AGRICULTURAL STATEGIES IN THE
POST PREFERENTIAL
MARKET ACCESS ERA
Ranjit H. Singh
Andrew Jacque
Department of Agricultural
Economics, University of
the West Indies,
St Augustine
Ministry of Agriculture
Trinidad and Tobago
DISCUSSION POINTS

Background Issues







Preferences
Trade Issues
Features of the Regional Agrifood Sector
Reflecting on Development Paradigms over
the Past 40 – 50 years
The Post Preference Era - A Shift in
Paradigm
The Broad Strategies
Key Drivers for the Development of the
CARICOM Agrifood Sector
PREFERENCES
Relevance to CARICOM
Contribution of Preferences

Preferences have benefited the CARICOM
agriculture, economies and people
•
•
•
•
•
•
•
•
•
Foreign exchange earnings;
employment,
rural development,
higher incomes;
Multiplier effects -- supported the input
supply, transportation and other industries;
provision of social services;
contribution to the environment
Food security
Contribution to Government revenue
Preferences Cont’d

Preferences have also had some negative
effects:
• Failed to provide incentives for developing
competitive production;
• stymied efforts at diversification;
• led to a concentration on primary as opposed
to processed products (raw versus refined
sugar; cocoa beans versus chocolates)
Examples of the Importance of
Preferences

Trinidad and Tobago in 2002 –







Sugar cane cultivated on 31% of the agric land
sugar and distilleries employed 10,100 persons
(5.1% of national labour force; 37.7% of Agric
labour force);
Wages in sugar 50% higher than in other
agriculture
raw sugar export earnings --0.7% of total export
earnings and 1.76% of non-oil export earning
0.54% of national GDP; 41.81% of agricultural
GDP
Rent transfers from the EU of US$16 million
High cost producer of sugar – cost was more than
2x preferential price
Examples of the Importance of
Preferences

Guyana Sugar –
• 50% of agriculture
• 17% of national GDP
• 25% of forex
• 8% of internal Government revenues
• 17.5 US c per lb -- Second lowest
producer in CARICOM behind Belize
• GNP per worker in sugar 2.7x national
average
Preferences --Implications


Loss of preferences is not only
about loss of foreign exchange but
involves loss of much more – at
the same time that it demands
change and realignment
Strategy for the post-preferential
era must take account of
• External challenges
• Internal weaknesses
Trade Issues
Trade Dependence
Trade is concentrated with a few regions and within those regions with a few countries

CARICOM-Imports from Regional Trade Blocks
food imports by PTA:
• 57% from NAFTA,
• 15% CARICOM;
• 13%EU15

Food imports by
countries:
•
•
•
•

51.8%
7.57%
4.98%
4.73%
EU 15
14%
OTHER
8%
ANDEAN
2%
CEN AM
1%
MERCOSUR
2%
from USA;
from T&T;
from UK;
Canada.
Food exports:
• 45.4% to EU;
• 27.9% CARICOM;
• 19.8% NAFTA
CARICOM
16%
NAFTA
57%
Excess of Import Value over Export Value
9.22
Haiti (mirror data)
6.69
Bahamas
• CARICOM -Net food
importers,
except
Guyana and
Belize
• Food imports
exceed food
exports by
52% (T&T) to
7,422%
(Antigua and
Barbuda) with
most
countries<
200%
5.79
St. Kitts and Nevis
3.45
Suriname
2.00
St. Lucia
1.51
Barbados
Grenada
1.08
Dominica
1.02
CARICOM (excl Haiti)
0.73
Jamaica
0.69
St. Vincent/Grenadines
0.64
Trinidad and Tobago
0.52
-0.26
Guyana -0.53
Belize
-2.00
0.00
2.00
4.00
6.00
Ratio (Imports/Exports)
Montserrat= 117,805%; Antigua and Barbuda=7,423%
8.00
10.00
Intra-regional food
trade
low shares for:
•Top 3:
Trinidad & Tobago-48.75%;
Guyana 14.65%;
Barbados 9.39%;

