|The Courier N° 152 - July - August 1995 - Dossier: NGO's - Country Reports: Belize, Malawi (EC Courier, 1995, 104 p.)|
|CTA - Bulletin|
by Don Walmsley
The member states of Caricom are all net importers of livestock products and these account for 40% of the total regional food import bill amounting to a little more than $1 billion. The domestic livestock industry has traditionally enjoyed government protection in the form of tariffs, quotas and subsidies. With the recent trends towards trade liberalisation, and the attendant removal of protective barriers local producers and processors have become very concerned about the future of the industry, and indeed about whether it has one! Caricom countries are GATT signatories and as such are bound by its rules. However, up until last year, agricultural products were not included in the commodities covered by the agreement. This has changed with the conclusion of the Uruguay Round in April 1994.
The aims of the GATT agreement on agriculture are to provide the mechanism to bring about increased access for members to each other's markets, and to reduce subsidisation of exports and domestic support of agriculture. In addition, the agreement covers sanitary and phytosanitary controls on trade in agricultural products since these have been used as non-tariff barriers, sometimes unjustifiably. A set of uniform rules to guide and enforce the sanitary and phytosanitary measures is to be provided in order to minimise their negative effects on trade.
The changes are scheduled to take place gradually extending over the six years of the agreement, that is from July 1995 to June 2001. However, there is provision for greater flexibility for developing countries; the reductions in tariff levels, domestic support and export subsidies, which are set at two thirds of the general level, may be effected over a ten-year period and international financial institutions may be approached for help in making the required adjustments. In addition, there are special concessions for net food-importing countries.
What are the implications for Caribbean livestock farmers? The reduction in subsidies will force them to become more cost effective or go out of business. The expected increase in feed costs will reduce their competitiveness since the industry is heavily dependent on imported feeds. On the other hand, the price of imported milk and meat products is likely to rise as export subsidies are lowered in the developed trading countries and this could lead to a reduction in the demand for them and thus stimulate domestic production. Some countries, notably Jamaica and Trinidad & Tobago, have begun the process of removing trade restrictions under structural adjustment programmes. The general consensus is that there is potential for growth in the Caribbean livestock industry, but lack of a definite policy presents a difficulty in its realisation.
Therefore, conscious of the need for discussion on how the changes in international trade would affect the livestock industry in the member states of Caricom, in March this year, CTA and the Caribbean Agricultural Research and Development Institute (CARDI) organised a regional seminar in Port of Spain, Trinidad, with assistance from the local Ministry of Agriculture.
Under the title Livestock Policies for the Caribbean, the objectives of the seminar were to examine the existing livestock subsector, define a regional policy and identify priority areas for implementation. Participants came from the Caricom member countries, Canada, the USA and the Netherlands. They included representatives from the regional government ministries, agricultural R. & D. organisations, universities, international institutions, veterinarians, farmers, livestock producers' associations, processors, credit agencies, feed manufacturers and other input suppliers.
In preparation for the meeting, CTA and CARDI commissioned three background studies that examined the implications of trade liberalisation, growing trends towards regionalism and structural adjustment measures for the Caribbean agricultural sector and, more particularly, the livestock subsector. As well as the consequences of the new GATT, the investigations also looked into the possible effects of the North American Free Trade Agreement (NAFTA) and the Inter-American Development Bank (IDB) agricultural sector loans programme in the region. The results of these studies were presented to the meeting for discussion. Papers given by staff of the World Bank, FAO and USDA also provided information to put the regional situation into perspective.
The livestock industry
The domestic livestock sector has been a major factor in food security efforts. The region's annual production of poultry meat in recent years has been about 94 000 tonnes, which makes it the main type of meat produced, exceeding by far that of beef (22 000t), pork (13 000t) and mutton/ goat meat (8500t). Some countries have become self-sufficient, or almost so, in some meats. This is the case for pork in Belize, Jamaica and Trinidad 8 Tobago, beef in Belize and Guyana and broiler meat (especially whole chicken) in Barbados, Jamaica and Trinidad & Tobago. Nevertheless, the successes with pigs and poultry are associated with high costs for imported feeds and feed ingredients.
The regional dairy industry produces about 98 000t per year of whole cow's milk, but this satisfies less than half of annual consumption. The shortfall is met from imported powdered, evaporated and condensed milk. Caricom nutrition plans have set a target of at least one pint (570 ml) of milk per day for each child of school age and also for pregnant and nursing mothers. This means that, at present, the region is producing less than a third of its minimum requirements.
There is a wide variation in trade protection measures applied to meat and milk in the different countries of Caricom although the Common External Tariff (CET), as its name implies, was designed to provide uniform protection for agricultural and industrial production. At present, it is set at an overall level of 30% but there are lower rates for certain foodstuffs and special goods that are critical in low income diets. The Caricom heads of government have exempted agriculture from the general provisions and agreed to maintain a rate of 40% pending international developments that might affect regional trade, such as GATT and NAFTA. There have been problems in implementing the CET because of the conflicting interests of tourist-based economies intent on low import prices and those countries wanting to develop and give protection to their agricultural sector. The compromise solution has been to allow flexibility to individual governments in setting the CET for agricultural commodities. Also, there are still problems of market access within the region in the form of non-tariff barriers for agricultural products, although for other commodities, these have largely been removed.
As can be seen in the following situations regarding the major types of meat consumed - broilers, beef and mutton/goat meat-the trading arrangements are by no means standard.
With regard to their broiler industries, both Jamaica and Trinidad & Tobago have implemented 'tarification' (i.e. converting non-tariff restrictions such as quotas, variable levies and negative lists into equivalent ordinary tariffs). In Jamaica, whole broilers are subject to no other charges than the CET of 40% whereas in Trinidad & Tobago, there is also an import charge of 20% with a phased reduction to zero by 1998. The story is different again for chicken parts: imports of all parts into Trinidad & Tobago are restricted but in Jamaica, backs and necks (important for low-cost nutrition) enter free of tariffs while other more expensive parts such as legs and breasts are subject to the same tariff as whole chicken.
The local production of mutton and goat meat has been provided with adequate levels of protection by imposing tariffs of 30% in Guyana and 35% (declining to 15% by 2000) in Trinidad & Tobago. Trade distortions associated with quotas and licences have been removed. It is considered that a tariff of 30% would allow for competition and improve productivity in all Caricom countries.
The situation with milk is somewhat more complex because of non-trade concerns such as social factors, nutrition, food security and rural stability. The majority of dairy farmers in the region are small and usually part of a mixed farming system where the sale of milk provides a valued cash income. In the past, because of nutritional concerns, governments tried to design policies that would stimulate milk production and, at the same time, make it affordable to the poorer sections of the population. This has not been successful because of conflicting objectives. For example, previous policy has been to put low tariffs on imported milk powder intended for processing and consequently, insufficient protection was given to the domestic dairy farmers. This has even threatened the survival of the industry. A solution to this problem, put forward at the meeting, would be to introduce regulations to prevent powdered milk being used in the milk processing industry. Under this system, milk powder could be imported free of duty, providing an alternative for those consumers who are not able to afford the (anticipated) high price of fluid milk.
During the course of the meeting, three working groups were formed (covering the broiler industry; mutton, beef and pork; and dairying). They were given the task of reviewing the papers presented, indicating other areas and factors affecting policy, making policy recommendations, indicating priority areas and suggesting a mechanism to get the recommendations on to national and regional agendas for agriculture, especially those aspects affecting livestock development.
The findings of these groups, which were presented to the meeting and incorporated into the seminar's conclusions and recommendations, are set out in the box.