With TT’s export agricultural GDP on the slide, fruit exporter Dhanoo Sookoo is doing her best to give it a boost.

Sookoo, owner of a packing house in Sangre Chiquito, has been exporting fresh fruits and vegetables to Barbados and the United States (US) for the last three years. She started her own business after cleaning and packing fresh fruits and vegetables for other exporters for about ten years. Now, she exports about 50,000 to 60,000 pounds of fruits and 60,000 pounds of vegetables per month. On the list are cabbage, pumpkin, water melon, portugal, paw paw, among others. For Agriculture Minister John Rahael that is good news. He noted recently that TT’s food import bill increased by 66 percent over the last 10 years, from TT$0.9 billion in 1991 to TT $1.5 billion. Export agricultural GDP also decreased from TT$24 million in 1991 to TT $21 million in 2001. “We must ensure that a greater level of investment must be made in the agricultural sector,” he said. He acknowledges that for the sector to grow, the private sector ought to be encouraged in future agricultural diversification ventures.

According to Agrinet, a publication of the Agriculture ministry, for more than 20 years TT’s agriculture sector has been experiencing low production and productivity. The sector is currently realising only a fraction of its real productive potential. Statistics show that the agriculture sector employs less than 10 percent of the labour force while its contribution to GDP is less than three percent. “The current state of our agriculture has been attributed to a number of factors including the impact of the petroleum “boom” during the 1970s and early 1980s; the poor returns on investments in agriculture; the breakdown of preferential marketing arrangements for our traditional export crops and the impact of trade policies administered by the World Trade Organisation (WTO),” explained Rahael. Additionally, he said Government’s focus on agricultural policies in the past has largely been towards the production of the traditional crops for export such as sugar, coffee and cocoa.

Rahael noted that this policy direction has partly contributed to TT being a net food importer, since the country has consistently failed to address the production of those commodities that would satisfy the domestic requirements. “Being a food deficit country will certainly have tremendous implications for our food security.” However, he noted that even with available funds for food importation, TT has to be aware of the potential disasters. But Sookoo, along with several of those in the industry wished that government played a more active role in the fruit export business. National Agricultural, Marketing and Development Corporation (NAMDEVCO), corporate manager, Ganesh Gangapersad, agrees. He believes that the export of fresh fruits and vegetables can be a very viable and lucrative industry in TT. There are, he says, untapped foreign markets and foreign exchange to be earned. NAMDEVCO facilitates the export of fresh agricultural produce, management of trade protocols and works with stakeholders and Government in expanding trade.

Sookoo says while her business has been a resounding success, “we still need some assistance from Government and the relevant authorities to help us take TT products to the world.” The fruits and vegetables are bought from farmers throughout the country. Carl Chang, another owner of a packging house, who has been exporting fresh fruits and vegetables to Barbados for the past four years, about one 20- foot container per month, buys his produce from farmers. His problem, he says, is accessing “top quality products” from the approved farmers at competitive prices. “Most times you may not get a farmer to stick to his price when delivery is made.” To boost the industry, NAMDEVCO plans to set up a modern packing house in TT with HACCP (Hazard Analysis of Critical Control Points) accreditation,  a preventative control to guarantee food safety.  TT, Gangapersad said, has always exported fresh fruits and vegetables to countries in the Caribbean, noting that exporting to Barbados was stopped for sometime but was resumed in 1998 with the adoption of a protocol for trade. Exports are made on a regular basis to Miami, New York, Montreal, Toronto, the United Kingdom (UK), and on a conditional basis to St Lucia. Negotiations are also taking place to export to Grenada, Antigua, Barbuda and Dominica. However, Gangapersad stressed that before TT can penetrate any new markets, a number of problems which exporters face on a daily basis have to be addressed. He said exporters are constantly burdened with the unavailability of freight at reasonable rates; export financing for exports of fresh produce; refrigerated storage at the airport and the unreliability of local produce.

