Agriculture and economic development in the ... - Science Direct

Agriculture and economic development in the Caribbean

Kempe R. Hope

This article examines the role of agriculture in the economic development of the more developed countries - Barbados, Caribbean Guyana, Jamaica, and Trinidad and Tobago. The agricultural sector’s contribution to the economy has declined in the past two decades. As a result, the agricultural sector has not generated sufficient employment or foreign exchange eamings. This has meant that the industrial sector has not been able to sustain development. Dr Hope is Chairman of Economics and Finance, Daemen College, 4380 Main Street, Amherst, New York 14266, USA (Tel: 716 639 3600).

over development strategy have often swirled around the relative importance to be assigned to agriculture v industry. Historical evidence suggests that this dichotomy is frequently overstated. Specifically, the notion that rapid industrialization entails a total neglect of agriculture is erroneous; it underestimates the importance of the mutually beneficial links between agricultural and industrial development and indeed, in most developing nations successful industrialization has been supported by sustained and broadly-based agricultural growth. The major issues in agricultural development in less developed countries are how to sustain a rate of growth that allows for a balanced expansion of all parts of the economy, and how to ensure that the pattern of agricultural growth is such as to make a strong and direct impact on rural poverty and, indirectly, on the reduction of migration of the poor to urban areas. In the struggle towards industrialization, it has been relatively easy to overlook the importance of the agricultural sector in development and to neglect the necessary harmony between policies to encourage the growth of industry and the performance of agriculture. But, despite the recent rapid rise of industry and the growing urbanization, the agricultural sector still looms large in the less developed nations since it is the sector which provides employment for the bulk of the labour force; contains the majority of poor people; and is the birthplace of many of the urban poor. Food and fibre, the products of the agricultural sector, are, moreover, prominent among those which poor people demand in greater quantities as their incomes rise. Furthermore, it is generally the foreign exchange earnings from the agricultural sector which tend to permit or constrain the expansion of industrial output and employment. Debates

The agricultural sector and change Table 1 reveals that, with the exception of Jamaica and Guyana, agriculture’s share of total value added to gross domestic product (GDP) has been diminishing steadily. In Guyana, the value added by agriculture increased considerably in 1975 and then declined. This was the result of an increase in agricultural production and the collection of windfall revenues from a sugar levy imposed in 1974. In Jamaica, there was an

0306-9192/81/040263-13$02.m

0 1981 IPC Business Press

253

Agriculture

and economic

Table 1. Percentage

development

in the Caribbean

contribution of agricultural sector to GDP by country, 1960-79.

Country

1960

1965

1970

1975

1976

1977

1978

1979

Barbados Guyana Jamaica Trinidad and Tobago

28.0 26.2 12.3 11.9

26.0 24.0 11.6 7.9

15.0 19.3 8.1 5.2

13.3 32.0 7.4 4.5

12.0 28.0 7.3 3.6

11.3 20.8 8.8 3.4

9.3 18.3 9.5 3.1

9.2 17.7 9.3 3.1

Source: United Nations, Yearbooks of National Account Statistics; and Inter-American Development Bank, Economic and Social Progress in Latin America, IDB, 1979; and World Bank, World Tables 1980, Johns Hopkins University Press, Baltimore, Washington DC, 1980.

increase in 1977 and 1978 reflecting the strong performance of crops for domestic consumption boosted by the restriction imposed on the import of food products. However, the data for 1979 indicates that Jamaican agricultural value-added fell by 3.4% in real terms because of torrential rains and floods. Despite the declining importance of agriculture in Barbados, along with fishing, it continues to be the largest productive sector in the country. Sugar continues to be the largest subsector of Barbadian agriculture. However, strong growth in the non-sugar component during 1970-78 resulted in an increase in its contribution to current agricultural valueadded from 33% in 1970 to approximately 47% in 1978. Real growth in the non-sugar subsector averaged close to 8% annually during 1976-78, compared with less than 4% per year during the first half of the decade; this improvement is expected to continue as the government accelerates its drive towards self-sufficiency in foodstuffs. The domestic food crop production index rose approximately 6% during 197677 continuing the recovery which had begun in 1975 after declines averaging 16% in 197>74. The crops that showed the biggest gains were yams, sweet potatoes, and string beans. Although there was a strong increase in poultry and milk production, other livestock products did not, resulting in only a 1.6% increase in the overall livestock products index, compared with an average annual growth rate of 6% in 1973-75. Preliminary information on domestic food production for 1979-80 suggests that output of yams and sweet potatoes increased, but that output of several vegetables was adversely affected by the unseasonably heavy autumn rains. In Guyana, the weak performance of its productive sectors in the 1970s caused a decline in the share of agriculture in current-price gross domestic product. The declining contribution of the agricultural sector continued through 1979 mainly as a result of an extended strike in the sugar industry, adverse weather, and a decline in the acreage cultivated. The sugar subsector continues to dominate Guyana’s agriculture. It accounted for 45% of agriculture’s contribution to current-price valueadded in 1979 after having slumped to a historic low of 37% in 1977 because of the effects of an extended sugar industry strike. The rest of the agricultural sector is accounted for by paddy rice, other crops, livestock, forestry and fisheries in descending order of magnitude. In 1979, however, rice production accounted for only 12% of agricultural output due to inadequate irrigation and drainage facilities. However, in 1977 output had doubled as a result of ideal weather conditions and a strong government drive to increase production through a wide range of assistance including credit, fertilizers, machinery, and marketing arrangements. The prospects for significantly increased production in the near future are good, given the drainage and irrigation projects currently underway in the major rice producing areas.

