Under the CBI Belize has also had several new investments, most notable of which is the investment in the citrus industry described in Appendix B. Nevertheless, while I appreciate that current review of the impact and effectiveness of the CBI is of limited scope, it would be remiss of me if I failed to inform you that due to its peculiar situation and the facts revealed above, Belize's trade and development have not been significantly advanced, partly due to the fact that Belize's most immediate and critical need is infrastructural development especially in energy, roads, transportation and credit. We are grateful for over $15 million in assistance through AID for mediumterm livestock development, training, roads and bridges, housing and $13 million for balance of payments support. However, this compares very unfavourably with Belize's neighbours. Without much more assistance, the CBI will continue to be hardly successful for Belize. One example of this is the scheme for economic support funds. Under the CBI, $5 million was made available by AID for on-lending to the private sector by local commercial banks, which are all affiliated with major international banks. However, the high prevailing interest rates, high collateral requirements and the banks' lending policies resulted in non-utilization of the facility. Unless such funds are made available to the entrepreneurs through existing public sector institutions for development lending, such stagnation will continue. In addition to infrastructural development there is a general need for economic diversification. We understand the efforts under the CBI to achieve this aim. Nevertheless, until such diversification has firmly taken hold, it should not be accompanied by dislocations in major established industries, as happened in 1985 with our sugar industry, long the mainstay of our economy. One of the two processing plants was closed by its non-Belizean owners, leading to massive layoffs of workers, reduction of output and dislocation of farmers. This was followed by a 16% reduction of Belize's share of the U.S. sugar quota. Now the prospects of a further loss under the Farm Act of 1986 looms large. One also recalls that under the OPIC enabling legislation, certain industries such as citrus, which compete with American industries, are excluded from coverage. This suggests that the effects of legislation other than the CBERA might tend to be adverse, thus deflecting the CBI's beneficial thrust. In summary, Belize's development, the tranquility of the region and the security and other foreign policy interests of the United States are symbiotic, and would benefit from actions under the CBI or a revision of the CBERA which would enhance infrastructural development, - aid public sector institutions for development lending, where private sector institutions are unable to deliver, furnish massive assistance for voluntary diversification and alleviating dislocations caused by involuntary diver sification, - provide for improved coordination of the activities of agencies of the Executive Branch involved in implementing the CBI, remove contradictions between the CBERA and other legislative schemes. At the same time, in the next five years Belize would wish to encourage American investors to capitalize on Belize's ideal location, stability, investment climate and other comparative advantages by developing an assembly industry and expanding the fledgeling garment industry. establishing canneries and processing plants for agricultural products of its fertile land, expanding the livestock, the deep-sea fishing and the new shrimp hatchery industries, assisting in the expansion of tourism, especially for admirers of nature (world's second largest barrier reef, projected jaguar preserve, bird-watching), adventure, archaeology and multicultural societies. Attached as Appendix C is a brief overview of the trade picture. APPENDIX A COVER STORY T New Hands For he travails of Belize's banara industry which has been travelling a slippery read since its establishment in the early seventies, may now soon be over. Cabinet this month decided the time was ripe and agreed to a plan for the handover of the industry to private enterprise. Accordingly, the debt-ridden Barana Control Board (BCB) has now sold off its 2,200 acres of bar ana plantations to various individuals and firms. The hope is that a rescheduling of the Beard's debts, combined with the vigour of private initiative will turn around the industry from a consistent mcney lcser into a major foreign exchange earner, and hopefully, a source of hundreds of new jobs. The decision to privatise the barana industry has come at a time when it is some $17.7 million in the red. The Banara Control Bcard is indebted to the Caribbean Development Bank, the Commonwealth Development Ccrpcration and the government of Trinidad and Tobago. A watertank that provides irrigation to the banana flelde. This is in addition to heavy operating losses which include $3.03M in 1981, $2.7M in 1982 and $1.0M in 1983. Losses for this year are projected at $.6M. And now the bogey-men are coming out with blame for the losses reading like an epistle, but which, no doubt should have been known all along: