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 Front Cover
 Title Page
 Table of Contents
 Abstract
 Introduction
 Background information on...
 The impact of the Caribbean Economic...
 The feasibility of export production...
 Summary and conclusions
 Reference
 Back Cover














Group Title: Bulletin - Agricultural Experiment Stations, University of Florida ; 878 (technical)
Title: The Caribbean Basin Economic Recovery Act and export vegetable production in Jamaica
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 Material Information
Title: The Caribbean Basin Economic Recovery Act and export vegetable production in Jamaica implications for the Florida vegetable industry
Series Title: Bulletin Agricultural Experiment Stations, University of Florida
Physical Description: viii, 51 p. : ill. ; 24 cm.
Language: English
Creator: Peters, Mark A., 1956-
Taylor, Timothy G
Publisher: Agricultural Experiment Stations, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville
Publication Date: 1990
 Subjects
Subject: Vegetable trade -- Jamaica   ( lcsh )
Vegetable trade -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
bibliography   ( marcgt )
non-fiction   ( marcgt )
Spatial Coverage: Jamaica
 Notes
Bibliography: Includes bibliographical references (p. 49-51).
Statement of Responsibility: Mark A. Peters, Timothy G. Taylor.
General Note: "March 1990"--Cover.
Funding: Bulletin (University of Florida. Agricultural Experiment Station) ;
 Record Information
Bibliographic ID: UF00086506
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 22121459

Table of Contents
    Front Cover
        Front Cover
    Title Page
        Page i
        Page ii
    Table of Contents
        Page iii
        Page iv
        Page v
        Page vi
    Abstract
        Page vii
        Page viii
    Introduction
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
    Background information on Jamaica
        Page 9
        Page 10
        Page 11
        Page 12
    The impact of the Caribbean Economic Recovery Act on winter fresh vegetable production in Jamaica
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
    The feasibility of export production in Jamaica
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
    Summary and conclusions
        Page 45
        Page 46
        Page 47
        Page 48
    Reference
        Page 49
        Page 50
        Page 51
        Page 52
    Back Cover
        Back Cover
Full Text






r'AIz 199' Eukd 7F (te ch c


The Caribbean Basin Economic Recovery Act
and Export Vegetable Production in Jamaica:
implications for the Florida Vegetable Industry







Mark A Peters
Timothy G lay-or















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nTS ,lIutet : of Food ': .:. '.it .,.1,:j','".ce
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The Caribbean 3as.n Economic Recovery Act
and Export Vegetable Proauction in Jamaica;
implications for the Florida Vegetable industry





























A iuti ho

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Table of Contelts


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22









List of Tables and Figures
Page

Table 1.1. Countries eligible for designation as beneficiaries of the
Caribbean Basin Economic Recovery Act. .................... 1
Table 1.2. The percentage change in gross domestic product (GDP)
for selected countries in the Caribbean Basin, 1960-84, and
its impact on income levels in the region. ................... 3
Table 1.3. Economic profile of selected Caribbean Basin countries, 1983. 4
Table 2.1. Jamaica: Gross domestic product (in million US$) by
economic activity at constant prices, 1974-84. ................ 10
Table 4.1. Distribution of farms in Jamaica by size of farms
and number of farms, 1978.............................. 22
Table 4.2. The distribution of farms by farm size in the St. Catherine
Vegetable Producers Association (Bushy Park Region). ......... 23
Table 4.3. Production constraints faced by producers of vegetables
in the Bushy Park Region. .............................. 25
Table 4.4. Average yield per acre of selected vegetables for Jamaica,
Mexico and Florida, 1983. .............................. 25
Table 4.5. Cucumbers: Estimated production and marketing costs for
Jamaica, 1984-85. .................................... 29
Table 4.6. Bell peppers: Estimated production and marketing costs
for Jamaica, 1984-85. ................................. 30
Table 4.7. Cucumbers and Bell Peppers: The cost of production in
Jamaica and the average season's price received by producers
at Pompano, Florida................................... 31
Table 4.8. Cucumbers: FOB price in $US at Pompano Market by
month, 1977-78 to 1984-85. ............................. 33
Table 4.9. Peppers: FOB price in $US at Pompano Market by month,
1977-78 to 1984-85.................................... 34
Table 4.10. Cucumbers: Price received in $US and quantity shipped
for Florida and Mexico, 1983-84 season. .................... 36
Table 4.11. Peppers: Price received in $US and quantity shipped for
Florida and Mexico, 1983-84 season ........... .......... 36
Table 4.12. Competitive advantage: Jamaica vs. Florida and Mexico .... 37
Table 4.13. Cucumbers: Estimated production and marketing costs
for Jamaica, Florida and Mexico, 1984-85. .................. 39
Table 4.14. Peppers: Estimated production and marketing costs for
Jamaica, Florida and Mexico, 1984-85. ................... .. 40
Table 4.15. Cucumbers: A comparison of labor costs between Jamaica
and Florida. ........................................ 41
Table 4.16. Peppers: A comparison of labor costs between Jamaica
and Florida ......................................... 41

Figure 4.1. Major channels for marketing vegetables in Bushy Park and
the percentage of vegetables marketed through each channel. .... 27




























































vi








Abstract


This study examines the economics of producing vegetables in
Jamaica for export to the United States and its implications for the
winter fresh vegetable industry in Florida. The study is divided into
three parts: 1) an evaluation of economic incentives created by the
Caribbean Basin Initiative (CBI) for the production of fresh winter
vegetables in Jamaica; 2) a determination of the profitability of
producing cucumbers and peppers in Jamaica for export to the
United States; and 3) an assessment of Jamaica's competitive position
relative to Mexico and Florida in U.S. winter vegetable markets. The
study shows that the CBI has not created any economic incentives for
fresh vegetables to be produced in Jamaica and exported to the
United States. Also, while it is profitable to produce vegetables in
Jamaica for export to winter fresh vegetable markets in the United
States, Jamaica does not have a competitive advantage relative to
Florida in these markets.

Key Words: Caribbean Basin Initiative, fresh vegetables, competitive
position, Jamaica.

























































viii









Chapter I

Introduction


The Caribbean Basin includes those countries located in Central
America, the Caribbean, and along the northern coast of South
America. Twenty-eight countries in the Caribbean Basin are eligible
for benefits granted by the Caribbean Basin Economic Recovery Act.
Of the 28 eligible countries, 22 have been granted beneficiary status
(Table 1.1) which permits their exports to enter the U.S duty free.

Table 1.1. Countries eligible for designation as beneficiaries of the Caribbean
Basin Economic Recovery Act.


I. Designated

Antigua & Barbuda
Aruba
Bahamas
Belize
British Virgin Islands
Costa Rica
Dominica
Dominican Republic
El Salvador
Granada
Guatemala
Haiti
Honduras


Jamaica
Panama
St. Lucia
St Vincent & the Grenadines
Trinidad & Tobago
Monteserrat
Netherlands Antilles
St. Christopher-Nevis

II. Non-designated

Anquilla
Cayman Islands
Guyana
Nicaragua
Surinam
Turks and Caicos Islands


The political and economic stability of this region is vital to the
strategic and economic interests of the United States. The region sits
astride the Panama Canal and several major shipping lanes; through
which nearly 50 percent of all U.S. trade passes, including 75 percent
of U.S. imported oil. The Caribbean basin ranks 12th in terms of
value of trade goods imported to the United States. The region also
provides a significant market for U.S. producers. In 1986 the total
value of U.S. exports to the region was US$6.3 billion, ranking it 7th
as a market for U.S. exports (i.e. as a market for U.S. exports, it is
larger than that provided by the USSR and Eastern Europe com-
bined, France, Italy, or Australia). The United States can ill afford
to have such an important region occupied by hostile or impoverished








countries (United States Department of State (USDS), 1982).
The countries in the Caribbean Basin are faced with an economic
crisis which threatens their political stability. Since 1980 the rate of
economic growth in the region has stagnated (Table 1.2). This has
led to a dramatic decline in the standard of living. The per capital
gross domestic product in 1983, after adjusting for inflation, had
fallen in all the countries in the region (except the Dominican
Republic, Panama and Trinidad and Tobago) to a level attained in
the 1970s or earlier (Table 1.2). Thus, many of these countries have
lost in a few years the economic gains they had made over the
previous two decades.

The U.S. Response to the Economic Problems of the
Caribbean Basin Countries
Leaders in both the Caribbean Basin and the United States feared
that the continued decline in the region's standard of living would
lead to increased political instability and the possible subversion of
regional governments by Marxist-led groups (USDS, 1982). This fear,
coupled with the economic and strategic importance of the region, led
to the formation of the Caribbean Basin Initiative (CBI) by the U.S.
government in an attempt to help solve the region's economic crisis.
It is widely believed that the region's economic structure is the
root of its economic crisis (Inter-American Development Bank
(IADB), 1985; USDS, 1982). The economies in the region are
generally characterized by small size, high levels of unemployment
(generally in the range of 15 to 28 percent), large trade deficits,
dependence on trade to supply intermediate and final consumption
goods, and the large proportion of total exports accounted for by
exports of primary commodities (Table 1.3). These factors, coupled
with the pervasive use of economic policies which discriminate
against export and agricultural production (Pagoulatos, 1983), have
left the rate of economic growth in the region highly dependent upon
the export of a few primary commodities and, consequently, highly
susceptible to changes in world economic conditions.
Thus, when the terms of trade between the region's exports and
imports began to decline in 1978, due to oil price increases, inflation-
ary conditions in the industrialized economies, and a decrease in the
demand for some of the region's major exports, including sugar,
coffee and bauxite (Pagoulatos, 1983; Organization of American States
(OAS), 1983); the countries in the region began to see an increase in
their trade deficits. In order to maintain their previous rates of
economic growth, the governments of the region financed their











Table 1.2. The percentage change in gross domestic product (GDP) for selected countries in the Caribbean Basin, 1960-84, and
its impact on income levels in the region.
Per Capita Year First
Country 1960-70 1970-80 81 82 83 84 AV GDP 1983 Accomplished
(U.S.$)

Barbados 6.2 1.7 10.5 .5 2.2 4.4 2,711.2 1972
Costa Rica 5.9 5.6 -4.6 -6.9 2.4 6.6 -.6 1,458.9 1972
Dominican Rep. 5.1 6.9 4.0 1.7 4.0 .6 2.6 1,201.9 1980
o El Salvador 5.6 3.2 -83 -5.6 -0.7 1.5 -33 632.0 1962
Guatemala 5.5 5.7 0.7 -3.5 -2.7 0.1 -13 1623 1973
Haiti 0.8 4.7 -0.9 -4.7 0.9 1.8 -0.7 309.8 1979
Honduras 5.0 4.8 1.2 -1.8 -0.5 2.8 0.4 664.8 1972
Jamaica 5.4 -0.9 2.0 0.7 1.8 0.5 13 1,712.8 1967
Panama 7.9 5.5 4.2 5.5 0.4 -1.2 2.2 2,163.4 1982
Trinidad and Tobago 4.3 4.8 03 0.4 2.1 -6.6 -1.0 3,017.1 1982
aSources: Organization of American States, 1985; International Monetary Fund, 1985.









