The Caribbean Agri-Business Association (CABA), some years ago, stated in its “Strategic Plan” that the deficiency in the technology supply service in the CARICOM region was the most critical impediment to the development of the agriculture sector. This was not a difficult conclusion to arrive at, since it was clear that for the agriculture sector to grow and be competitive, it had to have agronomic systems that enabled cost and quality competitiveness. This is still the straightforward economic reality today.
The invited Brazilian expert, in his presentation to the “Guyana Agriculture Diversification Summit” of December 2006, told the Summit that “for the sector to grow, competitivity is an essential feature. This means that to stay in the market, the productive processes must be gaining economic efficiency continually, so as to be able to face the competition”. Though English was not his first language, the point was clearly made: an efficient technology generation system is an absolutely necessary ingredient for agriculture development. The reality is that farmers, both small and large are profit driven entities. When they are given a more effective agronomic solution to produce their crops, a solution which makes them more money, they will grasp it with both hands.
The Declining Agriculture Sector in Guyana (and the Region)
Over the past two or so decades, the local agriculture sector has been steadily declining in its contribution to the national economy. The sector contributed over 30 per cent to GDP in the 1980’s, but fell to just about 17 per cent by 2015. Succeeding Governments have expressed the vital importance of the sector to national development, employment creation and poverty reduction, and have announced intentions to boost the sector. Yet the decline continues. The most recent statistics show that the major commodities, sugar, rice and marine products have all significantly declined, in value terms, in the first half of 2022. This must be a major concern for our country.
Experience at the Regional Level
At the level of the CARICOM Region, the imperative to halt the decline of the major commodities, sugar and banana, in the face of the removal of the European Union price subsidies, and to boost other crops, has absorbed the attention of numerous regional meetings. The need to halt the rise of an ever increasing food import bill, has also been the focus of much attention. Much effort has been expended in devising “Regional Agriculture Development Plans”, in 1975 and 2005, in particular, and numerous agricultural planning “summits” in between, have been held, with the objective of increasing agricultural production and food security in the Region. These efforts have not produced the intended results. Commodity exports have continued to decline, and the food import bill continues to grow, reaching over US$5 billion by 2019.
The past two years has seen yet another plan devised by the Region, with the objective of reducing the food import bill by 25 per cent by 2025. The plan includes the usual Heads of Government statements of commitment, regional planning committees, and investment/finance conferences. Guyana is expected, as usual, to play a major role in achieving the set targets for increased production. Yet, even as these plans are being announced, there is no expressed intention or plan to address the fundamental constraint of the agriculture sector’s lack of an effective technology service to support investment and growth.
Our Technology Supply Experience:
The Case of Sugar
The sugar industry is a prime example of the technology deficit in Guyana (and the Region). President Irfaan Ali took the opportunity, after the 2021 Heads of Government Conference in Belize, to tour the sugar industry in Honduras. He was understandably impressed by the success of that industry, which supplies a billion US dollar export market, and supplies up to 30 per cent of the electricity demand in Honduras during the sugar crop. President Ali expressed the view that the Guyana sugar industry could be similarly successful. President Ali, on his return home, also noted that the sugar cane yield in that country was double that of Guyana, and suggested that was a major reason for their success. The adage in the sugar industry is that “sugar is produced in the fields, the factory merely convert sugar cane to sugar”.
Maintaining and improving sugar cane yields is fundamental to a successful industry. The fact that sugar cane yields in Guyana have been falling inexorably over the past 70 years goes a far way to explain the problems in the industry. The anomaly is that the stakeholders in the industry were aware of the need to halt the slide in yields, but ignored it during the period of EU subsidized prices. Subsequently, the question was, where were the resources to come from?
It can also be noted that the highly successful sugar industry in India, the second largest exporter in the world, exporting up to 12 million tons of sugar per annum, addressed their own technology issues and achieved yields reportedly more than three times the yields obtained in Guyana. The improvement of yields is critical to the survival of the industry, and the stakeholders in the sugar industry needed to have addressed it urgently, either by themselves or with the support from the local technology supply service. For whatever reason that did not happen.