•Suriname (0.38%);
•Belize (3.57%);
•Haiti (0.11%);
•Bahamas (0.53%)
60
50
48.75
40
30
20
10
14.65
9.39 8.97
6.08 4.02 3.57
1.9 0.91 0.53 0.52 0.38 0.2 0.11 0.01
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Highlights – Some recent Changes
in the Caribbean Agrifood Sector
Highlights

The Primary Production Component
of the value chain earns only a small
% of the final Consumer Expenditure
– as low as 25% for fresh produce
• As low as 10 % for manufactured foods

Consumers are spending and
increasing share of their food budget
on FOOD AWAY FROM HOME
Highlights (cont’d)



The Food Industry / Food Service Industry
in the Region is one of the Fastest growing
An increase in post farm services in value
added for more ready to cook and
prepared foods
Earnings at the farm gate as a % of final
product value is expected to continue to
decline as the Remainder of the Value
Chain expands
AGRICULTURAL DEVELOPMENT
PARADIGMS:
Regional Experiences
Development Paradigm of the 1960s & 1970s
Features

Import Substitution

Self Sufficiency

Industrialization via
Substitution

Highly protected
domestic market



Regional Production
Allocation Eg Corn &
Soy Project
Direct state trading
and involvement in
production
Price Controls and
trade control
Failure

On Account of various
structural Factors

Domestic market Limited in
Size
Consequences

Frequent shortages

High Prices - Consumers taxed

Quality issues

Domestic market limited in
Size/ Absorption capacity

Restricted Competition – the
Existence of
Monopolies/oligopolies in the
Food trade
Development Paradigm of the 1980s & Early 1990s
The Issues:

Macroeconomic
Disequilibria
The Experience: Major
Deterrents in Accessing
Export Markets



Deficit on the External
Account
The Bitter Medicine:
Structural Adjustment


Strategies


Focus on Export led
growth to Enhance FOREX
earnings
Agricultural Diversification
- Non traditionals for the
Export Market
Exchange rate
adjustments
Transport logistics: cost,
unreliability & availability
High marketing transaction
cost resulting from low
volumes

Difficulty in accessing
Mainstream Markets

High levels of Competition
in Commodity markets


Significant Non Tariff
Barriers
Absence of market
development and promotion
activities
The Post WTO Period: 1995 +
Features




Globalization & Liberalization of
Markets
Erosion of Preferences –
Decline of the Traditional
Export Sector
Market Access now Governed
More by SPS and Other
Regulatory measures rather
than Tariffs; eg
• HACCP
• GAP
Limited role for National Policy
in Trade
Result

Declining export
performance (FOREX)

Increasing Levels of
Food imports


Impact on
Employment &
Poverty
Food Security
Concerns
PARADIGM SHIFT
FOR
AGRICULTURE
Implications for Future Development

Loss of Trade Preferences/Globalisation
• imperatives of developing competitive
industries
Trade profile 
• Limits to growth possibilities based solely on
primary perishable products
• Data highlights the importance of processed
products in expanding trade opportunities
(intra and extra-regional)
Implications Cont’d
Trade profile (Cont’d)
• Data suggest that there is a lot of scope for
expanding the regional food market
• Some countries are more integrated (southern
Caribbean) into the intra-regional food market
than others (Belize, Suriname, Haiti, Bahamas)
 scope for building the intra-CARICOM
market
Implications Cont’d

Changing Structure of Agri-Food
Markets
• Significant growth in the food retailing
and food service industry segments
• Declining share of farm-gate receipts as
a percent of expenditure on food
• Implication

The real economic opportunities lies with the
integration of all segments of the valuechain.
Implications Cont’d

