AGRICULTURAL DEVELOPMENT AND ECONOMIC PROGRESS
IN THE CARIBBEAN BASIN
Report of the Presidential Mission
on Agricultural Development in Central
America and the Caribbean
Presidential Mission on Agricultural
Development in Central America and
210 Collins Building
Tallahassee, Florida 32301
PRESIDENTIAL MISSION ON AGRICULTURAL DEVELOPMENT
IN CENTRAL AMERICA AND THE CARIBBEAN
210 Collins Building
Tallahassee, Florida 32301
August 25, 1980
The Honorable Jimmy Carter
The White House
Washington, D. C. 20500
Dear Mr. President:
Our Mission on Agricultural Development in Central America and the
Caribbean has completed its work, and we are transmitting, herewith, our
This effort has constituted a very challenging and sobering experience.
Many of the countries of the Caribbean Basin are facing serious economic
problems--far worse, in fact, than we had anticipated. In some countries,
these economic difficulties are contributing to problems of political
unrest and instability.
Serious balance-of-payments problems confronting many countries result
from the failure of agricultural exports, which represent approximately
three-fourths of foreign exchange earnings, to keep pace with spiraling
costs of petroleum and other imports, including food products. In many
countries, agricultural sectors are relatively stagnant, and export crop
earnings have actually declined in recent years.
We have concluded that one of the greatest hopes for revitalizing sagging
national economies throughout the Region lies in substantially improving
agricultural and agro-industrial sectors.
Our studies indicate that there are significant potentials for expanding
and improving the agricultural sectors of all countries in the Region.
The realization of these potentials, however, will require a major
effort to address the problems or constraints limiting such development.
Our Report includes many recommendations directed towards the removal of
We were asked at the beginning of our study to give particular attention
to the role of the private sector in agricultural development efforts
throughout the Region. We have done this, and our Report emphasizes the
significant contributions the private sector--both U.S. and local country--
must make if agricultural development potentials are to be realized. We
have, at the same time, identified problems, some of which result from
U.S. policies, which are limiting the contributions of the private
sector to development efforts, and have recommended appropriate remedial
We have also recommended other U.S. Government actions which, we believe,
will contribute to the realization of agricultural development goals in
the Region, including some reorientation of efforts by AID and other
U.S. agencies; the removal of certain U.S. customs, tariff, and non-
tariff restrictions on access by Caribbean Basin countries to U.S.
markets; and better coordination of overall agricultural development
efforts throughout the Region. In addition, we have suggested actions
by local governments, multilateral development organizations, and others
which, we believe, would contribute to the more rapid realization of
agricultural development goals in the Region.
First and foremost among our recommendations, however, is that there be
a greater commitment by the United States to the countries of the Caribbean
Basin. We believe that this Region and its future are-of such vital
concern to our nation that it must be given priority attention by the
U.S. in many ways--some of which we have identified in this Report.
Finally, may we express our appreciation for the opportunity to participate
in this Mission and indicate our continuing interest and support as
efforts are made to achieve the development goals set forth in our
E. T. Yor
Members of the Mission
Dr. E. T. York, Mission Chairman
State University System of Florida
Dr. Richard Baldwin
Vice President for Research and Development
Mr. Robert E. Culbertson
Florida International University
(Former AID Mission Director in several
Latin American countries)
Mr. Jonathan Dill
Assistant to the Executive Vice President
Overseas Private Investment Corporation
Mr. David Garst
Garst & Thomas Hybrid Corn Company
Mr. Robert L. Ross
Latin American Agribusiness Development
Dr. Quentin West
Office of International Cooperation and
U.S. Department of Agriculture
TABLE OF CONTENTS
I. Summary of Conclusions and Recommendations 1
II. Overview of the Situation in the Caribbean Basin 28
A. General Overview 29
B. Central America Overview 34
C. Caribbean Overview 39
III. Agricultural and Agro-Industrial Development Potentials 46
IV. Constraints to Agricultural and Agro-industrial Development 61
and Recommended Responses
V. An Agricultural Development Strategy for the Caribbean Basin 121
When President Carter, in early 1980, directed that "a mission of
knowledgeable private citizens" be organized to study "ways to enhance
agricultural productivity" in Central America and the Caribbean, he
underscored the vital concern of the United States for the future economic
development of this region. He also recognized that a strong and
viable agricultural sector is vital to the Region's economic future and
related political stability.
The President further identified the Mission as a key element in the
broader effort undertaken by the United States to enhance the quality of
life of and relationships with the people of the Caribbean Basin. 1/
Between early April and late May, 1980, the Mission visited Guatemala,
Costa Rica, Honduras, Jamaica, Haiti, the Dominican Republic, Barbados,
Trinidad, and St. Vincent. In addition, meetings were held in other
countries with representatives from Nicaragua and El Salvador.
1/ In this report, the term "Caribbean Basin" is intended to mean the
Central American countries and the island countries of the Caribbean
Sea. We did not, however, visit all of the countries considered to
be a part of the Caribbean Basin. Thus, throughout the Report,
when we use the term "Caribbean Basin," or "the Region," our
observations are limited primarily to the five countries of Central
America referred to in this Report, plus Jamaica, Haiti, the Dominican
Republic, and the Eastern Caribbean, as represented by Barbados,
Trinidad, and St. Vincent. We believe, however, that these eleven
countries are representative of the Region as a whole, and that
many of our conclusions and recommendations will apply, as well, to
the other countries of the Caribbean not specifically studied by
In each country, we received briefings from, and conferred with, U.S.
officials and business representatives as well as representatives of all
relevant sectors of each country's private sector, society, and government.
We met with each country's Chief of State (except in the Eastern Caribbean
Islands) and with Ministers of Agriculture, Finance, and Planning and
their staffs. We consulted with commercial farmers and campesinos,
domestic and export market producers, local and foreign investors in
agriculture and agro-industry, labor leaders, government officials, and
a broad spectrum of political leaders.
We also reviewed the programs and the views of such important regional
organizations as the Inter-American Institute for Agricultural Cooperation
(IICA), the Tropical Agricultural Research and Training Center (CATIE),
the Central American Research Institute for Industry (ICAITI), the
Nutrition Institute for Central America and Panama (INCAP), the Central
American Bank for Economic Integration (CABEI), the Caribbean Development
Bank (CDB), the University of the West Indies (UWI), the Caribbean Food
Corporation (CFC), and the Caribbean Agricultural Research and Development
In late July, the Mission also convened, for a two-day meeting in Washington,
individuals from outside the countries visited who are knowledgeable
about the Region and who might contribute to the implementation of our
Mission's recommendations. This group included representatives from
major U.S. Foundations, multinational development organizations, such as
the Interamerican Development Bank, the World Bank, U.S. universities,
AID, and U.S. corporations active in the Region.
We are deeply indebted to all who assisted us in our efforts. American
Embassies, AID Missions, government officials of host countries, repre-
sentatives of the private sector (both U.S. and host country), regional
institutions, and many other individuals and groups were most cordial,
cooperative, and helpful. The significant contribution of those who met
with us in late July capped a four month long period of study, the
fruits of which we hope will help point the way to more viable agricultural
sectors and stronger economies in the countries of the Caribbean Basin.
As the Mission undertook its task, we were generally aware of the serious
economic difficulties being experienced by most of the countries of the
Region. As in most of the developing world, the rising cost of oil and
petroleum products, together with more deep-seated economic factors have set
off a series of chain reactions that have left most Caribbean Basin
economies in a weakened and worsening state. Many of the countries are
victims of increasing import costs, declining export income, political
unrest, inflation, capital flight, balance of payments and budget deficits,
increased internal and external public and private debt and growing
difficulties in meeting increasing demands for education, health, roads,
and other public services.
We were soon to learn how much more ciritcal these problems are than is
generally understood, and to conclude that reinvigorating and developing
the agricultural sector is the most promising way back to healthy and
stable economies in countries throughout the Region.
Our conclusions and recommendations are recorded in summary form in the
Section which follows, and, in more detail, in the body of this Report.
We have not attempted in this Report to deal analytically with the problem
of rapid population growth, even though its relevance to agriculture, and
especially to food production, is abundantly clear. We have, rather,
accepted the fact that rapid population growth makes the achievement of the
levels of agricultural development we seek infinitely more difficult. Thus,
while we fully recognize the seriousness of high population growth rates
and their relevance to the achievement of agricultural goals, we have
felt that further analysis of this problem would be beyond the scope of
our assigned task.
We have also not attempted in this Report to assess problems of hunger
and malnutrition within the Region. Throughout the Caribbean Basin, as
in most other developing regions, there is undoubtedly widespread mal-
nutrition. We believe, however, that much of this malnutrition results not
so much from outright hunger as from improper or imbalanced diets. To
our knowledge, there are currently neither major famines within the Region
nor even serious problems of hunger--except, perhaps, in localized sit-
uations. Where hunger does exist, the problem is more likely to be the
result of a shortage of financial resources to buy food rather than a
general shortage of available food supply. In view of these circumstances,
our Mission has concentrated on the economic implications of agricultural
development efforts--in terms of the impact upon individual producers as
well as upon overall national economies.
I. SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS
Following are major observations and conclusions which provide the
primary basis for our recommendations:
Most of the countries of the Caribbean Basin are experiencing very
serious economic difficulties.
Many of these difficulties are related to unfavorable balances of
trade, resulting from the failure of exports to keep pace with
rapidly escalating costs of imports.
The solution to these economic difficulties is, in a large measure,
dependent upon the revitalization of the Region's agriculture,
which accounts for a high percentage of export earnings and can
contribute to a sharp reduction in import expenditures in most
countries of the Region.
The countries of the Caribbean Basin have great potentials to
expand their agricultural sectors and to make them more productive
and economically viable. In fact, they must make a major effort to
realize these potentials if they hope to solve the serious economic
difficulties which are contributing to significant social problems
and political instability throughout the Region.
There are currently many constraints which are preventing the
realization of the Region's agricultural development potentials.
Many, if not most, of these constraints can be removed by the
concerted action we have recommended herein.
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Major U.S. Commitment Needed
Before addressing specific problems or constraints limiting agricultural
development, our principal and overriding conclusion is that a greater
U.S. commitment to the countries of the Caribbean Basin is needed.
We believe that our vital relationships with the countries of the Caribbean
Basin can be preserved only by a greater commitment on the part of the
U.S. than we have yet made to share vigorously in the future of the
Region. Such a commitment must, in our view, be complete, consistent,
long-term and sustained. It should be clear as to purpose and intent,
and readily understandable both in principle and in specific application
from month to month and country to country.
The U.S. commitment should reflect our need for the relationships, as
well as theirs, and it should be viewed as a joint private and public
sector commitment to long-term economic and technical cooperation and as
a moral commitment by the U.S. to strengthening social and cultural
ties with our neighbors--neighbors no longer in the simple sense of
geographic contiguity, but as integral members of a single community.
Such a commitment must obviously have a major agricultural dimension.
But it must go beyond a commitment to strengthen and enhance weakened
agricultural economies because overall political, economic, and social
factors greatly impact what can be done in the agricultural sector
When we refer to a "major commitment" to the Region, we are not speaking
in monetary terms alone. More importantly, we are referring to a recognition
by the U.S. that the Region and its future are of vital concern to our
nation and that the Caribbean Basin must be given priority attention by
the U.S. in many ways.
Strong expressions by the President and his administration of such
interest and commitment could do much to create the sort of positive
climate which we believe is needed. But words, alone, are not enough.
They must be accompanied by actions which reflect our desire to develop
and maintain the closest, most meaningful, and mutually reinforcing
relations with our neighbors throughout the Region.
We believe the recent creation of the Caribbean/Central American Action
(CCAA) program designed to generate more private sector assistance and
involvement in the Region is a significant step in the right direction.
We further believe a major effort, such as our Mission proposes, to
strengthen the agricultural economies of the Region--including significant
private sector involvement--can represent another major step towards
carrying out the type of commitment to which we refer.
We do not suggest the need for massive increases in financial support to
the Region. Although we recommend an increase in AID funding for agricultural
development efforts, the proposed increase is very modest in terms of
the total AID budget. Such an increase could easily be met by a relatively
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small expansion in AID's overall budget or by shifting resources within
the current budget to reflect the high priority consideration we believe
the Region should receive. We should emphasize, therefore, that our
recommendation of a "major commitment" by the U.S. to the Region in-
volves many actions, spelled out in this Report, which are not related
to increased funding. Specifically, they include:
1. Major efforts to mobilize and involve in more meaningful ways
the significant private sector resources from both the U.S. and
the countries of the Region.
2. Actions by the U.S. Government to encourage private investment
in agriculture and agro-business in the Region.
3. A removal of policy restraints on AID operations that hamper
agricultural development efforts.
4. Action by the U.S. Government to remove U.S. customs, tariff,
and non-tariff restraints on Caribbean Basin access to U.S.
5. A reorientation of some U.S. efforts by AID and other organizations
in the Region to enable them to make more meaningful contributions
to agricultural development efforts.
