After spicing up the market, GK is now 'Fresh n Ready'
Published:Friday | July 15, 2011 | 12:00 AM
GraceKennedy Limited has struck deals with at least 60 farmers, who supply its factories with more than 45,000 pounds of pepper and escallion weekly.
Those farmers, in turn, have created 450 jobs growing feedstock for GraceKennedy's 10,000-square-foot spice plant in St Elizabeth, says the conglomerate's newly installed group CEO Don Wehby.
Meantime, the conglomerate has secured other supply commitments for vegetables to be used in the production of its 'Grace Fresh n Ready' line launched last week at the commissioning of the 8,800-square-foot Hounslow Post-Harvest and Packaging Facility where the line is being produced.
The spice plant, which went into production in 2009 with targeted output of one million kilogramme of crushed pepper in year one, was principally a strategic move by the conglomerate's food division to end its reliance on suppliers for quality pepper mash used in the production of its food products.
The experiment - which was dependent on reliable and consistent raw material supplies from farmers with a history of inconsistent yields - ended up providing enough pepper and escallion mash for export to the United Kingdom, Belize, St Lucia and the United States, and for sales to local agro-processors, among them Gray's Pepper, King Pepper and Spur Tree Spices.
The blue-chip company had edged its bet by working alongside the Ministry of Agriculture on technical assistance for farmers on field work as well as discounted agriculture inputs supplied by its agro-retail subsidiary, Agro Grace.
"What all of this means is that local agro-processors will no longer need to tie up limited working capital to buy raw materials for processing and storing mash," said Wehby, at the commissioning of the Hounslow factory last Friday, July 8.
"They will also have a reliable supply of pre-processed raw materials to meet the increasing demands of local and overseas consumers for jerk and hot sauces which, in turn, will reduce their reliance on imported mash to meet production requirements."
Last year, the GK Foods division recorded export sales of J$508 million from Grace-branded products "made from Jamaican ingredients".
Its value of purchases from local farmers amounted to J$917 million. And Hounslow is expected to build on the volume and value of trade.
"Our relationship with the farmers in St Elizabeth has taken on a life of its own. I say this because, the work which we were doing with pepper and escallion farmers led us to conclude that improvement of the consistency of supply of produce to the local market could be a viable business," Wehby said.
GraceKennedy has a 10-year renewable lease from the Jamaican Government to operate the Hounslow facility, said Wehby. It invested J$43 million in the plant, which has a staff of 26, Wehby said.
Hounslow will package fresh produce for distribution to hotels and retailers.
GK Foods has already contracted 16,000 pounds of raw material supplies weekly, and plans to trade in carrots, cabbage, lettuce, callaloo and sweet peppers, initially, while later expanding to sweet potatoes, onions and Irish potatoes, Wehby said.
The company has long-term contracts with 17 farmers to supply a variety of vegetables to the plant, "and this number is expected to increase, as business grows," he said.
"We are clear that the operations of GK Foods are inextricably linked to the agricultural sector, so it is in our best interest to ensure the success of the sector," said the GK group CEO.
"Beyond that, we are earning foreign exchange for the country, and creating significant employment."
GraceKennedy plans to leverage business from the new spice and fresh produce business for its agro-retail chain Agro Grace, which is in the business of supplying seeds and chemicals to farmers, and is already offering discounted inputs, field training and other technical services to farmers.
GraceKennedy is an international food and financial services company with businesses in the Jamaica and the Caribbean, North America and Europe. Last year, food contributed J$35 billion or 63 per cent of total group revenue and J$488 million or 15 per cent of pre-tax profit.