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Minister of Agriculture, Dr. Christopher Tufton, has said that the Ministry will be working with the Food and Agriculture Organisation (FAO) to develop a pilot for a new financing facility for farmers.
The development of this model forms part of the Ministry’s plans to strategically reposition itself by restructuring several bodies for which it has responsibility, and specifically to dissolve of the Agricultural Credit Board, to make way for an entity that will offer better financing to farmers.
Addressing journalists at a press conference held at the Ministry’s headquarters in Kingston on November 13, Dr. Tufton said that this facility will be similar to the Grameen-style model, “which…has worked in other parts of the world, which provides resources without the traditional forms of collateral.”
The Grameen model emerged from the ‘poor-focused’ grassroots institution, Grameen Bank, established by Prof. Mohammed Yunus in Bangladesh. It is a microfinance organisation and community development bank, which makes small loans available to the impoverished without requiring collateral.
According to Minister Tufton, the establishment of this financing facility is necessary as the Ministry is not satisfied with the performance of the People’s Co-operative (PC) banks or existing structures to provide financing for farmers.
“In fact, when we look at the data, in terms of small to medium-sized farmers, they are getting a very small percentage of resources that are available to the farming sector…less than three per cent of the overall loan funds that’s available to the sector,” he pointed out.
Dr. Tufton argued that with the current system, the assessment of risks is done in a very “traditional” way, in that, if the farmer does not have a land or house title, then they are unable to access the financing.
“If agriculture is to expand, if productivity gains are to be had, we have to develop a new mechanism of risk assessment that allows the farmer with a track record, who is willing to engage best practices, to access resources without having to provide the traditional forms of collateral that the banks currently require, including the PC banks,” he stressed.
In the meantime, the Agriculture Minister assured that the results of the restructuring process, in terms of improvements in production and productivity, should be seen by the end of the first quarter of next year.
He said that the Development Bank of Jamaica (DBJ) is a critical player in the process. The Agricultural Development Corporation (ADC); Agri-business Council of Jamaica (ABC); Marketing and Credit Division (MACD); Rural Agricultural Development Authority (RADA); and Agricultural Services and Productive Projects Fund Limited, are the other entities slated to be re-organised.