6. Better coordination of current agricultural development efforts
supported by the U.S. Government. This would include AID, OPIC,
the World Bank, IDB, CDB, and others. Such coordination should
also include, where possible, many private sector organizations
including foundations, universities, and businesses operating
within the Region.
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We agree with President Carazo of Costa Rica, who told us that the U.S.
Commitment to the Region should encompass all the countries of the
Region, that the "element of cohesiveness" we should support is the
fundamental democratic character of Inter-American Society, that foreign
transplants may appear for a while but will ultimately be rejected by
Americans--North, Central, or South-and that we should therefore work
with every country, tailoring our cooperation to the needs of each and
encouraging cohesiveness around democratic principles as each country
Throughout the Region, many expressed to us the view that the apparent
lack of a clear commitment by the U.S. to the Region was having a
serious destabilizing influence--contributing to difficulties in achieving
both short- and long-term agricultural development goals.
The Economic and Political Crisis
We found the Caribbean Island countries so deeply shaken by their
faltering economies that vigorous economic recovery programs are urgently
needed to avoid economic collapse and consequent political turmoil.
In Central America we found that continuing political turmoil has had
the effect of turning relatively strong economies sharply downward.
Nicaragua and El Salvador are in economic disarray, and Honduras,
Guatemala, and Costa Rica are suffering from the destabilizing effects
of the revolutions and related events in their two neighboring countries.
New investment has all but stopped. Costa Rica, struggling to maintain
its high level of public services in the face of budget and balance of
payments deficits, faces an economic crisis similar to those of some of
the Caribbean Island countries.
Both in the Island countries, where economic crises are inviting political
trouble, and in Central America where political trouble is causing
economic crises, the presence of the Soviet bloc (including Cuba) and
its efforts to influence events is being clearly and strongly felt. We
are convinced, however, that the peoples of Central America and the
Caribbean want to achieve peace, stability, and prosperity through
democratic processes and will do everything in their power to reject
We have had to conclude, however, that the peoples and the countries of
the Region cannot achieve this goal unless they take vigorous and urgent
steps to revitalize and strengthen their economies, most of which are so
overwhelmingly agricultural in both fact and potential that the solution
is as clear as the problem. Such programs require three principal
1. A maximum national effort;
2. A major new cooperation and assistance commitment from the U.S.;
3. The focusing of these economic recovery efforts on neglected
agricultural and agro-industrial sectors, including rural develop-
ment in the broader, people-oriented sense.
Agricultural Development: The Key to Solving the Economic Crisis
As expenditures, imports, and debt burdens have continued to outstrip
income, most of the countries are finding it increasingly difficult to
extricate themselves from an accelerating downward economic spiral that,
if not reversed, could end in disaster. Increasing exports and reducing
imports clearly must be major elements of any solution.
Agricultural products, on the average, account for over 70% of all
export earnings while also accounting for a substantial part of import
costs. It is, thus, very clear that the nations of the Region must
revolutionize their agricultural sectors so as to achieve two parallel
goals: to export more while simultaneously achieving a higher degree of
domestic self-sufficiency in the production of many agricultural commodities.
We believe that these two parallel goals are achievable.
It will not be easy, but it is our opinion that, with the countries
working together, and with the U.S. actively involved as an integral
member of the Caribbean Basin community, the needed agricultural revolu-
tion is possible.
The costs of oil and petroleum-based products cannot be controlled. But
fuel, fertilizer, and other petroleum products can be used more effi-
ciently, and alternative energy sources can be put into use. Import
costs can be cut by increasing domestic agricultural production.
Agricultural and agro-industrial exports can be substantially increased,
with more domestic and foreign capital attracted to this endeavor.
Capital flight can be reversed. The results of increased income from
exports and decreased import costs can relieve balance of payments and
budget deficits and provide funds for essential social services. In
short, the downward spiral can, with determination, skill, and coopera-
tion, be reversed.
The Potentials for Agricultural and Agro-Industrial Development
There are huge, unrealized agricultural potentials in Central America
and the Caribbean. Yields of most crops can be greatly increased by
introducing modern techniques. Present crop acreage can be shifted from
low-profit traditional crops to higher value export crops. New lands
can be brought into production in almost all countries, and a more
complete use can be made of the commodities that are produced.
There are sufficient potentials in agriculture and related industries to
give most of the countries of the Region significantly more export
earnings, near self-sufficiency in food, and a favorable balance of
payments--along with an expanding economy, making possible more jobs
and higher standards of living.
Constraints to the Realization of Potentials
There are, however, a number of severe constraints to agricultural
development in the Region that will have to be overcome if these potentials
are to be realized. They include:
1. A serious deficiency of trained personnel.
2. Inadequate levels and use of improved technology.
3. The absence of a "systems" or well integrated approach to the
production, processing, distribution, and marketing of agricultural
4. Deficiencies of key production inputs (such as water).
5. Inadequate capital and credit.
6. Inadequate marketing and distribution systems.
7. The general climate of political and economic instability.
8. U.S. Government policies, including various trade barriers.
9. Government policies (other than U.S.) such as export taxes and
price ceilings on agricultural commodities.
10. Negative attitudes towards farming and lack of interest among youth
in agriculture as a career.
11. Degradation of the natural resources base, especially soil and
12. Serious underutilization of land and human resources.
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A number of actions are recommended to address and, to the extent possible,
remove the individual contraints discussed above. These include the
1. Expand educational opportunities in agriculture through the follow-
a. Strengthen and expand national and regional institutions with
potentials for offering strong education and training programs.
b. Through Title XII of the Foreign Assistance Act, make more
extensive use of U.S. Land-Grant Universities in "institutional
building" efforts aimed at strengthening agricultural education
programs throughout the region.
c. Through AID, substantially expand participant training programs
in agriculture in U.S. institutions. Also develop programs
for mobilizing business and other private sector support for
training agricultural students both in the U.S. and in the
d. Develop major, continuing, in-service training programs for
agriculturalists throughout the Region.
2. Strengthen efforts aimed at developing and applying improved agri-
cultural technology. Specifically,
a. Initiate major programs to strengthen agricultural research
programs throughout the region. We recommend that in most
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countries, government research programs concentrate primarily
on adaptive research, while research concerned with new crop
varieties emerging disease or insect problems, etc. be dealt
with by regional organizations such as CATIE, CARDI, and the
international food research centers.
b. Because of the enormous gap between the level of available
technology and its use, we recommend urgent efforts to strengthen
and improve programs concerned with the transfer and use of
improved technology. Government extension programs need to be
greatly strengthened. Knowledge delivery programs, however,
must not be limited to extension efforts of ministries of
agriculture. Such efforts should also be built into other
programs, including those of cooperatives, credit institutions,
and land reform or resettlement efforts. Furthermore, a major
effort should be undertaken to involve private sector human
and financial resources in extension efforts.
c. We recommend a more extensive use of BIFAD and Title XII
mechanisms to involve U.S. universities in developing linkages
to strengthen agricultural research and extension as well as
training programs throughout the Region.
3. Develop well integrated production and marketing programs, including
the use of a "package" of essential production and post-harvest
a. Well planned extension programs should be developed and
carried out involving a complete technological "package" of
the best known production practices available.
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b. Agricultural production programs must be integrated with
marketing efforts if the potentials of each are to be realized.
4. Take necessary steps to assure the availability of key production
inputs by developing appropriate programs to insure that such
inputs--fertilizers, seed, pesticides, water, etc.--are available
when needed. This may require that national governments give
priority to the importation of such inputs as fertilizers and to
the development of irrigation projects aimed at supplying critically
needed water to agricultural operations.
5. Take appropriate steps to provide adequate capital and credit to
accommodate agricultural needs, including the following:
a. Measures to improve lender and investor confidence in the
future of the Region are greatly needed. We believe the
strong commitment of interest and support by the U.S. Govern-
ment could do much to restore this confidence.
b. Many governments throughout the Region need to give higher
priority to supplying the credit needs of farmers and agri-
industries. There is a need to strengthen programs to provide
production credit or working capital to farmers.
c. AID, OPIC, the Export-Impor, Bank, and other lending institutions
should increase the levels of loan and guarantee assistance
for agricultural projects.
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6. National and regional agricultural marketing programs must be
expanded and modernized. This will involve substantially improving
marketing systems from the farm gate to the ultimate domestic or
foreign consumer, including the development of better storage,
transport and processing facilities at all levels.
7. The U.S. government should take appropriate steps to contribute to
economic growth and stability throughout the region. Such growth
and stability are essential to long-term agricultural development
efforts. To this end, a major long-term commitment by the U.S. to
provide economic and technical cooperation and assistance is needed.
The implementation by the U.S. Government of the recommendations in
this Report, summarized in "8" below, should contribute much to
improving the climate of economic and political stability throughout
8. The U.S. Government should act to modify its policies and practices
which tend to inhibit or constrain agricultural development through-
out the Region. We recommend the following specific actions:
a. The constraint imposed by the lack of a clear U.S. government
policy towards the promotion of private U.S. investment in
agriculture and agro-industry in the Region should be removed.
Relevant U.S. government agencies not already doing so should
initiate specific programs to provide active encouragement and
assistance to specific investors. The cooperation of
Caribbean/Central American Action (CCAA) should especially be
enlisted in this effort.
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b. The U.S. Government should consider in its concessional foreign
assistance program an element of working directly with the
private sector in providing assistance to farmers and agro-
industries. This should include helping finance private
sector technical assistance and credit programs for small
farmer contractors. AID should also design and carry out a
program for co-financing projects with private firms or consortia
c. Increased funding should be provided by AID to private inter-
mediate credit institutions. AID should in this connection
consider projects providing for the creation of national
agricultural cooperative development banks to supply ample
credit to rural cooperatives, associations of cooperatives and
cooperatives engaged in agro-industry. AID should also be
enabled by new legislation to extend the existing experimental
Productive Credit Guarantee Program to all countries of the
d. AID should remove its policy constraints to supporting the
development of non-food crops.
e. AID should initiate bilateral programs with the nations of the
Eastern Caribbean which are currently being assisted by AID
primarily through regional institutions.
f. Emergency foreign exchange assistance from the U.S. through
E.S.F. funds may be needed to assist some countries in the
region currently facing extremely serious economic difficulties.
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g. In order to effectively implement (a) through (f) above, we
believe that AID resources for agriculture in the Caribbean
Basin should be increased from, we understand, the $110 million
level at present to at least $200 million annually. This
increase should come from a combination of regular development
funds, E.S.F., and the blanket extension of P.L. 480 Title III
authority to all the Caribbean Basin countries in which AID
In terms of the total AID budget, this proposed increase is
relatively modest and, in our judgement, completely justified
in light of the high priority consideration which we believe
the U.S. should give this Region.
We do not believe it appropriate at this time to terminate AID
support to so-called "middle income" countries of the Region,
such as Costa Rica, which still have great need for technical
assistance program help from the U.S.
h. The Peace Corps should step up its activities in support of
agricultural research and extension, including work with
private agro-business firms which provide technical assistance
and credit to small farmers.
i. The U.S. should give preferential trade treatment to agricul-
tural products from the countries of the Caribbean Basin.
This should involve the elimination of tariffs and quotas on
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j. USDA sanitary regulations should be carefully reviewed to make
certain they provide needed protection to U.S. interests
without being unneccesarily restrictive to the importation of
agricultural products from the Region.
k. We recommend the establishment of a trade promotion office in
the U.S. government to promote trade between the Caribbean
Basin countries and the U.S.
9. National governments should be encouraged to consider incentives to
agricultural development and modify or abolish policies which serve
as disincentives to such development. Such actions might include:
a. The elimination or substantial reduction in export taxes
imposed on agricultural commodities.
b. The elimination or use of more realistic ceiling prices on
c. The establishment of minimum or guaranteed price levels for
key agricultural commodities.
d. The development of incentives to encourage long-term investments
e. The establishment of salary levels for government employees in
such critical areas as agricultural research and extension
adequate to attract and maintain well trained and highly
f. The assignment of high priority in the use of foreign exchange
to the purchase of critical agricultural production inputs.
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g. The development of programs aimed at making more productive
use of government lands for agricultural purposes and the
clarification of laws concerning the ownership and use of
We recommend that assistance be provided the countries of the
Region to enable them to strengthen their agricultural policy
analysis capabilities so that such issues as the above might be
10. Efforts should be made throughout the region to give greater
prominence to agriculture as a profession, to provide opportunities
and inducements to young people to study agriculture in schools and
colleges, and to take many steps, highlighted in this Report,
needed to make farming and related business and industry more
satisfying and economically rewarding professions.
11. Measures must be taken to avoid further degradation of the natural
resources of the Region--particularly through deforestation and
accelerated soil erosion. Specifically:
a. Major programs should be developed to deal with serious problems
of soil erosion, especially in steep mountainous areas. Such
programs may include substantial reforestation efforts and
major soil conservation programs, including the use of terraces
and other measures aimed at reducing erosion.
