Cedric Stephens | The movement of resources is a risky business | Company

MP Anthony Hylton is the Opposition Critic for Industry, Investment and Logistics. I have a general idea of ​​what the first two parts of his parallel wallet entail. The third is like Greek to me.

Logistics, like icons or social media, are common words that people who use them assume others like me understand. I referred to my dictionary to make sure that even though the ghost wallet exists as a vision, I understood all parts of it. Logistics is defined as the process of managing how resources are acquired, stored and transported to their destinations.

Jamaica is an open economy and dependent on imports. Logistics are important. The process involves risks. Managing threats related to the acquisition, storage and transport of resources to their destination is part of the job of the logistics manager or logistician.

The MP, using his knowledge of logistics, criticized the Jamaican government when it contributed to the sectoral debate. It has failed, he argued, “to identify specific solutions to supply chain challenges that have contributed to the high prices (i.e., rising prices) of goods consumption and services in the economy”.

Supply chains and logistics are connected. A supply chain encompasses everything from the delivery of raw materials from the supplier to the manufacturer to its eventual delivery to the end user.

The opposition and other key stakeholders in society, he said, believe that “the central bank’s approach to tackling supply chain-induced inflation – raising rates of interest – is unlikely to achieve the desired result in the short to medium term, but will increase pressure on businesses and vulnerable people.One of the lessons learned from the pandemic was the risk of overreliance on a given (economic) sector The economy cannot be driven on a single engine.

Agriculture and Fisheries Minister Pearl Charles Jr and MP Anthony Hylton share similar ideas on the need to diversify the economy. The minister’s call for more investment in the agriculture and fisheries sectors to support the government’s efforts to increase local food production was one of the topics covered in last week’s article: “Can Jamaica imitate Rwanda in agriculture? Yes we can!’

Messrs. Hylton and Charles came to similar conclusions, from different starting points. The former approached the subject from the perspective of logistics, supply chains and the broadening of the economy. The conclusion of the latter was based on the pillars of food safety and avoidance or reduction of supply chain risks. Their arguments are complementary when considered from a risk management perspective.

Jampro President Diane Edwards presented data at a forum four years ago, according to a report by the Jamaica Information Service, which adds an economic dimension to MM’s arguments. Hyton and Charles. It established a link between the agriculture and agribusiness sectors and the performance of the country’s economy.

She was quoted as saying that “agriculture accounts for 7% of Jamaica’s gross domestic product, so often the GDP drops or swims depending on the performance of the agricultural sector. Considering value-added products, including agro-industrial products, the contribution of the two sectors amounts to 12% of GDP. When agriculture expands, GDP increases, and this is something we saw happen about three quarters ago when agriculture grew by 28%. So we know that agriculture can grow, and we believe that the time for agriculture has come”.

Rwanda Development Board CEO Clare Akamanzi, quoted in last week’s article, would agree.

According to the Food and Agriculture Organization of the United Nations 2008 booklet Risk management in agriculturefarming is risky.

“Farmers live with risk and make decisions every day that affect their farming operations. Many of the factors that affect the decisions farmers make cannot be predicted with 100% accuracy: weather conditions change; prices at harvest time could fall; hired labor may not be available during peak hours; machinery and equipment could break down when most needed; working animals can die and government policy can change overnight. These are examples of some of the risks that farmers face in running their farms. These risks affect the profitability of the farm,” he says.

Non-agricultural enterprises can transfer some of their risks to insurers. Jamaican agricultural businesses do not have this option, unlike their counterparts in many other parts of the world.

The Brookings Institution is a nonprofit public policy organization in the United States. Its mission is to conduct in-depth research that leads to innovative ideas to solve the problems facing society at local, national and global levels. In a publication from May 2021, Agricultural insurance: the antidote to many economic diseasesIt said:

“Agriculture, which remains the most important sector in many poor countries, is directly affected by climate shocks. In addition to threatening global food security and stability, these shocks can cripple livelihoods, disrupt value chains and even undermine macroeconomic stability. Weather shocks have caused significant fiscal volatility in recent years and aggravated corruption problems.

“Agricultural insurance can be an antidote to these risks: it reduces lending risks to the agricultural sector, enables loan repayment, reduces budget volatility of agriculture-related budget expenditures by transferring climate risk to the private sector , increases fiscal space during shock years, and stimulates growth in the agricultural sector, which can unlock potential for job creation.It can even reduce the extent of tax leakage and corruption.

This year, European risk managers from 27 countries identified the threat of supply chain failures as the second most important hazard facing businesses after cyber risks. Threats to the supply chain and the lack of a risk transfer mechanism for the island’s industrious farmers are barriers to investment.

Mr Hylton recommended a supply chain and logistics council that would bring together key institutions, from the public and private sectors, to share critical high-level data to solve problems. He also suggested that the Jamaican business sector review and redefine its logistics channels to ensure resilience and sustainability during this critical time.

I agree and, more importantly, the Minister of Finance and the Public Service would too.

Finally, the Jamaican government has examined the feasibility of universal health insurance and is considering introducing unemployment insurance. Why has crop insurance been left out of public conversation?

– Cedric E. Stephens provides independent information and advice on risk and insurance management. For free information or advice write to: [email protected] or [email protected]