In addition, government needs to address the issue of crop insurance; adequate infrastructure; negotiate for competitive air freight; establish a green box fund to assist exporters and promote and support agricultural investment. “These are some of the issues that need to be addressed if the industry is to be taken to a higher level,” he said. Sookoo stresses that the success of her business depends on constant dialogue between the TT Government and other countries in the region. She also believes that something has to be done by government to address the shortage of packaging materials in TT, stressing that farmers must be educated on what crops can be produced for exports. Farmers feel “left out” by government, she says. Farmers are constantly faced with rising fertiliser costs, which means the cost for fruits goes up. And because there are not enough markets guaranteed for exports, farmers are not willing to produce crops on a large scale. Sookoo said the government needs to speed up the negotiating process to openi up new markets for exporters, both regionally and internationally. She also called on Rahael to implement the necessary measures to ensure that exporters are paid for goods that they have exported. As an incentive, government, she believes, should subsidise agriculture in TT. Sookoo said the Agricultural Development Bank (ABD) should get its act together to assist farmers. While many local businesses have trade missions to different countries, agriculture is never represented, she said. “We should be allowed to be part of those trade missions since we have something to offer as well.” Sookoo said agriculture can reduce the unemployment rate in TT, but only  it is viewed as a profession. Chang, too, is of the view that while there will always be a demand for produce from TT, local exporters can only do so much.

The local business community still seems to be in the dark as far as the implications of the FTAA are concerned, said Anthony Hosang, First Vice President of the Trinidad and Tobago Manufacturers Association (TTMA). “It is felt that the FTAA, as important as it is to the development of the future of TT and the region, is not viewed as it should be. The importance is not recognised.” Hosang was speaking to members of the media at a seminar on the FTAA held recently at the Chamber of Commerce. Joined by his colleagues, Trade Consultant, Anthony Guiseppi and Lawrence Placide, Director of  International Trade Negotiations Unit of the Chamber of Industry, Hosang stressed that there is still a lot to be learned about the FTAA and what it means for the Caribbean region. “We are negotiating services on this trading block, so there is a vested interest from the standpoint of all professionals,” he asserted.

Such negotiations are being done by the International Trade Negotiations Unit  (ITNU), a Caribbean trade project established in April 2002 as part of an agreement between the Chamber and the Canadian Government. The Chamber officially entered into agreements with the Canadian International Development Agency (CIDA) through the Caribbean Regional Trade Policy Responsive Fund (CRRF) for a total of CDN $100,000. The main goal of the project is to sensitise the private sector to the ongoing negotiations of the FTAA. According to a release from the Canadian High Commission, it was designed to ensure that the interests of the private sector are appropriately represented in the negotiation process of the FTAA and dispense timely information on the course and results of negotiations. “The FTAA is the inevitable response to the powerful economic blocs being formed elsewhere in the world,” it stated, noting that “the sweeping changes brought about by globalisation will be intensified as the countries in this hemisphere concentrate on creating their own economic space in the emerging world order.”

It went on to state that given the current status of FTAA negotiations, it is critical that the private sector develops its negotiating positions in the range of areas covered by these agreements, and that a structure be put in place to provide firms with easily retrievable information on trade agreements that have been completed and those that are in the process of negotiation. The Chamber has agreed to focus on specific negotiating areas: Services, Investment, Competition Policy and Government Procurement. Although the FTAA is roughly two years away, talk of its inception has already raised the hackles of various groups which see it doing more harm than good. One organisation, the Global Exchange – a non-profit research, education and action centre founded in 1988, described the FTAA as “another example of the kind of free-market fundamentalism that has created a global race to the bottom that erodes environmental protection, workers’ livelihoods and human rights.”

According to the group’s website (www.globalexchange.org), the FTAA “will very  likely increase economic inequality both within and between countries by concentrating wealth, promoting privatisation of human and other essential services in addition to removing protections for small farmers and businesses.” FTAA is bound to increase profits for multinational corporations without providing real benefits to society as a whole, the group said. According to Dr Esteban Perez, Economic Affairs Officer of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), the recent globalisation process poses significant challenges to small developing economies such as those in the Caribbean, which are already dealing with a number of  issues in their pursuit of sustainable development. “The reduction,” he maintained, “of trade barriers and the increasing openness of these economies have not led to a significant increase in interregional trade or helped them to obtain a growing share of the extra-regional export market.” “In fact, they are dependent on preferential market access schemes granted by developed countries,” Dr Perez stated, adding that Caribbean economies are characterised by differences in per capita income and stage of development that are hard to reconcile with deeper integration schemes. In Dr Perez’s estimation, globalisation has both fostered and brought to light a process of sectoral change in the composition of output in favour of the services sector.  But this was to the detriment of agriculture and manufacturing.

