The Implications ofTrade Liberalization on the Agricultural Sector in 57

THE IMPLICATIONS OF TRADE LIBERALIZATION ON THE AGRICULTURAL SECTOR IN GRENADA

Desmond John (Ministry ofFinance, St. George's Grenada)

INTRODUCTION is presented at section 2. Section 3 looks at the WTO and trade The original General Agreements on liberalization, while section 4 analyses Tariffs and Trade (GATT) applied to the EU market environment as regards agricultural trade, but it contained the banana industry. Section 5 looks at loopholes. For example it allowed the impact of trade liberalization on the countries to use non-tariff barriers such sector in Grenada. as import quotas and to use subsidize. The challenges, constraints and Agricultural trade became highly opportunities for the sector in the face of distorted, especially with the use of trade liberalization are addressed in export subsidies, which would not sections 6 and 7 respectively. National normally have been allowed for food security considerations are industrial products addressed in section 8 while section 9 The creation of the World Trade identifies the strategies for agricultural Organization (WTO) represented a sector reforms in Grenada. fundamental transformation of Finally the paper provides some international economic relations. It concluding remarks in section 10. "closed" the loopholes of the GATT and purports to make world trade fairer and 1. GENERAL CHARACTERISTICS freer. OF THE AGRICULTURAL This paper analyses the effects of SECTOR OF GRENADA trade liberalization on the agricultural sector in Grenada since the WTO. Its The 1995 Agricultural Census shows the focus of analysis is the banana issue. agricultural sector in Grenada is Section 1 presents an overview of dominated by small land holdings, with the general characteristics of the sector. 51 percent of the farms less than one Agriculture in Grenada's national acre. The country's agricultural base is

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diversified, with the main traditional 2.1 crops banana, cocoa, sugar cane and nutmegs and the non traditional Data from the Central Statistical Office products, consisting of fresh fruit and show that real GDP has increased from vegetables as well as fishing and XCD 494.38m in 1993 to 655.2m in livestock production. The farming 1999; growth of 35.2 per cent. population is relatively old; over 50 Agricultural output during this period percent of the farmers are above fifty has declined slightly from XCD58.3m in years old. The level of formal education 1993 to XCD 58.08m. The agriculture is relatively low with 80 percent of the sector's contribution to GDP fell from farmers completing primary school, 10.6 percent in 1993, to 8.5 percent in while only 8 percent having had a 1999. The sector has been experiencing complete secondary education. Two negative real growth during this period. thirds of the farmers are males. Farm The traditional crops of bananas, management practices are generally cocoa, nutmeg and sugar, continue to be poor and working conditions act as a the main contributors to output in the disincentive for involvement in the sector. Their contribution has however sector. Wages are relatively low fallen consistently, from 73.5 percent in compared to other sectors of the 1993 to 71.9 percent in 1999. This is a economy. Average daily wage is about result of declines in the production of 20 XCD compared to 35 XCD for cocoa and bananas. unskilled road labour. The main reasons for the decline in production in the sector may be 2. AGRICULTURE IN GRENADA'S attributed to pest and disease, NATIONAL ECONOMY (particularly the Pink Mealybug) export price instability, increasing cost of The agriculture sector has been, and production and increasing cost of continues to be, an important sector domestic labour. within the economy of Grenada. It is a The contribution of the non- major contributor to Gross Domestic traditional sector to total agricultural Product (GDP), domestic income, output in the period of analysis has employment, foreign exchange and food increased slightly. security. It has been the basis for development of the rural economy and is critical to the determination of the standard of living of the rural community and of rural poverty.

