• TABLE OF CONTENTS
HIDE
 Front Matter
 Table of Contents
 List of Tables
 List of Figures
 Summary and recommendations
 Project description
 Project analyses
 Implementation plan
 Annexes






Title: Agricultural marketing development : Jamaica ; summary and recommendations
CITATION THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00089475/00001
 Material Information
Title: Agricultural marketing development : Jamaica ; summary and recommendations
Physical Description: Book
Language: English
Publisher: USAID
Publication Date: 1978
 Subjects
Subject: Caribbean   ( lcsh )
Spatial Coverage: Jamaica -- Caribbean
 Record Information
Bibliographic ID: UF00089475
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.

Table of Contents
    Front Matter
        Front Matter 1
        Front Matter 2
    Table of Contents
        Table of Contents 1
        Table of Contents 2
        Table of Contents 3
        Table of Contents 4
    List of Tables
        Page ix
        List of Tables 2
    List of Figures
        List of Figures 1
        List of Figures 2
    Summary and recommendations
        Page i
        Page ii
        Page iii
        Page iv
        Page v
        Page vi
    Project description
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
        Page 45
        Page 46
        Page 47
    Project analyses
        Page 48
        Page 49
        Page 50
        Page 51
        Page 52
        Page 53
        Page 54
        Page 55
        Page 56
        Page 57
        Page 58
        Page 59
        Page 60
        Page 61
        Page 62
        Page 63
        Page 64
        Page 65
        Page 66
        Page 67
        Page 68
        Page 69
        Page 70
        Page 71
        Page 72
        Page 73
        Page 74
        Page 75
        Page 76
        Page 77
        Page 78
        Page 79
        Page 80
        Page 81
        Page 82
        Page 83
        Page 84
        Page 85
        Page 86
        Page 87
    Implementation plan
        Page 88
        Page 89
        Page 90
        Page 91
    Annexes
        Page 92
        Page 93
        Page 94
        Page 95
        Page 96
        Page 97
        Page 98
        Page 99
        Page 100
        Page 101
        Page 102
        Page 103
        Page 104
        Page 105
        Page 106
        Page 107
        Page 108
        Page 109
        Page 110
        Page 111
        Page 112
        Page 113
        Page 114
        Page 115
        Page 116
        Page 117
        Page 118
        Page 119
        Page 120
        Page 121
        Page 122
        Page 123
        Page 124
        Page 125
        Page 126
        Page 127
        Page 128
        Page 129
        Page 130
        Page 131
        Page 132
        Page 133
        Page 134
        Page 135
        Page 136
        Page 137
        Page 138
        Page 139
        Page 140
Full Text






A.GlIC I F'rR INTERNATIONAL : E.~F. LC FN'

PROJECT PAPER FACESHEET


1 t OINIRY ENTITY


JAMAICA
5. PROJECT NUMBER I;' dig(ir')

[L532-0060o
. ESTIMATED FY OF PROJECT






A. FUNDING SOURCE

AID APPROPRIATED TOTAL
'( AN *
IOANi .
OTHER
U.5.
HOST COUN-TRY
OTHER DONORS)
TOTALS


B. PRIMA
A. APPRO URPO
PRiATION RS
PRtATION
CODE


AkC ~td~(L


1. TRANSACTION CODE
-" A ADD
A C CHANGE
0 DELETE


4. DOCUMENT REVISION NUMBER
u.


pp

2. DOCUMENT
CODE
3


7. PROJECT TITLE (Maximum 40 characters)

[AGRICULTURAL MARKETING DEVELOPMENT

9. ESTIMATED DATE OF OBLIGATION

A INITIAL FY LI7lJ B. QUAR TER
C. FINAL FY LI1l2 (Enter 1. 2, 3. or 4)
i IIL I~


10 ESTIMATED COSTS ;1000 OR EQUIVALENT
FIRST FY


r


RY
SE


I 130 .







A APPROPRIATION


'4)


B. FX C C

8,856._ .,Jl3.i -
737 I -
8,119 1,1 13



11,713

8,856 12,826
11. PROPOSED BUDGET


PRIMARY TECH. CODE


I LIFE OF PROJECT


-I ,. --


D TOTAL


E FX


F L'C:


F L I


Q QAQ


11 *


.G. TOTAL


11 QkQ


-- F -- --~--------.- 4- -- t 1~~Y~~


-+
; {
I


737 I


9.232 )


11,713__

21,682
APPROPRIATED FUNDS

E. IST FY T


C GRANT D LOAN GR GRAN

. 140 14 ---


K A' _t---


TOTALS
N 4TH FY 82

.. G AN I r LOAN

1, 000 --


T G LOAN


( 2.737 )


-- .) II


2.737 )


7- '.- -- -- 7


I 8.119 1


i 1.113 I


11.713


I 9.232 )


11.713


__ .1-I


10,856
(S000)


12,826


H. 2ND FY 8


I GRANT


7-7 I


J. LOAN


9IDT V


-- 9,232
0. 5TH FY 83


R GRANT


S. LOAN


4 1. FI


* - -


737 I -- 1000


LIFE OF PROJECT


T. GRANT


2.737


U. LOAN


9.232


-.__I --.!______ ____


SLUUU__ I -- -- I 2,737 I
13 .DATA CHANGE INDICATOR. WERE CHANGES MADE IN THE PID FACESHEET DATA. BLOCKS 1
FACESHEET DATA. BLOCK 12' IF YES. ATTACH CHANGED PID FACESHEET.


23,682


K..3RD FY-8


L GRANT


1 nnn


M. LOAN


12. IN-DEPTH EVAL-
UATION SCHEDULED




MML YY
1,111


19.232 1


2. 13. 14. OR 15 OR IN PRP


i I NO
Y ES


14. ORIGINATING OFFICE CLEARANCE
SIGNATURE A -

TITLE

Director USAID/Jamaica


15. DATE DOCUMENT RECEIVED
IN AID/W, OR FOR AID/W DOCU-
MENTS, DATE OF DISTRIBUTION



mmI MM I |YY

1 o


DATE SIGNED

I MMI 10 1 YY
018 1210 719


AID 1 10 4 ( lft


6. BUREAU OFFICE
A SYMBOL B. CCDE
LAC [ 05
COMPLETION


F8J4


I litI I I


9,23 ,113,


I


I 1 I


I


_1 'I I i I I '


19 j23 2


I


9. 232


q_ 232


e


,,,,




< ' ...... .. ,,,i J. i, uMuLlJl N ACLSUL A | ( ...I..," "1 Ir Ilk LroinrSr-
a "I) = lit u r
1') VIP COMP. L.TI'TPf flY L *'.lIi .l Ai lll r icrr 1 I) C 1r
lr'i ,,, ,r ,i J IT i .i 'v i. i i..-.-- ..
JAMA 1 CA
'. i.J,(I untn. ((i nt ,, ) .b .UliV.,! lCn l r I. CROJi.cr C ,t 1 ,L( ( a xi ,,,,,, i J A t

(532-0060 j. nyln4tL M. cooc
I LA. 5 AGRICULTURAL SECTOR
PII.r)P(a, 0 rD XT I)1,'.liT MI0. ESTIMATED C0STL

MM I o 000 on toiva..l t,r. ,n/',
A.. *3 D, 1 0 17 19i. I i L [ 1'i
A. AID APrnorFiATCC V-6b#,$O

_U..J.2.__

o. OIHEn DOoNo(S)
S0 ___ L 10, 00'
11...... r POSLO cUDIET AID APROPn IATED FU)S J s 000)
,.'AP1O(- B. rI'l.Y I'II-IARYI TECH. CODE E. FIRST TY 7'9 LIFE Or PROJECT
Pl IATIO'J PURPOSE -- ---
CI':)[ C. C r IT 0. LOAN r. ORANT C, LOAN H. rlNt I, Loa
()F&N 2.50 200 16,000 ~ 16,000

(.*) _.... ___ ______ _____ ____ ______ ___

10T AL _____
if. (- i(. 1J) IIP. I linrICAL (t.)L1- (,..,.,.,aum si- cod.-& of their >puoitio.. rai, 1.)

220 .1 252 1 010 031 040 061
Ij ,.l il.lA (.1 ii irsI (I l)lrj ("r AX '411-i4 IX c or.$ r reVF *il IC51 1* tACii) I l i..i rO iiilAlit
f iuii *Vr I ()o)i
BS COOP EQTY PART 210
15. "-)J'( 1. AL (' I To increase Jamaica's agricultural production, economic well-being-]
and social equity through a program of assistance to small farmers.

II.. I1.Hlt CI I,.;t'.:;,t. IAX IMLIx I Il-'jO inCHARACTEnS)

I To improve agricultural productivity, income, and equality of I
distribution through an integrated development program utilizing
community-based organizations as the vehicle for channeling
applied research, extension services, credit, inputs, and marketing
Sitfrastructure and assistance to small farmers.

;:, I ,MJilia, in ',i ;i i ?i i;(, ,, t )111..11 ,j1 s ,,,/,//,,n,,,,,,,

Approximately 6 person-months of TDY assistance to aid in
specialized aspects of project.
I 4 .lf l 0 11 : ItA NC:l C1 I A i fr-,*. ir.r1,.0.



S. ...I At /IL_

Ii__-di-I








Agricultural Marketing

TABLE OF CONTENTS


page
1. SUMMARY AND RECOMMENDATIONS . . . . . . . . ... .i

A. Recommendations . . . . . . . . . ... .i

B. Borrower/Grantee . . . . . . . .... ..... i

C. Project Description . . . . . . . . ... . i

D. Financial Summary . . . . . . . . . . .ii

E. Summary Findings . . . . . . . . ... . .iii

F. Issues . . . . . . . ... . . . .. . iv

G. Project Development Committee ..... . . . . . v


II. PROJECT DESCRIPTION . . . . . . . . ... . . 1

A. Background . . . . . . . . ... ...... 1

1. Overview . . . . . .... . . . . . 1
2. Agricultural and Food Marketing System in Jamaica . . 2
3. Problems and Constraints . . .... . . . ... .10
4. Project Rationale and Strategy .. . ..... . . .13
5. Other Donor Assistance and Related Agricultural
Sector Programs . . . . . . . ... ... 14

B. Project Components . . . . . . . . .. .... 19
1. Goal and Purpose . . . . . . . .... . .19
2. Marketing Division ... ... .. ......... 19
3. Subterminal Wholesale Distribution Markets ...... 33
4. Assembly and Grading Stations . .......... 40

C. Beneficiaries of the Project . . . . . . ... 47
1. Small Farmers . . . . . . . . . . . 47
2. Market Intermediaries . . . . . . . ... 47
3. Consumers . . . . . . . . . . . . 47






page
III. PROJECT ANALYSES . . . . . . . . ... ..... 48

A. Technical and Administrative Analysis . . . . .. .48
1. Introduction . . . . . . . . ... .48
2. Policy Framework . . . . . . . .... 48
3. Staffing . . . . . . . . ... ..... 49
4. Training . . . . . . . ..... ..... 50
5. Subterminal Wholesale Distribution Markets . . ... 50
6. Assembly and Grading Stations . . . . .. 51
7. MOA Capacity . . . . . . . . ... .. 51
8. USAID Capacity . . . . . . . .... . .52
9. Conclusion . . . . . . . . ... . .52

B. Engineering Analysis . . . . . . . . .. 53
1. Project Construction Costs . . . . . . . .53
2. Design and Supervision of Construction . . . ... 53
3. Engineering Criteria and Specifications . ..... 54
4. A & E Elements of Project Implementation ...... 54
5. Construction Contractors .. . . . . . . 55

C. Economic Analysis . . . . ...... . 56
1. Introduction . . . . . . . . ... .. 56
2. Projection of Benefits . . . . . . ... 56
3. The Costs . . . . . . . . ... . .62
4. Benefit-Cost Calculation . . . . . ... ... 62
5. Impact on Foreign Exchange Budget .. . . ... .65
6. Distribution of Benefits . . . . . . .. 68
7. Interpretation of Results . . . . . ... .71
8. Conclusion . . . . . . . . ... . .72

D. Financial Analysis and Plan . . . . . . . 73
1. Ability of GOJ to Meet Operating Costs of the Project 73
2. Profitability of Subterminal Wholesale Distribution
Markets . . .. . . . . . . . 77
3. Profitability of Assembly and Grading Stations ... 79
4. Financial Plan . . . . . . . . .... 81

E. Social Soundness Analysis . . . .. .. ..... ..83
1. Overview . . . . . . . . ... . . 83
2. Description of Target Groups .... .. . . . 83
3. Role of Women . . . . . . ... ... . 85
4. Impact on Higglers . . . . . . . ... 85
5. Extension Strategy ... . . . . ...... ... .86
6. Socio-Cultural Feasibility . . . . . .. 87





page
IV. IMPLEMENTATION PLAN . . . . . . . . ... ..... 88

A. Implementation Arrangements and Schedule . . . . .. 88

B. Evaluation Plan . . . . . . .. .. . . . 88

C. Conditions Precedent and Covenants . . . . . ... .89
1. Conditions Precedent to Loan Disbursements . . ... 89
2. Special Covenants for Project Loan Agreement . . . 90
3. Special Covenants for Project Grant Agreement . . ... 91
4. Conditions Precedent to Grant Disbursement . . ... 91


ANNEXES
A. Logical Framework

B. Statutory Checklist

C. Mission Director's 6,11(e) Certification

D. PID Approval Message

E. Request for Assistance

F. GOJ National Agricultural and Food Marketing Policy and Strategy

G. Technical Assistance Job Descriptions

H. GOJ Conditions of Contract, Bills of Quantities and Specifications

I. Initial Environmental Examination






Agricultural Marketing

LIST OF TABLES


Title


page


Table No.
1.
2.

3.
4.
5.
6.

7.
8.

9.
10.
11.
12.

13.
14.
15.
16.
17.
18.
19.

20.
21.
22.

23.

24.
25.
26.
27.


Budget Summary'. . . . . . . . . ... . .ii
Training Programs by Type of Training, Subject Matter
and Number of Participants . . . . . . ... 24
Marketing Division Staffing Requirements and Costs .... .30
Marketing Division Costs: New Funding . . . . .. 32
Wholesale Market Construction Costs . . . . ... .36
Subterminal Wholesale Distribution Markets Staffing Require-
ments and Costs . . . . . . . . .. .. . 38
Subterminal Wholesale Distribution Markets (4) Costs . . 39
Assembly and Grading Station Construction Costs by Model of
Facility . . . . ... . .. . . . .. 42
Assembly and Grading Stations . . . . . . .. 43
Assembly and Grading Station Staffing Costs . . ... 46
Assumptions and Projections of Project Benefits . . .. .57
Projection of Production of Major Products and Product Cate-
gories Affected by Project . . . . . . .. 59
Estimate of Gross Benefits . . . . . . . .. ..60
Estimate of Gross Benefits . . . . . . .... 61
Consolidated Start-Up Costs . . . . . . ... 63
Recurrent Costs . . . . . . . . ... .... 64
Benefit-Cost Analysis . . . . . . . . ... 66
Food Imports, 1971-78 and Projected to 1994 . . ... 67
Estimated Foreign Exchange Savings Through Import Substitu-
tion . . .. . . . . . . . . . . 69
Central Government Budget . . . . . . . ... 74
Project Recurrent Costs in 1985 . . . . . .. ..74
Distribution of Capital Costs by Market and Storage Area
Standard Warehouse Design .... ......... .. 75
Subterminal Wholesale Distribution Markets Annual Operating
Expenses . . . .. . . . . . . . 76
Annual Operating Costs and Sales at Break-even ...... 78
Assembly and Grading Stations Annual Operating Expenses . 79
Total Project Cost by Project Component . ... .. . . 81
Disbursement Schedule . . . . . . . . .. 82












Agricultural Marketing

LIST OF FIGURES
Figure No. Title page
1. Marketing System Illustrating Role of Producers, Assembly
and Grading Stations, Wholesalers, Subterminal Whole-
sale Distribution Markets and Retailers in Enhancing
Assembly, Concentration and Dispersion Roles . . . 4
2. Illustration of Proposed Marketing Distribution System .. 17
3. Present Parish Retail Markets and Potential Areas for Sub-
terminal Wholesale Distribution Markets . . . . 18
4. Technical Assistance Scheduling . . . . . ... 22
5. Marketing Project Training Scheduling . . . .. 25
6. Commodity Scheduling . . . . . . . .... . .27
7. Organization Chart of Proposed Marketing Division . . 29
8. Scheduling of Construction and Procurement . . . ... 36
9. Schedule of Construction for Assembly and Grading Stations 44
10. Agricultural Marketing Project Schedule of Key Events .. 92




-i-


1. SUMMARY AND RECOMMENDATIONS

A. Recommendations

USAID/Jamaica recommends a loan of $9,232,000 and a grant for
$2,737,000 to increase the efficiency of Jamaica's agricultural marketing
system. The loan will be funded in FY80 and the grant during the years
FY80-FY82. The loan will be for twenty (20) years with ten (10) years'
grace, with interest of 2 percent during the grace period and 3 percent
thereafter.


B. Borrower/Grantee

The borrower/grantee will be the Ministry of Finance on behalf
of the Government of Jamaica. The primary executing agency will be the
Ministry of Agriculture. The Ministry of Agriculture is responsible, inter
alia, for the development and implementation of the GOJ's marketing policy,
strategy and programs.


C. Project Description

The goal of the Project is to improve the living standards of
farmers, consumers and market intermediaries. The purpose of the Project
is to improve the efficiency of the marketing system.

The Project will provide for the:

establishment of a Marketing Division in the Ministry
of Agriculture

construction of four Subterminal Wholesale Distribution
Markets, and

construction of 25 Assembly and Grading Stations in pro-
ducing areas.

These basic interventions will make it possible for the market-
ing system to perform necessary functions now not carried out, as.well as
improve the performance of functions now undertaken poorly and at high cost.

An expanded and strengthened Marketing Division will assist in
improving post harvest technology, producer support and product distribu-
tion. It will also assist in: market development; the provision.of market
information; market research; marketing training and extension; and,
quality assurance.




-ii-


Subterminal Wholesale Distribution Markets will make possible
the: reduction of post harvest losses; expansion of markets for locally
produced crops; and, increased availability of graded agricultural pro-
ducts.

Assembly and Grading Stations will: permit collection and assem-
bly of commodities into volumes large enough to sort into identifiable
grades and facilitate shipment to other markets; reduce the cost and widen
the choices of commodities to other intermediaries; promote economies of
scale to producers and intermediaries; and, provide a more effective means
of distributing factor inputs to small farmers.

Technical assistance and training will focus primarily on the
Marketing Division and will impact on the establishment and operations of
the Subterminal Wholesale Distribution Markets and Assembly and Grading
Stations via the work of the Marketing Division as well as directly on
personnel involved in these market system components, e.g., training of
management staff. Commodity assistance, as appropriate, will facilitate
the successful completion of the three basic interventions.


D. Financial Summary

The total cost of the Project is $23,682,000. AID will provide
$11,969,000; the GOJ, $11,713,000. AID's contribution will consist of
$9,232,000 in loan funds; the grant will be $2,737,000.


Table 1
Budget Summary
__(US $000)
AID
GOJ Total
Grant LoanG Total
Technical Assistance 2,200 966 -- 3,166.
Participant Training -- 492 100 592
Commodities -- 1,026 -- 1,026
Buildings, Equipment
-and Land 5,000 4,300 9,300
and Land
Net Operating Expenses -- 4,829 4,829
Contingency & Inflation 537 1,748 2,484 4,769
Total 2,737 9,232 11,713 23,682




-iii-


The operating costs of the Marketing Division, a negligible por-
tion of the Ministry of Agriculture's budget, would be less than 10 percent
of the increased tax collections (conservatively estimated) attributable
to the Project. Revenues from the Subterminal Wholesale Distribution Mar-
kets and Assembly and Grading Stations are likely, at the least, to cover
operating costs, including depreciation.


E. Summary Findings

Marketing problems create substantial post harvest losses and
impede agricultural production. As a result, incomes of small farmers and
market intermediaries are depressed while consumers' purchasing power is
reduced and the nutritional status of critical groups is adversely affected.
Food imports are unnecessarily high and agricultural exports are constrained,
making for a harmful impact upon an already grave foreign exchange situation.