Lack of irrigation and drainage when required; "Lack of capital from the inception of the scheme; Slow reaction from lending agencies and lack of working capital to cover crisis situations which have had severe repercussions on production capability; "Human error and lack of technical knowledge. A Cabinet paper was soft on the charge of mismanagement, which was not specifically mentioned. But it is widely felt in the industry that a lack of the necessary supervisory inputs did play a role in bringing the industry to its knees, not to mention the fat salaries doled out to foreign "experts". The question now is why is it that private farmers are now expected to operate the industry at a profit when the Banana Control Board has failed? A study prepared by a former Bank of Nova Scotia Manager Mr. Craig Griffith, who is now the Board's Chairman and Operations Manager says that there is every indication that private farmers have gained much experience in producing bananas over the years. Their production figures reflect this. The willingness on the part of independent growers to purchase the BCB's farms also indicate a determination to make the investment a profitable one. Most of the farms in the Cowpen area of the Stann Creek District have been purchased by the Zabaneh brothers. The Catacamas Company, 50% Belizean and 50% Honduran owned, has also purchased 600 acres. This new company which will bring in their expertise from Honduras a major world exporter of bananas will play a pivotal role in making the banana industry big business in Belize. WIPING OFF THE DEBTS The New Belize August, 1985. dent growers are required to make regular use of the Bcard's aerial spraying facilities to prevent flareups of the disease which could cripple the entire industry. Belize is unique among Central and South American producers of bananas, in that it has a guaranteed market for its product. As a member of the Commonwealth and as a signatory to the Lomé Conventions (See July New Belize) Belize has a ten-year contract with Fyffes to supply bar aras to the United Kingdom at favourable prices. Under this contract negotiated by the Barara Control Bcard, Belize can sell all the bar aras it could conceivably hope to produce to Fyffes, which is a subsidiary of the multinational giant, United Fruits. Other countries such as Honduras, have to sell their bananas in this part of the world and have to battle a battery of quota systems imposed by major importers such as the United States of America. AN IRRITATING PROBLEM D espite its guaranteed market, Belize has a minor but irritating problem in getting its fruit to market. The industry has not been able to produce the 30,000 boxes of bananas per week which is the minimum amount needed for a ship to come to Belize to lead up with bararas for direct shipment to Europe. At present Belize's bananas are barged to Puerto Cortez, Honduras to catch a U.K. bound barana boat. This costs some $2.00 per box including customs duty in that Central American country. Projections are that Belize will be able to produce the 30,000 plus boxes per week by the middle of next year, adding substantially to farmers' profits. Belize currently has 1,500 acres under banana cultivation yielding some 600 thousand boxes of fruit. By next year with increased acreage now being planted by private farmers and the Catacamas company, along with the recently formed Belize Banana Growers Cooperative, there should be some 2,200 acres under production. With an increase in yields from the present 400 boxes of bananas per acre,Belize should be exporting well over one million boxes per year. Board Chairman Mr. Griffith says that with the "coming on line" of newly planted banana farms, production is expected to reach 700 boxes per acro by 1987 when the acreage under the cultivation should be 3,500. This works out to more than 2 million boxes of bananas per year resulting in some U.S. $16.1M in foreign exchange earnings at the present guaranteed prices offered by Fyffes. Some 650 people, half Honduran and half Belizean are directly employed in the banana Bananas being transported on cables to sheds. industry. By 1987 the number of field workers and fruit pickers is expected to rise to 1,400. Additional jobs are expected to be generated in the shipping services and through indirect employment. To give the industry a chance to regroup and make the big push that can make bananas the big cash crop it should be, all the funding agencies to which the Bcard owes money have agreed to a re-scheduling of its $17.7M debt. The lenders are convinced that the privatisation of the industry is the best possible thing to have happened to bararas in Belize. The Banana Control Bcard and the independent growers concur. Mr. Craig Griffith asserts that privatisation is the only way out for the Bcard. The plan will allow this statutory body to pay off its multi-million dollar debt and reduce its operating expenses. The Bcard previously had a monthly payroll of $110,000. With the privatisation scheme this has been reduced to $20,000 and will eventually be reduced again to $11,000. This is so because the 600 plus workers employed by the Board are now being paid by the various owners who have taken