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b. In countries experiencing serious erosion problems, we recommend
that consideration be given to the creation of a national
agency comparable, perhaps, to the U.S. Soil Conservation
Service, to deal with the problem.
c. We recommend the initiation of programs similar to those in
Jamaica which involve a combination of terracing and other
conservation measures to facilitate the cultivation of hillsides.
12. Efforts should be made in all countries to make more effective use
of land and human resources which, in most cases, are significantly
a. National governments should consider major programs to open up
and use for agricultural purposes large areas of undeveloped
b. Governments throughout the Region should also consider the use
of taxes or other incentives to move unused and underused
privately owned lands into more productive use, either by the
owners or by leasing or sale of these lands.
c. International financial agencies should work with the countries
of the Region to fund programs aimed at compensating large
land owners who sell their land to small and medium sized
farmers. This assistance might be in the form of loan guarantees
to commercial banks or through other appropriate measures.
d. Countries of the Region, with international agency cooperation,
should consider a series of massive two-pronged national
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attacks on rural illiteracy and ignorance. This would include
programs to educate adult farmers and farm families to use
modern techniques in agricultural production. It should also
involve programs of universal primary education which would be
extended to all rural areas.
e. The countries of the Region and external agencies working with
them should recognize more fully and act to correct the gross
neglect of women as human resources for development. Waste of
this resource, at least half a county's person power, begins
with denial of educational opportunity, especially in rural
areas, for girls to obtain even a primary education. It
extends to denials of education and training at all higher
levels of education. Recognition should also be given to the
fact that, despite lack of educational opportunity, women are
already emerging as pre-eminently gifted in certain areas such
as marketing and livestock management. Finally, an important
percentage of all heads of households are women. Many "small
farmers" are women but little recognition is given to this
f. Recognizing that there is marked underutilization of vast
expanses of land, while at the same time a high percentage of
the rural people are either huddled on tiny farms or represent
day laborers with no land at all, appropriate programs should
be considered to bring these two underutilized resources--land
and people--together so that the productivity of both might
- 20 -
be increased. It should be recognized, however, that land
ownership, per se, by the rural poor is the solution neither to
the nation's agricultural development problems nor to those of
the rural poor. Striking evidence of this is found in Haiti,
where the poor rural majority have owned almost all of the
land for two centuries, yet the country remains the poorest
and most undeveloped agriculturally of any in the Region.
g. Land colonization or redistribution programs must be accompanied
by strong agricultural research, extension, and marketing
efforts to support and sustain the activities of the farmers
occupying the new lands. Failure to do this will likely
result in failure of the overall program.
Private Sector Involvement
Throughout these recommendations we have identified many opportunities
for private sector involvement in agricultural development throughout
the Region. This need is so vital to the achievement of development
goals, it merits further emphasis here.
Some of the most successful agricultural development efforts observed by
our Mission in the Region involved U.S. private sector organizations.
These private groups were able to bring together the needed experience,
capital, technology and marketing expertise, and managerial capabilities
essential for success.
- 21 -
There are tremendous opportunities, however, for greater involvement by
U.S. business and industry in agricultural development activities--often
in joint ventures with local entreprenuers. Such activities could be
encouraged and stimulated by modification of U.S. laws, regulations, and
government policies. We have suggested herein a number of governmental
actions to make investment in agriculture in the Region more attractive
to U.S. business.
In addition to these specific actions, the strong, overall commitment by
the U.S. Government to the Region, such as we have recommended, should,
in itself, help provide a more stable and favorable environment for U.S.
business involvement in agriculture in the Caribbean Basin.
There are also excellent opportunities for other U.S. private sector
organizations to contribute substantially to agricultural development
efforts in the Region. Deficiencies in agricultural research, training
and extension programs represent some of the most serious constraints to
agricultural development in the Region. U.S. universities, particularly
Land Grant Colleges of Agriculture, have, perhaps, the best resources
and capabilities of any in the world to help strengthen the Regions
agricultural research and education institutions. The Board for Inter-
national Food and Agricultural Development (BIFAD) can serve as an
appropriate vehicle for forging linkages between U.S. universities and
those institutions in the Region needing assistance.
- 22 -
Although many private sector organizations, including foundations,
religious, and voluntary groups, are already active in agricultural
development in the Region; there are enormous opportunities and need for
more involvement. The newly created Caribbean/Central American Action
program provides a logical vehicle for helping to mobilize the U.S.
private sector resources to contribute to development efforts in the
The Chairman of C/CAA, Governor Bob Graham of Florida, has asked the
Chairman of this Mission, Dr. York, to lead a newly created task force
on agriculture within C/CAA. This task force will be concerned with
mobilizing resources within the U.S. private sector to address the
constraints and thus contribute to the realization of the agricultural
development goals identified in this Report.
We have made a number of recommendations herein aimed at removing the
constraints to agricultural development in the Region. We recongize
that all cannot be addressed at once and that some should have higher
priority attention than others. Among all the recommendations summarized
above and discussed more fully in Section IV of this Report we believe
that the five highest priorities should be:
1. The proposal that the U.S. make a new and much stronger commitment
to strengthening the economic, social, and cultural ties with our
- 23 -
Caribbean Basin neighbors through a wide range of public and private
sector cooperative efforts.
2. The family of recommendations aimed at mitigating, and eliminating
where possible, U.S. Government policies and practices that are
impeding agricultural development in the Region. Corollary to this
is the identification and implementation of U.S. Government policies
and practices which can advance such development efforts.
3. The family of recommendations that call for a greater involvement
of the U.S. and local country private sector in agricultural and
agro-industrial development, including the greater commercialization
of small farm agriculture.
4. The family of recommendations dealing with the strengthening of
national and regional agricultural research, education, and extension
programs. Strong institutions are vital to future development
5. The recommendation calling for a well integrated "systems" approach
to address the myriad of interdependent problems and constraints
limiting agricultural development in the Region.
In addressing priorities, we should recognize that most of the individual
constraints addressed herein are symptoms of "institutional" weaknesses
- 24 -
or deficiencies. Specifically, they symbolize weak institutions con-
cerned with education, research, extension, credit, marketing, etc.
Accordingly, it is not sufficient merely to address the symptoms. The
primary goal and objectives should be to strengthen the institutions
whose weaknesses are responsible for the constraints.
A Comprehensive Agricultural Development Strategy for the Caribbean Basin
Addressing the individual constraints to agricultural development through
the recommendations discussed above could do much to enhance the national
and regional agricultural and agro-industrial sectors throughout the
Region and thereby help achieve the basic goals of our Mission. We
believe, however, that there are still other dimensions to the problems
which must be addressed before our task is complete. We are, therefore,
proposing a comprehensive agricultural development strategy and program
for the Caribbean Basin which goes beyond the removal of individual develop-
In section IV we discuss the "principal of limiting factors" in agricultural
production, emphasizing the need to employ a total technological "package"
of practices affecting yields in order to achieve desired results. We
point out that the absence of a single essential element in the "package"
could contribute to the "weak link in the chain" and ulitmately result
in failure of the effort. We believe the same principle applies to
broad-based national and regional agricultural development efforts. The
- 25 -
failure to address adequately any one of the major constraints limiting
the realization of agricultural development potentials could prevent the
achievement of desired goals. These circumstances emphasize the inter-
dependence of the many factors required for successful agricultural
development, and thus the need for a "systems" approach to the whole
Another dimension to the overall problem is the question of size and
limited resources of most countries of the Region. Because of these,
many countries, individually, would have difficulty in dealing effectively
with the constraints limiting the development of their agricultural
These considerations suggest the essentiality of a region-wide mechanism
or vehicles for program cooperation and coordination.
At the beginning of this Summary section, we indicated that our principal
and overriding conclusion is that a greater U.S. commitment to the
Caribbean is needed. As one major step in implementing this commitment
we propose the creation by the U.S. Government through the International
Development Cooperation Agency (IDCA) of a Region-wide agricultural
development and trade program with the resources to assist in accelerating
the development of agriculture and agro-industries. This proposal is
developed fully as Chapter V of this Report.
IDCA should design the structure and scope of work of a Program that
would have the objective of developing the agricultural and related industries
- 26 -
within the Region--concerned especially with addressing and removing the
constraints that are limiting this development.
The Program would accomplish its goals primarily by working with and
through existing organizations--especially AID, OPIC, and the U.S.
Private Sector--with IDCA serving as a catalyst to stimulate, motivate,
expedite, and encourage the funding of worthy development efforts. IDCA
would collaborate closely with C/CAA in efforts to mobilize and involve
the U.S. private sector in such efforts.
While the U.S., through IDCA, would be the principal initiator of the
Program, other nations and organizations would hopefully cooperate
increasingly as associated donors. Such early donors might include
Venezuela, Mexico, and Trinidad. The cooperation of the World Bank, the
Interamerican Development Bank, the Caribbean Development Bank, the
European Economic Community, major U.S. foundations, agribusiness firms
and other appropriate organizations throughout the Region would also be
sought. A concerted effort would be made to develop a well integrated
and coordinated approach to agricultural development efforts involving
all organizations and agencies with abilities and resources to contribute.
This concept is discussed in greater detail in Section V of this Report.
One principle guiding the operation of the Program would be the encourage-
ment of production of commodities by countries having the greatest
competitive advantage--those which can produce and market the product
- 27 -
most efficiently and at the lowest unit cost. This, along with the
lowering or removal of trade restrictions now limiting the marketing of
agricultural commodities within the Region, could work to the economic
advantage of all countries involved, including the U.S.
We believe the proposed Program, as outlined in more detail in Chapter
V, would have the capability to carry out successfully the agricultural
development programs we have proposed, while also serving as the corner-
stone of the major new commitment that We believe strongly the United
States must make to economic growth and improved quality of life for the
peoples of the Caribbean Basin.
We urge that serious consideration be given to the implementation of
II. OVERVIEW OF THE SITUATION IN THE CARIBBEAN BASIN
The economies of most countries of the Region are in severe shock from a
combination of factors, including rapidly increasing import costs due in
part to rising oil and petroleum product prices, declining export income,
budget deficits, increased internal and external private and public
debt, and political instability.
As imports and other expenditures have continued to outstrip income and
ability to borrow, many countries are finding it increasingly difficult
to extricate themselves from an accelerating downward economic spiral
that, if not turned around, could end in chaos. Increasing exports and
reducing imports must clearly be major elements of any solution.
Agricultural products, on the average, account for over 70% of all
export earnings and also contribute to a substantial part of import
expenditures. It is, thus, very clear that the nations of the Region
must revolutionize their agricultural sectors so as to achieve the two
parallel goals of substantially expanding agricultural exports and
achieving a greater degree of self-sufficiency in the production of many
We believe that these two parallel goals are achievable. In the pages
that follow, we have undertaken to suggest how this might be done.
First however, we will present some regional and country background data
that will help to explain the nature of the problem and the basis for a
- 28 -
- 29 -
Relationship with the United States
The Mission was impressed with the level of good will towards the
United States and its people. Decades of close people-to-people contacts
have forged lasting personal bonds. Generations of students have studied
in American schools and universities. Many from throughout the Region
spend their holidays in the U.S. or seek medical attention here. Many
have family here. Local managers, technicians and businessmen are--or
have been--employed by local subsidiaries of U.S. companies. Such positive
ties are close and continuing.
Local attitudes towards U.S. foreign and economic policies were much
less positive and were, at times, outright critical. Principal complaints
centered around a lack of commitment by the U.S. to the Region and
unclear U.S. priorities.
We frequently encountered criticism of U.S. trade policy relating to
high, selective tariffs and import restrictions--especially on agricultural
products. Many repeated the commonly expressed phrase that they would
"prefer trade to aid." We found Central Americans, in particular,
confused over U.S. policy and rueful over its negative effect on both
local and foreign agricultural investment.
- 30 -
Cuban-Soviet Ties Within the Region
The Soviet Bloc, with a strong Cuban presence, is working diligently to
strengthen its ties throughout the Region. This subject would be
beyond the bounds of this Report except for its negative effect on
investment in agriculture and the fact that thousands of Central American
and Caribbean students are studying in Russia and other Soviet-bloc
countries, many of them studying agriculture. Few from the Region are
now studying agriculture in the U.S. We were told that generous full
scholarships for study in Russia are available for the asking and that
this opportunity is being increasingly taken by young people from all
over the Region who cannot afford the high costs of U.S. training,
cannot get scholarships for study in the U.S., and cannot understand our
Everywhere in the Region, the Cuba-Soviet-bloc presence is felt. We
talked with few who did not bring it up. Many are afraid that Russia's
will to become established in Central America may prove stronger than
our will to preserve democratic societies. This fear is contributing to
great concern throughout the Region and is having a significant destabilizing
influence upon new investment and economic planning.
Despite many similarities among the various countries of the Region, the
fact is that each nation faces a unique set of opportunities and constraints.
- 31 -
Although the Mission has undertaken to generalize in order to focus on
broader issues, we recognize distinct national differences.
