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<TABLE cellSpacing=0 cellPadding=1 width="100%" border=0><TBODY><TR><TD><SPAN class=TopStory>Agricultural and manufacturing sectors need a facelift</SPAN>
<SPAN class=Subheadline></SPAN></TD></TR><TR><TD>Dennis Morrison
Wednesday, October 18, 2006
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</TD></TR><TR><TD><SPAN class=Description>Dennis Morrison</SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>The issues raised at a recent Symposium on Productivity should not be allowed to recede into the background as more topical and controversial matters come to the fore. The fact is that the standard of living of our people will only improve on a sustained basis if the competitiveness of our economy matches or exceeds other countries. More specifically, our firms and industries must work at improving their productivity levels if Jamaica is to prosper economically - notwithstanding any distractions.<P class=StoryText align=justify>In a previous article I had pointed to areas of the economy where the penetration of information and communication technology in particular would obviously have raised efficiency and productivity levels in recent years. Among these are the financial sector, tourist industry, and the bauxite industry. The same cannot, however, be said about the agricultural or manufacturing sector where we have slipped significantly. Both the lethargic growth of exports by these sectors and the rapid increase in imports of manufactured and agricultural goods attest to this slippage.<P class=StoryText align=justify>Agriculture is perhaps the weakest link in terms of national productivity levels and competitiveness. In recent years, sugar production and yields have fallen to record low levels. Indeed, sugar production in 2005 calendar year amounted to only 122,100 tonnes, down almost 40 per cent from the output level of 203,000 tonnes in 2000. Not only has the number of hectares of cane reaped gone down, but it is taking more tonnes of cane to produce each tonne of sugar.
Over several decades, the sugar industry has stagnated in terms of the level of investment made in machinery and equipment, and to upgrade production practices. As a matter of fact, the investment profile of Jamaica shows that on average in the last 25 years only two cents of every dollar of investment has gone into the agricultural sector, as compared with over 25 cents in transport equipment. The result is that our sugar factories have been operating in many instances with post-World War II machinery and equipment, relatively low levels of mechanisation on the farms, and farming methods that are inferior to those of our competitors.<P class=StoryText align=justify>In spite of extensive research, policy debates and technical and economic studies, the modernisation process of the industry has been stalled. The industry has even gone through cycles of government takeover to privatisation and back to government takeover, and now is poised for privatisation once again - all under regimes from both sides of the political divide. Attempts to attract foreign investment have also been made, but without much success. Some local private operators have, however, managed to remain in business and have performed reasonably well.<P class=StoryText align=justify>The situation with the sugar industry has, to a large extent, been masked by the price support derived from the European Union, but that regime is now in its last days, as preferential regimes for both sugar and bananas are not sanctioned by the World Trade Organisation (WTO). The banana industry has had its own ups and downs, having been badly damaged by Hurricane Ivan and before that by the rulings of the WTO. These blows came after the industry had itself taken deliberate actions to tackle productivity problems
<SPAN class=Subheadline></SPAN></TD></TR><TR><TD>Dennis Morrison
Wednesday, October 18, 2006
</TD></TR></TBODY></TABLE>
<TABLE cellSpacing=0 cellPadding=5 width=70 align=left border=0><TBODY><TR><TD>
</TD></TR><TR><TD><SPAN class=Description>Dennis Morrison</SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>The issues raised at a recent Symposium on Productivity should not be allowed to recede into the background as more topical and controversial matters come to the fore. The fact is that the standard of living of our people will only improve on a sustained basis if the competitiveness of our economy matches or exceeds other countries. More specifically, our firms and industries must work at improving their productivity levels if Jamaica is to prosper economically - notwithstanding any distractions.<P class=StoryText align=justify>In a previous article I had pointed to areas of the economy where the penetration of information and communication technology in particular would obviously have raised efficiency and productivity levels in recent years. Among these are the financial sector, tourist industry, and the bauxite industry. The same cannot, however, be said about the agricultural or manufacturing sector where we have slipped significantly. Both the lethargic growth of exports by these sectors and the rapid increase in imports of manufactured and agricultural goods attest to this slippage.<P class=StoryText align=justify>Agriculture is perhaps the weakest link in terms of national productivity levels and competitiveness. In recent years, sugar production and yields have fallen to record low levels. Indeed, sugar production in 2005 calendar year amounted to only 122,100 tonnes, down almost 40 per cent from the output level of 203,000 tonnes in 2000. Not only has the number of hectares of cane reaped gone down, but it is taking more tonnes of cane to produce each tonne of sugar.Over several decades, the sugar industry has stagnated in terms of the level of investment made in machinery and equipment, and to upgrade production practices. As a matter of fact, the investment profile of Jamaica shows that on average in the last 25 years only two cents of every dollar of investment has gone into the agricultural sector, as compared with over 25 cents in transport equipment. The result is that our sugar factories have been operating in many instances with post-World War II machinery and equipment, relatively low levels of mechanisation on the farms, and farming methods that are inferior to those of our competitors.<P class=StoryText align=justify>In spite of extensive research, policy debates and technical and economic studies, the modernisation process of the industry has been stalled. The industry has even gone through cycles of government takeover to privatisation and back to government takeover, and now is poised for privatisation once again - all under regimes from both sides of the political divide. Attempts to attract foreign investment have also been made, but without much success. Some local private operators have, however, managed to remain in business and have performed reasonably well.<P class=StoryText align=justify>The situation with the sugar industry has, to a large extent, been masked by the price support derived from the European Union, but that regime is now in its last days, as preferential regimes for both sugar and bananas are not sanctioned by the World Trade Organisation (WTO). The banana industry has had its own ups and downs, having been badly damaged by Hurricane Ivan and before that by the rulings of the WTO. These blows came after the industry had itself taken deliberate actions to tackle productivity problems