He said, “this process accentuates the differences among Caribbean economies by creating a dual pattern of specialisation, so that countries are divided between service-based and goods-producing economies.” It also highlights the dependence and vulnerability of these economies, he noted. Dr Perez expressed his view that Caribbean economies have a narrow export base, since their direction of trade is highly concentrated towards North America and Europe due to preferential access for their major export products. “They are vulnerable to external shocks such as natural disasters and terms of trade, making their incomes prone to volatility,” he asserted, adding that their national savings fall short of the investment needs for developing economies. “Their small size limits the extent to which they can realize economies of scale in production and distribution and they exhibit limited institutional capacity to develop a competitive environment,” he said.

Blue-Stream, the TT-based telecommunications company, which will be using its own fibre optics system to deliver its services across the region, is charging  that Cable and Wireless (C&W) is using delaying tactics to protect its monopoly.

Blue-Stream raised the stakes in the telecommunications landscape by announcing that it will begin providing internet and data connectivity across the Caribbean from this month. Observers say this signals the start of competition for TSTT and Barbados-based C&W, which have dominated the telecommunications markets in their respective countries. Called Parasol, the service is initially aimed at international and regional businesses wishing to link up multiple offices or connect them to the internet.

However, Richard Carruthers, a director of Blue-Stream, charges that C&W has been obstructing new entrants to the market by using delaying tactics. “This is hardly surprising, as the Caribbean is a cash cow for C&W and is subsidising their global operations which are haemorrhaging cash.” However, despite these problems Carruthers said Blue-Stream has established itself on five islands including Antigua, Grenada, St Vincent, Trinidad and St Kitts. “We have been mostly supplying call centres that have been exempt from the stranglehold C&W have on communications,” he said in a telephone interview. Blue-Stream hopes to add Barbados and St Lucia to its list very soon. He noted that C&W has given Blue-Stream “trouble” in every territory that it has entered. Quoting from a New York Times report, which stated that C&W made over US $445 million profit from 11 Caribbean islands in 2001, this region, he said, accounted for only 28 percent of C&W global sales, but a whopping 95 percent of profit before charges. “That gives you an idea how valuable protecting their monopoly is to them, and how much pricing power they retain by controlling international bandwidth.” TSTT, he said, should not consider Blue-Stream a threat yet, because the company is not going to provide cellular or fixed line telephone. “Maybe TSTT will act differently because they are half state-controlled. Our objective is to co-operate with them and share future profits.”

Carruthers said in this depressed global telecommunications climate, Blue-Stream still managed to secure a loan from RBTT. The bank has granted Blue-Stream a seven-figure US dollar loan facility, but Carruthers would not elaborate. Blue-Stream’s parent company, the DataState group is also involved in a project to build a new fibre optic cable in the region. Accounting firm, Ernst and Young in Trinidad, is currently seeking local investors for Blue-Stream to raise money for an equity stake in the company. The new multi-million dollar underwater fibre optic cable, EC-1 is pitted directly against C&W’s Eastern Caribbean Fibre System (ECFS) cable. A Luxembourg registered company, Island Fibre Holdings, has been contracted to the Caribbean’s newest fibre optic cable. The EC-1 cable is expected to run from Puerto Rico to Trinidad with planned stops along the way at St Martin, Martinique, Guadeloupe, Barbados, St Lucia, Antigua, Grenada, St Vincent as well as the Grenadines, Dominica and St Kitts and Nevis. There is presently only one cable providing inter-island Internet and data connectivity in the region. This is the Eastern Caribbean Fibre System (ECFS), which is largely owned and controlled by Cable and Wireless PLC. Rae-Ann Harper Walters, corporate communications manager, TSTT says the company does not have a problem with BlueStream building additional fibre optic cables. In an interview last week, the TSTT official said, “we don’t know anything about the pricing structure of Island Fibre or Blue-Stream so we will be unable to comment.”

