Agriculture: The engine of growth

Published: Sunday | August 2, 2009



Dr Marshall Hall, Contributor

Food imports into Jamaica were in excess of US$800 million in 2008. If Jamaica, from domestic production, could reduce this massive food-import bill by 10 per cent, then businesses larger than the total exports of bananas and sugar to Europe in any recent year would have been created.

The emphasis that we have placed on protecting export markets for agriculture might have been better placed on protecting domestic production. We can, after all, exert more control over our own borders than we can, over Europe's borders. The starch imports alone - rice, potatoes, wheat and flour - were in excess of US$150 million. To reduce the import of these starch imports by only 10 per cent would result in foreign exchange savings of the order of US$15-million, and provide at least 1,000 or more jobs.

For many years, the political leaders in Jamaica have announced that agriculture would be one of the growth engines of our struggling economy. Prime Minister Michael Manley went so far as to name himself minister of agriculture for a short period, and under Prime Minister Seaga, we had Agro 21 and the grand Spring Plain initiative. These initiatives either tried to shore up, but not change the existing subsistence farming framework, or replace our current crops with new crops. None of the initiatives was successful, although the Spring Plain initiative did show what investment and the proper technology could achieve.

Both the current prime minister and the minister of agriculture have also announced that agriculture is the industry to provide the jobs and save on foreign exchange if Jamaica is to find a path to economic growth.

Focusing just on starchy food imports, we note that Jamaica does not produce wheat, rice or potatoes in the volumes imported, but the task is not to try to grow the same starches we import, but to produce more of our local starches at prices that can compete with the imported starches. We have a wide range of local starches - bananas, yams, cassava, potatoes, white and sweet, etc, but the volumes produced and the prices demanded gives the market to the imported commodity. As Jamaicans, we all have heard the comment that rice can stretch but yams cannot. We have also heard that bananas are long-grain rice, meaning that it can be used to replace rice. There is nothing inherently superior in the imported starches, but there are issues of price, marketing, taste and packaging and presentation.

Price has its base in the cost of production, but other demand factors, such as distribution, marketing and shelf life impact the consumers' willingness to purchase. Because of the short growing cycle, small and very small farmers tend to focus on our starch cash crops, and it is these farmers who are the main producers of these crops for local consumption. The minister of agriculture recently stated that there were some 200,000 small famers operating on less than one-hectare lots. Most of these farmers are in cash crops or livestock. This very small acreage per farmer and very basic farming methods mean that most of these farmers are close to the poverty line.

Successive governments have, therefore, tended to introduce programmes that have as their central focus poverty alleviation rather than improving productivity in crops for domestic consumption. Agriculture was either about the traditional export crops, or helping the subsistence farmer to simply survive. It was not about economic growth through commercially viable farms that concentrated on meeting the food needs of the Jamaican population.

Indeed, the policy was to focus on cheap food imports to reduce the cost of living for the population as a whole. The Food and Agriculture Organisation has noted, however, that "these cheap food imports have more to do with unfair advantage and privilege enjoyed by the industrialised countries in the form of their own high level of subsidies and other forms of protection, than with comparative advantage".

Economic growth is ultimately the only way to achieve poverty alleviation, but programmes designed as handouts without a clear focus on productivity will neither reduce poverty nor achieve economic growth. We need, therefore, to get our best agricultural and marketing minds focused on agriculture for the domestic market. If we can substitute 20 per cent of food imports with domestic production, we would have a US$160 million industry.

While there is a major role for small farmers in this thrust, the gains in productivity necessary to reduce price can only come from investment in machinery, technology, marketing and distribution. There is no successful model of how to do this outside of farms that are relatively large contiguous-acreage farms. Even the often mentioned, but never really achieved, model of the mother farm presupposes a mother farm large enough to allow for all the relevant economies of scale, so that the economies can be shared with the smaller satellite farms.

