SOME ISSUES OF TRADE POLICY IN THE WEST INDIES

V. The Problem Defined

It is held that the main purpose of current preferential policies is to secure external support for the weak competitive position of West Indian agricultural exports. It is alleged that the West Indies are high-cost producers of most of the export crops which they produce, notably sugar, bananas, and citrus. West Indian sugar is unable to compete on the open market with Cuban or Hawaiian sugar; West Indian bananas cannot compete with those from Ecuador, Colombia, or Central America; West Indian citrus is higher cost than that of the United States, Mexico, and Israel.

The argument is usually formulated in terms of higher wage costs per unit of output, because it is felt that lower levels of productivity in the West Indies, are not compensated for by lower wages. The evidence on this is hard to document, but there are a few scraps of information which can be put forward in support of this view. On the side of productivity, it is known for example, that acreage yields in respect of Jamaican bananas and citrus are among the lowest in the world. As far as bananas are concerned, Jamaican yields are substantially lower than those of some of the other producing countries in the Western Hemisphere.

As far as wages are concerned, there are practically no reliable data which can be examined. But from the information contained in the Annual Yearbooks of Labour Statistics published by the I.L.O., one can hazard the guess that neither Jamaica nor Trinidad have any significant wage advantage over other developing countries. Whatever the truth of the matter, it does appear that West Indian banana and citrus producers have been able to persuade the United Kingdom that they require much higher prices than other producing countries in order to survive.

Several explanations have been advanced in elucidation of the problem of high production costs. Low productivity is attributed to the small scale of some West Indian agricultural production. In Jamaica for instance, farms of under 25 acres in size, produce some 70% of the total output of bananas and citrus. It is generally recognised that productivity on these farms is low.* Most of them are concentrated in areas which are either dry, hilly, or have poor soils. Little use is made of irrigation or fertilizers. The results of the 1961 Agricultural Census show that less than 3% of the farms in this size group used any form of irrigation, while over 73% of those farms used no fertilizers at all. In addition, productivity is adversely affected by the lack of specialisation, arising from the widespread practice of mixed cropping.[2]

As far as the ‘estates’ sector is concerned, it is claimed that the growth of productivity has been held down by governmental discouragement of mechanization. This applies particularly to sugar, where the pace of mechanization has been slowed down by governmental action designed to protect existing levels of employment.

The case of sugar suggests that in recent years, wages have been rising faster than the cost of machines. This leads to a consideration of the factors which are held to account for the unfavourable level of wages. On this score, the main blame is placed on Trade Union ‘pushfulness’, which it is argued is more successful in the West Indies than elsewhere, because of the close association between unions and political parties. In addition, the claim is made that unions tend to resist wage differentials between industries, which reflect differences in productivity. Thus in Jamaica and Trinidad, high-productivity industries like bauxite and petroleum, serve as pace setters for the level of wages in the economy as a whole.

Looking at the entire cost situation then, we may recognise that all West Indian governments without exception, are firmly convinced that their agricultural production is higher cost than those of other competing countries.