The GOJ has established agriculture as a high priority develop-
ment sector and has recognized the improvement of marketing as a prerequi-
site to production increases. It has adopted an explicit marketing policy
and strategy and has launched a comprehensive, integrated set of marketing
activities. Total investment in these and related programs over the next
five years will be approximately $50,000,000 financed by the GOJ and sev-
eral donors, including the World Bank and the IDB.

This Project was designed jointly by the Ministry of Agriculture
and USAID/Jamaica expressly to carry out the GOJ's marketing policy, strategy
and proposed activities, and to complement and support the GOJ's other mar-
keting interventions. This Project also represents a key component of
USAID/Jamaica's development strategy in agriculture. It reinforces, and
in turn is reinforced by, other existing and planned USAID/Jamaica
projects.

This Project builds upon the existing marketing structure. It
provides incentives for participants in the marketing system to improve
their performance. The Project facilitates the role of the private sector
in the marketing system. Even with highly conservative assumptions, major
benefits to income, production and foreign exchange are expected. The
Project is judged to be feasible, consistent with AID legislation, policy
and Presidential and Congressional exhortations, as well as in accord with
applicable statutory criteria.




-iv-


F. Issues

1. One issue addressed in Project development was the question of the
Project's impact on employment of market intermediaries, especially
the higglers. Aside from the judgment that the overall benefits of
the Project more than offset the possible unfavorable employment
effects, other considerations indicated that the displacement issue
was likely to be relatively minor. Any higgler displacement would
be gradual, extended over several years. Moreover, the Project it-
self will provide employment opportunities and alternatives in the
Subterminal Wholesale Distribution Markets and Assembly and Grading
Stations. Finally, as the Jamaican economy recovers and resumes
its growth, many of those who became market intermediaries because
of the deteriorating economic situation during the last few years
are likely to return to their previous activities.

2. The second major issue addressed was feasibility. This issue has
many dimensions. Can the GOJ provide its required human and finan-
cial resources? Can the Ministry of Agriculture manage this Project
along with other USAID, foreign and Ministry projects? Can the
necessary institutional harmony and coordination be accomplished,
given the number of different actors involved--e.g., Ministry of
Local Government, Ministry of Works, Town Planning, Parish Councils,
and Agricultural Marketing Corporation? Can USAID/Jamaica handle
this Project?
As the paper shows, the human resource problem, although diffi-
cult, is manageable. The GOJ, namely the Ministry of Finance as
well as the Ministry of Agriculture, has worked up an organization
and manpower plan for the Ministry of Agriculture which accommodates
the additional personnel and financial requirements. The priority
assigned to this Project by the GOJ lends support to our conviction
that these contributions will be made. In addition, counterpart
generated by USAID PL-480 programs will facilitate the allocation of
Jamaican funds, whose first, mutually agreed upon criterion for use
is to support U.S. projects.
The Ministry of Agriculture will have a full plate with this
and other projects. However, other on-going projects are designed
to strengthen the Ministry and will directly help in carrying out
the proposed Agricultural Marketing Project. Moreover, some of the
required functions are already a part of the Ministry's responsibili-
ties and will not represent new burdens.
During the Project development stage, a great deal of inter-
agency coordination has already occurred. The Ministry of Agricul-
ture has taken the coordination problem very seriously, and its pro-
gress and success in developing consensus, understanding and support
have been impressive.










With this Project, there remains one more component of USAID's
approach to the agriculture sector to be developed--research and
extension. At that point, the Agriculture and Rural Development
Office will devote all of its attention for some time to implementa-
tion. The Office is adequately staffed and with the support of other
USAID personnel (Capital Resources, Controller, etc.) will be able
to manage its challenging portfolio, including this Project. The
continued presence of the USAID-financed Marketing Advisor to the
Ministry of Agriculture, one of the people most involved in the
development of the GOJ's marketing policy and strategy, and a
major contributor to this Project Paper, adds to the Mission's con-
fidence that this Project can be successfully carried out.



G. Project Development Committee


Agricultural/Rural Development Office
Patrick Peterson
Kenneth Ellis
Wilbert Wilson
Fitz Bartley

Capital Development Office
Paul Wenger

Economic Advisors Office
Clark Joel

Controllers Office
Michael Bradley

Technical Assistance
Thomas Bennett
USAID/GOJ Marketing Advisor
Thomas Fallon
USAID/Honduras/CONT
Brent Gatch
AID/W, LAC/DR
Carleen Gardner
Sociologist
Theodore Malyn
Marketing Specialist
Paul Morris
USDA/PASA


Ministry of Agriculture


Derrick Stone
Permanent Secretary
Fred Zenny Director
Production Extension Department
Ruddi Wallace
Production Extension Department
Canute McLean
Production Extension Department
Conrad Smikle
Production Extension Department

Ministry of the Public Works
Errol Alberger
Engineer


Reviewed by:
Donor Lion
DIR/AID/Jamaica
Henry Johnson
ADIR/Acting/AID/Jamaica








II. PROJECT DESCRIPTION


A. Background

1. Overview

Jamaica is centrally located in the Caribbean Sea on direct trade
routes between North and South America and between Europe and Panama.
Because of its location, Jamaica has, historically, been an important trans-
shipment point.

The island is divided into 14 Parishes, each with its own council.
These councils are supported by the Ministry of Local Government. The Minis-
try of Agriculture services rural areas through four regional offices.
Agricultural extension and other programs are administered by Regional Dir-
ectors responsible to the Ministry headquartered in Kingston.

Traditional agricultural export crops include sugar, coconut,
banana, coffee, citrus, tobacco, pimento, and cocoa, which are generally
served by a marketing board. Domestic food crops include fruits, vegetables,
root crops, and pulses. Food crops are generally produced by thousands of
farmers cultivating hilly land of one to ten acres. Export crops are
characterized by larger operations. The exceptions are cocoa, bananas,
coffee, and pimento, where a large number of small farmers produce a signi-
ficant percentage of total production.

The population of Jamaica is 2.1 million with about 45 percent
dwelling in urban areas. Agriculture accounts for about 30 percent of the
total labor force. In 1976, agricultural production per rural inhabitant
was $164 and in 1978, it was $129.1 Since 1971, food imports have risen
from $51 per capital to $81.

While Jamaica has good potential to reduce reliance on imported
foods, performance of the agricultural sector has been disappointing in
recent years. Idle land has increased to the point that one-third of
potentially productive agricultural land is not under cultivation. Rural
to urban migration has been growing.

Small farmers have only limited exposure to and make little use
of marketing information in deciding which crops to plant. Many small
farmers cultivate several plots which are some distance apart, making it
more difficult to sell and transport their produce. They have access to
few factor inputs and are, in general, inflexible in their cropping patterns.
They are not cognizant of market requirements, having as their major point
of contact small merchants, locally referred to.as "higglers."


Unless otherwise stated, all dollar amounts are in US$. The 1979 exchange
rate is US$1 = J$1.77875.










The farmer may sell to a higgler at his farmgate or take it him-
self to the Agricultural Marketing Corporation, a greengrocer, or a super-
market. However, in either case, the frequency of collection is inadequate
and the volume that can be handled is minimal. In the case of the higgler
on which the majority of the farmers depend, the volume that higglers can
handle is generally inflexible, resulting often in a large part of the
farmers' production spoiling in the field.


2. Agricultural and Food Marketing System in Jamaica

a. Definitions

Following are definitions of words and phrases used in this paper:

Marketing. All functions that are required to be performed in getting
agricultural and food products from the farm to the consumer. The defini-
tion can also be applied to the functions required to get factor inputs
from the supply origin to the farm.

Marketing Channel. The route a commodity or product takes from the farm
through the various intermediaries to the consumer.

Agricultural and Food Marketing System. Collectively, all of the various
marketing channels, the intermediaries performing the various functions,
the functions or services performed, the suppliers of factor inputs and
the various institutions and facilities providing regulation, information
and credit that influence or affect the distribution of agricultural and
food products.

A Market. A sphere within which a buyer and seller meet to mutually agree
on a price for the transfer of title of goods or services.

Development of Markets. The acquisition of new markets and the expansion of
existing markets for commodities or products and the development of new
products or finding new uses for existing products.

Marketing Development. Upgrading the capability of farmers and intermedi-
aries in the marketing system to perform their functions better.

Market Structure. The various intermediaries in the marketing system,
including the number and types of intermediaries, the types and size of
organizations.

Market Intermediaries. Those individuals or firms that perform functions
of buying, selling, and moving agricultural commodities and products from
the farm to the consumer. Included are wholesalers, retailers, truckers,
AMC, and higglers.










Terminal Wholesale Distribution Market. The major focal point of a country
to which commodities flow from a tributary supply area and from which assem-
bled and concentrated supplies move out to distributors. In Jamaica, the
Coronation Market is the Terminal Wholesale Distribution Market.

Subterminal Wholesale Distribution Market. The major focal point of a
region to which commodities flow from a tributary supply area or other
subterminal or terminal market, and from which assembled and concentrated
supplies not needed for local use move out to a tributary area of distri-
bution.

Assembly and Grading Station. A facility located within the area of pro-
duction where agricultural commodities can be assembled from many small
producers, and concentrated into a volume large enough to permit the grading
and packing into several identifiable grades, the selling of the commodities
in volume by grade and the shipment of commodities in volume and in a
packed form which will reduce post harvest loss and enhance efficiencies
of transport.

An effective marketing system is a two-way communications channel
between consumer and producer via intermediaries. When properly function-
ing, with efficient intermediaries, the system assists in determining what
to produce, at what quality, where and when needed, and at what price.
Marketing is an assembly, concentration and dispersion process (See Figure 1).


b. Jamaica's Current Marketing System

Agricultural marketing in Jamaica is being affected by rural to
urban migration. The urban population, now 45 percent of total population,
will soon exceed 50 percent. As a result, agricultural production is
becoming more commercially oriented with an increasing volume of food crops
being grown to meet urban demands. However, temporary shortages of some
commodities still occur in some areas of the island at the same time as
production gluts of the same commodities occur in other areas.

As an example in 1978 the spread between the prices of onions
at the farmgate and at retail was as follows:

Consumer Price
Farmgate Price Kingston Linstead
First Quarter $0.74/lb. N.A. $1.53
Second Quarter 0.37/lb. N.A. 1.52
Third Quarter 1.17/lb. $2.19 2.36
Fourth Quarter 1.19/lb. 2.85 3.80

















0



u 0


-4 D 0
u u oc 0
-1 -4 J to I
soI .0 vo c a<
















/
o to






























&> C
oc e o-c0
































,41A *r4
U4 ,

: C 0 c '
0) E l 4( 0


















WU -4 :1 (D 41 u





SO0 C A -
rD1 >,Lo=1 =d


0
-4
0
41
o o c a)

0r *r- 4 0 0)

a cbD o









u


0 0
o o





a $ 0 >r .-
ta i 0 ri =.
> r. cr-











Geographical differences in 1979 average first quarter prices
for onions were as follows:

J$1.88/lb. Black River Market
J$2.70/lb. Coronation Market in Kingston
J$3.33/lb. Spanish Town Market
J$3.82/lb. Highgate Market

These price spreads between farmer and consumer and between one region and
another were caused almost solely by distribution inadequacies and by lack
of marketing information.

Internal distribution of an estimated 500,000 tons of domestic
food products and a large volume of imported products is carried out
annually by a large number of intermediaries who collectively make up the
agricultural and food marketing system. These intermediaries include small
wholesalers and retailers, large trucker/wholesalers, supermarkets, green-
grocers, and the AMC.

Small retail and wholesale intermediaries numbered 14,000 in 1976
and perhaps number 20,000 today. They operate in 99 Parish markets and
numerous curbside locations. As a group, they distribute over 80 percent
of total food production. The other 20 percent is distributed by a small
number of large trucker/wholesalers, supermarkets, greengrocers, and the
AMC.

The Parish markets are located throughout the island and are gen-
erally out-dated, dilapidated and unsanitary. Many are retail outlets while
many others serve as both retail and wholesale markets. The Coronation
Market in Kingston can be termed the terminal or central distribution
market for the entire country. In spite of its dilapidated and congested
condition, about 50 percent of marketed agricultural and food products
move through this market to other markets and consumers.

Due to the higly atomistic nature of the marketing system,
insufficient facilities and low level of knowledge concerning post harvest
handling and technology, post harvest loss is high. An estimate by FAO in
1976 placed post harvest loss at 25 percent for fruits, vegetables and
other perishables. The FAO study, however, did not take into account other
factors including the volume of product that is discarded or rots at the
farm level because there is no buyer present on the day the crop must be
harvested or because the buyer present can only handle a portion of the
available crop. Including these factors, post harvest losses are estimated
at 30 to 40 percent.









1) "Higglers"

The traditional marketing system in Jamaica is often referred to
as "the higgler system." This system evolved during the 17th Century with
the pre-emancipation Sunday markets, where slaves sold provisions from small
plots allocated to them to encourage self-sufficiency in order to reduce
the operating costs of the plantation. Regular markets were first established
in 1670, and legal right to sell produce was granted to slaves in 1711.
After 1838, when restriction of movement was lifted and free villages
established, the number of markets increased and formed the catalyst for
growth of interior market towns, characteristic of the traditional system.

The group referred to as higglers perform both retailing and
wholesaling functions. The number of higglers fluctuates with the economic
condition of the country. With increases in unemployment, the number of
higglers rose. It is estimated that 22 percent of the higglers have started
just within the last four years. Many higglers operate part time, depending
upon the season of the year and the availability of commodities and products.
The average net income of all higglers is J$21 per week. Some of the larger
wholesale truckers, however, reportedly earn over J$30,000 per year.

Higglers fall into one or more of the following categories:

Direct farm to consumer retailing A farmer, farmer's wife, son or
daughter may take their own produce or the produce of a neighbor, and
sell it directly to consumers.

Peddler A man or woman not directly engaged in farming may buy
produce from farmers and sell directly to consumers.

Wholesalers Individuals may buy from farmers and sell to others
who in turn sell to consumers.

Retailers Individuals may buy from wholesalers and sell directly
to consumers either in a Parish market, on the roadside, or in an
elaborate shop (greengrocer, supermarket, etc.).

Wholesale/retail Individuals may buy from producers and sell to
consumers directly and to other individuals who in turn sell to consumers.


2) Agricultural Marketing Corporation (AMC)

The AMC was established by the Government in 1963 to bring order
and efficiency to the marketing system, to operate as a commercial venture
and to provide a mechanism for price and market guarantees to producers.
The Ministry of Industry and Commerce is responsible for AMC operations.
AMC has eight regional depots or branches which serve as assembly points for
a wide range of commodities. The Kingston depot is the headquarters and
central distribution point. Until recently, AMC operated 207 buying stations
throughout the country. As part of its price stabilization role, a list of




-7-


115 products with guaranteed prices was posted periodically and AMC would
guarantee a market at the price posted. AMC operates 19 greengroceries,
43 basic shops, and 75 mobile routes. The basic shops and mobile routes
are oriented toward providing low income families with low cost food.

The role of AMC is now under review, and its mode of operation
is expected to change. A 1978 report for USAID/GOJ by Francis A. Kutish,
"Assessment of Agricultural Marketing in Jamaica with Special Reference to
Small Farmers in Portland Parish" described the weaknesses of AMC as follows:

"Its functions developed generally in three broad areas: purchasing of
commodities, distribution of commodities, and providing ancillary market
-services. As a consequence, the AMC has found itself with duties relat-
Sing to farm price support, holding down general consumer food costs, and
welfare activities for low-income consumers. Often these functions con-
flict. In an effort to rationalize these conflicts, the blame has been
put on the higgler system for taking too wide a margin.

"Through its retailing efforts, AMC hoped that sufficient competition
would be injected to hold down consumer prices by cutting the higgler
retailing margins. But the AMC has never controlled enough of the re-
tail business to be an effective price setter. Although approximately
20 percent of the domestic food output has been handled by AMC, much of
this is supplied to institutions or wholesaled to higglers, supermarkets,
hotels, restaurants, wholesalers, or distributors.

"Although AMC has grade specifications for its purchases, they frequently
are not closely adhered to. More training and closer supervision are
needed for the buyers. Cooling and storage facilities at some of the
branch stations are inadequate, and management of storage often falls
short. Despite the weekly radio communication between all offices, the
spatial distribution of products over the island frequently leaves much
to be desired.

"All this, plus problems of excessive spoilage, waste, shrinkage, pilfer-
age, and procurement of unsalable foodstuffs, result in the AMC operating
in the red. The 1976 FAO/IDB study of agricultural marketing found AMC
suffering from problems of shortage of management, poor sites, inadequate
facilities and conflicting political objectives--and that in general
AMC was overextended both in crop coverage and in management. The April
1978, IICA study, 'Brief Overall Diagnosis of Hillside Farming in Jamaica,
concluded that one of the AMC mistakes is to compete and try to put the
higglers our of business. It found AMC to be a very large organization,
and because of its complexity, faces many problems such as bureaucratic
inefficiency, labor unrest, heavy financial losses, poor distribution,
high operating costs, and lack of proper research into market intelli-
gence.

"The dual charge to AMC to serve as a direction setter and a price sup-
porter on the production side and a means of holding down food costs on
the consumer side results all too often in policy conflicts--with the
result that the agency fails to accomplish either."











3) Supermarkets

There are a number of supermarkets of various sizes handling a
varied product mix operating throughout Jamaica. Most are found in shop-
ping centers or higher income areas of the larger urban centers. Fresh
food crops sales are estimated in the Francis A. Kutish report at 5 to 10
percent of total weekly sales and meats at 28 to 30 percent. The major
deterrent to an expansion in the volume of food crops sold through super-
markets is the lack of a continuing supply and volume of high quality
graded products.


4) Hotel, Restaurant and Institutional Trade

The hotel, restaurant and institutional trade is a very signifi-
cant portion of the total food market. The tourist trade is the second
largest source of foreign exchange, and the demands of hotels and restau-
rants are very specific as to quality, volume, and continuity of supply.
Currently, the trade obtains most of its requirements through imports
although in many cases the same products that are imported are pro-
duced in Jamaica. The problem for the trade in purchasing local products
is that there are no entities in Jamaica with the capacity to assemble the
volume of the premium quality products required to maintain a continuous
supply. The present marketing system does not provide for volume differen-
tiation of products and monetary rewards for quality.'


5) Transportation

Although the road system between major towns and cities is fairly
good, roads in many producing areas are very poor or practically non-
existent. Availability of trucks in major producing areas appears to be
adequate although in less developed production areas there is a problem
with the availability of any kind of vehicle. In these areas, produce is
carried by donkey or on the backs of farmers or higglers from the farm to
a road where a truck, bus, taxi or other vehicle can pick it up. The small
volume of produce to be picked up under this system is highly inefficient
and costly.

There are few refrigerated trucks hauling fresh produce. The
bulk of the produce is hauled on open trucks of various sizes. Many hig-
glers ride buses with their produce piled on a carrier rack on the roof of
the bus. The manner of packing and handling of produce results in a high
incidence of bruising. In general, little care is taken and little appre-
ciation is given to the perishable nature of fresh produce in the transpor-
tation of food crops.









6) Cooperatives

Although production and marketing of the traditional crops
(mostly for processing and/or export) is cooperatively organized, comparable
organization in the domestic food crops is practically non-existent.
Food crop producers in general do not perform the functions of grading and
packing. The little grading that is done is undertaken at the roadside,
where small traders pick up produce, or at the market. The use of grades
and standards of quality is neither formalized nor standardized. A concept
of "fair average quality" is the accepted norm, both for purchasing and as
the basis of Government price collection and reporting.


7) Storage

Storage facilities are limited. Cold storage capacity is almost
entirely within the AMC structure and totals between 250 and 300 tons. Cold
storage are located at AMC's main depot in Kingston and in some of their
other area depots. They are generally in poor condition and poorly opera-
ted with losses exceeding 30 percent. Cold storage capacity is insignifi-
cant, representing only 0.3 percent of marketed product. Dry storage opera-
ted by AMC totals 480,000 cubic feet and is utilized for short-term storage
of peanuts, yams, beans, etc. If utilized properly, it would be signifi-
cant, but the facilities are very poor and outdated. There is a need for
both cold and common storage for limited periods for commodities such as
potatoes, onions, citrus and similar crops. Storage is required mainly in
the producing areas and in regional centers of distribution. Freezer stor-
age on the island is estimated at 1.9 million cubic feet concentrated in
Kingston and Montego Bay. This is mainly for frozen processed products.


