CTA and ECDPM have posted a discussion paper in their ‘Aid for Trade and Agriculture’ series, looking at the lessons arising for the ACP from the experience of the Caribbean Rum Programme. This programme was established in response to the unilateral decision of the European Union to liberalise access to the EU rum market under an EU/US agreement. The programme was thus an explicit response to the challenge of preference erosion in the rum sector.
On the basis of successful advocacy work by the Caribbean rum sector and Caribbean governments, some €70 million was made available to finance a comprehensive programme of support to reposition the Caribbean rum sector within the evolving global rum market. The programme was administered from within the regional rum association secretariat (with technical assistance support and significant expansion of core staffing) and designed in close consultation with the affected industry players. The programme was thus market led and private sector based. It consisted of four main elements:
- marketing support to help reposition the Caribbean rum sector (through the development of an umbrella Caribbean rum marque, support for the penetration of identified target markets and support for individual companies’ promotion programmes);
- a investment support facility to assist with the necessary production restructuring;
- a technical assistance facility to provide specific technical advice with production restructuring;
- an institutional support facility to assist with building a common industry vision and efficiently administering the programme.
Integrated development programme for the Caribbean rum sector
|Programme element||Allocation €|
|Support to Caribbean rum producers (Cost-sharing grant scheme – 4 windows)||46,600,000|
|West Indies Rum & Spirits Producers’ Association – institutional support||3,450,000|
|Caribbean ‘rum marque’ programme||16,900,000|
The paper provides a detailed review of all aspects of the programme: the institutional support and technical assistance component; the core cost-sharing grant scheme component; and the Caribbean ‘rum marque’ programme. Twelve major lessons for the ACP are drawn from this experience:
- the importance of industry leaders in the affected sector developing a clear vision of the challenges faced, and the appropriate market-led responses required, with the building of a common, inclusive industry-wide approach to the restructuring process being essential;
- the central importance of basing programme management in a respected, representative, accountable and efficiently managed industry association, in order to gain and maintain the confidence of all affected stakeholders in engaging with the difficult process of trade and production adjustment;
- ensuring that technical advice remains independent, yet engaged;
- redefining the role of the state as a facilitator, not a driver, of the production and trade adjustment process;
- the central role of cost-sharing grant scheme (CSGS) support to stimulating proactive production and trade adjustment, by: providing investment support for capital investment in modernisation (€24.5m); addressing waste treatment and environmental issues (€9.8 m); support for business development (€0.9 million); support to marketing and distribution activities (€11.4 m). These need to be accompanied by simple and efficient management arrangements for the implementation of such schemes;
- the need to address the critical bottleneck of tendering and procurement issues up front, through jointly drawing up a specific manual of procedures for the implementation of the production and trade adjustment support measures, recognising the specific needs of such programmes (e.g. the importance of not cutting across normal ‘best practice’ supply chains, so as to minimise the costs of new investments);
- the need for support services to be built into the administration of cost-sharing grant schemes, so as to ensure that coherent business plans are developed at the company level, administrative requirements are fully understood, and bottlenecks in implementation can be swiftly addressed;
- establishing at the design stage the appropriate levels of co-financing from the CSGS in order to incentivise ‘risk taking’ in the production and trade adjustment process, given the specific situation in the sector concerned;
- building flexibility into the design of the windows of the CSGS, so that funds can be easily reallocated to where the greatest demand for support lies;
- ensuring procedural consistency and mutual recognition between EU procedures and local management practices, within an approach that seeks to promote ‘best business practices’;
- recognising the long and difficult process of building consensus around the design and implementation of such programmes and modifying the period for implementation of the programme in the light of these realities, so that EU procedural requirements do not prematurely halt the implementation of successful programme purely on the basis of arbitrary implementation schedules;
- ensuring a continuous dialogue between all stakeholders (private sector enterprises, trade unions, governments, regional authorities and the EC), in order to ensure the smooth and effective implementation of the overall programme.
The experience of the Caribbean Rum Programme closely parallels the experience of EU internal food- and agriculture-sector adjustment programmes implemented under axis-1 rural development programmes, with the key feature of such programmes being that they are market led and private sector based, and implemented within the framework of a clear identification of public policy objectives served through the programme. The Caribbean Rum Programme offers a model for adjustment support programmes in other sectors across the ACP, where the requisite local institutional arrangements and policy frameworks exist (e.g. the existence of a respected, representative, accountable and efficiently managed industry association, a policy framework that sees government playing essentially a facilitating role within the framework of clearly defined public policy objectives, and where the EC delegation plays an active supportive role). Potentially it offers a critical component of a wider, more coherent policy response to the challenges of preference erosion faced in the ACP sugar, banana, beef, and rice sectors, and, in the coming period, the fruit and vegetable sector.