Trade policy tools to be part of Jamaican policy response to boost production and reduce food imports
28 October 2012
According to Jamaican government websites, the Jamaican government is considering how it can boost production and reduce food imports in the current context of rising global food prices. The initial target is to reduce imports by US$300 million a year (approx. €231.6 million). Speaking at the Denbigh Agricultural and Industrial Food Show in Jamaica at the beginning of August 2012, Agriculture Minister Roger Clarke argued that two-thirds of Jamaican food imports could be produced locally, and that there is scope to boost agricultural exports to cover the remaining food import bill.
Mr Clarke highlighted the wide variety of policy measures being adopted across supply chains to stimulate production and reduce imports. These include:
- improved research (e.g. beef herd genetics) and extension (e.g. introduction of new banana varieties – see Agritrade article ‘ Reorientation of Jamaican banana sector underway’, 28 May 2012);
- a comprehensive overhaul of food health and safety infrastructure (J$200 million [€1.73 million] response to overhaul the system to ensure compliance with new US Food and Drug Administration requirements – see Agritrade article ‘ Contrary signs on impact of stricter US food safety regulation on Jamaic...’, 28 November 2011);
- the development of irrigation and marketing infrastructure (e.g. investments in storage of Irish potatoes, following a boost to local production which eliminated imports of Irish potatoes between January and July 2012);
- the introduction of legal and regulatory reform including divestment of government control of unprofitable state enterprises (e.g. in the sugar, coffee and cocoa sectors) and the restructuring and redefinition of the role of commodity boards.
In addition to initiatives in the sugar sector linked to the now completed privatisation process, a major banana sector resuscitation programme has been launched, aimed at removing the need to import banana chips –imports of banana chips cost US$8.5 million in 2011. The programme includes the expansion of technical assistance support and the establishment of loan financing facilities to support farmer investment in restructuring. Memorandums of Understanding have been signed with two major banana-processing companies who have undertaken to ‘buy the bananas from the farmers and to curtail their importation of chips’.
However, these developments need to be seen against the background of the government’s decision to increase stamp duty by 15% on banana chip imports. This forms part of a wider initiative to stimulate local production and discourage imports, consisting of a review of existing tariff waivers on food product imports in those areas where local potential to expand production is seen to exist.
Targets for expanded domestic production have been set by the Ministry of Agriculture for a range of products including ginger, turmeric, Irish potatoes, onions, pineapples, yams, hot peppers, honey and sheep/goat meat. The agriculture minister also noted that critical areas for intervention along each supply chain had been identified.
Editorial comment
For any Caribbean country to move towards producing two-thirds of the food products that are currently imported, a substantial and sustained level of investment will be required not only in farming, but also in food processing. Processed food products constitute a large proportion of the food import bill, while in some countries imports of intermediate inputs to the food processing sector also constitute a substantial proportion of the total food import bill (e.g. in Trinidad and Tobago). Costs can be reduced where economies of scale can be gained through serving regional markets, which raises the issue of the appropriate level for the pursuit of reduced food import dependence (i.e. at the national level or at the regional CARICOM/CARIFORUM level).
Recent gluts on national markets of agricultural products that have been targeted with government support to increase production highlight the importance of ensuring that regional markets are fully developed to absorb expanded national production. This suggests that careful consideration will need to be given to what national and regional trade policy frameworks are required to boost food production and reduce import dependency.
It remains to be seen whether the adoption of such trade policy measures will give rise to any problems in the context of EPA implementation (see Agritrade article ‘ Implementation of Caribbean tariff cuts in the spotlight’, 27 August 2012). It also remains to be seen whether this effort, driven largely by the need to reduce foreign exchange expenditures on food imports, will form part of a cohesive and coherent agriculture and food security strategy that is closely integrated with the overall economic development strategy of the region.
