In his 2014 budget presentation, Finance Minister Dr.Ashni Singh announced that this year growth in the manufacturing sector was projected at 7.1 per cent, driven largely by what, in his words was an “anticipated recovery of the sugar industry.”
Some commentators have already expressed the view that it is hardly the best of signs that any real growth in the manufacturing sector is likely to hinge largely – if not solely – on the “anticipated recovery” in sugar given the imponderables associated with that projection.
The fact that the budget presentation could have pointed to no other particularly strong indicator to back itsprojection of a likely significant growth in the manufacturing sector is itself an issue worth dwelling on for a while.
Before doing so, however, it is worth pointing to the budget projection of 484,562 ounces of gold this year, which, according to the Finance Minister, is no more than “a moderate growth of 0.7 per cent, reflecting the volatility of world market prices.”
Setting aside the budget’s own modest projections regarding the performance of the gold industry this year, operators in the sector itself have told this newspaper that price uncertainties have already resulted in a drop in the level of investment in the sector and that gold mining in 2014 has not commenced with the level of investor enthusiasm demonstrated in the two or three previous years.
So that for the first time in perhaps three or four years the economy will have to contend with, perhaps, a less robust performance from the gold industry than we have grown accustomed to, coupled with another sluggish performance from manufacturing, if we set aside the projection of a 15.6 per cent improvement in sugar production.
That leaves the rest of the manufacturing sector more or less unaccounted for in terms of any projection of what it will do this year. In the case of rum, a major manufactured export, one can perhaps anticipate another robust performance from a sector which understands the international market quite well and can be expected to fight its corner. The same can hardly be said for the forestry sector where a combination of environmentally driven operating constraints, lowering investments and at the value-added end, high electricity costs continue to negatively affect the performance of the sector.
This year’s budget appears to be relying on “improved monitoring and management practices and buy-in and cooperation of the harvesters” to realize a 3.3 per cent expansion in the sector though it has to be said that we are going to have to wait and see to what extent the stated conditionalities for the projected expansion in the sector will be met.
That leaves largely the food production end of the manufacturing sector and it is here, of course, that many of the problems in the manufacturing sector lie. The list of constraints to the sustained growth of the manufacturing sector – including high electricity costs and lack of financing for suitable plant and equipment – are probably well-known and not worth repeating here. What is clearly worth repeating, however, is the increasing constrictions in market access arising out of the imposition of non-tariff barriers, even in some CARICOM territories and, in the case of the United States, the creeping spectre of the Food Safety Modernization Act (FSMA), a piece of US legislation that seeks to significantly raise the bar as far as safety and health issues associated with food consumed in that country are concerned.
In the absence of any real evidence that our state-run monitoring and testing entities are properly equipped to scientifically ascertain that our manufactured foods meet FSMA requirements, our access to US markets could be heading for a condition of limbo.
It is therefore not so much that the 2014 budget’s projection of a 7.1 per cent growth in the manufacturing sector is (or is not) attainable, but whether the range of challenges – some of them formidable ones – confronting both manufacturing itself and the marketing of manufactured products, will allow for the realization of that target.
