BUSINESS MONDAY - change focus

Focus less on food security and more on improving agricultural productivity to become competitive within external markets.

This was the advice given to Caribbean islands by Principal Economist with the Inter-American Development Bank’s (IDB) Research Department, Ernesto Stein, following the presentation of a report entitled ‘What Global Integration Can Do for Latin America and the Caribbean’.

Speaking to Business Monday recently at the Hilton Barbados, Stein, who co-authored the report with his colleague Mauricio Moreira, stated: “In agriculture, many times policies want to focus on food security, and in the name of food security, you protect markets and you try to generate local production, even if local production is much more expensive than production elsewhere.

“I think policies that I would promote in terms of agriculture [are those] based on the provision of public goods, like research from a public research institution,” he said.

“Focus on policies which make products more competitive, not necessarily on policies that protect local production at the cost of higher prices for consumers. Typically, the poorer consumers are the ones that devote a bunch of their consumption basket to food, so I would focus on promoting innovation, research, irrigation and rural roads so farmers can access other markets,” he stressed.

Also taking Stein’s stance, IDB’s Principal Economic Advisor, Mauricio Moreira, said within the Caribbean the tariffs on agriculture are high and need to come down.

“There are food security concerns, but I think there is room for reducing those tariffs, particularly because of the distributional impacts. You are hurting the poor when you raise the cost of food and you
are also telling them to stick to this kind of activity even though productivity is fairly low, so it is not really a promising policy to adapt. So focus on the supply side policies and try to make sure that they can do better without protection, because with protection you end up hurting the people you want to protect,” he said, noting the change should be implemented gradually.

“You need to start somewhere to initiate this gradual process of change from policies focused on protection and from this supposed food security, to policies that focus on improving productivity in agriculture and improving opportunities for small farmers to reach other markets,” Moreira noted.