There is no regional economic or agricultural policy even though most
nations belong to either the Central American or Caribbean Common Markets.
Much of the Central American integration movement has been based on
industrial trade, and agricultural sectors have proven to be most difficult
to integrate into a regional framework. Much trade in basic grains and
cattle among contiguous countries in Central America is unofficial.
There is a tendency on the part of the international financial community
to look at Central America in regional terms when considering country
investment risk, while the Central Americans vigorously emphasize the
An interesting but little-recognized fact is that many of the countries
of the Region have both tropical and temperate climates. In agriculture,
a wide range of tropical crops may thrive. In addition, however, many
sub-tropical and even temperate zone crops can be grown at higher altitudes
in the mountains. No one knows what the real agricultural potentials
offered by these unique climatic conditions really are. The Caribbean
Basin provides a great "laboratory" to explore these potentials more
- 32 -
The Role of Agriculture
Agriculture and related industries form the backbone of virtually all
the countries in the Region. They account for over 70% of total exports.
Agriculture is the major source of employment and, typically, the most
important source of government revenue.
Despite progress in certain sectors of agriculture in many countries,
there are high levels of agricultural underemployment throughout the
Region and a high percentage of the Region's poor people live in rural
These facts have been known for years. Unfortunately, however, this
knowledge has not resulted in the establishment of priorities or the
allocation of public investments needed to deal with the problems of the
agricultural sector and to take advantage of its great potential. Too
much attention has, at times, been devoted to planning in many countries
without commensurate programs of action to address the problems of
agriculture and the rural poor.
Some progress has been made in many countries of the Region to expand
agriculture and related industries. This progress, neither uniform nor
sustained, has been spearheaded by the commercial sector. In most
instances where such progress has been made, the efforts were largely
planned, organized, and financed by the private sector. In some cases,
governmental agricultural policies supported these efforts; in others,
- 33 -
they did not. Individual entrepreneurship was the major motivating
force behind the growth in commercial agriculture. Private entrepreneurs
were able to obtain the financing, find technical assistance where
necessary, hire management, clear land, plant crops, build processing
plants, and organize marketing programs. Some efforts failed, but
enough succeeded to have a major impact on agriculture during the past
Despite such demonstrated progress in commercial agriculture, not all
segments of the rural population have benefited from these developments
in terms of employment or income. Many people in rural areas are essentially
untouched by the money economy because they live in such isolated areas
or the volume of private investment in farming and related industry has
not been sufficient to absorb the available rural labor force.
Government priorities have sometimes contributed to this situation.
Until recently many governments in the Region were giving priority to
industrialization and urbanization. Consequently, major investments
were made in low cost urban housing, sewage plants, urban electrification
and water systems, urban schools, etc.--rather than in rural or agriculturally
The Dichotomy Between Commercial Agriculture and Subsistence Farming
When attempting to generalize about past agricultural performance and
future potential, we found it necessary to distinguish between the
- 34 -
dynamism and efficiency of commercial agriculture and the stagnation and
low productivity of subsistence farmers. It is obvious that each sector
is faced with somewhat different and unique problems which must be
addressed if the potentials of each are to be realized. It is equally
obvious that one of the major goals of an agricultural development
program in this Region should be the encouragement of more extensive and
viable commercial farming operations by small scale, subsistence farmers.
While an essential long-range concern is that the productivity of the
small farmer be raised to the point that he is a viable commercial
producer, other concerns, such as meeting domestic food and export
commodity goals, should be the focus of vigorous national public sector
efforts. This will require a viable commercial sector including the
active participation of many small farmers in the Region.
Central America Overview
In Central America, political turmoil is engulfing two countries and is
spilling over into three others. The economies of Nicaragua and El
Salvador have been shattered by war, and the fear that the conflict may
spread has so seriously throttled new investment in Guatemala, Honduras,
and Costa Rica, that these economies also are seriously threatened.
Costa Rica has long maintained high standards of public service which it
now finds increasingly difficult to maintain in the face of decreasing
- 35 -
growth and income. Honduras' economic health, in some respects, seems
to be the most stable in the Region. It appears not to be in a downward
spiral; yet it remains the poorest country in Latin America and substantially
poorer than any other country in the Caribbean Basin, except Haiti.
Guatemala is beset by political strife, and its economy is beginning to
suffer from loss of investor confidence. Yet, Guatemala's economy
remains strong relative to the others.
Except for Costa Rica, Central America's economies had, until last year,
been strong, with their basic strengths in the export of traditional
agricultural crops. The wars in Nicaragua and El Salvador, however,
have brought both agriculture, and the economies of these countries in
general, to the brink of disaster. Costa Rica, Guatemala and Honduras
have been adversely affected by the disruption of trade with Nicaragua
and El Salvador, capital flight, increasing difficulties in borrowing
abroad, a slow-down in new investment, and increasing import costs.
New investments are limited by external credit restraints resulting from
high foreign interest rates and a reluctance of U.S. and European lenders
to differentiate commercial and political risks in Central America on a
country by country basis. Guatemala's and Honduras' traditional foreign
capital sources are holding back despite the excellent investment opportunities
available. Even Costa Rica, whose internal social and political stability
are exemplary, finds itself victim of the same "guilt by association"
blight. At the same time that private financing sources for cotton,
sugar, coffee, and beef, as well as non-traditional crops and agro-
industry are drying up, levels of U.S. bilateral assistance have also
- 36 -
In Nicaragua and El Salvador, many crops are not being planted as a
result of actual and/or threatened violence, expropriation, or both.
Nicaragua's 1980 cotton crop is expected to reach only 40% of normal.
El Salvador's growers are similarly constrained by the fear of violence
and of confiscation under the new land reform program. New investment
in agriculture throughout the Region is being seriously hurt by the fear
that the Nicaraguan experience may be repeated in the other countries--a
fear that is underscored by uncertainty as to whether or not outside
forces either intend to help bring about or prevent new "Nicaraguas".
In Costa Rica we found a warm reception to the evidence our Mission pro-
vided of renewed U.S. interest in increasing its participation in develop-
ment in Central America. We also found strong hopes that this would
mean a higher foreign assistance budget for Costa Rica. President
Carazo appealed eloquently to us in two veins: First, Costa Rica wants
U.S. public and private external investors to view Costa Rica on its
merits--not simply as an undifferentiated part of Central America in
turmoil. Agricultural and agro-industrial investment possibilities in
Costa Rica are substantial. Second, President Carazo urged that we
provide equally strong support to all of the countries of the Region--to
the Nicaraguans as well as the Guatemalans. Costa Ricans believe that
democracy and growth with equity, as concepts, are Central American
philosophical norms, and that, given help and understanding, all Central
American societies, including Nicaragua's, will reject foreign ideologies
and maintain free and open economies.
- 37 -
The Recent Past in Central America
Economically, Central America has been one of the success stories of the
post-war period. Having formed a Common Market in the late 1950's, the
Region achieved economic growth rates in excess of 7% a year for almost
two decades. This performance was one-third better than Latin America's
as a whole. With its Common Market, and its own regional development
bank, the Central American countries together built regional transportation
and communication networks, and integrated industrial economies. Intra-
regional trade rose from practically nothing to almost $1 billion a year
between 1958 and 1970, and, even after the war between El Salvador and
Honduras in whose aftermath the Common Market was able to function only
partially, regional trade continued to increase.
Unfortunately agriculture, by and large, did not share in the integration
and prosperity of the Region's economy. Each country expanded its
traditional agricultural exports to markets outside the Region, grew
some of its own food supply, and imported most of the rest directly from
outside the Region. Whereas hundreds of small industries prospered as a
result of the regional markets and the creation of urban jobs, those
engaged in agriculture did not benefit from a similar increase in intra-
Industries had been assigned, by agreement, to one or more countries, to
serve the needs of all five, taking into account factors of competitive
- 38 -
advantage. In agriculture, however, no effort was made to identify
competitive advantage situations in order to designate specific countries
as primary regional suppliers. The result was that while five urban-
industrial societies, built around the five capital cities, grew rapidly
and prospered, most of each country's population engaged in food production
did not benefit. In fact, the real income and standard of living of
many declined throughout the 1960's and 1970's.
Basic to the future of Central America is the fact that the population
and the labor force will more than double in the next 20 years. Agri-
culture and agro-industry will have to bear the brunt of providing
employment for the fast growing labor force. Although rural population,
as a percentage of total population, will decline--to 50%--the absolute
numbers of people on farms will substantially increase, and their economic
plight will worsen if agriculture does not grow and become more productive
on a labor-intensive basis. Without such growth, the World Bank estimates
that rural unemployment will likely increase from 14% today to 30% by
the year 2000. Likewise, the real income levels of the rural majority
will likely decline further. At present, the poorest 40% receive only
10% of the total net income. They are malnourished and receive few
public services. This situation can only worsen if a dramatic improvement
in agricultural production and employment does not take place.
- 39 -
Caribbean Island Overview
The British Caribbean
The Caribbean island countries are characterized by alarmingly deteriorating
economic situations--economies living beyond their means and income--
with resultant social stresses that are taking on increasingly sharp
political hues. These countries have been independent for only a few
years. They have a heritage of concern for economic, as well as political
democracy, without, however, having avoided income disparities almost as
wide as those in Central America. As their populations have grown
without commensurate economic growth they have become progressively
poorer. Despite their democratic bases, the Caribbean countries now
face major economic problems that could cause serious political turmoil.
A revitalization of sagging agricultural sectors would appear to offer
these countries their best opportunity for overall economic regeneration
and the avoidance of political chaos.
The British Caribbean countries, without exception, have lost ground in
agricultural exports for the past 15 years. This is in sharp contrast
to the Central American countries where export agriculture remained the
greatest strength of the nations' economies, and productivity increased
until the Nicaragua and El Salvador Civil Wars.
- 40 -
The reasons for the decline in agricultural exports in the Caribbean include:
1. The breaking up of the large, usually foreign owned, plantations
after independence, and the parceling out of the land to new small
holders who could not, without assistance that did not materialize,
maintain the productivity levels of the large estates;
2. Control of commodity exports by government-run Commodity Marketing
Boards, some of which have created bureaucratic disincentives and
inefficiencies in the marketing and export processes.
3. In recent years, a growing shortage of foreign exchange, born of
both lower exports and increased imports, has made it difficult or
impossible to import the inputs needed to keep production up or
start new businesses.
4. Increasing costs cf petroleum based inputs and sea and air transport
have seriously affected these nations' ability to compete in world
5. A de-emphasis of agriculture as a priority subject, both by government
policy and individual choice of profession. The latter is partly a
reflection of the drudgery inherent in the profession and the low
and uncertain prospects for profits.
- 41 -
As in Central America, the governments accorded industrial development
or tourism highest priority. Neither in investment policy nor in foreign
exchange allocations did agriculture receive due consideration. An
example of the results of this is Jamaica where, by 1977, agriculture,
as a percentage of GDP, had dropped to 9%.
Despite some governments' programs to parcel out land to small farmers,
farming has come to be looked upon by many as a last resort profession--
only for the poor and unskilled who can't find anything else to do. The
average age of those engaged in farming as their principal work is today
approximately 50, and going up. Concern about this, however, is building,
and programs are being considered to make farming as a profession more
attractive to youth. Small gains in this direction have been made by
slowly improving extension services, increasing credit availability,
education, introducing terracing programs, multiple cropping and new
higher-value crops; and providing more roads, rural schools and health
services. But inadequate progress in this regard has been made thus
The poorest country in the hemisphere is a land of paradoxes. Poverty
and malnutrition surpass those of any other nation in the hemisphere,
yet almost all rural families own their own land. In fact we were told
that ninety percent of all the land is owned by ninety percent of the
people--a situation very atypical of the Region.
- 42 -
Unlike most campesinos of Central America, the poor Haitian farmer, who
constitutes 80% of the population and operates 617,000 farm units on
907,000 hectares of land, is often a commercial farmer. He grows most
of his output to sell while buying much of his food. He grows so little,
however, and sells at so low a price, that he lives in poverty. While
GNP per capital is $230, rural per capital income is under $135.
Haiti, like all the countries of the Caribbean Basin is both tropical
and mountainous. Coffee is Haiti's principal foreign exchange earner.
Haiti's mountain slopes, however, are being seriously eroded by bad
cultivation practices and deforestation. This process could, however,
be halted and, in some cases, reversed by the type of terracing and
multiple cropping methods being developed in Jamaica.
Haiti has little unused arable land and, thus, has to make the most of
what it has. With population density at 1,000 per square mile and the
average family farm holding less than two acres, intensive farming on
the Taiwan model would seem to offer great promise.
Another Haitian paradox is the fact that, as untrained Haitians flee
their present poverty by migrating to the U.S., trained Haitians are
returning home as new investment creates jobs and the industrial economy
in general inches forward.
Despite the fact that imports are currently twice the level of exports
and the balance of payments deficit is over $60 million, the Gourde
- 43 -
remains steady at 5 to the dollar, where it has been since 1919. And,
there are no foreign exchange controls.
