Guyana’s agriculture is in a downward spiral

Dec 14, 2009 Letters

Dear Editor,

I refer to an article captioned, “Banks to re-examine agricultural investment policies, SN 12-08-2009” and would like to endorse the views stated by Mr. John Tracey, CEO, GBTI.

Specifically, he asserted that total bank financing to agriculture, and especially to farmers, has declined, while commercial banks have collectively been diversifying their portfolios out of agriculture, due in part to the high probability of loan default, uncertainty in the sector, and the lack of skilled human resources to conduct feasibility studies and manage on-farm investments in agriculture.

In addition, he acknowledged, among other things, that commercial banks have not placed much emphasis on the agriculture sector, ‘noting that lending terms on loans are not flexible’ and this has reduced access to long-term loans by farmers. This, of course, is the mismatching problem when short-term funds are allocated to finance long-term investments, a condition no serious commercial bank would undertake. Yet the PPP/C Government failed to understand this financial rubric when they closed GAIBANK, a development institution that had a mandate, human capital, institutional memory, and financial resources to lend both short and long-term loans to the agricultural and other sectors.

The PPP/C Government followed the ridiculous idea of two foreign consultants who did not even understand the mismatching problem, claiming that the local commercial banks would take on board the agriculture credit portfolio of GAIBANK. This never happened, with the result we have less than an optimal credit facility for long-term lending for on-and off-farm infrastructure, farm equipment and working capital for crops and livestock projects, especially for agriculture activities that require more than 12 months before generating saleable output due to biological requirements. Examples of these activities are sugarcane, coconuts, dairy and beef cattle, citrus, among other production in agriculture. Rice has been spared to some extent due to government intervention since only recently a $400 million ‘hand-out’ was allocated to the sector without a feasibility study or repayment terms being specified. Incidentally, it would be useful if one can conduct an investigation to see what happened to the “Development Finance Facility” that opened sometime in 1995.

Meanwhile, what has been the impact of declining credit levels for the agriculture sector during the last decade? One possible outcome has been the notion that both agriculture credit and agriculture output declined simultaneously across the entire agriculture sector. Evidence from the Bank of Annual Reports 2008, Tables 10-1, show an Output Indices Table in which agriculture output for several activities, excluding poultry, coffee and rice, have declined during the period 2000 to 2008. The largest declines, more than 50 percent and as high as 93 percent have been in eschallot, cassava, cereals and legumes, citrus, plantains, ground provision, bananas, mango, coconuts, bora, hot peppers, pineapples, tomatoes, prawns, sugar and fish (Table 1).

Table 1: Agriculture Output 2000 and 2008

Agriculture

Activity

Output

2000

Output

2008

Output Decline

Since 2000

Percent

Decline

Eschallot (tonnes)

4,524

330

(4,194)

(0.93)

Cassava (Tonnes)

44,854

4,127

(40,727)

(0.91)

Cereals & Legumes (Tonnes)

4,596

496

(4,100)

(0.89)

Citrus (Tonnes)

14,485

1,564

(12,921)

(0.89)

Plaintains (Tonnes)

23,292

2,562

(20,730)

(0.89)

Other Ground Provision (Tonnes)

15,254

2,105

(13,149)

(0.86)

Bananas (Tonnes)

18,644

4,605

(14,039)

(0.75)

Mango (Tonnes)

9,118

2,881

(6,237)

(0.68)

Coconuts (Nuts, millions)

98.9

32.5

(66)

(0.67)

Bora (Tonnes)

12,484

4,120

(8,364)

(0.67)

Hot Pepper (Tonnes)

4,878

1,883

(2,995)

(0.61)

Pineapples

3,180

1,310

(1,870)

(0.59)

Tomatoes (tones)

4,683

1,943

(2,740)

(0.59)

Prawns (Tonnes)

1,132

932

(200)

(0.18)

Sugar (Tonnes)

273,703

226,352

(47,351)

(0.17)

Fish (Tones)

28,629

24,707

(3,922)

(0.14)

Source: Derived from the Bank of Guyana 2008 Annual Report, Table 10-1

Of course, some will say changing weather patterns, aging farmers and migration also had an impact and that these events should not be excluded from any sector analysis.

However, neglecting to consider the obvious structural weaknesses at a policy level, and especially on policy and operational issues related to research, extension, storage, transportation, drainage and irrigation, processing, marketing and credit, would be an irresponsible act by those in authority.

Moreover, to speak of food security and Guyana being a ‘bread-basket’ must be a cruel hoax, given the output data between 2000 and 2008, which confirm that Guyana’s agriculture is in a downward spiral.

Consequently, someone must be held accountable for what has been visited upon Guyana’s agriculture; for this decline, if left unchecked, will increase hunger and poverty at levels never before seen in Guyana.

Government must therefore take the bold step to re-establish the necessary support agriculture services; and to re-establish a development bank aimed at supporting credit and financial services at interest rates that ensure financial viability and access, knowing that commercial banks have other priorities and objectives.

Kenrick Hunte

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Table 1: Agriculture Output 2000 and 2008
Agriculture Activity	Output 2000	Output 2008	Output Decline Since 2000	Percent Decline
Eschallot (tonnes)	4,524	330	(4,194)	(0.93)
Cassava (Tonnes)	44,854	4,127	(40,727)	(0.91)
Cereals & Legumes (Tonnes)	4,596	496	(4,100)	(0.89)
Citrus (Tonnes)	14,485	1,564	(12,921)	(0.89)
Plaintains (Tonnes)	23,292	2,562	(20,730)	(0.89)
Other Ground Provision (Tonnes)	15,254	2,105	(13,149)	(0.86)
Bananas (Tonnes)	18,644	4,605	(14,039)	(0.75)
Mango (Tonnes)	9,118	2,881	(6,237)	(0.68)
Coconuts (Nuts, millions)	98.9	32.5	(66)	(0.67)
Bora (Tonnes)	12,484	4,120	(8,364)	(0.67)
Hot Pepper (Tonnes)	4,878	1,883	(2,995)	(0.61)
Pineapples	3,180	1,310	(1,870)	(0.59)
Tomatoes (tones)	4,683	1,943	(2,740)	(0.59)
Prawns (Tonnes)	1,132	932	(200)	(0.18)
Sugar (Tonnes)	273,703	226,352	(47,351)	(0.17)
Fish (Tones)	28,629	24,707	(3,922)	(0.14)

Guyana’s agriculture is in a downward spiral

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