Data released by the Statistical Institute of Jamaica (STATIN) indicate that for the first two months of this year, exports were running at US$224.4 million - US$42.0 million less than the US$266.0 million programmed under the agreement with the International Monetary Fund (IMF).
Under the agreement, exports were projected to climb to US$1.6 billion this year, up from the US$1.3 billion to which it slumped last year, based on a depreciation of the exchange rate to J$91.5 to the US$1.0. The exchange rate is however trading at J$86 to the US$1 despite the desperate attempts by the central bank to contain it.
The central bank recently absorbed foreign exchange from the market, albeit not on a sustained basis, while reducing interest rates and the cash reserve ratio in order to provide more Jamaica dollars to purchase the greenback.
These moves have however had very little impact on the value of the dollar because of the lack of confidence in the management of the economy and the consequential weak aggregate demand due to the pilingup of significant arrears and the steep fall-out in employment.
The Statin data indicated that the country exported some $38.5 million in food during the first two months of this year; US$15.3 million in beverage and tobacco; US$83 million in crude materials and US$58.3 million in mineral fuels.
The same data also pointed out that exports of machinery and transport equipment amounted to US$6.7 million, while that of manufactured and miscellaneous ran at US$5.3 million. Meanwhile free zone exports accounted for US$24.9 million.
Exporters have been complaining that the recent appreciation in the value of the Jamaican dollar against its international counterparts is having negative impact on their profitability because it leads to a reduction in the amount of Jamaican dollars they are getting for every dollar, pound and euro of export earnings, while their Jamaican dollar denominated costs are galloping.
Vitus Evans, president of the Jamaica Exporters Association (JEA) says the umbrella exporter body is currently conducting a study on the impact of the appreciation of the Jamaican dollar on the viability of its members. He also says that the JEA would be seeking a meeting with the central bank and or the Ministry of Finance when this study is completed.
Evans also posited that he expects this meeting to take place in a few weeks time, while stressing that the discussions would be informed by the results of the study. Speaking in an interview recently, he also pointed out that preliminary results indicate that the agro processing sector is the one which has been the hardest hit by the 4 per cent climb in the value of the Jamaican dollar in relation to the US dollar, 2.5 per cent relative to the Canadian dollar and 18 per cent against the euro.
This is bad news, given that this is one of the sectors in which the country has a comparative advantage because of its factor endowment with large tracts of under-utilised arable and a lot of idle able-bodied people.
The agro processing sector is one of the many sectors, which exporters want to push in order to drive export earnings, which tumbled from US$2.6 billion in 2008 to US$1.4 billion last year, primarily because of the fallout in the mining sector.
So there is only one way to make profit when you are in the export business and that is to hope for devaluation.
The fact is our aggregated earnings of US$ from exports is not increasing and that is what is required - not necessarily more $JA from devaluation.
Why are we never forward thinking, why aren’t we looking at bringing in capital goods and equipment now to take advantage of the cheaper US $.
Why are we not seeking to retool so we can become more efficient so when the global economy starts moving again, we are in a position to capitalize on the fact that we would have lowered our manufacturing cost.
Guess if a expert from overseas come and say it , then we will then start thinking.
Its always short-term thinking in Ja, never long-term.
The author of this article continues to persue a line of argument which is in every sense foolishness and anti-prodcutive. Until the exporters and the JMA to which you have drawn reference begin to truly compete in the world market as all other companies then they will never learn. The era of large profits on balnce sheet gained specfically fromthe depression of the Jamaican Dollar and high interest ratses is over. Therefore get use to it. The losses they are seeing now has been there for decades masked by the over inflated US dollar ,now that the reality of the true value of the US dollar has reached the Jamaican economy it is skewed tobe the fault of the GOJ . Wake up people read the article in the Frifay Observer on The soap manufacturer who has realised huge profits based n the valuation of the Jamaican dollar , bottomline reduction in cost of production. Therefore the author on this article really needs to do either of two things find something much more constructive to write about or quit writing altogether.