Gov’t Secures US$7.8 Million Agricultural Loan from CDB

The Government of Jamaica has secured an agricultural loan of US$7.8 million from the Caribbean Development Bank (CDB), for on-lending to farmers.
Minister of Agriculture, Dr. Christopher Tufton, speaking in the House of Representatives yesterday (Dec. 16), said that the loan, which was approved by the Board of Directors of the CDB last week, will be channelled to the agricultural sector through the Development Bank of Jamaica early next year, at an interest rate below eight per cent.
“These loan funds are going to be used to encourage the modernisation of the agricultural sector,” he stated.
Dr. Tufton, in the meantime, pointed to the need for a dedicated and sustainable source of funding for the agricultural sector, and informed that the Ministry is preparing a proposal to submit to Cabinet, in the New Year, for the establishment of an Agricultural Development Fund, which will provide a critical mass of funds at low cost to deal with the modernisation of the sector, including commodity areas.
“It must be recognised that agriculture involves a high level of risk and therefore, lenders are concerned about project viability and a lack of collateral,” he stated.
“The only way farmers are going to qualify for financing is if we are able to better manage the risk profile of the farmer. We have a Productivity Unit that is working with farmers with specific crops to establish best practices and better yields, which will make it easier for these farmers to benefit from loan funds,” Dr. Tufton informed.
He indicated that the Ministry is pursuing several initiatives to encourage the Development Bank of Jamaica and other financial institutions to relax some of their collateral requirements, while the Government is reviewing different models of financing for small farmers, including the Grameen Bank Model.
He told the House that the Food and Agriculture Organisation (FAO), is assisting the Government to undertake a study, which will determine the appropriateness of the model as a micro finance tool.
“Six weeks ago, we had two consultants funded by the FAO here in Jamaica. We are working with them to develop this model …which will be tailored for farmers in order to qualify them without the requirements of traditional collateral,” Dr. Tufton said.