Nearshore Americas

Jamaica Works Hard to Diversify its Economy

ANNOTTO BAY, Jamaica — On one side of the dirt road, 400 acres of banana fields stand abandoned, a victim of four hurricanes in five years and the collapse of the Caribbean banana export market.
On the other side, 150 acres of banana trees with tons of plump bunches grow in the shadow of a sprawling pack house, where an assembly line of workers wash, pick and box the pretty ones for the local market and bag the others for the chip-making fryer.
The global financial crisis, which has battered Caribbean economies, is forcing Jamaica and other countries in the region to rethink how they do business. Although most Caribbean nations continue to wrestle with how to avert financial meltdown, Jamaica is mounting an aggressive campaign to help diversify its economy.
The banana plantation in Annotto Bay, about 22 miles north of Kingston, is at the forefront of how Jamaica is reinventing itself from a country that once shipped fresh bananas and other produce to one that now processes and packages them.
“This year we have an export business that we didn’t have last year,” said Rolf Simmonds, commercial director for Jamaica Producers Tropical Foods, a division of Jamaica Producers Group, which revamped its business model a year ago. “We were exporting bananas. This year we are exporting banana chips and doing well at it. We are building a business slowly but surely.”
No longer should shipping ackee, cocoa, Scotch Bonnet peppers or banana in its raw form be good enough, farmers are being told. Can it, box it — add value to it, government officials are demanding.
“We are having to deal with two significant challenges at the same time,” Prime Minister Bruce Golding said in a recent interview with The Miami Herald. “One is how to charter our way out of this global storm, but secondly how to address long-standing structural deficiencies in our economy . . . and how to do that in the midst of the global storm.” For Golding’s two-year-old government, it means shifting focus.
“The Jamaican economy has relied too much on too narrow a range of industries over the years,” Finance Minister Audley Shaw said. “We’ve relied on bauxite, we’ve relied on tourism, and we’ve had limited manufacturing that has gotten worse — and it got worse not just because of the implosion. Jamaica had its own implosion long before the world implosion.”
Even before the recession blew a $1.3 billion, or 20 percent, hole through Jamaica’s budget, the country’s economy was already on shaky ground: external debt of almost $6.2 billion, years of anemic economic growth, the removal of guaranteed markets and prices for sugar and bananas, and the 1995 collapse of more than 40 banks.
In the past year, remittances have fallen by 16 percent, or $300 million. Tourism is up, but earnings are down by $100 million. Three out of the country’s four bauxite plants that produce aluminum ore have closed, at a loss of $900 million.
Given the threat to the government’s ability to meet its debt obligations and keep the country of 2.7 million running, Jamaica has frozen wages for public employees, significantly reduced government travel and called on the International Monetary Fund for help.
The decision to bring back the IMF comes 14 years after the country said “ta-ta” to the Washington-based lending institution, and on the heels of similar requests from several other Caribbean nations — St. Vincent and the Grenadines, Dominica, St. Kitts and Nevis and St. Lucia.
Meanwhile, as the government attempts to put the brakes on spending — without massive layoffs — it is also pushing another strategy.
Enter agro-processing, one of several areas that is getting another look here and that has become the poster child for diversification.
Betting on the Jamaican Diaspora’s “insatiable desire” for ethnic foods, government number-crunchers estimate that Jamaica can easily export 10 times more than the $250 million it currently exports in processed foods.
Shaw sees processed foods as a key to stimulating the country’s economy.
“We have to use the opportunity of this crisis to begin to right-size the economy,” he said. “It is something we should have done long ago.”
To get there, Jamaica is transforming its ministry of agriculture, adding marketing and promotions to its portfolio, and doubling the number of extension officers to provide technical advice to farmers and market locally grown, hurricane-resistant crops. Ripening houses for bananas, refrigeration for farmers and processing plants to produce liquid eggs and pork products are also being installed across the countryside.
“There’s no doubt we have in Jamaica an opportunity for much greater levels for agro-processing,” Agricultural Minister Christopher Tufton said. “The challenges are many, but the opportunities are equally many.”

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Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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