Amidst the heralding of developments in an industry awakened by an invigorating and informative Festival last year October, the real groundwork required for a solid foundation for the coconut industry is proceeding with less fanfare.
One characteristic of rebuilding an industry of this potential magnitude in today’s competitive world is the need for a solid production base sustained by sound principles of business. Investment decisions must be based on solid data, and this principle applies to any enterprise on any scale. It is in recognition of this fact that field work on characterizing the production base of coconut sectors across the Caribbean is proceeding apace, with Guyana, along with Jamaica and the Dominican Republic, being very much in the forefront of that initiative.
The initiative, spearheaded by the International Trade Centre (ITC), has extracted samples from a database being compiled by the National Agricultural Research and Extension Institute (NAREI), a vital support agency for the local National Stakeholders Platform (NSP). The Institute’s data base boasts around 1600 active coconut farmers with the size of holdings varying from less than 2 acres to about 3000 acres in a national acreage cumulatively estimated at about 25,000 acres. A tallying valid for up to the middle of 2017 shows 81% of farmers falling within categories of less than 2 to 6 acres, thus representing the Project’s prime target beneficiaries.
Rehabilitation of the coconut industry can be costly. One small farmer at Helena, Mahaica, quoted a figure of around $375,000 per acre for initial rehabilitation works, estimating at least 15 hours of excavator-driven clearing of trees, shrubs, and two main drains. There are also considerable costs associated with fertilizing (whether inorganic or by composting coconut waste), and replacing old trees with improved varieties. The replacement cost could be as low as $250.00 per seedling or $700.00 per seedling, depending on the market being targeted.
Consultations with one land developer who is currently engaged with large investors emphasizes the fact that rehabilitation costs will vary significantly, according to the condition of the land, whether virgin on sand, clay or swamp land, or in need of rehabilitation from previous cultivation. In his assessment, “virgin thick primary forest and stiff clay soils, not close to a drainage outlet will cost approximately $463,000/acre on the high range” while “land with light bushes, sandy clay and close proximity to a good drainage outlet will cost approximately $282,000/acre on the low range.” These estimates include making of beds and supplying seedlings. In short, the cost of rehabilitation can easily approach half a million dollars per acre varying with size of operation.
This kind of investment represents a major challenge for modest investors. Accordingly, projected returns on investment of borrowed capital is essential for any discussions with creditors. Placed in this context, the need for intercropping and profitability studies is essential, hence the current preoccupation with selection of lead farmers who will be trained on a number of fronts in this thrust.
While the challenge may seem daunting, there are possibilities of excellent returns given the financial wherewithal. Contextually, one can point to the level of investment being made by Ramotar Investments of Land of Plenty, Essequibo Coast, which is owned by Mr. Roopan Ramotar. He has invested some $3.5M USD in the three main links of his value chain, production, processing, and marketing. A visual inspection of his farm holdings gives an insight into what is possible with adequate financing.
The excellent work executed in the development of his drainage system attests to the importance of adequate machinery, but while larger proprietors like Ramotar may own their equipment the targeted small holder must rent at a cost of about $25,000 per hour.
Institutions like the Institute for Private Enterprise Development (IPED) have expressed a preparedness to assist in financing such development. Understandably, IPED insists on seeing the profitability of enterprises.
In support of this need, CARDI, at the launch of the Caribbean coconut rehabilitation project here in Guyana, in April 2016, released two farm bulletins on technical aspects of inter-cropping coconuts using both crops and livestock.
Much training is needed to re-orient thinking from subsistence farming to agribusiness. Accordingly, one of the aims of the Farmer Characterization Survey is to gather essential data on the industry’s production base. Sampling in Guyana was done in 3 zones using about a dozen parameters. The zones initially selected were Regions 2, 4 & 5, and Region 10. Parameters for assessment included:
1.General information on farm household – composition & size of family, household structure, education, age, gender differentiation;
2.Land – size, type of tenure, gender differentiation in tenure, employment (permanent vs occasional);
3.Production – main crops, frequency of production, average land under cultivation by crop, selling point; Issues affecting production – Pests & diseases, theft, flooding, drainage, low production & productivity, farmers’ proposals for solutions;
4.Selling issues – prices, buyers, markets, farmers’ solutions;
5.Coconuts – types, age, production, seed sourcing, value addition;
6.Market linkages & channels – buyer preferences by farmers, attendance of fairs & exhibitions;
7.Risk taking – innovativeness & risk strategies;
8.Income generation and allocations (with gender differentiation);
9.Expansion of farming activities – ambition/intention vis a vis availability of land;
10.Funding – current sourcing and attitude to credit;
11.Access to information – on prices; setting of prices; on contacting markets; use of phone
12.Institutions and support – types and regularity of contact
Up to October, analysis for Guyana was 50% complete and is expected to be ready before year end.
This baseline will serve as a guideline for advisory services to farmers, raising their level of income and setting a trend to transform the production base from subsistence to commercial farming through selective intercropping. A stabilization of income from this agribusiness approach would also address the issue of fragmentation of supplies, identified as an actual and potential cause of failure in establishing and maintaining coconut value chains in Guyana.
A task of this magnitude requires structured public/private sector collaboration with inputs from regional and international agencies to balance training in husbandry with appropriate financial services that will accelerate development of small holders in particular. The business aspect of agriculture therefore must be included in any comprehensive advisory service.
Raymond Trotz is the Chairman of the National Stakeholders Forum for Coconut Development