Table 13. Economic profile of selected Caribbean Basin countries, 1983.
Primary
Exports Commodity
Pop. GDP Share Share of Unemployment Accounts
Current (000) (US$ millions) of GDP Exports Rate (US$ millions)
Antigua & Barbuda .8 128.0a .72 20 -43
Bahamas 228.0 1,313.4 .80 .89b 25 -45
Barbados 252.0 1,056.0 .70 .07b 16 -42
Belize 158.0 175.9 .53 .45b 15
Costa Rica 2,460.2 2,410.0 .43 .59 8 -269
Dominica 74.0 72.0a .40 .41b 15 -4
Dominican Republic 6,416.0 7,177.5 .14 58 25 -442
El Salvador 4,830.0 3,726.6 .22 .62 -65
Grenada 113.0 107.6a 36 .64 25 -17b
Guatemala 8,000.0 8,332.4 .15 .47 22 -224
Haiti 5,800.0 1,557.5 .27 33 114
Honduras 4,424.0 2,813.4 .77 .5 20 -225
Jamaica 2,388.0 2,097.7 .55 .73 25 -359
British Virgin Islands 249.0 .98 16 -194
Panama 2,100.0 4,182.8 39 .56b 15
St. Lucia 120.0 139.8 39 .48 13 -29
St. Vincent 138.0 91.9 .68 .28 20 -3
Trinidad & Tobago 1,168.0 7,315.8a 36 .83 10 -909
Source: Caribbean/Central American Action, 1985; International Monetary Fund, 1985.
a1982, b1984.








growing trade deficits by borrowing in international financial
markets. During the worldwide recession of 1980-82 the real rate of
interest increased dramatically. This resulted in a liquidity crisis and
a foreign exchange shortage as the amount of hard currency needed
to service the debt escalated out of control. This in turn led
governments in the region to adopt austerity measures in order to
reduce their trade deficits. Unfortunately, the burden of austerity fell
heaviest on investment (IADB, 1985), further aggravating the
economic growth problems in the region.
The Caribbean Basin Initiative (CBI) was formulated by policy
makers in the United States in an attempt to aid the Caribbean
Basin countries to diversify their export production and generally to
stimulate production. The CBI as originally proposed consisted of
an integrated package of trade, investment and economic assistance
initiatives. The initiatives included granting duty-free treatment for
12 years on virtually all goods produced in Caribbean Basin coun-
tries, granting tax credits to U.S. producers on investments in the
region, and providing financial assistance to alleviate the immediate
liquidity problems facing many of the region's countries. Thus, the
CBI, through its encouragement of investment in export production
and its provision of financial assistance, sought to address the
underlying structural problems within the economies of the region,
thereby helping the countries through the difficult period of struc-
tural readjustment.
The CBI became law in 1984, two years after it was proposed.
The law (PL98-67), which is entitled the Caribbean Basin Economic
Recovery Act (CBERA), is the policy mechanism of the CBI. The
length of time taken to pass the act, plus the fact that the initiative
underwent significant changes along the way, has led to a great deal
of confusion over just what type of incentives the CBERA contains.
The CBERA includes the originally proposed provisions for granting
duty-free treatment of Caribbean Basin products and granting
financial assistance to alleviate the liquidity crisis. However, it does
not include any provision for granting tax credits on the investments
of U.S. producers in the region. Also, the CBERA specifically
excludes textiles and wearing apparel from duty-free treatment.
Sugar, although it receives duty-free treatment, is still subject to
import quotas established previously by the U.S. government to
support the domestic price of sugar.
The ability of the CBERA to increase export production in the
Caribbean Basin may be questioned on several counts. First, for a
wide range of products, duty-free treatment as an incentive is
irrelevant. Eighty-seven percent of the total value of the region's
exports already entered the United States duty-free under the








Generalized System of Preferences (GSP) instituted in the Trade Act
of 1974 (Pagoulatos, 1983). Second, the two exports from the region,
sugar and textiles, that would benefit the most from increased access
to U.S. markets do not gain greater access as a result of the CBERA.
Third, the fact that 87 percent of the region's exports already
received duty-free treatment suggests that other factors (such as
domestic economic policies which discriminate against the production
of exports) are more important constraints to increased export
production in the region than lack of access to U.S. markets.

Florida's Concerns and the Interest in Jamaica
Despite the questions surrounding the effectiveness of the CBERA,
Florida vegetable producers still have a great deal of concern about
CBERA's impact on the ability of Caribbean countries to increase
their exports of winter fresh vegetables to the United States. Of
particular concern is the possibility that incentives offered by the
CBERA will induce U.S. agribusiness investment in export vegetable
enterprises in the Caribbean Basin.
Twenty-six different kinds of vegetables, valued at over $1 billion
at shipping point, are produced in Florida each year. While vegeta-
bles are grown throughout the year, most are grown for the winter
season, which extends from late October to late May or early June.
If there is a substantial increase in the exports of fresh vegetables
from the Caribbean Basin to the United States during this time, then
the Florida vegetable industry could suffer a substantial decrease in
earnings.
Even though Florida producers are concerned about the potential
impact of the entire Caribbean Basin, this study focuses on Jamaica.
Jamaica is one of the 22 countries in the region whose fresh
vegetable products are eligible under the CBERA for duty-free entry
into the United States. It also possesses the basic resources of
climate, land, and water to produce vegetables on a commercial scale.
Furthermore, several studies have indicated that it may be feasible
economically for Jamaica to export fresh vegetables to the United
States (Nazorio, 1963; Sarfaty, 1978). In addition, the government of
Jamaica is making a concerted effort to develop the potential to
supply 10 percent of the U.S. winter fresh vegetable market. This
effort includes introducing new technology, developing the required
infrastructure, and offering incentives to induce domestic and foreign
investment in winter vegetable production.
Jamaica also represents a good "test case" for evaluating the
potential impact of the CBERA on winter vegetable production in the
region. The economic problems of Jamaica reflect those facing many








other countries in the region. Its economy is characterized by high
unemployment, large trade deficits and great dependence on primary
product exports (such as bauxite, cane sugar and bananas) to provide
foreign exchange for the import of required intermediate and final
consumption goods. (Bauxite and agricultural exports typically
account for 75 percent of Jamaica's export earnings.) Jamaica's
economy has stagnated throughout the eighties, with growth in real
Gross Domestic Product averaging less than one percent from 1980-
84 (Statistical Institute of Jamaica, 1985). In part, this has been due
to a decline in the production of the bauxite and agricultural
products. This decline has resulted in a scarcity of foreign exchange,
which has acted as a constraint on growth in the manufacturing
sector of the economy.
Futhermore, the government of Jamaica has taken steps to reduce
its discrimination against export production, which is necessary if the
CBERA is to succeed (USDS, 1982). These steps include reduced
government regulation of the private sector, elimination of price
controls on most commodities, reduction of governmental restrictions
on trade, and depreciation of the Jamaican currency.

Problem Statement
Considering the above, two questions come to mind: (1) does the
CBERA provide sufficient incentives for Jamaica to produce and
export winter vegetables to the United States; and (2) is it profitable
to produce vegetables in Jamaica and export them to the United
States? In one respect, the last question will be determined by
economics. In order for Jamaica to export vegetables to the United
States, the cost of producing and shipping must be less than the
price received. Even though previous studies have indicated that it
is feasible to do so, Jamaica has not been a significant supplier of
fresh vegetables to the United States. This suggests that other
factors, such as the government's economic policies, have had a
significant effect on Jamaica's ability to compete in export markets.
Thus, the analysis of Jamaica's potential to produce winter vegetables
for export to the United States is a somewhat complex political-
economic issue, requiring a broad perspective.

Objectives
The purpose of this study is to evaluate the potential of Jamaica
to develop an export vegetable industry under the CBERA. Within
this framework two key issues need to be examined: 1) the effect of
the CBERA on export production in Jamaica; and 2) the feasibility








of producing vegetables in Jamaica for U.S. winter markets.
The specific objectives are as follows:
1) to provide an analysis of the CBERA and its potential to
stimulate the development of export vegetable industries in
Caribbean Basin countries;
2) to provide a description of the structure of agriculture in
Jamaica with special reference to export vegetable production;
3) to identify the competitive position of vegetable producers in
Jamaica as regards export markets in the U.S; and
4) to provide an analysis of political and economic barriers to
export vegetable production in Jamaica.

Organization
Chapter II provides additional background information on Jamaica,
its economy and its export program. Chapter III looks at the
question of whether the CBERA has created any new incentives for
winter vegetable production in Jamaica. It reviews the provisions of
the CBERA and compares the economic treatment of fresh vegetables
exported from Jamaica under the CBERA to their economic treat-
ment before the CBERA was implemented. Chapter IV contains a
description of vegetable production in Jamaica, an analysis of the
profitability of producing winter vegetables in Jamaica, and a
determination of the probable competitive position of Jamaica's
producers in the U.S. winter vegetable market. In Chapter V the
results from the previous three sections are brought together and
final conclusions are made concerning export vegetable production in
Jamaica.








Chapter II
Background Information on Jamaica
Physical Characteristics
Jamaica is centrally located in the Caribbean Sea, approximately
600 miles from Miami and slightly less than 2,000 miles from New
York City. It is the third largest island in the Caribbean with a total
land area of 4,411 square miles and a population of approximately
2.5 million. Of its total land area, 1,258,000 acres, approximately 46
percent is classified as agricultural land.
Jamaica's topography is characterized by a mountainous interior,
broken up by several major interior valleys, all surrounded by a
coastal plain which is broadest along the southern coast. The coastal
plain and interior valleys consist primarily of alluvial soils and
contain the best agricultural lands in Jamaica. The predominant
crop grown in these areas is sugar cane.
Jamaica has a tropical climate with a yearly average rainfall of 77.1
inches. However, the pattern of rainfall varies regionally and
seasonally. The periods of greatest rainfall are generally from May
to June and again from October to November. Rainfall varies
dramatically between regions of the island, ranging from a yearly
average of over 300 inches in the Blue Mountains to less than 50
inches along the southern coastal plains. However, irrigation water
either from surface or underground sources is readily available in
these areas. Thus, virtually all water-sensitive crops, including
vegetables, can be grown in Jamaica throughout the year.

