John Myers Jr., Agriculture Coordinator

GRANT

After months of delay, farmers should be able to gain access to the special $250 million loan facility that has been set aside for the agricultural sector by the Bank of Nova Scotia Jamaica (BNS), by next month, pending approval of a Government guarantee.

"The draft (of the loan document) has been sent to the Attorney-General because the government is supposed to be providing a guarantee ... so he has to sign off on it," Byron McDonald, general manager for credit and operations at the Development Bank of Jamaica (DBJ) told Farmers Weekly on Tuesday.

Government guarantee

"Once they have signed off on it they would now pass it to the Ministry of Finance to obtain the Government guarantee and then from there BNS would be able to disburse the funds to us and then we can start lending to the farmers," Mr. McDonald said.

In April, Prime Minister Portia Simpson Miller had announced a special $600 million loan facility to assist with the development of the tourism and agricultural sectors. At that time it was announced that the money was being provided by BNS for on-lending to the DBJ, which would distribute the funds to qualified farmers through the Peoples' Co-operative Bank network.

However, since the announcement, the farmers have been unable to access the funds due to a dispute over the spread which the PC Bank would get to facilitate the disbursement of the funds.

Senator Norman Grant, president of the Jamaica Agricultural Society (JAS), consequently expressed concern about the prolonged delay and urged the parties to quickly settle the differences, failing which he said the government should intervene.

Under the original arrangement, Mr. McDonald explained that the PC Bank would have earned a mere one eighth per cent of the value of one per cent of the loan amount, but that was refused by the bank. He said the PC Bank instead requested a spread of three per cent, which they are accustomed to receiving when facilitating such transactions. However, this would have pushed up the interest rate above the recommended 7.8 per cent.

Appropriate collateral

With the issue still unresolved Dr. Omar Davies, Minister of Finance and Planning, announced in Parliament last month that the Government would be guaranteeing the spread which the PC Bank would get to offset any increase in the interest rate.

"Pending government signing off on the guarantee we hope to see this thing (the money being made accessible to farmers) in the next month," Mr. McDonald told Farmers Weekly.

To benefit from the special loan scheme, farmers will need to present appropriate collateral and business plans. However, Mr. McDonald said the PC Bank has been advised to "be as creative as possible in ensuring that all viable projects are accommodated...."