Previous - Next
Country presentation
Dr. James Fletcher Produce Chemist, Union Agricultural Station Ministry of Agriculture
3.10.1 Summary
Agriculture is a major contributor to the economy of Saint Lucia, but the island exists primarily as a primary producer. The agro-industry on the island is very poorly developed, despite tremendous pioneering work in the late 1970' and early 1980's by the Produce Chemist's Laboratory. The development of the agro-industry is a key component of the agricultural diversification programme of the Government, but many factors hinder this development.
Most of the assistance to the agro-industry is provided by the Produce Chemist's Laboratory, but there is a chronic shortage of public funding to finance the activities of this unit. There is a need for greater institutional support to be provided to the industry, both by the Ministry of Agriculture and by the Ministry of Trade and Industry. Difficulty in obtaining financial assistance has often been cited by agroprocessors as a major constraint. The absence of linkages between the agro-industry and the primary producers, and between agroindustry and the rapidly expanding tourism and hospitality sectors, is also a drawback.
In the light of the problems currently besieging the cottage agro-industry on the island and the recognized role which the industry has to play with respect to the reduction of post-harvest losses in locally-grown fruit and vegetables, food security and import substitution, and the generation of employment particularly among the rural population, a strategy is proposed for the revitalization and strengthening of the industry.
3.10.2 Introduction
Saint Lucia is an island of 616 square kilometres, with a population of approximately 151.000, which is increasing at a rate of roughly 1.8 per cent. Agriculture is a major contributor to the economy and over one-third of the working population is engaged in it. Although most of the agricultural activity is centred around bananas and coconuts, significant quantities of plantains, mangoes, breadfruit, grapefruit, hot-pepper, sweet potatoes and cocoa beans are also grown. The island also produces a variety of other fruits and vegetables, including orange, pineapple, sour sop, avocado, yam dasheen, cashew, carambola, passion fruit, tomatoes, cabbages, sweet peppers, carrots, lettuce and cucumbers. However, with the notable exception of coconuts, Saint Lucia functions mainly as a primary producer and the agro-industry is very poorly developed. Thus, there is a heavy wastage of fruits, particularly tree crops.
The problem is not as severe in vegetables, as farmers only produce sufficient quantities to meet market demands. Cottage agro-industrialactivity on the island is at present restricted to the production of ground spices and condiments, tomato ketchup (manufactured from tomato paste), gravy browning, table sauces, desiccated coconut, coconut milk, cocoa (chocolate) sticks and ground roasted coffee. Only three plants are operational. Up until 1990, a plant existed which manufactured fruit jams, jellies and marmalades, but financial difficulties forced its closure. A few individuals produce fruit jams and jellies using very limited home facilities, but production is sporadic and not organized.
Marketing is very poorly organized and has always been a major constraint to the development of the agro-industry. There is very little market intelligence available to agroprocessors, and they very often have to do most if not all of their' market research. Financing is another major obstacle to the development of the industry, and persons involved in agro-industry often complain of general unavailability of finance, high levels of collateral security asked for by the lending institutions, high rates of interest on loans, and difficulty in obtaining a run of credit.
All of the cottage agro-industry plants operating on the island are privately owned. In only one of the plants can the equipment available be regarded as being adequate. The procurement of packaging material is most often a costly and difficult affair for the agroprocessors, and inadequate packaging of locally produced commodities has contributed greatly to the relative lack of success of these products on the local markets. There has traditionally been heavy involvement of women in the agro-industry in the country, and in most instances women have outnumbered men. There has, however, been a disproportionately small number of women involved in the higher levels of the industry as skilled technicians and as managers.
The Produce Chemist's Laboratory (PCL), in the Ministry of Agriculture, was established in the mid 1970's with a mandate to generate and transfer technology for processing the wide variety of fruit and vegetables grown on the island. To this end, the unit developed methodologies for over 30 products ranging from fruit jams, jellies and nectars to banana flour. The unit was responsible in its early years for training individuals in agro-processing activities and for providing an extension service to the agro-industry. Many of the persons currently involved in the field of agro-processing have benefitted from the service provided by the PCL.
3.10.3 Government policy
The Government is committed to the development of the agro-industry, and has identified the industry as an integral part of its agricultural diversification programme. In addition to broadening its export base, the Government sees a vibrant agro-industry as making a significant contribution to its food security and import substitution programmes.
