For the tourism industry to continue to grow it needs essential help from the U.S. government in infrastructural improvements, and training of local citizens. Tourism is an essential industry of development for the region, and should be a higher priority under the CBI.

For

5. Integrity of the CBI. We also want Congress' support in maintaining the integrity of the CBI, which could be one of its most important contributions to a positive business environment. Although the region still faces major challenges, significant progress in the economic sectors has occurred. instance in Central America the shocking decline in the region's GNP has been decreased. With the exclusion of Nicaragua, the region as a whole grew 1-2% in 1984. Although C/CAA is encouraged at this progress we clearly recognize it as insufficient over the long run.

Finally, in reviewing the economic progress of the Caribbean Basin under CBI, we must keep in mind the Initiative is designed to prevent hostile threats and meanwhile foster an on-going relationship built on mutual respect, cooperation and dialogue. As a result, the CBI is not simply a program, but an on-going process. The Caribbean Basin Initiative gives us an excellent opportunity to increase and diversify our supply sources and markets, while aiding Caribbean nations to develop their economy. Such programs as trade preferences, economic development assistance and investment promotion activities are critical elements of the CBI; each program's goal is to develop a strong relationship between the Basin countries forged on strong democratic institutions and healthy, vibrant economies.

One of the most important goals of recent years has been the change in attitude toward private enterprise demonstrated by both the government and the private sector. We believe the majority of people who know the region feel a substantial change in attitudes for the better. There is increasing awareness that it is the private sector which is predominately the source of innovation, investment, opportunities, and growth. Lastly, the role of government is viewed increasingly as a way to provide an environment within which the private sector can operate efficiently and successfully rather than it being the main catalyst of economic activity.

Thank you.

The following is a brief tourism analysis for the Caribbean countries of Barbados, Dominica, Dominican Republic, Jamaica, and St. Kitts-Nevis.

Barbados had 362,470 tourists in 1984. The average tourist expenditure was $97.00/day. The retention of the U.S. tourist dollar in Barbados is approximately 60%. Employment in the tourism sector accounted for 138 of the labor force. This statistic includes both those directly in the hotel trade, as well as those employed by tourism related industry such as airports, beach shops, etc.

Dominica had 22,826 tourists in 1984, with an average expenditure of U.S. $60.00/day. The retention of the U.S. tourist dollar in Dominica is approximately 50%. Employment in the tourism sector is approximately 118.

The Dominican Republic had 758,440 tourist arrivals in 1985. The average tourist expenditure in 1983 (latest figure) was $564.00 for the stay. Retention of the dollar is estimated at 60%.

In 1984, Jamaica had 843,400 visitors with an average expenditure of $516.00 for their stay. The dollar retention is estimated at 60%. Employment in the tourism sector is 38 (28,000), including those directly employed by tourism, as well as "fringe" businesses such as equipment rental, airport services, etc.

St. Kitts-Nevis had 64,000 visitors in 1984. Cruise ship visitors spent an average of $17.00/day, while hotel visitors spent $85.00/day. The U.S. tourist dollar retention is approximately 45%. Five percent of the labor force of St. Kitts-Nevis is employed by the tourism industry.

The varying percentages of U.S. tourist dollar retention are estimates by the Caribbean Tourism Research and Development Center. The figure is based on the first transaction between the tourist and the destination- i.e. hotel and taxis. The countries differ in their percentages depending on domestic food supplies such as beef, exotic vegetables, or other non-indigenous products. Another factor influencing the dollar retention rate is the percentage of property that is locally owned, versus that which is held by foreign interests.

For example, St. Kitts-Nevis retains approximately 45% of the U.S. tourist dollar based on the first transaction. However, after the necessities for the hotels, such as red meat, vegetables, and diesel to run the air conditioners are purchased, the retention rate drops to 15%. The more domestic products a country has available, the higher the dollar retention.

Finally, a rough dollar break-down for the Caribbean region would be approximately 60% spent on accomodations (excluding air ticket), 30% on food and beverage, and 10% on taxis and souveniers.

