Jamaica, a leading per capita...

Jamaica, a leading per capita exportcountry known for its commitment to

creativity, innovation and exceptional quality.

The National Export Strategy of Jamaica was developed on the basis of the process, methodology and technical assistance of the International Trade Centre (ITC).

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i n d u s t r y s e c t o r s t r a t e g y

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Coffee

IntroductionRationale

The Jamaican brand of coffee, Blue Mountain, remains an iconic brand globally and stands as a symbol of a high-quality product from Jamaica. It is also an example of a protected mark, serving as inspiration and a viable model to several other products and product groups from Jamaica.

In addition to this qualitative rationale for the industry, coffee contributes to the Jamaican economy, grown in a region with full employment, something very few geographical areas are able to boast. In addition to its social contribution there is significant export potential that may be realised from both increased production and export volume, increased value of export by expanding the percentage of value added production locally, as well as development of value-added products.

It is argued that the sector has negatively impacted the natural environment and is likely to continue doing so, however, farm practices have improved with increased utilisation of natural fertilisers and pesticides. Further damage to the environment is not likely to occur with planned increase in output, which will be based on improving yield (and not expansion of planted lands), while inter-cropping and other environmental practices are also to be pursued.

Product Groups and Related Programmes

The strategy covers the complete sector, as defined by its value chain. It is important to note that the strategy is partially derived from a broader strategic plan for the sector’s development that was prepared by the Coffee Industry Board (CIB), and therefore aligned to it. The resulting action plan covers initiatives that complement those of the CIB, and especially those not in its core mandate.

Where Do We Want to Be?The Vision

“To be the global standard for quality coffee, as well as the global benchmark industry.”

The Jamaican Blue Mountain© Coffee is already known as the premium coffee in the world, leaving little aspirational goals for the industry, and a focus on maintaining the current levels of quality. However, the industry has agreed to transition itself as the global benchmark for the coffee-growing and processing industry; particularly based on anecdotal evidence of Jamaica having originated “fair trade” practices in the industry.

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Strategic Objectives

1. To access new market niches in at least three countries.

2. To increase the volume of exports by 20% by

a. Improving ‘clean bean’ yield to 980

kilograms per hectare (from 590)

b. Increasing premium exports to 45% of total (green bean) export (from 23% baseline).

3. Increase in sales to the tourism sector by 15%.

Value Chain


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Where Are We Now? An AssessmentExport Performance and Assessment of Overall Competitiveness

Coffee is one of Jamaica’s top ten export products. Although not a major producer globally, the Jamaican product attracts the highest market value in export markets. Jamaica’s ranking in 2006 was 39.

The value of exports increased during the 2001- 2002 period from 30 million to 33 million USD. Exports fell slightly during the 2002-2003 period to 29 million but then shot up 10 million to 39 million USD in total value. Coffee production, along with other industries, took a devastating blow as a result of the destruction caused by Hurricane Ivan in September of 2004 as well as Hurricanes Dennis and Emily in 2005. This was reflected in the export value of coffee dropping 17 million USD to 22 million USD between 2004 and 2005. Annual growth in value and quantity also reflected the blow to the industry caused by the hurricanes as they both sharply declined to -6% and -7% respectively. The share of total exports as well as world exports declined similarly from 2.49% to 1.24% and from 4% to 1% respectively. The 2005-2006 period, however, saw

the sector recover with an annual growth in value of 44%. The number of exported products which valued more than USD100,000 fluctuated between 2 and 3 between 2001 and 2005 while the number of export markets valued at more than USD100,000 moved from 6 to 9 between 2001 and 2002 and then remained at 9 through 2005.

In 2006, Jamaica exported coffee to the top 9 world importers of coffee. While the USA is the number 1 world importer of coffee, Jamaica’s principal market for coffee was Japan. In 2006, Japan had 80% share in Jamaica’s exports and imported 25 million USD of Jamaican coffee while the USA had 9% share and imported only 2 million USD.

