By K.C. Soares, Contributor
A yam farmer taking produce from his field to the market.
I HAVE been saying all along that for economic growth and development to take place two sectors will have to play pivotal roles.
These sectors are the tourism sector and the agricultural sector. Both sectors have to perform in tandem if there is to be growth and development. If things remain as they are there is some hope from the tourism sector as far as creditable performance is concerned.
Unfortunately, all is not well in the agricultural sector and if something is not done immediately the sector will continue to decline. This sector needs urgent attention.
Some may argue that tourism alone may lay the foundation for economic growth and development. I disagree for three main reasons. Firstly, the tourism industry employs far fewer persons than the agricultural sector and therefore the impact of any multiplier effect is greatly diminished without the active participation of those involved in agriculture.
Secondly, if the tourism sector expands, and the agricultural sector continues to decline the bulk of the food needed to maintain the former sector may well have to be imported. In so doing we would be creating incomes in the countries exporting such food to us rather than creating the incomes here at home.
The end result is that the standard of living of Jamaicans will continue to fall rather than improve. This state of affairs certainly cannot be considered as economic growth and development. Thirdly, the tourism industry is fickle. Any world disturbance, usually brought about by terrorist acts or any upsurge in crime in our own country, will scare away tourists from our shores.
DISRUPTIONS
With the world stage set for continued terrorist acts and the rising unemployment here in Jamaica, the probability of having disruptions in the tourism sector is high. For these reasons we cannot depend solely on tourism to revive our ailing economy. Agriculture must be at the forefront.
It is therefore important for us to embark on a strategy to develop our agriculture along new lines. The old traditional ways of doing things will have to be dispensed with.
To formulate this strategy it may be necessary to firstly ascertain how many small and micro-enterprises (SMEs) are involved in agricultural sector. When I speak of the agricultural sector I include agro-processing as well as the production of the raw materials that is being processed.
Some schools of thought categorise agro-processing in the manufacturing sector. I do not. As far as I know there are no available figures confirming the number of SMEs actively involved in agricultural production. My own estimation is that of the total number of SMEs reported to be in operation in the year 2002, at least 35 per cent are involved in agriculture with a whopping 60 per cent in services which is essentially higglering. The remaining 5 per cent is split among the other sectors of the economy.
In absolute terms, of the 21,592 SMEs reported in 2002, 7,557 are estimated to be agricultural enterprises while 12,995 are involved in higglering. The other sectors of the economy (tourism, manufacturing, mining & quarrying, construction & entertainment etc.) account for the remaining 1080. It should be borne in mind that SMEs account for approximately 93 per cent of the total number of businesses operating in Jamaica.
With advances in technology more and more people are expected to be made redundant. Where will these people be employed? Where will the new entrants to the labour market be employed? There is only one sector that can absorb these people - the small business sector.
EMPLOYMENT
The two main areas for employment in the small business sector at this time are agriculture and higglering. Higglering is non-productive and does not contribute to development of the country. Therefore the importance of the agricultural sector at this time cannot be over-emphasised as it will have to absorb not only persons made redundant but also new entrants into the labour market.
Bearing in mind that approximately 75 per cent of the population is not academically qualified and that the emerging sectors such as the Information Technology sector require qualified people, the only chance of the masses gaining employment is in the agricultural and service sectors.
The service sector does not contribute to economic growth and development as much as the agricultural sector. Therefore all efforts should be made to boost to the agricultural sector.
The first step in a strategy to improve agriculture is to make funds available for research and development. In my opinion it is pointless putting funds into the construction of various buildings.
As it is, we have enough buildings to go forward. What is preventing us from going forward is an economic base to build on.
K. C. Soares is a former banker and is now a business consultant with Soledad Financial Services Limited. E-mail: soledad@netcomm-jm.com.