8) Processing

There are about 125 agricultural processing plants in Jamaica,
but they are not being utilized to capacity. Many were established by the
Government to utilize "surplus" crops. Because of underutilization, the
Government has now invoked a moratorium on construction of new processing
facilities. Processing suffers, basically, from high priced inputs,
unavailability of equipment and parts, a general lack of technical know-how
and the lack of an agricultural base producing specifically for processing.


9) Jamaica Agricultural Society (JAS)

The JAS, largest and oldest farm organization in the country,
is involved in several areas of marketing. The organization has branches
in various localities of the country. Many of these branches have farm
supply stores that, although inadequately financed and supplied, attempt
to provide farmers with factor inputs. The JAS, in cooperation with AMC,




-10-


has been involved in a project to take over the former AMC buying stations
and provide a collection function to AMC. Currently, the project is work-
ing only in one locality. The JAS is farmer-based and national in scope
but lacks financing, personnel and expertise.


3. Problems and Constraints

The evolution of an atomistic market structure (many small inter-
mediaries) servicing an atomistic production sector (many small producers)
has resulted in an inefficient and inflexible marketing system. There are
few market intermediaries capable of concentrating a large enough volume
of a particular type, variety or quality of commodity to fulfill the demand
that exists for "differentiated" products. There are no wholesale inter-
mediaries (including AMC) or wholesale facilities capable of efficiently
influencing the orderly movement of products from those areas where sur-
pluses occur to deficit areas. At the production end, no one producing unit
or entity is sufficiently large, or strategically located, to assemble a
large enough volume of a particular commodity to permit proper sorting into
various qualities (grading) and packing and shipping it to the areas where
it is demanded.

Products frequently go from outlying parishes to Kingston and then
back again. Marketing costs are conservatively estimated at 68 percent.
This is extremely high considering the low quality of produce and the few
services involved. Production has failed to expand as anticipated by the
GOJ in spite of numerous programs and projects aimed at increasing produc-
tion because the required market stimulus is not forthcoming. Specific
problems have been identified as follows:

(1) Small farmers have difficulties in finding buyers for their produce.
A commonly heard complaint of small growers is that they cannot
find anyone to buy their products. Or, if they can find a buyer,
his price offer is so low that it isn't worthwhile to produce the
product. Also, the volume that can be taken may only be a portion
of the total volume produced.

(2) Country higgler buyers pick up small quantities and mixed lots
resulting in high assembly costs per unit. Higglers who go from
gate to gate to buy produce from small growers must make several
stops to get their purchases and travel a considerable distance
to get any volume of produce. And, they wind up with a varied
load of products.

(3) Low volume handled by higglers requires high markups. The small
quantities of food typically handled weekly by higglers require a
larger markup in order for them to live.







-11-


(4) Credit for retail 1jgglers is lacking. The need to turn to non-
institutional sources for credit and the large number of higglers
seeking this credit makes it difficult for higglers to handle
larger volumes.

(5) Public markets are inadequate and inconvenient. Most of the public
markets are old, lack adequate space and light, are unsanitary, and
have inadequate storage facilities. There are not enough of them at
conveniently located places in the urban areas to attract and serve
the consumers.

(6) Transportation is inadequate. Small growers or intermediaries liv-
ing beyond the bounds of existing improved roads find travel to and
from markets difficult. This increases costs, restricts access to
market and increases damage to fragile products.

(7) Retail prices fail to reflect consumer preferences.
Farm production tends to follow a traditional planting pattern and
does not respond quickly to changes in consumer demand.

(8) Sharp differences in market prices exist among parish markets.
Produce fails to move quickly between parishes in response to short
supplies or gluts at these markets.

(9) There are large amounts of physical wastage and spoilage. Losses of
30 to 40 percent of the value of the crop are estimated to result
from spoilage and wastage.

(10) Retail prices of fresh produce are "sticky." Higglers tend to main-
tain the retail prices of their deteriorating quality produce and
then have to discard it as unfit, rather than reducing the price soon
enough to sell it while the product is still salable.

(11) Daily market intelligence is lacking. Neither buyers nor growers
have adequate knowledge of current prices over the island. There
are two newspapers which publish retail prices for a limited number
of crops, but do not mention volume, quality of produce and demand.
Monthly estimates of marketing are collected by the MOA, but are
used internally only and neither published nor broadcast. The small
grower has no knowledge on which to base his marketing decisions.
The higglers are restricted in their market knowledge to what they
can pick up by word-of-mouth.

(12) Production planning information is lacking. The Government makes
quarterly crop surveys, but no information is disseminated to growers.
There is no projection of expected supplies, demand and income pros-
pects for the different crops to provide the producer with economic
intelligence to use in making his production decisions.





-12-


(13) There is a failure to use readily acceptable grades and standards.
Failure to develop and use grades and standards impedes trading of
produce, for it means every lot must be inspected personally to
establish grade and quality as a basis for price. This problem
makes it very difficult to trade by telephone and increases the
time needed to carry out the marketing process.

(14) There are substantial seasonal gluts and shortages. Frequently it
is a case of too much, followed by too little. Storage of seasonal
surpluses for later use is inadequate, and there is lack of planned
production to try to meet off-season demand. The result is inade-
quate producer outlets during seasonal gluts and dissatisfied con-
sumers during shortages.

(15) Nutritional needs and consumer demands are not sufficiently reflected
in setting Government price supports. Too much emphasis is placed
on cost of production as a basis for production policies. This is
not necessarily a good indicator of production patterns which are
in the best interests of the consumer.

(16) Small growers employ excessively low levels of technology. This
results in poor quality of products produced, and inadequate national
volume of output of certain crops. It also contributes to low small
farmer income.

(17) Because of uncertainty, instability, or lack of confidence, growers
large and small generate inadequate investment.

(18) Supermarkets are unable to get a steady supply of acceptable quality
of fresh produce. Customers cannot depend on them as a steady source
of quality produce which in turn impedes the growth of supermarkets
in selling fresh produce.

(19) There is a lack of a well developed and structured wholesale distri-
bution network. Jamaica is one of the few more highly developed
Third World countries that does not have a prominent group of whole-
sale distributors. This can be attributed to a number of factors
including a lack of wholesale facilities and a lack of adequate
sources of credit.

(20) Trained and experienced agricultural marketing personnel are lacking
in the public and private sectors with the necessary grasp of post
harvest technology and marketing techniques.

(21) No institution exists specifically to assist those engaged in market-
ing agricultural and food products and to initiate required changes
in the system.




- -13-


Most of these problems can be synthesized into the following nine
constraints and are addressed in this Project:

(1) High Assembly Costs
(2) High Wastage and Spoilage
(3) Absence of Uniform Grades and Standards
(4) High Marketing Margins (Retail and Wholesale)
(5) Absence of Adequate Market Intelligence
(6) Lack of Production Planning Based on Market Demand
(7) Lack of Adequate Distribution
(8) Lack of Wholesale Market Facilities
(9) Lack of a Marketing Institution (Department or Division) within
the Ministry of Agriculture


4. Project Rationale and Strategy

Marketing has been- identified as one of-the- greatest stumbling
blocks to increasing agricultural production in Jamaica. Under present con-
ditions, the marketing system is unable to cope with larger volumes of
product and does not relay the demands of consumers, reflected in price
movements, back to producers. Moreover, post harvest losses in Jamaica
are currently estimated at 30 to 40 percent. With a 40 percent loss, an increase
in productionof 66 percent would be required to offset the loss. Thi would
be impossible within the life of the Project.

Greater benefit, therefore, can be achieved by investing in the
marketing system and upgrading its efficiency rather than by concentrating
solely on increasing production. Any increases achieved in production,
without accompanying improvements in marketing, will only increase the rate
of post harvest losses. With or without production expansion, marketing
improvements can result in (a) a relatively large increase in the availabil-
ity of agricultural and food products to the consumer, (b) increased income
for the farmer and those engaged in the various functions of marketing,
and (c) a range of benefits for consumers.

The GOJ has adopted a National Agricultural and Food Marketing
Policy and Strategy (Annex F). The Policy and Strategy recognize that the
present system, although inadequate, can be upgraded through the provision
of assistance, extension, and training to intermediaries and producers to
increase efficiency of operations and bring about more rapid technological
change. MOA is given responsibility for marketing of agricultural and food
products.

To effect changes and improvements in the marketing system requires
an institution to undertake marketing development activities and marketing
extension. The Marketing Division to be established in the MOA will fulfill
that function.




-14-


To achieve efficient distribution of agricultural and food products,
wholesale distribution facilities are required to permit assembly, concen-
tration and distribution of quality products in volume. (See Figures
2 and 3.) The Subterminal Wholesale Distribution Markets to be constructed
and established in four areas of the country will enhance orderly marketing
and the efficient distribution of products. In addition, they will facili-
tate more adequate market regulation and monitoring, and the development,
dissemination and utilization of market information.

The establishment of Assembly and Grading Stations will facili-
tate the assembly of commodities as near as possible to the farmgate into
volumes large enough to sort into different grades and permit the volume
shipment of these commodities by grade to the market or buyers where they
are required. By distributing the various grades or qualities of commodi-
ties to those differentiated markets where a premium can be earned for the
best quality (such as to the hotel and restaurant trade) and distributing
the other grades at varying reduced prices in less discriminating markets,
higher profits can accrue to the farmers.


5. Other Donor Assistance and Related Agricultural Sector Programs

The adoption by the GOJ of a National Agricultural and Food
Marketing Policy and Strategy was a precondition established by both the
Inter-American Development Bank (IDB) and USAID for funding of marketing
projects. Over the past several months, discussions have been held with
the GOJ and IDB to formulate measures to achieve the strategy objectives.
The Agricultural Marketing Project is the second key element of an overall
marketing development strategy. The first element, the reconstruction of
Parish Retail Markets, is underway, funded by IBRD, and will be expanded
under a project soon to be approved by IDB. The third element, the construc-
tion of a new Terminal Wholesale Distribution Market and the reconstruc-
tion of retail mar-kets in the Kingston-St. Andrew area, is-in the planning--
stage. Several donor agencies have expressed interest in funding this
project which will likely be scheduled for 1982 or 1983.

The Project will be implemented in cooperation with other GOJ
ministries and agencies. It will be complementary to, and in certain cases
a prerequisite to, achieving goals and objectives for other GOJ and inter-
national donor agency-funded projects now in operation or soon to be imple-
mented. These projects include the following:

(1) Inland--isheries Project (USAMPD($8.9 million)1
The establishment of the Marketing Division, construction of sub-
terminal markets and development of producer marketing organiza-
tions will enhance the benefits of this $8.9-million project. Once
the volume of freshwater fish reaches the level at which local mar-
kets near the producing area can no longer absorb the supply,


Figures for this and all projects in this listing include GOJ contribution.




-15-


countrywide distribution will be a constraint requiring the con-
certed efforts of a Marketing Division and the facilities and
intermediaries to assemble, concentrate and distribute.

(2) IBRD First Rural Development ($15 million)
Nine parish markets in the Western Region of Jamaica are being
reconstructed. These markets will benefit directly from implemen-
tation of this Agricultural Marketing Project and their long run
prospects will be improved by an improved wholesale distribution
network and by the marketing extension activities of the Marketing
Division.

(3) IDB Parish Market Reconstruction Project ($10 million)
Under this project, 17 Parish retail markets (located throughout
all regions except the western) will be reconstructed. Optimum
use of these markets will depend upon this Agricultural Marketing
Project.

(4) Integrated Rural Development Project (USAID) ($26 million)
The proposed Agricultural Marketing Project will be instrumental
in initiating marketing programs for the 4,000 farmer families
involved in this program.

(5) Agricultural Planning Project (USAID) ($6.6 million)
This project will upgrade the MOA's capability to collect and
analyze data, manage the training of its personnel, and develop,
interpret and analyze government policies as they affect agri-
cultural and rural development. The Agricultural Marketing
Project will utilize basic data developed by the Planning Project
and in turn will provide it with an analysis of markets, situation
and outlook analysis, and.daily and periodic market news.

(6) Self-Supporting Farmers Development Program (GOJ/IDB) ($34 million)
This IDB-funded credit program is operated by the Jamaica Develop-
ment Bank for farmers in the 5-25 acre category. Interest of
10 percent is charged with the repayment and moratorium depending
upon the nature of the enterprise. Farmers must provide security
for loans, preferably a registered title for the land on which the
development is to be undertaken. There is no ceiling on the amount
of a loan.

(7) Agricultural Radio-Project ({-SAIDIGOJ/JBC) ($0.5 million)
This project will Iuild a radio transmitter inMandeville a-p
broadcast agricultural programs to the small farmers in the area.
This will facilitate the dissemination of market reports and exten-
sion information developed by the Marketing Division.

(8) National Planning Project (USAID/GOJ) ($0.3 million)
The Agricultural Marketing Advisor funded under this project has
assisted the MOA to develop a Marketing Strategy and Policy. The
proposed Project is part of that strategy.





-16-





Two related (GOJ) agricultural sector programs that will benefit
from the Project include Project Land Lease and Pioneer Farms. The Project
will provide marketing expertise and assistance in developing marketing
programs for farms established under these programs.

Other programs and activities that will be benefited by the Pro-
ject as well as be beneficial to the Project include those encompassed by
the Agricultural Credit Board, the Crop Lien Program, the Jamaica Industrial
Development Corporation, and the Jamaica Export Trading Corporation.




Figure 2
Illustration of Proposed Marketing Distribution System


Key





0
0
'o


<=>


Facility
=Terminal, Wholesale Market


= Subterminal, Wholesale Harket

= Parish, Retail Market [
= Maior Storaep
= Assembly and Grading
Stations


* I
-1






Figure 3

Present P'acish Retail Markets and Potential Areas for Subterminal Wholesale Distribution Markets


ST, MARY


PORTLAND


ST. THOMAS


* usa 1uba
* MIDUM MHIIl
* uAULL IWIII
0 Potential.Area Subterminal Market


-KINGSTON


ST. ANDREW


TERMINAL
MARKET


ST. JAMES


HANOVER


TRELAWNY


ST. ANN




-19-.


B. Project Components

1. Goal and Purpose

The goal of the Project is to improve the living standards of
farmers, consumers and market intermediaries. This will be achieved by
reducing post harvest losses, increasing producers' share of final price
for the product, cutting intermediaries' costs, and providing larger
quantities of better quality food to consumers.

The purpose of the Project is to improve the efficiency of the
marketing system.

To accomplish the goal and purpose, the Project provides for:

the establishment of a Marketing Division in the Ministry
of Agriculture;

the construction of four Subterminal Wholesale Distribution
Markets; and,

the establishment and construction of 25 Assembly and Grad-
ing Stations in producing areas.

Discussion of each of these components follows:


2. Marketing Division

AID Loan $1,991,000; Grant $2,737,000

GOJ $3,426,000

A Marketing Division in the Ministry of Agriculture will be
established and strengthened through technical assistance, training, com-
modity support, and additional personnel so that it will have the capability
to undertake the following activities:

Marketing Development Assist individuals, firms and government insti-
tutions involved in the agricultural marketing system to perform their
marketing functions more efficiently. Marketing development includes:

a) Post-Harvest Technology assisting with commodity and food
handling techniques, storage, processing, grading, packing,
and transportation;

b) Producer Support helping producers in organizing to market their
produce, to improve their harvesting, handling, grading, packing,
and transportation methods, to improve the assembling of their
products into larger volumes of identifiable grades, and to dis-
tribute factor inputs; and,





-20-


c) Product Distribution assisting wholesalers and retailers
(including AMC) in the agricultural marketing system to per-
form their roles better: 1) to assist them in improving their
organization; 2) to upgrade their marketing techniques; 3) to
assist them in obtaining financing; 4) to assist them in setting
up record keeping systems; 5) to assist them in expanding their
operations to a more efficient level; and, 6) to plan and up-
grade marketing facilities and market infrastructure.

Development of Markets Assist in the acquisition of new markets and
the expansion of existing markets, either domestic or export, and assist
in developing new products and crops or finding new uses for existing
ones.

Market Information Provide market analysis, supply and demand analysis,
crop forecasts, periodic situation and outlook reports, market monitoring
of prices, volume and quality, storage and processor stocks, domestic
market trends, international supply and demand, imports, exports,
export trends and the dissemination of timely reports, publications and
news releases.

Market Research Perform research on commodity production costs, market-
ing costs and profit margins at each marketing stage.

Marketing Training and Extension Upgrade the level of marketing aware-
ness of producers, market intermediaries, government employees engaged
in servicing agriculture, and individuals, firms or government institu-
tions performing any of the functions of marketing.

Quality Assurance Develop and enforce grades and quality standards for
the domestic and export markets. The regulation of marketing practices
and compliance with grades and standards will be enforced by trained
inspectors.


a. Technical Assistance

The level, types and timing of technical assistance are based
upon the need to fill the marketing expertise gap in the MOA in the short
run while training the Marketing Division to be self-sustaining by the end
of the Project. A total of 32.5 person-years of technical assistance will
be required for these purposes at a cost of $4 million (of which $2.7 mil-
lion will be grant-funded and the remainder loan-funded). The GOJ has
requested that only the technical assistance provided directly to in-country
training programs be included under the loan. The balance the GOJ requests
be grant funded.










The technical assistance to be provided includes the following
(See Annex G for job descriptions and Figure 4 for the proposed technical
assistance schedule):

a) Long-term technical advisors (29.5 person-years)

Team Leader
Horticultural Marketing Specialist
Livestock and Animal Products Marketing Specialist
Market Information Specialist
Market Training Specialist
Inspection/Quality Assurance Specialist
Market Management Specialist

b) Short-term consultants as required (3 person-years)

Storage Specialist
Processing Specialist
Grading and Packing Systems Specialist
Architect
Wholesale Distribution Specialist
Export Marketing Specialist
Market Administration/Institutional Development Specialists

Commodity areas requiring technical assistance include fruit,
vegetables, flowers and ornamentals, livestock, dairy and fish. In addition,
technical assistance is required in areas of processing and in producer
organization. Recognizing the limitation in the number of advisors that
could be provided, it was deemed advisable to provide a Livestock and
Animal Products Marketing Specialist with some knowledge of the principles
of fish marketing and experience in producer organization and in aspects
of processing. The Horticultural Marketing Specialist would have knowledge
of marketing fruits, vegetables, flowers and ornamentals, in various as-
pects of processing, in the operation of grading and packing plants and in
producer organization. The commodity advisors will be required throughout
the full duration of the Project.

The Marketing Information Specialist will be required to assist
with the marketing information/intelligence program of the Division. His/
her services are required as soon as possible after initiation of the
Project. It is believed that three years will be sufficient for this
advisor to help establish a satisfactory marketing information program as
there is already a base upon which to work. The same is true for the Qual-
ity Assurance Specialist. There is now a unit responsible for inspection
of fresh produce for export. Utilizing the existing competence, four years
should be sufficient to develop grades and standards and a comprehensive
quality control/inspection program in the Division. A Marketing Training
Specialist is needed to assist in initiating and carrying out marketing
training programs. Because of the dearth of trained marketing people,
this specialist will be required throughout the duration of the Project.




-22-


Figure 4

Technical Assistance Scheduling


Person
Area of Assistance Year 1 Year 2 Year 3 Year 4 Year 5
Years

Long Term
Team Leader_ __ 5

Horticulture Marketing
Specialist

Livestock & Animal Products 5
Marketing Specialist

Marketing Information Specialist __ __ 3

Inspection/Quality Assurance 4
Specialist

Marketing Training Specialist 5

Market Management Specialist ___ 21

Subtotal (person years) 29

Person
Short Term Months

Storage Specialist 6

Processing Specialist 3

Wholesale Distribution 3
Specialist

Export Marketing Specialist 4

Grading & Packing Systems 2
Specialist

Architect Wholesale Markets 6
& Producer Markets

Miscellaneous as Required 12

Subtotal (person years) 3

Total (person years) 32




--LJ--


A Market Management Specialist is required to assist the MOA, other related
ministries and market intermediaries in.the operation and management of
the Wholesale distribution system. The full.-t.e services.-of the-advisor
will not be required until midway in the Project when the first Subterminal
Wholesale Distribution Market is nearing completion.