The Ministry of Agriculture is the Government institution with the most direct impact on the agro-industry. Most of the involvement of this Ministry is at the level of the Produce Chemist's Laboratory (PCL). The institutional assistance provided by the
PCL has taken the form of research and development activities, extension and advisory services, training, and a quality control programme. Many factors, however, have restricted the role which this unit has been able to play in the development of the agroindustry. After having fulfilled its mandate to develop processed products using simple methods and technologies so as to facilitate the transfer of the technology to interested individuals, the PCL operated in a sort of vacuum with no clear R & D directives. During the latter part of the 1980's and up until early 1991, the unit went through a period when it lost most of its professional staff due either to resignations or positions being made redundant. During this time, the unit also suffered from an acute shortage of public funding resulting in the nonmaintenance of its physical facilities and of its laboratory equipment. Hence, for an extended period the PCL was not able to provide the badly needed leadership and guidance to the agro-industry. Although this was not the only factor which militated against the development of the industry, its significance cannot be underestimated. The PCL, without any clear Government policies and objectives at the time to guide it, functioned for the major part of the 1980's as an illequipped fire-fighting unit responding to sporadic requests for testing, information and advice. The inadequacy of the unit during this period resulted in an erosion of most of the public confidence which the unit had worked so hard to acquire during its early years.
At present, the unit consists of a Produce Chemist and a Lab Technician. There is a desperate need for the replacement of the obsolete or non-functional equipment, which comprises the vast majority of the equipment in the lab. There is also an urgent need for a chemical analyst and two trained technicians.
3.10.4 Technical. economical and organizational aspects of the development of small agro-industries
In terms of technical aspects of agro-industrial development, the most gearing weaknesses are in the support facility of the PCL. As already stated, this unit needs to be strengthened both in terms of equipment and manpower needs. There is also a deficiency in the technical knowledge of equipment availability and its cost and in the transfer of technology to agro-processors. It is also felt that sufficient research is not being undertaken at the regional academic institutions in the area of food technology. In order to serve the technology transfer needs of the industry, a resource person could be made available regionally, who could be asked by the relevant national bodies responsible for the agroindustry to provide technical information when required. The recently-proposed Technology Extension Service to be administered by the Caribbean Council for Science and Technology and the European Commission for Latin America and the Caribbean is a step in the right direction.
As already mentioned, a deficiency exists in the area of market intelligence. This problem needs to be addressed by both the Ministry of Agriculture and the Ministry of Trade and Industry, and a marketing officer identified and put in place who could provide agro-processors with all the relevant marketing information. This brings up another point, that of the low level of liaison which has existed between the aforementioned ministries on matters relating to the agro-industry. The agro-industry, although traditionally the responsibility of the Ministry of Agriculture, should also be supported by the Ministry of Trade and Industry. Hence, there is need for greater cm operation between these ministries on the subject of agro-industrial development.
Another reason for the failure of cottage agro-industry activities on the island is the failure of linkage development between agro-industry and the primary producers. This is important not only because agro processors usually have a preference for a particular variety of a fruit or vegetable because of factors such as colour, juice content, acidity and fibre content, but also because such a linkage assures the processor a constant supply of produce at an agreed-upon price. What currently occurs is that the agro-processor has to settle for whatever variety is available, in whatever quantity and at whatever price (usually quite high) demanded by the producer.
There is also a need for linkage development between the agro-industry and the rapidly-expanding tourism and hospitality sector. These sectors use substantial quantities of food, and it stands to reason that they would provide a ready, reliable market for agroindustrial output.
The price of packaging material is very often prohibitive for the cottage-type producer and precludes her/him from keeping a stock of such material. Bulk purchasing may be a solution to this problem. This would necessitate the formation of an agroprocessors association or co-operative. Such a co-operative would not only facilitate bulk purchasing of packaging material but also of primary produce, and at the same time it would represent a group capable of seeing after its own interests. Countries such as Barbados and Trinidad and Tobago, which manufacture packaging material, could also be involved in some form of intra-regional scheme to assist agro-processors in Saint Lucia.
A serious impediment to the development of the agro-industry in the country is the fact that many of the distributive outlets on the island are also major stockists and commission agents for imported processed agricultural commodities. Very often, the same business house earns importer's commission, a wholesale markup and a retail markup before the product reaches the consumer. Thus, the owners of these business houses tend to view local agro-processors as competitors rather than as suppliers, and their vested interest in imported products takes precedence over any thrust aimed at promoting local agro industry products.
