JCFA demands better accounting or removal of cess on Jamaican cocoa
The Jamaica Cocoa Farmers Association, JCFA, which represents more than two thousand growers, agro-processors and traders, has written to the agriculture minister demanding a rollback of the cess imposed on cocoa beans bound for export.
They also want a clear demonstration of how cocoa taxes are benefiting the struggling sector.
The missive under the signature of JCFA President Clayton Williams charged that while the cess – set at one per cent of the export value – was imposed to “improve farming output”, there was no transparency in how the funds paid over to regulator JACRA were being used.
“We ask the Ministry of Agriculture & Fisheries to have JACRA behave in a more transparent way and demonstrate how the cess has been spent to directly benefit the farmer,” said Williams in the letter seen by the Financial Gleaner.
Cocoa currently sells on the international market for US$5 per kilogramme.
Up to 2020, the most recent data available, around US$452,000 worth of cocoa was exported. A one per cent cess would have amounted to US$4,520 across the industry.
“We see the cess as an unnecessary burden on the farmer, while providing no competitive value or advantage for the cocoa sector. It is, in our opinion, an artificial cost burden on the sector that disincentives investments in cocoa farming,” Fulton wrote, adding that cocoa farmers already have to contend with static farm gate prices, drought, climate change and disease.
The Jamaica Agricultural Commodities Regulation Authority also collects a cess on cocoa imports that’s applied at a rate of US$0.22 per kilogramme.
However, the import of cocoa beans are exempt from charges. And JCFA wants that to change. The US$0.22 rate should cover all imports, it said, while insisting that the ensuing proceeds should similarly go towards programmes that directly benefit local cocoa production.
Jamaica currently spends about $1 billion in local currency each year importing about two million kilogrammes of cocoa beans and other products, annually, according to the Statistical Institute of Jamaica.
“This policy only benefits the importer at the expense of the farmer, as evidenced by historic production lows. Our cocoa is a national asset that is being ruined by the JACRA Act,” Williams charged.
The group wants JACRA to publish a breakdown of the direct benefits from the cess, and is demanding that “no less than 50 per cent” of the funds should be utilised in this way in support of “farmers whose hard work helped generate” the revenue.
“We hope that the minister will institute this policy, given the current state of the cocoa industry,” he wrote. “This cess policy is a discriminatory practice that must end.”
The JCFA also charged that the cess policy was stifling the producers of chocolate products, saying they are subject to licensing fees and local regulations from various agencies that have overlapping responsibilities, while the importer has no such burden.
“Jamaica has all the ingredients to make a high-value chocolate bar that can compete internationally. However, there is very little support to nurture and market our industry,” said JCFA.
The association also noted that there are very few incentives for large-scale investments in the chocolate sector, because local cocoa production levels are too low to sustain any large-scale, value-added volumes in the sector.
“In fact, our fellow Caricom nations do far more with less resources. We are at a competitive disadvantage with Caricom nations who have deregulated their cocoa sectors and have more facilitatory policies,” the group said.