Haiti also suffers the common problem of the Caribbean Sea countries:
traditional export crop production, and exports, have for some time been
steadily falling. Once a major sugar exporter, Haiti is now a net
importer of sugar as well as of food in general.
Occupying 2/3 of the same island, the Dominican Republic obviously has
fundamental interests in common with Haiti. These have, however, only
recently begun to be exploited constructively. The use of Haitian labor
in the Dominican Republic has recently begun both to relieve unemployment
in Haiti and meet farm labor shortages in the Dominican Republic. The
two countries also share a common long-term tie with the U.S.
The Dominican Republic also suffers from faltering agricultural exports,
rising imports, and balance of payments problems. These problems were
greatly aggravated by 1979's twin hurricanes, David and Frederick, which
caused some $860 million in damages.
The Dominican Republic's present government recognizes the central
importance of agriculture to the economy and is giving it top priority.
The previous Balaguer government had concentrated on the development of
Santo Domingo and industry and had done an excellent job. Rural areas,
- 44 -
however, in this period, stagnated in relative terms. The new government
is trying to rectify this situation both in terms of commercial and
export agriculture and in terms of rural living standards. To help all
farmers, large and small, vigorous programs are underway to improve
research, extension, and credit and to carry out an agrarian development
program based on the needs of small producers. The land distribution
program is controversial but the controversy seems to revolve principally
around how it is being administered. However, basic issues remain
unresolved, one of the principal ones being whether families resettled
on new lands will each hold title to their own individual plots or have
only a communal interest in the whole settlement.
Also involved in the government's major agriculture sector development
program are measures to remove old constraints, such as export and
import taxes, to increase credit for agriculture, including large scale
commercial agriculture, and to provide preferential exchange rates for
the importers of agricultural inputs and the exporters of agricultural
products. At the same time, the present administration is said to be
uncomfortable about appearing to be too friendly to "big business" and
feels constrained politically from taking measures to aid "commercial
agriculture" or "big investors." This, in turn, has had a dampening
effect on the country's ability to attract new foreign investment in
agriculture and agro-industry.
- 45 -
Even though more should be done to increase intra-regional agricultural
trade among the Caribbean island countries, the maximum achievable would
not likely be significant on a regional basis, although some smaller
countries might benefit greatly. These countries basically grow the
same crops at the same time, and there are severe limits to the absorptive
capacity of both the internal national markets and the intra-regional
market. To survive, each country has to have direct ties to the outside--
especially to the U.S. and European markets. The "British Caribbean"
countries already have an advantage in that they have established access
to the EEC, and some have special, protected U.K. markets as well. The
Dominican Republic and Haiti, however, have no such established ties.
While all the island countries want and need increased access to U.S.
markets, Haiti and the Dominican Republic have no other practical external
market than the U.S., to which to seek access.
III AGRICULTURAL AND AGRO-INDUSTRIAL
POTENTIALS IN THE CARIBBEAN BASIN
The countries of the Caribbean Basin have some unique potentials for
substantially expanding agricultural production and developing thriving
agro-industries. Such a prosperous agricultural and agro-industrial
economy must intelligently reflect the nature and the natural advantages
of the Region.
The Caribbean Basin is tropical at sea level and temperate at the altitudes
many of these countries enjoy because they are also mountainous, filled
with upland valleys, plateaus, terraceable slopes, and forests, rising
from sea-level to as high as 10,000 feet. Such variations in climatic
conditions offer potentials for a diversified agricultural development
unique in this hemisphere and, indeed, in much of the world.
This potential for further agricultural development is also related to
the relatively large areas of unutilized land. For example, in Central
America, there are, at present, some 18.5 million hectares in farms. A
total of 42 million hectares of land are available, although substantial
amounts are in wet tropic forests and in broken topographic situations,
lacking the productive potential of much land already in farms. There
remains, however, the opportunity to substantially increase the land in
farms--especially if Central America recognizes its own unique qualities
and exploits them by developing silvaculture and agro-forestry, introduces
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terracing and other soil conservation measures, and takes advantage of
the opportunity to grow adapted crops in its mountain valleys, plateaus,
and terraced highland slopes. There are also significant opportunities
to put into more productive use, large areas of crop land, currently
unused or grossly underutilized. Except in the case of a few export
crops, levels of productivity are quite low by modern standards, providing
great opportunities for improvement.
These circumstances offer the potential for producing vastly more food,
fibre, wood, and other agricultural products, including many crops
relatively new to the peoples of the Caribbean Basin as well as the
traditional commodities--coffee, sugar, bananas, beef, and cotton for
export and basic grains for domestic food consumption.
Efforts to more nearly realize these potentials should be oriented
toward three principal economic objectives:
a. Major increases in foreign exchange earnings through a substantial
increase in exports;
b. Significant foreign exchange savings through a reduction in imported
food requirements; and
c. Maximization of profit and employment opportunities from objectives
(a) and (b) above, by endeavoring to process agricultural products
as close as possible to the producer, and as fully as possible
prior to the products being offered for export or retail sale.
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We can speak with some specificity about the potentials for some of the
traditional export commodities. Our Mission, however, has not had the
time nor opportunity to make a detailed study of the opportunities for
expanding the production of a wide range of additional commodities which
should offer potential for expanded production. Some of the more important
groups of commodities warranting further study include a wide range of
tropical fruits and vegetables, aquaculture, agro-forestry, poultry,
swine, dairy, small ruminants, marine fisheries, tobacco, "ethnic" foods
for export, citrus and deciduous fruits, pineapples, coconuts, cacao,
avocados, macadamia nuts, a wide variety of spices, flowers, and ornamental
plants and tropical exotica.
We would be seriously remiss in any review of the agricultural and agro-
industrial potential of the Caribbean Basin if we did not focus at least
briefly on the excellent past accomplishments and future potentials of
the larger-scale private commercial farmers and processors. While major
efforts must be made to increase small farmer production and productivity,
these efforts alone will not permit the countries of the Region to
realize their full potential.
Larger commercial farms are a major source of employment. These farms
also produce significant quantities of export crops which generate both
foreign exchange as well as local tax revenues. Agricultural processors,
both domestically and foreign owned, create additional direct employment
as well as new opportunities for farmers to market their crops.
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Frequently, these processing companies will contract with the more
sophisticated medium-sized local farmers rather than with the very small
traditional farmers since it is easier to introduce new crops, quality
control measures, etc. with the medium-sized farmers. Such orientation,
however, should not deter efforts to include the small traditional
farmers in such commercial operations as they can be trained and provided
the credit and production inputs needed for viable operations.
Following are specific comments concerning some of the traditional
export commodities and basic food crops for domestic consumption, as
well as other commodities which appear to have potentials for expanded
production for both domestic use and export.
Throughout Central America and the Caribbean, the key commercial activity
is generated by the major traditional export crops--coffee, sugar,
cotton, and bananas. These crops form the economic backbone of all of
the Central American and the larger Caribbean countries. In Central
America, these traditional crops generally did well over the past 20
years, providing major employment opportunities, both permanent and
seasonal, generating most of the region's foreign exchange, and contributing
much of the governments' tax revenues. Productivity of these crops in
some Central American countries is already quite high. Increased production
will often have to come from expanded acreage, although opportunities to
increase productivity among small farmers are still substantial.
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The Caribbean presents a contrasting situation with declining production
of export crops, lower yields and less land devoted to their cultivation.
The short term priority should seek to restore prior levels of productivity
and acreage cultivated.
One of the greatest potentials is to take fuller advantage of existing
processing companies, exporters, producer associations, and cooperatives
to increase the output of export commodities. The overseas markets for
these commodities are well organized and the long term growth potential
for most is favorable.
Coffee is the leading export crop of Central America and a major one in
the Caribbean. The prospects for increasing coffee production are
favorable in several Central American and Caribbean countries through
higher productivity per acre, particularly among small farmers. For
example, it is estimated that coffee farmers in Guatemala are averaging
only 500 Ibs/acre compared to 1400 Ibs. in Costa Rica, where most coffee
producers are also small.
A significant potential exists for increasing productivity two- to
three-fold among small coffee farmers of Guatemala, Honduras, the Dominican
Republic, and Jamaica by applying existing technology already proven in
Costa Rica and El Salvador. This technology calls for more coffee trees
per acre, more frequent and careful pruning, and more fertilization.
Such production is more labor intensive and thus would create additional
rural jobs. However, it is also more expensive, because of the larger
number of trees per acre and the high cost of fertilization, and also is
more technologically demanding of the small farmer. Guatemala has the
most land available to increase acreage devoted to coffee, but other
countries, such as the Dominican Republic, could also devote additional
acreage to coffee.
One limiting factor in Central America is coffee rust which has broken
out in El Salvador, Nicaragua and, most recently, in Honduras. While
disease resistant strains have been developed by CATIE, they are lower
yielding. If it became necessary to replant with rust resistant varieties
on a massive scale, this could lead to a decline in coffee productivity
Cotton. The growth potential for cotton is modest. Guatemala, Honduras,
Nicaragua, and perhaps Costa Rica and Haiti have suitable land available
for more production. In some Central American countries, cotton is
generally grown on large, well managed commercial farms obtaining very
high yields by international standards. Opportunities for further
increasing productivity on these farms are limited. Yields, in fact,
may well fall in several countries with political instability.
The cotton industry is generally well organized and capable of solving
its own problems with little outside help. One problem noted in Guatemala
was the high use of chemical pesticides and the presence of traces of
the chemicals in beef carcasses from cattle fed cotton by-products or
grazed on land near cotton fields. (Concern was also expressed about
the potential for pesticide contamination of shrimp beds).
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Bananas are a major export crop in most Central American and Caribbean
countries. Although doing well in Central America, production has
fallen in the Caribbean (by nearly 80% in Jamaica). In most countries,
American or British fruit companies are still responsible for marketing
although banana production continues to be shifted to local growers.
Productivity remains high in countries where the fruit companies provide
technical assistance or growers are organized into effective associations.
There is more suitable land for bananas in most of the region's countries.
The major constraint to expanded production is the demand in international
markets, which, we were told, is essentially being met with current
levels of production world-wide.
Sugar production is currently expanding in Central America, but declining
in the Caribbean. Increased cane production for the manufacture of
alcohol for gasohol is being increasingly considered in both areas. In
Central America, the Dominican Republic, and Jamaica, sugar is grown
mainly by large producers, many of them linked by ownership to sugar
mills. Productivity is generally acceptable although government owned
sugar lands in the Dominican Republic and Jamaica have significantly
lower yields than privately owned farms. In Haiti, growers include both
large and small producers and productivity is low. The industry is well
organized throughout the region and can generally solve its own technical
problems. Low price ceilings fixed by the government are a major obstacle
to increased production in some countries. The availability of suitable
land and financing also constitute significant obstacles.
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Beef. The production of beef has been increasing steadily and has the
potential for continued growth in most Central American countries, as
well as in the larger Caribbean island nations.
Central America, except for El Salvador, still has an agricultural
frontier for pasture land. The typical pattern of land clearing in
Central America is to clear land initially for cattle grazing. This
pattern will probably continue into the far seeable future. Acting
against this will be a tendency to convert the best pasture land into
farming. This trend will continue as the rising price of farm land
induces landowners to increase the productivity per acre of their land.
The industry is steadily improving its productivity through a combination
of better cattle breeding and management practices, pasture improvement,
and more utilization of agricultural by-products as a feed to fatten
cattle. One important opportunity for this industry is to industrialize
the by-products of the slaughterhouses, particularly leather products in
the manufacture of such products as hand bags, suitcases, and shoes.
Fruits and Vegetables (excluding bananas). The potential for increasing
the production of tropical and temperate zone fruits and vegetables is
very high. Although specific opportunities will vary according to local
growing conditions, they are significant in most countries of the Region.
The nucleus of the processing industry, including canning and freezing,
has been developed over the past two decades and is oriented to domestic,
regional and international markets.
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Most fruits and vegetables have the advantage of being sold to both the
fresh and processed markets locally as well as overseas. The variety of
market opportunities offers more options to the farmer as well as the
potential to link primary production with processing industries. The
potential for increasing production will depend importantly on integrating
production and processing facilities and expanding local, regional, and
Tropical fruits and vegetables are already being exported fresh, canned,
and frozen. The primary market for many of these products has been the
Hispanic ethnic market in the United States. Some crops, however, like
mangoes and other tropical fruit, already have broader market appeal and
the immediate potential is considerably larger.
The potential for sub-tropical and temperate zone fruits and vegetables
is considerable. Much progress has been made in recent years in producing
canned fruits and vegetables for local and regional markets. Opportunities
exist to expand production for local fresh markets, especially in countries
with a growing tourist industry, using intensive growing techniques such
as hydroponics, as well as more conventional methods. Another potential
is to increase the production of deciduous fruits in highland areas for
sale in local, regional, and distant export markets--in either fresh or
processed form. A wide range of vegetable crops is already being
exported frozen. The potential for expanding these exports based on
year-round availability and low wage rates appears significant.