over the banana farms. The Beard can now concentrate on marketing, disease control, field tests and research aimed at increasing production through climatological and crop studies. Mr. Anthony Zabaneh is a prominent banana grower in Independence, a village in the heart of the banana industry. As a shareholder in the Zabaneh Brothers Company and Chairman of the Banana Growers Association he has the pulse of the industry. He is emphatic that the privatisation venture is the "light at the end of the tunnel". He is confident that with a recently negotiated price of $8.75 per box, the industry is set for a big take off. "Independent growers as businessmen are in the business of making money. We will do just that," he says. All the necessary remedies have now been mixed. It remains to be seen whether their application will invigorate and nourish the industry towards the robust health it has never known. Citrus is one of the few fruit products in which Caribbean and Central American producers are competing in a year-around market with domestic U.S. growers. It is also one of the few products dutiable in the absence of the CBI, and therefore one where the impact of the CBI can most easily be felt. As Miami Herald business writer Gail DeGeorge points out in a recent article, these CBI benefits will become even more significant over time, giving Caribbean Basin producers a critical price advantage over their main competition, the non-exempt Brazilians. Both Central America and the islands stand to gain from the citrus boom. Currently, the region's top orange producers are El Salvador, Costa Rica, the Dominican Republic, Panama, Honduras, Belize, Jamaica and Haiti. The last four are also the major grapefruit producers; and Haiti, Jamaica, El Salvador and the D.R. lead in lemons and/or limes. Dominica, with production less than half any of the above, nevertheless ranks next in both the grapefruit and lemon/Ilme categories. US. Firms Seek Caribbean Option Despite this widespread citrus industry in the Caribbean, the production of all CBI countries combined, in each category of fruit, remains but a tiny fraction of Florida's own output. A recent trend, however, has U.S. companies themselves increasingly exploring the Caribbean option. The USDA's Foreign Agricultural Circular (June 1985) reports that a large citrus nursery established by a U.S. investor in Costa Rica four years ago now has over a half-million trees planted, with plans for planting another half-million before the end of the decade. The Costa Rican government hopes to have another 15,000 hectares put into citrus (about 3 million trees), with an eventual building of a modern processing plant there. For Florida citrus producers, going off. shore is not so much an alternative as a fallback. A series of freezes and problems with citrus canker in recent years have left many Florida grower-packers short of fruit. Bin Harmon, a major Groveland packer who lost 90 percent of his groves to freezes, told the Miami Herald he is planting a 25,000-acre grapefruit and orange grove in the Bahamas to survive: "You can't run the second largest packing house in the state without fruit." Coca Cola Invests in Belize The most dramatic recent development was Coca-Cola Foods' decision to purchase, along with Barry Bowen of Belize and two Houston businessmen, some 700,000 acres in Belize, where the firm will plant a 25,000-acre citrus grove over the next seven years. Coca-Cola's Minute Maid brand has a 22 percent share of the U.S. orange juice market, and its 22,000 planted acres in Florida make it the state's largest grower. The Wall Street Journal reported that Coca-Cola and its partners paid $5-7 million for the land and partnership interests. Jonathan Parker, Coca-Cola Foods' executive vice president for operations, explained that with over 200,000 acres of Florida groveland lost to freezes and U.S. orange juice consump tion up 20 percent, over the past five years "our company has been forced to import Brazilian concentrate." The Belize operation will offer an additional alternative. New Employment Opportunities Initial plans are to start a nursery in late 1985 or early 1986. "The project will start out small and self-contained, with Minute Maid personnel, and any future growth will depend on its profitability and market conditions," according to vice president for communications Michelle Beale. It is expected to take up to 15 years to reach full maturity. Each 5,000 planted acres will provide jobs for about 100 permanent employees plus 150 seasonal workers in harvesting operations. Later plans include a processing plant to be built in the mid-1990's. Coca-Cola would train the estimated 800 permanent Belizian employees to operate the plant, which would also provide about 1,500 seasonal jobs. The CBI sparked Coca-Cola's interest in Belize, Ms. Beale said. “Belize is a stable, proU.S. (ree enterprise nation with a citrus growing tradition, available land, and good climate." She said this will be Minute Maid's first citrus operation in the region. Belizian Prime Minister Manuel Esquivel welcomed the investment, saying it will not only provide jobs but "serve as an example to other firms looking for a good environment." |