Invest in soil not oil

Doug Hewson

Rising food prices and declining agricultural production levels in the Caribbean Community (CARICOM) nations have caused growing concerns and alarm for food security.

“CARICOM countries now import more than US$ 4 billion in food annually, an increase of 50 percent since 2000. Moreover, food imports are projected to increase to US $8-10 billion by 2020 if current efforts are not successful in addressing this problem.”

Dr Lystra Fletcher-Paul, FAO Representative for Trinidad & Tobago and Subregional Coordinator for the Caribbean

As the population and economic growth in developing countries continue to increase so does food prices. In the meanwhile, local farmers continue to struggle to make ends meet because of limited access to capital, land, technology, labour and a suitable market for their products.

But there may be hope for the region, as we heard from quite a few policy makers and stakeholders in the Caribbean agricultural industry.

Organised by the Cayman Islands Government, in collaboration with CARICOM, IICA, CARDI, FAO and CTA, the Caribbean Week of Agriculture took place from the 24^th – 28^th October 2016 under the theme “Investing in Food and Agriculture”. Stakeholders met in George Town, Grand Cayman Islands for the 14^th edition of this event to discuss new opportunities for investing in agriculture.

During the first Plenary Meeting themed “Investment Needs and Strategies for Agriculture and Agribusiness,” where the keynote speaker Mr Douglas Hewson, Managing Partner of Portland Private Equity spoke of his company’s willingness to invest in the CARICOM agriculture sector.

Mr Hewson in his talk explained the purpose of an equity firm which is to find a deal, structure and work with the deal until it meets the requirements of the company and client, then execute the transaction.

He also emphasised that his firm has to be more than a good source of capital, that they also have to provide a return on the investment to their investors.

Could this be why the agriculture sector is failing, when we invest in the agricultural sector do we actually expect a return on the investment?

This is definitely food for thought especially when you consider that whenever investments are made in other areas for example oil and gas production or tourism most times the financial returns exceed expectations.

Despite the apparent economic failings of the agriculture sector Mr Hewson and his organisation still, see numerous benefits for investing in the Caribbean.

He indicated that his company to typically goes for “US $20 – 40 million per investment, so the company has to be a certain size before it’s able to absorb that kind of capital”.

But how does this venture help the small-scale farmers and producers, let face it it doesn’t as Mr Hewson clearly states in an interview with myself and a representative of a Cayman radio station, that his business model best suits large scale business ideas for the sector.

This leads us to determine whether such an investment would cause more hindrance than an improvement to the life of small scale farmer.

As the discussions on investment in soil was continued, we had a few great speeches on proposed plans and suggestions for the region’s development.

Barton Clarke, Executive Director of the CARDI, said during the same session that “Taking action is the only way to bring about transformation in the agriculture sector” and that “managing of the value chain process is important, so farmers have total ownership of packaging”.

Mr Clarke urged CARICOM to take a big view of agriculture and discussed the relevance of the Jagdeo Initiative with the delegates along with CARDI’s vision for the sector.

Dr Fletcher-Paul, echoed similar sentiments to Mr Clarke, as she spoke of the FAO plans for the development of the region and to achieve the sustainable development goals.

As you can see there are other types of investment which the regional agriculture sector can certainly benefit from but more often than not, the investment is not financial in nature or requires much implementation, which is our biggest weakness of the region – the inability to properly implement a program or strategy.

It’s difficult to understand why Caribbean countries have little engagement when it comes to trading and invest regionally. Our local farmers need a separate market for their value-added.

Policy makers and stakeholder need to create a strategic investment plan which would facilitate inter-regional trade negotiations between farmers, manufacturers, policy makers and consumers.

Yes, we know there will be challenges, but we need the industry to move forward, or it will not survive.

So whether you were born in the Caribbean or Pacific, we all have one thing in common, and that is we all need food and water to survive.

This makes you part of this industry, so today I encourage you to invest in soil, invest in our farmers because “Money won’t create success, the freedom to make it will” – Nelson Mandela