We quit! Jamaica Producers exit UK banana export business

Published: Monday September 22, 2008

Jamaica Producers Group (JP) Limited, following the dilapidation of its banana farms by Tropical Storm Gustav, announced that it has ceased the production of bananas for export to the United Kingdom.

JP had just prior to Gustav resumed its banana export production after Hurricane Dean devastated the industry last year, but was dealt a major blow when the ferocious storm passed over the island three weeks ago. Damage to the banana sector is still being assessed, but most of the losses will be absorbed by JP, which controls over 80 per cent of the industry.

"JP had been called upon to make significant investment in recent years in rebuilding its banana farms following their destruction by Hurricane Ivan in 2004, Hurricanes Dennis and Emily in 2005 and Hurricane Dean in 2007," said JP in a release on Friday. "The frequency of hurricanes that Jamaica has been experiencing has been the major factor behind the decision of JP not to again re-invest in export production."

JP chairman Charles Johnston, said that the company remained committed to the production of bananas for the local market and banana based snacks for the local and international markets. In addition, Johnston indicated that the company was already implementing plans to expand its production of tropical snacks - to include cassava and breadfruit lines - at its factory in St Mary. This factory will rely on banana, cassava and breadfruit produced on its own farms in St Mary but will also continue to expand its procurement from small farmers in the Eastern parishes.

"JP is confident that it will be able to continue to show leadership in agri-business in Jamaica through its focus on the production of produce for the local market and its continued development of the tropical snacks business," said Johnston.

The chairman said that the decision to retreat from its banana export business would directly affect Eastern Banana Estates (EBEL) in St Thomas, which employs 460 persons - most of whom will be made redundant. Johnston explained that JP was prepared to explore other uses for its St Thomas farm, which he said has good quality soil and water and an excellent irrigation and pack house infrastructure.

"The board of Jamaica Producers took the decision to suspend export production after careful consideration of all options available to it and after a review of the impact on all stakeholders," said the chairman. "JP has expended considerable resources over many years to secure the viability of Jamaica's export banana industry. It is with deep regret that this decision has had to be made."

For the six months ended June 14, 2008, JP's Banana Division, which is comprised of banana production and sales in Jamaica and Honduras, plus the manufacturing and sale of banana chips, recorded a loss of $136.9 million, significantly more than the $15.7 million it lost last year. Revenues of $538.2 million over the period under review represented a 55 per cent decline.


Source: Jamaica Observer
http://www.jamaicaobserver.com/magazines/Business/html/20080920T220000-0500_140390_OBS_WE_QUIT__.asp