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AS I SEE THINGS: An answer to the high food import bill


Brian M. Francis, [email protected]

AS I SEE THINGS: An answer to the high food import bill

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IT IS NO SECRET that most Caribbean countries import a tremendous amount of goods and services but export only a few commodities.

What that scenario has done over the years is create huge and rising deficits on the current accounts of our regional economies’ balance of payments.

With the increases in these deficits, foreign reserves have fallen and upward pressure has been brought to bear on existing exchange rates in the various countries.

Clearly, therefore, there is an urgent need for every country in the Caribbean to address once and for all the dual problem of poor export performance and high importation especially of food and oil.

But how exactly should our countries proceed to resolve this long-standing problem of weak external positions?

As a policymaker, I would embark on a strategy of agro-industrialisation with the twin objectives of, firstly, import substitution: coffee processing, cocoa processing, fruit and vegetable processing (into fruit juices and nectar), fish processing (making our own salt fish), the processing of minor spices, nutmeg processing to extract nutmeg oil; and secondly, exporting these products to our Caribbean neighbours and later to countries outside the region, after mastering the competitive production of all of those commodities with regard to price and quality.

Indeed, the idea here is to capture the local market in these products, thus replacing the imported items. In so doing, one has to be extremely careful about the notion of infant industries with the need to protect them.

Experience suggests that most “infants” never grow up; that is to say, that industries given tariff protection – raising the tariff on imports of the products in question, so as to make the locally produced items artificially cheaper – tended to create in the country, over time, a whole raft of manufacturing plants unable to compete without these artificially high tariff barriers.

Indeed, in some cases, these industries even needed the imposition of import quotas well as high tariffs to control imports.

After all, if local agro-processing plants are designed to be able to soon export their products but they were unable to compete successfully within the economy against imports of the same products – competing in both price and quality – why should overseas markets buy the local products?

The answer to that question provides the rationale behind the provision of zero special quotas or tariff production of any kind, or even special tax concessions, for the production of local juices, nectars and salt fish, among other commodities.

Further, if this export measure is successfully implemented, then, it would be reasonable to expect that not too long after starting production the country would be able to begin effectively exporting small quantities of these products to neighbouring countries and even fill demand orders from supermarkets and other institutions in places such as Canada and the United States of America.

Given the huge level of unemployment among our women and young people, particularly in rural communities, a trade strategy that focuses on the development of export and import substitution industries is sure to economically empower everyone who actively participates in the production of all of the commodities identified.

Are you with me Mr Policymaker?

Email: [email protected]

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