Thursday, July 16, 2009

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Agriculture: The darling of Bahamian banking? By VERNON CLEMENT JONES ~ Guardian Business Editor ~ vernon@nasguard.com: While almost all sectors of the economy can rightfully complain of dried up borrowing opportunities through the country's commercial lenders, agriculture, says the Central Bank's 1Q 2009 report, isn't one of them. While commercial lending to fisheries, manufacturing, mining and even tourism business for the three months between January 1, 2009, and the end of March fell off a cliff, that for farming operations grew. Specifically, that's a near-three million-dollar surge compared to the year-ago period, according to the Central Bank's latest quarterly report, released yesterday. The end result was $14.5m in loans to agricultural players in this country, up from the $11.9 million recorded for the prior year period. It's worth noting that the industry was nonetheless held to a meager 0.2 percent of the total nationwide credit now in play. Still, that rise in the real number had one Nassau grower scratching his head Tuesday, trying to figure out exactly where that new capital went and to whom. Those details weren't part of the report. The answer may lie in the growing street cred. agriculture continues to gain — at least among bankers — as the recession wears on and inflated food prices, running at over seven percent in this market, continue to increase. They've managed to grow demand for local, and increasingly cheaper, produce. "I think the banks are starting to realize that agriculture even in The Bahamas can be a profitable business worthy of their (backing)," said Warren Armbrister, one of a growing number of Andros small-scale pepper farmers. As a group they've seen their own profit margins widen as the prices they fetch from wholesalers benefit from the same global inflationary trend. The price escalation has also increased their supply and infrastructure needs, as it has for larger operations in Nassau, Grand Bahama and the Abacos. "I hope the banks are responding to that need and that's why we see the loan amounts rising," said Armbrister, a transplanted Nassauvian. That may in fact be wishful thinking. The rise in credit for the agricultural sector, likely went to a single deal — a land purchase and/or the heavy equipment needed to farm it — said one banker, speaking to Guardian Business yesterday. He suggests small operators looking for money to expand their operations — and especially entrepreneurs seeking startup cash — are still required to present an almost-unsinkable business plan. Wednesday, July 1, 2009