254

FOOD POLICY November

1981

Agriculture

and economic

development

in the Caribbean

Rice is Guyana’s second most important crop. Unlike sugar, where production takes place on large government-owned estates, rice production is undertaken by small farmers. Rice contributes about 5% to GDP and about 55% of the total rice production is exported annually. The crop is grown along the flat coastal lands which extend inland from the coast for distances of 10 to 50 miles. All of the rice produced for commercial purposes must be sold to the Guyana Rice Marketing Board (GRMB), which is responsible for both local distribution and exports. The Guyana Rice Corporation (GRC) is responsible for providing technical services and credit to farmers. The other agricultural crops are small in their contribution to GDP. However, their output has been increasing in recent years. This is partly due to government import controls on consumer goods and strong government support with respect to inputs, technical assistance, and ancillary services. Crops include coconuts, plaintains, bananas, legumes, and other vegetables. This subsector has increased its contribution to agricultural value-added to 11% in 1978 from an average of 7% in 1974-75. In contrast to the uneven growth of crops, the dairy products and livestock industry has grown satisfactorily since 1970. Much of the growth is attributable to the significant increase in pork and poultry production. Guyana is now self-sufficient in poultry and egg production. Much of the livestock production is concentrated on the coast and is carried out by small farmers. Most beef is produced on mixed cattle+rop farms along the coast, largely as a supplementary enterprise and managed extensively. Jamaica’s agricultural sector has traditionally been divided into exportoriented medium and large-size plantations (producing primarily sugar and bananas) and small farmers producing largely for domestic consumption. Over the years, this structure has contributed to the emergence of a highly unequal distribution of agricultural land and income, mostly in favour of the export-oriented sector. Given this structure as well as mounting problems posed by unemployment and food imports, the government in its long-term development strategy has given high priority to the modernization of the agricultural sector, with emphasis on more efficient use of available land resources, greater production of food for domestic consumption and creation of employment opportunities. To achieve this, the government initiated in 1973 Project Land Lease which by 1977 had benefitted more than 23000 small farmers through leasing land from private as well as government properties. Similar projects such as Project Food Farms and Project Self Help were launched in 1973 and, subsequently, in 1975 the First Rural Development Project was formulated with international technical and financial assistance. The government restated the need for restructuring the agricultural sector in its 1977 Emergency Production Plan. Among the recommendations of the Emergency Plan was the immediate cultivation of 50000 acres of land and the adoption of measures to strengthen infrastructure and credit. Between 1977-78, the agricultural sector performed favourably growing at 9.3%, in real terms, compared with a decrease of 4.1% in 1976. This reflected significant production increases in some of Jamaica’s domestic consumption crops, primarily root crops and vegetables. These increases were sufficiently large to offset the moderate expansion in export crops, mainly sugar and bananas. In Trinidad and Tobago, the agricultural sector, which contributed 5%


1981

255

Agriculture

and economic

development

in the Caribbean

of GDP in 1973, contributed only 2% of the current GDP in 1977-79 and provides the second largest source of foreign exchange earnings primarily from sugar, cocoa, and coffee exports. Approximately 65% of the arable land of the island is devoted to export agriculture. Since 1974, sugar has provided about one-half of total agricultural value-added, while export agriculture as a whole has accounted for almost 60%. Agricultural performance in 1978 and 1979 continued to be disappointing. Real value added is estimated to have declined moderately in 1978, compared with an average annual growth of 2.8% in 1976-77 and 8.4% in 1975. The sluggishness in agriculture in 1978-79 was mainly due to the decline in sugar cane production. The result was a decline of 15.7% in processed sugar production. Cocoa and tobacco, which experienced a disastrous year in 1977, recovered somewhat in 1979. Cocoa production grew rapidly in 1979 but was still some 30% below the record output of 1975. Coffee production was down 14% in 1978, after a9.3% rise in 1977, and remained more than a third below the peak of 1975. The food processing industry, which is expected to create linkages with the agricultural sector and contribute to a reduction in the food import bill, has only been moderately successful. However, in 1979, the food production index grew 11.5%. The most dynamic of the food processing industries have been fruit and vegetables, which have attracted a large number of small operators and provided a basis for a sound cottage industry. Nevertheless a number of factors, including insufficient agricultural services, a widening urban-rural wage differential, rising production costs, and a weak marketing system for domestic food crops, have all contributed to a general decline in the agricultural sector in the past decade in Trinidad and Tobago. The declining share of agriculture in GDP in the Caribbean has been accompanied by an uneven decline in per capita food production since 1976. As shown in Table 2, the per capita food production level in all of the countries during 1971-79 was below that of the base period 1961-65. Declining per capita food production, apart from indicating the general state of the agricultural sector in the Caribbean, also points out the dilemma of economic development in the Caribbean. One of the fundamental roles that agriculture has to play in economic development is the expansion of local food supplies. This becomes important because, as economic development proceeds, there is a substantial increase in the demand for agricultural products. A failure to expand food supplies might impede economic development, as it results in either an increase in imports and loss of foreign reserves or increases in food prices. Spending scarce foreign exchange on food means that less is available to import capital. technology, and other factors of production. Poor agricultural performance, in other words, hinders the growth of the rest of the economy and limits the resources available to promote growth. Another important aspect of food production is its contribution to the Table 2. Indices of per capita food productiin by country, 1971-79.a Annual % growth countryb Guyana Jamaica Trinidad and Tobaqo