STATEMENT OF JONATHAN E. PARKER, EXECUTIVE VICE PRESIDENT, COCA-COLA FOODS, HOUSTON, TX

My name is Jonathan E. Parker, I am executive vice president of Coca-Cola Foods in Houston, TX. I am here today to discuss Coca-Cola Foods' operations and proposed project to grown citrus in the Caribbean Basin, specifically in the country of Belize. But first let me give you some background about our company and our expertise in citrus.

Coca-Cola Foods is a division of the Coca-Cola Company we are headquartered in Houston. Although we manufacture and market a variety of consumer products, our flagship product is Minute Maid Orange Juice. Our company pioneered the development of frozen concentrated orange juice in 1946 and today we are the category leader with roughly 22 percent of the market.

Our orange juice processing operations are principally located in Florida where we employ about 1,200 fulltime employees and 800 seasonal workers. Coca-Cola Foods is the largest orange grower in the State. We grow approximately 3 percent of the State's total citrus crop and process about 13 percent. Our company participates in many Florida citrus industry groups, and we watch the domestic and world markets for orange concentrate very closely.

I appreciate having the opportunity to testify before this committee today and to share with you our knowledge of the citrus industry, and our plans for development in the Caribbean. I would like to start with some historic background on the industry.

In 1975, the U.S. consumer orange juice business, including both frozen concentrated orange juice and chilled orange juice, was primarily a frozen business. Ninety-two percent of that orange juice was supplied from Florida with 3 percent being imported principally from Brazil. However, freezes in 1977, 1981, 1982, 1983 and 1985 have resulted in Florida supplying approximately 50 percent in 1985, with 48 percent being imported primarily from Brazil. During this time, U.S. consump tion of orange juice grew annually compounded at 3.6 percent per year from 1975 until the peak year, occurring in 1983. Because of price increases in 1984 and 1985, consumption declined 1 percent and 4 percent in those years.

The volume declines in Europe were even more dramatic in 1985. Europe relies almost exclusively on Brazil for orange juice supply. The combination of the higher Brazilian price, which is priced in dollars, and the strong dollar accentuated the price increase in Europe. As a result, the sales decline in Europe was even more dramatic than in the United States. Because of the higher prices, Brazil had been increasing plantings and taking better care of their groves, these actions produced significant volume increases in Brazil. The combination of decreasing consumption in 1985 and the increasing supply caused the current situation, whereby there is a surplus of Brazilian orange juice resulting in the lowest price in 61 years. Wholesale prices of retail packages have been dropped to levels below 1983. It may take several more months before the lower prices stimulate significant increases in demand.

We believe that the best thing for the consumer and the industry is for long term stability in prices. The current surplus in the marketplace is very much a function of prices escalating too high in 1985. Had price increases been more moderate, volume growth could have been sustained, and the marker would be more able to absorb the increased production.

Brazil makes up 90 percent of all concentrated orange juice moving in world trade. They have been the major factor in determination of price over the last several years. This was particularly true of the high prices in 1985 since there were export quotas which limited supply. In addition, Florida's recovery of orange production is expected to be fairly slow. The Florida Department of Citrus Projections show a total increase of only 12 percent 2 over the next five years. The recovery is slow for several reasons. First, the 1983 and 1985 freezes resulted in the loss of approximately 200,000 acres of groves, more than 20 percent of the State's acreage. These groves were not just damaged, they were totally destroyed, and must be replanted. Continued cold in the northern part of the State has aggravated the situation. Trees which were replanted after the 1983 freeze were refrozen in 1985. In addition, the frost which occurred in January 1986 caused some foliage damage to trees in the north.

Another major factor affecting the Florida citrus industry is the recent discovery of citrus canker in nurseries. Canker has substantially impacted the replant pro

1 1980 average price $844/mt.

2 130 mm boxes round 1985/86; 148 mm boxes round 1990/91.

gram, as there have been more than 18 million nursery trees destroyed. In addition, restriction on movement of nursery trees has specifically hampered planting efforts. While many new groves have been planted in the South, continued expansion in the southern part of the State is restricted by water availability and population pressure.

Finally, we should be reminded that even when plantings are successful, once trees are replanted, it is five years to meaningful production.

