THE ECONOMY

Macro Economic Overview
The Jamaican economy is heavily dependent on services, which now account for more than 60% of GDP. The country continues to derive most of its foreign exchange from tourism, remittances, and bauxite/alumina. Remittances account for nearly 20% of GDP and are equivalent to tourism revenues. Jamaica's economy is saddled with a record of sluggish growth and faces serious long-term problems: high interest rates, increased foreign competition, exchange rate instability, a sizable merchandise trade deficit, large-scale unemployment and underemployment, and a debt-to-GDP ratio of 135%. Reflecting several adverse developments in both the local and international environment, most economic variables pointed to a weaker economy during the 2008 year. Local economic activity was sluggish as the lingering effects of Hurricane Dean and the passage of Tropical Storm Gustav in August 2008, resulted in a contraction in the
agricultural sector.

Despite moderate growth in the services sector, GDP growth followed a see-saw pattern for the remainder of the year, registering marginal growth of just 0.2% at its peak in the March 2008 quarter. In light of slower growth in the economies of the country’s major trading partners, as well as further damage to the agricultural sector, data showed that the economy remained weak in the final quarter of the financial year.

Sharp increases in international commodity prices also added to domestic challenges as domestic inflation accelerated at its fastest pace in years.

Net International Reserves
Despite the intervention sales of US Dollars by the Central Bank in the foreign exchange market, the Bank of Jamaica recently advised that Net International Reserves remained relatively strong and stood at US$1.7 billion at mid February 2009.

Inflation
After recording stable moderate inflation over the past several years, inflation climbed to 16.8% in 2008, the same rate as 2007.

Employment
High unemployment exacerbates the serious crime problem, including gang violence that is fueled by the drug trade. The government faces the difficult prospect of having to achieve fiscal discipline in order to maintain debt payments while simultaneously attacking a serious and growing crime problem that is hampering economic growth.

Interest rates
In an effort to anchor inflation expectations and maintain investor preference for the local currency, the Bank of Jamaica increased interest rates on the entire spectrum of its open market instruments several times during the year.

Foreign currency market
The local currency weakened by 12% against the US dollar during the financial year, as higher prices for imported commodities contributed to an increase in the demand for hard currency. However, the Central Bank employed a three pronged strategy throughout the year to address the temporary supply shortfalls. These include augmenting supply levels through the sale of US currency to the market, increase in interest rate and the issue of
several attractive instruments from the Bank of Jamaica.

Fiscal
For the 2007/8 fiscal year, central government ‘s operations resulted in a deficit of $42.2 billion or 4.7% of GDP.

The government is targeting a deficit of 4.5% of GDP for the 2008/9 fiscal year. This is to be achieved on the basis of faster pace of growth in the local economy, increased revenues and a reduction in interest costs on debt financing.

However, achieving the 4.5% target has become more difficult in light of several adverse developments. The slowdown in local economic activity is threatening to undermine revenue generating efforts and significant infrastructural damage caused by weather could put
pressure on expenditure.

Further, the current tightness in the international credit markets and the sharp rise in risk aversion may affect the government ‘s ability to access funding on the international capital markets.

Outlook
The continued deterioration of the global economy, with the collapse of major financial institutions in The United States and Europe, has severely affected the performance of the Jamaican economy.

These developments have resulted in a decline in the external demand for Jamaican goods and services and a reduction in access to global credit and financial markets.

While the downward trend in commodity prices augurs well for further moderation in inflation, the crisis in the financial market and the prospects for a weaker global economy are expected to dampen domestic output given the negative implications for tourism and remittance in flows.

On March 4, 2009, International Rating Agency Moody’s Investors Services negatively downgraded Jamaica’s foreign and local currency government bonds rating to B2 from B1 and Ba2 respectively, to reflect deterioration in the country’s fiscal debt as a result of the global economic downturn. Foreign currency country ceiling for deposit was down graded to B3 from B2, whilst all other ratings were unchanged. The dramatic reduction in demand for aluminium worldwide has reverberated in the local industry. All producers have slashed production drastically, and at two major producers have closed their Jamaican plants.

THE LIVESTOCK SUB-SECTOR

Key performance indicators are shown below;

FINANCIAL RESULTS

In 2008, loss after tax increased to $161.6 million from $21.8 million in 2007. Loss per stock unit also rose to $2.81 from $0.38 the previous year.

Gross operating revenue decreased by 16% to $1.0 billion from $1.2 billion in the previous year.

Expenses, excluding finance costs decreased by 2% to $359.8 million. On the other hand, finance costs rose by 65 % to $63.4 Million.

The negative change in profitability resulted mainly from a
combination of higher operational costs, the devaluation of the Jamaican Dollar and the challenging Jamaican economic climate.

ACKNOWLEDGEMENT

The management is fully cognizant of the challenges it will continue to face in the year ahead. Nonetheless, we remain confident that with the support of our customers, staff and directors, improved results can be achieved in the year ahead.

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Henry J. Rainford
Chairman
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Byron Thompson
Director