CCMB seeks buyers for confiscated coffee assets
Published:Friday | October 7, 2011 | 12:00 AM
Avia Collinder, Business Writer
Rupert Scott, the chairman of the Blue Mountain Coffee Co-operative (BMCC-Moy Hall), is pushing for government intervention in the three-year fight between Moy Hall and the Coffee Industry Board (CIB) over the suspension of its licence to trade coffee beans.
The agriculture ministry has already come to BMCC's aid several times since 1997.
The impasse with the CIB has led to the lands and factory being offered up for sale by Moy Hall's financier, Capital and Credit Merchant Bank (CCMB), for unpaid debt, which Scott estimates is now above J$100 million.
MBCC-Moy Hall was also indebted to two other companies: Yutaka Trading and Coffee Pacifica.
"I cannot give up," said Scott, who in 2001 became chairman of the 800-farmer co-operative located in Cedar Valley, St Thomas.
He said Tuesday that the troubles of the factory started on April 30, 2008 when its licence to sell coffee beans was suspended by the CIB. The suspension halted efforts to find equity partners for Moy Hall, which was already struggling financially.
J$68-million loan
It was also short on options to service a loan of J$68 million from CCMB that was used to fund purchase of cherry coffee from the co-operative's network of 3,000 suppliers.
Moy Hall's annual turnover was J$300 million prior to the 2008 suspension of sales. The business has been dormant since then.
"The debt will be above J$100 million now because of the interest, and may well exceed the value of the assets, which include 1,000 acres, factory and buildings," Scott told the Financial Gleaner.
On Sunday, October 2, assets comprising 1,134.68 acres of agricultural land and 12 factory-type buildings were advertised for sale. Coffee sources said the seller was CCMB.
Chairman of CCMB, Ryland Campbell, said Monday that he was unable to comment on the debt, saying by law, such disclosures are punishable by a fine of J$200,000 and/or two years of prison time.
"Considering your request, please be advised that under the Financial Institutions Act (FIA) Section 44 (Secrecy of Licensee Official) we are not permitted to disclose such information to any third party," Campbell said.
Scott said that since 2008, investors willing to help the co-operative have been discouraged by the stance of the CIB, which has kept "changing the goal post".
"They said we owed them J$1 million in cess and also charged us with under-reporting sales of coffee on the local market. But if they had really wanted the cess they could have taken it from one shipment. They have that power," said the co-operative chairman.
CIB director general Chris Gentles said the licence was suspended in the interest of the farmers.
"A responsible regulatory body had to act. We respectfully asked for documentation, repeatedly, which was not forthcoming. They also would not present a crediblefinancial plan in time," said the CIB director.
But Scott insists that Moy Hall had been poised to recover from several devastating weather events, the co-operative having used its own resources to retrofit damaged factory buildings, repair roads and rehabilitate land for some 100 farmers who lease lands owned by the co-operative and who suffered from landslides in successive hurricanes and flood rains.
In 2005, the factory was damaged extensively by Hurricane Dennis when the main offices, drying areas and the pulping house were flooded.
Energy savings
But, Scott said operations were back on the upswing in 2008.
"We had just installed a bio-digester with funding from the Japanese Embassy, which meant that we were positioned to use coffee pulp for energy and cutback on JPS as a source. More money would go to the farmers," he said.
The plant was costed at US$89,000 and was expected to bring annual savings of US$100,000.
Prior to that, in February 2007, BMCC signed with Las Vegas-based firm, Coffee Pacifica, as exclusive dealer outside of Jamaica to distribute its Penlyne Castle brand.
The deal would have allowed the co-operative's 3,000 farmers to participate globally on a 'Growers Direct' market and enhance price paid, according to Scott.
At that time, BMCC was said to represent approximately 30 per cent of the Jamaica Blue Mountain green bean annual production averaging 10,000 tonnes of cherry coffee.
It is not the first time the co-operative, which was started in 1948 by the Jamaica Agriculture Society to get better prices on cherry coffee for farmers, has suspended operations.
Crippled by debt, it was restarted in 1997 with new management after the Government injected an unspecified amount of capital. Another government injection of J$12 million followed later in 1999, under a wider drive to revitalise the coffee-farming subsector.
The factory also received a grant of J$22 million in 2001 under the Eastern Jamaica Agricultural Support Project, funded by the Government and the European Union. Grant funding was also secured through the Environmental Foundation of Jamaica and CHASE Fund, resulting in "enviable" levels of field culture, Scott claims.
Now he wants the newest head of the agriculture ministry, Robert Montague, to intervene with the CIB on Moy Hall's behalf.
"I am asking the minister to intervene on our behalf and get us back on track."
Permanent secretary in the Ministry of Agriculture, Donovan Stanberry, said Monday that the co-operative represented another failed attempt to find equity to recover from indebtedness, consequent upon which the land and other assets were being sold.