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Two of the most important weaknesses at present are the inability to
grow a quality product consistently and within industry specifications
and the inadequacy of marketing infrastructure.
With a few exceptions, such as tomatoes, Central America and the Caribbean
have had little experience as yet in growing temperate zone fruits and
vegetables. There is only a handful of trained horticulturists, and few
new ones are being prepared. Most of the successful cases of horticul-
tural development have been sponsored by U.S. companies or individuals
with little outside assistance.
Since fruit and vegetable farms tend to be medium to small, and local
technical and financial institutions to work with small farmers are so
limited, to organize a major expansion of production would require
substantial external technical, capital, and marketing assistance.
Numerous efforts have been made in recent years to develop export markets
in the U.S. and Europe for fresh fruits and vegetables other than such
traditional crops as bananas and citrus. Except for limited success
with crops such as pineapples, mangoes and avocadoes, such efforts have
met with considerable difficulty and often failure. Logistic and marketing
problems have frequently proven to be major obstacles. Despite these
difficulties, we believe there are excellent potentials for producing
and exporting such fresh commodities, but success will depend largely
upon well planned and carefully integrated production and marketing
efforts. Engaging the assistance of foreign marketing firms in these
efforts will likely be desirable.
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Fruits and vegetables are typically high value crops and they offer a
potential to increase net income significantly. One region with a
favorable potential for fruits and vegetables is the Guatemalan highlands,
where the predominant crop, wheat, yields a low income to the farmer and
limits his ability to earn an adequate living from his small plot of
land. From all indications, many labor intensive fruits and vegetable
crops are well adapted to this region.
Spices. The availability of mini-climates gives Central America and the
Caribbean the opportunity to produce spices for world markets. These
have been traditional crops in the Caribbean. They are generally labor
intensive and yield high incomes per acre. The potential for expanding
these crops is, at present, limited by lack of market development efforts.
One spice with a favorable growth potential is cardamon seeds, grown
primarily in Guatemala, which exports about $40 to $50 million worth
annually. Other constraints to expansion of these crops are the lack of
long term financing and the need to improve productivity continuously in
order to meet competition from other producing countries.
Cut Flowers and Ornamental Plants. This industry has been growing
rapidly in recent years based on regional sales and exports to the
United States and Europe. The industry is highly labor intensive and
requires high levels of technical and managerial skills, and well developed
international marketing capabilities. It is dominated by medium-sized,
family-run businesses, with a few large corporate growers. The industry
is relatively well run and can be expected to grow for the foreseeable
future, primarily in Costa Rica, Guatemala, Honduras, Jamaica, and the
Sesame Seed. Exports of dried and decorticated sesame seed have been
growing in recent years in response to strong international market
conditions and a favorable climate, particularly in Central America.
Most sesame seed is grown by small and medium-sized farms on marginal
lands during the dry season, often in lieu of corn. This crop is grown
mainly in El Salvador, Guatemala, and Nicaragua, and more recently in
Honduras. It is an attractive, low risk, high income crop to small
farmers and efforts to expand the production of this crop should be well
Tree Crops. Central America and the Caribbean offer opportunities to
grow for domestic and export markets a wide range of tree crops--including
African palm, rubber, cinchona (quinine), cacao, macadamia nuts, cashews
and trees for lumber, paper and charcoal. In addition to being an
attractive income opportunity, for hilly and marginal lands, trees also
serve the purpose of controlling soil erosion, which is a growing problem
in much of the region. Some tree crops also lend themselves to multiple
cropping programs designed to increase income per acre on small farms.
A major factor limiting the expansion of tree crops is long-term financing.
None of them produces a profitable crop in less than five years, which
means that tree crops need financing up to 8-10 years or longer. The
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problem of long-term financing has been made more acute by the political
uncertainty prevailing in the Region.
In addition to their value as exportable raw materials, both rubber and
wood offer domestic industrial opportunities to generate off-farm employment.
The major obstacles to this development are local legislation limiting
private sector involvement in the wood industry in some countries, and
the U.S. tariff structure which imposes higher duties on molded wood
products than on unprocessed timber.
Animal Products (including poultry, eggs, pork, and dairy products).
The market potential for animal products lies primarily in the local
markets, which have been growing well throughout the region.
The production of broilers and eggs has been expanding rapidly at rates
of up to 40% per year over the past decade. A major contribution to
this growth has been dramatic improvements in productivity which have
been passed along to consumers in the form of lower prices and more
convenient foods. This productivity gain has occurred at a time of
growing urban affluence and rising prices of competing animal protein
foods, such as beef. The near term prospects for the poultry industry
remain strong. Growth rates in domestic demand of 15-25% per annum can
be expected in the near future.
The swine industry has also grown in recent years, although at a slower
rate than poultry. The potential for the industry remains favorable,
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based on domestic and regional markets, for processed foods such as
sausages, canned pork, and hams.
The market for dairy products has grown rapidly, but much of this new
demand has been met with lower priced imports, particularly powdered and
condensed milk. A major reason why local milk production has often not
kept pace with demand is that government price ceilings on milk and
dairy products seriously discourage production.
Basic Grains for human consumption include white corn, beans, rice, and
wheat. Most of this production is accounted for by small farmers,
except for rice, which is sometimes grown by large-scale commercial
producers. Crops for animal feed include yellow corn, sorghum, and
Wheat is grown at a high cost in the Guatemalan highlands where conditions
may be more favorable for the production of other commodities. There is
little soybean production anywhere in the Region. The area is essentially
self-sufficient in white corn, but deficient in feed corn. The Region
as a whole is theoretically self-sufficient in rice; however, some
countries import part of their needs while the others export surpluses.
There is some potential for expanding rice production in the Region.
The potential for increasing small farmer grain productivity is limited
by several endemic problems. The most immediate and difficult one to
overcome is governments' inability to plan, manage, and carry out programs
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to reach most small farmers with credit, technical assistance and an
assured market. Another problem is the cost of making the land more
productive (levelling, terracing, contouring, irrigation, drainage,
etc.). Other problems include inadequate national systems for storing,
distributing, and marketing grains and the fact that many governments
have opted to control prices of basic grains. Even though these programs
may start out as minimum support prices designed to encourage farm
production, too often they have become maximum prices designed to hold
down urban food prices and inflation. The resulting low prices to the
farmer have the effect of discouraging production and limiting rural
Root Crops, such as yams, yautia, and cassava are relatively more important
to the Caribbean diet, although cassava is grown on a modest scale in
parts of Central America. The potential for root crops is moderate.
Local production approximately satisfies local demand. As a traditional
food, per capital consumption could actually fall as urbanization progresses
and other foods are substituted.
IV. MAJOR CONSTRAINTS TO AGRICULTURAL AND AGRO-INDUSTRIAL
DEVELOPMENT AND RECOMMENDED RESPONSES
This section describes a number of problems or constraints which are
limiting the achievement of the agricultural development potentials dis-
cussed earlier. Some of these constraints apply more to some countries
than to others, but all apply in one degree or another, and each country's
constraints profile reflects a pattern of serious obstacles to the realiza-
tion of its agricultural development potential.
In addition to identifying the constraints, we have also indicated, in each
case, the specific response or action we recommend to deal with the con-
straint. In the final section of this report, we are also proposing a
comprehensive program or plan of action for helping to overcome the broad
spectrum of problems or constraints which are limiting the realization of
agricultural development potentials throughout the Region.
Following is a discussion of some of the more specific constraints to
agricultural development, and our proposed responses. No attempt has been
made to order these constraints in terms of their relative importance.
CONSTRAINT: Serious Deficiency of Trained Personnel
One of the greatest constraints to agricultural development throughout the
Region is the serious shortage of well-trained personnel, both men and
women, in agriculture and related industries. This problem was highlighted
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- 62 -
in every country visited.
For example, in one Central American country with tremendous potential for
expanding the production of tropical and subtropical fruit, vegetables, and
other horticultural crops, such as ornamentals, we were told by AID per-
sonnel that, to their knowledge, there was not one well-trained horticul-
tural specialist in the country.
The need for trained personnel, including women, is not limited to technical
areas, however. There is also a great need for personnel trained in eco-
nomics, development planning, and management. Many identified the shortage
of well-trained managers as one of the major limitations to agricultural
development efforts since their deficiencies limit both government and
private efforts to effectively implement agricultural development programs.
At one time, AID provided significant opportunities and financial assistance
for many foreign nationals to be trained in U.S. institutions. Such AID
programs have been greatly curtailed--in fact, virtually eliminated in many
In one country some $600,000 in AID funds were available to the local
government for training but were not being used. Government officials
explained that many personnel trained through such programs would, upon
their return, leave government positions and enter the better paying
private sector. (Observation: in terms of achieving overall national
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development goals, having such trained personnel in the private sector may
be just as important as having them employed within government.)
Although there are institutions in several countries offering programs at
the baccalaureate-equivalent level, most agricultural programs in these
institutions need to be greatly strengthened and improved. Opportunities
for graduate level training are extremely limited throughout the Region.
At the present time, the Soviet Union has an aggressive program throughout
the Region in offering full, expense-paid scholarships to young people to
study in universities within Russia or Eastern-bloc countries. We were
told, for example, that over seven hundred students from Costa Rica and an
equal number from the Dominican Republic are currently involved in such
programs within the Soviet Union.
A minister of agriculture in one of the countries visited informed us that
he wanted to send several students to a U.S. University but was told that
his government would have to pay full expenses of the student plus forty
percent overhead. With offers of full scholarships to Soviet-bloc countries
and with very limited resources to finance educational programs in the
U.S., many young people have little choice if they want to pursue a program
of study outside their country.
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Educational opportunities and overall human resource development efforts in
agriculture must be expanded greatly throughout the Region. Nothing is
more basic to long-term agricultural development than this, and development
goals cannot be realized without such efforts.
The Mission recommends the following steps be taken to address this need:
1. Efforts should be made, through the Board for International Food and
Agricultural Development or other appropriate mechanisms, to involve
U.S. universities in cooperative arrangements with institutions in
the various countries throughout the Region to strengthen and improve
local university programs in agriculture at both the undergraduate and
2. Special efforts should be directed towards expanding and improving
certain institutions of considerable potential having regional scope
and dimensions. In addition to AID-related mechanisms, assistance to
these regional institutions might be provided by major U.S. foundations
or other private sector organizations and such multilateral development
organizations as the World Bank and the Interamerican Development
Bank. These institutions include:
a. The Panamerican School of Agriculture in Honduras. This institu-
tion, with students from many countries, has a unique program
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involving a combination of practical experience and strong
academic training at the post-high-school--sub-baccalaureate
level. The institution has the potential to at least double its
present enrollment and has initiated a program to include women
students in its program. The School should be supported in both
of these objectives.
b. The University of the West Indies, with its agricultural programs
located on its campus in Trinidad, is already offering work in a
wide range of agricultural disciplines at the B.S., M.S., and
Ph.D. levels and has the potential to substantially expand its
c. The cooperative program between the University of Costa Rica and
CATIE's regional research program at Turrialba offers some
excellent opportunities for graduate level training and asso-
ciated research on problems of importance to the Region.
3. AID should devote more of its resources to human resource development
in agriculture through participant training programs in the U.S. Such
efforts should not be limited to project related programs and might be
oriented more to broad-based agricultural developmental opportunities
within the country.
4. Aggressive efforts should also be directed towards mobilizing business
and other private sector financial support for training agricultural
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students in the U.S. Such opportunities should be particularly good
with U.S.-based businesses or industries operating in these countries.
This assistance might include summer intern programs with the sponsor-
ing company to allow the student to earn a portion of his expenses as
well as gain valuable experience. Such a program might well be
carried out through the Caribbean/Central American Action Program.
5. Opportunities should be explored for untilizing other universities in
the Region such as the University of Puerto Rico and the National
Agricultural University at Chapingo in Mexico. Such institutions
provide the obvious advantage of offering programs in Spanish for
those students who cannot speak English.
6. Greater effort should be directed to offering special, in-service
programs for agriculturalists throughout the Region to help them keep
abreast of new developments. The new AID-sponsored in-service training
program for extension workers to be offered by the University of West
Indies should serve a very useful purpose. Regional institutions,
such as IICA, can give effective, continuing leadership to a wide
spectrum of in-service training programs in agriculture. Private
businesses should be encouraged to participate in these training
programs, both as trainers and trainees. The training of managers for
cooperatives should also be stressed.
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CONSTRAINT: Inadequate Levels and Use of Improved Technology
In all countries visited and with most commodities produced in these
countries, the lack of--or failure to apply--improved technology is a major
constraint to enhancing agricultural productivity and efficiency.