The Economy
From 1973-80 there were seven straight years of negative growth
in the real gross domestic product of Jamaica (GDP), with the rate
of growth in GDP averaging -0.9 percent annually over the entire
decade of the seventies. Since 1980, this negative trend has been
halted, but economic growth continues to be stagnant as the average
rate of growth in GDP from 1980-84 was about one percent annually.
There are four key production sectors in Jamaica's economy:
manufacturing, agriculture, mining and tourism. The mining sector
consists mainly of bauxite mining and alumina processing operations.
The agriculture sector is divided into export and domestic food crop
production. The major agricultural exports are sugar, bananas,
coffee, pimento and copra. The manufacturing sector is well
diversified, but heavily dependent upon imports to supply needed
production inputs.















Table 2.1. Jamaica: Gross domestic product (in million $US) by economic activity at constant prices, 1974-84.
Sector 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984


Export
Agriculture 36.5 32.7 36.2 29.5 333 24.6 24.9 24.4 23.6 24.5 26.2

Domestic
Agriculture 70.2 72.2 68.0 75.8 90.0 803 75.9 78.6 69.2 75.2 87.0

Bauxite &
Alumina 1873 148.2 117.5 139.4 143.2 141.6 1583 160.5 112.4 1 112.8 115.8

Manufacturing 387.2 396.0 378.6 350.5 334.1 317.8 280.9 283.9 302.03 311.6 291.6

Government 2513 265.1 3073 3283 344.1 369.8 351.4 360.2 368.63 374.0 364.2

TOTAL 932.5 914.2 907.6 9233 944.7 934.1 891.4 907.6 875.9 898.1 884.8
Source: Statistical Institute of Jamaica, 1985.








As Table 2.1 shows, the performance of all of Jamaica's major
production sectors, with the exceptions of domestic agriculture and
government, has declined since 1973. The decline in the manufactur-
ing sector parallels the performance of the economy as a whole. The
manufacturing sector's performance in part can be attributed to the
decline in mining and, to a lesser extent, to export agriculture.
These two sectors of the economy have traditionally accounted for
approximately 75 percent of Jamaica's export earnings. Their decline
has led to a scarcity of foreign exchange and a shortage of raw
materials and spare parts needed by the manufacturing sector.
Most important to the specific concerns of Florida's vegetable
producers is the decline in productivity of Jamaica's export agricul-
ture sector, specifically sugar. The number of harvested acres of
sugar cane declined by 24 percent, or 16,000, acres from 1980-84
(Planning Institute of Jamaica (PIOJ), 1985). This has contributed
to the decision by the government of Jamaica to withdraw 21,000
acres from the production of sugar cane and put it to alternative
uses, such as the production of winter vegetables (PIOJ, 1985).

Incentives for Winter Vegetable Production in Jamaica
In its effort to increase exports of fresh vegetables to the United
States, the government of Jamaica has implemented several programs
designed to encourage winter vegetable production. These programs
are summarized briefly below.

Agro 21. Agro 21 was initiated by the Government of Jamaica in
1983. Its broad mission is to increase the productivity of Jamaica's
agricultural sector through technological innovation, commercializa-
tion of agriculture, and bringing abandoned and under-utilized land
into production. This is to be accomplished primarily through
diversification of Jamaica's agricultural exports. Agro 21 is respon-
sible for the selection of crops with significant development potential,
the organization of the resources and infrastructure needed for their
development, and the removal of existing constraints to development.
Agro 21 is the policy mechanism by which the Jamaican govern-
ment's goal of supplying 10 percent of U.S. fresh winter vegetable
market is to be achieved. Potential winter vegetables include green
beans, honeydew melons, snapbeans, tomatoes, cucumber, sweet
peppers, green peppers, sweet corn and okra. The program has
targeted 8,000 acres for development. In 1985 over 1,515 acres had
been put into fresh winter vegetable production (National Planning
Agency, (NPA), n.d.).








The Export Crops Project. The objective of the export crops
project is to expand the production and export of agricultural goods,
such as winter vegetables, by providing credit, support services, and
infrastructure (PIOJ, 1985). The export crops project is funded by
the World Bank and the government of Jamaica.
This project and Agro 21 are complementary projects. The funds
available to investors under the Exports Crops Project are part of the
resources Agro 21 is marshalling for the development of export
vegetable production.

Jamaica National Investment and Promotions Ltd. (JNIP). The
JNIP is a government corporation designed to encourage and
coordinate foreign investment in Jamaica. It also has made the
development of Jamaica's potential in winter vegetables a top
priority. To this end, the program has identified several large tracts
of land believed to be highly suitable for vegetable production and is
actively seeking investors.

The Agriculture Marketing Project. The primary goal of the
agricultural marketing project is to improve the efficiency of market-
ing domestic food crops. The government hopes that improvements
made in the marketing system will allow domestic producers to
participate actively in the export markets. The major improvements
being undertaken by this project are 1) the establishment of standard
grades for fresh produce, 2) the reorganization of the Agricultural
Marketing Cooperative (AMC), and 3) the building of five packing
and collection stations throughout the island, each run by a producer
marketing organization (PMO).
The purpose of the packing and collecting stations and the
development of the PMOs is to increase the efficiency of small
producers in marketing fresh produce. It allows small producers to
pool their efforts, and to benefit from the reduction in processing
costs due to increasing returns to scale. By 1985 two PMOs had
been formed in the major vegetable producing regions in the island.
The AMC, which previously had the responsibility of marketing
food crops on the island, has been restructured and given the role of
acting as an export center for fresh produce. This restructuring of
the organization has resulted in the development in Kingston of a
wholesale terminal and fumigation facilities for pre-clearance. The
organization also will provide several services such as export
licensing, market news, produce inspection and pre-clearance for
shipment to the United States. The agricultural marketing project
is being financed jointly by the United States Agency for Interna-
tional Development (USAID) and the government of Jamaica.








Chapter III
The Impact of the
Caribbean Economic Recovery Act on
Winter Fresh Vegetable Production in Jamaica

The CBERA was designed to increase the level of export produc-
tion in Caribbean Basin countries. It grants duty-free access to U.S.
markets to virtually all goods produced in the Caribbean Basin. In
effect it establishes a one-way, free trade zone between Caribbean
Basin countries and the United States. This has led to a widespread
impression that by eliminating the duties on goods coming into the
United States from the Caribbean Basin, that the CBERA has
created a significant incentive for increased export production in the
region. This can be the case only if the primary constraint to
increased export production in the Caribbean Basin is limited access
to U.S. markets. However, for a great many goods, the free access
to U.S. markets via CBERA is irrelevant. Prior to the passage of the
CBERA, 87 percent of the region's exports already received duty-free
access to U.S. markets under the provisions of the Generalized
System of Preferences (GSP). This raises a very important issue for
vegetable producers in Florida. This issue is whether the CBERA
has created any new incentives for winter vegetable production in the
Caribbean Basin in general, and in Jamaica in particular.
The first two sections of this chapter briefly outline the major
provisions of both the CBERA and GSP and the motivations behind
their passage. The third section compares the two trade laws and
discusses the significant differences between them as they apply to
fresh winter vegetables.

The Caribbean Basin Economic Recovery Act
and its Incentives
The CBERA, Title II, Section 211 (1983) states the following: "The
President may proclaim duty-free treatment for all eligible articles,
from any beneficiary country in accordance with the provisions of
this title." Thus, in order for a good imported into the United States
from the Caribbean Basin to receive duty-free treatment, it must 1)
be an eligible article as defined in the legislation, and 2) be from a
designated beneficiary country, that is, a country whose goods may
be considered for duty-free treatment.








Beneficiary Status
Under Section 212 provisions of the CBERA, designation as a
beneficiary country is to be established with the mutual consent of
both the United States and Caribbean Basin country concerned. In
conferring beneficiary status on a country, the President of the
United States is to consider such factors as the economic conditions
in the country in question, its labor laws, its trade relations with the
United States, and the steps it is undertaking to promote economic
development. The President is prohibited from granting beneficiary
status to a country if:
1) it is Communist;
2) it has nationalized or has taken any action which has the effect
of nationalizing the property of a U.S. citizen without providing
just compensation;
3) it does not act in good faith in recognizing or enforcing arbitral
awards in favor of U.S. citizens;
4) it accords preferential treatment to products of other industrial-
ized countries which has an adverse effect on U.S. commerce;
5) it does not cooperate with the United States in narcotics control;
6) it does not have an extradition treaty with the United States; or
7) it broadcasts or publishes copyrighted material of U.S. citizens
without prior consent (CBERA, 1983). The President may waive
any or all of the above conditions for national security reasons.

Goods Eligible for Duty-Free Treatment
In order for a good to be eligible for duty-free treatment under
Section 213 of CBERA, it must be either the growth, manufacture,
or product of a beneficiary country. In order to prevent merely
"pass-through" operations, at least 35 percent of a given good's value
must be derived from operations performed in the country of origin.
The CBERA allows the 35 percent value-added requirement to be
fulfilled by production activities undertaken by a group of beneficiary
countries. It also permits up to 15 percent of the 35 percent value-
added requirement to be fulfilled by operations undertaken in the
United States and Puerto Rico. Goods which involve only packaging
or combining operations or which simply involve the dilution of the
product while not materially altering its characteristics are expressly
forbidden. In addition, textiles, wearing apparel, shoes, handbags,
tuna, watches, watch parts and petroleum products have been
excluded from eligibility for duty-free treatment, while sugar,








although eligible, remains subject to current import quotas.

The Fast-Track Mechanism
One additional aspect of section 213 of the CBERA which deserves
attention is its provision for the protection of U.S. industries from
injury due to increased imports of goods from the Caribbean Basin.
Any industry which feels that it has been harmed by increased
imports from Caribbean Basin countries as a result of the CBERA
may file for import relief with the United States International Trade
Commission (ITC).
For the producers of perishable products such as fresh vegetables,
the CBERA provides a special fast-track mechanism by which they
can receive emergency relief until the ITC makes a final ruling. U.S.
producers of any perishable product who feel they have been injured
by imports from Caribbean Basin countries may file for import relief
with the ITC, under section 201 of the Trade Act of 1974. While
they are awaiting adjudication of their case by the ITC, they may file
for emergency import relief with the Secretary of Agriculture. The
Secretary has 14 days to determine whether the imports in question
have increased and have caused or possess the potential to cause
serious injury to U.S. producers. If action is called for, a recommen-
dation can be made to the President to grant import relief. The
President then has seven days to either act or ignore the recommen-
dation. If the President decides to grant import relief, duty-free
status can be suspended immediately and the good in question would
be subject to the same duties it would have received under the GSP.
The suspension of duty-free status will continue until there is a
determination of the case by the ITC or until the circumstances
which lead to the granting of emergency relief have changed.


