Alongside tourism and financial services, agro-industry is an area that holds significant potential for diversification and growth in Trinidad and Tobago’s economy. With a rich tradition of agricultural production and a climate that facilitates the cultivation of a number of cocoa hybrids, the sector has long been earmarked as a potential driver of growth. Furthermore, both raw and processed agricultural exports represent a vital source of much-needed foreign exchange.
Current State
Agriculture contributes less than 1% to GDP but employs 3% of the population. Flooding has recently affected vegetable and root crops, resulting in a decline in agricultural output in the fourth quarter of 2018. Exports of food, live animals, beverages and tobacco for the year to September 2019 amounted to approximately $1.97bn, equating to 8% of total exports. At the local level, processors buy raw produce from farmers and process it to sell on to supermarkets, shops, hotels and restaurants. Typically, small operators in the sector are focused on various root crops such as dasheen, sweet potato, yam and cassava, producing jam, fruit juices and sauces.
Food inflation was generally flat in the first three quarters of 2019, averaging 0.9% between January and August, while the environment of generally suppressed food prices has been characterised by price declines in a number of subindices throughout the early stages of the year, including vegetables, milk, cheese, eggs, butter, fruits, bread and cereals. Conversely, the meat subindex experienced persistent inflation as chicken prices were strong throughout the early stages of the year. As such, price increases for chicken, goat and lamb fed into the 3.4% year-on-year rise in meat prices recorded in May 2019.
Key Crops
Due to T&T’s colonial history, cocoa, coffee and sugar have traditionally been the country’s main agricultural exports to Europe. The sugar industry, however, was discontinued in 2007 and sugar imports for the agro-processing industry are now sourced from Guyana and Central America. T&T’s major agriculture export markets within the region are Barbados, the Dominican Republic, Guyana, Jamaica and Suriname – some 75% of intra-regional exports come from the latter – while its main trading partners globally are the US, Argentina, Chile, Colombia, the Netherlands and Spain. Its foremost agricultural crops are cocoa, rice, citrus, coffee and vegetables. Poultry production is also high, and exports of tomatoes and cut flowers continue to be robust.
Cocoa
The global chocolate market was valued at $103bn in 2017 and is expected to continue increasing its value to $162bn by 2024. However, this segment is largely untapped in T&T and the surrounding region, with only 1.5% of all chocolate exports currently originating in the Caribbean, despite the sector’s obvious potential. According to the Central Statistics Office, an estimated TT$30m ($4.4m) of cocoa and approximately TT$235.6m ($34.8m) in chocolate were exported between 2016 and 2018.
Potential in T&T is abundant; it is one of eight countries to be certified in exclusive fine or flavoured cocoa, which accounts for 5% of global production, and one of only two gene banks for cocoa plants is located within its borders. T&T’s unique cocoa hybrids – Criollo, Trinitario and Forastero – fetch high prices in the global marketplace. Meanwhile, the University of the West Indies and the T&T Bureau of Standards and are both working to improve the quality of locally produced cocoa beans through the ongoing development of benchmarks. According to Paula Gopee-Scoon, minister of trade and industry, the government is committed to supporting downstream agro-processing as a form of economic diversification.
Cannabis
Another area of potential for Caribbean agro-industry is medical marijuana sales. In its “European Consumer Staples” report, Barclays estimated that the global cannabis market is worth $150bn, asserting that this could rise to $272bn by 2028. In late 2018 Prime Minister Keith Rowley announced that T&T would decriminalise marijuana in 2019, joining only a handful of other Caribbean countries in a bid to reduce drug trafficking and boost local economies, and in early December the law was passed. The new cannabis bill legalises marijuana for medical purposes, decriminalises possession of up to 15 g and allows for the cultivation of as many as four plants. This legislation, however, addresses just one obstacle. A 2018 CARICOM report concluded that prohibition denies the Caribbean substantial economic benefits, with T&T’s latent agricultural tradition emerging as a potential foothold for the industry.
Elsewhere in the region, Jamaica has invested significantly in the medical cannabis industry as part of its diversification drive and is funding further research into its medicinal properties. Should cannabis be legalised, T&T could find itself at the vanguard of a booming agro-processing subsector, due to its tropical climate and relatively advantageous position for exports to large North American markets.
Real Estate
A number of real estate options are available to agro-processing manufacturers in T&T. The 57-ha Cove Eco Industrial and Business Park in Tobago and 445-ha Tamana InTech Park in Trinidad are two of the more established sites. Meanwhile, the Moruga Agro-Processing and Light Industrial Park, to be run by Evolving TecKnologies and Enterprise Development Company (eTecK) in south Trinidad, will be the country’s first such plant upon completion. Spanning 8 ha, the eTeck park consists of 11 developed land lots, including five purpose-built factory shells with 25-year leases and six lots available as developed sites for 30-year leases. Prices range from TT$6475 ($957) to TT$7000 ($1030) per ha annually, including all major utilities such as electricity, telephone, internet, water, wastewater treatment and access roads for each lot, putting the facilities on a competitive footing regionally. Just 62 km away from Moruga is Point Lisas, a public-private port that is the islands’ second-largest such facility and serves as a major logistics centre. Also nearby, the 860-ha Point Lisas Industrial Estate houses some 103 tenants.
Path to Success
In addition to the recent expansion of real estate options, three developments are set to help realise the potential of agriculture in T&T: reviving traditional agriculture and livestock production, both of which have declined over recent decades as the boom in oil and gas production has drawn away focus; identifying products to process and package, as well as their corresponding markets and marketing strategies; and supporting entrepreneurs in developing private sector agro-processing companies. According to ExporTT, the government’s export facilitation arm, there is high demand for food processing, packaging equipment and materials.
Barriers to Growth
Several environmental issues in T&T have a heavy bearing on agriculture, and in particular on agro-industry. Water shortages, disposal of chemicals, forest fires and soil erosion are all important considerations for investments. Breaking into wider markets remains an issue for many agro-processors, notwithstanding T&T’s abundant export potential and relatively well-established trade links both inside and outside the region. Despite the availability of grants, it can be difficult for new entrepreneurs to meet operational costs, and margins are often low for new entrants to the sector. With the presence of considerable red tape and bureaucracy considerations, the ease of doing business is another issue, and a number of stakeholders feel that correcting this would be a more productive use of government funds than focusing on incentive programmes.
Free Zones
In a talk before the OECD in January 2019, Gopee-Scoon spoke of the government’s work to abolish its current free zone regime and replace it with a new, modern special economic zones (SEZs), specifically delineated areas where businesses benefit from targeted incentives to encourage investment in certain sectors. As a member of the OECD’s Base Erosion and Profit Shifting (BEPS) Inclusive Framework since November 2017, T&T is required to adhere to standards including the free zone reform. In the October 2019 budget it was reiterated that the SEZ regime would be implemented in line with the BEPS.
Announcing the national budget in October, Colm Imbert, minister of finance, proposed removing all taxes and duties on inputs and resources registered for agricultural purposes by farmers. In addition, he moved to make agriculture, including the processing of local agricultural products, a tax-free industry. While the full extent of this tax-free status remains to be seen, the potential for the agro-processing sector in T&T is nonetheless bountiful, particularly considering the country’s region-leading export sector and advanced processing, printing and packaging capabilities. Medicinal cannabis and chocolate are the subsectors showing the most promise, while a nascent drive to recover the country’s former agricultural standing should help to further stimulate this growth.