Coca-Cola Foods is heavily committed to Florida with about 22,000 acres of planted groves. We will continue to replant our frozen groves in Florida; however, we have also been impacted by the canker. We had undertaken major replantings in 1984 and 1985, but recently were ordered to destroy 900,000 trees in our nursery and 165,000 in our recently replanted groves because of the discovery of citrus canker in our principal nursery.

With the industry relying on 50 percent of its requirements from Brazil for the next five years, and the uncertainties in Florida, our company felt that it would be prudent to add a third source of supply. We believe that a third source of supply will help to stabilize prices over the long term. We evaluated possibilities in the Caribbean and Central America because of the proximity to Florida. We would begin planting a nursery late in 1986 and ultimately would plant about 25,000 acres of groves. A processing plant would be constructed about 1995, and it is our intention to ship concentrate from Belize to Florida when it would be blended and repackaged for retail and food serving use.

We found available land suitable for citrus. The small citrus industry which already exists in Belize gives additional confidence in the ability to grow citrus there. We were also attacted by the stable and friendly Government of Belize and its free enterprise orientation. Further, we felt that it was a country friendly to the United States which would benefit significantly from this type of development. The existence of the Caribbean Basin initiative is an indication of the U.S. Government's desire to stimulate projects in that area. We would certainly like to see a stable, democratic influence in that region. The establishment of the CBI shows evidence of U.S. support to that region; however, it will be only of limited value to us if it expires as scheduled in 1995. A citrus project is a long-term commitment. It takes almost two years to have trees ready to put into a grove. Then, it takes five more years to reach meaningful production. Nine years from now, when our planned Belize project would really come onstream, it would coincide with the scheduled expiration of the CBI in 1995.

As I explained, our preliminary plans are to plant approximately 25,000 acres in phases over five to seven years. Based on current pricing, and without the CBI's duty-free status, the rate of return for grown citrus in Belize would be marginal. For projects with a very long payback, extension of central CBI benefits could significantly increase the rate of investment in the Caribbean.

Another very important aspect of this project is to obtain political risk insurance. While the political situation in Belize at this time is certainly very favorable, because of the long payback for this project, it is essential that we obtain insurance. We have discussed this with OPIC, the organization which grants political risk insurance to other Caribbean projects, and understand that they have policy restrictions against providing political risk insurance to projects that involve the importation into the United States of fresh fruit or concentrated orange juice. It is our understanding that this restriction is not because of actual prohibitions in the law, but because of a desire to protect Florida growers. It is our belief that this historic policy restriction is now outdated given the world dominance of Brazil in the orange juice market, and the severe difficulties that the Florida industry has recently sustained, as I outlined.

Brazil now has the capability to sell directly into U.S. markets, by-passing American processors and marketers such as ourselves. If the U.S. citrus industry does not take active steps to expand our sources of supply, we very well can find ourselves in the position of many other American industries who now must compete with foreign marketers.

The issuance of political risk insurance is an important factor to citrus marketers such as ourselves who are anxious to establish projects in the Caribbean. Political risk insurance is available through private insurance companies such as Lloyds of London, but in our discussions we have found private insurance to be costly, and very limited in length of coverage.

We believe that it would not be in the best interest of our company to make the sizable investment in Belize, which we plan, without securing political risk insurance. OPIC is the agency set up by Congress for that purpose, and we do not believe policy guidelines should restrict the project that can be insured. Such a policy not

only discriminates against aggressive marketers who wish to expand their supply sources, but also runs counter to the goals and purposes of the Caribbean Basin initiative.

In summary, I would like to reiterate our company's commitment to the FLorida citrus industry. We do not intend to abandon that State or to reduce our level of investment there, on the contrary, we have increased our investment in Florida substantially, and we intend to remain a viable and aggressive member of the Florida citrus industry. But Florida growers must now compete in a world market and be able to respond to changing, growing conditions. The Caribbean Basin initiative provides us an excellent opportunity to expand our supply sources while assisting Caribbean nations to develop their economy. But because citrus is a long-term project, the CBI really will not benefit the citrus industry if it expires in 1996. Secondly, there is a keen need to change current OPIC policy restrictions against the issuance of political risk insurance for citrus projects in the Caribbean.

Thank your for your time and attention, I will be glad to answer any questions.