Carruthers noted that Blue-Stream already has one client in Trinidad, a call centre called Kairi Technologies in Port-of-Spain, that has been operational for some months now. He added that the company intends to open its new head office in Port-of-Spain around March 10, having previously been based in Grenada. The Blue-Stream director said the company is interested in investing in Trinidad because it likes the dynamic business atmosphere and the number of large, multi-national companies that could become clients for their private network products. Carruthers said the initial focus in TT will be on companies that have a presence on several islands, and want to link all their offices together to share data and internet access. “By building them a private network they can save costs and become more efficient.” Business IT managers, if they choose, will be able to design their networks on Blue-Stream’s website: www.Blue-Stream.net. By simply stating the countries and connection speeds they want, a customised network blueprint will be generated and a price quotation delivered immediately. Each connection will be priced at the same rate no matter what the distance or number of countries needed. The Parasol network uses a pioneering mix of fibre and satellite links to ensure resiliency, Carruthers said. It was engineered by chief technical officer, Leigh Porter, who left C&W’s London operations a year ago to join Blue-Stream.  Blue-Stream boasts that it will be the first Caribbean-based company to provide such multi-island services, besides CW.

Some of the other products and services that Blue-Stream will be offering potential clients in TT include : mission critical internet connectivity; custom built private networks; wholesale global voice minutes; call centre solutions and dedicated and virtual server hosting. In the short term, the company’s will focus on Trinidad, Jamaica, Barbados and the Organisation of Eastern Caribbean States (OECS). Carruthers believes that Blue-Stream will be welcomed and viable. “Oh yes, we expect to be very successful in our venture, because businesses need choice of providers, better service and better pricing.”  Blue-Stream is a British Virgin Island (BVI) registered company that began operating two years ago in anticipation of liberalisation of the telecommunications market. The company began in Grenada and was formed by British nationals Sebastian Stephens, an entrepreneur who built one of the most expansive private data network in Europe in the late 1990s (called Wisper, it is now owned by C&W), Carruthers and ex-British army captain, Naunton Dickens who developed web based e-mail in the United Kingdom (UK). Over the last year Blue-Stream, through agreements with C&W, has managed to route international traffic through Trinidad, Grenada, Antigua, St Vincent and St Kitts. But these have been strictly for use by companies running private networks and call centres.

Eleven Caribbean Development Bank (CDB) borrowing member states posted positive growth in 2002, the Bank has reported. In releasing new financial data on the performance of Caribbean economies last year, the Bank listed foremost among the challenges prevailing uncertainty following the September 2001 United States terrorist attacks, a subsequent decline in travel and international pressure on the region’s international business sector.

Despite these challenges, Trinidad and Tobago, Jamaica and Guyana managed to record higher levels of economic activity than the previous year. The CDB reported that the economy of Trinidad and Tobago grew by 2.7 per cent due to a strong performance in the petroleum sector, while Jamaica posted a 1.3 per cent increase as a result of its communications, electricity and financial services and Guyana one per cent increase based on growth in agriculture. In terms of other more developed countries (MDCs), economic growth in Belize was estimated to be up by five per cent due to an increase in agricultural production. “Real output in the Bahamas and Barbados, however, is estimated to have fallen though not as sharply as in 2001,” the Bank said in a statement.

Available data for the British overseas territories also showed that activity generally increased, with the Cayman Islands, Turks and Caicos Islands and the British Virgin Islands leading the way. “Output in Cayman was up by 1.7 per cent, reflecting strong performances in the financial services, banking and construction while rising output in the Turks and Caicos is estimated to have been led by tourism-related construction and in the BVI by expansion in tourism and construction,” the Bank added. On the other hand, the Bank said real GDP in Anguilla contracted by between two and three per cent as a result of low output in tourism and construction that during 2001. Other small but independent Eastern Caribbean islands showed signs of recovery in 2002 – though modest when compared to the previous year – with real output in Antigua and Barbuda reaching 1.5 per cent, St. Vincent and the Grenadines 0.7 per cent, St. Lucia 0.5 per cent and Grenada less than one per cent. Growth in St. Kitts and Nevis however was also estimated to have slowed to 0.8 per cent while the economies of Montserrat and Dominica contracted. The Bank said overall performance in agriculture and construction rose notably while tourism recorded a significant decline. There was mixed performance in the manufacturing sector while the financial services sector remained under pressure due to demands from the Financial Action Task Force and the Organisation for Economic Co-operation and Development.

Scotiabank T & T Limited
Results for the quarter ended January 31, 2003.