1971

1972

1973

1974

1975

1976

1977

87 78 79

74 77 81

65 73 70

86 75 74

85 69 63

75 71 75

77 67 72

1978

1979

1977-78

197S79

63 67 71

74 65 74

9.1 0.0 0.0

-11.9 3.0 2.8

Sources: Same as Table 1. Notes: a 1961-65 = 100: b No data available for Barbados

256

FOOD POLICY November 1981

Agriculture

‘AS. Oberai, Changes in the Structure of Employment with Economic Development, International Labour Office, Geneva, 1978, p20.

and economic development in the Caribbean

formation of human capital. Until quite recently, economists regarded food strictly as a consumption good. It is now recognized, however, that part of food utilization really should be considered an investment which improves the quality of the labour force. Malnutrition causes both mental and poor diets also affect general health. and physical retardation, Hence, it is absolutely essential, for the continued promotion of economic development, that the levels of per capita food production increase. Also of importance is the role of agriculture’s contribution to employment. In Table 3 the proportion of the Caribbean labour force in the agricultural sector is exhibited. From that table it can be gleaned that the percentage of the labour force employed in agriculture has been declining. In 1978, there was some increase over the 1977 figures in Jamaica, but it was insufficient to reverse the trend which began in the 1950s and which, after 1970, has resulted in the services sector in all four countries being the major employer accounting for more than 40% of the labour force. The primary employer in the Caribbean services sector is the government. Though the rapid growth of services sector activity is a new phenomenon in the Caribbean economy, it can be stated that one of the primary reasons the supply of labour has shifted from agriculture to the service and industry sectors has been the greater possible opportunities for employment in the urban areas where those two latter sectors exist. However, how effectively and efficiently the service and industry sectors can continue to absorb such a large influx of workers remains to be seen. This, of course, will depend on the extent to which the traditional Caribbean agricultural sector is left behind the more modem industrial and service sectors. Since the modern sector is often characterized by relatively higher wage rates, there is usually a supply of labour available to this sector. Therefore, the growth of employment in the modern sector is primarily determined by the growth in the demand for labour. The traditional agricultural sector, on the other hand, is characterized by personalized economic relationships which permit the absorption of labour into economic activities even at low levels of productivity. Thus the growth of employment in this sector is determined not only by the demand for labour, but also by the supply of labour in the economy as a whole. ’ Finally, let us examine the issue of agricultural trade and its contribution to the overall trade of the Caribbean nations. Table 4 indicates that, with the exception of Guyana, all of the countries experienced deficits in their balance of agricultural trade during the 1970s. In 1975, however, Barbados and Jamaica joined Guyana as countries with a surplus in their balance of agricultural trade. That surplus was due primarily to increases in the volume of sugar production and the resultant increase in the value of sugar exports which was aided by increases in world sugar prices. The Caribbean region as a whole, and the smaller islands in particular, depend heavily on food imports. The relationship between agricultural trade and the total trade of each of the four nations is shown in Table 5, Table 3. Percentage Caribbean labour force employed in agriculture, 1950-78.

Source: Same as Table 1; World Bank, World Development Report, 1980. World Sank, Washington DC, August 1960; and 110, Yearbodc of L&our Statistics. ILO, Geneva, Several Years. Note: aEstimate.


Country

1960

1960

1970

1977

1979

Barbados

26.6 43.7 51.6 24.0

26 34 39 22

19.9 32 29.4 1a.5

9.6 30.9 24 13

6.3 26.6a 26 12.2

Guyana Jamaica Trinidad and Tobago

257

Agriculture und economic development in the Curibbean Table 4. Balance of trade for agricultural and food products, 1965-Z

($ x lo”).

Barbados

Guyana

Year

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977

Exports

Imports

25.8 26.9 28.6 26.2 21.9 22.3 20 9 20.9 25.1 35.7 59.5 35.5 28.9

20.4 21.8 20.6 21.8 24.2 28.8 31 .o 38.0 44.4 51.5 51.9 57.0 59.2

5.4 5.1 8.0 4.4 -2 3 4.5 -10.1 -17.1 -19.3 -15.8 7.6 -21 5 -30 3

Exports

Imports

Balance

543 56.7 61.3 58 2 59 9 58.6 68.9 74.1 54.7 162.3 223.1 1287 107.9

20.6 21.8 21.8 19.9 21.3 21.2 24.0 22.5 29.8 39.5 44.6 46.9 47.0

33.7 349 39.5 38.3 38.6 37.4 449 51.6 24.9 122.9 178.5 81.8 60.9

Trinidad and Tobago

Jamaica Year

Source:

