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David Phillips banks on Jamaican agriculture
Al Edwards
Friday, January 16, 2009
David Phillips shows off National Meatslatest brand Hart Hill. This is a new premium brand said to be launchedon the Jamaican market next month.Main principal and managingdirector of St Ann-based National Meats, David Phillips is nowventuring into the agricultural business as well as creating his ownfood lines in an effort to make his company a major force in theregional food production business.Phillips began selling meat out ofthe back of a panel van with just one employee, low overheads and nocollateral. In order to fund his enterprise, he sold furniture and carson the side which meant his energies were fully engaged. Twenty-fouryears later, Phillips controls a US$50-million food empire that isstill in expansion mode, turning to local agricultural produce to addyet another arm to his business interests.
In the beginning
"When I started back in 1985 itwas to introduce locally produced beef to the Jamaican hotel industrybecause back then everything was imported," he said. "At that time,there was high production of local beef but no market for it. We thenexpanded our product line and entered new markets. It was not so muchvision but survival that forced me into new areas such as stew beef andother meats for general consumption. From there we became afull-fledged distributor of meats, both to the hotels and local market,with our refrigerated products."
The founder of National Meats sawan opportunity to provide customers with a new experience. He knew thathoteliers put a premium on quality and service and that all too oftenthat eliminated local suppliers. With hoteliers valuing imports,Phillips sought to offer an equal alternative - local meat productsdelivered via a first-class service.
This model would not be thepreserve of just the hotels but to all National Meats customers. Partof his strategy was to target local hotels that understood theimportance of supporting local industries through buying Jamaican goods.
On a tour of National Meatsfacilities earlier this week, it would not be suspension of disbeliefto say that one could literally eat their lunch in one of his operatingtemperature-controlled units. They are pristine, well kept andextremely clean. The professionalism of the staff indicates that theyhave been inculcated into Phillips' ethos and that the entire team hasbought into it.
The facilities are extremelyimpressive, and with US$30 million of capital expenditure going intoit, Phillips has given a clear indication of just what his intentionsare. His facilities, which he is now expanding, sits on 25 acres with areal estate value of approximately US$50 million. This includes 27,000square feet of cold storage space, 21,600 square feet of totalwarehouse space, a dry-cold freezer room of 17,000 square feet andchilled storage space of 14,300 square feet.
David Phillips (right) shows RADA executives his new agricultural storage facilities in St Ann.The importance of moderntechnology has not escaped Phillips' attention and if National Meats isto be a leading distributor of food products with an eye to both theregion and the diaspora, then a global provider of enterprise-widesoftware solutions for food distributors and retailers would be needed.National Meats opted for the Israeli Retalix Power Enterprise system,the best in the world with 50 of the top 100 food distributors usingit. National Meats is the only company in the Caribbean and LatinAmerica to operate this system.Speaking about his investment inthis state-of-the-art technology Phillips said: "By putting thishigh-tech management system in place it allows our customers to receivetotal compliance with their orders. Retalix allows us to track not onlyour quality but all the specifications of the products, including brandand expiry dates. We can be compliant with our customers 100 per centof the time. They can get confirmation of their orders when they placethem. Customers can go online and view the processing of their orders."
The food processing business in Jamaica
Thehead of National Meats sees the technological processing of food inJamaica as in its infancy. He notes that in the past there never was aclear link between agriculture and the tourism business and that theynever truly supported each other.
"What you had was farmersproducing with no relationship to demand. That created famine or feast.At National Meats, we are now trying to link these two industries withthe farmers going under contract, which means the farmers will alwayshave a market and are guaranteed a payday with no delays. It also meansthat the hotels will benefit from consistency in the quality of theproduct delivered on a timely basis," explained Phillips.
He noted that in the past thequality of the agricultural produce always proved problematic tohoteliers. More often than not farmers would turn up at the hotelsdepot docks with deteriorating goods that had been impaired after ajourney in 85 degrees heat. Post harvest would invariably prove to betheir Achilles heel.