The principal exception to this general observation is in the area of
certain high-value export crops where the private sector or autonomous
government-related organizations have carried out aggressive programs to
develop and apply improved technology. Examples of such efforts are most
notable with cotton in Guatemala, coffee in Costa Rica, and bananas in
Honduras where the yields of these commodities are among the highest in
the world. Other exceptions may be found where private-sector food-process-
ing organizations are working directly with growers to supply the commodi-
ties needed for processing operations.
One of the most surprising and disturbing observations by the Mission was
the lack of technological improvements in most sectors of agriculture
during the last ten to fifteen years. In fact, with the exception of some
export commodities, there appeared to be an actual retrogression in recent
years in terms of the use of modern technology. This is particularly true
with traditional food crops--but it is also true with many export crops--
especially in the Caribbean island countries.
In Haiti and the Dominican Republic, comments were made that coffee wasn't
"produced," it was "harvested"--reflecting very little attention to the
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application of improved methods. In Costa Rica, we were told that less
than one-third of all the corn acreage receives any fertilizer at all
and less than five percent of corn is planted to improved seed. These
statistics are particularly striking--and disturbing--in light of the
well-known responsiveness of corn to fertilization and improved germ
plasm. Yet the circumstances in Costa Rica are not atypical of the
Region as a whole.
Throughout the region, therefore, with the few exceptions noted above,
there is an enormous gap between the level of know-how available and the
adoption of that know-how. Tremendous progress could be made through
improved knowledge delivery programs.
There is also need for expanded and enhanced adaptive research programs,
aimed at determining how technology developed elsewhere can best be used to
meet local needs. Furthermore, research is needed to meet newly emerging
problems, such as new plant or animal diseases or new insect pests in
situations where appropriate control measures are not known.
Throughout the region, yields of many crops could easily be doubled or
tripled merely by using well-established improved technology in situations
where positive results can be predicted with a high degree of certainty.
There is a great need to strengthen programs aimed at the development and
effective use of improved technology in all countries of the Region. This
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must be done if needed improvements in agriculture are to be realized.
The Mission recommends that the following steps be taken to achieve such
1. Major efforts are needed to strengthen programs concerned with the
development of improved technology. Expanded Title XII and other AID
mechanisms will likely be needed to achieve such institutional build-
ing objectives. As such programs are carried out, we recommend that
in most countries, government research efforts concentrate primarily
on adaptive research, while research concerned with developing new
varieties or addressing newly emerging disease or insect problems, for
example, be dealt with by regional organizations such as CATIE and the
International Food Research Centers.
2. Because of the enormous gap between the level of available technology
and its use, we recommend major efforts to strengthen and improve
programs concerned with the transfer and use of improved technology.
Government extension programs obviously need to be strengthened. Such
programs should be very closely tied to the adaptive research programs
of the country, so that, demonstrations, and other joint efforts can
be conducted most effectively.
Knowledge delivery programs should obviously not be limited to the
extension efforts of ministries of agriculture. Such efforts should
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also be built into other programs including those of cooperatives,
credit institutions, land reform or resettlement programs and private
companies. Wherever possible commodity organizations should be assisted
to organize and supply their own technicians to advise growers concerning
the use of improved practices. In a number of instances, such efforts
have already proven highly successful. Other successful private initiatives
have involved food processing operations which work directly with producers
in helping to modernize their operations for most efficient and effective
Such private sector initiatives have been most successful when one or
more of the following conditions are met:
1. The program is crop specific. This makes it easier to train the
technician working with farmers, and he can become more specialized in
dealing with a single crop.
2. The service is provided in conjunction with credit, with funds advanced
for the purchase of seed, fertilizers, and pesticides. This makes it
easier to assure the use of appropriate production inputs.
3. The service is provided by the organization purchasing the crop--in
many cases under a guaranteed price arrangement. Under this arrange-
ment the provider of the technical assistance is motivated by self-
interest to make certain that the farmer does the best job possible--
and the farmer is assured of a market and an acceptable price.
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CONSTRAINT: Failure to Utilize a Total "Package" of Essential Production
Practices and to Follow an Integrated Production and
One of the major reasons why agricultural development potentials are not
being realized throughout the Region is the failure to utilize a well
integrated approach to agricultural production and marketing operations,
including the use of a total "package" of essential production practices.
Such problems are, of course, not unique to the Caribbean Basin, but they
are important constraints which must be addressed if the agriculture of the
Region is to realize its potential.
There are many factors which can limit the production of a given crop:
various plant nutrients, variety or genetic makeup of the plant, water and
other climatic factors, diseases, insects, weeds, and other pests, etc.
Applying either the biological principle of "limiting factors" or the old
adage about a chain being no stronger than its weakest link, crop produc-
tion may be limited by a single essential factor--even though other
conditions are optimum. No matter how favorable all other factors may
be, a single "weak link" or deficient element may curtail the production
of the crop. Accordingly, it may do little to apply optimum levels of
fertilizer to a crop which is suffering from a lack of water, or is
ravaged by insects or disease. The level of water or the extent of pest
damage will determine the yield--not the amount of fertilizer applied.
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Accordingly, successful production programs must, to the extent possible,
involve the application of a "package" of practices which, in effect,
strengthens each "link of the chain"--or keeps each essential element
needed in production from becoming the limiting factor.
The same principle applies to the need to have well integrated agricultural
production and marketing efforts. We observed many examples of opportunities
to greatly expand production of certain commodities when appropriate market
outlets were not available--or when inadequate transportation facilities
prevented access to good markets. Similarly, we saw examples of marketing
efforts--especially food processing plants--which failed because of inadequate
production of the commodities needed to supply the processing plant. This,
again, illustrates the need to have a well coordinated or integrated produc-
tion and marketing program if the overall effort is to be successful.
There must be a broad recognition of the principle of limiting factors and
its implications--together with the development of appropriate, well
integrated production and marketing programs in an effort to try to eliminate
the limiting factors which could spell failure.
Specifically, extension programs for a given commodity should involve a
complete technological package of the best known productions practices
available (seed, fertilizer, pest control, etc.). Furthermore, the farmer
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must be impressed with the importance of using the total package, not just
one or two elements thereof.
Similarly, production of a given commodity must be directed towards meeting
a given market demand--just as market organizations must be developed to
utilize predicted and needed levels of production of the commodity to be
Obviously, the most successful operations are those in which production and
marketing are well coordinated, either through cooperatives or through
private sector initiatives where one organization is concerned with both
production and marketing or where a marketing concern contracts with the
producer for given levels of a commodity.
CONSTRAINT: Deficiencies of Key Production Inputs
Deficiencies of important production inputs, such as improved seeds,
fertilizers, pesticides, water, and energy represent major constraints to
agricultural production throughout the Region.
One of the most serious constraints of this nature, is the deficiency of
water. Many areas have lengthy dry seasons or, in some cases, shorter
periods of inadequate rainfall when a deficiency of water seriously limits
crop production. In many areas, the availability of irrigation could
permit farmers to grow an additional crop each year.
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The potential for irrigation from either surface or ground water sources
exists in many places. Very limited irrigation is carried out, however--
being restricted primarily to high-value commercial crops.
Inadequate usage of improved seeds and desired levels of fertilizer and
pesticides constitute great constraints to agricultural production in the
Region. Indeed, appropriate combinations of these inputs, along with other
favorable conditions, could result in increasing production of many commodi-
ties by 100 to 200 percent.
In most countries, there seem to be reasonably adequate supplies of fertil-
izer, seed, and pesticides to meet current demands. Accordingly, inadequate
levels of use, rather than unavailable supplies, constitute the principal
deterrent to improved production. however, in some countries serious
shortages of foreign exchange have resulted in difficulties in importing
sufficient quantities of badly needed fertilizers and pesticides. Fre-
quently, a lack of local credit prevents farmers from securing the fertil-
izers and pesticides needed for efficient and productive operations. In
some cases marketing and distribution problems cause localized deficiencies.
Supplies of petroleum, per se, do not constitute major constraints to
agricultural production in most countries within the Region. Mechanized
operations are limited primarily to large scale commercial operations--
although limited mechanization is occurring through cooperatives where
small farmers may have access to tractors and related machinery. The
rapidly escalating cost of petroleum products, however, may constrain some
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agricultural operations unless major efforts are made to reduce the cost of
energy per unit of production by marked improvements in productivity.
There are great opportunities to improve the productivity and efficiency of
agricultural operations by eliminating deficiencies of badly needed inputs.
There should be little difficulty in supplying needed levels of such
inputs as improved seed, fertilizer, and pesticides in most countries,
except, perhaps, where shortage of foreign exchange may pose difficulties.
The critical need is to encourage greater usage of a balanced package of
these vital inputs through effective extension and related educational
programs. Such needs are considered in greater detail elsewhere in this
There are substantial opportunities to greatly expand agricultural produc-
tion through the development of irrigation facilities. In some cases, this
may involve major expenditures for large irrigation projects. In other
cases, as demonstrated in the Guatemalan Highlands, relatively inexpensive
irrigation systems for small farmers may be quite feasible. Where a shortage
of water constitutes a major constraint to agricultural development, careful
consideration needs to be given to developing appropriate irrigation systems.
There should also be a full and complete exploration in all countries
throughout the Region of opportunities to develop alternative energy
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sources and reduce dependency upon foreign oil used in agricultural opera-
tions. It may be possible in many instances to produce alcohol or methane
gas from agricultural products or residues. The feasibility of such opera-
tions needs to be thoroughly explored. The production of trees for fuel
has interesting potentials not only as an alternative energy source, but
also as an environmentally and commercially attractive crop.
"Appropriate technology" programs in a number of countries are involved in
developing and demonstrating the use of small solar dryers for agricultural
products. It would appear that programs of this type could be very benefi-
cial to small farmers at little cost.
CONSTRAINT: Inadequate Capital and Credit
A serious constraint to agricultural development is financing in all
forms, but particularly equity capital, long-term project funding, crop
financing and working capital. This shortage is particularly acute at the
present time. The development needs of the Region are so great that the
indigeneous financial institutions and systems cannot accommodate them.
Equity capital, which has been scarce even in good economic times, is less
available because of the present political uncertainties. The availability
of normal commercial bank credit has become increasingly scarce because of
local developments, including nationalization of the banking systems in El
Salvador and Nicaragua, and credit-tightening domestic monetary policies in
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the other three Central American countries and several Caribbean countries.
In some Caribbean countries, local credit is available, but there is a
major problem of securing hard currency financing to pay for imported
capital goods. In the Eastern Caribbean, credit is generally available,
although not for long-term investment.
Abroad, international banks have become more reluctant to extend credit to
the Region because of concern about Central America's political situation
and because of high balance of payments deficits in many Caribbean and some
Central American countries. Some international bankers generalize about
Central America without taking into account national differences.
Specifically Honduras, Costa Rica and Guatemala appear to offer substan-
tially better credit risks today than the international commercial banks
Central America now finds it more difficult to tap the medium and long-term
Eurodollar markets. External financing resources available in the Region
are increasingly limited to the international aid agencies and export
credit from industrial nations.
These financial constraints affect the entire agricultural sector. Tradi-
tional export commodities--cotton, sugar, coffee, and beef--are the most
immediately affected because they rely most heavily on bank credit and are
most integrated into the money economy. Among these, cotton is likely to
be the hardest hit in the short run because it must be replanted annually.
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The shortage of long-term capital constrains the introduction of tree
crops, the settlement of new lands, the development of irrigation projects
and new agro-industries and other long-term programs.
1. Restoration of lender and investor confidence in the U.S. policy in
the Region is the first requisite. This requires a long-term U.S.
commitment to the future well-being of Central America and the Caribbean
as an integral part of an interdependent Caribbean Basin which includes
2. While not the sole reflection of a strong U.S. commitment, U.S. Govern-
ment decisions as to AID levels in Central America and the Caribbean
will be crucial indicators of the depth of commitment. In one Central
American country, a representative of a major U.S. business firm asked
the Mission, "Why should my company be making greater investments here
when the U.S. Government itself doesn't have enough confidence in the
country to support it?"
3. In most countries there is need for more effective programs to provide
production credit or working capital. Steps should be taken to
strengthen institutions or agencies charged with supplying such
credit--especially to the small producers. In many cases, this may be
effectively done through cooperatives.
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4. The governments of the Region, generally, must place a higher priority
upon supplying the credit needs of farmers and agro-industries if
development potentials are to be realized.
CONSTRAINT: Inadequate Marketing and Distribution Systems
In the case both of the inadequate internal distribution and marketing
systems for small farmers and the more complex export system, post-harvest
loss is one of the most serious economic problems in the agricultural
sector. It is conservatively estimated that 40% of all agricultural
production in the Caribbean Basin is lost, after harvest, in the distribu-
tion and marketing processes, domestic and international.
Inadequate marketing and distribution systems for both basic foodstuffs and
cash crops often act as constraints to developing the small and commercial
farmer sectors. The system is typically based on a complicated network
of intermediaries, often women entrepreneurs, who buy small quantities
from individual farmers and by stages bring the crops to urban markets
and agro-industries. Although functioning as a marketing system, it, in
fact, provides farmers relatively low prices for their products, and
frequently results in high rates of spoilage and uncertain quantities
and qualities of produce.