Sidney Chernick et a/, The Commonwealth Caribbean: The Megration Experience, Johns Hopkins University Press, Baltimore, 1978, Statistical Appendix; and FAO trade Yearbook, FAO, Rome, Several years

‘For an analysis of the impact of intra regional trade in the Caribbean, see Kempe R. Hope, ‘A macro-economic overview of the trade impact of CARICOM: a study of selected Caribbean countries’, Economia hternazionale, Vol 32, November 1979, pp 43W7; Kempe Ft. Hope, ‘CARIFTA and Caribbean trade: an overview’, Caribbean Studies, Vol 14, April 1974, pp 16S179’; and, Kempe R. Hope, ‘The post-war external trade of Guyana’, Economia Internazionale, Vol 28, FebrualyIMay 1975, pp 139-l 56.

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977

Exports

Imports

Balance

Exports

imports

Balance

85.5 90.3 85.5 79.9 75.9 75.4 78.3 89.7 93.9 140.5 212.8 128.8 142.8

64.0 70.0 73.7 77.6 77.2 92.7 104.6 128.5 137.9 200.4 195.9 191.9 179.1

21.5 20.3 11.8 2.3 -1.3 -17.3 -26.3 -38.8 A.4 -59.9 16.9 431 36.3

36.1 34.2 348 39.2 40.5 41.5 43.8 45.6 46.5 82.3 113.7 87.8 81.5

57.3 58.6 55.4 48.3 58.6 60.3 72.2 71.9 87.1 131.8 144.6 145.8 149.3

-21.2 -24.4 -20.6 -9.1 -18.1 -18.8 -28.4 -26.3 40.6 49.5 -30.9 -58.0 $7.8

which indicates that the volume of agricultural imports in relationship to total imports of goods and services has been changing unevenly during the 1970s while at the same time the volume of agricultural exports has been decreasing. The composition of the import bill for the Caribbean nations gives an indication of the major food deficiencies of the region. The most important imported items are animal proteins - meat. dairy and fish products, and animal feed - which make up more than 50% of the total value of food imports, while fruits and vegetables account for about 8%. In terms of intraregional trade of agricultural products, Barbados and Guyana are responsible for approximately 30% of the imports while Guyana and Trinidad and Tobago are responsible for about 44% of the exports.’ The regional integration effort in the Caribbean has hardly affected agriculture. This is primarily because agricultural exports from the Caribbean go to destinations outside the region rather than to other countries within it. Moreover, the countries of the region have broadly similar weather, topography and soils, leading to a high degree of intra-

Table 5. Value of agricultural exports and imports as a percentage of value of total exports and imports, 1970-77. Guyana

Batiados

_ Trinidad and Tobago

Jamaica

Year Exports

Imports

Exports

Imports

Exports

Imports

Exports

Imports

22.7 18.4 16.4 16.8 18.8 27.0 16.8 10.8

20.3 20.8 22.2 21.9 21.7 20.1 20.1 18.4

39.5 41.6 449 34.4 55.1 59.9 43.9 39.4

13.9 15.6 13.3 14.2 14.1 12.0 11.6 18.1

15.1 15.1 15.4 15.9 14.2 20.3 14.6 15.2

15.7 16.7 18.3 18.2 18.9 15.2 17.3 19.4

6.9 6.5 6.1 4.9 3.3 5.2 3.3 2.9

9.9 97 8.5 9.9 6.7 8.9 6.8 7.4

1970 1971 1972 1973 1974 1975 1976 1977 Source: Same as Table 4.

258


Agriculture

and economic

development

in the Caribbean

regional competition rather than to complementarity in the crops produced:’ The major agricultural products traded within the region are rice, which comes primarily from Guyana, coconut products, vegetables, processed food. and fruits.

Assessment

‘Sidney Chernick eta/, The Commonwealth


of agricultural development

Agricultural development in the Caribbean seems to suffer from basic problems associated with the structure of the industry. and technical and institutional weaknesses. However, the overall decline and transformation of Caribbean agriculture seems consistent with the notion of what is expected to occur during economic development: that is, the decreasing importance of the agricultural sector in the national economy and the growing importance of the industry and service sectors. But, it is desirable that this be accompanied by increased productivity in the agricultural sector and increased food production capacity to supply the growing share of the population not employed in agriculture. This process has not yet taken place in the Caribbean. The relatively low productivity of Caribbean agriculture has given rise to a severe problem: that is, the problem of feeding the expanding population of the Caribbean in the long-term. Accelerated growth in the agricultural production of less developed nations is of primary importance. It not only increases a nation’s chances of feeding its population but it also can sharply increase the transfer of resources between agriculture and other sectors of the economy. Such changes affect relative rates of capital formation and income growth in various sectors, the structure of growth, and overall rates of growth. Sustained agricultural production, however, requires major policy decisions and some steps have been taken in that direction. A Regional Food Plan (RFP) was designed by the Caribbean governments and was approved in 1975. The RFP was designed specifically to reduce the region’s rapidly rising food import bill through the implementation of projects to supply the region with vital agricultural inputs. Additionally, a Caribbean Food Corporation (CFC) was established in 1976 as the primary regional institution for implementing the RFP. Shares in the CFC are held in all the member governments of the Caribbean Community (CARICOM). Moreover, as mentioned before, in 1977 Jamaica established its own Emergency Production Plan which had as its primary goal the restructuring of the agricultural sector. The CFC grew out of efforts toward implementing an improved trade regime in the agricultural sector through the establishment of joint regional projects. The RFP’s largest component is the regional livestock programme and its ambitious overall scope is indicated by its objectives. By the end of 1985, when the RFP is fully implemented, it is expected to result in the production of 23 million pounds of beef per year; 77 million hatching eggs per year; 7.5 million pounds of mutton and lamb per year; 427.6 pounds of liquid milk; 33.5 million pounds of soya beans; 2 million pounds of red kidney beans; and 2 million pounds of black-eye peas.” Some progress has been made with respect to the RFP but the regional governments need to place renewed emphasis and interest in its imple-