The effort and resources put into the export of sugar and bananas - financial support, research, and extension services - must now be focused on production for domestic consumption. We cannot wish the subsistence small-farming sector away, so we must develop the framework that allows for small farms to come together to access technology, equipment and marketing.

Reward system

A system that rewards success in producing for the domestic market needs to be introduced to attract large investors into agriculture. We need to say to investors and large landholders demonstrate that you have undertaken new investment for domestic consumption, and done so successfully for three to five years, and you will receive a post-production grant. We cannot afford to subsidise failure, hence the grant is for success achieved and not potential. The reward process must be clear and agreed to prior to the investment.

Investors would register with an appropriate body their plans for investment and their targets. It is the audited achievement of these targets that would trigger the post-success grant. No success means no grant and no real cost. Before we dismiss the idea of a success grant, consider where we would be today if we had been able to attract a portion of the funds tied up in Government Of Jamaica financial paper into agriculture for domestic consumption. It is worth an experiment. Similar initiatives have certainly worked elsewhere.

The taste transformation of which we speak involves using and presenting our food starches in new ways that emphasise user-friendly packaging and processing that recognise that the urbanised world of today wants the virtues of health, ease and shelf life built into its food purchase.

Over the years, many reasons have been put forward as to why our ability to feed ourselves has declined. Some of the major reasons often cited are, hurricanes, droughts, high interest rates, ineffective land policies, praedial larceny, import food-friendly regimes, poor infrastructure, bad environmental practices and poor extension services. All these things have happened or exist to some extent but other than the acts of God, they are all of our own doing. We must stop scoring goals against ourselves and in this regard, the frequency and size of praedial larceny must be reduced.

Police and judges need to understand the extent and seriousness of this type of theft and formally enlist the aid of the citizenry in reducing this scourge. We kill praedial larcenists and then often hear that the killed had been suspected by citizens before the theft. A supportive citizenry and police should share the information and act on the possibility of theft by appropriate questioning and monitoring. The introduction of, "the three strikes and you are out rule", a very long sentence for a third-time offence in praedial larceny, is worthy of serious consideration.

If the frequency of named hurricanes that strike Jamaica, Ivan 2004, Dennis and Emily 2005, Dean 2007, and Gustav 2008, is maintained Jamaica will have to reassess its commitment to tree crops as all of them - coffee, citrus, mangoes, ackees, etc, and of course bananas - do not fare well in hurricanes. While we do not advocate abandoning tree-crop production we are obliged to encourage mixed estates that incorporate large acres of more resistant hurricane crops, along with large acres of tree crops. Starches tend to be relatively hurricane resistant as they do not grow tall and to an extent, are not seasonal, although yields will differ over the course of the year. The short planting-to-harvesting period also allows flexibility in planting and harvesting time to minimise the risk of hurricane loss.

Agriculture as a growth engine need not of course, be confined to production for home consumption, or just to cash crops. The potential to increase exports from agriculture - vegetables, fruits, root crops etc - will only be fully realised if the requisite investment in production, technology and marketing is made.

The current minister of agriculture recognises the problem and is pushing on all fronts - technology change through green houses, poverty alleviation through fertiliser-support projects, the introduction of new varieties in pineapples, and the encouragement of eating local in his cassava initiative. He has sought to encourage the larger agricultural companies to join with him in rice, cassava and pineapples, and is committed through divestment to reduce the sugar subsidies.

We applaud these initiatives but ask that his plans be specific in terms of expected output and not just the inputs. Successful results must be the primary yardstick and Rural Agricultural Development Authority, for example, should have clearly agreed and announced and measurable output targets. The mantra of the Ministry of Agriculture must be demonstrated increases in targeted agricultural commodities. The drive to replace imported food with domestic production must begin immediately, and the Government must use all the measures at its disposal to achieve this transformation.

Dr Marshall Hall is former CEO of Jamaica Producers Group. Feedback may be sent to columns@gleanerjm.com.