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 belizeagreport@gmail. com.