Provisions of the Generalized System of Preferences
The GSP was established under Title V of the Trade Act of 1974
and grants duty-free treatment to any eligible good from a beneficiary
country. The purpose of the GSP was to encourage export produc-
tion in the lesser developed countries (LDCs), thereby accelerating
their rate of economic development. It was also viewed as a way to
eliminate special trading agreements between European countries and
the LDCs, which often granted preferential treatment to European
products over American products in LDC markets. To receive the
benefits available under the GSP, a country must agree not to grant
preferential treatment to products from any industrialized country
over products from the United States.








Under the provisions of the GSP, the President is given the
authority to determine which countries are to be given beneficiary
status and which goods are eligible for duty-free treatment. In
making these decisions, the President is to consider the present
economic conditions of the country in question, the extent to which
other major industrialized countries are undertaking comparable
efforts and the anticipated impact of such actions on U.S. producers
of competitive products.
A developing country is excluded from the provisions of the GSP
if:
1) it has a Communist government, unless it already receives non-
discriminatory treatment or is a signatory to the General
Agreement on Trade and Tariffs (GATT) and a member of the
International Monetary Fund (IMF);
2) is an OPEC country;
3) affords preferential treatment to products of an industrialized
country which results in or could result in adverse effects on
U.S. commerce;
4) has nationalized or instituted measures to nationalize the
property of U.S. citizens without just compensation;
5) does not cooperate with the United States in narcotics control;
6) does not act in good faith in recognizing or enforcing arbitral
awards to U.S. citizens.
For national security reasons, the President may waive any of the
above conditions when granting beneficiary status to a country.
The President is also to determine which goods are eligible for
duty-free treatment. Any good produced by a beneficiary country can
be taken under consideration; However, the good must be imported
directly to the United States with at least 35 percent of its appraised
value being the result of operations performed in the nation of origin.
Specifically excluded from consideration for duty-free treatment are
textiles, wearing apparel, shoes, watches, import sensitive electronics,
import sensitive steel products, and glass products. Import relief is
provided for injured U.S. producers as outlined in The Trade Act of
1974.

Comparing the CBERA, the GSP and Their
Treatment of Fresh Vegetables
Under the CBERA, fresh vegetables and all other agricultural
products receive duty-free treatment. Much has been said about the








potentially negative impact this could have on Florida. This concern
is somewhat surprising considering the provisions of the GSP have
been in effect since 1974. Except for some minor differences, the
treatment of goods exported from Caribbean Basin countries to the
United States under the provisions of the CBERA and the GSP are
essentially the same. The only major differences between the two
are the manner in which the eligibility of goods is determined, the
types of goods specifically excluded, and the CBERA's provision of an
emergency relief mechanism for producers of perishable products.
Under the GSP, the President determines which goods produced
by developing nations are eligible for duty-free treatment while the
CBERA grants duty-free treatment to all goods, unless specifically
excluded. The essential difference between the GSP and the CBERA
is one of attitude. The GSP appears to say to beneficiary nations
that the United States will take up the issue of granting duty-free
status to a good once the nations start exporting it to the United
States, while the CBERA says that the United States will grant duty-
free status on anything you could possibly export, with a few notable
exceptions. Thus, the CBERA does give the assurance to potential
investors in Caribbean export enterprises that their products will
receive duty-free treatment before they begin to produce for U.S.
markets. In practice this has not been the case, as U.S. customs
officials have refused to guarantee duty-free status for products to be
produced by U.S. investment.
In order to determine if Jamaica's fresh vegetables are treated
differently under the CBERA than under the GSP, the tariff schedule
must be consulted. Of primary interest is the treatment which the
GSP gives fresh vegetables from January to March, since this is the
time period targeted by Jamaica's producers for export to the United
States (Hollowell, 1985).
Table 3.1 shows the duties imposed on the 10 vegetables most
likely to be exported by Jamaica, as outlined in the Agro 21 planning
document (NPA, n.d.). Of the 10 different vegetables listed, five of
them are charged a duty for some period of time during the year.
Only two of these, sweet corn and snap beans, are charged a duty
year round. Tomatoes are charged a duty of three cents per pound
from March 1 until November 14, while sweet peppers are charged
a duty of three cents a pound from May 1 to June 30 and again
from September 1 to October 30. Melons are charged a duty of 35
percent ad valorem for a period of six weeks beginning August 1 and
ending September 19. This is in contrast with the CBERA, where
all vegetables receive duty-free treatment throughout the entire year.
During the key period of January through March, tomato is the
only fresh vegetable listed which does not receive duty-free treat-








ment. (There is a tariff on tomato imports in March.) This presents
the possibility that the duty charged on tomatoes could be a
significant barrier to Jamaica's exports to the United States.
However, in discussions with individuals in Jamaica, there was never
any indication given that the duty charged on tomatoes played a
significant part in the decision not to export them.


Table 3.1. Schedule of duties on vegetable products under the CBERA and
the GSP.

Vegetable CBERA GSP
Tomatoes
3/1 10/14 Free $.03/lb
10/15 2/28 Free Free

Green Peppers Free Free

Cucumbers Free Free

Sweet Peppers
5/1 6/30 Free $.03/lb
9/1 10/30 Free $.03/lb
Other Times Free Free

Sweet Corn Free 50%ad valorem

Okra Free Free

Snap Beans Free $.03/lb

Eggplant Free Free

Summer Squash Free Free

Melons
8/1 9/15 Free 35% ad valorem
12/1 3/31 Free Free

Source: U.S. International Trade Commission, 1984.


If one extends the period of particular interest to run from
November to June, exports of sweet peppers, tomatoes, sweet corn
and snap beans from Jamaica are all charged a duty under the
provisions of the GSP. These duties can only serve as significant
barriers to entry into the U.S. market if they increase the production








costs of these vegetables in Jamaica above their export price. If they
do not, then the tariffs imposed are irrelevant. Since peppers are
one of the two vegetables where cost of production is being examined
in this study, the determination of the significance of the findings on
the feasibility of exporting peppers from Jamaica to the United States
will be deferred until Chapter IV.
In summary, with the exception of sweet corn and snap beans, and
for short periods during the year for tomatoes and peppers, the
treatment of winter vegetables is no different under the CBERA than
under the GSP. Thus, it is clear that the CBERA has not created
any substantive new economic incentives for the production of winter
vegetables in Jamaica, and that the impact of the CBERA in
stimulating increased exports of fresh vegetables is of questionable
significance.
Given this conclusion and Jamaica's historical performance, one
could argue that there is limited potential for Jamaica, and perhaps
the Caribbean region as a whole, to expand exports of fresh vege-
tables to the United States. This assumes that everything else
affecting the feasibility of winter vegetable production in Jamaica has
remained the same; however, this is not the case. The Jamaican
government has instituted policies to increase the production of
export goods in general and is making a concerted effort to develop
Jamaica's potential for producing fresh vegetables for export to the
United States. The government of Jamaica's export drive presents
the possibility that the changes in economic policies may have a
major impact on improving the potential for exporting fresh vege-
tables to the United States.
The fast-track mechanism of the CBERA appears to be somewhat
of a misnomer, at least with respect to agricultural goods. Under the
provisions of the fast-track mechanism, the duties imposed on a good
as a result of emergency import relief can be no greater than the
duties existing under previous legislation. For the countries of the
Caribbean Basin, this happens to be the GSP. Thus, for most
agricultural products from Caribbean Basin countries, this would
amount to no relief at all for the domestic producer until the ITC
makes a decision, since most agricultural products already receive
duty-free treatment.

























































20








Chapter IV
The Feasibility of Export Production in Jamaica

The two objectives of this chapter are to determine the economic
feasibility (i.e., profitability) of producing fresh vegetables in Jamaica
for export to winter markets in the United States, and, to the extent
possible, ascertain the competitive position of Jamaica's producers in
these markets.
An activity is generally defined to be economically feasible if the
revenues received by producers exceed the costs of production. This
definition, however, implicitly assumes that the necessary infrastruc-
ture for the participation of producers in the market already exists.
Given the current level of winter vegetable production in Jamaica,
information concerning the infrastructure supporting the production
and marketing of vegetables is extremely important in determining
economic feasibility. Indeed, if the necessary infrastructure does not
exist, the export of fresh vegetables from Jamaica may not be
feasible, regardless of costs and revenues. Consequently, a broader
interpretation of economic feasibility is adopted in this study.
Economic feasibility will be evaluated not only by comparing costs to
revenues, but also by evaluating the ability of the current agricultural
infrastructure in Jamaica to facilitate the exportation of vegetables by
Jamaican producers.
We will examine also the competitive position of Jamaican
vegetable producers relative to both U.S. and Mexican producers.
The methodology will be the same as the one used by Zepp and
Simmons (1979) and Buckley et al. (1986) in their respective studies
of the competition between Florida and Mexico in fresh winter
vegetable markets. In both studies, the relative competitive position
of a given set of producers in a particular market was determined by
comparing their costs of production and prices received to those of
other producers.
This analysis looks specifically at the feasibility of producing
cucumbers and peppers in Jamaica for export to U.S. winter markets.
These vegetables were selected because at present they are the
principal vegetables being grown for export in Jamaica and the only
ones for which the cost of production is readily available.
Florida and Mexico currently are the two major supply areas for
the winter vegetable market in the United States. In the 1983-84
season, Florida accounted for 37 percent of total cucumber shipments
and 41 percent of total pepper shipments, while Mexico accounted for
47 percent and 37 percent of total shipments, respectively (Federal-
State Market News Service, 1984). Thus, Jamaica's competitive








position in winter vegetable markets will be evaluated with respect
to the position of producers in Florida and Mexico. But first, we will
present a description of the agricultural infrastructure in Jamaica.

The Agricultural Infrastructure in Jamaica
The major crops produced in Jamaica for export have been
sugarcane, bananas, coffee, cocoa, tobacco, pimento, and citrus.
Crops produced primarily for the domestic market include a wide
variety of root crops, pulses, fruits and vegetables.
The distribution of land and the size of farms in Jamaica is highly
skewed (Table 4.1). Farms of less than 5 acres (average 1.43 acres)
make up 82 percent of all farms, but account for only 16 percent of
the agricultural lands, whereas farms of 100 acres or more represent
less than one percent of all farms, but account for 57 percent of the
land. Furthermore, activities on 78 percent of the large farms are
devoted to the production of either export crops or livestock or both,
thus leaving the production of domestic food crops, including
vegetables, to small, farmers (Pollard and Graham, 1985).


