John Myers Jr, Business Reporter

Bananas were the hardest hit, with an estimated 90 per cent of the trees felled by Hurricane Dean. - Norman Grindley /Deputy Chief Photographer

The Development Bank of Jamaica (DBJ) has set aside $100 million for emergency loans to farmers whose holdings were affected by the recent passage of Hurricane Dean.

Credit operations manager at the DBJ, Byron McDonald, said his agency would disburse the funds at 7.85 per cent interest on the reducing balance for on-lending to farmers through its islandwide network of People's Cooperative Banks (PC Bank).

The new loan facility is separate from the existing $250 million special line of credit, from which McDonald said $150 million has already been disbursed.

Both facilities are being run concurrently.

Strong demand

McDonald said the demand for loans has been strong, adding that the state lending agency plans to approach the Government for an additional allocation.

"Apart from the new loan facilities, we are also providing support to existing loan customers both at the PC Banks and commercial banks who have got DBJ-funded loans," he told Wednesday Business.

"Obviously, the cashflow is going to be affected by virtue of whatever they have suffered, and therefore we are prepared to look at restructuring those loans, be it to give them an additional moratorium in respect to the principal payments or look at a total restructuring, bearing in mind the new cash-flow projections that they would now face," he added.

Jamaica Agricultural Society (JAS) president, Senator Norman Grant, has suggested that farmers be given a nine-month moratorium on repayments on the principal loan amount and a seven to 10-year repayment period for the entire loan amount.

"I had a meeting with the managing director of the DBJ yesterday (Monday) and I am very encouraged," said Grant.

DBJ is headed by Milverton Reynolds.

McDonald said the DBJ would consider any proposal to assist with the recovery of farmers, but noted that the repayment terms would be determined by the farmer's cash flow, type of farming, and the extent of damage sustained.

The new loan facility is open both to farmers seeking loans new, as well as those with loans but who might need additional funds to finance cash flows and restructure their operations in the aftermath of the hurricane.

Tightening risks

The JAS president also recommended that farmers who had received loans under the special loan facility be given a six-month moratorium on payments.

As for future loan arrangements, he said the institution should consider crop liens as collateral, noting that more farmers would be able to access funding.

It would also require a tightening of DBJ's risk-management policies, Grant acknowledged.

Jamaica's agricultural sector was hit heavily by Hurricane Dean last Sunday, almost wiping out the banana industry.

The assessment of the damage has not yet been completed, but preliminary surveillance has indicated that 90 per cent of the banana industry, 40 per cent of the coffee industry, 20 per cent of the citrus industry, 30 per cent of the sugar industry and over 50 per cent of domestic agriculture were swept away in the category four winds.

This has reversed the rapid growth recorded by the sector last year, which has been recovering from the effects of Hurricane Ivan in 2004 and other storm systems in 2005. The sector recorded growth of 15 per cent in 2006, and was a chief driver of economic growth last year.

Prime Minister Portia Simpson Miller, in the wake of the hurricane, announced a $225 million assistance programme for the sector, saying the loan funds would be lent at single-digit interest rates. Some of the assistance is in the form of fertiliser to be issued through JAS and the Rural Agricultural Development Authority and grants.

The loans would be made available through the PC Bank network, the PM said.

Fertiliser aid

Senator Grant said the distribution of the first tranche of 50,000 bags of fertilisers to farmers in St. Catherine began Tuesday, with the parishes of St. Andrew, St. Mary, Manchester, St. Elizabeth and Clarendon to follow.

Ten thousand bags have been allocated for Blue Mountain coffee farmers, which will be distributed through the respective marketing companies.

Grant said distribution of fertilisers through the All-Island Banana Farmers' Association to banana farmers who were affected by 'Dean' in St. Mary, Portland and St. James would start Thursday.

john.myers@gleanerjm.com