hall, chief executive officer of JP. "It will be good for employment and foreign exchange," he said.
Red Stripe disclosed the agreement with Jamaica Producers alongside the release of its half-year results showing a 58 pr cent rise in profit for the six-month period. The beer company made J$808 million of profit from J$6.5 billion of revenue at half-year ending December 2013.
Partnership could evolve
If cassava is found to be a viable alternative, Hall indicated that the partnership with Red Stripe could evolve into a more sustainable business partnership.
Hall said that JP would essentially be supplying the tuber to Red Stripe, but said the details of the arrangement would be subject to the findings of the study. Red Stripe similarly said more details of the partnership would come at the end of the testing phase.
"The MOU is for JP and Red Stripe to collaborate together on completing a feasibility study for the large-scale cultivation, harvesting and processing of cassava to produce cassava starch for brewing," explained Cremin.
"At the end of the feasibility study we will have more details on how much is to be supplied, location of farms, processing facility, among other details," she said.
Cremin adds that the early results of the pilot suggest the tuber is of good quality.
"Already we have worked on test plots of under four acres that produced good-quality cake," she told Wednesday Business.
Red Stripe plans to phase in the replacement local inputs into the production process over five years.
"We expect with the adoption of modern cultivation, harvesting and processing technologies and mechanisation, it will allow the venture to be in line with global prices for cassava," said Cremin.
"This scale of cultivation has never been attempted within the last 30 years but we believe we can make this venture locally sustainable, profitable and globally competitive within cassava trading market," she said.
Red Stripe expects that partner JPG will engage small and large farmers who are willing to adopt the farming model that the feasibility study advises to supply the crop, Cremin said.