Scotiabank (SBTT) posted an increase in net interest and other income of 13.0 percent for the quarter ended January 31, 2003, largely due to increases in net interest income. 
In 2003, this figure reached $134.2 million, while in 2002 the corresponding figure was $118.8 million. Non interest expenses grew by 8.1 percent to $62.2 million in 2003 from $57.6 million incurred in 2002.  Loan loss expenses were down by $1.9 million in the first quarter of 2003 compared to the same period in 2002, indicating improved credit control. Earnings before taxes rose 17.7 percent in 2003 to $72.0 million over the $61.2 million made in the corresponding quarter in 2002.  After tax profit was 28.5 percent higher, at $51.3 million for the first quarter of 2003. In 2002 the same figure was $40.0 million.  This improvement was owed in part to a lower provision for taxes, which was down by 2.7 percent.  This was due to the decrease in corporation taxes which we had predicted would bode well for SBTT. The asset base of the bank grew by 0.9 percent to $7.271 billion, and the annualised return on average assets rose 25.9 percent to 2.8 percent. The annualised return on average equity was 5.1 percent higher at 24.9 percent.
 
Indicative of current low interest rate conditions in the money market, deposits declined by $45.1 million in the first quarter of 2003.  Conversely, loans increased by $44.8 million, so increased net interest margins are a possible explanation for these good results. Earnings per share reached 43.7 cents in the first quarter of 2003, a 28.5 percent improvement over the 34.0 cents recorded in the similar period in 2002. The directors have resolved to pay a first interim dividend of 17 cents per share on March 31, 2002 to registered shareholders as at March 10, 2003. We are projecting earnings for 2003 of $1.85 and a total dividend pay out of 75 cents per share.  At the current price of $21.30, the forward P/E is 11.5, and we believe this an attractive investment for all investors given the trends in the market. 

Caribbean Communications Network Limited
Results for the Year Ended December 31, 2002

Caribbean Communications Network Limited (CCN) released very impressive results for the year ended December 31, 2002.  The group achieved sales of $146.167 million, an increase of 9.61 percent over the 2001 figure of $133.356 million. 

Cost of Sales increased from $101.775 million in 2001 to $110.065 million in 2002, an increase of 8.15 percent. Gross profit moved from $31.581 million in 2001 to $36.102 million in 2002, an increase of 14.31 percent. Operating profit increased from $21.572 million in 2001 to $24.470 million in 2002, an increase of 13.43 percent. The Group achieved a profit before tax of $26.057 million, an increase of 18.00 percent over the 2001 figure of $22.083 million.  The main contributors to this better performance included $2.149 million in negative goodwill compared to $0.716 million in 2001. Also contributing was the increase in share of profit from associated companies, from $0.612 million in 2001 to $3.156 million in 2002. This was a direct result of the acquisition of 20 percent of The Nation Corporation. However, finance costs increased from $1.336 million in 2001 to $4.205 million in 2002.  At the end of the year the Group was able to retire $31 million in long term borrowings bringing the total down to $26 million.

The yen swap which the group provided, $3.975 million at the half year, declined to $1.9 million at the end of the year. Taxation moved from $8.565 million in 2001 to $7.674 million in 2002, a decrease of 10.40 percent.  The effective tax rate declined from 38.79 percent in 2001 to 29.45 percent in 2002. 

Overall profit attributable to shareholders improved from $14.093 million in 2001 to $18.874 million in 2002, an increase of 33.92 percent.  Fully diluted earnings per share increased from 31? in 2001 to 41? in 2002. The Board of Directors has approved a final dividend of 14? per share which, together with the interim dividend of 6? per share, brings the total dividend for the year to 20? per share. This is an increase of 66.67 percent over the 2001 figure of 12? per share. This share is trading with a dividend yield of 6.04 percent, the highest in the market.

We believe that this Group is poised for further growth because:

1. Cost cutting efforts by the group;
2. Lower interest cost from the interest rate swap and lower debt (full year in 2003);
3. The group’s dominance in its markets;
4. The lower corporation tax; and
5. The expected buoyancy in the local economy.
Therefore at the current price of $3.31 and using the 2002 earnings per share of 41 cents, this share is trading at a PE of 8.07 which is a considerable discount to the market.