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2.2 Foreign Exchange/Balance of for 23.7 percent of total imports. In 1999 Payments food imports increased to XCD 122m or 23.8 percent over 1996. The contri- Exports bution of food imports to total imports has fallen from 23.7 percent in 1996 to Agriculture has been, and continues to 19.6 percent in 1999, but is projected to be, the main source of foreign exchange increase to 21.3 percent in 2000. This for Grenada. Table 1 shows the balance proportion of food imports in total of trade and selected agricultural imports can be considered relatively exports. The contribution of agricultural high. The effect of this can be a exports to total export revenues has reduction in the resources available to been falling. Data from the Central the country to purchase the equipment Statistical Office show agriculture's and machinery needed to provide the contribution to export revenues fell from necessary infrastructure to advance the 66.8 percent in 1995 to 46.9 percent in country's economic and social develop- 1999. ment. Table 2 shows selected food The traditional sectors, cocoa, imports from 1993 to 1998. nutmegs and bananas, accounted for 84.4 percent of agricultural exports in 2.3 Direction of Trade/ Main 1999, compared to 66.9 percent in 1995. Trading Partners Growth in export in that period was due solely to the good performance of Grenada's main trading partners are nutmeg and mace earnings. Export Caricom, NAFTA, and the European revenues from bananas and cocoa have Union. Tables 3 and 4 show that in the fallen consistently during this period, as period 1996 to 1999, over 90 percent of have revenues from exports of non- exports went to these regions, while traditional crops of fresh fruit and Grenada purchased over 80 percent of vegetables and fish. its imports from these regions. The data show a decline in the share Imports of exports to the Caricom region, not matched by the increase in imports from Grenada's imports increased by 49.5 the region. Grenada has, however, percent, from XCD 416.1m in 1996 to increased its share of exports to XCD 622m in 1999. Imports of food in NAFTA. 1996 was XCD 98.6m, and accounted

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Table 1. Balance of Trade and Selected Agricultural Exports, XCD'000

1995 1996 1997 1998 1999 (5)/ (4)/ (3)/ (2)/ (1) (2) (3) (4) (5) (4) (3) (2) (1) % % % % _ Balance of Trade - - - - 11.4 13.6 7.0 360169.7 385362.6 437840.0 , 487742.6 Total 13.1 18.1 11.9 Imports , 416114.2 , 365753.5 550095.9 622037.6 . Total 55944.5 80390.9 112255.9 134295.0 19.6 39.6 43.7 Exports Re-Exports 3777.8 6211.6 7746.0 8959.8 '15.7 ' 24.7 64.4 Total 56559.3 52166.7 74179.3 104509.9 125335.2 19.9 40.9 42.2 -7.4 Recorded Domestic Exports Agric. 37756.4 31906.3 37619.4 42864.3 58771.5 37.1 13.9 17.9 -14.8 , Exports , Bananas 4925.3 1478.3 1.4 77.3 356.3 360.9 5421.4 -99.9 -70.0 Cocoa 8953.3 6995.2 5047.8 5575.8 3807.7 _ -31.7 10.5 -27.8 -21.9 Nutmegs 9434.8 11274.2 18715.0 23386.5 40319.9 72.4 25.0 66.0 19.5 Mace 1642.3 2082.2 3153.8 3729.3 5129.0 i 37.5 18.2 51.5 26.8 Fresh 2708.4 1539.2 936.3 833.6 775.4 -7.0 -11.0 -39.2 -43.2 Fruits and Vegetables Fish 9793.3 8537.2 9765.1 9261.8 8383.2 -9.5 -5.2 14.4 -12.8

Source: Central Statistical Office, Ministry of Finance.

2.4 Employment and Income compared to 10 percent in 1996. The sector accounted for!6.5 percent of total The agricultural sector has been, and employed males and 9.7 percent of total continues to be, a very important source employed females in the economy. of employment in Grenada. Preliminary Of the 4,794 workers employed in results of the 1998 Labour Force Survey the industry in 1998, 71.5 percent were (LFS) show that 13.8 percent of total males, compared to 66 percent in employed persons in the economy 1996 (1996 LFS), reflecting a growing worked in the agricultural sector male domination of the sector.

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Table 2. Selected Agricultural Imports, XCD'000

Commodities 1993 1994 1995 1996 1997 1998

Meat and meat 15759.7 18549.5 20790.6' 21976.3 25592.1 22992.7 Products Fish and fish 4701.7 .4752.6 - 4682.4 5835.7 5643.8 6312.0 Products Milk and milk 13427.5 12965.4 14427.7 15337.2 15592.4 14291.4 Products Rice 4146.6 2238.5 3760.2 3173.7 4086.1 5229.6 Sugar 2629.4 3067.3 2810.0 2949.7 3188.3 6935.3 Flour 1791.9 1606.9 1815.3 _ 1416.4 1549.0 , 2195.3

Source: Central Statistical Office, Ministry of Finance.

