Guyana Focus

which is subject to the uncertainties of international pricing and demand/supply arrangements, whereas agriculture provides food security and sustains the livelihood of a significant portion of the population, especially the rural poor. It is also a source of foreign income from exports – a potential that has never been fully exploited. The current state of the Trinidad & Tobago (T&T) economy should serve as a stark reminder of what could happen to economies like Guyana’s. Declining oil production in the wake of low world market prices has left the T&T economy in dire straits, creating a massive shortage of foreign currency necessary to buy basic goods.
T&T has in the past enjoyed tremendous wealth from oil and Guyana could too in the future. But experience shows that focusing on oil alone is a perilous strategy.
Putting aside Guyana’s two largest traditional agricultural industries – rice and sugar - Guyana has failed to exploit the opportunity to diversify its agricultural base, with limited success under various governments. The impact of a variety of small scale initiatives is infinitesimal on the economy, although these initiatives provide fodder for the government to show that the agriculture sector is on the development track.
The country’s on-off focus on non-traditional agriculture for the past four decades has not benefitted from the level of commitment required to support its growth.
The consequence is a rising food import bill. Not only will the failure to spur non-traditional agriculture production result in food insecurity but it will also eat up excess potential oil revenues – which incidentally are not in the near term picture.
There is therefore no doubt that it makes strategic sense to emphasize non-traditional agriculture but success will be dependent on the extent of the government’s commitment and the existence of a comprehensive plan to guide the sector’s development.
Past experience shows that there has been weak integration of implementation efforts, resulting in sporadic ventures that have engendered limited success. In fact, over time there have been more failures than successes in a broad spectrum of agribusinesses, ranging from processing facilities to livestock development.
Although Guyana has the physical resources to ensure success in non-traditional agriculture and related agribusinesses, it would be prudent not to ignore the reasons for failure of similar ventures in the past. For instance, consistency in the supply or output of the sectors has always been problematic. Crops tend to be affected by the vagaries of weather and diseases, which have led to manufacturing downtime and consequently supply/demand shortfalls. This has had a negative impact on exports whereby contractual supply arrangements were not fulfilled; as well as resulting in inefficient domestic plant operations, where they exist.
This problem has been compounded by scale of operations which has not allowed for sufficient output for exports or agro-processing. For example, in the case of agro-processing, plants have not had sufficient inputs to operate efficiently.
It is also necessary to improve co-ordination of farm-to-factory supply and establish a formal mechanism to ensure that processes put in place actually work. It is easy to argue that such mechanism, like the Guyana Marketing Corporation already exists but whether they work effectively remains questionable.
A second problem relates to standardization of quality, especially for the export market.
Third, transportation and storage of perishable crops have caused farmers substantial losses, giving rise to the need to establish adequate facilities such as storage, refrigeration and transportation to support farm to market activities.
Fourth, Guyanese have a preference for foreign goods, which ultimately limits the expansion of domestic industries. In as much as foreign imports can force local industries to be competitive, if local industries are not given some form of protection to develop as part of a feasible business strategy, they will not prosper.
One important aspect of the government’s strategy that has not been emphasized is the potential to build around established industries – such as rice and sugar, taking into account the availability of inputs.
Evidently, backward and forward linkages between the base and satellite industries can provide a competitive advantage and offer greater control over the growth of the offshoot of the traditional industries. Such a strategy would also be beneficial because the country would be able to maximize the use of its existing skills in established industries.
On the other hand, if the principal inputs for a specific target segment are imported, then control over output and cost of production can be restrictive – based on supply and prices of raw materials.
Arguably, appropriate technology to support an agribusiness strategy can be expensive. Government involvement, through international official and non-official assistance and supporting private sector initiatives is necessary if small or large-scale industries are to be developed. For certain industries, foreign investors should be wooed by offering them incentives to invest in the country, backed by relevant legislation.
In recent years, foreign investors have been wooed to the agricultural sector but interest has been lukewarm primarily because of high levels of political uncertainty and unfavorable business conditions. With the advent of globalization, Guyana must be able to compete for foreign capital which tends to seek countries with minimal risk.
Foreign businesses are also sensitive to a highly unionized environment which is prevalent in Guyana. Well-developed infrastructural, legal and regulatory environments are also preferred by foreign investors. While Guyana has made some progress in these areas, the perception is that its position remains unstable.
Venturing into non-traditional agriculture will reduce the country’s vulnerability to its traditional industries, create jobs and enhance its overall development prospects.
Arguably, the government has made some headway in these areas but sustaining its achievements remains a challenge. Apparently, small successes have been dramatized, giving a false sense of success. For now, there needs to be a measurable, well coordinated effort to support the diversification of the sector and to track its success.
Conversely, Guyanese are largely unskilled in the oil industry. While the terms of engagement with oil exploration companies stipulate using Guyanese labor, it is likely that very few Guyanese will obtain skilled employment in the oil industry. However, agriculture will remain a major source of employment.
It goes without saying that the agriculture sector has the potential for viable development. Obviously, increased price pressures and global competition for the country’s traditional primary commodities – sugar, rice and bauxite – have spurred the government to look at new growth areas – a term that has been often used by the previous administration. Such tactical shift would reduce the country’s dependency on its primary products and expand its economic base – without relying on the over-hyped oil industry.