Table 4.1. Distribution of farms in Jamaica by size of farms and number
of farms, 1978.
Size (acres) Total Number % Total Acreage %
<5 150,633 82.0 216,679 16.0
5-25 29,839 16.0 255,841 19.0
26-100 2,400 1.4 107,216 8.0
> 100 1,116 0.6 751,309 57.0

TOTAL 183,988 100.0 1,327,045 100.0
Source: Pollard and Graham, 1985.


The Production System
Small farm production has many of the same characteristics found
in small-scale agriculture throughout the world. It is characterized
by intensive use of labor; use of multiple and mixed cropping; small,
spatially dispersed fields; limited use of production inputs such as
fertilizers and agricultural chemicals; limited availability of credit, and
low productivity (U.S. AID, n.d.; NPA, 1983).
Because of the extent to which mixed cropping occurs on small
farms, there is little information on cultivation practices used
exclusively in the production of vegetables. However, as part of the








government's marketing improvement project a survey was conducted
by Partnership for Productivity (1984) examining the production and
marketing practices used by vegetable producers in Bushy Park, a
major vegetable producing region. Thus, while there is little
information pertaining to production techniques employed island-
wide, there is information on production techniques used by
vegetable producers in one of the major vegetable producing regions.
The Bushy Park region is located just west of metropolitan
Kingston and encompasses about 6,000 acres. Major agricultural
crops in the area are sugar cane, livestock, and vegetables. Some
fifteen different vegetables are grown, with the most important ones
being peppers and pumpkins. Bushy Park is also the headquarters
of the St. Catherine's Vegetable Growers Association, which was
formed in 1983 for the express purpose of creating new domestic and
export markets for the association's members. The association has
a total of 110 members, 70 of which actively participated in the
survey.
A majority of the vegetable production in the Bushy Park region
occurs on small- and medium-size farms (Table 4.2). Small farms
(less than 10 acres) make up 79 percent of all farms and account for
31 percent of the land in vegetable production. Medium sized farms
(10 to 100 acres) represent 17 percent of all farms and 35 percent of
available land, while the large farms (greater than 100 acres) make
up three percent of farms and 33 percent of the land. While the size
of farms in the area is perhaps larger than typical for Jamaica, the
scale of operation of even the largest producers in the region is small
in comparison to vegetable enterprises in Florida.


Table 4.2. The distribution of farms by farm size in the St. Catherine
Vegetable Producers Association (Bushy Park Region).
Acres % No. of Farms %
<1 0.3 5 4.3
1-4 11.4 48 41.0
5 15.7 34 29.0
6-9 3.9 6 5.0
10 9.3 10 8.5
11-20 4.8 4 3.4
21-50 11.1 4 3.4
51-100 9.7 2 1.7
101-200 30.6 3 2.5
200+ 2.8 1 0.8
Source: Partnership for Productivity, 1984.








The survey did not discuss production methods used for any
specific vegetable crop, but some idea of production techniques can
be inferred from the description of management practices used by
vegetable producers in the region. Despite widespread knowledge of
modern production techniques, management of the operations in the
area was generally poor. While seed beds were used, they were over-
crowded, infested with weeds, and seedlings were left in beds past
the optimal stage of maturity for transplanting. Fertilizers used
often were inappropriate for the crop grown, applied at improper
rates and times, and applied in locations which prevented maximum
nutrient benefits from reaching the plant. Weed and pest control
programs were also characterized by poor management. The
intervals between weeding and spraying were too long, and the
sprays used were either inappropriate for the type of insect infesta-
tion or were not applied in adequate amounts.
The most significant problem found was inadequate management
of water. Rainfall is seasonal and averages only 20 to 30 inches
annually, with the monthly rainfall during the winter growing season
averaging less than two inches. Consequently, irrigation is necessary
if vegetables of export quality are to be produced during the winter
season. Farmers in the area have little or no knowledge of the water
requirements for the vegetables they are growing. Perhaps even
more important is the finding that farmers experience either a
complete lack of water for irrigation purposes, or intermittent and
unpredictable supplies of water from the government irrigation
system which services the area.
In addition to these deficiencies in the management of vegetable
operations in the Bushy Park area, the survey identified and
compiled a list of significant constraints faced by the vegetable
producers in the area (Table 4.3). Almost every factor necessary for
the vegetable producers in the area to participate in export markets
is presented as an impediment. The most important of the con-
straints, mentioned by 100 percent of the farmers, was the un-
availability of water for irrigation. Other major constraints men-
tioned by farmers were the lack of available inputs, limited access to
agricultural credit, lack of markets for fresh produce, lack of labor,
and governmental bureaucracy. Problems with the bureaucracy
involved delays in obtaining needed credit and duty-free status for
production inputs, even though the government declared that the
inputs were to receive duty-free treatment.
The affect of these production problems and constraints is
illustrated in Table 4.4 which reports the yield per acre for cucum-
bers and bell peppers in Bushy Park, Jamaica as a whole, Mexico,









and Florida for the 1983 season. Yields for all vegetables in the area
are low in comparison to yields obtained in Mexico and Florida, and
often of a quality unsuitable for export to U.S. markets (Matt Tokar
and Gene McAvoy, personal communication 1985).1



Table 4.3. Production constraints faced by producers of vegetables in the
Bushy Park Region.

Constraint No. of Producers Percent


Water 70 100
Inputs 65 93
Credit 45 64
Markets 43 61
Labor 41 59
Bureaucracy 40 57
Land 38 54
Machinery and Equipment 36 51
Transportation 31 44
Praedial Larceny 23 33
Technical Assistance 23 33
Source: Partnership for Productivity, 1984.


Table 4.4. Average yield per acre of selected vegetables for Jamaica, Mexico
and Florida, 1983.

Jamaica

Crop/Unit of Measure Island Bushy Park Mexico Florida

Cucumber (bushel) 166 146 499 500
Bell Pepper (bushel) 79 200 708 900
Tomato (box) 419 600 633 1100
Source: Ministry of Agriculture, Jamaica (1985); Partnership for Productivity (1984);
and Buckey et al. (1986).


'Matt Tokar and Gene McAvoy are consultants working with vegetable
grower cooperatives in St. Elizabeth Parish and the St. Catherine Vegetable
Growers Association, respectively.








The Marketing System
Vegetables produced in the Bushy Park region are marketed
primarily through what is termed the higgler system, although some
use of exporters was made by a few farmers in the area (Figure 4.1).
The higgler system, which involves some 20,000 independent agents,
handles an estimated 80 percent of the fresh produce marketed on
the island (U.S. AID, n.d.). Higglers purchase crops directly at the
farm gate and then deliver them for sale at various parish markets
throughout the island. Currently there are three types of agents
operating within the system: the higgler, truck higgler and super
higgler.
Higglers are usually females in their forties (U.S. AID, n.d.). They
purchase either directly from the farmer or at a parish market from
other higglers, who act as wholesalers. Higglers generally buy
produce in small lots and sell it directly to the consumer in the
parish markets. For 1977, it was estimated that cash outlays by
higglers to purchase produce were in the range of J$56-$672 per
week with an average net income of J$11.80-$28.00 (U.S. AID, n.d.).
Truck higglers typically own their vehicles and purchase either at
the farm gate or in parish markets, buying in larger lots than regular
higglers. Truck higglers sell directly to the consumer in the parish
markets, at the roadside, or door to door. They also sell produce
wholesale to other higglers. Their cash outlays in 1977 were
estimated to be J$525 per week (U.S. AID, n.d.).
Super higglers function as full time wholesalers. They typically
purchase large lots at the farm gate or in parish markets and resell
them in the large urban markets or to hotels, restaurants and
institutions. Their capital outlay was estimated in 1977 to be over
J$1,000 per week (U.S. AID, n.d.).
Other marketing agents found in the system are the Agricultural
Marketing Corporation, various producer marketing organizations
(PMOs), such as the Christiana Potato Growers Association, and
various food processors. However, these agents play a minor role in
the marketing of fresh produce on the island.
The major retail outlets for fresh produce are parish markets.
Retail stores such as supermarkets handle less than 5 percent of the
fresh produce sold in Jamaica (U.S. AID, n.d.). The largest parish
market is Coronation Market, in downtown Kingston. Coronation
Market also serves as the major wholesale terminal handling an
estimated 50 percent of the food crops marketed (U.S. AID, n.d.)



2In 1977 U.S. $1.00 = J$ 0.91, (IMF, 1985).









Figure 4.1. Major channels for marketing vegetables in Bushy Park and
the percentage of vegetables marketed through each channel.


(71%)


(21%)


3Higglers also play a major role in the export of fresh vegetables to other
countries in the Caribbean Basin. Information regarding higgler participa-
tion in this channel was not available in the survey.








Given the atomized structure of production in the domestic crop
sector and the commensurate high cost of collection, the higgler
system may be the most efficient way of getting produce from the
farmer to the consumer. However, there are several deficiencies
within the system which cast doubt on its ability to serve as the
primary collection channel for fresh vegetables destined for U.S.
winter markets. The key problems are the high level of post-harvest
loss and the lack of any established grade and size standards for
vegetables. The lack of a system of grade and size standards
presents a major problem because it requires that a buyer be
physically present during the time of purchase in order to ensure
that the produce conforms to quality expectations. The high levels
of post-harvest loss, estimated to be as high as 40 percent (U.S. AID,
n.d.), not only raises the costs for vegetables, but more importantly
casts doubt on the ability of the current marketing system to deliver
a product of sufficiently high quality to meet U.S. market demands.
Given all of these factors it does not seem likely that the tradi-
tional producers of fresh vegetables in Jamaica have the potential to
participate to any great extent in U.S. fresh winter vegetable
markets. The only producers that do appear to have a realistic
potential are the new commercial operators. They alone have
sufficient resources available to make the major investments required
to provide the necessary infrastructural elements (e.g., irrigation,
proper handling and the grading of produce) for participating in
export markets. Even if the producer marketing project successfully
establishes a system of grade and size standards and significantly
reduces post-harvest losses, the small producers probably would still
be unable to participate in export markets due to the high cost
collecting and processing small volumes of vegetables (Matt Tokar,
personal communication 1985).