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1 http://www.trademap.net/jamaica/product_clus_4d.htm?typetrade=E&selctry=388&product=09%20 &reporter=%20.

Performance against Critical Success Factors

The industry is benchmarked on the product quality determined by taste and appearance of the bean. Jamaica has the number 1 ranked brand with the highest price internationally, however, the brand is not considered exciting, but old. The quality achieved is based on the combination of (i) soil (ii) growing and reaping practices (iii) elevation. Some of these are unique to Jamaica and contribute to the product quality, however with respect to farming and management practices the ability to maintain standards means that the

industry has performed well against this factor.

A critical success factor for the coffee industry is to maintain its position as the #1 ranked global brand, which allows the industry to attract the highest price. The strategy therefore looks at how to maintain this from a market-driven perspective; identifying threats to the brand rank and how to mitigate these.

The table below reflects the industry’s assessment of its performance against the critical success factors that were identified.

Year Exports in Value(USD mil)

Share of total exports

Share ofWorld Exports

2001 30 2.4917% .4657%

2002 33 2.9478% .5050%

2003 29 2.3921% .3865%

2004 39 2.7864% .4264%

2005 22 1.2466% .1780%

20061

Exports in value

Annual growth (value)‘02-‘06

Annual growth (quantity)

’02-‘06

Annual growth (value)’05-‘06

Annual growth in value of

imports’02-‘06

32 mil USD -6% -7% 44% 21%


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Government Policy and Strategy in Support of the Sector

The coffee industry has no direct policy, but would be included in an agricultural policy. The Coffee Industry Board is

resourced by its own revenues without direct assistance from the GoJ.

The Sector’s Trade Support Network: Capacity, Competency and Coordination

Factor Rating Comment

Freshness High This is achieved in production, but is impacted by the period and conditions between shipper and consumer. The industry maintains freshness in the areas of the value chain in which it is involved and is engaged in monitoring the life of product on shelves, and for its part performs well in this area.

Brand

• Origin High With the Blue Mountain seal, the local industry is the best performer in this area globally.

• Ethical practices (for example fair trade)

Medium Farmer welfare is among the best, however the story is not told, and practices are not documented, and so the performance is medium, with the potential to be high.

• Environ-mental

Low-medium Performance is currently low-medium because not enough options for environmentally sustainable production are being pursued, like shade grown, or organic.

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The main entity with responsibility for the industry is the CIB. The industry is concerned about the capacity of the Board to effectively carry out the roles and functions assigned.

As is the case with other product groups, there is support from the JEA and JTI for export development and promotion. There are no sector-specific functions or programmes.

SWOT Analysis of the Sector

Strengths• Established product brands and very

strong destination reputation.

Weaknesses• Very little collaboration among

members of the sector.

• Few processors and roasters have international certifications.

• The industry has not successfully told their story to drive sales, enhance social equity of the brand.

• The industry standards and requirements do not include social and environmental standards, and so it may be perceived as weak in these areas.

Opportunities• Opportunities exists for increasing

use of current lands (fill gaps) to increase the production volume using currently dedicated lands

Threats• Low domestic consumption limits

sales for business and industry growth.

• Heavy concentration in the Japan market


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The Way Forward

(over 3-5 years)The desired future state of the industry in each strategic perspective is reflected below.

The Development Perspective:Developmental Considerations and Priorities

• The industry contributes to environmental sustainability by expanding environmentally friendly practices and re-introducing new ones, such as intercropping, and organic production.

• By increasing the yield and therefore earnings, improve the welfare of farmers in the growing regions.

• Promote enhanced labour productivity to improve the current low yield/acre.

• Social responsibility is fostered at the industry level with increased number of community programmes.

• Investment is directed to the industry (for privatisation of the government owned entities) that enhances the industry.

The Competitiveness Perspective

Border-In Issues and Priorities

• Yield increased through the provision of technical information and support to growers.