Table 3. Main Trading Partners Share of Domestic Exports,(%) 1996-2000

Country 1996 1997 1998 1999 (Est.) 2000 (Proj.) Caricom 31.7 27.4 23.2 16.3 20.9 35.0 34.6 31.2 31.4 33.0 , NAFTA 24.7 33.0 _ 38.4 39.7 39.3

Source: Central Statistical Office, Ministry of Finance.

Table 4. Main Trading Partners Share of Domestic Imports (%)1996-2000

Country ' 1996 1997 ' 1998 ' 1999 (Est.) 2000 (Prog.) . Caricom 26.6 27.2 , 28.0 _ 31.9 33.5 European Union 15.1 13.4 14.2 14.0 14.1 , NAFTA 42.7 43.3 42.5 39.5 37.7

Source: Central Statistical Office, Ministry of Finance.

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3. WTO AND TRADE 3.1 (AoA) LIBERALIZATION The objective of the Agreement on The creation of the World Trade Agriculture (AoA) is to reform trade in Organization (WTO) in January 1995 the sector and to make policies more marked the biggest reform of inter- market-oriented. This would improve national trade since the General predictability and security for importing Agreements on Tariff and Trade and exporting countries alike. Grenada, (GATT). It was born out of the Uruguay like several other CARICOM countries, Round and its agreements cover trade in is not required to notify during the goods, services and intellectual implementation period considered property. (Antoine 1999). The principles of the WTO The new rules and commitments agreements include non-discrimination under this agreement apply to market in 'favoured nations' treatment and access, domestic support and export national treatment, free trade, predict- subsidies. able policies encouraging competition and extra provision for less developed Market Access countries. The three main objectives of WTO This essentially removes various trade agreements are to help trade flow as restrictions confronting imports. The freely as possible, to achieve trade new rule for market access in liberalization' through negotiation and agricultural products is 'tariffs only'. to set up an impartial system of settling disputes. Domestic Support The WTO agreements are legal ground rules for international commerce These refer to subsidies and other and bind signatory governments to keep programmes including those that raise or their trade policies within agreed limits. guarantee farmgate prices and farmers The WTO therefore constituted a income. The main complaint about fundamental challenge to the system of policies which support domestic prices, preferential trading arrangements. We or subsidize production in some other will briefly look at the two main way, is that they encourage over- agreements of the WTO. production. This squeezes out imports or leads to export subsidies and low-priced 'Trade liberalization refers to the removal of dumping on world markets. obstacles to trade, such as quotas, non-tariff The AoA distinguishes between barriers, nominal and effective rates of protection, and exchange controls. support programmes that stimulate

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production directly, and those that are listed, the Agreement requires WTO considered to have no direct effect. members to cut both the amount of Domestic policies that do have a direct money they spend on export subsidies effect on production and trade have to and the quantities of exports that receive be cut back. Grenada did not undertake subsidies. During the six-year reduction commitment on domestic implementation period, developing support. By so doing, Grenada indicated countries are allowed certain conditions that it was not engaging in 'trade to use subsidies to reduce costs of distorting12 domestic support measures. marketing and transporting exports. The The domestic support given to the sector Government of Grenada did not notify in Grenada falls within the so-called the WTO of the use of export subsidies. 'green box'3 policies; that is, they have This implies a de facto binding of export minimal impact on trade and can be subsidy to zero. used freely. To the best of our knowledge, the 3.2 Agreement on Sanitary and Government of Grenada has not notified Phytosanitary Measures (SPS) the WTO of the use of any domestic support measures. The Agreement on Sanitary and Phytosanitary Measures (SPS) is an Export Subsidies agreement on food safety, and animal and plant health standards. It allows The AoA prohibits export subsidies on countries to set their own standards. But agricultural products unless the it also stipulates that regulations must be subsidies are specified in a member's based on science. The regulations lists of commitments. Where they are should be applied only to the extent necessary to protect human, animal or plant life or health and should not 2The concept of 'distortion' is used a lot when arbitrarily or unjustifiably discriminate agricultural trade is discussed. Essentially trade is between countries where distorted if prices are higher or lower than normal identical or and if quantities produced, bought and sold are similar conditions prevail. also higher or lower than normal. The Agreement allows countries to 3These are measures permitted by the WTO. use different standards and different include They government services such as methods of inspecting products and research, disease control, infrastructure and food security. They also include payments to farmers includes provisions on control, that do not stimulate production, such as direct inspection and approval procedures. income support, assistance to help farmers Governments must provide advance restructure agriculture and direct payments under notice of new or changed SPS environmental and regional assistance programmes.