Profitability of Producing Cucumbers and Peppers
The profitability of producing cucumbers and bell peppers in
Jamaica for export to the United States is determined for a represen-
tative commercial enterprise. Costs are valued in U.S. dollars and
include all costs incurred by the producer up to the point of delivery
at the wholesale terminal market in Pompano, Florida (Table 4.5,4.6).
The Pompano market was selected as the final destination because
current plans in Jamaica call for shipping vegetables to the Pompano
market, and from there to other markets in the United States
(Hollowell, 1985). Because the cost of transporting cucumbers and
peppers is included in the calculation of producer's costs, the
Pompano FOB price is used to represent the price received by









Table 4.5. Cucumbers: Estimated production and marketing cost for Jamaica,
1984-85.

Average Per
Category Acre Box
Yield (boxes) 300

Dollars (U.S.) -

OPERATING COSTS
Seed 80.00
Fertilizer 78.00
Fungicide 150.00
Herbicide 20.00
Insecticide 40.00
Nematicides 28.00
Labor 235.00
Machinery 60.00
Interest 172.92
Miscellaneous
Beehives 25.00

Total Operating Cost 888.92

FIXED COSTS
Land Rent 40.00
Machinery 30.00
Management Fee 196.50

Total Fixed Cost 266.50

TOTAL PREHARVEST COST 1,155.42 3.85

HARVEST AND MARKETING COSTS
Packing Crates 360.00 1.20
Labor 390.00 1.30
Shipping 900.00 3.00
Handling 300.00 1.00
Selling 420.00 1.40

Total Harvest and Marketing Costs 2,370.00 7.90

TOTAL COST 4,114.34 11.75
Source: Hollowell, 1985.









Table 4.6. Bell peppers: Estimated production and marketing costs for
Jamaica, 1984-85.

Average Per
Category Acre Box
Yield (boxes) 500
Dollars (U.S.) -

OPERATING COSTS
Seed 100.00
Fertilizer 150.00
Fungicide 280.00
Herbicide 20.00
Insecticide 75.00
Labor 274.00
Machinery 81.00
Interest 222.20

Total Operating Cost 1,202.20

FIXED COSTS
Land Rent 40.00
Machinery 30.00
Management Fee 262.50

Total Fixed Cost 332.50

TOTAL PREHARVEST COST 1,534.70 3.07

HARVEST AND MARKETING COSTS
Packing Crates 600.00 1.20
Labor 650.00 1.30
Shipping 1,400.00 2.80
Handling 500.00 1.00
Selling 700.00 1.40

Total Harvest and Marketing Costs 3,850.00 7.70

TOTAL COST 5,384.70 10.77
Source: Hollowell, 1985.








producers in Jamaica for their exports of cucumbers and peppers.
Unlike production costs which are fairly stable over time, prices
received by producers vary considerably from year to year. Because
of these variations, using a set of prices from a single year will more
than likely lead to over- or under-estimating the profitability of
producing vegetables in Jamaica. To correct for this problem,
monthly FOB prices in Pompano were averaged over eight years,
beginning in the 1977-78 winter season and ending with the 1984-
85 season.
Three average seasonal prices for Jamaican producers are calcu-
lated (Table 4.7). The first represents the average price received by
producers when each monthly price is weighted according to the
proportion of the 1983-84 crop which was exported during the
month. For example, since the greatest proportion of Florida's crop
in cucumbers and bell peppers is marketed at the beginning and the
end of the winter season, Zepp and Simmons (1979) gave the prices
received by Florida producers at these times greater weight than the
prices they received during January, February and March. The
second price represents the price received by producers if they adopt
a strategy of only exporting cucumbers and peppers during January,
February, and March. The third is a simple average of monthly
prices, and represents the average price received by all producers,
assuming shipments of cucumbers and peppers from Jamaica are
evenly distributed throughout the winter season.


Table 4.7. Cucumbers and Bell Peppers: The cost of production in Jamaica
and the average season's price received by producers at Pompano,
Florida.
Cost/ Average Price Received Simplec
Crop bushel 1983-84a Mk. Strat.b Avg.
Cucumber 11.75 13.62 14.00 10.58
Bell Pepper 10.77 12.41 11.85 10.41

aBased on shipments of Jamaica's exports during the 1983-84 season.
bBased on shipments only occurring January-March.
CThese prices are based on average monthly price obtained by averaging the monthly
FOB prices in Pompano over an eight year period, 1977-1985.

A comparison of production costs to price received for exports in
the 1983-84 season (Table 4.7) suggests that Jamaica does have some
economic potential to become a supplier of both cucumbers and








peppers to the U.S. winter market. This is not surprising since the
only prices included were those received by producers when vegeta-
bles were actually exported. A clear indication of the profitability
under these circumstances requires a comparison of total costs of
production to total revenues received by the producers.
A more revealing picture of the profitability of exporting fresh
vegetables to the United States can be gained by comparing the
simple average seasonal price to the weighted-average price received
by producers based on the three-month marketing strategy. A
comparison of the price received by producers based on the simple
average of monthly FOB prices in Pompano to the costs of producing
cucumbers and peppers indicates that it is not profitable to export
either vegetable from Jamaica to the United States throughout the
entire winter season. On the other hand, the price received by
producers based on the three month marketing strategy indicates
that it is profitable during January, February, and March. This is
when prices in the U.S. market are generally at their highest levels.
The profitability of exporting cucumbers to the United States
during January, February and March is fairly stable. Over the eight
year period (Table 4.8) it would have been profitable for producers
in Jamaica to export cucumbers to the United States during these
months 5 out of 7 years in which prices were reported. For the
month of April it would have been profitable 4 out of the 8 years.
In the case of peppers (Table 4.9) only during the month of February
was it profitable in five or more years of the eight year period.
This suggests that a major constraint to the feasibility of winter
vegetable production in Jamaica may be the variability in the prices
received by producers from year to year. The variability in the price
of peppers indicates that in order to remain in business, Jamaica's
pepper producers must be able to sustain several years of substantial
losses due to low prices. The ability of producers to sustain these
periodic losses depends upon their access to sufficient capital to carry
them through the unprofitable seasons.
The above analysis indicates also that the implementation of the
CBERA and its removal of duties has little impact on the feasibility
of exporting bell peppers and cucumbers to the United States. Prior
to the CBERA, the only duties on Jamaica's exports of these two
vegetables applied to bell peppers during May to June and September
to October. However, even without the duties, the cost of producing
peppers in Jamaica is too high for its export to be profitable during
these times. It costs producers in Jamaica US$10.77 per bushel to
produce peppers whereas the average price for peppers at the
Pompano Market was US$9.88 per bushel in October and US$9.73
per bushel in May.
















Table 4.8. Cucumbers: FOB price in $U.S. at Pompano Market by month, 1977-78 to 1984-85.
OCT. NOV. DEC. JAN. FEB. MAR. APR. MAY JUN.

($/boxa)


5.88
7.35 8.00
10.40 10.00
12.74 1233
9.83 19.00
10.00 14.02
6.43 12.25
11.25 12.75


11.50 11.00
9.00 12.00
14.17 14.69
17.25 12.65
1533 26.46
20.00 16.94
12.00 16.83


14.50 6.71
11.50 10.00
18.75 5.94
11.02 8.88
9.24 10.13
19.83 7.69
14.00 8.50
10.25 9.13


7.90 9.24 12.62


14.18 15.80 13.64


8.37 11.41


aa box= 55 Ibs.
Source: Federal-State Market News, 1978-1985, various issues.


1977-78
1978-79
1979-80
co 1980-81
1981-82
1982-83
1983-84
1984-85


9.88
5.50
10.00
5.17
7.00
7.19
5.00
-


5.13
5.00
12.06
9.50
7.64
9.50
6.39
8.00


Average


6.40

23.13
933
11.17
7.00















Table 4.9. Peppers: FOB price in $U.S. at Pompano Market by month, 1977-78 to 1984-85.
OCT. NOV. DEC. JAN. FEB. MAR. APR. MAY JUN.
($/bushel)


4.50 4.94
5.60 5.81
11.70 8.88
11.50 10.17
838 9.88
6.90 14.25
5.25 10.75
6.88 6.50


6.33 8.80
7.94 7.90
7.00 830
18.75 35.00
12.50 9.75
19.63 16.50
20.00 21.00


7.59 8.90 13.16 1532


16.67 6.00
8.25 -
10.25 11.00
10.63 8.00
7.13
14.88 15.00
7.50 11.50
14.75 6.87

11.26 9.73


"a bushel =25 lbs.
Source: Federal-State Market News, 1978-1985, various issues.


1977-78
1978-79
1979-80
1980-81
co 1981-82
1982-83
1983-84
1984-85


5.25
6.50
7.25
10.50
7.17
7.50
10.00
731


9.75
10.00


Average


U








Jamaica's Competitive Position4 in Winter Markets

The simple fact that it may be profitable to export cucumbers and
peppers from Jamaica to the United States does not imply that
producers of those crops in Florida will be injured by Jamaica's entry
into the U.S. winter vegetable markets. The extent to which Florida
producers may be harmed by Jamaica's entry into the market is
determined by their relative competitive position. Only if Florida is
at a competitive disadvantage would the potential exist for injury to
Florida vegetable producers.
Competitive position, as defined by Zepp and Simmons (1979), is
determined not only by comparing costs of production between sets
of producers but also by comparing differences in average price
received by producers. The prices received by producers can play a
significant role in establishing the competitive position of producers
in the market, because they reflect differences between products
which allow producers to receive higher prices. The differences in
product prices can be due to differences either in quality or in
seasonal availability (Zepp and Simmons, 1979). By including the
advantage producers have in prices received in the determination of
net competitive position, a region can theoretically have an overall
competitive advantage in the winter markets while being at a
competitive disadvantage in terms of production costs. In analyzing
competition between producers in Florida and Mexico for U.S. winter
vegetable markets, Buckley et al. (1986) found this to be the case
with peppers. Mexican producers of bell peppers were found to have
a net competitive advantage over Florida producers, even though
their production costs were higher.
The price advantage enjoyed by Mexico's producers of cucumbers
and peppers is due primarily to unfulfilled seasonal demand in the
United States rather than to significant differences in the quality of
Mexico's vegetables compared to Florida's (Tables 4.10, 4.11). The
higher prices received by Mexico's producers occur when shipments
of cucumbers and peppers from Florida are low due to climatic
conditions. Therefore, the measure of net competitive position used
by both Zepp and Simmons (1979) and Buckley et al. (1986) reflects
a seasonal advantage for Mexico's vegetable producers, not a




4Measures of competitive position are not measures of comparative
advantage. Consequently they should not be used to evaluate whether
Jamaica should or should not produce fresh vegetables for export.









