Let’s Make an Agricultural Revolution,
Belizean Style
This country has a big, ugly debt problem. Mostly it smolders; in
2012 it bubbled up, but one day it’s going to erupt in the form of a
sharp currency devaluation and painful austerity measures that set
the country’s economic and social development back generations,
with all the human misery that that entails. Fortunately, we have
the power to change the future through our economic choices and
agriculture has a leading role to play.
Belize imports more than its exports: the merchandise trade deficit
rose by Bz$81.3m or 23.3% in 2012-13; the balance of payments
current account deficit widened to 2.7% of GDP. The value of
exports of goods produced in Belize (rather than re-exports)
dropped by Bz$25.3m; imports for domestic consumption
increased by Bz$162.8m. The fixed exchange rate is feeding our
addiction to imports, but hamstrings export competitiveness. The
trend is unsustainable and eventually the dollar peg will snap.
But the problem is bigger than trade. We don’t save enough to
generate funds for investment: the IDB Country Strategy for Belize
talks about the high cost of domestic finance as a brake on growth
and the need for foreign investment, including in agriculture. There
is no stock exchange for companies to raise capital and the banks
are ineffective in recycling savings to feed cash-hungry businesses.
Governments periodically indulge in spending splurges, resulting
in a precipitous public debt level of 78% of GDP. We borrow to
cover current expenditure: the government had a Bz$17.3m deficit
in 2012-13 and capital expenditure is dependent on handouts from
foreign agencies.
Transport, telecommunications, power generation, education and
healthcare. These are the building blocks that enable a society to
improve productivity and living standards over the long term.
Why can’t Belize afford to invest in infrastructure? We have a
thriving tourism industry; oil, which earned Bz$186m in 2012;
and an enormously fertile and productive land with highly skilled
farmers. We have a largely peaceful population, no refugee crisis,
no insurgencies, and no terrorist groups. And yet the basic problem
remains that the economy despite its healthy preliminary figure
of 5.3% in 2012 does not produce enough wealth to invest in the
future and underpin long-term economic and social development.
The problem is partly a fiscal one. Simply put, there is not enough
tax revenue and the little that comes into government coffers
quickly flows out. In fiscal 2012-13, 56% of government expenditure
went on wages, pensions and related expenses and a mere 18% on
capital expenditure. The public sector is bloated, though we can’t
entirely blame successive administrations: Dr Ydhalia Metzgen in
a September 2012 report prepared for the Central Bank, states:
“Many Belizean citizens also consider the government employer
and provider of last resort”. The state sector as a whole represents
about one-third of the economy and is crowding out private
enterprise.
Agricultural produce comprised a muscular 61% of domestic exports
in 2012. Clearly, Belize has considerable expertise in agricultural
production, but if it were to supplement commodity exports with
value-added food products, foreign currency earnings would less
vulnerable to adverse swings in the terms of trade. Pepper sauce
is one such example, which earned Bz$1,987,821 from overseas
sales in 2012. The exports would not only be more valuable, but
also less volatile. Metzgen agrees: “Belize’s export growth would
benefit from an upgrading of the export basket via new activities
entering the export sector or by introducing more sophistication in
export products” and the IDB: “Belize needs to upgrade its export
basket, particularly to non-traditional agriculture for export, given
the eroding preferences for banana and sugar exports as well as
explore other potential areas such as high value foodstuffs...”
So where are the Belize health snack bars, the chocolate covered,
spicy banana chips, the coconut water sports drinks? Where are the
attractively packaged, branded goods that tumble readily into the
shopping baskets of American consumers? “The main challenges
for export competitiveness” according to the IDB, “are compliance
with sanitary and phytosanitary international standards,
production technology, infrastructure, and difficulties in obtaining
long-term capital”. Not to mention a thorough understanding of
marketing, logistics and supply chain management.
It would seem an uphill battle to develop these skills from scratch
and expensive to buy them in from abroad. Fortunately, Belize has
a reservoir of extremely knowledge professionals with relevant
skills and experience and networks of relationships in key overseas
markets. They are the retirees and prospective retirees who could
be given credits towards residency and citizenship in exchange for
knowledge transfers, coaching and mentoring and consulting for
local businesses.
Agricultural producers must look for opportunities to work
with new food businesses. Agriculture must be a cheerleader for
innovation, challenging received wisdom, breaking down rivalries
and looking for new ways to do business: new methodologies,
new technologies, new markets, new business partners and
new products. It must channel its extensive expertise in new
directions and adopt a long-term outlook, seeking out investment
opportunities that will be the enduring success stories of the next
decade not the marginal revenue improvement of the next quarter.
Government is uniquely positioned to be an enabler in this
agriculture-led revolution. It can support and reward entrepreneurs,
risk takers who have the capability to build internationally
recognized brands and create thousands of new jobs; it can drive
reform of the financial sector to make it easier to source start-up
capital; it can build and communicate the Belize country brand
through a government-sponsored global marketing campaign; it
can prioritize investment in urgently needed infrastructure; and
it can work to effect a culture change that embraces individual
initiative and creativity as the sparks of sustainable economic
growth not government expenditure and public debt.
If the agricultural sector and government can join hands to find
common cause in the interests of national advancement and better
living standards for all Belizeans, a new industry, an agricultural
revolution and an end to successive debt crises is within their
grasp. It will take bravery, determination and a willingness to look
beyond narrow interests. Are our leaders up to the challenge?
Jo Carpenter, BSSc (Hons), MA, lives in Maya Beach. She is a
distance learning MBA student at the University of Warwick in the
UK and founder of ‘Safer Business Travel for Women’, a website
providing expert travel security advice for female business
travelers (www.saferbusinesstravelforwomen.com). Comments
about the article may be sent to her via [email protected]
com.
The BELIZE AG REPORT