Editorial | Agriculture in the ‘pivot’

With Prime Minister Andrew Holness’ announcement of his government’s planned “pivot” from stability to a search for robust and sustainable growth, it may be a good time to be talking about agriculture.

Put another way, agriculture and agribusiness development should be part of a deeper national conversation towards fashioning an industrial policy, with the aim of extricating Jamaica from its trap of low wages, low technology, low value-added and low growth, while at the same time enhancing the island’s food security.

It is not that these things – building a modern and productive agricultural sector – are not talked about. They are. But in silos; not in the context of a large, multisectoral, coordinated and strategic project.

This newspaper, however, believes that Jamaica has compelling reasons for making agriculture a key element of its reframed economic mission.

First, as has long been obvious, and recently acknowledged by Prime Minister Holness, as vital as macroeconomic stability is to the achievement of growth, a dozen years of tough fiscal discipline has shown that it is not by itself sufficient to induce a robust and sustained expansion of GDP.

Indeed, the sharp post-pandemic bursts apart, Jamaica has struggled to achieve real growth of beyond two per cent. And the economy remains exceedingly vulnerable to internal and external shocks, and natural catastrophes.

After storms and flooding in the summer, for instance, real GDP is expected to decline by one per cent, or deeper, in 2023. Yet, at 4.2 per cent, Jamaica enjoys a historic low unemployment rate, underlining the country’s continued low, and declining, labour and factor productivity.

POTENTIAL TO CONTRIBUTE

Agriculture/agribusiness is one of the sectors with the potential to contribute to economic transformation.

Agriculture, according to government data, accounts for just under eight per cent of Jamaica’s GDP (real value added). It employs just shy of 200,000 people, or over 12 per cent of the labour force.

On the face of these statistics, Jamaica’s agriculture may appear to be in a healthy state. The reality, though, is not rosy. Farmers mostly cultivate small plots, are mostly old (over 50), undereducated, not steeped in modern farming techniques, and employ low technology. They are inefficient.

Which does not mean that the outlook is entirely pessimistic, or that the sector is without opportunities. One vision of the possibilities is through the past.

Over 70 years ago, the famed Jamaica animal geneticist, T P Lecky, developed the Jamaica Red Poll, the Jamaica Black and the Jamaica Brahman cattle, highly prized for their capacity to thrive in tropical environments and their delivery of beef and milk. The island’s Blue Mountain coffee, as well as its ginger, cocoa and pimento are considered best-in-class products.

Unfortunately, Jamaica has been unable to produce most of these, and other potentially high-value niche crops, with the consistency or in sufficient volumes to sustain markets. Herein lay opportunities.

Further, Jamaica has an annual food import bill of over US$1 billion (it reached over US$1.4 billion just prior to the onset of COVID-19), accounting for 14 per cent of visible imports. Much of the imported food is consumed by the nearly three million who holiday on the island.

Experts say that 20 per cent, and up to a quarter, of the food import could be substituted with domestic production/alternatives. That suggests that between US$200 million to US$250 million, or over J$30 billion in foreign exchange outflows, or a substantial chunk if it, could be retained in Jamaica. Some of it could be invested in agribusiness.

NATIONAL INDUSTRIAL STRATEGY

There is little readily available data on the sector, but except for sugar, it seems a reasonable assumption that relatively little of the island’s agricultural output moves on to further processing.

In the United States, direct farm production accounts for only 0.7 per cent of the country’s GDP, but agriculture, food and related industries generate 5.6 per cent of national output, generating US$5.3 trillion.

In the European Union (EU), in 2023, agriculture accounts for 1.3 per cent of the 27 member states, with a gross value added of Є218.1 billion – that is after subtracting the Є223.9 billion of intermediary inputs. However, the overall value of the EU’s agricultural industry was over Є537 billion.

With respect to Jamaica, the scale would be different, but the possibilities are obvious. Disruption in global supply chains during the pandemic and the Russia-Ukraine war further emphasise domestic agriculture’s value to food security.

But building a modern, efficient agribusiness sector will not happen by wishing for it or by fiat. It has to be worked at as part of a national industrial strategy, which this newspaper believes would be best coordinated via the National Partnership Council . That body already involves the Government, the private sector, the labour movement and civil society and is a forum where consensus is most likely to be achieved.

As part of this process, the Government has to have a rational land use policy that frees the island’s most fertile acreages from the peril of real estate development; specialised research and training institutions must be at the forefront of innovation and education, and have to align with the national strategy; and fiscal policy must support the strategic vision. And the process will be required to bet on likely winners.