REPORT #519 September 2002

by Frank Redmond, Belize, Central America

Hi Peter,
I too am glad your back.

The situation with the major agro industries (sugar, citrus & bananas) is very serious. Inevitably, in developing countries like Belize, Governments must tax the inputs of the productive sector to finance the social programs needed for the country. We therefore will inevitably have a higher cost of production than say the USA because of its economies of scale and other taxation benefits which the agro-sector receive.

In Belize, we are competing against farmers, many of whom are also facing problems (the plight of small town America is sad indeed) but who in the USA, Europe and Japan, receive large Government subsidies and tax breaks. Our Governments cannot afford these types of subsidies.

I view these subsidies as trade distorting, and a decision of the respective governments to maintain their own food security and low prices to their own people. Fair enough.

The problem arises, when these same Governments want our country in the EU, FTAA & WTO trade negotiations to remove our own protective tariffs whils still maintaining their own. They want our markets for their farmers. As you rightly point out, after 6 months, Belize would have no foreign exchange to buy what we need if our present agro industries go under.

These big three, all had agreed in the Uruguay round of talks to have all their domestic subsidies remove by 2000. In fact, they have increased them ! Note that 43% of the EU budget is used for farm/food subsidies !.

Many of the agro industries in Belize have adopted the position that protective tariffs should be increased prior to 2005 when the first EU deals are supposed to be finalized, and then reduced after the developed countries have transparently removed all their own domestic subsidies, given us a level playing field to compete on, and then we should be prepared to reduce our own protective barriers over the equivalent time it took the developed nations to remove theirs since Uraguay.

As an independent farmer, i have no worries about competing on a level playing field with anyone. The problem is we may not have that, nor may we be allowed to do so.

As regards foreign exchange, the position is very tight. Casa de Cambios do not sell wire transfers required for normal overseas business. Their rate is $2.30. The banks have some, ration it severly and charge $2.07. Priority is given to the inputs for the foreign exchange earning industries.

By the way, you need to start congratulating us farmers. 20 years ago, i needed to sell 400 bags of corn to buy a 70hp tractor. Today, I need 5,000 bags to buy the same tractor !

Interesting times ahead.


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