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regulations, and establish a national This, together with practical enquiry point to provide information. management problems in the early Grenada has not notified the WTO implementation of the new regulations, of its SPS measures. With regard to led to an initial period of greater price SPS legislation, only plant quarantine volatility and lower average prices in the legislation exists, but no regulations. marketplace. Standards for pesticides are Under these arrangements, the ACP established under the Pesticide Act, producers, including producers in which is administered by the Pesticide Grenada are allowed to export duty free Control Board. With regard to the a quantity equivalent to their highest existence of a diagnostic laboratory for exports up to 1990. The quota for conducting scientific survey of pests and Grenada under the 1993 arrangement disease, four laboratories are available; was 14,000 metric tonnes. two for animal health and one each for Since the new EU banana regime plant health and animal pesticide and rules were implemented in 1993, residue. they have been subjected to continuing Concerning capabilities to undertake legal challenges brought mainly by risk analysis, Grenada has a number of countries having • interests in the trained persons in plant and animal production and/or marketing of "dollar health. bananas". This regime was found to be These resources are however incompatible in some aspects with WTO insufficient for Grenada to adequately rules. satisfy its obligations under the A new banana marketing regime agreement. was introduced from January 1 1999 when a tariff rate quota system was 4. MARKET ENVIRONMENT introduced. The WTO ruled against certain aspects of the regime and the EU The Caribbean, including Grenada, is committed to reforming the system to relies on the EU market as the sole be WTO compatible. outlet for their banana exports. The EU The Commission has proposed a market offers the Caribbean and other tariff- only system to be implemented no ACP states preferential access. later than January 1, 2006 and a The introduction of a new EU transitional tariff rate quota system banana import regime in July 1993, consisting of: while continuing preferential access for • Quota 'A' which would maintain ACP bananas, increased access to the both the current GATT bound quota UK market for lower cost, higher quality of 2.2 million tonnes and a tariff rate 'dollar' bananas from Latin America. of EUR 75/tonne

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• Quota 'B' autonomous quota of for access to the EU market with the 353,000 tonnes with a tariff rate of dominant companies trading in dollar EUR75/tonne bananas. • Quota 'C' a new third autonomous Given the structural surplus in world quota of 850,000 tonnes. production of bananas, there will be All quotas will be opened to all intense competition for the available suppliers. ACP bananas would have a quotas, which is bound to result in tariff preference of EUR275/tonne both Caribbean and Grenada bananas failing under and outside of the tariff quotas. to secure access, in spite of the tariff The Commission has been exploring preference proposed. the possibility of maintaining the quota The has deemed that regime with the quota allocated based FCFS is incompatible with WTO and on past trade. There has been no has urged the resumption of talks on a agreement among the parties on that historical system. formula. Because of the ambiguities of the WTO ruling, it is impossible to 4.2 Tariff Only System proceed without agreement. The Commission proposes that if the 4.1 First Come, First Served FCFS is not acceptable, then a flat tariff with no other restriction on imports will The European Commission proposed to be instituted. They anticipate that a tariff the Council on October 4th- 2000 the could be imposed that would provide allocation of tariff rate quotas on a first protection equivalent to that provided by come, first served basis (FCFS). This tariff quotas. However assessments from system grants import rights to operators WIBDECO conclude that Caribbean on the basis of applications made at the bananas will not survive under a tariff opening of the weekly or fortnightly only system unless growers receive quota periods from vessels already at some form of support that ensured them sea. If the sub-quota were over- a viable return. subscribed, every application would be According to these officials, only a scaled down pro rata. tariff quota that ensures continued FCFS system would place access to the EU market by a license Caribbean banana producers at a allocation based on past trade could save significant disadvantage in competing the industry.