In addition to the long term advisors, short-term consultants
will be required from time to time in special technical areas such as:
storage, processing, wholesale distribution, export marketing, grading
and packing systems, mass media communications, architects, extension
techniques, marketing administration and institutional development.

Because of the complexity and broad scope of work to be under-
taken, a Team Leader will be required to assist the Director of the Market-
ing Division in coordinating the technical assistance program. Under the
current USAID National Planning Project, a Marketing Advisor is being
provided through October 1979.. The advisor will be available to assist
with start-up and initial implementation of this Agricultural Marketing
Project. The GOJ has also indicated its intention to request an extension
of this same advisor to fill the position of Team Leader.

b. Training

There is a dearth of people in Jamaica trained and experienced
in the field of agricultural and food marketing in either the public or
private sector. Training in various aspects of marketing is a prerequi-
site to achieving improvements in the marketing system. Training for the
three elements of the Project will be centered in the Marketing Division,
and will be undertaken in cooperation with the Training Division of the
MOA.

Training will be undertaken at two levels. 'Level one is the
training of Division staff. Level two is the training of individuals
involved in the Subterminal Wholesale Distribution Markets and Assembly
and Grading Stations and other participants in the marketing system.
Training at level two will be undertaken by Division staff and technical
advisors in cooperation with the Training Division of the MOA.

Training will consist of 20 person-years of long-term external
training (10 persons undertaking a two-year master's degree or equivalent
program), 5 person-years of short-term external training (20 persons under-
taking three-month training programs), and 34.6 person-years of short-
term in-country training (600 persons undertaking three-week in-country
courses). A total of 59.6 person-years of training will be provided,
affording training in various aspects of marketing to 630 people. The long-
term and short-term external training will be financed through USAID funds
and the short-term internal training through GOJ funding. Prior to the
participant trainees' departure from Jamaica, the GOJ will implement pro-
cedures for ensuring that the participants will return to their posts for
a period of time not less than twice the length of time spent in training.
(See Table 2 and Figure 5.)







Table 2

Training Programs by Type of Training, Subject Matter and Number of Participants


Subject


General Marketing
Exporting
Grading & Packing
Market Research
Commodity Marketing
Market Information/
Analysis
Packaging/Transpor-
tation
Storage Operation
Market Management
Processing Logistics
Retailing & Management
Wholesaling & Management
Quality Assurance/
Inspection
Market Regulations
Market Monitoring
Harvesting & Handling
Market Structure


Long-Term (External)


(2 Years Each)
1


1
2

1

1

1
1








2
10


Tvpe of Training


Short-term (External)


.1 I.-


(3 Months Each)


20


Short-Term (In-Country)


(3 Weeks Each)
100
20
60
20
20


20

20
20
20
20
60
60

20
20
20
100

600


i. I-i


I








Figure 5

Marketing Project Training Scheduling


Activity


Master's or Equivalent

First Program (3 degrees)
Second Program (4 degrees)
Third Program (3 degrees)

Short Term External

20 persons to be trained at 3 months/person

Short Term In-Country

20 persons per 3-week course (6 per year)


Year 1


Year 2 | Year 3


,I
Year ear 1 Yar 3 Year 4 1 Year5


_______ ____________ 1-


(120).


(1)


(120)
--.--- I


1


Year 4 1 YearS


(120)


(120)


(120)


I








Master's or Equivalent Training

Ten candidates will be selected from among MOA staff to be assigned
to the Marketing Division and/or from new staff recruited for the Division.
During the first year of the Project, three persons will be sent to a U.S.
university for two years of training in special areas of marketing. At
the beginning of year two, four more persons will be sent, and at mid-year
of year two, three more persons will be sent. The first three willtcomplete
training and return to take up duties in the Division in the middle of the
third year of the Project.


Short-Term Training External

Persons selected will receive three months of training at various
institutions, organizations or firms in countries other than Jamaica.
Trainees will receive either practical experience or training in a special-
ized field in a training program. Two persons will receive training in the
first year, five in the second, eight in the third, four in the fourth, and
one in the last year of the Project. Short-term external training will
concentrate mostly on staff of the Marketing Division and key staff of
the Subterminal Wholesale Distribution Markets.


Short-Term Training In-Country

Short-term in-country training will be financed by the GOJ and will
be undertaken in cooperation with the Training Division of the MOA. The
Training Division will provide facilities and assist in scheduling the
courses. Training will be conducted by the Marketing Training Specialist
and other technical advisors and by key staff of the Marketing Division.

Training courses will be three weeks in duration with 20 persons
in each class. Six courses will be given each year, approximately one every
other month and will be conducted in the MOA training facilities. A total
of 120 persons will be trained per year with 600 trained during the course
of the Project.

In addition, on-the-job training will be given during the course
of establishing the Assembly and Grading Stations and the Subterminal Whole-
sale Distribution Markets. This training will be undertaken by technical
advisors and Marketing Division staff. The first two Assembly and Grading
Stations established the first year will serve as on-the-job training
facilities for both Marketing Division staff and members of the rural commun-
ity.

The Jamaica School of Agriculture (JSA) is the principal educa-
tional institution in Jamaica providing formal training in agricultural
subjects. Some dialogue has already been held with JSA with regard to the
possibilities for upgrading the marketing curriculum. Further discussions
will be held on the possibility of technical advisors and Marketing Division
staff teaching courses in specialized areas of marketing at JSA.




-27-


c. Commodity Support

Transportation will be a key factor in successful implementation
of the Project. The Ministry has no vehicles for new projects, and staff
immobility is already a serious problem.

A total of 11 utility vehicles will be financed for use by the
Marketing Division. Two vehicles are required for'each of the three
branches of the Division to carry out their programs. One vehicle is
required for administrative purposes, and one vehicle is required in each
of the four districts. Other commodities to be provided include miscellan-
eous equipment and supplies required for training programs, research and
general Division activities. These include calculators, audio-visual equip-
ment and equipment for quality control and inspection.

Scheduling for the procurement of these commodities will be as
shown in Figure 6.

Figure 6
Commodity Scheduling

Marketing Division Year 1 Year 2 Year 3 Year 4 Year 5

Ordering & Delivery
of 5 Utility (5)
Vehicles

Ordering & Delivery
of 6 Utility (6)
Vehicles

Miscellaneous Equip-
ment (Calculators,
films, etc.)








d. Personnel

The Marketing Division has been structured to meet the minimal
requirements of providing the various activities and functions that must
be performed to upgrade the Agricultural and Food Marketing System.. The
structure of the Division is based upon the experience of similar
divisions in other commonwealth countries, both developing and developed,
and adapted to conditions existing in Jamaica. The Division will consist
of three branches, and eight units, each with a specific task, but each
having complementary interactions with other units. The number and com-
position of staff to be provided are considered the minimum necessary to pro-
vide the broad spectrum of services required (Table 3 and Figure 7).

The professional marketing staff of the Division will total 55
while support staff will total 41. There are currently 25 positions in the
MOA which have been identified as marketing related, and these will be
transferred to the Division. The remaining 71 positions will be recruited
during the first two years of the Project.

The Director of the Division will be the Project Manager. The
Director/Project Manager, with the assistance of the technical advisors,
will be responsible for implementing the Project and establishing the
Division.

In addition to the Director/Project Manager, the Project staff
will consist of the following:

Assistant Directors (3)
Three Assistant Directors are required for the three branches of
the Division.

Unit Heads/Marketing Specialists (7)
Seven Unit Heads are required to develop programs and oversee the speci-
fic undertakings of their units.

Agricultural Marketing Specialists (16)
Agricultural Marketing Specialists with expert knowledge of particular
commodity or functional areas are required to carry out the activities
of each of the Units. They will bethe core of the Division. The
commodity and functional specialists will serve as resource personnel
to the various subprojects and activities while the other specialists
will be involved in specific areas providing continuing information and
services. These 16 specialists include the following:

2 Outlook Specialists
2 Marketing Research Specialists
1 Fruit and Vegetable Marketing Specialist
1 Livestock and Animal Products Marketing Specialist
1 Food Grains and Traditional Crops Marketing Specialist
2 Agricultural Export Marketing Specialists


-Zd-





Figure 7

Organization Chart of Proposed Marketing Division


~- V~.~~ ..


INuTM6irtvDl
L..LZe2


--~=F-I~*1








est X,4j


1. rtin* vNT/wn.rr 9mr.eI.

3. eOuv Pst~$ns N.w IN PtrArmn UNIT
q, Om Pes erN nrf t 7 Pre r IyRI


............................................................................. .;







Table 3
Marketing Division Staffing Requirements and Cots
Marketing Division Staffing Requirements and Costs--


($000)


I T + 4


Grade



SMG
NPS
FMA
FAA
PST
TSSGT
CR
ST
LMO


Total
Number


(4)
(35)
(3)
(2)
(16)
( 1)
(11)
(19)
( 5)


Position



Directors
Marketing Specialists
Administration/Personnel
Finance
Inspection/Monitor
Lab Technician
Clerk
Stenographer/Typist
Driver
Subtotal (salary & allowances + 25%
bonus
Fringe Benefits (15 %)
Travel
Consultants (As required)
Total
Less Staff now in'MOA (including
travel, bonuses and allowances)

Additional Funding Required


Year 1


Staff in Place
': $
(4) 52
(20) 169
(3) 19
(2) 14
(12) 71
(1) 5
(6) 18
(11) 35
(2) 5
388

58
7
44


(61) 497

226

271


Year .2


Staff in Place
$
(4) 53
(35) 291
(3) 20
(2) 15
(16) 97
(1) 5
(11) 34
(19) 58
(5) 13
587

88
10
45


(96)


234

496


(96)


Year 3


Year 4


.1. 4. .5. 4


Year 5


$

55
301
21
15
101
5
35
61
13
608

91
10
45


$

56
311
22
16
106
5
37
63
14
630

94
10
45


$

57
320
22
17
110
6
37
66
14
649

98
10
45


Total


273
1,392
104
77
485
26
161
283
59
2,862.


429
47.
224


3,562

1,206

2,356


45 4


1 / Includes annual salary increments


779

249

530


802

256

546


(96)








1 Retail and Wholesale Marketing Specialist
1 Agro-Industries and Food Processing Specialist
1 Producer Marketing Specialist
1 Senior Market Inspector
2 Agricultural Marketing Specialists in Quality Control
1 Agricultural Marketing Training Specialist

Four Regional Officers/Marketing Speci-alists will be assigned, one
to each Regional Office. They are required to provide administrative respon-
sibility for 24 out-posted field staff of the three branches. In addition,
they will serve as senior marketing extension specialists. They will be
responsible directly to the Director of the Marketing Division, but will
also report to the Regional Director to facilitate regional administration
of field activities undertaken by the Division.

Eight marketing extension specialists in the Marketing Develop-
ment Branch, eight market monitors in the Market Information and Research
Branch, and eight inspection officers from the Quality Assurance Branch
are required to be out-posted--two of each category in each Region with a
total of six in each region. They will look to the Regional Marketing
Officer for administrative matters and assistance. When needed, they will
have office space and support from the regional offices.

On the support side, key officers will include an administrative
officer, financial officer, personnel officer, and an accountant. The per-
sonnel officer and the accountant will be out-posted to the Personnel
Division and the Accounting Division, respectively. Other staff require-
ments include a lab technician in the Quality Assurance Branch, a research/
statistical librarian in the Marketing Information and Research Branch and
clerks (11), secretaries (4), typists (15), and drivers (5) located through-
out the various branches and units. In addition, funds are provided for
local consultants to be used as required.


c. Marketing Division Budget

The life of Project costs for establishing the Marketing Division
within the MOA are shown in Table 4.


_/ J








Table 4
Marketing Division Costs: New Funding

(US $000)




TT R A D G 0 J
Year 1 Year 2 Year 3 Year 4 Year 5 Total Year:l Year 2 Year-3 Year 4 Year 5 Total


Staffing 2 / -- -- -- -- 271 496 513 530 546 2,356
Vehicles 50 60 -.i0 -- -- 1--
Vehicles Fuel &
Maintenance --8 27 37 37 37 146

Utilities & Miscell-
aneous -- -- -- -- 7 7 7 7 7 35
Training 41 178 208 53 12 492 20 20 20 20 20 100
Training Supplies &
Materials 2 2 2 2 2 10 -- -- -
Miscellaneous Equipment 3 2 1 -- 6 -- -- -- -
Technical Assistance 660 648 704 642 512 3,166 --
Total 756 890 915 697 526 3,784 306 550 577 594 610 2,637
Contingency (5%) 38 44 46 35 26 189 15 28 29 30 31 133
Inflation (10%) -- 89 192 230 244 755 55 121 197 283 656
Project Element '794 1,023 1,153 962 796 4,728 321 633 727 821 924 3,426
Cost
Total Element Cost (USAI + GOJ) .. 8,154

1/ There are 25 positions in the MOA that have been identified that will be transferred to the Division
2/ Includes allowances, fringe benefits, travel expenses, 25 percent project bonus and annual salary increments.




-33-


3. Subterminal Wholesale Distribution Markets

AID Loan $5,860,000

GOJ $5,442,000

In order to achieve efficiencies in distribution, reduce post
harvest losses, expand markets for locally produced food crops, and increase
availability of graded agricultural products, four Subterminal Wholesale
Distribution Markets are planned under the Project. Given the size of the
island, its topography, and geographical distribution of production and
retail centers, it has been determined that four such markets would provide
the most efficient coverage.

Selection of sites for the Subterminal Wholesale Distribution
Markets will be undertaken in cooperation with Parish Councils, the Minis-
try of Local Government, Town Planning, Ministry of Works, and other perti-
nent agencies. Criteria for selection of sites will include:

Patterns of product flow;
Present and historical usage of area for markets;
Adequacy of road network;
Availability of utilities and services;
Location with respect to sources of supply and retail markets;
Overall civic development plans;
Ease of access to main road(s); and,
Physical characteristics of the soil and drainage.

Separate buildings or "blocks" situated on sites of approxi-
mately 10 acres are most appropriate to reduce contamination of one type
of product by another and to permit optimum efficiency and utilization of
the premises. Size of the blocks is based upon models presented in the FAO
study mentioned earlier. The size of the site and the layout of the various
blocks allow for future expansion.

Market design will follow closely the principles outlined in the
FAO study. Experience of the U.S. Department of Agriculture in designing
wholesale facilities will also be utilized. The type of facility will be
based on an "open-hall" system, which is considered to be appropriate for
Jamaican conditions, considering cost, efficiency and protection of produce.
The four markets will vary somewhat in size, but will consist generally
of market blocks and storage for fruits and vegetables; meat and fish, and
general provisions; a general administration block and employee facilities;
a maintenance block; a farmers' market; and vendors' offices.

The fruit and vegetable and meat and fish market blocks will
provide for display, temporary on-floor storage and sales area. In addi-
tion, office space will be provided for twenty wholesalers on a mezzanne




-34-


above the sales floors. The general provisions block will provide display
and sales area and, in addition, will serve as a longer term storage area
for produce not requiring temperature or humidity control.

A farmers' market will be included in each market with a covered
sales area of 2500 square feet plus parking space. This will provide for
20 sales stalls where farmers or higglers may bring their produce to the
market, park their trucks, wagons, or other type conveyance, and sell
directly to wholesalers and/or retailers.

The meat and fish cold storage will be located immediately to
the rear of the meat and fish market blocks with direct access from the
market. The fruit and vegetable cold storage will be located adjacent
to the fruit and vegetable markets. Produce can move directly into cold
storage either from delivery trucks or from the market. Produce can also
move directly out of storage onto trucks for immediate delivery (sales
out of storage) or into the markets for display and sale.

A general administration block will provide offices and facili-
ties for the management staff of the market and facilities for the produce
inspectors and market monitors. A cafeteria, washrooms, dining room and
changing rooms will be provided in the employee facility. The maintenance
block will provide facilities for storing tools, undertaking minor repairs
on equipment and vehicles and will provide a parking area for the three
refrigerated trucks to be provided to each market. General maintenance
of all market equipment will be carried out by a general mechanic/mainten-
ance man from the facility. A standby generator and fuel tank will also
be located at the facility.

Access to the market will be limited to qualified wholesalers
and.retailers and to farmers or small market intermediaries. Consumers
will not be admitted. A system of control will be implemented to limit
entry into the markets.

The four Subterminal Wholesale Distribution Markets will be
constructed at a 6csf-of $7.6 million. Table 5 shows the cost breakdown.
Final plans, blueprints and lists of required equipment will be prepared
during the first six months of the Project by the Marketing Division and
the Agricultural Research Projects Unit of the Ministry of Public Works.
Construction time is projected to be 18 months. Equipment lists will be
finalized after site selection. Equipment, which is part of the cost of
the facilities, includes compressors and condensors, air conditioning units,
piping, truck scales, meat rails and hooks, backup generators, rol-ler con-
veyors, carts, scales and fork lifts. Scheduling of construction and pro-
curement is shown in Figure 8,






Table 5

Wholesale Market Construction Costs
(US$)


Component


Dimensions


Fruit & Vegetable Market
Meat & Fish Market
General Provisions Market
Meat & Fish Cold Storage
Fruit & Vegetable Cold
Storage
General Administration
Employee Facilities
Maintenance
Farmers' Market
Vendors' Offices (10)
Total Construction Costs


(ft)
;0 x 200
0 x 200
0 x 50
0 x 50 x 14

0 x 100 x 14
0 x 50
0 x 24
0 x 60
5 x 100
0 x 30


Footaee


(Sq..Ft.)
16,000
10,000
2,000
1,500

3,000
1,500
1,440
1,800
2,500
3,000
42,740


Unit Cost
($/Sq. Ft.)
10
30
15
56

56
20
30
30
5
20

22 (avg.)


Site Development (30% of construction)
Design Contingencies (10% of construction)
ASE/QS/Construction Supervision Fees
(16%.of construction)
Ten Acres of Land
Standby Generator, Truck Scales
& Miscellaneous Equipment
Average Cost per Market

Total Costs for Four Markets plus Rounding


l atagj Cost


$
160,000
300,000
30,000
84,000

168,000
30,000
43,200
54,000
12,500
60,000
941,700



282,510
94,170

150,672
82,000


338 000
1,889,062

7,600,000


AID


$
80,000
200,000
10,000
75,600

151,200
18,000
25,920
27,000
9,375
36,000
633,095


338,000
971,095


GOJ


$
80,000
100,000
20,000
8,400

16,800
12,000
17,280
27 ,000
3,125
24 000
308,605



282,510
94,170

150,672
82,000


917,967


3,900,000 3,700,000


Total Cost


Component -- -=-


-




-36-


Figure 8

Scheduling of Construction and Procurement


Activity Year 1 Year 2 Year 3 Year 4 Year 5

Wholesale Distribution
Markets
Ordering & Delivery of (6) (6)
12 refrigerated trucks

Buildings, equipment,
infrastructure, con- (2) (2)
tracts, construction




Three ten-ton refrigerated trucks, one for meat and the other
two for produce, will be provided to each of the four Subterminal Wholesale
Distribution Markets to facilitate transport of perishables from one region
to another. This will help to alleviate the chronic problem of surpluses
in one area and shortages in another and help the markets fulfill their
assembly, concentration and distribution functions. The number of trucks
to be provided will be sufficient to demonstrate the benefits of refrigera-
ted transport and provide the capability to move a large volume of produce
from one wholesale facility to another. Trucks of .various sizes, but
without refrigeration, are now utilized. The trucks will be rented to
wholesalers or retailers by the management of the market.

To manage the markets, a limited liability company will be
established with the GOJ as the principal stockholder. The company will
be under the aegis of the Marketing Division of the MOA, but each market
will have its own staff and operate autonomously. The Board of Directors
of the company will consist of two representatives from the MOA (one member,
the Financial Officer of the Marketing Division, will serve as Corporate
Secretary), the manager of each wholesale market, and five members from
the agricultural and private sector.

