Agriculture and the threatened economic crisis

Arguably the most disconcerting dimensions to what are widely believed to be the serious economic challenges that lie ahead for Guyana are the imponderables that are linked to the current global economic crisis.  The fact of the interdependent nature of the global economy and, in this context, the particularly dependent nature of the Guyana economy, essentially means that we have no control over the likely scale of the knock-on that will accrue to us, the true extent to which it will affect us and, the crisis in the major developed countries having been brought under control, how long the subsequent recovery period will be for countries like Guyana.

If the 2009 budget has acknowledged these considerations and has, as best it could, promulgated measures that take account of the situation, the best that can be said is that the crafters of the budget were really not in a position to plan further than they could see.

There are some things about the local economy that we already know. First, there are the uncertainties associated with the likely pace of recovery of an ailing sugar industry. This, given the fact that so much of the growth this year depends on money earned from sugar is by no means an inconsequential consideration. Secondly, there is the issue of shrinking global demand and its impact on a local export sector particularly a manufacturing sector, which, even in the best of times, has been weak and underdeveloped.

Thirdly, there is the issue of reduced customer liquidity occasioned by VAT-stricken prices that are already high, by cuts in remittance flows and by likely increases in unemployment levels. These, of course, will have implications for the local commercial sector as far as demand for both goods and services is concerned.

Another thing that the budget acknowledges is the importance of placing emphasis on the agricultural sector as a means of ensuring self-sufficiency in food, creating employment and income subsidies as well as maximizing those export opportunities that will persist through the crisis given the regional and global demand for food. In this context it is disappointing that the plans set out under the Jagdeo Initiative last year to maximize food production for export by seeking to attract more local and foreign private investment to the agricultural sector appears to be moving more slowly than might have been first envisaged.

Here, the challenge clearly lies in seeking to persuade both local and foreign potential investors that, even in these times of crisis, investment in the envisaged mega-farms and agro-processing projects are worth the while and that, frankly, is by no means an inconsequential challenge. It is, however the government’s challenge.

Setting aside all of the difficulties associated with overseas investment, the local situation is attended by the traditional aversion to huge investments in agriculture, outside of sugar and rice, given all the risks and uncertainties associated with investment in the sector including the now decidedly major issues  associated with changing weather patterns and weak defences against flooding.  How to change the culture of aversion to large scale local investments in the agricultural sector – which must, of necessity include the issue of protecting crops against flooding – is a consideration which, in the circumstances must be addressed frontally.

We must make no mistake about it – there are few if any options to turning to our agricultural potential in order to, at best, ride out the difficulties that lie ahead and if we accept that this is indeed the case we may as well begin now to prepare the sector for what we will have to ask of it.

One of the interesting features of this year’s budget is that it appears  to acknowledge the importance of broadening the culture of farming to embrace those sections of the population that have not traditionally been involved with the sector. The monetary allocation for non-traditional farming could perhaps have been larger in the circumstances, but the point is that what has been allocated appears at least to reflect an understanding of the expanded role that agriculture must now play in helping to see us through this crisis.

While this newspaper is loathe to recommend discourses that may turn out to be little more than time-consuming, even counter-productive talk shops, we see the need for a  meeting of minds among stakeholders designed to address  those issues that must be addressed in order to give ‘shape’ to some sort of plan for the sector.

And while we make no claim to being agenda setters for such a forum we believe that such a forum must, of necessity, include wide-ranging discussions and clear and concrete understandings    on issues such as (a) how to provide potential investors in the sector with reasonable assurances of protection for their investments; (b) incentives for large scale investment in the sector; (c) vastly improving drainage and irrigation infrastructure to better protect farmers from crop losses; (d) shifting a greater amount of our agricultural production to lands that are safer from flooding; (e) offering traditional farmers training in conventional business practices including and particularly marketing  techniques;  (f) exploring more joint venture possibilities between traditional farmers and potential investors; (g) providing microfinancing support and some level of technical support for small and micro business in the agricultural sector as well as non-traditional farmers possessing viable business plans for agricultural pursuits; (h) how best to improve packaging and export marketing of agricultural products.

This is by no means an exhaustive list of issues that need to be considered. There are, for example, issues of land allocation, the expansion of the support services within the Ministry of Agriculture and the creation of a nexus between the agricultural sector and its agro-processing sub-sector.

The point to be made here, however, is that these deliberations must be open, practical and all embracing, must be outcomes-oriented and must be part of a seamless plan that envisages the swift implementation of outcomes. Otherwise, we may as well not bother.

The bottom line here is that if we can accomplish a significantly increased level of food production linked to local food security, export earnings, local job creation and providing income subsidies, we are likely to fare a good deal better in the period of difficulty ahead.

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