Table 4.10. Cucumbers: Price received in $US and quantity shipped for
Florida and Mexico, 1983-84 season.
Florida Mexico
Week Price Percent Price Percent
Ending $/1-1/9 bushel Sold $/1-1/9 bushel Sold

Oct 5.00 4.7
Nov 6.39 17.8 11
Dec 6.43 12.6 7.20 23
Jan 12.25 2.4 11.50 20
Feb 20.00 2.0 19.75 18
Mar 16.94 7.2 15.40 20
Apr 14.00 19.4 12.00 9
May 8.5 27.2
June 11.17 6.7-
Sources: Florida Crop and Livestock Reporting Service, 1986; Federal-State Market
News Service, 1985.


Table 4.11. Peppers: Price received in $US and quantity shipped for
Florida and Mexico, 1983-84 season.
Florida Mexico
Week Price Percent Price Percent
Ending $/bushel Sold $/bushel Sold
Oct .6 2
Nov 11.50 8.0 2
Dec 6.00 17.4 8.5 12
Jan 11.00 9.6 10.5 21
Feb 8.25 5.2 14.25 20
Mar 16.5 8.9 14.00 27
Apr 9.12 20.0 13.5 9
May 10.69 20.7 4
June 8.00 9.6 3
Sources: Florida Crop and Livestock Reporting Service, 1986; Federal-State Market
News Service, 1985.



competitive advantage in the winter markets due to differences in the
quality of the vegetables produced in Florida and Mexico.
This indicates that differences in prices received by producers do
not necessarily provide a good indication of competition in winter
fresh vegetable markets. This is because the differences in average
prices received do not reflect differences in quality. Consequently, in








this study the competitive position of Jamaican cucumbers and
peppers in the winter markets in the United States is determined
solely by comparing production costs in Jamaica to production costs
in Florida and Mexico.
Table 4.12 shows the relative competitive position between
producers of bell peppers and cucumbers in Jamaica and the
producers of these vegetables in Florida and Mexico. A ratio value
greater than one means that Jamaica's producers have a cost
advantage whereas a value less than one indicates that Jamaica's
producers are at a cost disadvantage. The data indicate clearly that
cucumber and pepper producers in Jamaica are at a cost disad-
vantage in the U.S. winter vegetable market. Indeed, the difference
in production costs between Florida and Jamaica are substantial,
with Florida producers enjoying a $4.16 per box advantage over
Jamaica's producers of bell peppers, and an advantage of $2.74 per
box over Jamaica's producers of cucumbers.


Table 4.12. Competitive advantage: Jamaica vs. Florida and Mexico.
Jamaica Florida Mexico
Crop --------- $/Box ----------
COSTS
Cucumbers 11.55 8.81 8.55
Bell Peppers 10.75 6.59 7.80

RATIOS
Cucumbers 0.76 0.74
Bell Peppers 0.61 0.72
Sources: Hollowell, 1985; Buckley et al., 1986.

The fact that Jamaica's producers are at a competitive disadvantage
in the winter markets indicates that any significant impact on
Florida producers due to direct competition with Jamaican producers
is quite unlikely. This does not, however, take into account any
possible reduction in revenues to Florida producers from increased
supply in the winter markets. Due to the small size of current
commercial operations in Jamaica, this effect should be small, if not
negligible.








Major Factors Contributing to the
Relative Competitive Position of Jamaica and Florida in
Fresh Winter Vegetable Markets
It is perhaps surprising that the cost advantage for Florida
producers over Jamaican producers is so great, especially given the
substantially lower wage rates in Jamaica (Hollowell, 1985).
However, two major factors stand out as contributing to Florida's
competitive advantage in the winter market: yield per acre and the
cost of marketing (Tables 4.13, 4.14).
The impact of the differences between Jamaica and Florida in
yields and marketing costs can be demonstrated by taking a closer
look at Jamaica's supposed advantage in the cost of labor. The pre-
harvest cost of producing cucumbers in Jamaica is $431.50 per acre
for labor while for Florida it costs $588.96 (Table 4.15). However,
when pre-harvest labor costs are measured on a per-box rather than
a per-acre basis, a totally different picture of labor costs in the two
regions emerges. Producers in Jamaica pay $1.44 per box for labor
while Florida pays $1.18 per box. Thus, when differences in the
yield per acre between Florida and Jamaica are taken into considera-
tion, Florida actually has lower pre-harvest labor costs than Jamaica.
The pre-harvest labor costs of producing peppers in Jamaica is
higher than in Florida even when measured on a per-acre basis
(Table 4.16). This advantage in the cost of pre-harvest labor for
producers in Florida becomes even more pronounced when pre-
harvest labor costs are measured by the bushel. Cost of labor to
grow peppers in Jamaica is $1.07 per bushel compared to $0.44 per
bushel in Florida (Table 4.16).
Jamaica's lower wage rate is most evident in the cost of harvest-
ing. It costs producers in Jamaica $1.30 per bushel for labor to pick
and pack both cucumbers and peppers, whereas it costs producers
in Florida $2.87 per bushel for cucumbers and $2.21 per bushel for
peppers. This gives Jamaica an initial advantage (Tables 4.15, 4.16),
but it costs Jamaica US$1.40 per bushel to market both crops while
it costs Florida US$0.25 and US$0.30, respectively. This reduces
Jamaica's total advantage in labor costs significantly and, in the case
of peppers, it reverses it so that total labor costs for the production
of peppers are higher in Jamaica than in Florida (Tables 4.15 and
4.16).





Table 4.13. Cucumbers: Estimated production and marketing costs for Jamaica, Florida and Mexico, 1984-85.
Jamaica Florida Mexico
Average per Average per Average per
Category Acre Bushel Acre Bushel Acre Bushel
Yield (bushels) 300 500 587
------------Dollars (U.S.)----------
PRE-HARVEST COSTS
Land Rent 40.00 240.00 64.71
Machinery 90.00 384.74 129.20
Fertilizer 78.00 343.74 54.77
Pesticides 238.00 35.85 149.61
aLabor 431.50 588.96 285.63
Interest 172.92 63.87 39.41
Miscellaneous 105.00 408.22 184.54
Total Pre-harvest Cost 1,155.42 3.85 2,344.00 4.69 977.82 1.67
co
o HARVESTING AND PACKING
Pick & Pack 130 2.87 1.29
Materials 1.20 0.76 0.86
Transport/Haul 0.24 -
Administrative 0.11
Total Harvesting Cost 750.00 2.50 1,935.00 3.87 1,326.62 2.26
MARKETING
Selling 1.40 0.25 1.50
Transporting 3.00 1.62
Fees/Duties 1.00 1.50
Total Marketing Cost 1,620.00 5.40 125.00 0.25 2,711.94 4.62
TOTAL COST 3,525.00 11.75 4,405.00 8.81 5,018.85 8.55
"includes supervision
Source: Hollowell, 1985; Buckley et al., 1986.







Table 4.14. Peppers: Estimated production and marketing costs for Jamaica, Florida and Mexico, 1984-85.
Jamaica Florida Mexico
Average per Average per Average per
Category Acre Bushel Acre Bushel Acre Bushel

Yield (bushels) 500 900 708


PRE-HARVEST COSTS
Land Rent
Machinery
Fertilizer
Pesticides
"Labor
Interest
Miscellaneous
Total Pre-harvest Cost


40.00
101.00
150.00
375.00
536.50
222.20
100.00
1,524.70


------------ -Dollars (U.S.)----------
240.00
473.23
362.04
489.38
40031
113.67
741.55
3.05 2,820.18 3.13


HARVESTING AND PACKING
Pick & Pack
Materials
Transport/Haul
Administrative


Total Harvesting Cost
MARKETING
Selling
Transporting
Fees/Duties
Total Marketing Cost
TOTAL COST


1,250.00


2,600.00
5,375.00


5.20
10.75


2,844.00


270.00
4,405.00


includes supervision
Source: Hollowell, 1985; Buckley et al., 1986.


64.71
147.20
104.50
190.91
39034
55.65
427.87
1,380.68


1,493.88


2,711.94
5,522.40









Table 4.15. Cucumbers: A comparison of labor costs
Florida.


between Jamaica and


Activity Jamaica Florida %Differencea

U.S. Dollars

Preharvest
(acres) 431.50 588.96 + 36
(bushels) 1.44 1.18 18

Harvesting and packing
Picking/packing 1.30 2.87 +121
(bushel)
Sub-total (bushel) 2.74 4.05 + 48

Marketing
selling (bushel) 1.40 .25 82
total (bushel) 4.14 4.30 + 4
a.+" indicates that costs were higher in Florida.







Table 4.16. Peppers: A comparison of labor costs between Jamaica and
Florida.
Activity Jamaica Florida %Differencea

U.S. Dollars

Preharvest
(acre) 536.50 400.31 25
(bushel) 1.07 .44 59

Harvesting and packing
Picking/packing
(bushel) 1.30 2.21 + 70
Sub-total 2.37 2.65 + 12
(bushel)

Marketing
selling (bushel) 1.40 .30 79
total (bushel) 3.77 2.95 21
a.+" indicates that costs were higher in Florida.








Another factor which makes an important contribution to Florida's
competitive position in U.S. winter fresh vegetable markets is the
yield per acre. The yields of both cucumbers and peppers in Jamaica
are substantially lower than in Florida. This differential in yields
between producers in the two regions, as with labor costs, has a
significant impact on the competitive position of Jamaica's vegetable
producers. For example, while the pre-harvest cost of producing an
acre of peppers in Florida is almost twice as high as in Jamaica, the
yield per acre in Jamaica is 44 percent lower. The end result is that
the cost per unit of producing bell peppers in Florida is essentially
the same as in Jamaica (Table 4.14).
The differences in the cost of marketing between Jamaica and
Florida also play an important role in Florida's competitive advantage
in U.S. winter fresh vegetable markets (Tables 4.13 and 4.14). The
cost of marketing cucumbers accounts for 46 percent of the total cost
of production in Jamaica, but only three percent of the total cost in
Florida. Thus, while it costs US$6.35 to grow, harvest, and pack
cucumbers in Jamaica (compared to US$8.56 in Florida), after
marketing costs are included, the total cost of producing cucumbers
in Jamaica is US$11.75 per bushel compared to US$8.81 in Florida.
Florida has an advantage over Jamaica in total marketing costs
for bell peppers of US$4.24 per bushel. Again, as with cucumbers,
producers in Jamaica have slightly lower preharvest costs than do
producers in Florida. When marketing costs are included, the cost
of producing peppers in Jamaica becomes substantially higher than
in Florida.
The two most expensive components of Jamaica's cost of marketing
are labor and transportation. The cost of selling cucumbers and
peppers in Jamaica is US$1.40 per bushel while the cost of selling
cucumbers and peppers in Florida is US$0.25 and US$0.30, respec-
tively. In addition, it costs Jamaica US$3.00 and US$2.80 to ship
both cucumbers and peppers, respectively, to the United States. In
the case of peppers, if the US$3.90 difference between selling and
shipping costs were eliminated, then the total cost of production of
peppers between the two regions would be nearly equal. Obviously,
Florida's vegetable producers will always have some advantage in
regard to transportation costs because of their closer proximity to the
market.