The intermediaries, however, lack the capital and know-how to build and
operate a system of storage warehouses and distribution centers which could
stabilize price fluctuations and cut losses incurred in the distribution
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process. Nor do they help the small farmer to gain access to credit and
technology. The intermediary's primary function of value to the small farmer
is that he provides an access to markets, paying the small farmer in cash.
Although the intermediary provides a market for traditional crops, he is
unable to help the small farmer increase his productivity either through more
efficient growing of traditional crops or through the introduction of non-
traditional, high-value crops. This "system," in other words, is not able to
provide the small farmer an integrated package of inputs, credit, technical
assistance, storage, transport and markets.
Efforts to produce new crops, such as fresh and frozen vegetables and fruits,
have, all too often, been started by well-meaning developers prior to there
being assured markets for the products, or interim cold storage, reliable
international transportation, or assured handling and marketing facilities
overseas. The results have frequently been disastrous, costing millions of
dollars in spoiled, wasted produce.
To take advantage of production potentials, therefore, there must be well
integrated marketing programs involving the development of storage and trans-
portation facilities along with good domestic and foreign market outlets.
Such improvements in marketing systems are essential if development potentials
are to be realized.
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1. AID and other International Development Banks should be encouraged
to provide technical and capital assistance on a priority basis to both
the public and private sectors in support of modernizing national and
regional storage, transport, and marketing facilities.
2. Joint ventures among private investors should be encouraged where
an experienced firm with an established international market and trans-
port system joins with local entrepreneurs and producers to grow and
process foods and fibres in-country for both the domestic and the export
CONSTRAINT: Climate of Political and Economic Instability
A serious overriding constraint on agricultural development in the Region is
the uncertain investment and business climate as perceived both locally and
internationally. Private enterprise traditionally has provided the initia-
tive for development in the Region. In some countries, however, the rules of
the game are currently being rewritten and it is not yet clear what economic
model will replace them. In every country where the role of the private
sector is being deemphasized, capital formation has come to a virtual stand-
still, replaced by capital flight--and agriculture suffers the consequences.
The specific causes of instability differ from country to country but the
outcome in terms of investment in agriculture has been the same. The changing
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political environment typically impacts initially and primarily on commercial
agriculture. However, all sectors of the economy are eventually impacted
through a reduction in farm and agro-industry employment, lower tax collec-
tions which depend heavily on commercial agriculture, and the growing short-
age of foreign exchange which affects all sectors of society.
Although major changes in economic systems within the Region have been
limited to Nicaragua and El Salvador, the concern of many businessmen in
other Central American countries that political instability may spread to
their country is seriously retarding the rate of private capital formation.
Such political uncertainties also undermine the effectiveness of orthodox
investment incentives, such as tax rebates, in promoting new business
Unfortunately, many believe this instability is at least partially the
product of U.S. attitudes or policies toward the Region. Many--both U.S. and
foreign nationals--expressed the belief that a reaffirmation of U.S. commit-
ment to the Region would do much to overcome the atmosphere of uncertainty
and contribute to greater stability.
It is not within the province of the Mission to recommend to the countries of
the Region how to improve their political climates. There are already far
too many opinions inside and outside the area as to what political and
economic forms will bring the most lasting tranquility.
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We have but one major recommendation in this regard. It is the basic rec-
ommendation with which we began this Report and shall end it: that the U.S.
Government must make a new and greater commitment to the development of the
nations of Central America and the Caribbean--a commitment based on a long-
term preferential consideration and evidenced by new and meaningful actions.
The commitment should flow from a recognition that due to the economic
interdependence of the United States and the other countries of the Caribbean
Basin, the future of the entire Region will be determined to an important
degree by how effective the U.S. commitment is in helping the people of the
Region achieve their development goals and aspirations.
CONSTRAINT: U.S. Government Policies
The Mission observed a number of U.S. Government policies which are acting as
deterents or constraints to agricultural development in the Region.
Policies Dealing With the Promotion of Private Investment
Our Mission was charged with exploring ways to encourage more U.S. private
sector involvement in agricultural Development. Yet, United States private
investment in the Region is seriously constrained by certain policies of the
U.S. Government. A general policy applicable to State, Commerce, Agriculture,
and others, issued in 1977, states that it is U.S. Government policy "neither
to promote nor discourage" U.S. foreign private investment. This policy
states that "there is no basis for concluding that a general policy of
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actively promoting... international investment would further the U.S.
This policy is interpreted by U.S. officials as requiring a posture of
"neutrality" toward U.S. foreign investment, even in developing nations. In
practice, this means that U.S. officials in embassies abroad and in the
Commerce Department do not seek to provide assistance to prospective U.S.
private investors or provide encouragement to them to undertake investments
that would further agricultural development in the nations of the Region.
This policy is, of course, in conflict with the legislative mandate of
the Overseas Private Investment Corporation to "mobilize and facilitate"
increased private U.S. investment in these countries and with the AID policy
of lending funds to such organizations as the Latin American Agribusiness
Development Corporation, whose purpose is to promote joint ventures in the
Region and with U.S. Government support for the International Finance
Despite its mandate, OPIC, too, is constrained by the general Government
policy of "neutrality" toward foreign investment. OPIC finds it difficult to
gain the necessary cooperation from embassy and AID staff in the field, upon
whom OPIC must rely for much of its effectiveness. In addition, OPIC is
prevented by policy from assisting larger U.S. companies to invest in "middle
income" developing nations, such as Costa Rica, Barbados, and Trinidad.
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Another constraint upon the ability of the United States to encourage in-
creased private investment in the nations of the Caribbean Basin grows out
of the reorientation of AID policies during the past decade. In response to
legitimate developmental and budgetary considerations, AID has focused its
efforts on providing direct assistance to the poorer rural families. AID's
guidelines, however, do not permit AID adequate flexibility to utilize
private investors in achieving the maximum possible developmental impact on
this target group. AID's activities are restricted primarily to working
directly with host government organizations, cooperatives or non-profit
voluntary organizations that, in turn, are working directly with the poorest
The Mission witnessed numerous cases in which AID could have made an impor-
tant contribution to furthering agricultural development and directly benefit
its target groups if it had been able to work with or through private,
profit-making corporations as well.
One of the most serious constraints to AID's being able to operate effec-
tively is a lack of managerial organization and technical skills in the
cooperating government agencies through which it seeks to operate. There are
many cases in which private, profit-making corporations with excellent
managerial and technical skills, operating in the agricultural sector, could
do much more to help the small farmer if more working capital and technical
personnel were available to them through AID. Such expanded programs would
involve small farmer credit, marketing assistance, and production/processing/
storage technologies, all among the most important types of assistance which
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AID itself attempts to provide to small farmers but primarily through
Ministries of Agriculture, often with discouraging results.
Policy Restrictions on AID Operations that Hamper Agricultural Development
a. Non-food Crop Restrictions
AID's ability to assist small farmers is also restricted by its apparent
policy limitations on promoting or improving the production of non-food
crops. One of the best means for AID to help small farmers to increase
their income per acre is to assist them to grow non-food crops such as
cacao, coffee, cardomon and rubber. These high-value crops are labor-
intensive, relatively easy to market, and can be grown in hilly terrain
not suitable for row cropping. Tens of thousands of small coffee
farmers in most of the nations of the Caribbean Basin suffer from a lack
of knowledge of modern production techniques. A program to develop
small farmer production of these crops could result in significant
increases in small farmer income and provide the basis for utilizing
presently unutilized mountainous lands for agriculture. (AID recently
made a policy exception in Haiti to undertake a program to assist small
coffee farmers in improving their production and marketing techniques,
and in the Dominican Republic, small-farmer coffee rehabilitation
efforts are a major part of AID's emergency response to 1979's hurricane
damage. We believe that more exceptions of this nature would be
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b. Lack of Long-term Commitment Capability
Another constraint upon AID's effectiveness is the lack of a long-range
planning capability due to the short-term nature of its budget processes
and its predilection to short-term projects. This constraint prevents
consideration of projects requiring a long-term commitment. The ability
to make long-term commitments is essential if AID is to undertake such
projects as the development of small farmer production of rubber, mango,
citrus, and other crops which require from six to ten years before the
trees begin to produce economic returns.
c. Lack of Bilateral Funding in Eastern Caribbean
AID is also constrained in its ability to accelerate agricultural
development in the Eastern Caribbean nations by its policy of funneling
most of its assistance through the Caribbean Development Bank and other
regional institutions. While these institutions need and deserve
support, there are many pressing agricultural development problems
within each of the Eastern Caribbean nations which cannot be addressed
effectively through a purely regional approach. For example, there are
numerous projects which are too small or too "one-of-a-kind" for funding
by the Caribbean Development Bank, yet highly important to each of the
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d. Inability To Assist Civic Action Programs
Another constraint to agricultural development imposed by United States
policies stems from the fact that in some countries the national mili-
tary establishment conducts important agricultural development projects.
The United States does not have an effective means for providing appro-
priate development-oriented assistance to these civic action programs
many of which are no more political than those of the U.S. Corps of
For example, in the Dominican Republic, forest areas and reforestation
and watershed management programs are the responsibility of the military.
Deforestation, erosion, and rapid silting of reservoirs behind multi-use
irrigation and hydroelectric dams are serious problems; yet the
Dominican armed forces lack the necessary human and financial resources
to deal with these problems, and AID cannot help.
Similarly, in Guatemala, the military is performing a major civic-action
role in the opening of the vast Northern Transversal Region now being
made available for small-farmer settlements. The Guatemalan military
builds roads and schools and operates a transport system to provide
supplies to and market the crops of the new small farmer settlers.
In both of these cases, the failure of the United States to provide
appropriate assistance to the government agency responsible for these
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development tasks constrains the rate of agricultural development in
e. AID's Concentration of its Resources on the "Poorest of the Poor"
AID's mandate during the past several years to focus its efforts on the
"poorest of the poor" has, we believe, been counterproductive, at times,
to overall agricultural development objectives. While there seems to
have been some relaxation of this policy, we believe that it would be
desirable for AID to have the freedom and flexibility to work with all
sectors of the agricultural community which can contribute meaningfully
to economic development goals and to sustained growth.
Although the poorest small farmers should continue to receive assistance,
the potentials for more rapid agricultural development which may be
greater at times with other sectors should also be exploited.
U.S. Customs, Tariff, and Non-tariff Restrictions on Caribbean Basin
Access to U.S. Markets
A theme commonly expressed by our country hosts in our visits was their need
for better access to the U.S. market, both in terms of the current export
commodities--sugar, coffee, beef--and other crops which may have export
potential, such as fruits, vegetables, wood products, and ornamentals.
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These concerns include quota restrictions, tariffs, grading and standards
requirements, and sanitary regulations and inspection, plus pressures from
U.S. producers to prohibit the entry of products competitive with theirs.
The Mission recognizes the major initiatives that the United States has taken
in recent years to facilitate trade from developing countries through the
General System of Preferences and Most Favored Nations concessions. Many of
these concessions have been favorable for exports from the Caribbean Basin.
We also recognize that the Region has not made the best use of these con-
cessions because they have frequently not been able to compete with other
developing countries such as Brazil and Israel. One of the dilemmas is that
many concessions which could have been of potential benefit to the Region
failed because lower cost producers in other developing countries took the
lion's share of the benefits.
There are many agricultural products for which no concessions were granted
because of potential injury to domestic U.S. producers. However, the export
of many products from the Region to the U.S. could be substantially expanded
without threatening U.S. producers.
In the area of trade policies, there are a number of tariffs, quotas, or
restrictions which affect the area. These include the fear of reinstatement
of beef quotas and the lack of officially recognized fumigation programs for
fresh fruit and vegetables within the producing countries.
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Some in Congress continue to express concern about foreign competition from
products such as citrus, sugar, palm oil, cotton and tobacco. If the U.S. is
seriously interested in helping to revive the economies of the Caribbean
Basin, however, something significant must be done to increase the Region's
export of a variety of agricultural commodities. We agree with the comments
made to the Mission in a number of countries that trade was more important
than aid in reaching their agricultural development goals.
All these countries are small. Even if they produced and exported to
capacity, the impact on the U.S. market would be relatively insignificant.
For example, the Caribbean Basin countries produce an annual total of 600,000
metric tons of beef compared with a U.S. total of 11,000,000 tons. The data
for vegetables are 1.7 million metric tons in the Region vs. 25 million
metric tons in the U.S. Obviously, only a portion of the Region's production
is available for export to the U.S. The Caribbean exports $1.6 billion in
coffee as compared with world exports of $11 billion. The comparable data
for sugar are $0.5 billion vs. $5.5 billion.
1. The United States Government, in its concessional foreign assistance
programs, should work directly with the private sector to provide
assistance and opportunities to small and medium size farmers as well as
to agro-industries. Such a program of using the private sector to
accelerate small farmer development can be more effective than trying to