Increased agro-processing is a potential solution to a key challenge currently facing Trinidad and Tobago: the long-term decline of its agricultural sector, which has led the country to spend increasingly scarce foreign exchange on rising food imports.
Decline In Production
While in the 19th and early 20th century the twin-island republic was essentially a sugar-based commodity-exporting economy, the discovery and expansion of oil and gas reserves led to a long-term decline in agriculture. Commercial production of sugar has ceased. Some 30 years ago agriculture represented 4.2% of GDP but this dwindled to only 0.5% in 2015. According to data from the Central Bank of T&T (CBTT), the value of agricultural production, measured in constant TT dollars of 2000 in that year was TT$429.8m ($64.2m), or 0.5% of GDP. Within that total, the largest single item was domestic agriculture, with an output worth TT$271.8m ($40.6m), or 0.3% of GDP, followed by sugar distilleries with an output of TT$153m ($22.9m), or 0.2% of GDP.
The country no longer cultivates or refines sugar, but significant amounts are still imported from elsewhere in the Caribbean to be distilled and used in the production of rum, soft drinks and other beverages. The third category, export agriculture, is almost statistically non-existent, with a 2015 value of TT$5m ($747,000), or 0.01% of GDP.
Under the shadow of the energy boom, agriculture and livestock has dwindled to a historic low. Despite this contraction, the sector remains diverse; output levels can be volatile due to weather, pests and economic factors. The UN’s Food and Agriculture Organisation (FAO) has identified some of the country’s top-10 production commodities as poultry, fresh fruit, pork, eggs, beef, citrus fruits, pineapples, coconuts and dasheen (a root vegetable). FAO officials say T&T has become a net food importer, meeting up to 85% of its needs from imports, compared to 60% in 2000. Food purchases from overseas are estimated to be running at nearly $1bn, or 10% of the value of annual merchandise imports. In its review of the economy in 2015, the CBTT noted increased output of eddoes, rice, paw-paw, broiler meats, pig, live sheep and live goats. In contrast, there were falls in production of cassava, ginger, dasheen, sweet potatoes and cocoa, among others.
The case for increased agro-processing in T&T is framed in various ways. First, the current small size of agriculture and livestock does not reflect its true potential. While primary agriculture and livestock may represent only 0.5% of GDP, in value chain terms it links into the food, beverages and tobacco segment of the manufacturing industry, which accounts for 4.5% of GDP. Second, even from a low base, any increase in either domestic or export agricultural production will reduce the country’s food dependency and contribute to a net foreign currency saving. Third, although T&T is small, and a marginal global agriculture and livestock producer, it has the ability to process local raw materials into relatively smallbatch but high-value quantities of tropical products, such as spices, peppers and speciality chocolates, capable of winning niche markets. Fourth, there are potential synergies, particularly in Tobago, with the further development of tourism, another important foreign exchange earner. So far, various new agro-processing initiatives have met with mixed results. One of the best known is the Caroni Green Initiative (CGI), which emerged in 2013 as a government-supported plan to cultivate agricultural land previously owned by Trinidad’s last major sugar plantation, which had been redistributed to former employees in 0.81-ha lots. The original plan, according to which the former employees would cultivate 2347 ha of vegetables and root crops, was not achieved. A newly created state-owned company, trading as Caroni Green, later replaced it. In 2015 an audit of the company by consultancy EY said government funds had been wasted and agricultural output had been lost because of poor management decisions and inadequate spending controls.However, by early 2016, under Sharma Lalla, the company’s then-new and now former CEO, it was reported to have sold $100,000 worth of red peppers to the US in the last quarter of 2015, produced on a cultivated area of 12 ha with 35 employees. Lalla said T&T was importing significant volumes of pepper mash from Costa Rica and the Dominican Republic for local processing.
The CGI had begun selling its own peppers for local pepper mash production, raising the possibility that in the future fewer imports would be needed. Its success in the US market reflected what Lalla described as the development of “a tried and proven solution to the long-standing problem of unreliability of supply, which has hindered the country’s ability to sustain a presence in the agricultural export sector”. Lalla also suggested that at the then-current price of $1 per a pound of pepper mash, T&T could boost exports in the long term to as much as $400m per annum. Yet, CGI’s resurgence under its new name and management was cut short on March 16, 2017, when the government closed the organisation, citing it as a burden on taxpayers’ money.
Lalla said the CGI had increased its revenue from exports from TT$700,000 ($105,000) to TT$2.9m ($433,000) in three years and that its former workers were in the process of forming an agricultural cooperative to continue their work.
