What is a ‘cess’ payment?
November 26, 2013
What is a ‘cess’ payment?

Very often, when the banana industry is being discussed, reference is made to a “cess”. SEARCHLIGHT asked Ashley Caine of the Ministry of Agriculture what is a cess, and this was his answer:{{more}}

The cess was a mechanism used in the banana industry to facilitate the availability of inputs to the farmer. An agreed portion of the price payable per pound, e.g. eight cents per pound or a rate established by the Board of Directors, was retained by the Association on the farmer’s behalf, in individual farmer (cess) accounts. The farmer could then use the money set aside/ retained by the BGA on his behalf to procure inputs for his/her farming operations, e.g. fertiliser, twine, herbicide etc.

A cess voucher was prepared at the farmer’s request, up to the value of his accumulated contribution and provided to the farmer, who then used it to collect inputs up to the value of what he had available at the Agricultural Input Warehouse. It was an excellent mechanism, since it allowed farmers to have production inputs as required. When the value accumulated way beyond the farmer’s need the farmer could, with the approval of Board or management, have cash instead of inputs up to a limit. The mechanism was also useful to the Association as it provided an additional source of short-term funding for the industry – internal borrowing, as opposed to going to the bank for commercial rate short-term capital needs.