AGRICULTURAL STATEGIES IN THE POST PREFERENTIAL MARKET ACCESS ERA - PowerPoint PPT Presentation

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AGRICULTURAL STATEGIES IN THE POST PREFERENTIAL MARKET ACCESS ERA

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Title: AGRICULTURAL STATEGIES IN THE POST PREFERENTIAL MARKET ACCESS ERA


1
AGRICULTURAL STATEGIES IN THE POST PREFERENTIAL
MARKET ACCESS ERA
  • Department of Agricultural Economics, University
    of the West Indies,
  • St Augustine
  • Ministry of Agriculture Trinidad and Tobago
  • Ranjit H. Singh
  • Andrew Jacque

2
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

3
PREFERENCES
  • Relevance to CARICOM

4
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

5
Preferences Contd
  • 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)

6
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 US16 million
  • High cost producer of sugar cost was more than
    2x preferential price

7
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

8
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

9
Trade Issues
10
Trade Dependence
Trade is concentrated with a few regions and
within those regions with a few countries
  • food imports by PTA
  • 57 from NAFTA,
  • 15 CARICOM
  • 13EU15
  • Food imports by countries
  • 51.8 from USA
  • 7.57 from TT
  • 4.98 from UK
  • 4.73 Canada.
  • Food exports
  • 45.4 to EU
  • 27.9 CARICOM
  • 19.8 NAFTA

11
  • CARICOM --Net food importers, except Guyana and
    Belize
  • Food imports exceed food exports by 52 (TT) to
    7,422 (Antigua and Barbuda) with most countrieslt
    200

Montserrat 117,805 Antigua and Barbuda7,423
12
Intra-regional food trade
  • low shares for
  • Suriname (0.38)
  • Belize (3.57)
  • Haiti (0.11)
  • Bahamas (0.53)
  • Top 3
  • Trinidad Tobago-48.75
  • Guyana 14.65
  • Barbados 9.39

13
Highlights Some recent Changes in the Caribbean
Agrifood Sector
14
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

15
Highlights (contd)
  • 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

16
AGRICULTURAL DEVELOPMENT PARADIGMSRegional
Experiences
17
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

18
Development Paradigm of the 1980s Early 1990s
  • The Experience Major Deterrents in Accessing
    Export Markets
  • Significant Non Tariff Barriers
  • 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
  • Absence of market development and promotion
    activities
  • The Issues
  • Macroeconomic Disequilibria
  • 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

19
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

20
  • PARADIGM SHIFT
  • FOR
  • AGRICULTURE

21
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)

22
Implications Contd
  • Trade profile (Contd)?
  • 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

23
Implications Contd
  • 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 value-chain.

24
Implications Contd
  • 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

25
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

26
Broad Strategies (contd)
  • 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

27
Broad Strategies (contd)
  • 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

28
Broad Strategies (contd)
  • 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

29
  • Drivers

30
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

31
Market Development
  • The Concept of the Agrifood Industry is one
    Comprising the entire VALUE CHAIN
  • Primary production
  • Primary value added/ pre-processing post farm
  • Food / Industrial Product Manufacturing
  • Wholesaling
  • Distribution / Brokerage
  • Food Service (fast foods, convenience foods,
    restaurants)

32
Markets (contd)
  • 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

33
Market Development Contd
  • 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)

34
A FRAGMENTED AGRI-FOOD INDUSTRY WITH WEAK LINKAGES
35
A FRAGMENTED AGRI-FOOD INDUSTRY WITH WEAK LINKAGES
Agro- Procssing
Wholesaling
Food Service
Primary Production
Retailing
Distribution
EFFECTIVE COORDINATION
CREATING STRONG LINKAGES
A FULLY INTEGRATED AND FUNCTIONAL AGRI-FOOD
INDUSTRY
36
CREATING STRONG LINKAGES
EFFECTIVE COORDINATION
A FULLY INTEGRATED AND FUNCTIONAL AGRI-FOOD
INDUSTRY
37
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

38
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 RD funds
  • Importance of labour-saving technologies
  • Biotechnology (e.g., improvements in
    productivity, quality and pest resistance)
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