Another initiative, the T&T Agri-Business Association (TTABA), has also had some management issues to contend with. TTABA was initially established in 2006 as a private sector – but partly government funded – not-for-profit initiative to increase local agro-processing and deliver savings on the food import bill. It started a number of ventures including processing cassava into cassava flour, and using the flour to manufacture cassava dumplings. TTABA also became involved in the production of a variety of fruit juices and drinks, including pommecythere, lemongrass, coconut water and passion fruit. In July 2016 Rex Collymore, the director of TTABA, acknowledged that the not-for-profit had come close to bankruptcy in an 18-month period following problems over renovation work at its main processing plant. It was nevertheless seeking government backing under the National Agri-business Development Programme, known as NADP 2. The plan sets as its objective the production of an additional 54,000 tonnes a year of agricultural commodities by 2020, creating 5000 new jobs in the country and saving TT$254m ($38m) worth of foreign exchange.
While it has yet to articulate a comprehensive strategy, the government has sought to encourage the development of agri-business. In the budget for FY 2017 – the year to September 30, 2017 – Colm Imbert, T&T’s finance minister, announced an agro-processing tax relief programme. Under its terms, which started during the second quarter of FY 2017, all agro-processing operations will be tax free, provided they adhere to a certification process establishing minimum quality standards. Clarence Rambharat, the minister of agriculture, said there had been discussions with a well-established local business group about a TT$30m ($4.5m) high-tech vegetable production facility. “There has been significant local private sector interest in making investments in agriculture, as it relates to cocoa, coconuts, vegetable production, honey and aqua-culture,” Rambharat said, adding that the government was seeking to ensure that local products should be produced, packaged and chilled alongside imported ones.
Scope For Expansion
Companies involved in agro-processing range from small-scale producers to medium or large operators. Examples of the former are members of the Tobago Agro-Processors Association (TAPA). Charmaine Strong, a member of TAPA and an independent processor, explained to OBG that she runs a small business processing dasheen, sweet potatoes and yams, and manufacturing jam, jellies and fruit juices. She processes and packages these products for a variety of outlets – local Tobago supermarkets, and shops and hotels that cater to the tourist trade. Strong says there are big opportunities for growth, but a number of challenges including a lack of working capital, need to be overcome. The transition from marketing only one, to marketing three or four main product lines, can be difficult to make. “As processors we have to innovate and create, to own a space in the market, and to reach a bigger volume of people,” she told OBG. “We try to make things interesting. Take dasheen – many people just boil it and slice it. But in TAPA we are making dasheen flour, we are processing dasheen cake, we are making dasheen ice-cream, and we are even making a dasheen spritzer wine.”TAPA members hope that the potential construction of a new Sandals hotel in Tobago (see Tobago and Tourism chapters) will boost demand for locally processed food and allow it to be marketed more widely.
An example of a much larger local company is Trinidad-based poultry meat producer, Arawak. Robin Phillips, the company’s director of marketing and public relations, told OBG that Trinidad is largely self-sufficient in chicken meat and egg production, meeting respectively around 80% and 98% of demand from local production. It also exports chicken meat. Arawak uses a combination of contract farmers and its own wholly owned chicken farms. Despite falling GDP, demand for poultry products in supermarkets and in fast-food outlets remained strong in 2016. “Just try and go to a fast-food outlet on a Saturday morning – you’ll need to book in advance or queue for a table,” Phillips said. The company nevertheless had to remain alert to competitive threats. The much larger US poultry meat market puts a premium on white meat – chicken breast and wing cuts – and therefore tends to have an exportable surplus of dark meat such as legs and thighs. Consumer tastes are almost the exact reverse in T&T and other parts of the Caribbean as legs and thighs are more favoured, meaning there is a potential to be undercut on price from US suppliers. Arawak’s strategy is to pursue, for example, greater value added, ready to cook and fully cooked chicken cuts using local flavour and sauces. One sector player that analysts are watching closely is bottled water producer Blue Waters (BW). The company is diversifying its portfolio by developing a 121.5-ha coconut plantation, the first of its kind in over a century in T&T, with a view to producing coconut water for domestic and export markets.
Dominic Hadeed, managing director of BW, told OBG that while labour is a key challenge for the agriculture sector in the country, it does not need to be. “The onus is on companies to make the industry more attractive to workers. There is no shortage of labour for agriculture, but it is often located in areas isolated from farmland, and the transport costs are prohibitive,” said Hadeed. “One solution is to set up bungalows on the farm itself, allowing for employees to live on the farm Monday to Friday and return home on the weekends. It’s more convenient and affordable for them. By providing housing and a good day’s pay, businesses can get a good day’s work.”
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