For the second time in just over four months, one of the world’s major multilateral institutions concerned with monitoring and supporting the global financial and economic recovery has provided a positive assessment of the likely rate of recovery by Caribbean territories.
An assessment by the International Monetary Fund (IMF) of prospects for economic recovery in Latin America and the Caribbean, published in May this year–Regional Economic Outlook: Western Hemisphere–which predicted a swift if uneven rebound from the crisis by Caribbean economies, has been followed by a September 2010 study by the Economic Commission for Latin America and the Caribbean (ECLAC)–Latin America and the Caribbean in the World Economy: 2009 – 2010–that provides more good news about the short to medium term prospects for the economies of the region. According to the more recent study, exports from Caribbean Community (Caricom) countries are expected to grow from minus 41.6% in 2009 to 23.7% this year.
Significantly, the May IMF study has also predicted that post-crisis economic growth in Caribbean territories will be driven by “strong prices for their commodity exports” though the IMF warned that some of the smaller economies in the region will experience more sluggish growth and some may even contract.
The September report notes that while export growth in Latin America and the Caribbean over the past decade was slower in the 1990s and lower than in any other developing region, both in value and volume, the most notable upswing from the worst period of the crisis is expected to occur in Caricom. It, however, also warns that the region’s best chance of maximizing that potential is located in “the diversification of exports, a strong boost to competitiveness and innovation and greater regional cooperation.
Signs that Caricom countries may be responsive to the upbeat predictions of the IMF and ECLAC are reflected in recent moves by community member countries to develop a more coordinated approach to agricultural production to satisfy both regional food security needs and to take advantage of an extra-regional market in the face of a predicted global food crisis. Recent state-driven initiatives at the level of Caricom Heads have seen high-level intra-regional discussions on shoring up the agricultural sectors in the respective member countries as well as embarking on private sector-driven mega agricultural projects that combine the technical and research resources of regional organizations with both intra and extra-regional financing and the large tracts of arable land available in member countries like Guyana.
Guyana’s President Bharrat Jagdeo has been leading the charge for the strengthening of the region’s agricultural sector, pointing both to Caricom’s multi-billion dollar food import bill and to the global market opportunities afforded by the growing international demand for food. Progress, however, has not been proceeding at breakneck speed. Apart from the fact that private sector commitment to making large investments in an expanded intra-regional agricultural sector has been slow, the pace of progress has been reduced by the need to create a technical infrastructure to drive the process.
Commercial bank and other private sector investments in agriculture are unlikely to proceed at a gallop in the absence of assurances of protection on investments against the risks associated with farming, particularly in countries like Guyana. Commercial banks will remember only too well the millions of dollars in loans to the local rice industry lost in failed projects and, moreover, would have been chastened by the catastrophic floods in 2005 and 2006 which completely ruined a number of farms in coastal Guyana.
Regional focus on addressing the challenge of crop protection through insurance schemes has witnessed the involvement of the Caricom Secretariat in partnership with the World Bank and the Government of Italy, along with other stakeholders in examining various approaches to offering crop insurance in order to allay the fears of potential investors. In Guyana, the local Ministry of Agricultural has long conceded that efforts to maximize agricultural production for local consumption as well as for the export market will be challenged by climate change, the impact of which has already been witnessed in the worst floods in the country’s history recorded earlier in the decade. “Climate change will affect agriculture, forestry and fisheries in complex ways,” the Ministry of Agriculture declared in its 2010 First Quarter report on the sector.
A more recent brief provided by the Ministry of Agriculture says that the country’s agricultural sector is “disproportionately vulnerable” to disproportionate weather events and that “flooding and drought” have been the two main recurrent events that “have caused millions of dollars of economic losses.” Statistics provided by the Ministry indicate that seven natural disasters, between 1998 and 2006, have resulted in losses totalling more than US$34 million, annually.
The Ministry says that the 2005/2006 floods have created a new sense of awareness on the parts of both the general population and the farming community. It says that a survey conducted through its 2008 Second National Communi-cation Project indicated that 78% of the farmers involved in the survey “gave an acceptable explanation on what it (climate change) meant.” Agriculture Minister Robert Persaud says his Ministry “has been aggressively promoting agriculture diversification and climate change awareness through programming and outreach exercises, highlighting the need for employing new, climate resilient farming varieties and techniques.”
Farmers, the banking sector and potential investors, however, will probably be even more interested in measures designed to protect their investments against climate-driven catastrophes and will be anxiously awaiting the emergence of a “market–based area yield index insurance scheme” for the rice sector, which the Agriculture Ministry says “will transfer exogenous agricultural risks to a third party.” Addressing the predictability of cash flows to the agricultural sector” is the primary purpose of the insurance scheme and if potential investors buy into it, the door may well be opened to fresh waves of local and foreign investment in rice and other agricultural sub-sectors, paving the way for increased production to satisfy local, regional and international demand.