3.10.5 Proposal for the development of the cottage agro-industry
Given the current retarded state of development of the agro-industry in Saint Lucia, it is imperative that a programme be embarked upon to breathe new life into the industry, specifically through the promotion of the cottage agro-industry. This would have the following beneficial effects:
The objective of the project is to stimulate the development of cottage-type agro industries in the rural areas of the island, and to provide all the necessary support facilities to ensure the long-term viability of the cottage agro-industry. The programme of activities suggested to achieve this objective is as follows:
a)An educational programme must be undertaken to sensitize the rural population to the benefits to be derived from agro-processing activities. This programme should seek to demonstrate how simple technologies can be used to produce a high quality product.
b)A national training centre should be established to train interested persons in agro processing techniques. This will necessitate the training of trainers (an activity which may have to be undertaken on a regional bases) and the equipping of the centre with basic, small-scale processing equipment including hand refrac tometers, a juice extractor, a food processor, a heat sealer, a pH meter, a drying oven, a refrigerator, a freezer, a stove, and assorted sizes of pots and pans.
c)The primary support facility for the agro-industry, the Produce Chemist's Laboratory, has to be strengthened by providing it with the necessary equipment and personnel.
d)The Ministry of Agriculture and the Ministry of Trade and Industry should develop a coordinated approach to agro industrial development. This is particularly needed in the area of marketing.
e)Linkages should be developed between agro-processors and primary producers, and between the agro-industry and the tourism and hospitality sectors.
f)Financial credit has to be made more accessible for small-scale agro-processors. This may require the setting up of a special fund to assist them.
g)Someone regionally-based, perhaps at the Caribbean Development Bank, should be made available so as to provide up-to date information on the technology available and on the availability, suitability and cost of agro-processing equipment.
h)It may become necessary for some form of quota system to be implemented in the short term to allow locally produced commodities to establish a niche in the market. This quota system may at least negate some of the unfair practices currently employed by some local business houses. It should be understood, however, that once they become established on the market, the quota system will be retracted and local goods will have to compete on an even keel with imported products.
i)Given that the persons who will be doing the processing will also have to manage the business, and that such persons have probably never had any training in management, it will be necessary to conduct management skills training programmes for interested persons. The Saint Lucia Industrial and Small Business Association can be asked to assist in this regard.
I have little doubt that if the above conditions can be met, the cottage agroindustry will grow into the vibrant, successful industry that we all know it can be.
3.11 St. Vincent and the Grenadines
Problems and prospects for the development of agro processing at the cottage industry level
Mr. Andreas Wickham Industry Officer Ministry of Agriculture, Industry and Labour
3.11.1 Summary
This document represents a global view of the problems and prospects for development in the small scale cottage industry operations in St. Vincent and the Grenadines. It does not by any means encompass all the factors which influence the development of the sector, but focusses on some of the major issues and problems which impinge on its development. It also examines the present situation in the country as it relates to agro-processing. The country continues to rely on its agricultural sector for its foreign exchange earnings. Both agriculture and industry contribute a significant percentage to the Gross Domestic Product. The food processing and beverage sub-sector plays the dominant role in industry, but this is dominated by a few medium and relatively large scale enterprises whose combined output is in excess of 90 per cent of all foods and drinks processed and packages.
The agro-processing establishments which operate at the cottage industry level are either small urban-based and owner manages or slightly larger rural based community group operations. They produce for a limited market and have not yet created any significant impact on the economy in terms of employment and income generation. A wide range of products are offered by these small scales operators, but they are beset by problems of a technical nature associated with quality control, packaging and labelling, etc. In addition, the problems of access to credit, and lack of managerial and marketing skills, remain dominant features of these businesses.
Government's policy towards the development of the sector is also highlighted. This policy is based on Government's recognition of the role of agro-processing within the overall development plan. The institutions such as the Ministry of Agriculture, Industry and Labour and the Development Corporation are expected to provide support services to this sphere of the economic activity and plans are ahead to lend further assistance, by addressing the question of incentives. Government is also committed to providing technical assistance through the establishment of a facility for product development, testing, quality control and standards. The role of the National Development Foundation in promoting small business development is also highlighted.
Finally, the paper briefly describes some of the technical and economical aspects of the development of the sector, showing that problems of a technical managerial and financial nature are the major constraints to the further development of cottage industry type operations involved in agro-processing.
3.11.2 Present situation
In St. Vincent and the Grenadines, the twin productive sectors of agriculture an industry are of critical importance to the development of the country's economy. Traditionally, agriculture has been the principal foreign exchange earner, but the industrial sector, while still embryonic is playing and will continue to have a vital role to play in accelerating economic development.
Between 1986 and 1990, the agricultural vector contributed an annual average of 18.45 per cent of Gross Domestic Product (GDP), while manufacturing industry contributed 10.43 per cent. Within the agricultural sector, banana production and export play a dominant role. In 1989, approximately 66 million kg of bananas were produced and exports totalled 89.9 million dollars up from 66.1 million in 1988, representing just about 40 per cent of total exports. The percentage contribution of food imports vis-a-vis overall imports increased gradually from 18.9 per cent in 1987 to 23.0 per cent in 1989. Food exports, on the other hand, constitute 75 per cent of all exports.