The company will be responsible for hiring the General Manager
of each market and for reviewing the operations of the markets. The Cor-
porate Secretary will consolidate the financial reports of the markets,
reporting to the Board at periodic meetings. There will be no full time
staff of the Board other than the Corporate Secretary, who will be a staff
member of the Marketing Division.

Market fees will be assessed on the basis of square footage of
market space utilized, rental for office space and rental of storage. Fees
will be based on operating costs and amortization of capital costs. (See the
Financial Analysis Section for a more detailed discussion.)




-37-


The management of the wholesale facilities and the wholesale
distributors will require training in management and wholesaling, The
management staff will be selected and hired in advance of completion of
the facilities and provided with short-term external and in-country train-
ing. Wholesalers will be provided short-term in-country training and assis-
tance by marketing extension specialists and technical advisors. The
training will be provided through the Marketing Division in cooperation
with the Training Division of the MOA.

Each market will require a minimum staff consisting of a
general manager, an assistant manager, a storage manager, an assistant
storage manager, an accountant/cashier, two clerks, a typist, a dispatch
clerk (for vehicles), a mechanic/equipment maintenance man, two custodians,
three general laborers, six drivers, three gatekeepers and three guards,
one for each shift. (Table 6).

The total cost of the Subterminal Wholesale Distribution Markets
over the life of the Project is $11.3 million. The allocation of these
costs to the relevant categories is shown in Tables 6 and 7,







Table 6


Subterminal Wholesale Distribution Markets Staffing


Requirements and Costs 1/


Personnel


Market Manager
Assistant Manager
Storage Manager
Assistant Storage Manager
Accountant
Clerk
Typist
Dispatch Clerk
Mechanical/Equipment Maintenance
Custodian
Laborers
Drivers
Gatekeeper
Guards
Total Salary
Fringe Benefits (15%)
Total Salary + Benefits
Contingency (5%)
Inflation (compounded 10%)


Total
Numhbr


(4)
(4)
(4)
(4)
(4)
(8)
(4)
(4)
(4)
(8)
(12)
(24)
(12)
(12)







(108)


Year 1


Year 2


Year 3


Number


No. $

(2) 12
(2) 9
(2) 9
(2) 7
(2) 8
(4) 9
(2) 5
(2) 7
(2) 10
(4) 5
(6) 7
(12) 40
(6) 12
(6) 12
152
22
174
9
37
(54) 220


Year 4


118
6008) 494


1/ Includes Annual Salary Increments


Year 5


Total


$

66
47
47
36
42
48
24
36
50
30
39
210
63
63
801
120
921
46
335
1,302


_ _ _ _ _ _ _ _ I I. _ _ _ _ _


Yer


-I- --.I ++


No. $

(4) 26
(4) 18
(4) 18
(4) 14
(4) 16
(8) 19
(4) 9
(4) 14
(4) 19
(8) 12
(12) 15
(24) 83
(12) 24
24
311
47
358
18.





28
20
20
15
18
20
10
15
21
13
17
87
27
27
338
51
389
19
180
588-




Table 7
Subterminal Wholesale Distribution Markets (4) Costs
(US $000)


Capital Costs
Land Acquisition
Construction, Equip-
ment, Plans,
Fencing, etc.
Trucks, Refrigerated
(12)
Total Capital Costs

Operating Expenses
Utilities, Telephone,
miscellaneous
Staffing & Labor
Vehicle Fuel &
Maintenance

Gross Operating
Expenses

Revenue
Net Operating
Expenses

Net Cost to GOJ
Contingency (5%)
Inflation (10%)

Project Element Cost

Total Element Cost
(USAIDI GOJ)


_ II _


Year 1 Year 2 Year 3 Year 3 Year 5 Total Year I1 Year 2


450

2,575





--


__ --


D--

129
258

2,962


--
1,000


450

1,450


72
305

1,827


775


39
257

1,071


3,900


900


4,800 300 1,800


Year 3



1,000





1,000


11

173
25


209


II --. 209


--

240
820

5,860


1,800
90
180

2,070


1,209
60
253

1,522


Year 4 Year 5 Total


600


28

359
50


437


105
332


932
47
308

1,287


40

388
50


478


314
164


164
8
76

248


328
3,372





3,700


79

.920
125


1,124


419
705


4,405
220
817

5,442

11.302


1 .1 L _________ J 4. J ~ I







4. Assembly and Grading Stations


AID Loan $1,381,000

GOJ $2,845,000

To achieve optimum marketing efficiency, farm produce should be
assembled, graded and packed for distribution as near to the farmgate as
possible. The Project provides for establishing 25 Assembly and Grading
Stations in selected producing areas. It was determined that the Market-
ing Division would be able to handle approximately 25 Stations
over the five year life of the Project. Also, preliminary analysis
of the marketing system and production regions indicated a need for
establishing about six Stations in the general vicinity of each Subterminal
Wholesale Distribution Market.

Establishment of the Stations will permit the cooperative col-
lection and assembly of commodities in volumes large enough to sort into
identifiable grades and to facilitate shipment to subterminal or terminal
markets. For small intermediaries, the Assembly and Grading Stations will
greatly reduce the cost of obtaining produce because they can go to a faci-
lity and obtain whatever volume is required of the commodities
handled. The product will already be graded, affording the intermediary
the opportunity of purchasing whatever grade or quality is desired. Collec-
tion of like commodities and differentiating them by grade will both pro-
mote economies of scale and result in greater unit profit to the producer.
Assembly of larger volumes of differentiated products in the producing area
will also encourage development and growth of larger, more efficient distri-
butors (wholesalers) and evolution of a more structured marketing system.

Assembly and Grading Stations will also provide a means of dis-
tributing factor inputs (fertilizer, insecticides, fungicides, herbicides,
small tools and implements and containers) to small farmers. Presently,
small farmers do not have easy access to such inputs.

Selection of areas and sites for the Stations will be undertaken
on a case-by-case basis. Initial contact with producers by production and
marketing extension staff and Jamaica Agricultural Society personnel to
upgrade marketing knowledge and awareness will precede area and site selec-
tion. Detailed surveys will be conducted in producing areas by the Market-
ing Division to ascertain producer and market intermediary interest. Pro-
ducer groups which will participate in the development and operation of
Stations will then be selected by Marketing Division staff together with
JAS personnel, agricultural extension agents and other pertinent agencies.
Criteria for selection of Station sites and producer groups will include
the following:

producer and/or higgler interest in joining together in a market-
ing activity;
production know-how of producers;
volume of particular crops within a "reasonable" radius;
adequacy of feeder roads; and,
availability of utilities.







In order to assure the desired degree of participation by
farmers and "country higglers" prior to the selection of an area for estab-
lishment of a Station, a survey will be made to provide information on
farm families, higglers, interrelationships between farmers and higglers,
number of households and their degree of involvement and dependence on
higglering, the type and relative influence of social organizations, and
the leadership structure. Extension strategy and training programs will
be oriented to overcoming the perceived socio-cultural constraints as well
as constraints of a more technical nature.


a. Construction and Equipment

The type and complexity of facilities to be constructed and the
operations to be undertaken will vary from Station to Station. The criteria
for determining the type of facility at each site will include the following:

types of crops to be graded, packed and marketed;
general quality of produce;
size, number and volume of producers;
range of commodities produced;
target market (e.g., domestic, export, or both); and,
distance from markets.

Design of the facilities will be undertaken in conjunction with
fruit and vegetable marketing specialists and consultants in grading and
packing systems. Two basic models have been developed (See Table 8). Final
design of each will be based on these models, but there will be variations
depending on the above criteria.

Final area and site selection will occur during the first three
years of the Project. Two sites will be selected and plans prepared during
the first six months of year one. The first two Stations will be operational
before the end of year one. They will serve as training centers and trial
demonstrations and as a basis for other centers to be established.

The Agricultural Research Project Unit (ARP Unit) will be respon-
sible for plans, blueprints, letting contracts, and supervision and inspec-
tion of contractors' performance.

Construction costs for the 25 Stations are estimated to be $1.7
million (Table 8). Equipment to be provided includes grading and packing
equipment, pre-cooling equipment (hydro or air blast),'compressors,-conden-
sors, and roller conveyors.

Scheduling for construction of the Stations is as illustrated
in Figure 9.








Table 8


Assembly and Grading Station Construction Costs


by Model of Facility


(US$)


AID GOJ TOTAL


Model No. 1

Grading & Packing (30' x 60')
Offices & Store (15' x 30')
Equipment
Site Development
Total


Model No. 2

Grading & Packing (35' x 70')
Offices & Store (20' x 35')
Cold Storage (30' x 60' x 14')
Equipment
Site Development

Total


Total Estimated .Construction Cost -
25 Stations


4,500
5,625
5,000


15,125


6,125
8,750
90,720
25,000


130,595


4,500
5,625


4 050
14,175


6,125
8,750
10,080


26,100
51,055


9,000
11,250
5,000
4,050
29,300


12,250
17,500
100,800
25,000
26,~00
181,650


576,000 1,647,000


$1,071,000









Table .9
Assembly and Grading Stations
(US$ 000)


USA ID GO J


Year 1 Year 2 Year 3 Year 4 Year 5 Total


Capital Costs
Land acquisition
Construction, Equip-
ment, Plans,
Services, etc.
Total Capital Costs


180
180


Operating Expenses
Utilities, Telephone,
and Miscellaneous
Staffing & Labor --
Materials & Containers
Vehicle Hire, Fuel
and maintenance -
Gross Operating Expenses --

Revenue -
Net Operating Expenses -
Net Cost to GOJ
Contingency (5%) ,9
Inflation iO% compounded)--
Project Element Cost 189


200
200


10
20
230


400
400


20
84
504


200
200


10
66
276


120
120


6
56
182


1 100
1,100


55
226
1,381


Total Element Cost-(USAID + GOJ)


Year 1 Year 2 Year 3 Year 4 Year 5 Total


2 ;. 6


48
50



9
22
17

8-
56

m--

56
106
5

111


114
120


11


219
230


31 74
99 258
118 286


59
307

38
269
389
19
39
447


143
761

202
559
789
40
166
995


6


114
120


3 28


77 572
80 600
!ii


96 109 319
357 412 1,148
369 420 1,210


185
1,007

567
440
560
28
185
773


210 605
1,151 3,282

888 1.695
263 1,587
343 2,187


17
159
519


109
549
2,845
4,226


"
" " "




-44-


Figure 9
Schedule of Construction for Assembly and Grading Stations


______ Activity Year 1 Year 2 Year 3 Year 4 Year 5
Buildings &,Equipment (
(2 Stations)
Buildings & Equipment
(5 Stations) (5)
Buildings & Equipment
(10 Stations)0)
Buildings & Equipment (
(5 Stations)(5)
Buildings & Equipment
(3 Stations) (3)



The facilities, each to be located on a site of approximately
two acres, will consist of a grading and packing shed, an office and dry
storage block and, at some Stations, cold storage. The minimum size of a
grading and packing shed will be 30' x 60' which is sufficient to provide
shelter for workers, accommodate grading and packing equipment, and stack
incoming produce before grading, as well as the packed produce awaiting
shipment.

The office will accommodate a manager and, depending upon the
size of the operation, a bookkeeper and other staff. Rest rooms and chang-
ing rooms will also be provided. Dry storage is required for supplies,
such as boxes, labels, detergents, waxes, depending upon the size and com-
plexity of the operation.

Cold storage will be provided at those facilities located in
high producing areas and particularly where there have been historical
problems with "surplus" removal. The type of storage will be determined
by the crops produced in the area.

Equipment to be installed at the various Stations will vary
greatly. .The minimum will include a simple grader with cull eliminator,
inspection rollers, brushes, sizer and packing tables. Other facilitating
equipment will include roller conveyors, scales, and miscellaneous packing
aids. The larger facilities, depending upon the crops to be handled, will
have a grading line consisting of a cull eliminator, washer, dryer, wax
applicator, .sizing units, and packing tables. In addition, pre-cooling
equipment (i.e., hydro-cooler or air 'blast) may be provided. Roller con-
veyors, scales, carts and other packing aids will also be included. In
essense, the type of equipment to be provided will be correlated with
the type of operations and the target market.




-45-


b. Training

Training will consist of short-term classroom training, on-the-
job training and general extension training, and will be provided by
technical advisors of the Marketing Division to personnel of the Assembly
and Grading Stations, farmers and market intermediaries. Training will
address the concept of established grades and standards and their applica-
tion, the logistics of produce collection, the operation of grading and
packing equipment and the use and operation of cold storage. Station
managers and key personnel will receive training in special three-week
courses. Others will receive on-the-job training supervised by technical
advisors and Marketing Division personnel. The first two Assembly and
Grading Stations established will provide on-the-job training for personnel
of succeeding Stations.


c. Management and Personnel

The Stations will not be organized on a uniform basis, but
may be established as a cooperative, an association, or a limited liability
company. The particular form of organization appropriate for a given
Station will be determined by the Marketing Division of the Ministry on
the basis of the technical and socio-economic surveys to be made in con-
nection with site selection. Once the appropriate form of organization
has been determined, training programs can be designed accordingly. Staff
of the Stations will vary according to the type and size of operation, but
in general will consist of a manager, a storekeeper/accounting clerk, and
part-time employment for security personnel and laborers. Staffing costs
over the five year life of the Project are shown in Table LO.





S-46-


Table 10
1 1
Assembly and Grading Station Staffing Costs
(US$000)






Year 1 Year 2 Year 3 Year 4 Year 5 Total


Number of Stations (2) (7) (17) (22) (25) (25)
Manager 8 28 70 96 117 319
Storekeeper/Accounting Clerk 3 12 30 41 50 136
Security 2 8 20 28 33 91
Laborers 8 50 138 192 212 600
Total Salary 21 98 258 357 412 L,146
Contingency (5%) 1 5 13 18 21 58
Inflation (compounded 10%) 0 10 54 118 191 373
Total 22 113 325 493 624 L,577-


J _________1___________. _________ 1_________ I _________ ________


1 / Includes annual salary increments




-47-


C. Beneficiaries of the Project

Upgrading of the marketing system will produce positive benefits
for small farmers, market intermediaries and consumers.


1. Small Farmers

With more efficient marketing, small farmers will be able to
sell more produce and thereby increase their incomes. This increase in
income will enable farmers to afford more factor inputs, such as fertili-
zer, pesticides, and tools. Increased income to small farmers will also
result in better housing and nutrition.

As a result of the marketing extension activities of the Project,
farmers will be able to improve their farming practices which will result
in the production of larger quantities of higher quality produce and
higher incomes.

Establishment of the Assembly and Grading Stations, the Sub-
terminal Wholesale Distribution Markets, and revitalization of Jamaica's
already established small agro-industries will generate alternative employ-
ment opportunities for family members of small farmers as well as small
market intermediaries.


2. Market Intermediaries

One of the problems identified by higglers is the large amount
of time required to collect produce from individual farms. Establishment
of the Subterminal Wholesale Distribution Markets and the Assembly and
Grading Stations will enable higglers to obtain their produce more effi-
ciently and in larger quantities. Higglers thereby will be able to sell
larger quantities and reduce transportation costs allowing them to make
greater profits.

Larger wholesalers or groups of small intermediaries will be
able to rent space in the wholesale markets which will enable them to
expand their operations.


3. Consumers

Consumer benefits from a more efficient marketing system will be
in the form of a large volume of better produce at reduced prices.

With better grading of produce, low income populations in urban
centers will be able to obtain more food at lower prices resulting in
improved nutrition, particularly among children. Upper and middle income
populations will be able to purchase better quality, locally produced food.
Availability of higher quality produce in-country will decrease the present
need to import commodities to supply the hotel and restaurant trade.




-48-


III. PROJECT ANALYSES

A. Technical and Administrative Analysis

1. Introduction

The approach of improving the total agricultural marketing system
of a country or region by introducing a wholesale distribution system as
proposed in this Project has been tested in a wide range of countries.
For example, similar systems were developed in Malaysia in 1964, Jordan
in 1965, Peru in 1955 and expanded in 1971, Colombia in 1972, and various
regions of Brazil from 1966 to 1975. In these and many other cases, the
wholesale systems have led to substantial marketing efficiencies and reduced
post harvest losses.

Several factors contribute to the appropriateness of this approach
for Jamaica at the present time. Jamaica has a rapidly expanding urban
population. It has a relatively well developed all weather road network.
There is a substantial potential market for locally produced quality food
products in the tourist industry on the North Coast. Some experience in
solving storage, handling, distribution, grading, and packing problems
already exists in connection with the traditional export crops,


2. Policy Framework

The timing of the Project is particularly appropriate. The GOJ's
high priority efforts in recent years to increase agricultural production
have clearly demonstrated the inability of the present marketing system
to handle an expanding load. This marketing constraint has been exacer-
bated by the recent curtailing of the Agricultural Marketing Corporation
(AMC) buying facilities.

Aware of the urgent need for marketing reform, the GOJ has been
considering a number of policy options for carrying it out. These delibera-
tions culminated in a recent Cabinet level policy and strategy decision
calling for improvements to the marketing system as envisioned in this
Project and charging the Ministry of Agriculture (MOA) with responsibility
for coordinating these improvements. (See Annex F.) As a result, the
Ministry of Local Government, which has responsibility for the parish retail
market system, has agreed that responsibility for management of the new
Subterminal Wholesale Distribution Markets should be lodged with the 'MOA.
Also, the Ministry of Industry and Commerce, within which AMC now falls,
has requested MOA to develop a plan for AMC's future role and organizational
relationship.

Thus, the overall policy and organizational framework for Jamaica's
future agricultural marketing development, which AID, IDB and other donors





-49-


have been encouraging the GOJ to define for some time, is now in place.
Momentum should not be lost in moving toward implementation of planned
improvements.


3. Staffing

The Project calls for establishing a Marketing Division in the
MOA with a staff of 96 persons of which 25 are now on board. The four
Subterminal Wholesale Distribution Markets will require new staff totaling
over 100 persons and the Assembly and Grading Stations will require about
50 persons. Wholesalers will also be needing additional personnel. Given
the current unemployment rate in Jamaica of about 30 percent, the flow of
graduates of about 650 per year from the Jamaica School of Agriculture and
College of Arts, Science and Technology and the current reduction of
AMC staff by about 200 persons with some marketing experience, it is not
expected that there will be any difficulty in obtaining the necessary per-
sonnel.

A recent Cabinet level decision permits the GOJ to offer salary
incentives for personnel working on projects receiving assistance from
foreign donors. The guidelines for implementing the decision, as estab-
lished by the Ministry of Public Service (MPS), require that the MOA write
job descriptions for each position for submission to and approval by the
MPS. The MPS will classify each position into a particular job category
and approve the total number of positions. The MOA will determine speci-
fic salary levels on the basis of an individual's qualifications and respon-
sibilities. The range of salary can be as low as J$4,000 to as high as
J$18,000. The only limitation is that the salary cannot exceed 25 percent
more than the existing civil service pay rate for the highest level in a
particular technical classification. It is estimated that it will take
approximately 18. months for the MOA to hire the full Marketing Division
staff under these procedures.

After the Marketing Division has been staffed, the Project
allows 18 additional months for the MOA to obtain MPS approval of the
Division as a permanent part of the MOA. One precondition to MPS approval
is the commitment of the necessary GOJ funds. This commitment will be
provided at the time the GOJ signs the Loan and Grant Agreements. A con-
dition precedent to initial disbursement under these Agreements will be
agreement in principle by the MPS to the number and types of personnel
included in the staffing plan. The Agreements will also contain a Cove-
nant that the MPS will approve the Marketing Division as a permanent part
of MOA before the end of the third year of the Project.





-50-


4. Training

Many of the new staff will require overseas training. To
insure that persons sent for training abroad will return to work in
Jamaica, the Manpower Training Division of the MPS will execute a loan
agreement with each participant to be trained abroad for three months or
more. The loan agreements will be backed by a Guarantor for surety.
The agreements will provide that unless the participant returns to per-
form service to Jamaica for a period at least twice the length of train-
ing, the participant will repay to the GOJ the full costs of the training
including both AID and GOJ contributions.