Agriculture

and economic

development

in the Caribbean

necessary legislation to enable the CFC to act effectively as the implementing agency for the RFP, as was originally planned. The CFC is currently endeavouring to secure financial and managerial resources for regional food and agricultural projects. The authorized capital of the Corporation is $100 million. divided into shares of $1000 each which may be increased by the Board of Governors on the recommendation of the Board of Directors. Additionally, in Trinidad and Tobago, the government is determined to reverse the trend in the decline of agricultural production and greater dependence on food imports and, to that end, has adopted a system of subsidies and price supports as well as a priority programme of investment in the agricultural sector, including: land settlements; mixed farming with tree crops for hillside areas; the establishment of extensive acreages of fruit crops; and the rehabilitation of old cocoa plantations, where possible. However, in any attempt at increasing Caribbean agricultural production, consideration must be given to two factors: first, increasing the acreage available for agricultural production; and second, increasing the crop yield. In the first case, the issue is one of expanding cropped area through new land development. Jamaica, for example, has made some progress in that direction and land is now made available to small farmers under Project Land Lease and Project Self-Help, which were initiated in 1973. But, with the exception of Guyana where there are govemmentowned and controlled estates, land holdings in the Caribbean have taken the form either of large estates involved in commercial, export-oriented agriculture, or small owner-operated farms. In both cases, significant inefficiencies result. On the large estates inefficiencies in land use occur primarily because of the land volume which remains uncultivated. Estates usually cultivate one crop on the most suitable sections of their total holding so that while output per acre of cultivated lands might be high, output per acre of land owned is typically much lower. Moreover, the particular crop that is usually produced for export tends to be related to the needs of the parent company and is not necessarily the most appropriate crop for the land. Estates are also plagued by a chronic shortage of labour. This is caused by three factors: the social stigma attached to plantation work; the high wages paid to the small section of the labour force working in modern and, the comparatively more strenuous capital-intensive activities; nature of agricultural work.’ On the small farms inefficiencies exist because of poor cultivation practices; poor and inadequate use of inputs such as fertiliser; the absence of proper soil conservation and irrigation methods; and the sporadic provision of complementary services. The combined effect of all these factors is that small land-holders are one of the poorest groups in the region. Land reform, therefore, seems necessary in the Caribbean. Land re5For more on this issue, see George form can be regarded as a systematic, policy-directed change in the terms Persistent Povetly: UnderBeckford. under which the agricultural population holds and uses land. The objectdevelopment in Plantation Economies of the Third World, Oxford University Press, ives are, generally, to improve the farming population’s economic perNew York, 1972, p 86; and, P. Foster and P. formance as well as its economic and social position. Essentially, land Creyke, The Structure of Plantation Agrireform seeks to redistribute rights in land for the benefit of small farmers culture in Jamaica, University of Maryland, College Park, 1968, pp 7-8. and agricultural labourers.6 Since land reform, in the sense of redistribuOSee Doreen Warriner, Land Reform in tion of land, involves a conflict of interest between ‘haves’ and ‘havePrinciple and Practice, Clarendon Press, Guyana’s nationalization of the nots’, it is also a political question. London, 1969.

260


1981

Agriculture

‘Folke Dovring, Economic Results of Land Reform, US Agency for International Development, Washington DC, June 1970, ~23. “For a review of agricultural research in the Caribbean see L.B. Coke and P.I. Gomes, ‘Critical analysis of agricultural research and development institutions and their activities’, Social and Economic Studies, Vol28, March 1979, pp 97-l 38.


