Economic doubts in agro-tourism

Now it is certainly true that agro-processing and tourism should be the mainstays of foreign exchange earnings for the Caribbean. Indeed, if the government of Trinidad and Tobago were thinking in the long-term, it is these sectors, along with services, cultural products and intellectual capital, that it would be developing through incentives and investment. However, this "Caribbean agro-tourism industry" seems like something a bureaucrat thought up merely because it sounds impressive. But does it actually have any economic merit?

Narine’s argument is that, for every tourist dollar spent in the region, more than two-thirds returns overseas. "Many hold the position that regional food security and effective linkages between agriculture and tourism can significantly reduce this leakage by reducing the Caribbean’s food import bill," he declared. Who these "many" are he didn’t say, but in any case the argument makes little sense.

The reason for the "leakage" — which is itself a misnomer — lies mainly in the fact that much of the investment in tourism comes from extra-regional sources. So the leakage is nothing more nor less than the expected return on investments made by the foreign business persons. The one exceptional exception is the Sandals resorts and, if there is less leakage there, it is because the owner is a Jamaican. But there is no economic logic which can link agricultural development to a smaller percentage of tourist dollars returning to foreign investors. The only tenuous link is that a developed agricultural sector could earn foreign exchange, but that would happen because of exports, not because tourists would eat more when they visit the Caribbean.

Indeed, the economic hollowness of Narine’s speech was shown by his raising that other favourite chimera of politicians — "food security." This is a concept that has little or no relevance to a 21st century globalising economy. Trying to be self-sufficient in agricultural production makes no economic sense, and impacts negatively on the consumer if it results in cheaper food imports becoming more expensive due to tariffs. Caribbean leaders have persisted in trying to keep their favoured-nation status in this sector, when the better approach would be to lobby the World Trade Organisation to stop developed nations from subsidising their agricultural sector and imposing tariffs on agricultural exports from developing nations.

Where agriculture needs to be developed is in the agro-processing area. But before that can happen, the government has to do the basics: reduce flooding, build access roads, provide an electricity supply, and give tax incentives to entrepreneurs. If we can export processed tropical fruits and spices and even meats, this would be a significant foreign exchange earner. The market exists, but we have only tapped the smallest part of it. Waiting for tourists to come here to get our products, however, is surely a non-starter.