It is noteworthy that CABA, in collaboration with staffers of the University of Guyana Faculty of Agriculture and Forestry, in the face of the huge problems in the industry, prepared a research proposal which was submitted to GuySuCo and the Government in May, 2017. The research proposal was aimed at improving cane yields by at least 50 per cent, using organic soil enhancement techniques practiced in India with much success. The research was proposed to be over a two year period and costed about G$180 million. The reaction of GuySuCo’s top management at the time, was that the idea was a good one, but they would recommend the addition of another soil enhancement technique to the research: that of the use of “cover crops”. The big impediment was, where would the cash strapped company find the financing? The Government’s response was silence. They were consumed at the time with efforts to divest or close the most loss-making estates. There the proposal rested.
Our Technology Experience:
The Case of Rice
Success in the rice industry was in contrast with our experience in sugar. The survival of the rice industry was in no small measure due to the research funds supplied by the European Union subsidies when the OCT route for export into Europe was closed. That subsidy was channeled through the Caribbean Rice Association, a private sector body, who allocated most of the subsidy to rice research. The resulting dramatic improvement in yields ensured the international competitiveness of the industry and thus its survival. This experience can be compared with that in sugar, where the EU subsidy was used primarily for urgent national budgetary support and the new factory at Skeldon.
Our Technology Experience:
The case of Other Crops
Numerous projects in the intermediate savannahs, and the coastal plains have failed because they could not find the right agronomic solutions to ensure efficient and cost competitive production systems. Many of these projects, in the face of minimal information and support from the local technology supply service, were forced to attempt to solve their agronomic problems by themselves, while at the same time trying to drive up production to meet investor targets. This was a highly risky proposition, and the result in many cases was that the projects ran out of funds and investor interest, before adequate, cost effective solutions could be found. Many of these projects, such as the Global Agri Project, and the CARICOM Corn Soya Bean Project, to name just two in grains, planned large scale production of grains, legumes, aquaculture and fruits but eventually collapsed for this lack of technical support.
The Technology Solution Approach: The Case of Fundacion Chile
The technology supply system in Chile was given a fortuitous boost with the formation of Fundacion Chile, a non-profit joint venture agriculture research organization. It was started with an initial capital injection of US$50 million, contributed half by the Government and half by the “good-will” of ITT, the US based telecommunications conglomerate, during its compensation negotiations for its nationalized assets in Chile. It was agreed that ITT would manage the organization for the first ten years, subsequent to which there would be joint selection of the management team.
Fundacion Chile was set up to generate and adapt technological solutions in the agriculture, forestry and marine sectors of the Chilean economy, sectors in which Chile had a natural advantage. Its main operating model was to demonstrate the viability of the technology solutions it developed, by creating and operating a business, which would demonstrate the profitability of their technology solutions to the private sector. As an example of its model in operation, Fundacion Chile was the main actor in the development of the ocean-caged salmon production business in Chile. They initially bought a small US company to access critical technology, then adapted the technology to Chilean conditions. They adapted and developed technology in multiple areas, including cage construction, genetic stock selection, cost effective feed solutions, and, effective management systems. They not only developed effective technological solutions, but demonstrated their efficacy in the company they earlier bought, eventually divesting it to the private sector for US$21 million.
As a result of the work of Fundacion Chile, the export salmon business of Chile grew from virtually nothing to a multi-billion US dollar business. The nascent Guyana fish cage project could learn much from the Chilean experience.
The characteristics of an effective Technology Supply System
Our experience in the sugar, rice, and other crops industries, clearly point to the absolute necessity to revamp the local technology supply system for the agriculture sector to achieve dynamic growth. The current system is too archaic, inefficient and ineffective to support the development plans of the country and the CARICOM Region. An examination of best practices in agriculture exporting powerhouses Chile and Brazil and across the world, tells us that an effective technology generation system exhibits the following main characteristics:
(1) Adequate funding
(2) Highly trained professionals
(3) Incentivized/market driven operation.