In-country training is to be provided for staff of the Marketing
Division as well as for personnel to manage the Markets and Stations,
market intermediaries, and producers. Training will be conducted largely
in MOA's existing training facilities. Curriculum and training materials
will be drawn from those developed for use in other countries.


5. Subterminal Wholesale Distribution Markets

Rentable market and storage area for the four Markets tptals
23,500 square feet. The volume of produce required to move annually
through these markets to break even is 0.7 tons per square foot (see
Table 24). At a minimum, therefore, 16,450 tons of produce will be required
to move through each Market or a total of 65,800 tons through the four
Markets each year. This represents only 13 percent of the 500,000 tons of
fruits, vegetables, meat and fish, eggs and poultry marketed annually
through regular market channels in Jamaica. It is anticipated that ,the
throughput of these Markets will considerably exceed this volume. Accord-
ing to FAO estimates of market capacity, up to 0.5 tons per square foot
for markets in the least developed countries and up to 2.5 tons per square
foot in the most developed countries can feasibly move annually through
markets of the type envisioned under the Project.

During development of this Project Paper, the GOJ has suggested
the establishment of a limited liability company to manage .the Markets.
The MOA would be the only shareholder of the'company. This is a familiar
institutional arrangement in Jamaica and has a number of advantages. These
include more autonomy regarding personnel and financial matters than a
government agency would have; specifically, the company would keep its
own books, pay its own operating and amortization expense from revenue,
and return the balance to its shareholder. The Company can set and change
the fee structure for use of the facilities within reasonable bounds. In
addition, if necessary during the early stages of the Project, the MOA can
cover any deficits of the company out of central treasury funds without
loss of autonomy by the company. USAID has studied this suggestion by the
GOJ and strongly endorses it.




-51-


6. Assembly and Grading Stations

When operational, the 25 Stations will have a minimum operating
grading capacity of 119,175 tons per year--roughly 24 percent of marketed
produce. At maximum operation, total volume of output from the 25 Stations
could total 330,000 tons. Cold storage, to be constructed at six Stations,
will have a total holding capacity of 24,000 tons. Depending upon turn-
over and volume of loading, the total amount of produce that could be
stored is.very significant. Assuming a very conservative turnover rate
of four times per year (again recognizing that storage requirements are
for short to medium turn), total storage volume could equal 96,000 tons
or about 20 percent of marketed produce.

In addition to the volume of produce that will be graded and/or
stored at the Stations, a large volume will be marketed by the Stations
and delivered directly from the farm to the market without physically
flowing through the facilities. It is estimated that an average of
24,000 tons may be marketed in this manner, or 20 percent of the grading
and packing capacity of the Stations.

As pointed out in Section II above, organization of these Stations
may take at least three different forms--producers' cooperative, association,
or limited liability company. Experience exists in Jamaica with all three
organizational forms.


7. MOA Capacity

In carrying out this Project, the Ministry will start with a
base of 25 persons for the new Marketing Division to be established. It
is recognized that most of the needed staff will have to be recruited
and trained. Training, therefore, represents an important element of the
Project design.

The capacity of MOA to carry out this Project will also be
enhanced by the USAID/GOJ Agricultural Planning Project to begin in 1979.
This Planning Project provides support to three units of the MOA that will
directly relate to the Marketing Division. These units are the Training
Division,.the Data Bank and Evaluation Division, and the Planning and
Policy Review Division.

The Planning Project will provide the Training Division staff
with skills in training administration to meet its responsibilities to:

furnish physical training facilities;
perform a skills' inventory of Marketing Division personnel to
assist in determining training needs; and,
provide required support to the Marketing Training Division in
support of the Agricultural Marketing Project.




-52-


The Data Bank and Evaluation Division is being assisted in
development of staff capabilities through the Agricultural Planning
Project and a USAID/PASA with the U.S. Bureau of the Census which has
provided approximately 24 person-months of technical assistance to pro-
mote development of survey techniques and facilitate a rapid, efficient
collection of data. By the third year of the Agricultural Marketing
Project, the Data Bank and Evaluation Division will be capable of supply-
ing the basic data required by the Marketing Division. Doing so will not
levy an additional workload on the Data.Bank and Evaluation Division;
rather the Marketing Division will merely represent another customer for
the basic agricultural data collected by the Data Bank and Evaluation,
Division's field enumerators. Analysis of the raw data will be performed
by the Marketing Division.

The Planning and Policy Review Division of the MOA performs pri-
marily macro and micro program and project planning in all areas relating
to agricultural production and marketing. The Planning and Policy Review
Division will obtain marketing data from the Marketing Division which will
be incorporated into overall planning for the agricultural sector. The
Planning Division in turn will provide planning guidelines for the Market-
ing Division. The Planning Division has already contributed to rewriting
the Marketing chapter in the GOJ current Five Year Plan, and drafting.
the "National Agricultural and Food Marketing Policy" and the "National
Marketing Strategy" which have received GOJ approval.


8. USAID Capacity

USAID capacity to handle the Project will be tested
given the projects already under implementation or planned in the rural
development sector (the Integrated Rural Development; Fish Production;
Agricultural Planning; Agricultural Radio; and Agricultural Research,
Extension and Training projects). Of great help has been and will continue
to be the services of a Marketing Advisor provided under the National
Planning Project whom the GOJ has indicated will be requested to serve as
Team Leader under this Project as soon as it is approved and funded. The
USAID Rural Development Office, which will have principal project manage-
ment responsibility for this Project, will still require the same degree
of support from the Capital Development, Controller, Economic Advisor,
and Program Offices during implementation as has been provided during
this Project Paper preparation.


9. Conclusion

The conclusion of this section is that: introduction of a whale-
sale distribution system is a feasible approach for Jamaica; the necessary
policy and organizational framework exists; the needed personnel can be
obtained and trained; the Subterminal Wholesale Distribution Markets and
the Assembly and Grading Stations are feasible technically and organizationally;
the MOA can carry out the Project; and the USAID will be able to perform its
Project management responsibilities.





-53-


B. Engineering Analysis

1. Project Construction Costs

The total cost of construction is estimated to be approximately
$9,300,000. This figure includes related items such as land, equipment,
furniture, standby generators, etc., as well as the cost of construction
of the four Subterminal Wholesale Distribution Markets and 25 Assembly and
Grading Stations. Estimates were made on a square foot basis taking into
consideration elements needed for the intended function. Square foot unit
prices were based on similar structures for which bids were received
recently by the MOA. Since they are excluded by the Loan Agreement, duties
and taxes are not included in the estimate. The estimate is based on pre-
liminary layouts of the markets and includes an appropriate design con-
tingency cost factor. Prices used were 1979 figures; inflation factors for
costs are contained in the overall cost of the Project. The estimate is
considered satisfactory for planning purposes and satisfies the require-
ment of the Foreign Assistance Act (Section 611 a). (Details of the
estimate are contained in Tables 5 and 8.


2. Design and Supervision of Construction

A group has been transferred from the Ministry of Works (MOW) to
the MOA to provide necessary architectural and engineering (A & E) services.
This group is known as the Agricultural Research Projects Unit (ARPU).
This group of architects, engineers and technicians will carry out design,
preparation of contract documents, letting of contracts and supervision
of construction.

The present staff of ARPU consists of 12 people including four
professionals and six technicians plus administrative support. ARPU was
transferred to MOA in 1978 to satisfy the requirements of international
lending agencies for a competent and independent staff to design and super-
vise construction. ARPU is presently engaged in various stages of design,
and contracting for construction of several other projects funded by 1DB
and the World Bank.

ARPU is supported by the MOW. Additional staff will be provided,
either directly from MOW or through service contracts, as required. For
example, a qualified.Clerk of Works is expected to be provided from the
MOW staff to supervise the construction of each major market.

A review of previously prepared contract documents, including
plans and specifications, indicates this group is capable of designing the
Project facilities. There should be no problems in the supervision of
construction provided the proper staff is added to the ARPU. The MOA is
well aware of the staffing level required for this task, and provision,
therefore, is included in overall Project staffing requirements.





-54-


3. Engineering Criteria and Specifications

There are two basic GOJ design criteria for the design of
structures. All buildings are designed to withstand hurricanes having a
wind velocity of 120 mph and to withstand earthquakes in accordance with
the lateral load requirements of the SEAOC Code of Southern California.
Government rules and regulations and FAO Guidelines cover criteria for
site selection in terms of waste disposal and will be mentioned briefly
below under environmental considerations.

Specifications used by the Government are based on British
Standard Specifications (BSS) adapted nationally by MOW and locally by the
Ministry of Local Government (MLG). During site investigation, for example,
soil samples and tests are performed for the design of foundations. The
MLG provides specifications concerning conditions unique to a given area.
Specifications are contained in the Conditions of Contract. Excerpts from
a contract for construction of a market are contained in Annex H .


4. A & E Elements of Project Implementation

Following the determination of the site location, based on appro-
priate agricultural marketing considerations, the following activities will
take place:

1. Site study including soils listing, topographic surveys,
determination of utilities available and to be provided,
and other site-unique requirements;

2. Arrangements for land acquisition;

3. Preparation of bidding and contract documents including plans
and specifications;

4. Determination as to preselection of contractors or open
invitations to submit tenders;

5. Evaluation of tenders;

6. Contract Award/Notice to proceed;

7. Supervision of construction;

8. Final acceptance of the work.

Government and USATD approval will be obtained at the appropriate stages
of the implementation process.




-55-


The Government of Jamaica uses a Bill of Quantities type con-
tract for this type of construction. The procedures are as follows. When
design drawings have been completed, a Bill of Quantities or list of mate-
rials, is written by a Quantity Surveyor (QS). A document is then prepared
and contains Conditions of Contract, Bills of Quantities and Specifications.
This document, along with the design plans, constitutes the construction
contract documents for tendering bids and for construction.

A Clerk of Works is appointed to supervise the construction
contractor. When an item of work has been completed, the Quantity Surveyor
is brought in to measure the actual quantity of work completed. Payment
is then based on these quantities at the rates established in the accepted
tender. Variations are provided for in the contract and paid from contin-
gency amounts, if necessary.

This method of construction contracting is widely used in Britain
as well as Jamaica and to a limited extent in the United States. Qualified
Quantity Surveyors are chartered or registered, as are architects and'en-
gineers, and are considered as professional staff.

A Clerk of Works will be a professional staff member or a tech-
nician depending on the nature and scope of the work. For example, in
relation to the Subterminal Wholesale Distribution Markets, the Clerk of
Works will be equivalent to a resident engineer.


5. Construction Contractors

The Ministry of Works grades contractors "A", "B" and "C" accord-
ing to each company's resources and capabilities. Each grade is further
classified into specialties, such as buildings or civil works. Grade "A"
contractors are considered capable of carrying out work in excess of
J$500,000. There are over 30 Grade "A" contractors presently operating in
Jamaica. Many of the Grade "A" firms are considered by ARPU to be capable
of constructing the Markets under the Project.

Skilled construction craftsmen are available in sufficient number
for the construction of the Markets. Wages are considered relatively high
and comprise as much as 40 percent of the.cost of construction. Wages
are controlled by the Joint Industrial Council. A labor/management agree-
ment was signed in 1978 and continues until March of 1980. Although labor
struggle is endemic to Jamaica, allowance therefore has been made in schedul-
ing and cost estimating. Needless to say, the entire GOJ will cooperate
in seeking to minimize labor problems affecting Project implementation.









C. Economic Analysis

1. Introduction

This Project is a sine-qua-non for any significant increase in
the production of perishable agricultural products. Without improvement
in the marketing system for perishable produce, there is little or no
incentive for a significant increase in agricultural production.

In estimating the economic impact of this marketing project, a
number of conservative assumptions are made. It would also be reasonable
to assume that the reduction in waste and distribution costs, and the in-
crease in production, will be significantly larger than postulated. In
addition, sensitivity tests show that the benefit-cost ratio would still
be highly favorable, even if the impact on waste and production obtained
by the Project were less than those resulting from the conservative assump-
tions on which the analysis is based.


2. Projection of Benefits

Three types of benefits are expected from the project: reduction
in waste, lower distribution costs and increase in production. Assumptions
with respect to these benefits are outlined in Table 11.

Post harvest losses for perishable products as a result of spoil-
age and deterioration are currently estimated at 30 to 40 percent df production
valued at farmgate prices. The ratio is projected to decline gradually
as a result of this Project from 35 percent of production (valued at farm-
gate prices) to 25 percent by 1987 (Table 11, column 1).

As a result of the development of new market opportunities, the
net value of production after netting out costs associated with the increase
in output is projected to increase by 3 percent in 1984 and by another
2 percent in 1985 (column 3), and will exceed the level that wouldother-
wise prevail by a constant rate of 5 percent beginning in 1985. The MOA's
Marketing Advisor estimates that the Project should be expected to raise
the gross annual production level by about 10 percent. However, since
(a) the impact of this Project must be estimated apart from the impact of
other agricultural production; (b) some costs are involved in producing
the additional output which should be netted out; and (c) it is deemed
prudent to adopt a more conservative projection, the benefit-cost calcu-
lation assumes that the Project will induce an increase in agricultural
production of only 5 percent, this amount being on a net basis (i.e., after
netting out costs associated with increased production).

Average distribution costs of perishable products1 are estimated
to be about 68 percent of farmgate prices. For fruits and vegetables,


1Excluding cereals. Principal components are vegetables, legumes, fruits
and meat. See listing in Table 12.


~ JVf





-57-


Table 11

Assumptio a sections and Prof Project Benefits-


Year Projected Waste
Waste as % of Cumulati
Total Marketed Reduc-
Production tion


1980


1982

1983

1984


1986

1987

1988

1989

1990


1992

1993


Increase in Produc-
etion (Cumulative)
ve%


Reduction in Distribution Costs
Distribution Costs
as % of Total Cumulative %
Marketed Production Reduction


68%


1/ Expressed


as a percent of total value of marketed production.


2/
- The distribution costs in this column refer to the weighted average percent mark-up
over farmgate price. The figure for 1980 (68%) was obtained by collecting data on
farmgate and retail prices for 38 perishable products for which data were av ilable.
Distribution costs were calculated as the difference between retail and farmgate
prices expressed as a percent of the farmgate price for each product. Thesei38
products were then weighted in accordance with the value of output in 1978.


-------


---- ---------




-58-


distribution costs are higher--about 76 percent--and for meat, fish and
poultry somewhat lower (about 50 to 60 percent). The Project is expected
to reduce distribution costs by reducing unit transport handling and stor-
age costs, i.e., by assuring a more efficient and speedier transfer of
produce from the production areas to market centers as well as by deliver-
ing a higher quality product. We have assumed that the Project will re-
sult in the lowering of the weighted average distribution margin by
8 percent--from 68 to 60 percent--of farmgate values (see columns 4 and
5 of Table 11). The MOA's Marketing Advisor actually anticipates a
larger reduction.

The first step in the analysis is to estimate the current value
of production (at farmgate prices) of perishable products expected to be
affected by the Project, and to project this output over 1980-94. Since
our assumptions relating to the reduction of waste, increase in production
and reduction in distribution costs are all expressed as percentages of
the value of the production of perishable products to be channeled through
the marketing system, the estimation and projection of the total value of
production is essential to the quantification of the benefits.

The projection presented in Table 121 projects agricultural pro-
duction over 1980-94 in the absence of a vigorous program to alter the
historical trend over 1973-78. The projection is by the least squares
method, and is thus very conservative.2 Only half of the total production
of eggs and poultry was included in the projection since a substantial
share of these two products is raised under contract with large distribu-
tors and does not move through regular market channels.

Note that the total value of production affected is very large--
J$417 million in 1979--and is projected to rise to J$497 million in 1984
and J$659 million in 1994, and that it is in constant 1978 Jamaican dollars.
3
The gross benefits of the Project are estimated in Tables 13
and 14. The first column of Table 12 shows the production projection
derived from Table 12. In column 2, allowance is made for the fact that
not all agricultural production moves through the marketing system. Some
portion is consumed on the farm. On the basis of estimates for some pro-
duct categories made by the Data Bank and Evaluation Division of the
Ministry of Agriculture, we have estimated that the portion of production
consumed on the farm is about 10 percent, and have reduced our estimating
base (shown in column 2) by this proportion.


Prepared by the MOA.
As it entails a year-to-year increase that is constant in absolute terms,
the increase thus constitutes a continuously declining percentage of total
production.
In the sense that Project costs have not yet been netted out.
In An Agro-Socio-Economic Sample Survey, Pindars River and Two Meetings
Area, 1977, Tables 42A through 42P.







'Abl e 12

iPr c ion of PrulJi .1:n ,: M1a ior l'reduct .ti And
P1oduct CLii.oU 1.- Afctaed by Projuct -
11973 JJJO0)


PRICE PLR I
IUNIT 1979


1981 1982 1983
1981 1982 1983


1984 1985 186 1987


1988 1989 ,1990 1991


1992 1991 I 199"


__ _ __ _ 4 .1 -- -------,-- + 4-


2506/ton

609.03/1Un

348.36/tonf


30,072

71,25b

100,676

52 560u


6,106

293.50/tonI 7,631

280/ uln 60.5

420/ton 1i,839.6

300/ton 1,657.2


Liiumw.

Vee6Ljbles

R.ut CrJps



Li LI On

Plantains



r1i cappl ,

t'iL.rtrmaon


Lt.,) l pro-
JuCtion)





Park

UJ.1C

Poultry (a 3
cucJL pro-
Juctlin)


11,000

44,160

39,164

18,170

3,293

29,080


1


32,578

76,129

104,160


52,560

6,106

7,924

793.8

1,839.6

1,830.3



11,800

44,280

39,178

18,515

4,032

30,800


417,425 432,526


35,084

81,001

107,643


40,096

85,873

110,778


42,602

90,136

114,262


45,1U8

95,009

117,746


50,120 52,626

104,753 109,625

124,364 127,500


47,614

91,881

123,881

56,893

6,1016

8,805

961.8

,839.6 il

,695.3 12



16,300

44,520

19,306

20,125

7,896

19,320


59,191

6,106

9,098

1,029.0

1,839.6

3,042.0



18,000

44,760

39,348

20,700

9,240

42,724


55,132

113,889

130,983

00,375

6,106

9,098

1,062.6

1,839.6

3,215.1


18,900

44,760

39,377

21,045

10,080

44,440


52,560 53,611 54,683 55,777

6,106 6,106 6,106 6,106

7,924 8,218 8,511 8,511

827.4 861.0 894.6 92-8.2

1,839.6 1,839.6 1,839.6 1,839.6 '1

2,003.4 2,176.5 2,349.6 12,522.7 2



12,850 13,700 14,600 15,450

44,280 44,280 44,400 44,400

39,206 39,235 39,249 39.277

18,86 ) 19,205 19,435 19,780

4,872 5,544 6,384 7,056

32,520 34,200 35,920 37,600



447,578 45,723 481,372 497,111
447,578 465,723| 481,372 497,1111


I 1


57,638

119,370

134,119

61,582

6,106

9,392

1,096.2

1,839.6

3,388.2



19,750

44,880

39,391

21,275

10,920

46,120



576,867


62,650 65,156 67,662 7U,138

123,633 126,505 133,378 13 ,250

137,602 141,086 144,221' 141, J5

62,814 04,070 65,352 oou9

6,106 6,10b 6,106 1 b,10o

9,392 9,6d5 9,685 9.v/

1,129.8 1,163.4 1,197.0 1,230.

1,839.6 1,.i 9.6 1,839.6 1,8J9.1

3,561.3 3,734.4 3,907.5 4,060.



20,600 21,450 22,300 21,2.1)l

44,880 45,000 45,120 45,1 U

39,419 39,448 19,462 39,4'A)

21,620 21,850 22,195 22,24)

11,592 12,432 13,104 13,,44

47,840 49,560 51,240 22,920



594,679 611,085 626,769 b42,Buj 6


___ i__,L


.10/da.

1.20/lb.

1.42/1b.

1.15/lb.

1.68/lb.

0.bO/lb.


72,674

143,122

150,571

67,966

6, 106

10,272

1,264

i 8!

