Emergency Assistance to Farmers Impacted by Drought
At a very lengthy press conference that went through the lunch hour today, Prime Minister Dean Barrow announced that a state of emergency is to be declared in parts of the country due to the prolonged drought that is impacting the agriculture and other sectors. This has become necessary to access funding to assist affected farmers. Now, as a first step, a working group has been formed, which is putting together a package of relief measures, including low interest loans to be made available to farmers. It is estimated that as much as fifty million dollars has been lost millions in produce. News Five’s Isani Cayetano reports.
Isani Cayetano, Reporting
Belize is experiencing the worst period of extreme dry weather in almost four decades and farmers in the north, particularly in the Orange Walk and Corozal districts, are hardest hit by the extended drought. It is anticipated that thousands will be affected by below-average precipitation which will have a substantial impact on the ecosystem, as well as the agriculture of northern Belize, mainly cash crops and livestock production.
Dean Barrow
Prime Minister Dean Barrow
“This infernal drought which has so confounded us, the Ministry of Agriculture puts the losses suffered in consequence of the drought currently as being in excess of fifty million dollars.”
The effects of the drought have only made worse an already delicate agriculture sector taking into consideration recent contractions in citrus, the reduction in international sugar prices and serious challenges faced by both the banana and aquaculture sub-sectors. The impact of the weather-related phenomenon directly threatens food security, since agriculture is a mainstay in economic resiliency. That in mind, the Central Bank of Belize, along with the Ministry of Finance and the Ministry of Agriculture have put together a working group comprising the banking and agricultural sectors to offer emergency relief to farmers.
Joy Grant
Joy Grant, Governor, Central Bank of Belize
“On September second, we at the Central Bank realized that something had to be done and done early for the farmers. Now the prime minister alluded to it that people think of Central Bank and bankers, et cetera, as thinking only about money. Well that’s not in fact so. Actually the people are at the foremost in everything that we do and so we realized that there would be a situation in the country whereby people would have loans, need loans and that we would have to step in to make sure that they could get these facilities and get it at rates that they can afford.”
In doing so, certain regulatory requirements on banks and credit unions will be relaxed in order to accommodate refinancing or financing for existing and new borrowers in the agricultural sector. The Central Bank will then purposely allow lenders to deliver financial relief through the restructuring of loans, reduction of interest rates, and moratoriums on repayments and extended loan maturities.
Joy Grant
“The agricultural sector is a risky sector, you have droughts and you have floods and you have pests and you have diseases and everything else. So within the banking sector this is seen as a high-risk area. So we knew we had to address that, but also it’s very important to the banks and to credit unions the provisioning, because when you provision for a loan we have three categories. We have the doubtful category and the loss and of course we start with substantial. The substantial, doubtful and loss and then the banks would have to make some provision that if it’s not paid that will have to come out of their bottom line somewhere down the road and so of course they are very wary about doing provisions and we understood that.”
Approximately ten percent or an estimated two hundred and seventy-seven million dollars of all loans in the financial system, domestic and international banks, as well as credit unions included, are for agricultural purposes. Sandra Bedran, a career banker who sits on the newly formed working group, explains the effect of the drought on the cost of food.
Sandra Bedran
Sandra Bedran, Chair, Belize Bankers Association
“The cost of food will go up folks, like it or not that is going to happen. There is a multiplier effect when you don’t have a basic grain like corn. There is also a multiplier effect when the farmers that plant vegetables have been affected. They have their tomatoes on the ground, the sweet peppers on the ground, the new seedlings have died and the ground is dry, dry, dry. Even if they were given the money and the seed right now, they cannot put it in the ground. So we have to wait for this whole cycle to swing and that’s why we are very pleased that the Central Bank has agreed to give us the time to work with the farmers and we can’t go out there and do it as a blanket. We’ll have to literally visit each one of our customers.”
At present, there are seven thousand registered farmers and roughly eight thousand farms, a majority of which are concentrated in central, western and northern Belize. The drought emergency response measures to address the issue includes extending the classification period from twelve to eighteen months for select agricultural loans, in order to stimulate additional credit. The Development Finance Corporation is part of the working group.
Natalie Goff
Natalie Goff, General Manager, DFC
“Our board has said that they are willing to go up to twenty-four months in interest, but of course we have to have that discussion with the Central Bank because we know the approval is only up to eighteen months. We are looking at very subsidized interest rates, if we can get cheaper financing, if we can get it at one percent the interest rate can be much lower because all we are looking on is to add the admin cost of putting a loan on the books and of course there will be some risk so it will be at very subsidized rates because it’s in our best interest for these loans to be repaid. If we don’t do this, the investment we have on the ground right now we will not recover.”
Assurance is being given to all stakeholders, especially farmers and ranchers, that government and the Central Bank will adopt all possible measures to support the agriculture sector during this challenging time. Reporting for News Five, I am Isani Cayetano.