• There is increased investment in product research to facilitate product development and higher value alternatives for waste.

• More aware and sophisticated enterprises with: - roasters no longer lacking certification and technical competence; failure to stay ahead of the curve on customer food safety; lack of funds; lack of management and system depth.

• There is an increase in adaptive research conducted on density and planting systems, nutrition management and Coffee Berry Borer management (through the support of parasitoid programmes) to transform the efficiency of the sector.

Border Issues and Priorities

• Farm and parochial roads are improved to significantly improve access to farms and national production and sales.

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• Alternative pesticides & fertilisers are sourced to reduce the current high costs.

• There is increased availability of credit / micro-lending for growers to finance their production.

• Processors are able to secure more favourable cost and access to working capital,

• There is increased stock of seedling of larger size to facilitate plantation renewal that will substantially increase yields in the medium term.

• High cost of crop insurance (usually needed for hurricane recovery) is reduced.

• Initiatives to reduce praedial larceny are more effective, reducing loss from theft.

Border-Out Issues and Priorities

• The industry is able to access new markets for the premium product.

• The industry collaborates to design and implement a sector programme for increased brand promotion and market penetration that includes (brand building exercises, developing and telling the story of the product

and industry, creative market promotions based on opportunities that exists, such as country promotion of other sectors).

The Client Perspective

Export Client Prioritisation: Support Requirements and Response

As noted earlier, the industry is essentially an export industry, with most of the production sold in export markets. Most of the local sales are also felt to be sales from visitors and locals who purchase for gifts (and therefore also classified as exports). The export clients within the industry therefore comprise:

o The Coffee Industry Board which (for quality control and efficiency purposes) is the sole exporter of green beans,

o Roasters, most of whom export.

Those who do not export, produce an export quality product (which is the industry standard), and are therefore potential exporters. It is therefore proposed that export support requirements be considered for the entire industry. With a focus on the quality and production for exports, the response should be focussed on


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brand development and promotion, market development and penetration, export skills and other trade promotion support.

Implications for Sector Support Services

Business Development & Export Readiness

• Most enterprises in the sector, which operate as small businesses and lack depth in management, are provided competency training and counselling.

• Processors and roasters are typically focussed on the technical aspect of production with weaknesses in marketing, and require support from relevant agencies.

Trade Information

• Data for decision making is required, such as product perception.

Financing

• A working capital programme is needed that will assist with the cost of fertiliser, coffee berry borer prevention programmes, soil tests,

extension support services and pesticides in order to improve productivity.

Quality Management

• Technical and financial support are required to address the lack of QMS (quality management systems) and EMS (environmental management systems) certification which are critical to the future of the industry.

Other Support Services

• Packaging and labelling expertise are required as a support service for the industry.

• In order to maintain the desired standards, the effectiveness of the current intervention to enhance processors’ technical competence will need to assessed.

The Institutional Perspective

Strengthening the Sector’s Strategy Support Network

The CIB is the lead strategy organisation for the industry. Its influence with other national strategy support entities needs to be stronger in order to garner support for strategy.

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For example, based on the experience built in a model for use of a mark, it may be a benchmark for other industries and be supported accordingly, as well as be integrated into national brand-building programmes.

Strategy Coordination and Management:

STRUCTURE

The CIB currently executes the industry’s development programme. The Coffee Exporters’ Association will need to be involved in the coordination, advocacy and monitoring of the strategy however, and engaged in those areas in particular that are outside the mandate of the CIB.

PROCESS (STRATEGY MONITORING)

Since the Board now monitors the industry’s performance, monitoring may reside with the Board, by using similar measures and monitoring mechanisms, at least initially. Support should be provided by the private sector who will have to collaborate with the board for reporting.