Some Implications
We have shown that it is feasible for Jamaican producers of bell
peppers and cucumbers to export to the United States in terms of
profit potential, but that they do not possess a competitive advantage








over Florida producers. Therefore, any adverse effect on Florida's
producers due to an increase in Jamaica's exports of cucumbers and
bell peppers would not be due to price competition. Perhaps even
more importantly, this analysis indicates also that winter fresh
vegetables produced in Jamaica will not be competing directly with
Florida products. This is due to the high cost of production in
Jamaica, which restricts exports of fresh vegetables from Jamaica to
the U.S. winter markets during January, February and March.
Because exports from Jamaica are limited to January, February,
and March, Mexico's producers are more likely to be harmed by
increased exports of fresh vegetables from Jamaica. This suggests
that it may be beneficial to producers in Florida to expand their
operations to countries such as Jamaica, where they can take
advantage of its growing conditions during the months of January
through March.
One way Jamaica would be able to increase its competitive position
in U.S. fresh winter vegetable markets would be to reduce transpor-
tation costs. This could be done by making use of back haulage,
which is not presently available.
Production costs for export vegetables in Jamaica also could be
reduced by Jamaican producers selling their culls in secondary
markets. Buckley et al. (1986) estimated that production costs for
cucumbers in Mexico were reduced by 15 percent by selling culls in
secondary markets. Using this figure as a proxy for the degree to
which Jamaican production costs could be reduced, the effect of
access to secondary markets would be to reduce the cost of cucumber
production by 58 cents, from $11.75 per box to $11.17 per box.
However, secondary markets presently are not available to winter
vegetable producers in Jamaica for two reasons. First, the small size
of Jamaica's domestic market for vegetables severely limits its ability
to absorb culls from the export market. Second, even if Jamaica's
domestic market could act as a secondary market for commercial
operators, their use of this market could have adverse social effects.
This is because the present suppliers of fresh vegetables to the
domestic market are the small farmers. In all probability they would
not be able to compete with the commercial operators in these
markets and would be put out of business. Small farm incomes in
Jamaica are already low, and the ability of the island's economy to
employ displaced farmers is low. It is unlikely that the government
of Jamaica would allow commercial operators access to the domestic
vegetable markets. Consequently, this does not appear to be a
feasible alternative for commercial producers.



























































44








Chapter V

Summary and Conclusions
Summary
The political and economic stability of the Caribbean Basin is vital
to both the economic and strategic interests of the United States.
The region includes the 28 eligible CBERA countries, all of which
have witnessed a dramatic decline in their standards of living, due to
the stagnation in the growth of their economies beginning in 1980.
By 1983, in all but a few countries in the region, real per-capita GDP
had declined to the level achieved during the 1970s or before.
Leaders in the Caribbean Basin and the United States feared that
the continued decline in standards of living throughout the region
would lead to increased political instability and the possible subver-
sion of the region's governments by Marxist-led groups. This threat,
coupled with the region's strategic value to the United States, led to
the formulation of the Caribbean Basin Initiative (CBI). The CBI
was designed by the United States to address the structural problems
in the region's economies. The overdependence of these economies
on imported intermediate goods and their reliance on the export of
a few primary commodities make them highly susceptible to changes
in world economic conditions. The major objective of the CBI is to
increase the rate of economic growth throughout the Caribbean Basin
by increasing the region's production of export goods. The major
incentive it uses to accomplish this is to grant duty-free entry to
virtually all goods produced by eligible countries. This has caused a
great deal of concern among Florida's vegetable producers, who fear
an increase in the region's exports of fresh vegetables to the United
States.
Jamaica possesses one of the strongest foundations in the Carib-
bean Basin on which to develop an export winter vegetable industry.
Its location, climate, and the availability of land and water provide an
ideal physical environment for producing fresh vegetables for export
to U.S. winter markets on a commercial basis. In addition, the
government of Jamaica has made the development of a winter
vegetable industry a major objective of its development program.
The stated goal of the government is to eventually supply 10 percent
of the demand in the winter vegetable markets in the United States,
which, if realized, could significantly reduce net income in the Florida
vegetable industry. Thus, Jamaica represents a good test case for
evaluating the potential for increasing exports of fresh vegetables to
the United States from the Caribbean Basin and of the CBERA's
potential impact on winter vegetable production in the region.








The purpose of this study was to determine Jamaica's ability to
produce fresh vegetables for export to U.S. winter markets. Two
issues were examined: the effect of the CBERA on winter vegetable
production in Jamaica, and the economic feasibility/profitability of
producing vegetables in Jamaica, for U.S. winter markets.
In order to determine whether or not the CBERA created any new
incentives for winter vegetable production in Jamaica the provisions
of the CBERA and the manner in which it treats fresh vegetable
exports from Jamaica were compared to the treatment Jamaica
would have received if the CBERA was not in existence. Our study
revealed no significant difference in the way fresh vegetables from
Jamaica were treated under the CBERA than they had been treated
under the GSP. Thus, we conclude that the CBERA has not created
any new incentives for increased vegetable production in Jamaica.
The profitability of producing cucumbers and peppers in Jamaica
for winter vegetable markets in the United States was evaluated by
comparing their costs of production to the price received by produ-
cers. It showed that it is profitable to export both cucumbers and
peppers to the United States, only during January through April.
Further analysis showed that Jamaica's producers of cucumbers
and peppers were at a competitive disadvantage relative to producers
in Florida. Whereas in Jamaica it costs US$11.75 to produce and
market a bushel of cucumbers, and US$10.75 for a bushel of peppers,
in Florida it costs US$8.88 per bushel for cucumbers and US$6.60
per bushel for peppers.
This indicates that the impact on producers in Florida from
Jamaica's entry into U.S. winter vegetable markets is likely to be
minimal. Given that production plus marketing costs are lower in
Florida than in Jamaica, producers in Florida are not likely to be
forced out of the market by price reductions due to increased
supplies from Jamaica. However, there is the possibility that
Jamaica's entry into the winter vegetable markets will cause a
reduction of revenues to producers in Florida.
Due to the high costs of production, it is only profitable for
producers in Jamaica to export during the months of January,
February, March, and April. This coincides with a reduced supply
from Florida producers and the major supply period for Mexican
producers. Thus, it appears that the impact of Jamaica's entry into
U.S. winter vegetable markets will fall more heavily on Mexico's
vegetable producers than on Florida's.
This study shows that marketing costs were the major source of
Florida's competitive advantage over Jamaica in cucumber and
pepper markets. The cost of marketing for cucumbers and peppers
averaged 25 cents and 30 cents per bushel, respectively, for U.S.








producers, and $5.40 and $5.20 per bushel for Jamaican producers.
The high cost of marketing in Jamaica primarily is due to
transportation costs, which averaged $3.00 per bushel for both
cucumbers and peppers.
It is also important to note that pre-harvest costs per unit in
Florida and Jamaica were nearly equal, even though wage rates are
much lower in Jamaica. This suggests that Florida has a definite
technological advantage, which compensates for higher wage rates.

Conclusions
Information on costs of production indicates that it is potentially
profitable for Jamaica to produce vegetables on a commercial scale
and export them to the United States. Does this indicate that
Jamaica will become a new supplier in the U.S. winter vegetable
markets? The answer to this question is more complex than a
simple comparison of revenues to costs. It must take into account
the hidden costs incurred by producers due to government economic
policy or the lack of experience producers have in supplying the U.S.
winter market.
An example of a hidden cost is the time delay caused by the need
to obtain the required import licenses or papers for duty exemptions.
These time delays, due to government red tape, and their associated
costs are not accounted for in the costs of production.
Despite recent reforms, the policies used by the government of
Jamaica remain biased economically against export production
(Peters). Especially critical in this regard are the continued use of
prohibitive duties and quantitative restrictions on imports, import
and export licensing requirements, and currency controls. All of
these policies, while costless to the government, impose costs to
producers, even those supposedly exempted from them. The simple
fact that these trade controls are in place requires that even
exempted producers supply the forms required to obtain the
exemptions. The government bureaucracy in Jamaica is known for
long delays in processing the papers producers need to receive their
exemptions. These delays can cause goods to sit on the dock for
days, waiting for the necessary approval to be shipped. For perish-
able goods, this can be disastrous.
The lack of experience Jamaica's winter vegetable producers have
with the U.S. markets also can impose hidden costs. This can be
due to their inability to find buyers for their produce, failure to
supply the quality of product desired, or ignorance of the proper way
to handle and store produce during shipment to ensure proper
quality at destination point.








In addition, the success of a producer in the winter vegetable
market depends upon his good name. That is, buyers must believe
that they are trustworthy and dependable; otherwise, buyers will not
do business with them. There appears to be a general perception
among buyers of fresh produce in the United States that producers
in Jamaica are generally undependable and untrustworthy.
Indications are that the hidden production costs caused by both
government economic policy and lack of business expertise are
sufficient to make the production of winter vegetables for U.S.
markets in Jamaica unprofitable. For example, the Spring Plains
farm, which was the centerpiece of the government's winter
vegetable development program, has folded. Also, two others, Grace
Kennedy, a major Jamaican conglomerate, and H. M. Shield, a
produce brokerage firm in the United States, also have pulled out of
winter vegetable production in Jamaica.
In conclusion, the CBERA does not create any new incentive for
winter vegetable production in Jamaica. It does not effectively treat
fresh vegetable exports from Jamaica any differently than they were
being treated under the GSP, which has been in existence since
1974. The fact that nothing happened in regard to winter vegetable
production in Jamaica or in the Caribbean Basin prior to the passage
of the CBERA suggests that the results under the CBERA will be no
different. The government of Jamaica's export expansion drive raised
the possibility that producers in Jamaica would begin to exploit their
potential to export winter vegetables to the United States. However,
the analysis of Jamaica's economic policies has indicated that there
has been no significant change in the climate for export production
in Jamaica. Thus, despite the fact that it is profitable for winter
vegetables to be produced in Jamaica and exported to the United
States, Jamaica is not likely to become a significant supplier.
Therefore, it would appear that the concerns of the Florida vegetable
industry are largely unfounded.








References


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U.S. Department of State. GIST, February 1982.


U.S. International Trade Commission. Tariff Schedules of the United
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