and economic development

in the Caribbean

country’s sugar estates is a prime example. The government’s commitment to ownership and control of the country’s major resources dictated such an outcome. However, the scope of the land reform effort in the rest of the Caribbean, to date, has been marginal. Jamaica has experimented with state farms and also, along with Guyana, with cooperatives. But so far those programmes have not been successful. It is, therefore, necessary that a major programme of land reform be implemented in the Caribbean. The benefits of any vigorous land reform programme are many. First, the transfer of land from large properties into small ownership can be expected to lead to an increase in agricultural production, as a result of higher inputs of labour owing to its higher marginal productivity. An essential reason for the continued success of agricultural development after land reform is, as generally recognized, in the production incentive it gives small-scale own-account workers. Also, when production increases in the wake of land reform, more of it is likely to stay in the rural area as farmers’ incomes. The whole incentive theory of land reform as a factor causing production to increase assumes that this happens, and so the agricultural population ought to become better off. At least in the short run, this should also mean better off in relation to the people in other sectors. This characteristic is one that leads to increased distributive equity in agriculture which may carry over into other sectors, and could conceivably be one of the more important, as yet overlooked, aspects of land reform.’ Given this normal level of expectation pertaining to incomes and production, then reform can be compatible with development, though the change in structure in itself is not likely to generate a higher rate of growth. In the Caribbean, it is essential that attempts be made to derive some of these advantages. Essentially, land reform provides the landless rural classes and small owners with new opportunities to better their lot. Higher incomes will result in their being able to have more food, better housing and clothing, and a greater chance to educate themselves and remove themselves from the poverty rolls. The experience in countries that have undertaken land reform is encouraging in this respect, even in those where land reform has been the result of a violent change in the agrarian structure and without the benefit of careful planning and execution, as happened in the early stages of land reform in Mexico. Related to the issue of agricultural productivity and income, resulting from land reform, is their dependence on credit, infrastructure, extension services, and research activities. However, all four of these factors are grossly inadequate in the Caribbean. In 1974, the Caribbean Agricultural Research and Development Institute (CARDI) was established. But CARD1 has been terribly ineffective to date, primarily because of the lack of financial support it currently receives from member governments. Of course, this needs to be changed if agricultural research in the Caribbean is going to contribute to increased agricultural productivity and development.” A fundamental problem affecting agricultural activity in the Caribbean is that of the lack of agricultural credit, although, like most economic activities, some marginal steps have been taken to alleviate the problem in recent times. Guyana, for example, has established two cooperative banks. One of them, the Guyana National Cooperative Bank (GNCB), was established in 1970 primarily to mobilize the savings of the nation and

261

Agricuhure

und economic development in the Caribbean

“For a discussion of the role of the GNCB in Guyana, see Kempe R. Hope, ‘National cooperative commercial banking and development strategy in Guyana’, American Journal of Economics and Sociology, Vol 34, July 1975, pp 309-322. “‘Gladstone Lewars, Small Farm Financing in Guyana 7968-7970, Institute of Social and Economic research, University of the West Indies, Kingston, Jamaica, 1977, p 74. “See Uma J. Lele, ‘The role of credit and marketing functions in agricultural development’, A paper presented at the Inter national Economic Association Conference in Bad Godesberg, Germany, 26 August-4 September 1972, p 1. “Guy Standing and Fred Sukdeo, ‘Labour migration and development in Guyana’, international Labour Review, Vol 116, November/December 1977, p 306. “Recent empirical studies have verified and reinforced the notion that income expectation is one of the most powerful factors having a positive influence on migration propensity. See, for example, Ram D. Singh, ‘Labour migration and its impact on employment and income in a small farm economy’, International Labour Review, Vol 116, November/December 1977, pp331341.

to act as the government’s financial agent in the promotion and financing of all types of cooperatives. The GNCB is a fully fledged commercial bank operating on sound development banking principles.’ The second bank created was the Guyana Agricultural Cooperative Bank (GACB). The main purpose of the GACB is that of mobilizing the savings and the financing of agricultural cooperatives and other rural development projects. Agricultural credit plays an important role in development of the agricultural sector. Although the magnitude of agricultural credit has been increasing in most Caribbean nations, it is still limited. A primary issue seems to be unequal access. It was found that, in Guyana, the major constraint in the use of credit came from inadequate demand which was the result of the low incomes and backwardness of the farmers.“’ This, therefore, means that access to credit must be equalized. An agricultural credit system in the Caribbean must allow free transfer of resources between sectors, between regions, and across income classes to bring about an efficient allocation of a country’s scarce resources. It must finance the needs arising from the use of appropriate technology in agriculture. It must encourage and mobilize savings from the incomes generated by the expanding agricultural production. As an important factor of production, credit must play a pivotal role in fostering an equitable distribution of the increasing agricultural income.” The extent to which agricultural credit can perform these various diverse functions effectively rests, on the one hand, on the national commitment of the Caribbean governments and, on the other hand, on the organizational abilities and skilled human resources required to create and nurture an appropriate institutional infrastructure. One interesting feature of Caribbean agriculture, particularly in Trinidad and Tobago, is its considerable and growing mechanization. This in turn has resulted in a decrease in the number of people employed in the agricultural sector and further rural migration. In Guyana, for example, it was found that the limited work opportunities and low income potential of agriculture have encouraged the rural population to learn non-farming skills and seek other sources of income.‘* To acquire these skills requires migration to the urban areas. Correspondingly, the practice of those skills require settlement in urban areas where there are generally greater employment opportunities in the service and industry sectors and where the incomes to be earned are much greater.” In Table 6 the extent of rural-urban migration is shown by the decline in the rural population and the growth of the urban population during 196&79. During the period 196&79 all the countries, with the exception of Barbados, had urban population growth rates of more than 3%. The low growth rate of Barbados’s urban population reflects both a slower rate of

Table 6. Urban and rural population and growth rates of urban population (1960-79).