The agro-processing subsector falls within the ambit of manufacturing, but is critically linked to the agricultural sector, since the primary products used for processing must originate from this sector. Food and beverages within manufacturing occupy a pivotal position, but the operations are dominated by a few medium sized and relatively large processing concerns, whose production is approximately 90 per cent of all processed food produced in the country. These large operations by and large utilizes imported raw materials.
At the level of the cottage industry, a range of economic activities take place. These include fishing, handicrafts, garment manufacture and agro-processing. Most of the agroprocessing activities tend to be based in close proximity to the urban market instead of the raw material source in the rural areas, this undoubtedly being a manifestation of the wider centralization of manufacturing and service industry activities in the urban area. A wide range of products, including plantain and banana chips, spices, seasoning (wet and dry) hot pepper sauce, salted nuts, jams and jellies, cakes and pastries and other snack foods, are being produced at this level, all feared towards domestic consumption.
Most of the small operations have sough to utilize surplus agricultural produce, thereby creating some backward linkages; however, a number of problems still exist, one of these being the raw material supply. This is not always readily available for processing, despite our tradition as an agricultural-based economy.
Agro processors have to compete with the fresh produce market for vital primary inputs and farmers usually elect to go for the fresh market, since prices are generally higher there. In respect of processors who utilize banana as a major input, the situation is much more acceptable since she/he is able to purchase bananas rejected for the export market at reasonable prices lower than the existing market price. The experience of most of the small operations have shown that financial, managerial and technical constraints remain the greatest obstacles to further development. Much of the management of community based groups involved in agro-processing is provided on a voluntary basis, since available resources are insufficient to have trained management and besides volunteer staff are poorly trained.
Financial and technical assistance come in the form of grants, particularly to the rural-based community organizations, since their operations are more community spirited, funding agencies are more disposed to provide financing and free technical assistance to these than to family owned urban-based operations. Technical assistance in management, marketing, quality control, packaging, labelling and research is still very hap-hazard and needs to be upgraded. Many operators depend on their own proven experience on the technological processes involved in agro-industry or, at best, seed assistance from the larger operators in the industry who have at their disposal laboratory facilities for controlling quality and for research and development purposes. The absence of a Government research and development and standards facility has greatly hindered progress in this area.
The systems that are in place for marketing the finished products of the subsector are rudimentary. In respect of the rural based operations, products are sold directly to shops and households in the community and in other surrounding villages, by the members of the organization. Only in exceptional cases does the level of production and acceptability of product allow for incursions into the urban market. Most of the urban-based operations are owned and managed by individuals of families. Products are supplied directly to shops and supermarkets which carry these products depending on the existing demand.
3.11.3 Government's policy and perspectives
Governments policy towards small-scale cottage industry operations is an integral part of its overall policy towards the industrial sector, a policy which is designed to further promote the development of indigenous industries based on agro-processing. At present the country's thrust in agricultural diversification to reduce the dominance of banana production and export, coupled with the land reform programme, are creating the conditions for increased production of primary agricultural produce. Tremendous scope exists for the processing of secondary and tertiary products for the local regional and even international markets.
Within this framework, the Government views the cottage industry subsector as being a vital catalyst for the expansion and development of agro-industries. The Ministry of Agriculture, Industry and Labour and the Development Corporation are the two Government institutions charged with the responsibility of guiding the country's industrial and agricultural development; hence, they are called upon to play the leading role in ensuring that the sub-sector is given the necessary support for expansion into viable small businesses, capable of generating employment and earning foreign exchange.
The assistance presently provided is limited to small loans disbursed by the Development Corporation at lower interest rates than the commercial banks; however, no structured system is in place for the delivery of extension services and training to the small agro-processor. Non-governmental Organizations (NGO's), however, such as the
National Development Foundation (NDF) do extensive work in the sub-sector and offer technical assistance and training in specific areas. In this respect, Government has committed itself to a budgetary subvention on an annual basis to the NDF, to assist the organization in its work.
While the Fiscal Incentives Act exists as Government's premiere legal instrument for the grant of concessions to the manufacturing and agro-processing industries, it does not make allowance for small operations, since most of these establishments are not registered companies; hence, cottage industries are yet to benefit from tax and duty free concessions. Plans, however, are afoot to convert empty factory shells into smaller workable units to accommodate enterprising operators of cottage industries, as part of Governments programme of support to this sub-sector.
