Why TT should focus on robust Agricultural Sector

In 1985, agriculture accounted for 3.021 percent of TT’s GDP, according to World Bank statistics, but by 2015, that number had plummeted to 0.477 percent. Granted, the economy has evolved since 1985 when real GDP was US$7.376 billion (and inflation hovered between six and ten percent) compared to US$24.64 billion (TT$160 billion) in 2015 (with inflation falling steadily from almost eight percent at the start of the year to just below two at the end), but the data suggests what when GDP rises, agricultural output falls. (See graph at left) It therefore stands to reason that the government should consider greater investment in the sector in order to reverse this trend—especially as it urges citizens to “tighten belts” as revenues from oil and gas tumble.

“Agriculture and fisheries are critical to economic recovery,” agricultural economist Omardath Maharaj told Business Day.

There’s a need to protect and strengthen the actual productive farmers, fishers and local food industry entrepreneurs, he said, but the issues confronting them are endemic—under-addressed after decades of underinvestment and lack of prominence in the country’s development history.

“Policymakers and administrators need to wake up to the new reality, engage in out of the box thinking and understand that it cannot be business as usual in TT,” Maharaj said.

For its part, during this fiscal year the government allocated $1.26 billion to the Ministry of Agriculture, Land and Marine Resources, with $156 million allocated to the Development Programme.

This year was a “foundation year” for the Ministry, Agriculture Minister Clarence Rambharat told Business Day.

“I set three priorities: reviewing the structure of the Ministry with a view to improving the support and services we provide; dealing with the issues of good governance so that the Ministry and its agencies are aligned to government policy; and dealing with vacancies particularly in key technical areas,” he said.

Rambharat noted that so far he had made some headway with this checklist but he did acknowledge what is possibly the biggest challenge to the industry—Trinidad and Tobago’s massive food import bill.

“We cannot ban imports. We can, however, make local foods more readily available at prices that are competitive,” he said.

The country’s average food import bill for 2014/2015 was a staggering TT$5.5 billion—huge in comparison to local agricultural output, which stands at a paltry TT$764 million. Food is also the primary driver of inflation—even though headline inflation is 2.9 percent, according Central Bank data, food inflation is 6.8 percent.

The food import bill might only balloon, Maharaj suggested, as tightness in the foreign exchange market continues, and as the government and opposition continue to bicker over the passage of the Foreign Account Tax Compliance Act (FATCA), which is crucial for the country to maintain its privileges doing business with commercial banks in the United States.

“TT imported an estimated $1.15 billion in rice and sugar between 2013-2015. We moved from being self-sufficient and having some export potential to being a net importer of these two basic commodities which we have the capacity to produce,” he lamented.

In that period, TT also imported $2.5 billion in fruits and vegetables and an estimated $155 million in peas, lentils, channa (chick peas) and kidney (red) beans.

“At a very basic level we need to re-think our approach to manage the sector as a national asset including the consumers,” Maharaj added.

In fact, during the last budget presentation, the government noted that “we must do all that we can to reduce our reliance on imported food products.” “TT already celebrates 100 days of Christmas, so we already spend 30 percent of the year doing that… that we spent TT$100 million (in six months) on whiskey is no surprise [to those in the food production industry],” he noted, referring to a statement made by Rambharat in Parliament last month.

When Finance Minister Colm Imbert gives his National Budget address tomorrow, it will be noteworthy to see how the sector will have fared on less money spread among more agencies.

This becomes critical when, considering the allocation given to the Ministry (then the Ministry of Food Production under the People’s Partnership government) in 2014 was $1.328 billion, the returns from the industry one year later fell short of that by $564 million.

Fundamentally, however, the change has to come from consumers choosing to buy local.

As former Central Bank governor Jwala Rambarran infamously pointed out last December, the biggest consumers of foreign exchange in Trinidad and Tobago were business that traded significantly in imports or else manufactured products that required imported materials as primary ingredients—ultimately to supply the local market.

Rambharat, though, was confident that consumers would eventually gravitate to local produce: “Farmers’ markets are extremely popular and they are a good gauge that people are prepared to buy what they know.”