Phillips saw an opportunity hereand decided to take the produce from the farmers at a fair price,process and package them in his cooling facilities and then sell themto the hotels, restaurants, retailers and other customers.
"When youlook at our agricultural produce here in Jamaica, we can compete withanywhere in the world," he said. "We are blessed with a great climateand good soil. It is just a question of whether we can turn farminginto a profitable venture."
The National Meats project willallow small farmers to grow from a few acres to large acres becausethey now have ready-made markets. Phillips intends to dot the country'sfarming communities with silo cells where they can drop off theirproduce for processing. They will be in a position to increase theirproduction to meet the needs of a growing market.
"The way it works is we have thecontracts with the hotels and then we sub-contract to the farmers," heexplained. "We also provide the packaging facilities for the farmerswhich pre-cools to 30 degrees within half hour of harvesting. We willgrade the products, collect them on a daily basis and bring them hereto our headquarters in Lydford, St Ann where our units have sevendifferent temperature zones where we not only cool, chill, but drystore goods. There is no moisture and the produce are then delivered tocustomers in excellent condition. What we deliver is a higher standardthan the imported goods because they have a longer shelf life. Thisshould help persuade hoteliers to buy local."
The 24-hour operation is housed infacilities which come close to US$30 million. Phillips says that hisforay into agricultural goods will help him service the loans with areturn on investment expected in two years. Once fully operational heis expecting weekly sales of J$200 million.
"This venture will helpJamaicans benefit from tourism on a much larger scale. The end resultwill not only be national development but rural development, wherecommunities can once again make progress via farming," said Phillips.
He pointed out that most of themodern industrial countries had a strong agricultural base with theexceptions being Singapore and Hong Kong. He cites Port Antonio,Linstead, and Montego Bay as examples of some of the major areas ofJamaica with a strong agricultural base during and in post-colonialtimes. For a very long time the revenue base of Jamaica was largelycoming from bananas, sugar and other agricultural products. He saidJamaica has lost its way with agriculture and with people choosing tomigrate to the cites, this urban drift has created a new set ofchallenges that continue to put the country under increasing pressure.
"Once Jamaicans see people makingprofits out of farming, it should act as a catalyst for young people togo into farming, take rural development very seriously, because the wayI see it, a lot of the problems we are having with crime are associatedwith the mass migration to the cities," said Phillips. "When thedeportees come back they tend to end up in the major urban areasbecause there are no opportunities in the rural parts of the country.The success of this country will once again come from agro-basedsocieties. Agriculture will once again be king because towns andcommunities will again form around it.
New brands
Phillips has gone beyond being adistributor of foods and has now created National Meats' own brands.The first is Hart Hill, a premium brand with no additives andpreservatives. The emphasis here will be on quality. This will belaunched on a phased basis with the company entering the natural juicemarket. The juices will not come from concentrate or have potassiumsorbate. They will be all natural. No doubt this product line will gohead to head with Tru Juice. National Meats' director of humanresources and public relations, Elizabeth Phillips said that thisproduct line has undergone a battery of tests and they now have theperfect product. Hart Hill will be launched during the first quarter ofthis year.
"Our goal is to go regional theninternational with these products. The packaging is first class and wewant it to be at a standard that we can take it across the world,"declared Elizabeth Phillips.
She added that the company wanteda consumer-friendly brand that was more affordable with quality beingthe watchword. They came up with the second brand, Penny, a brand thatmay have preservatives and additives. This product line will be rolledout next month.
The third brand will be LydfordFarms where the focus will be on agricultural produce, poultry, fishand meats. Here, National Meats will be working closely with theMinistry of Agriculture, more specifically the Rural AgriculturalDevelopment Authority (RADA). The packaging here will be provided bythe local outfit, Jamaica Packaging. This brand will provide thevehicle for local farmers to sell their produce to the hotels andrestaurants. For the first time in Jamaica, agricultural produce willbe graded first before being packaged.