Government's commitment to the development of the agro-processing sub-sector is borne out by the fact that the draft of the new Five-Year Plan speaks of St. Vincent and the Grenadines commitment to ensure that in the revision of the harmonization of Fiscal Incentives at the CARICOM level, provision will be made "... for a package of special incentives to the local national investor, especially in the area of agriculturalbased manufacturing".
In respect of assistance in research and development, the Government recognizes that within the last few years a number of these small scale operators have been able to offer products for sale on supermarket shelves and shops. These products, however, lack proper techniques during the processing and packaging stages and there is a general lack of technical direction in respect of the processing and marketing aspects of the operations.
Government has plans to establish a Standards/Product Development facility to provide services needed in the area of research and development, testing, quality control and training. The cottage industries stand to benefit from the establishment of this facility, since technical assistance would be made available for improving on the packaging and labeling of products while prolonging shelf life. This facility will also provide information on market requirements. The objective of the Standards/Product Development Unit will be:
a)To encourage research and technological efforts in critical
areas such as agriculture, agro-industry and small scale
manufacturing.
b)To promote research and development and innovation in both the
public and private sectors.
c)To conduct research and development into new formulas and new
products from local agricultural produce.
d)To offer technical assistance to small producers in terms of
their preparation techniques, packaging, labelling etc.
e)To conduct sanitary and other tests on local and imported food
products.
f)To provide technical information on market requirements to
producers.
g)To provide other services within its field of competence to
producers and the general public alike. The establishment of such
a facility could only augur well for the development of the
cottage industry and small business sector.
In respect of intra-regional cooperation, the instruments which are in place at the regional level to regulate and programme industrial development, though well-meaning, have not reached down to the level of the cottage industries. Indeed, in most cases these do not function well at the level for which they were intended. Cooperation could be better developed in the areas of market information sharing, raw material availability, sharing of experiences in the development of small businesses, sharing of research findings and regional cooperation in quality control and standards. Some work is now being carried out in respect of the standardization of regional products; spearheaded by the CARICOM Export Development Project (CEDP).
The region,through the Common External Tariff (CET), has also placed some protection around the manufacturing and agro-processing industries; however, the actual implementation of this trade mechanism has been delayed by some countries, thus effectively maintaining the status quo in respect of the inflow of extra-regional processed foods.
3.11.4 Technical economical and organizational aspects
Some of the major difficulties in the development of small scale agro-processing are of a technical nature. At present, most of the technologies used in cottage agroindustry are rudimentary; this, in spite of the considerable amount of research and development activities which take place in the region. The availability of those technologies, simple but effective, are absolutely necessary if the agro-processing industry is to expand. Research findings need to be filtered down to end users and in a form easily adaptable.
Since there are no Government-owned institutions which deal specifically with research and development, St. Vincent and the Grenadines has a distinct disadvantage. It is in recognition of this limitation that the Government is seeking to establish a facility which will spearhead this type of technical work. In the meantime, there is need for greater contact between the industry, the primary producers, Government institutions and regional research and development institutions, to allow for available technology and market information reaching the end users. The question of proper packaging and labelling is of critical importance for product acceptability. The cost, however, for proper packaging materials is for most part prohibitive to the small operator, but this undoubtedly enhances the aesthetic appearance of a product and helps to open up market opportunities.
Perhaps the most acute problem associated with small business development is that of financing. Access to credit is extremely important for the development of these businesses. Credit on concessionary terms, when properly managed, could determine the economic viability of a small business. A number of national and international agencies and institutions are in the business of funding small projects, whether on soft loaner grant terms; however, one of the weaknesses associated with the use of the available resources is the inability of the recipient to efficiently manage and account for these resources. This has been the demise of a number of good initiatives engineered by rural-based community groups and farmers organizations.
The NDF is a not-for-profit organization which works closely with the sub-sector through the provision of credit and business guidance in the establishment and development of these small and micro enterprises. Funding is sought from international donor agencies and lent to these small operators at concessionary rates. The organization has in its programme a number of economically feasible small projects in the agro industrial subsector, designed for implementation in specific rural communities where raw material availability has been relatively consistent. Should those projects become a reality, economic activity in those areas will be enhanced: they will provide employment and strengthen the linkages between agriculture and industry. These objectives are in keeping with Government's perspectives for development in this area.
The economic impact of small scale agro processing is at present relatively minimal, but tremendous potential exists for the development of this sub-sector to convert it into a major employer and generator of income. There are lucid examples all over the Caribbean of small owner-managed agro processing facilities developing into mediumsized companies, not only for domestic demand, but also for export.