Urban (thousands)

Barbados Guyana Jamaica Trinidad and Tobago

94 175 361 361

RUd

(thousands)

139 403 1232 561

1960-79

1979

1960

Urban (“/)

Urban (thousands)

Rural (thousands)

Urban (“/)

Growth rates of urban population (%)

40.3 30.3 23.6 39.2

112 361 1403 707

132 454 734 425

46.1 45.6 62.7 62.6

1.o 4.2 7.1 3.6

Sources: Inter-American Development Bank, Economic and Social Progress ,n Lafin America, IDB. Washington DC, 1979, Statistical Appendix.

262



‘“The annual average rate of urban unemployment in the four countries during 1960-78 was: Barbados 11.4%; Guyana 13%; Jamaica 19.5%; and Trinidad and Tobago 17%. ISMichael P. Todaro, ‘Internal migration, urban population growth and unemployment in developing nations: issues and Journal of Economic controversies’, Development, Vol5. July 1980, pp 8-l 1. ‘“Standina and Sukdeo. . on . cit. Ref 12. D ,

309. “P.

I

-

Coombs

and M. Ahmed, Attacking Rural poverty: How Nonformal Education Can He/p, Johns Hopkins University Press, Baltimore, 1974, pp 13-14.

FOOD POLICY

November

1981

rural-urban migration and the considerable success of the island’s family planning programme which severely reduced population growth. The island of Jamaica had the highest urban population growth rate and correspondingly the highest rate of urban unemployment among the four countries. I4 Only a few years ago, rural-urban migration was viewed favourably in the economic development literature. Internal migration was thought to be a natural process in which surplus labour was gradually withdrawn from the rural agricultural sector to provide needed manpower for urban industrial growth. The process was deemed socially beneficial since human resources were being shifted from locations where their social marginal products were often assumed to be zero, to places where this marginal product was not only positive but also rapidly growing as a result of capital accumulation and technological progress. However, in contrast to this viewpoint, it is now persuasively clear that rates of rural-urban migration continue to exceed rates of job creation and to surpass greatly the capacity of both industry and urban social services to effectively absorb this labour. In the Caribbean, relatively large-scale rural-urban migration in recent years is causing a rapid congestion of urban areas and, from the experience of the developing world, rural-urban migration will continue as long as the urban expected real income is greater than the average real agricultural product. This flow is motivated, however, not only by the expected income differential between the rural agricultural sector and the modem urban sector, but also by the expected income differential between the rural sector and the informal urban sector. I5 Expectations about social and cultural amenities in the cities, which people in rural areas do not normally enjoy, may also play a part. As such, and as evidenced in Guyana, high urban unemployment does not appear to deter migration. I6 But, can migration to Caribbean cities be discouraged? It can be argued that so little has been done to make rural farm life desirable compared with urban life, it is only to be expected that anyone who can will move to the city. On the other hand, a strong argument can be made that agriculture cannot be expected to absorb all of the rural labour force in the Caribbean unless there are major increases in the demand for agricultural products. What is needed, therefore, is a comprehensive integrated rural development programme which is not only employment oriented but also provides infrastructure as well as fiscal and other services as they befit particular rural areas. Rural development is taken here to mean the far-reaching transformation of social and economic institutions, structures, relationships and processes in any rural area. It conceives the cardinal aim of rural develoo-. _ ment not simply as agricultural and economic growth in the narrow sense, but as balanced social and economic development - including the generation of new employment; the equitable distribution of income; widespread improvement in health, nutrition, and housing; greatly broadened opportunities for all individuals to realize their full potential through education and a strong voice for all the rural people in shaping the decisions and actions that affect their lives. ” 1 _ All of the four countries in this study have some type of rural development programme. However, these oroarammes have met with marginal _ _ . Y _ success. In Guyana, for example, the programme is aimed at development of rural cooperatives and agricultural land settlement with the expected result being a contribution to the growth of agriculture which in

Agriculture

and economic

development

in the Caribbeun

turn is expected to provide considerable indirect support for the growth of rural non-farm activities and employment. I8 In Jamaica, as mentioned above, the First Rural Development Project aided by international technical and financial assistance was formulated in 1975. But what is needed in the Caribbean is a rural development strategy which shows clear, annual and attainable targets for the share of public expenditure and public investment in agriculture, and for the share benefitting rural activities. This means, of course, that the strategy must be integrated into their development plans. A rural development strategy may enter into the planning process at some or all of the following levels: the aggregate level, the sectoral level, the project level and at the level of special measures loosely linked with the main structure of the plan. The Caribbean countries have acquired a great deal of experience in formulating development plans and, as such, the inclusion of a rural development strategy in these plans should pose no major problem. Realization of the objectives of a broad based rural development strategy, however, hinges on national commitment and on the translation of that commitment into three sections of action. First, there must be the necessary policy changes, including more equitable distribution of land rights and incentive pricing for crops produced by subsistence farmers, in particular for food crops. Second, resources must be allocated on a priority basis to increase the productivity of the subsistence rural sector to develop agricultural technology, effective extension, and transportation networks. Third, an adequate effort must be geared to developing institutional capability, not only in the organized public sector but also in the rural agricultural sector to use to the maximum the existing resources and thus ensure effective implementation of the policies and plans directed at the unemployed. Fundamental to any process of planned rural development is the active and willing participation of rural peoples in development of the area in which they reside.” Such participation requires that these people not only share in the distribution of the benefits of development, be they the material benefits of increased output or other benefits considered enhancing to the quality of life, but that they share also in the task of creating these benefits. Participation may be regarded as a substitute for political mobilization. It is, in that sense, therefore, the antithesis of politicization. It provides, optimally, political legitimization for institutional programmes without significant conflict.“’ This then serves to enhance the viability and success of the programme or programmes.