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5. EFFECTS OF TRADE quality (see Table 1). The effect of this LIBERALIZATION ON THE disqualification was a reduction in AGRICULTURAL SECTOR IN potential foreign exchange to the GRENADA country and significant reduction of income to the rural economy. The The clearest effect of trade liberalization industry and the country are to date on the of Grenada and the suffering the effects of that measure. is manifested in the The Poverty Assessment Report banana issue. for Grenada (1999) estimated 32.1 per cent The European Union (EU) pre- of Grenadians and 28 per cent of ferential banana regime was challenged Grenadian households were poor.4 That by the United States (US) before the report revealed that 13 per cent of the WTO panel as being contrary to free population was indigent. The data trade rules. The rulings of the WTO in showed the parishes of St. Patrick's, St. favour of the US, and subsequent George's, St. Mark's, St. Andrew's and sanctions by the US against the EU, was St. David's were the poorest in the the clearest manifestation of the impact country with headcount indices5 of 35.4, of trade liberalization on the economy of 34.4, 33.5, 32.1, and 31.3 percent small agriculturally based developing respectively. The study thus showed that countries like Grenada. rural poverty was relatively high in The impact of the WTO ruling sent Grenada. shock waves through the Windward With regards to gender and age, the Islands in particular and developing study showed that female headed countries in general and constituted the households and children under 16 are first real threat to the banana industry in the most vulnerable. the Windward Islands and the The report identified, among aggravation of rural poverty. a number of structural factors contributing In Grenada, changes in the to poverty, the undiversified nature of international market environment and the Grenadian economy, and its subsequent changes in the EU market inheritance as a small plantation regime led to the collapse of the banana economy inserted into the international industry and the increase in rural system during the colonial poverty. system. The general causes of poverty The collapse of the industry was identified included: manifested in huge losses of foreign exchange earnings from bananas since 4The poverty line was established at ECS3,262.00 Grenada was disqualified from the per month. exportation of the fruit because of poor The 'headcount index' measures the prevalence of poverty.

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• The secular decline in the banana profound permanent effects on our industry and the failure to domestic economy and ultimately our modernize banana production and standard of living and quality of life". post-harvest techniques (Anthony Boatswain, Minister of • Limited diversification of the Finance, 2000 Budget Speech.) economy especially in down stream The fundamental challenge facing processing of existing primary the agricultural sector in Grenada in production light of trade liberalization is that it will • Unavailability of skilled knowledge- have to become internationally able workers at internationally competitive in price and quality and find competitive rates. new market niches that provide a While bananas have been most competitive edge. affected by the WTO because of the Another challenge is that some of preferential market access situation, the major developed and developing other agricultural sectors such as cocoa, countries apply science and technology nutmeg and non-traditional crops will to agriculture in a way that Grenada have to be competitive and efficient if does not understand. The application of these industries are to survive. It means science and technology provides a therefore that the effects of the AoA and competitive advantage to those countries SPS will be felt throughout the entire that can adequately use those methods. sector. In fact, Grenada has already The application of science to received several inspection visits from production of food will result in quality importers of nutmegs and fish to improvements, while technological ascertain whether the required health improvements will lead to productivity and food safety standards have been gains both in terms of labour employed met. and land utilization. The biogenetic revolution manifested in the production 6. CHALLENGES FACING THE and commercialization of genetically AGRICULTURAL SECTOR IN engineered food is a classic example of GRENADA RESULTING FROM the application of science and TRADE LIBERALIZATION technology to agriculture. Trade liberalization means that "By all indications, developments in the Grenada will have to compete with world economy in the 21' centwy will North America, , Ireland, Europe be dominated by trade liberalization, as and the world in the trading of well asfurther improvements in the field agricultural products on an even playing of science and technology. Both field. developments will continue to have

