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Chairman of the Banana Export Company (BECO), Dr. Marshall Hall has proposed that banana farmers consider the possibility of paying an increase on their insurance cess, in order to cushion any financial losses they might incur in the event of a hurricane.
Dr. Hall, who was speaking yesterday (Sept. 14) at BECO’s annual general meeting told the farmers, “one of the things growers need to do between now and December, is to think through whether they are prepared to pay the increase in the insurance cess, and also ask the Banana Insurance Fund what they would receive if they pay an increased cess.”He observed that the frequency of hurricanes hitting Jamaica was of obvious and serious concern for farmers, and insurance was therefore a serious matter.
However, the BECO Chairman pointed out that presently, local farmers did not have adequate insurance coverage that could protect their crops, if damaged by natural disasters.
“The problem we face with respect to insurance,” Dr. Hall informed, “is the current premium of 14 cents a pound [charged by the Banana Board to banana growers]. there is no way that 14 cents a pound can buy insurance so that the industry can recover as a result of a blow down”.
In the aftermath of Hurricane Ivan last year, he explained, “what we did therefore .was persuade the European Union Banana Support Project (EUBSP) to make funds available to us, but it was felt that some of the funds that some growers collected from insurance, small though it was, would also contribute to meeting some of the labour cost.”
Reiterating that the banana insurance issue remained unsettled, Dr. Hall noted, “we face an insurance fund that cannot increase cover to growers unless growers decide to significantly raise the cess they pay”.
Under the Banana Board Act, all export growers are required to pay the cess that is annually imposed by the Ministry of Agriculture in order to secure insurance. That cess is currently 14 cents per pound. Dr. Hall emphasised that the terrorist attacks of 9/11 in the United States coupled with the regularity of hurricanes affecting the Caribbean region, were significant factors that had caused insurance costs to skyrocket.
“If we were to try to use the same insurance process we used up to last year or the year before, what we would have been told is that it would have cost us something of the order of 25 per cent of the sum assured to insure,” he said, explaining that this meant, if the insurance had a value of $100, and the banana sector was to experienced a total wipe-out, it would cost $25 per year to receive that coverage.
“Now the only cover that we can provide, is one in relation to the premium that we pay, now when you pay 14 Jamaican cents per pound, that’s a miniscule premium, and therefore the absolute amount of insurance you could receive, is indeed miniscule but even that miniscule insurance would cost you 25 per cent of the sum assured, that doesn’t make any sense,” he asserted.