The Sector’s Services Delivery

NETWORK

The mandate of the CIB is fairly wide, but understandably so, and as such the Board needs the capacity and resources to be able to deliver all its services effectively. An aspect needing to be strengthened is the Board’s service network and strength of alliances and relationships in order to ensure that the requisite services that are within the scope of other entities are provided to the sector, such as export-related services provided by JTI.

s t r a t e g y a t a g l a n c e

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Vision

The Jamaican Coffee Sector is the global benchmark and standard of quality for the growing and processing of coffee for export.

Development Perspective

The Jamaican Coffee Sector is promoting environmental sustainability by utilising environmentally friendly practices and fostering farmer welfare and increased community development

programmes.

Competitiveness PerspectiveSUPPLY SIDE (BORDER-IN)

Coffee yields increased.

Adaptive research in primary production increased.

Research in product development and higher value waste alternatives

increased.

TRANSACTION COST OF BUSINESS (BORDER)

Farm and parochial roads improved.

Alternative pesticides & fertilisers sourced.

Credit / micro-lending for growers made available.

Stock of seedling increased.

Praedial larceny eliminated.

Crop insurance costs reduced.

DEMAND SIDE (BORDER-OUT)

New markets Accessed.

Sector programme for increased brand promotion

and market penetration developed.

Client PerspectiveTRADE INFORMATION

Data for decision making made

available.

STANDARDS AND QUALITY MANAGEMENT

Quality Management Systems and

Environmental Management

Systems certification applied.

BUSINESS DEVELOPMENT AND EXPORT READINESS

Competency training and counselling

provided.

Marketing competency of processors and

roasters improved.

FINANCE

Affordable and accessible finance

made available.

PACKAGING

Affordable quality export packaging

made available locally.

Institutional Perspective

The Coffee Industry Board of Jamaica (CIB) and the Coffee Exporters Association are the primary vehicles for coordinating policy initiatives and implementing the sector development plan.

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a c t i o n p l a n owner/support

objectives measures targets initiatives entities timeline

THE DEVELOPMENT PERSPECTIVE

The coffee industry to mimises the negatives inpact of growing practices on the environment

Environmental standards developed

Completed in Y1

• Produce and disseminate technical manuals for the promotion of agro Forestry and intercropping, and provide technical services for their implementation.

• Promote organic coffee farming.

• Develop National Industry Standards manual ( for growers, dealers, processors and roasters) expanded to cover:

o technical manual related to production: from farm to cup.

o environmental standards.

o Health and safety standards.

o Social standards, such as employment, wage minimums/ farm gate prices, etc..

• CIB

• Ministry of Agriculture

• JOAM

• NEPA

Y1

Investment is attracted into the sector to enhance competitive-ness and capacity

Percentage of investment opportunities attracting investment

50% • Prepare investment opportunity profiles for NBM & BM coffee that include:

o Cost of production models (mono/intercropped/agro forestry).

o Current partnership opportunities.

• Survey coffee regions and develop an inventory of idle land & abandoned farms that may be put in production and promoted for investment.

• Match prospective growers and land owners to facilitate increased production.

• CIB


• JTI

Y1 – Y3

Sector’s economic contribution

Production outputYield

980 kgper

hectare

• Promote best practices among growers in order to foster improvement in labour productivity through the best farmer award.

• Increase the provision of technical information and support to growers that is required to increase production yield.


• CIB

Y1 – Y3

THE COMPETITIVENESS PERSPECTIVE

BORDER –IN

Sector Diversification

The coffee sector increases domestic value addition

Improved feed conversion (from 2 to 1.5)

1.5 • Obtain better quality feed.

• Develop business plan for Jamaica AquaFoods Limited.

• Cluster

• Ministry of Agri-culture

Y1

To increase recovery from 30%

Number of value added product developed for commercialisa-tion

2 • Conduct product research to identify:o value added products that are feasible for

introduction into operations.

o higher value alternatives for waste (such as briquettes).

• Promote and facilitate commercialising feasible products.

• SRC

• CEA

• CIB

• Ministry of Energy

Y2

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a c t i o n p l a n owner/support


Capacity development

There is increased yield (output) resulting from improved practices and efficiencies

Production outputYield

980 kgper

hectare

• Increase adaptive research conducted on the density and planting systems, nutrition management and Coffee Berry Borer management, to transform the efficiency of the sector.