Conclusions “See Kempe R. Hope, ‘Problems of rural cooperatives in Guyana’, Review of International Cooperation, Vol 72, No 2, 1979, pp 75-82. “See David J. King, Land Reform and Participation of the Rural Poor in the Development Process, World Bank Conference Papers on Land Reform, Washington DC, 1973. %harles Harvey et al, Rural Employment and Administration in the Third World: Development Methods and Alternative Strategies, ILO/Saxon House, Geneva, 1979, pp 23-25.

264

The importance of the agricultural sector and its contribution to economic development in the Caribbean has been on the decline during the past two decades. As a result, the role of the sector in generating the necessary employment and foreign exchange earnings has been disappointing. Several structural problems exist. There are also technical and institutional weaknesses coupled with the characteristic of dualism resulting from the contrast between small’farms and estates. Dualism is shown not only in such areas as resource availability and use, but also in the ecological and social impacts of the technological options chosen within the two types of farms. As such, any survey of Caribbean agriculture would conclude that the technology applied at both ends of the spectrum of



“L B Coke and P.I. Gomes. op cif, Ref 8, p9;. z2Dharam Ghai et a/, Overcoming Rural Underdevelopment, 110, Geneva, 1979, p 27. ‘)For further arguments in support of these points of view see, ‘The role of agriculture in economic development’, in William Murdoch, The Poverty of Nations: The Political Economy of Hunger and Population, Johns Hopkins University Press, Baltimore, 1970, pp 169401; and Nevin S. Scrimshaw and ~l&ce Taylor, ‘Food’, in Gerard Piel et al. eds. Economic Development, W.H. F&man and Company, San Francisco, 1980, pp 26-36. “See. ‘Jamaica veers to the right’. South, December 1980, pp 12-l 5. z5See E.S. Liboreiro. ‘The small farmer in the context of agrahan reform and rural development in Latin America and the Caribbean’, in Land Reform: Land Settlement and Cooperatives, No 1, FAO, Rome, 1979. pp 80-97: and International Labour Off&, ‘Growth, Employment and Basic Needs in Latin America and the Caribbean, ILO, Geneva, 1979.

FDOD POLICY November 1981

agricultural enterprises results in varying degrees of technological dysfunctionality.” Many of the structural problems plaguing Caribbean agriculture are historical in origin, although they might have been reinforced by govemment policies during the past two decades. Therefore, the establishment of individual agricultural development programmes in each of the countries based upon their needs and available resources is essential. Within this context, distributive land reform becomes important, particularly in Barbados, Jamaica, and Trinidad and Tobago. Both historical and empirical evidence suggests that egalitarian farm systems have been compatible with the reduction of poverty. The cases of Japan and Taiwan are good examples. Land reform also leads to increased productivity. Compared to large farms, small farms have higher employment and yields per unit of land; a higher capital/land ratio but lower capital/labour ratio; and income distribution in small farm systems tend to be more egalitarian.** Even with an initial fall in production, the share of income of the rural poor tended to increase because the redistribution of land meant the redistribution of income from property. However, apart from land reform, the agricultural development programme must contain elements which address the issues of infrastructure, extension services, credit, marketing policies, price policy, migration, employment, and rural cooperatives. It must involve a more integrated form of development based on changing the social relations of production in the rural areas of the Caribbean. It ultimately means, therefore, the development of rural communities equipped with the infrastructure and organization to make them economically and socially viable.23 But what are the prospects for the immediate future? The shifting political situation in the region inevitably will have a major impact both on policy decisions and in the implementation of those decisions. Recent elections in Jamaica, for example, resulted in the removal of Michael Manley’s government, that espoused democratic socialism and major land reforms, and the installation of a government that is sympathetic to big business and capitalism. Under this new government major land reform and further distribution of cultivable land does not seem feasible.“’ As such, the large private plantation system in Jamaica seems destined to regain its prominence. Land reform is one of the most relevant institutional factors in agricultural development. Without land reform in the Caribbean small farmers would be left with two alternatives: to migrate temporarily to other rural areas; or to move to the urban areas. The option is usually for the second alternative which then results in increases in the urban rate of unemployment, because although the rate of growth and the demand for labour are greater there than in the rural areas, they are not sufficient to absorb both the cities’ own natural increase in population and the flow of migrants from the rural areas. Inevitably, all of this leads to friction - a friction that has its roots in the rural areas. But despite this friction there still does not exist integrated rural development programmes in the Caribbean.25 Instead, the agrarian reform strategies have as their objectives: to increase production and supply levels; reduce the rural exodus to the urban areas; and enlarge the rural markets for goods and services coming from the branches of the economy. Though these objectives are commendable, until the agricultural development strategy becomes an integrated one, its potential impact is bound to remain marginal.