Adequate Funding
Guyana spends far too little on agriculture research and development (R&D). It is estimated that we spend less than 0.5 per cent of agriculture GDP on this area. This can be compared with Brazil and Chile who spend approximately 1.2 per cent, while developed countries spend over 2.0 per cent, with Australia as high as 4 per cent. Brazil and Chile, the two agriculture exporting power-houses in South America, are known to have jump started their export booms in the mid 1970’s by significantly increasing funding for R&D. Brazil, in addition to dramatically increasing funding, also reorganized the technology system, and created EMBRAPA, to operate as an aggressive, well resourced “private sector type” organization. The Brazilian expert told the “Guyana Agriculture Diversification Summit” that: “The creation of EMBRAPA and its performance in generating agricultural technology over the last three decades is widely recognized as a decisive factor for the remarkable success of Brazilian agriculture in the period.”
Chile, for its part, set up research funds, to provide competitive research grants, using not only budgetary resources but also borrowed significant sums from the International Financial Institutions, such as a US$70 million loan from the IADB. These research funds provided commodity groups and businesses access to research financing to solve their specific problems along the production – marketing chain. These resources to the sector were, according to the Chilean expert, addressing the “Guyana Agriculture Diversification Summit”: “Instrumental in enabling Chile to move from a net food importing country in 1975 to one of the 20 largest food exporting countries in the world by 1985, exporting over US$ 8 billion annually by that date”.
Highly Trained Professionals
Guyana has expended significant resources on its tertiary education system and has received, over the decades, international technical assistance from countries such as Britain, the USA, Canada and Germany, to name a few, to train scores of Guyanese to the Masters and Doctoral
levels in agriculture technology. The unfortunate development was that the vast majority of these highly trained persons found it more beneficial to remain overseas or to migrate soon after returning home. Many reported that they just could not find professionally or economically satisfying employment in Guyana. The result was that we lost most of these highly trained individuals. The simple fact is that the country’s agriculture sector could not develop while losing almost all its agricultural scientists. The anomaly is that we badly needed those scientists to support growth in the sector, but were not able to devise a technology generation system sufficiently motivating for them to work in the country. It is of note, as one study pointed out, that there was a dramatic decline in the loss of Chilean agriculture scientists to North America, when the local research system was reorganized and funding increased.
Reorganizing the Technology Supply System
Guyana presently utilizes the “national agricultural institute” model, funded by a national budgetary subvention. This model, as the main vehicle to conduct research, has long been abandoned in most countries decades ago. This model is simply too bureaucratic, too ineffective in motivating high performance in generating agriculture technology. Research requires intense intellectual application, often over many years, with a dedicated, single-minded, focus on the problem to be solved.
It has been found that multiple nodes of researchers operating in an incentivized system, encourages high performance. Effective systems around the world have research being generated mainly in Universities, Agricultural Colleges, Private Sector Organizations, as well as government owned institutions. These research providers have to compete for research projects. This is an important characteristic of an effective national research system. Research entities should compete for research projects and benefit remuneratively from a successful completion.
Impact of Increased Resources
The question of whether it is cost effective for the country to allocate significantly increased resources to agriculture R&D, is answered by its likely impact on agriculture sector growth. A study of the impact of agriculture R&D, financed by the World Bank, and entitled: “Getting beyond the National Institute Model for Agriculture Research in Latin America”, concluded as follows: “Investment in agricultural research gives high rates of return and is an essential component of any modern agriculture sector. Studies over the past 25 years, including many in Latin America, confirm the value of such investment. Nevertheless research needs to be revitalized if it is to fulfill its role in modernizing agriculture in the region.”
This evidence of the generally high rates of returns to agriculture research investment, should further convince our policy-makers on the importance of dramatically increasing allocations to this area for national development. We only need to look at the enormous sums it has cost the nation to support the sugar industry to be convinced of the necessity to significantly invest in R&D to make the sugar industry profitable.
Concluding Statement
The announced agriculture sector development plans of Guyana, and the regional plan of 25 per cent reduction of imports by 2025, are on very shaky grounds without an urgent revamp, and resourcing of the technology supply system. Experience with previous national and regional plans which failed to produce the desired results, should inform and encourage us to diligently address the technology supply system in our country. An effective system will likely take years to develop, but its presence is a necessary requirement for development of the agriculture sector. It is hoped that our new found wealth will enable us to address the critical technology service deficit in our country. (Fitzroy Fletcher is a former Guyana Director of CABA.)