4,254



24,100

45, 120

39,51P

22,885

14,784

5'i,600


59,076


1/ Projection of estimated value of production (at farmgate prices) over 1973-78 by least square method.
Milk was omitted as it does not pass through the regular marketing system; and only one-half of the egg
and poultry production was included (It was assumed that 50. moves through special channels outside tho
normal marketing system).


513,144 528,955 544,829 560,302


5E,0JO

6,106

8,8U5

995.4

,639.6

,868.9



17,150

44,640

39,320

20,355

8,568

41,040


I


I







Table 13

Estimate of Gross Benefits

(1978 US$000)


Total Projected
Production 1/

432,526
447,578
465,723
481,372
497,111

513,144
528,955
544,829
560,302
576,867

594,679
611,085
626,769
642,883
659,076


Total Projected
Production to
be Marketed 2/

389,273
402,820
418,881
433,235
447,400

461,830
476,060
490,346
504,272
519,180

535,211
549,977
564,092
578,595
593,168


Reduction in
Waste 3/




4,332
13,422

27,710
38,085
49,035
50,427
51,918

53,521
54,998
56,409
57,859
59,317


Increase in
Production 3/





13,422

23,092
23,803
24,517
25,214
25,959

26,761
27,499
28,204
28,930
29,659


Reduction in
Distribution
Costs 3/





13,422

27,710
38,085
39,227
40,342
41,534

42,817
43,998
45,128
46,288
47,453


Total Gross
Benefits
(2)+(3)+(4)




4,332
40,266

78,512
99,973
112,779
115,983
119,411

123,099
126,495
129,741
133,077
136.429


1/Carried
Carried


over from Table


2/
- Makes allowance for the fact that not
is consumed on the farm. The figures
by .9.


all agricultural production is marketed. An estimated 10%
in this column were obtained by multiplying those in Column 1


3/
- Calculated in accordance with the assumptions described in Table 11.


1980
1981
1982
1983
1984

1985
1986
1987
1988
1989

1990
1991
1992
1993
1994


--








-61-


Table 14

Estimate of Gross Benefits
(1978 US$000) 1/


(1)
Reduction in
Waste







2,826
S 8,755
18,076
24,843
31,986
32,894
33,867
34,913
35,876
36,797
37,742
38 694
337,269


(2)
Increase in
Production









8,755
15,062
15,527
15,993
16,448
16,934
17,456
17,938
18,398
18,871
19 346
180,728


(3)
Reduction in
Distribution
Costs







8,755
18,076
24,843
25,589
26,315
27,094
27,930
28,701
29,437
30,194
30,955
277,889


(4)
Total Gross
Benefits
(1)+(2)+(3)






2,826
26,265
51,214
65,213
73,568
75,657
77,895
80,299
82,515
84,632
86,807
88,995
795,886


1/ Figures in Table 13 converted into 1978 U.S. dollars at
that prevailed in 1978, estimated at US$1.00 = J$1.533.


the average exchange rate


Year



1980
1981
1982
1.983
1984
1985
1.986
1987
1988
1989
1990
1991
1992
1993
1.994


-~~---~





-62-


IColumns 3, 4 and 5 show the reduction in waste, the increase in
production and the reduction in distribution costs, respectively, all ob-
tained by applying to the marketing production figures in column 2 the assump-
tions stated in Table 11. For example, in 1986, it was assumed that waste
would be reduced by 8 percent (equal to J$38.1 million), production would
be increased by 5 percent (equal to J$23.8 million) and distribution costs
would be reduced by 8 percent (J$38.1 million). Thus, total gross benefits
in 1986 amount to J$100 million (column 6). Note that this projection is
in thousands of constant 1978 Jamaican dollars. In table 13 these figures
are converted into constant 1978 U.S. dollars at the average 1978 exchange
rate of US$1 = J$1.533.


3. The Costs

Costs are divided into two categories: the start-up costs over
the Project implementation period (1980-84) and the recurrent costs over
the whole projection period, 1980-94. The start-up costs consist of land
acquisition, construction and equipment, refrigerated trucks and vehicles,
technical assistance, training and training supplies. The start-up costs,
presented in Table 15, represent the consolidated costs of the three major
components of the Project: the MOA's new Marketing Division, the four
Subterminal Wholesale Distribution Markets and the 25 Assembly and Grading
Stations.

The recurrent costs are projected in Table 16. The projection
after 1984 includes the addition of a maintenance allowance of US$100,000
per annum for the four Markets ($25,000 for each) and another $100,000 for
the 25 Stations ($4,000 for each). All other operating costs were projected
to increase by 5 percent annually in real terms to allow for expansion.
Extra allowances were included for the Markets in 1986 to allow for the
purchase of eight new refrigerated trucks and to replace the original truck-
ing fleet in 1989 and 1992. The operating costs in the Economic Analysis
differ from those in the Budget Summary and in the Financial Analysis be-
cause the operating revenues (cash receipts) of the Markets and of the
Stations were not deducted from costs in the Economic Analysis to avoid
double counting the benefits.


4. Benefit-Cost Calculation

The benefit-cost calculation is presented in Table 17. The bene-
fit figures in column 1 are carried over from Table 14 (column 4), while
those in column 3 were derived by summing the costs figures in Tables 15
and 16. The benefits and costs were discounted at an annual rate of 11
percent which is the current commercial bank prime lending rate. Note that
this discount rate is actually very high since the whole analysis is in


After allowance for increased costs related to the increase in production.





Table 15

Consolidated Start-Up Costs


(1978 US$ 000)


Construction
Equipment and
Land Acquisition




530

4145

2630


Refrigerated
Trucks and
Vehicles


50

510

450


1695


9200


1010


Technical
Assistance


660

648

704

642


3166


Training,
Training
Supplies &
Misc. Equip-
Ment

46

182

211

55

14

508 -


Total
(1) thru
(5)




1286

5485

3995

2392

726

13,884


Allowance
for Contin-
gency &
Inflation



64

823

1039

911

373

3210


Total






1350

6308

5034

3303

1099

17,094


1 / Total training costs during the 1980-84 period are actually US$608,000 (instead of $508,000). We assumed
that US$100,000 financed by the GOJ are recurrent costs which will be continued after the start-up period
and have, therefore, treated these as recurrent costs charged to the Recurrent Budget in Table 15 of this
analysis.


Year


1980

1981

1982

1983

1984

Total








Table 16

Recurrent Costs
(1978 U.S. $000)


Marketing
Division 2/

321
578
606
624
641

673
707
742
779
818

859
902
947
994
1044


Wholesale Distri-
bution Markets 2 /



263
487
503

628
655+600
682
711
742+450

774
808
843+450
880
919


Assembly &
Grading Stations 4/

61
326
801
1060
1209

1369
1433
1500
1570
1643

1720
1801
1886
1976
2069


1/ Includes operating costs only. Excludes cash receipts of the
Markets and Stations, as well as any allowance for inflation as all
figures are in constant 1978 U.S. dollars. For these reasons, the figures
in the above table differ slightly from those in the Budget Summary and
in the Financial Analysis.

2/ For 1985-94, operating costs of the Marketing Division were assumed
to rise by 5% a year in real terms (in constant U.S. dollars) to cover
expansion of staff and increase in real salaries.

3/ For 1985-94, operating costs of the Markets were assumed to
rise by 5% a year in real terms to cover expansion of operations. An
additional US$100,000 a year was added for maintenance. In 1986,
US$600,000 was provided for the purchase of 8 new refrigerated trucks.
US$450,000 was added in 1989 and again in 1992 to cover replacement of the
fleet of refrigerated trucks acquired during the project implementation
period.
4/ For 1985-94 operating costs of the Stations were projected to rise
by 5% annually in real terms. In addition, an annual allowance of
US$100,000 (for all) was made to cover maintenance costs.


1980
1981
1982
1983
1984

1985
1986
1987
1988
1989

1990
1991
1992
1993
1994


Total


382
904
1670
2171
2353

2670
3395
2924
3060
3653

3353
3511
4126
3850
4032


_______




_JJ


terms of constant 1978 U.S. dollars. The discount rate is thus in real
terms, and so makes a substantial allowance for the risk element. The year
1980 was taken as the base year for the benefit-cost calculation, with dis-
counting starting in 1981.

Total projection benefits discounted at 11 percent a year through
1994 total US$305 million1 (column 2 of Table 17), while the sum of the
discounted costs amounts to US$32.9 million (column 4), yielding a very
impressive benefit-cost ratio of 9.27. Note that the cutoff of the calcu-
lation in 1994 is quite arbitrary. Had it been extended by another five
to ten years, the B/C ratio would have been substantially higher.

The sum of the net discounted benefits (column 5) or the Project's
net present value comes to US$272 million. This figure indicates that the
Project would return that amount over and above the full amount of the ini-
tial investment plus a real rate of return of 11 percent a year. The in-
ternal rate of return is 84 percent.

The projected benefits are so large that the analysis could with-
stand any reasonable sensitivity test. Thus, if it were assumed that the
projected annual benefits were only half as large as those shown in column 2
while the annual costs remained the same, the benefit-cost ratio would still
amount to 4.6. Alternatively, if we abstracted from the projected reduction
in distribution costs and calculated our benefits solely on the basis of
the reduction in waste and the increase in production, the B/C ratio would
still be a very impressive 6.0.


5. Impact on Foreign Exchange Budget

By reducing waste and increasing production, the Project will
have a significant impact on the availability of foreign exchange, either
by reducing the need for food imports and/or by providing for increased
exports.

As illustrated by the data in Table 18, Jamaica is a substantial
food importer. Its food imports have risen significantly since 1971--from
US$92 million to almost US$170 million in 1978. Of this amount, we esti-
mate that 17 percent, or US$28 million, consists of fresh vegetables,
legumes, fruits, fish, poultry and meats that could be substituted by domes-
tic production moving through the marketing system.

If Jamaica's food import requirements over 1979-94 are piojccted
to increase at the same rate as population (i.e., 1.4 percent) in lieu of
the historical rate of 9.1 percent that prevailed over 1971-79, food imports
would reach US$212 million in 1994.1 This is several times the magnitude of


In terms of constant 1978 U.S. dollars.




-Do-
Table 17

Benefit-Cost Analysis
(1978 US$000)


Year Projected Annual Benefits 1/ Projected Annual Costs 2 /
Undiscounted Discounted @ Undiscounted Discounted
11% per annum 11% per
(beg. in '80) Annum
(beg. in 80)


1980
1981
1982
1983
1984


1985
1986
1987
1.988
1989

1990
1991
1992
1993
1994


2,826
26,265


51,214
65,213
73,568
75,657
77,895

80,299
82,515
84,632
86,807
88,995


Total
1980-94


2,066
17,302


30,393
34,866
35,435
32,830
30,451

28,280
26,181
24,191
22,354
20,646



304,995


1,732
7,212
6,704
5,474
3,452


2,670
3,395
2,924
3,060
3,653

3,353
3,511
4,126
3,850
4,032


1,732
6,497
5,441
4,003
2,274


1,585
1,815
1,408
1,328
1,428

1,181
1,114
1,179
991
935


(5)
Net Discounted 3 /
Benefits
(Col. (2)-(4))



1,732
6,497
5,441
1,937
15,028


28,808
33,051
34,027
31,502
29,023

27,099
25,067
23,012
21,363
19,711


32,911 272,084


Benefit-Cost Ratio:


304,995 = 9.27
32,911


1/ From Table 13
2/ Includes both start-up and operating costs (summation of figures in Tables 15 & 11
SThese cost figures differ from those in the budget summary and in the financial
analysis because the cash receipts of the Markets and Stations were not
deducted from costs inthe Economic Analysis to avoid any double counting of the
benefits. The discounting process (at 11% p.a.) starts with the year 1981.
The 1980 was chosen as the base year for the calculation.
3/ Discounted benefits less discounted costs (column minus 4).


__ __._
._ __~_ ___





-67-




Tab]e 18

Food Imports, 1971-78
and Projected to 19941


Actual
(Million of US$)


1971
1972
1973
1974
1975
1976
1977
1978


91.9
108.3
126.9
192.7
196.2
183.0
126.9
169.5


Projected
(Millions of 1978 US$)


1980
1985
1990
1994


1/ Source for food imports 1971-78: Ministry of Finance Statistics Division,


174.3
186.8
200.3
211.7


__I~__




-68-


the combined waste reduction and production increase projected to result
from the Project. Thus, it is most likely that most of the increased food
availability resulting from the Project will readily find a market in
Jamaica, and will serve to reduce Jamaica's dependence on food imports.
The extent of this reduction will depend, in large part, on the extent to
which increased domestic food production is substitutable for imports, the
price and income elasticity of demand for food and the priority that the
authorities give to food imports versus other uses of foreign exchange.
Column 1 of Table 19 shows the combined increase in production and the
reduction in waste expected from the Project (summation of columns 1 and 2
of Table 14). If we assume that the reduction in food imports will be
equal to only half this amount (with the remaining 50 percent available for
increased consumption), the resulting saving in foreign exchange would
amount to US$259 million over the period 1983-94 or an average of about
US$22 million per year.


6. Distribution of Benefits

The above analysis suggests that the social benefits from the
Project are likely to be substantial. But are they likely to be broadly
distributed among farmers, consumers, and intermediaries? The benefits
to each of these groups will be analyzed in turn.


Benefits to Farmers and Consumers: Farmers stand to gain as a result of
the reduction in waste, the increase in production, and the reduction in
distribution costs. We have noted that these are the major sources of
the benefits expected from the Project, accounting, respectively, for 42
percent, 23 pe cent and 35 percent of the total gross benefits of nearly
US$800 million expected to accrue over the twelve year period 1983-84
(Table 14).

The benefits derived by the farmer from reduced waste, increase
in production and improvement in the quality of his product require little
elaboration. Farmers would fail to realize those benefits only if the
market demand schedule for their products remained fixed over time, and
if in addition, farm output could not be substituted for imports so that
producers would be forced to move down an inelastic demand curve. However,
these conditions are extremely unlikely to prevail since (a) Jamaica is
importing substantial amounts of foodstuffs, some of which can be grown
domestically; (b) demand for foodstuffs is most likely to expand over time,
given the increase in population; and (c) serious shortages of basic food-
stuffs have plagued Jamaica's major urban centers since 1976 and are con-
tinuing to do so.



1Assuming that a foreign exchange control system remains in force.
2
In terms of constant 1978 U.S. dollars.
*




-69-


Table 19

Estimated Foreign Exchange Savings
Through Import Substitution


(Millions of 1978 U.S. $)


(1)
Assumed Increase in Production
and Reduction in Waste as a
Result of Project


(2)
Assumed Foreign
-Exchange Savings
(50% of Col. 1


1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994


Total 1980-94


2.8

17.5

33.2

40.1

48.0

49.3

50.8

52.4


1.4

8.8

16.6

20.0

24.0

24.7

25.4

26.2


53.8

55.2

56.6

58.0


517.7


26.9

27.6

28.3

29.0


258.9


______ ~




-70-


Farmers will also benefit from reduced distribution costs. These
should result in lower prices to consumers and in a higher sales volume and
net return to farmers. The reduction in distribution costs could also mean
increased farmgate prices as farmers will receive the benefit from higher
quality output and from reduced spoilage of produce in transit.

The benefits to consumers need little elaboration: the substan-
tial reduction in waste that is expected, along with the increase in pro-
duction resulting from strengthened incentives to farmers, should induce
an increased volume of production reaching urban markets. There should also
be some improvement in the quality of the produce.


Impact on Intermediaries: We shall discuss the Project's impact on three
categories of intermediaries: wholesalers, small wholesalers or "country
higglers" and retailers.' The latter consist of supermarkets and green-
grocers as well as small retailers (or higglers) operating out of the
parish and street markets.

Wholesalers will be able to rent stalls in the new Subterminal
Wholesale Distribution Markets that will be built. They will have cold
storage facilities and a place to receive, assemble and distribute a larger
volume of produce. They will also be able to.,receive or ship produce in
larger volumes and thus benefit from lower unit costs.

"Country higglers" or small wholesalers are people who perform
the function of carrying the farm produce from the farm to the nearest
market or station or collection point where it is loaded onto trucks for
shipment to markets. To the extent that these higglers are operating in
an area where an Assembly and Grading Station has been established, these
higglers will benefit from a lower cost and better price for their product,
selling a larger volume and traveling a shorter distance.

Retailers, both large (supermarkets and greengrocers) and small
(higglers operating out of parish or street markets) are expected to bene-
fit from access both to a wider selection and larger volume of produce all
in one place. Supermarkets, restaurants and hotels, will have assurance
of continuity and quality of supply. This assurance of continuity will
enable retailers, particularly those catering to tourists, to substitute
domestic produce for imported supplies, thus stimulating domestic produc-
tion and contributing to savings in foreign exchange, while ensuring a
larger and steadier volume of sales to the intermediaries.

While intermediaries as a group are expected to benefit from
the Project, there may be those that may be adversely affected. As in any
modernization process, some displacement of labor may be expected to occur
among "country higglers." However, this displacement effect is not expec-
ted to be major as it will be mitigated by the following circumstances:




-71-


(a) the displacement is not expected to be drastic as higglers will still
collect and carry the produce from the farm to the nearest market or Assem-
bly and Grading Stations; (b) the improvement of the marketing structure
will be gradual and spread over a number of years; (c) many of the displaced
higglers will be absorbed in the new system, e.g., at the Assembly and
Grading Stations, at the new Subterminal Wholesale Distribution Markets or
as employees in the restructured marketing system.


7. Interpretation of Results

The benefit-cost analysis shows that if the national level of
agricultural production can be taken as base in estimating the impact of
the Project on waste, increase in output and reduction in distribution costs,
the benefits derived from the Project then become a substantial multiple
of Project costs. For the Project to have no impact on waste, output or.
distribution margins, it would be necessary to assume either that waste,
spoilage and market outlets are not a problem in Jamaica, or that the
expected benefits to the Project will not materialize because other signi-
ficant bottlenecks are not being removed.

The first assumption is clearly contrary to fact. The serious-
ness of the marketing problem in its various manifestations was described
in some detail earlier in this loan paper. The prevalence of a substantial
amount of waste was confirmed by the 1976 FAO report in support of the
IDB Parish Markets Project which conservatively estimated meat losses at
31 percent, and fruit and vegetable losses at 25 percent.

The second possibility--that key bottlenecks in other areas may
prevent the anticipated Project benefits from materializing--may have to
be taken more seriously. However, GOJ agricultural planners are well aware
of the need to deal with the country's agricultural problems by means of
an integrated program, and have spelled out such a program in their Five
Year Agricultural Development Plan. Several elements of this plan are
underway. These include Project Land Lease (leasing public lands to small
farmers), Pioneer Farms (settlement of young workers on farms), provision'
of agricultural credit through the Jamaica Development Bank, land irriga-
tion, reclamation and terracing schemes, etc. Several projects currently
under implementation are benefiting from a substantial amount of international
agency financing. It is clear that this Project is part of a broad program
to develop Jamaica's agricultural resources and that it is unlikely to fail
owing to the presence of major obstat-les in other areas that are not being
addressed.




-72-


8. Conclusion

This analysis indicates that there is a strong justification
for the Project. Its benefit-cost ratio is extremely favorable, and it is
likely to effect a significant saving in foreign exchange. Failure to
undertake it would dilute the benefits of other aspects of the agricultural
development program. On the other hand, the impact-on production and foreign
exchange savings of the overall agricultural program jointly implemented
and financed by the GOJ, the IFIs and AID is almost certain to be a multiple
of the impact estimated here from this particular project. The benefits ,
of the Project are apt to be broadly distributed, encompassing farmers,
consumers and intermediaries as a group. While some higglers may be dis-
placed, this effect is not expected to be major as the restructuring of
the marketing system will be spread over a period of years and some of the
displaced people are likely to find employment in the newly established
marketing institutions.




-73-


D. Financial Analysis and Plan

The economic analysis has established that substantial benefits
can be expected from this Project even on the basis of conservative assump-
tions, and that farmers, consumers and intermediaries can all be expected
to benefit from the Project. This section will examine whether the GOJ
can be expected to bear the financial costs of the Project, and whether
the Subterminal Wholesale Distribution Markets and Assembly and Grading
Stations can be expected to process a sufficient volume of produce to
meet their cost of operation.