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One of the fundamental constraints of 21st century agriculture and to and perhaps the greatest challenge to develop a scientific based agricultural Grenada's ability to compete in the area production in Grenada. of science and technology and to face The best opportunity is to encourage the challenges of liberalization, is the young people into farming and equip quality of the agricultural workforce as these young farmers with the scientific well as the small size of the holdings. and technical training needed to According to the 1995 agricultural transform land use policy that will census, 80 per cent of the farmers had provide the natural resource base for the completed only primary education while expansion of the agricultural sector and only 8 per cent, had completed to make it competitive. A farming secondary education. Average farm size community with 42 per cent part time in 1995 was 2.6 acres and farm sizes of farmers and over 50 per cent of the 5 acres or less constituted 83 per cent of farmers over 50 years old (1995 the farm pool. Agricultural Census) will not be able to Two points are important here: make that transformation! • If the agricultural sector should be Another challenge Grenada faces is transformed through diversification the creation of the human, financial and to non-traditional crops, poultry and institutional capability needed to fish, with private sector sponsored implement the AoA and SPS measures. projects (as the 2000 Budget Speech suggests), then the land tenure 7. OPPORTUNITIES TO GRENADA structure serves as an impediment to FROM TRADE LIBERALIZATION a successful transformation process because of economies of scale The existence of a free global market considerations. space presents an opportunity for • On the other hand, Grenadian Grenada to increase trade, with farmers, because of low levels of emphasis on the export market. The free education, will be unprepared to trade in services also represents an adopt the advances of science and opportunity to diversify the economy technology in agriculture compared and to create market niches. Trade to their counterparts in North liberalization may also present America, Europe, Ireland, where the opportunities for increased foreign levels of education of the farmers direct investment. are higher and the farm sizes larger. These opportunities could lead, There is a need, therefore, to invest ultimately, to an increase in national in education to bring the farming output, employment and income and a community in line with the requirements

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general improvement in the well being that enough food is produced to meet the of the population. country's needs. In this context the question of 8. TRADE LIBERALIZATION AND domestic support, in so far as the AoA is NATIONAL FOOD SECURITY concerned, may have repercussions for the food security of Grenada after the Food security at the national level is a ten-year 'grace' period. major policy decision of the Govern- Potential problems may arise under ment of Grenada. This has been the SPS with regard to the export of emphasized in the 1998-2000 Medium agricultural goods from Grenada. This Term Economic Strategy Paper as well may arise because some of Grenada's as the Ministry of Agriculture draft exports may not meet the required Food Policy. standards set by the importing country National Food Security6 may be because Grenada does not have the defined as a satisfactory balance physical infrastructure necessary for between aggregate food demand and efficient implementation of this food supply at prices that do not exclude Agreement. poor households from access to food. The effect could be a reduction in The achievement of national food agricultural exports and erosion in self-sufficiency pre-supposes both relative terms, of Grenada's ability to adequate and stable supplies obtained import food which is necessary for through an appropriate combination of maintaining our food security. domestic production and trade, and Data from the 1995 Agricultural sufficient demand or purchasing power Census suggest that Grenada has enough to guarantee adequate access to food. available land that can be used The WTO Agreement on efficiently to eliminate the threat to its Agriculture aims to eliminate distortions food security that may result from trade in agricultural trade resulting from liberalization. actions by governments to protect the industry. Governments on the other 9. STRATEGIES FOR hand, usually provided subsidies to their AGRICULTURAL SECTOR farmers as a mechanism for increasing REFORM IN GRENADA agricultural production and to ensure The Government of Grenada, to mitigate the challenges of trade liberalization, 6Eele, Hay and Hoddinot. "Household Food has developed a number of strategies. Security and Nutrition" in "Understanding the The objectives of these strategies are: Social Effects of Policy Reform." The 1993.