Answering the detractors
Rumours abound that National Meatscontinues to evade taxes on imports. Phillips said that his competitorshave told hotels not to do business with National Meats because it willbe fined US$20 million in penalties for breaches and that will put itout of business.
"These malicious rumours arenothing more than character assassination and can have an impact on notonly my reputation but can affect our business," said Phillips. "I wantto take this opportunity to set the record straight and address thismatter.
"I have always had an open doorpolicy and I am asking the Customs Department, especially DanvilleWalker, to come and examine our operations and conduct the necessaryinvestigations. I can answer any questions they want me to answer and Iam available at any time. The rumours have persisted from September2007 and it is very important that they be scotched once and for all,"said Phillips.
There are those in Jamaica who putvery little stock in Caricom and believe that Jamaica should pull outbecause it offers few opportunities for Jamaican trade. Instead, theyargue, Jamaica should look to the north because the cost of shipping tosmall markets makes it a futile exercise. Phillips does not subscribeto that view. He makes it clear that the region is very important tohis business model. He sees the Caribbean as a big market for NationalMeats' agricultural products.
"I do not agree that the Caribbeanis too small a market and that it is too expensive to ship there," hesaid. "The Caribbean offers relatively cheap freight and it is lessexpensive than going into North America. Countries like Trinidad thatdoes not have a large population but does have a high consumption witha higher income per capita than Jamaica makes, it is a very attractiveproposition. Barbados is growing at six per cent a year, St Lucia atfive per cent and this cannot be ignored.
"Being Caribbean people we have an affinity that we need to take advantage of."
In the not too distant future,National Meats would like to make an impact in the Diaspora, very muchlike GraceKennedy has done. While National Meats has done well as asupplier and distributor, perhaps it is time to become a retailer. Isthis an area that Phillips will enter into?
"I don't want to be seencompeting with our customers," he said. "Grace has done it successfullywith HiLo. But you have to remember that those same supermarkets areour customers. You get better support from the customers when you arenot competing with them. You can develop a better long-termrelationship with them when they know you pose no threat to theirbusiness.
"When I talk about going into thediaspora, I don't want to target just Jamaicans but all Caribbeanpeople who live there. I think I would get amazing support withCaribbean people there," explained Phillips.
Track star Usain Bolt's homecommunity in Trelawny has always been good to National Meats. In fact,Bolt's father was a butcher who bought meats from David Phillips'company. With Bolt proving a sensation at last summer's Olympic games,Phillips felt compelled to provide big screen televisions andrefreshments for the people of Bolt's hometown so they could see theirnative's son's blistering performances. National Meats went as far assponsoring many of the homecoming celebration parties.
Phillips wanted to put on acelebration event in the Trelawny Stadium but the Government was notenamoured with the idea, however, Bolt's alma mater gladly volunteered.
According to Sports Illustrated, 30,000 people turned up for the homecoming event with Shaggy and other artistes performing.
"This event assisted instrengthening our ties to the local communities and it was a privilegeto be part of the celebrations. Usain is huge in China and can be anambassador for Jamaican businesses which should take him all over theworld," said Phillips.
The future of National Meats
In the same way Italian foods have become renown worldwide, Phillips would like to do the same with Jamaican foods.
"We have a unique culture, uniquemusic and unique foods," he said. "I can't see why we can't export ourfoods very much like how the Italians have done. We have to properlypromote our foods on the international scene and that is what NationalMeats aims to do. For too long the private sector in Jamaica has lookedto the Government to provide funds and assistance for their businesses.That, to me, is the wrong way to go about it. Businesses should findtheir own funding and let the Government be facilitators of business. Ibelieve in Jamaican agriculture and its possibilities and that is why Ihave invested so heavily in upgrading our facilities so that we cancompete effectively with anyone in the world right from here inJamaica."
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