The Government is introducing a loan insurance scheme that will require farmers to only put up half of the collateral for loans of up to $2 million.
“What it means is that someone who is interested in borrowing $500,000 instead of being required to collateralize the entire loan amount, they will now be required to collateralize 50 percent. In other words, we (the Government) are going to guarantee the other 50 per cent of the loan,” Ministry of Agriculture and Fisheries, Hon. Dr. Tufton told the House of Representatives recently as he made his contribution to the Sectoral Debate.
This reprieve will come with some conditions – there must be strict supervision by the loan officers, and the institution granting the loan must work closely with the Rural Agricultural Development Authority (RADA) and the extension services, to ensure the viability of the project.
“That viability assessment is going to move from the potential markets that are available to sell the product, right through to the soil preparation, to water management … RADA therefore has to sign off on that loan,” the Agriculture Minister explained.
These loans will attract an interest rate of 9.5 per cent, and a moratorium on payment that will vary for up to 10 years, depending on the farmers’ crop cycle.
The Government will also expand distribution outlets for loans funds to include more credit unions and other micro-financing entities such as Jamaica National Small Business and National Growth.
Importantly also, there will be discussions with the Development Bank of Jamaica and international partners to review and restructure People’s Co-operative banks, which Dr. Tufton asserted, are “institutionally weak”.
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