Wed | Oct 21, 2020

Judge to rule on Salada quota next month

Published:Wednesday | September 23, 2020 | 12:14 AMKarena Bennett/Business Reporter

Salada Foods Jamaica will know next month whether it must change its formulation to accommodate new quota rules for Jamaican beans in its coffee blends, or whether it is its regulator that will be dragged back into line by the Supreme Court.

The parties presented their case to the court last Wednesday, but the judge will not come to a decision until sometime in October – the precise date was not disclosed – on whether the Jamaica Commodities Regulatory Authority, JACRA, overstepped its bounds when it mandated that Salada triple the portion of local coffee beans it utilises to produce instant coffee, from 10 per cent to 30 per cent.

The change in formulation was slated for September 1.

Salada, which filed for a judicial review of the directive on August 31, is seeking orders of certiorari and mandamus, which means the company is asking the court to quash, or cancel, the JACRA decision on the basis that it overstepped its authority.

Michael Hylton QC, Kevin Powell and Kerri-Ann Mayne of law firm Hylton Powell are representing Salada, while JACRA is being represented by the law firm Livingston, Alexander and Levy.

Powell told the Financial Gleaner that the company is challenging elements of Section 19 of the Jamaica Agricultural Commodities Regulatory Authority Regulations Act 2018, which requires coffee producers to include 30 per cent local coffee content in their coffee formulations.

Salada is the sole processor of instant coffee in Jamaica and owner of the flagship Jamaica Mountain Peak and Mountain Bliss 876 brands. It’s said to control over 50 per cent of the instant market, which includes a range of Jamaican own brands as well as imports.

Powell said the legal challenge mounted by the coffee processor was on a number of grounds, including a contention that JACRA’s directive was irrational on the basis that an increase in roasted coffee content is not necessary for the production of instant coffee.

Additionally, Powell notes that imposing the regulation on Salada alone would be deemed unfair to the coffee producer, since there are “other local producers of coffee on whom it is not imposed”.

The legal team also presented arguments that the quota directive falls outside the JACRA Act.

“In that act, there is a list of things which JACRA has the power to do, but we are saying this particular regulation is not included in the powers that JACRA is given,” he said.

Efforts to get a response from JACRA’s lawyer were unsuccessful.

Powell also noted that the regulator has not responded to Salada’s requests for import period submitted between January and March of this year.

Such responses, he adds, are usually forthcoming about 30 days from the application date.

“No response was received from JACRA as to whether the permits were granted or refused, which is unusual,” the lawyer said.

“We are effectively challenging their failure to consider the permit application.”

Salada and JACRA have been at loggerheads over fees and quotas since the regulator’s formation more than two years ago.

JACRA first required Salada to increase the local coffee content in its instant coffee formulation to 30 per cent in March 2019, but a month later amended that to allow the company a 10 per cent local coffee quota in response to Salada’s request for relief in order to compete in the domestic instant coffee market.

The waiver came to an end in December 2019.

The regulator, in defending its directive to Salada prior to the court case, pointed to inventory build-up of non-exportable local coffee for which there was no market.

Salada is against changing its formula, having argued over time that it would affect the taste profile of Jamaica Mountain Peak and add to its cost of doing business, as Jamaican coffee was more expensive than the imported beans they would replace.