Development Paradigms 
• CSME

Expands the economic space for sectoral
development
• Most recent paradigm suggests need to shift
focus from mainly on primary to integrated
industry approach
• Need for efficiency in all segments of the value
chain
• Development must be industry-led but with
strong public sector support in the provision of
public goods
• Mechanisms must be built in to ensure
balanced development among countries and
equity in the distribution of benefits
Broad Strategies in the Post
Preference Paradigm
1. Creating/Broadening/integrating the New
Economic Space that CSME Offers
2. A Focus on the Agrifood Industry rather
than the Farming Component in the Main
3. Integration of markets into a fully
functional & efficient CARICOM Market:
Broad Strategies (cont’d)
4. Efficient & Cost Effective Provision of
Critical Public Goods to the Agrifood
Sector - (the Drivers of Competitiveness)
5. Adopting a Strategic Development
Approach with a Focus on Priority
Industries
• Prioritization of Industry for Development
(resource constraints requires this)
• Focus resources on key industry constraints for
enhanced competitiveness
Broad Strategies (cont’d)
6. Creating an Enabling Environment for
Investment Mobility throughout the Region
with a focus on the agrifood sector
7. Developing the Institutional Framework to
Facilitate strong Regional Public Sector/
Private Sector Partnership and
Stakeholder Linkages
Broad Strategies (cont’d)
8. Monitoring & Evaluation of the total
Contribution of the Agrifood sector to
the Regional Economy
• The negative effect of inaccurate
economic accounting wrt Resource
allocation to the Sector
Drivers
Creating the CSME Economic
Space: Key Impediments

Provision of Timely & Reliable Information:
• Markets
• Opportunities
• Investments options


Transport Infrastructure
Provision of Appropriate Fiscal Incentives,
harmonization of Regulatory Measures
Market Development
The Concept of the Agrifood Industry is one
Comprising the entire VALUE CHAIN:

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Primary production
Primary value added/ pre-processing
post farm
Food / Industrial Product
Manufacturing
Wholesaling
Distribution / Brokerage
Food Service (fast foods, convenience
foods, restaurants)
Markets (cont’d)


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A large % of food for retailing or fast
foods restaurants & the Tourism
Sector are sourced from outside the
region
Limited & Weak linkages of the food
chains with Domestic Agriculture
Little conscious attempts to
development the linkages
A fragmented and underdeveloped
regional food market
Market Development Cont’d

Opportunities
• The attractiveness of Retail Food & Food
Service Industry in the region
• is evidenced by the number of foreign
food chains in both retailing and food
service (fast foods and restaurants)
A FRAGMENTED AGRI-FOOD
INDUSTRY WITH WEAK LINKAGES
A FRAGMENTED AGRI-FOOD INDUSTRY
WITH WEAK LINKAGES
EFFECTIVE
COORDINATION
Primary
Production
CREATING
STRONG
LINKAGES
AgroProcessing
Distribution
Wholesaling
Retailing
Food Service
A FULLY INTEGRATED AND FUNCTIONAL AGRIFOOD INDUSTRY
CREATING
STRONG
LINKAGES
EFFECTIVE
COORDINATION
Primary
Production
AgroProcessing
Distribution
Wholesaling
Retailing
Food Service
A FULLY INTEGRATED AND FUNCTIONAL
AGRI-FOOD INDUSTRY
Critical Public Goods Support: Drivers of
Competitiveness
Efficient & Cost Effective Provision of Critical Public Goods to
the Agrifood Sector– Requires effective multi-sectoral
coordinating institutions

Technology Support (Research, Development & Innovation)

Agricultural Health and Food Safety

Drainage & Irrigation

Access Roads

Land Policy & Access to Arable lands



Protection of Water resources to ensure Sustainable
Agriculture
Protection and maintenance of Suitable Water Quality to
ensure food safety
Risk management
Technology Support (Research,
Development & Innovation)
• A more appropriate institutional framework

effective coordination and mobilisation of the research
capability in the region to support the entire value chain

Greater stakeholder involvement in establishing research
agenda and priorities

Performance-based funding for research/contract
research/Contestable R&D funds
• Importance of labour-saving technologies;
• Biotechnology (e.g., improvements in productivity,
quality and pest resistance)