Retail monopolies, concessions, among in-country hindrances to “25 by 2025” goal

May 22, 2022 News

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…Jagdeo says Caribbean far away from mission

By Zena Henry

Kaieteur News – Among the many constraints preventing the Caribbean Community (CARICOM) from reducing its food importation bill by 25 percent by 2025 is the fact that there are private sector-run monopolies in some business areas that influence trade regionally and prevent competition, existential threats that affect the ability to trade internationally, and the fact that governments need to sign trade barrier removals now to ensure the region contributes to its food security.

Vice President Bharrat Jagdeo shared the foregoing when he gave his keynote address on the “Binding constraints to agriculture growth” at the inaugural Agri-Investment Forum and Expo, which was held at the Arthur Chung Conference Centre over the past three days. In fact, the Vice President said that a political issue exists which was not highlighted in previous CARICOM food security documents.
On the issue of concessions, he revealed that usually the sectors with the greatest lobbying powers are often the ones that emerge in a national framework with greater concessions. The tourism industry is one that walks away with large concessions because of their lobbying power as they add to the country’s foreign currency as well as employ large personnel. In the same vein, there must be a champion group for agriculture to lobby its position on a national framework. At governmental levels, the Vice President said, the state must make commitments and keep it, so that if a decision is taken for example, to grow the agriculture budget to 15 percent every year for next five years, “that it is not to be treated as a residual allocation but that it is a priority…” and that the ring-fence sum which would go to roads, research, among others, would remain when balancing the budget. There is also the need for fiscal concessions for agriculture to be comparable with what other sectors enjoy.
Added to this, there is a need for government offices to help cut through local retail trade monopolies. This is a single large group that has strong political influence by their sheer presence and period within a country, thus making it hard for newcomers, which encourages competitiveness. “Someone needs to break that up,” Jagdeo said, highlighting the lobbying power of these monopolies and their deep connections within governments and regulatory agencies. They push the regulatory agencies and restrictive phytosanitary standards as protectionist tools and maintain dominance. “We have had that issue when we try to get some of our exports out and we know where it is coming from directly…,” said the Vice President as he noted that it is not necessarily governments, but the private sector pushing these standard agencies. And in some “ridiculous cases asking to visit factories that produce ice-cream in one country, but they won’t do that to factories in the US.”
Elaborating on a major point made by Barbados’ Head of State, Mia Mottley during the opening of the conference, Jagdeo said that even if many of the problems are fixed, there remains a real threat in the evolution of the global trade and development finance framework, which has not been favourable to small countries. “We have seen a dedicated campaign to remove the preferences that were fought and won…there has been a systematic erosion of that driven by large countries who say they want to help us. They will give us a small loan or small grant and maybe $10 million but take away in trade preferences, $50 million.”
The VP continued that sometimes even regional policymakers become so enamored with the logic of what they are told that they become willing participants in the destruction of the intentional framework that is favourable for the developing countries. Speaking from practical knowledge, he recalled that during the regional negotiating machinery involved in the regional economic partnership agreements with the European Union, “We had a major fight and some of our own people were fighting for full reciprocity, recognising that under conditions of full reciprocity, we will never be able to survive in some of these markets. Especially when countries like St. Kitts have few people living there than sometimes the number of persons living in a single building in New York. That country would be unable to trade competitively with America on a reciprocal basis.”
Vice President Jagdeo listed some of the constraints previously identified in hindering food security including limited financing and inadequate investments, outdated and insufficient agricultural health and safety systems, inadequate research and development, fragmented and unorganised private sector, inefficient water distribution and management systems, lack of markets and human resources, among others.
He noted that if the Bloc is to reach its target, it must increase output by over US$1.5B in three and half years. Based on the scale of investment, at for example, a 20 percent rate of return for agriculture investment, it means that over $7B of investment from private sector alone and another sum from the public sector would be needed for roads, drainage and irrigation, research capabilities and support systems as structural frameworks would come from the state.
Jagdeo said it is a large amount of money that is needed to reach the 25 percent and from the interventions, “we are a far way from mobilising those resources necessary.” A massive outreach and a very practical framework to stimulate, for instance the $7.5 billion investment, would be needed. In relation to this, Jagdeo noted that some farmers currently need new markets as they are in the position to produce more, but have nowhere to sell their products. As such, he told regional leaders, access to more markets is an essential part of reducing the food bill and improving supply response. In this case, further investment is not needed, but it would address the issue of trade barriers. He told leaders that they must leave the conference with a firm commitment to take action not at the regional level, but as individual jurisdictions and sign trade barrier removal agreements now.

 

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