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• To rationalize the agricultural sector operations and an increase in price to achieve long-term efficiency and to farmers. viability. 3) Review incentives for private sector • To promote the sustainable growth investments in • the agriculture of the agricultural sector, thereby sector. increasing the foreign exchange 4) Diversification around traditional earnings from traditional and non- exports. traditional crops. Banana Sector: The present strategy • To improve national food and is to concentrate efforts in the nutrition security. banana industry to production for • To reduce rural poverty. the domestic market, while The following strategies have been exploring possibilities for regional developed: export markets. 1) Coordination of greater linkages Consideration is also being given between agricultural production and to exploring opportunities for marketing. In this regard a processing of bananas for niche Marketing Unit has been developed markets. in the Ministry of Agriculture to Cocoa Sector: Creation of value conduct marketing studies for non- added. In this regard, consideration traditional agriculture, as well as should be given to the establishment conduct research of marketing ofjoint ventures in the area of cocoa alternatives for traditional agricul- processing. tural exports. The aim is to assist Nutmeg Sector: Creation of a farmers to become more quality assurance laboratory that commercially oriented and viable. would ensure that the quality of 2) Liberalization and commerciali- nutmegs and other agricultural zation of the banana, cocoa and exports meets the required nutmeg industries. The banana international standard. The nutmeg industry has already been liberalized industry will also expand its nutmeg as a condition of the Windward reconditioning plant to include the Islands Action Plan. The post- production and export of ground harvest operations of the cocoa nutmegs. Additionally, the sub- industry will be liberalized. This sector is working to create value- action is expected to result in the added products such as nutmeg soap upgrading of the processing and and nutmeg butter, from residue drying facilities owned by the from its nutmeg oil distillation plant. private sector, the reduction of the 5) Development of a proper operating costs of the post-harvest agricultural and land use policy for

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the orderly and efficient use of This in turn has led to an increase in fertile arable lands. rural poverty. 6) Implementation of a national The fundamental challenge facing irrigation programme to ensure year the agricultural sector in Grenada in round production of selected crops. light of trade liberalization is that it will This will facilitate increased have to become internationally production and improved quality of competitive in price and quality and find selected crops, leading to increased new market niches that provide a farmers' income and expansion of competitive edge. the agriculture sector. The low level of education of the 7) Creation of additional infrastructure agricultural labour force and small farm for the fishing industry. This will be size are important constraints to through construction of a state-of- Grenada's achievement of a competitive the-art fish market in St. George's agricultural sector. and Grenville. Grenada lacks sufficient 8) Adoption of a food and nutrition institutional capability to effectively policy. The strategy of the implement the WTO Agreements (AoA agricultural sector to achieve food and SPS). As a result, human, financial security will have to be to increase and material assistance will be required. domestic production of food in While the effect of trade order to reduce the high food import liberalization on Grenada's food bill and increase exports, so that the security cannot yet be assessed, there is country's food security is not a potential threat to the country's food threatened. security. The liberalization of trade does present opportunities for the 10. CONCLUSIONS development of the agricultural sector and the economy in general. The The agricultural sector has been and agricultural reforms strategies outlined continues to be an important sector in the Medium-Term Strategy Paper within the economy of Grenada, constitute a necessary first step to notwithstanding its declining share of preparing the sector to face the many GDP. challenges ahead. The advent of the and the new trading arrangements have led to the collapse of the banana industry due to the industry's inability to satisfy market requirements in terms of quantity and quality of fruit.

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REFERENCES Grenada Country Strategy Paper on • the Agriculture Sector. Ministry of Finance. Priority Issues for CARIFORUM Grenada. July 1999. Agriculture in the Upcoming WTO Grenada Medium Term Economic Strategy Negotiations. Patrick A. Antoine Ph.D. Paper 1998-2000. Ministry of Finance, March 1999. Grenada. May 1998. Central Statistical Office, Ministry of Grenada Medium Term Economic Strategy Finance.(Various statistical tables) Paper, 2000-2002, Ministry of Finance Poverty Assessment Report- Grenada Vol.1 Grenada. June 2000. Main Report. Kairi Consultants Ltd., Strategic Plan. Grenada's Non-Traditional October 1999. Sub-Sector. March 1999. Protocol Amending the Treaty Establishing 1998 Labour Force Survey Draft Report. the (Protocol V - Ministry of Finance Grenada 1999. Agricultural Policy) 2000 Budget Speech. Hon. Anthony Understanding the Social Effects of Policy Boatswain, Minister of Finance Reform - Demery, Ferroni, Grootaert Grenada. December 1999. and Wong-Valle. The World Bank 1993 The Impact of Globalization on Caribbean Economies. Timothy Antoine Ministry of Finance, Grenada. May 1999.

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