1. Ability of GOJ to Meet Operating Costs of the Project

It is assumed that only the operating costs of the Agricultural
Marketing Division of the Ministry of Agriculture will have to be met out
of the GOJ budget. The Markets and the Stations are expected to be charg-
ing rates and to process a volume of produce sufficient to cover their
costs. In the following section, the reasonableness of this latter assump-
tion will be explored in detail.

The total Central Government's budget (recurrent and capital)
and that of the Ministry of Agriculture for the period 1975 through 1980
is presented in Table 20. The budget has been reduced by the amount of
debt servicing to determine the funds available for expenditures in support
of the Project in normal Government activities.

In order to estimate the impact of the required recurrent expendi-
tures associated with the Project, these costs will be compared with the
totalGOJ budget and with the budget of the MOA (net of debt servicing)
for 1979-80. This comparison assumes that the budget will not increase in
real terms, which is admittedly unrealistic. However, correction for this
factor would not alter the results significantly. The recurrent costs
associated with the Project are summarized in Table 21.

The calculation at the bottom of Table 21 indicates that the
projected recurrent expenditures of the Marketing Division
the MOA as a result of this Project are not expected to impose a signifi-
cant charge on the GOJ budget. It will increase their annual recurrent
budget by only J$1.0 million, which constitutes .08 percent of the net2
overall 1979/80 GOJ budget and 1.32 percent of the budget of the Ministry
of Agriculture.


The costs of the Marketing Division staff currently on-the--MOA
payroll were netted out. Only recurrent costs are included in the cal-
culation. The calculation also assumes that the Markets and Stations
will cover their operating costs.
2Total GOJ budget less debt service charges.




-74-


Table 20

Central Government Budget

(J$ Million)


Debt
Servicing

123.7
241.7
203,3
380.2
395.2


Net
Budget

852.1
1065.1
1027.7

1436.5
1365.1


MOA
Budget

63.6
100.4
99.6
127.0
78.4


Table 21

Project Recurrent Costs in 1985
(1978 US
(1978 US$)-


Total Annual Recurrent Costs
Less: Revenue Wholesale Dist. Mkts.
Less: Revenue Assembly and Grading
Stations

Net Additional Expenditures




Percent of GOJ Budget
Percent of MOA Budget


2,670,00~2
628,000 /


1,369,000

US$ 673,000
or

J$1,031,709
.08%
1.32%


1/ At US$1 = J$1.533
2/ From Table 16
3/ Assumes that revenues will be equal to the recurrent costs projected
in Table 16.


Year



1975-76
1976-77
1977-78
1978-79

1979-80


GOJ
Total
Budget

975.8
1306.8
1231.0
1816.7

1760.3


___ ____ _~~


_.__ ~ I


_____I___








TAHIF: 22

iJtrlibution o C' 'r1t.;l :n:.tn by hrl t arid Storaro Ai'd.
S.:andart W.uwoiase Le'sirn

(In Sq. Ft. and U.S. $)


[e-" tript ion

b l,1 ingss
'rilt i anl Veg. kr (t.
.!.,t aurl Fl:;l Mkt..
,-w',ril rt'vloioons Mkt.
Famors .'t.
I[.at Storage
Frult and Veg. Storage
Vendoiu Off'ic'.s
Welfare block
Ieneral Admln.
h.ilnt. block


Area of Buildinivs
Total Rentable


Sq._Ft.
16000
10000
2000
2500
1500
4000
3000
14110
1500
1800


S. Ft.
9000
60300
1500
1500
1200
3000
3000


Use- Total
ful Cost
Life
30 160000
30 3o0000
30 30100
30 12500
20 84000
.20 168000
30 600oo
30 43200
30 30000
30 5o000


titV It
and Veg.
r03C -


Meat len' 1 Farmers Heat
;nd. Fish Provi- Mkt, and Fish
Mkt. slons Mkt. Storage


Fruit Ve:ndcrs Trucks
an,! VZo. Offices
Stor:ure


12500


84000


15129
10714
12150


10286 2571
71'3 1786
8100 2025


2571 2057
1786 11129
2025 10800


1680u0
60000
5143 5143
3571 3571
1050 1050


10800


D4ignlT Cont.

Sui total


Generator

Truck -.cale, other



.:;b total
GrInd total ~


;4,iual Depreciation
Bulldit'as
Equipment


91U0V 2 2Jt)J 1 .

43740 25200 1035880 231929 317953 41988 24'1188 102770 191976 83976 10800


10 100000 18750 12500 3125 3125 50000 6250 6250

20 238000 103478 68985 17246 13798 34493 -



338000 122228 81485 20371 3125 63798 l07'13 6285n
1373880 354157 429438 62359 27613 166568 232719 90226 10800


20/30 39142 7731 11598 1o00
10/20 21900 7049 4699 1175


5139 9599
5690 2350


2799 360
625


Does not Include the following costs which will not be used to arrive at
rental fees: Site development $282,510, A&E $150,672 and land $82,000.


6 065 0484 11212 11 2


6 6 6 2124 5606








Table 23
.Subtemdnal -WhMlesal istribution Markets


Operating Expense
Admin. staff & labor


Fruit and Meat and
Veg. t. Fish Mkt.

21.4 14.3


Annual Operating Expenses
(US $000)
Gen'] Provisions Fanners Meat
Mkt. Mkt. Storage


Fruit and Vendors
Veg. Storage Offices Vehicles Total


3.6 5.7 14.3


7.1 27.0 97.0


Utilities,telephcne and Misc.

Vehicle fuel and Maint.
Maintenance (bldg. and equip.)

Total cash
Depreciation buildings
equipment
vehicles
Total

Contingency 5%
Grand Total
Cost/sq. ft.


2.0 1.3


.4 4.0 1.0 1.0


.9 10.0


- 10.0


12.5 12.5
2.5 1.8 25.0


28.7 19.2 4.8 4.9 19.7 17.8 9.9 39.5 144.5
7.7 11.6 1.4 .8 5.1 9.6 2.8 .4 39.4
7.0 4.7 1,2 .3 5.7 2.4 .6 21.9
45.0 45.0

43.4 35.5 7.4 6.0 30.5 29.8 13.3 84.9 250.8


2.2
45.6 '
5.07


1.8
37.3
6.22


.3 1.5 1.5 .7 4.3
6.3 32.0 31.3 14.0 89.2
4.20 26.67 10.43 4.67 11.91-/


12.5
263.3


'Per hour basis assumed 260 days/yr., 16 hours/day, 60% usage, 3 trucks




-77-


The impact that the Project will have on tax revenues should
also be considered. A quick calculation of possible revenue collections
can be made on the basis of the benefit-cost analysis in, Table 17. In
1985, for example, the total projected annual benefits (undiscounted)
were estimated at $51.2 million and costs at $2.7 million (in constant
1978 U.S. dollars) yielding net benefits of $48.5 million or J$74.3 million.
Tax collections over the last three years have varied between 16 and 22
percent of the GDP. If we assume that only 10 percent of the increased
income estimated from the Project can be captured by the tax system, tax
collections would increase by J$7.4 million in 1985, which is a substan-
tial multiple of the recurrent costs of the Marketing Division estimated
in Table 21.


2. Profitability of Subterminal Wholesale Distribution Markets

The purpose of the following two sections is, first, to esti-
mate the cost of operations of the Markets and of the Stations after they
have become fully operational and, second, to estimate the amount of
produce that would have to be handled by;the facilities for them to break
even, i.e., for their revenues to equal operating costs, assuming that
rental charges for the use of the facilities bear a fixed percentage to
the sales value of the produce. (See Table 22.)

The costs per square foot in Table 23 are the average annual
charges which the wholesalers would have to be assessed in order for the
revenues to equal operating costs, including depreciation, assuming that
the facility is fully utilized. The charges per square foot range from
a low of $4.67 for vendor office space to a high of $26.67 for meat and
fish storage. This significant range was to be expected as the cost of
construction and maintenance for a refrigerated area is considerably
greater than for simple office or market space.

The question which has to be answered at this point is, given
the costs per square foot, what are the expected sales of wholesalers on
a square foot basis and what percentage of those sales will the cost for
use of the wholesale facility represent. Since this is a new activity
in Jamaica, it was not possible to obtain reasonable estimates of either
of these two variables. On the basis of studies and experience in other
countries, it was determined that the rental charge should be about 2
percent of the value of the produce sold in the wholesale markets.
With the assumption of a 2 percent cost, the annual volume of
produce that would have to be sold per square foot ranges from a low of
0.2 tons at the meat and fish market to a high of 1.4 tons at the fruit
and vegetable storage facility. The FAO report indicates that facilities
of this type generally sell annually between 0.4 tons per square foot in
developing countries to 2.4 tons in developed countries. The weighted
average 0.7 ton per square foot requirement obtained in Table 24 is near
the lower end of this range. This minimum tonnage level should be readily
attainable and is, in fact, likely to be exceeded.

In summary, the revenues from the use of the Subterminal Whole-
sale Distribution Markets will cover operating expenses at a moderate cost
to wholesalers.






Table 24

Annual Operating Costs and Sales at Break-even


(US$ and Tons)


(1) (2) (3) (4) (5) 2 (6) (7) ._
Area of Operating Charge per Required Avg. Value Required Tons
Buildings Costs per Sq. Ft. as % Sales per per sq. ft.
Sq. Ft. of Sales Sq. Ft.

Market Section Total Rent-
able $ $ $ ( $/ton) Tons


Fruit and Vegetable Mkt. 16000 9000 5.07 2.0 254 385 .7
Meat and Fish Mkt. 10000 6000 6.22 2.0 311 1460 .2
Gen'l provisions Mkt. 2000 1500 5.20 2.0 260 704 .4
Farmers Mkt. 2500 1500 4.20 2.0 210 385 .5
Meat Storage 1500 1200 26.67 2.0 1333 1460 .9
Fruit and Veg. Storage 4000 3000 10.43 2.0 522 385 1.4
Vendors Offices 3000 3000 4.67 2.0 -
Weighted average
(Excludes Vendors Offices) 6.91 318 .7


From Table 20
Col 5 Col 3
Col. .7 = Col


Col. 4
- Col. 6




-79-


3. Profitability of Assembly and Grading Stations

Two general designs of the Stations have been prepared. The
first will contain a grading and packing building, administrative office
space, and limited storage totaling approximately 2250 square feet. The
second design provides for a grading and packing building, office and stor-
age space and, in addition, a cold storage facility totaling about 4950
square feet.

Since the size of the facility will depend on many factors,
such as location, production, local infrastructure available, etc., this
analysis has been undertaken using an average cost of $59,359 for construc-
tion of the facilities and $9800 for equipment in order to determine the
amount of produce which would have to be sold at the "average" Station in
order for the revenues to cover the costs of operation including depre-
ciation.

In Table 25 the estimated annual operating expenses for an
average Assembly and Grading Station are presented.


Table 25
Assembly and Grading Stations Annual Operating Expenses

(US $000)

Useful Life -- Cost


Operating Expenses

Admin. Staff and Labor 16.5
Utilities and Telephone 4.4
Materials and Containers 16.8
Vehicle-rent, Fuel and
Maintenance 8.4
Maintenance (Bldg. and Equip.) 4.0
Total 50.1
Depreciation Building 20
Equipment 10 1.0
Grand Total 54.1




1/ Total cost of the 25 stations is US$1,728,993 of which building costs will total
$1,168,050, equipment $245,000, site development $233,610 and contingency (5%)
$82,333.




-80-





Unlike the Subterminal Wholesale Distribution Markets, the
revenue for the Stations will be generated by an assessment based on the
sales value of the product, which we estimate will be a maximum of 5 per-
cent. This charge will cover labor, packing materials, transportation,
sales cost, and overhead. It is in line with charges for such services
in other countries. Therefore, in order to cover the annual operating
expenses of $54,100, sales should amount to a minimum of $1,082,000 per
Assembly and Grading Station. This will represent approximately 2810
tons of fruits and vegetables, with an average farmgate price of $385
per ton.

It is anticipated that the Stations will be used by farmers within
a radius of approximately five to ten miles of the facility. Although an
agricultural survey of the areas in which these facilities will be construc-
ted has not been undertaken, it may be possible to roughly estimate what
percentage of the production the required sales represent in an average
producing area. Within a circle with a radius of five miles are 50,265
acres. If we assume that fruits and vegetables are cultivated on only
25 percent of this area with a value of production of $850 per acre, 1
then total annual production would have a value of $10,681,313 and repre-
sent a volume of about 27,740 tons. Therefore, the amount of produce
that would be required to utilize a Station to the extent necessary to
enable it to attain self-sufficiency would represent only about 10 percent
of the total amount of produce raised within a five mile radius. Since the
average percentage of production required is low, it is reasonable to
assume that the revenue of the Stations will keep pace with operating
expenses and that actual utilization will probably exceed the minimum
volume requirement.

As the volume handled by the Stations increases, charges per
unit handled can be reduced. After the break-even point of 2810 tons per
annum is exceeded, it may be possible to reduce the rate charged from
5 percent to perhaps 3 percent, thereby encouraging still greater use of
the facility.

The grading and packing will be done by hand but facilitated by
machines of varying degrees of sophistication. At the break-even point,
there will be a substantial amount of excess capacity. It is estimated
that the grading and packing equipment to be provided under the Project
will have a capacity of about 4.4 tons per hour or of approximately 13,200
tons of product annually, if the equipment is operated 300 days per year,
10 hours per day. We have noted that the amount of produce consistent
with the break-even point is only 2810 tons per annum, or 21 percent of
the equipment's maximum capacity.


Report of the Agricultural Sector Assessment Team of the Office of
International Cooperation and Development of the U.S. Department of
Agriculture to USAID/Jamaica and to the Minister of Agriculture of
Jamaica, "The Small Farmer in Jamaican Agriculture: An Assessment of
Constraints and Opportunities," Kingston, November, 1978, p. 101.




-81-


In conclusion, it is reasonable to assume that revenues obtained
from the Stations will cover operating expenses since the average percent-
age of production needed to break even is relatively low in relation to
the area's total production, and the machine hours necessary to handle
the volume of output at the break-even point are substantially below the
equipment's rated capacity. The estimated cost of packing and grading is
expected to be offset by gains in the overall product value and decreases
in transportation costs.


4. Financial Plan

Tables 26 and 27 present the estimated total cost of the Project
by source and use of funds and the disbursement schedule.


Table 26

Total Project Cost by Project Component
(US $000)
AID GOJ
Use AID Total
FX LC LC

1. Marketing Division
Technical Assistance 3,166- 3,166
Training 492 100 592
Commodities 126 126
Operating Expenses 2,537 2,537

II. Wholesale Distribu-
tion Markets
Construction 3,200 700 3,700 7,600
Trucks 900 900
Operating Expenses 705 705

III. Assembly & Grading
Stations
Construction 900 200 600 1,700
Operating Expenses __ ____ 1,587 1,587
Subtotal 8,784 900 9,229 18,913
Contingency 439 45 462 946
Inflation Factor 1,633 168 2,022 3,823
TOTAL 10,856 1,113 11,713 23,683

AID 51%
GOJ 49%


1/$2,200 Grant Financed.
$2,200 Grant Financed.




-82-


Table 27

Disbursement Schedule
(US $000)


Year 1 Year 2 Year 3 Year 4 Year 5 .Total

AID
Loan 436 3,168 2,269 1,277 334 7,484
Grant 500 497 496 395 312 2,200
Inflation & Contingency 47 550 719 637 332 2,285
Subtotal AID 983 4,215 3,484 2,309 978 11,969

GOJ 712 2,739 2,575 2,086 1,117 9,229
Inflation & Contingency 36 410 670 795 573 2,484
Subtotal GOJ 748 3,149 3,245 2,881 1,690 11,713

Total AID + GOJ 1,731 7,364 6,729 5,190 2,668 23,682






E. Social Soundness Analysis-

1. Overview

Although the traditional agricultural marketing system in
Jamaica, namely a large number of small scale market intermediaries
(higglers) who purchase at the farmgate and retail at parish markets, re-
mains dominant, it was found that important changes are taking place. For
example, a growing number of large wholesalers, with considerable resources,
handling large volumes, has begun a system of forward contracting in
response to the demand for large volumes of food by institutions and hotels.

It was also found that farmers and intermediaries are dissatisfied
with the present system. Farmers' main complaints were that: they produce
larger quantities than small higglers can handle; they suffer losses from
spoilage of reaped and unreaped produce; and, farmgate prices are low in
relation to costs of farm inputs.

Intermediaries identified high transportation costs, poor physi-
cal conditions in the market, and seasonality of produce as problems affect-
ing them.

The Agricultural Marketing Project addresses problems identified
as constraints by both small farmers and market intermediaries: namely,
produce availability, quality, distribution and poor physical facilities
at the market.


2. Description of Target Groups

a. Farmers

In Jamaica, 176,263 farmers, or 88 percent of all farmers, are
on farms of one to ten acres. The 1978 Agricultural Sector Study showed
that a high proportion of these small farmers are involved in commercial
agriculture, and produce most of the country's domestic food crops. There
is little crop specialization on small farms, as farmers diversify land-use
by mixed-cropping to ensure a steady cash income year round. By and large,
tradition rather than market demand dictates the farmer's choice of crops.

The majority of farmers do not now perceive marketing as part
of their occupational role; they have limited knowledge of appropriate
harvesting techniques, product differentiation and packing. The principal
reason is that marketing has been the responsibility of female household
members since the pre-emancipation era, when slaves exchanged provisions
at Sunday markets. As a consequence, the higgler is given the responsibility
of marketing produce, with the farmer playing a passive role. Farmers



This section summarizes a sociological study of the marketing system con-
ducted by Jamaican sociologist Ms. Carleen Gardner. The data for the ana-
lysis were compiled from an in depth literature search and extensive sur-
veys and personal visits with market intermediaries, small farmers and con-
sumers.




-84-


place high value on the services of the higgler, who, in addition to
marketing produce, assists with reaping, purchases on the farm, and is
regular and accessible. The majority of farmers sell to higglers. In
fact, a survey of nine communities in eastern Jamaica found that for all
crops, excluding coffee which is grown for export, the higgler was the
most frequently reported first-handler.

This investigation found that between higglers and small farmers
there exists kinship and locality ties, a high degree of economic coopera-
tion, a level of trust and sharing of basic social institutions, and that
income from higglering makes an important contribution to small farm
hou-seholds.


b. Market Intermediaries

The Higgler Survey, conducted by the Ministry of Agriculture in
1977, found that 80 percent of the domestic food is marketed by higglers.
The number of higglers at that time was estimated to be approximately
14,000; however, because of rising unemployment in other sectors, the
number today may be as high as 20,000.

The majority of higglers are rural residents of which 83 percent
are women of low socio-economic level with less than six years of primary
education. They purchase from farms in their own locality and supply pro-
duce from their own farm. The business operation of the "country higgler"
is characterized by small weekly cash outlay, poor accounting practices
and low profits. The average weekly net profit is J$26, and 78 percent
purchase less than J$100 of produce. They perceive their business as risky
and perform a number of functions to guard against risk, such as trading
in fixed quantities of specific items with established customers, selling
scarce items along with low demand items (a system called "marrying"),
and waiting in the market for up to three days, if necessary, to get a
desired price for their produce.


c. Consumers

Income distribution data indicate that 67.5 percent of wage
earners have a weekly income of under J$50. The only available expenditure
data, for 1972, indicated that 40.6 percent of income goes for food. With
the escalation of food prices since 1972, it is now estimated by the
Nutrition Advisory Council that 70 to 80 percent of the income of. the low-
est income groups goes for food. Rising food prices have had -serious
effects on the nutritional status of low income groups. The Nutrition
Advisory Council also points out that food unavailability is a contributing
factor to malnutrition. Consequently, malnutrition is most severe in sugar
producing areas and urban slums where little produce is grown and food is
therefore directly related to the efficiency of the marketing system.




University of Florida Home Page
© 2004 - 2010 University of Florida George A. Smathers Libraries.
All rights reserved.

Acceptable Use, Copyright, and Disclaimer Statement
Last updated October 10, 2010 - - mvs