• Increase the stock and size of seedlings.

• Ministry of

Agriculture

• CIB

Y1-3

The Jamaican Coffee Industry is recognised as the global industry standard

TBD TBD • See initiative to Develop Industry Standards Manual for Objective 1

• CIB


• JOAM

• NEPA

• Ministry of Labour

Y1-2

BORDER

Cost of Doing Business

There is improved infrastructure and business environment for growers and processors to enhance revenue

Percentage of farm roads targeted that are improved

50% • Advocate GoJ to improve farm and parochial roads.

• Facilitate and promote alliance to source and purchase alternative pesticides & fertilisers to reduce the current high costs.

• CIB

• CEA

• Advocate for increased availability of credit / micro-lending for growers to finance their production.

• CIB

• CEA

Programme redesigned

• Engage stakeholders in review and design of crop insurance programme.

• CIB

• CEA

Y2

Crime

Percentage reduction in loss due to theft

50% CROSS-CUTTING INDUSTRY INITIATIVES ARE RELEVANT

• Ministry of

Agriculture

• Ministry of National

Security

• JCF

Y1-3

BORDER-OUT

The sector benefits from an improved branding and marketing programme

Percentage increase in export sales

20% • Design and implement a programme for increased brand promotion and market penetration that includes (brand building exercises, developing and telling the story of the product and industry, creative market promotions based on opportunities that exists, such as country promotion of other sectors).

• CIB (R)

• JEA (R)

• JTI (R)

• CEA (A)

Y1

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owner/support


a c t i o n p l a n

4 p r i o r i t y i n d u s t r y s t r a t e g i e s

Sector Promotion

International As above • Generate and communicate positive messages about the brand.

• Identify and recruit branding and marketing expertise for the sector’s programme.

• Determine/validate market positioning & promotion strategy.

• Maintain and improve our relationship with Japanese Importers.

• CIB

• JEA

• JTI

• CEA

Y1-2

Domestic – Tourism

Percentage increase in tourism sales

15% • Design and execute a promotional campaign targeting buyers at all ports (air & sea) that includes partnering with retailers on supporting promotional activities.

• Develop a promotional campaign to be integrated into Restaurant Week.

• Create linkage with HEART Runaway Bay to train hospitality staff in coffee preparation & terminology.

• Initiate training programme in hotel sector.

• CIB• JEA• JTI• CEA

Y1

THE CLIENT PERSPECTIVE

Business Development and Export Competency

CROSS-CUTTING INDUSTRY INITIATIVES ARE RELEVANT

Increased participation in exports in the sector, and improved export performance of enterprises

Percentage of roasters and processors participating

80% • Design and deliver and export awareness and readiness programme for the sector.

• Inform the enterprises of export agencies and their services.

• JTI

• JEA

Quality Management

The Jamaican Coffee Industry is recognised as the global industry standard

Standards and support programmes developed

Completed in Y1

• Execute a certified seed program for private coffee nurseries.

• Collaborate with relevant entity(s) and lobby for funds for the certification of Coffee Extension Agent.

• Provide technical and financial support to firms to address the lack of QMS and EMS certification which are critical to the future of the industry.

• CIB• Ministry

of Agriculture• JOAM• NEPA• Ministryof Labour

Y1

Trade Information

• Develop and disseminate market reports for the sector to provide firms with data for decision-making.

• JTI

• JEA

Other Trade Support Services

• Identify packaging and labelling expertise as a support service for the industry.

• JTI

• JEA

THE INSTITUTIONAL PERSPECTIVE

• Provide support for cluster development to facilitate collaboration among enterprises within the sector.

CIB diversi-fies and expands its revenue streams

• Strengthen agency network and relationships.• Lobby to modify the Cess order to include

Imports of coffee.

CIB

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