Salada now compliant with JACRA quota rules
Published:Friday | January 29, 2021 | 12:21 AM
Coffee processor Salada Foods Jamaica is now compliant with a mandate from its regulator to utilise at least 30 per cent Jamaican beans in its Jamaica Mountain Peak instant coffee blend, based on its latest import order request sent to the Jamaica Commodities Regulatory Authority, JACRA.
Salada lost a two-month battle to overturn the mandate that JACRA had stipulated last summer. Then regulator was concerned that, amid the pandemic, the beans were going to waste as farmers had no market for their crops.
It had previously given extensions to Salada on the implementation of the quota – Salada was then using around 10 per cent local content in its formulation, whereas the regulations call for three times that amount – but the inventory build-up led JACRA to the decision that it would give no further leeway to the instant coffee processor.
The regulator mandated that Salada begin complying with the quota rule as of September 1, 2020. Salada, however, challenged JACRA’s authority to impose the rule and lost in court after a two-month battle.
Its unclear whether the result hoped for – that is, Salada as a buyer for the unsold, non-exportable beans – has come to fruition.
“I’m not absolutely sure of the state of any transaction between Salada and members, and I would have to speak with a few of them in order to make a comment,” said Norman Grant, chairman of the Jamaica Coffee Exporters Association, JCEA. “But also, I may have to reserve that comment since it is a private transaction,” he told the Financial Gleaner.
Members of the Jamaica Coffee Exporters Association were in search of markets for around 600,000 pounds of beans held in inventory last year, about 12 per cent of which belonged to Salada.
The JCEA had hoped Salada would have bought up the inventory form other members, but the price became a sticking point. The coffee suppliers wanted US$3 per pound; Salada was not prepared to pay more than US$2.
Salada, in its year-end September 2020 financial filings, reiterated that the regulatory environment remains hostile to its business model, an issue it has been vocal on from as far back as 2018, and that margins are being “squeezed” by the cess imposed by JACRA on coffee beans imports.
The company noted that it expects its margins to be further depressed this year with the directives to increase its local content to 30 per cent.
The company has so far been silent on the forecasted impact on sales, but its past objection to the quota rule had rested on its concerns about how its loyal customers would react to the changed formulation, and feared the prospect of losing market share were its customers to react adversely to changes to the taste profile.
In response to emails sent to the company by the Financial Gleaner, Salada General Manager Dianna Blake-Bennett said she had “no update”.