Deslandes
The following is an excerpt from a letter submitted by the Ministry of Agriculture and Fisheires in response to Claude Clarke's Public Affairs article of November 8 titled, 'The US$900m myth'.
Claude Clarke in his article, 'The US$900m myth', has opened up avenues for very useful debate on the economic model that should be pursued in order to lead Jamaica out of its current malaise, and into the realm of economic development and prosperity. In my responses to Clarke's assertions, I will first address some of the points he makes, pointing out the flaws in the arguments he puts forward, then demonstrate that quite to the contrary, the focus on agriculture is not misplaced and maybe reflects more of Clarke's lack of understanding of its importance, and its potentially strong relationship to manufacturing and other key sectors of the economy.
Manufacturing and not agriculture
Clarke argues that the opportunity to replace significant portions of our imports is more in manufacturing, and not in agriculture.
However, this argument is made on the basis of a zero-sum game. That is, it is either agriculture or manufacturing, and that any attempt to increase agricultural output would come at the expense of manufacturing. This argument is flawed and ignores the symbiotic relationship that exists between manufacturing/agro-processing and agriculture around the world.
Recent work done through the Inter-American Institute for Co-operation on Agriculture (IICA) on behalf of the Ministry of Agriculture and Fisheries has indicated that though agriculture contributes approximately five per cent of GDP, when one measures its linkages to other sectors of the economy, its contribution increases to 9.52 per cent or 1.9 times its primary GDP contribution. By contrast, in an earlier IICA study of 11 western hemispheric countries, the extended value of agriculture ranges from 2.6 to 11 times primary GDP, with the United States showing the most significant change.
INADEQUATE ANALYSIS
While Clarke's assertion that not all of the $900m can be replaced by local production is correct, his assertion that "primary agriculture represents no more than 10 per cent of their value" is simply wrong, and demonstrates a lack of proper analysis of the import data, which is partially reproduced for your perusal. An examination of the 2008 import data bears this out. Of the more than $900 million of imports, an initial examination of the data suggests that more than 50 per cent represents opportunities for replacement by local production. Importantly, contrary to Clarke's view, many of these products do have significant primary inputs.
Now, while we may never be able to replace completely the big three (wheat, rice and corn) in any significant way, because we lack the kinds of efficiencies (climate, land availability, etc) needed to produce cost-effectively, with the right framework we can grow enough of these crops to provide us with some of level of security in our human and animal food supplies. In addition, we can and should examine the possibility of replacing a percentage of some of these crops with other alternatives that we can grow with some level of efficiency.
imported juice concentrates
Again, an examination of the data indicates that one of our major imports is in the form of juice concentrates, with mangoes being one of the more significant. Yet, as a country, there is tremendous waste of our mango resources year in, year out.
Clarke has missed key elements in his reading of the Government's agricultural thrust, and has also demonstrated a lack of understanding of new approaches to economic development that have been advanced over the past 20 years. One such approach is the development of the value chain, which addresses the full range of activities required to bring a product or service through the different phases of production to the final consumer. Using a value chain approach, the focus shifts from the cost associated with any one element of the value chain to considering the entire value chain.
For example, rather than merely focusing on primary sweet potato production, you would address issues related to the growing, the post-harvest handling, the agro-processing, through to the production of potato chips (as one example) for the market. The overall benefit of developing an entire industry around sweet potato would provide greater benefit to the country, rather than merely importing sweet potato directly for the factories, which is the model Clarke appears to be supporting. The benefit of this is the full integration of the agriculture, agro-processing and manufacturing sectors leading to more sustainable and balanced development. This is the strategy that the minister of agriculture has been pursuing for the past two years.
no factual support
Clarke goes on to argue that, of the three major sectors of tourism, agriculture and manufacturing, "agriculture offers by far the lowest potential for economic expansion and for lifting our rural population out of poverty".
Unfortunately, the facts do not support this. The last 10 years have seen massive investments in tourism, yet we have not seen the kinds of benefits that as a country we were hoping for. Based on Clarke's premise, how can this be?
Recent work by D. Ramgeesingh at the University of the West Indies' Management Studies Department has calculated the tourism multiplier at 1.10. This means that, for every dollar put into tourism, we are earning 10 cents, notwithstanding the massive incentives provided to the sector by the Government. In contrast, recent work at the Ministry of Agriculture and Fisheries has placed the agriculture multiplier at 1.93. The point to be made again is that this is not a zero-sum game, and Clarke seems not to understand the value of integrating all three sectors. It cannot be beyond us to organise the agriculture sector to fully support the tourism and manufacturing sectors, and thus improve the rural economy while simultaneously improving the country's overall economic performance.
In dismissing agriculture as the least able to improve the rural economy, Clarke fails to tell us how tourism or manufacturing will be able to do it. What is it that can be done differently to address the needs of the 200,000 farmers plus their 800,000 dependants? We have to modernise and transform the sector to adversities we now face, and to fully take advantage of the opportunities present within these adversities. There is no one size fits all; every country must develop within the context of its strengths and weaknesses, and we believe that, given the vision outlined by the current minister, agriculture can become a major pillar of Jamaica's sustainable economic recovery.
two per cent of gdp
While it is true that primary agriculture represents approximately two per cent of GDP in most major developed countries, such values are more a function of the way GDP contributions are calculated. If agriculture were no longer valuable, as Clarke appears to be suggesting, why do countries spend so much money to subsidise it and to ring fence it from competition? For many of these developed countries, agriculture represents one of the linchpins of their economies.
Subsidies allow for the development and protection of large industrial farms that provide consistent inputs to the manufacturing and agro-processing sectors. Subsidies are not provided because "agriculture is important but has little value", as Clarke would have us believe. Clearly, if agriculture is important, then it must have value, otherwise countries such as the United States of America would not spend $70 billion to protect it. Perhaps it is a function of how that value is calculated, as indicated earlier.
Clarke also correctly spoke about the commoditisation of numerous agricultural products, and spoke to the ability of countries to build agro-industries without having to produce the raw material themselves. In this he is correct; however; one must not forget that many of these commodities on the international market are heavily subsidised, and as subsidies decline and alternative uses are found (eg, increasing use of corn and cane for ethanol are cases in point) then prices will rise as we have seen in the past two years. While prices have retreated somewhat, the indications are that they will not go back to historically low levels.
need new framework
While I disagree with Clarke re: the agriculture multiplier, I agreed with him that, as a country, we need to agree to a new framework to address the linkages between agriculture and other sectors of the economy, which I believe is precisely the point the prime minister made in Montego Bay.
However, this is not just a Government and Opposition debate. This is a debate that requires agreement among key stakeholders, including the private sector, as to how we intend to emerge from this crisis. This is a process that has already begun. The ministries of Agriculture and Fisheries, Education and Industry and Commerce have held discussions on linking the school-feeding programme to output from the agriculture sector. In fact, we expect that, in a few weeks, Nutrition Products Limited will pilot a programme to supply juice made from fruits grown locally by small farmers to 130,000 students in the school system.
In addition, the use of locally produced milk, as well as eggs, is also being examined for possible introduction as well. Ongoing discussions have been taking place between the Ministry of Agriculture, snack food and fast food companies, as well as hotels, with a view to introducing more value-added products to the marketplace using local raw materials.
Dr Derrick Deslandes is director of the Centre of Excellence, Ministry of Agriculture, Jamaica. He may be contacted at ddeslandes@moa.gov.jm.
An attractive display of tomatoes, cabbages and sweet peppers at Denbigh Agricultural and Industrial Show. - file