Summary
The current crisis in the Belize potato sector is a problem common in many small ACP economies, where efforts are made to sustain and develop local horticulture production in the context of competing production from much larger neighbouring economies. A sharing of policy experience on how to effectively manage imports, so as to leave market space for local production could usefully be shared across ACP countries. Namibia’s horticultural sector policy experience which has successfully used public policy tools to strengthen the functioning of local horticulture supply chains would appear to be particularly relevant for the Belize potato sector and beyond (with this horticulture experience now being rolled out across all sectors of the Namibian economy via a Retail Sector Charter)
At the end of February 2017 in the face of large volumes of cheap imports from Mexico, potato producers in Belize faced low prices and the prospect of having to destroy large parts of their 2.5 million lbs of unsold potato harvest. (1) Local production represents almost ½ of Belize’s annual potato consumption (2).
The current market difficulties have occurred despite the use of import permits to control imports of potatoes. (2). Local producers complain about falsification of import permits, which is giving rise to an excessive supply of Mexican potatoes (2). This is compelling producers to accept lower prices, which, according to local parliamentary representatives, is leading to ‘desperate’ farmers selling potatoes at whatever price they can get. (3) The currently prevailing price of imported potatoes (75c/lb) is seen as insufficient to cover the costs of smaller scale Belizean potato producers.
Local parliamentary representatives have called on the government to secure ‘the cooperation of the French fry importers’, to hold back on imports for a month while local potato production finds a market.
This market situation arises each year not only for potatoes but ’with key vegetable crops which are grown locally, but not in sufficient quantities for year round supply’. (3)
Following meetings with potato producers and potato importers, the government of Belize has established a ‘potato working committee made up of producers and importers’, to try and address the current market situation.
Source:
(1) 7newsbelize.com, ‘Potato farmers forced to reduce prices’, 3 March 2017
http://www.freshplaza.com/article/171789/Belize-Potato-farmers-forced-to-reduce-prices
(2) News 5, ‘Ministry Sympathizes; Working to Resolve’, 20 February 2017
http://edition.channel5belize.com/archives/142418
(3) 7newsbelize.com, ‘Thousands of Pound of Local Potatoes Rotting In The Fields’, 20 February 2017
http://www.7newsbelize.com/sstory.php?nid=39414
(4) New Era, ‘Potato, Onion Scheme Gaining Momentum’, 24 February 2015
http://allafrica.com/stories/201502250150.html
(5) Agronomic Board, ‘Horticulture in Namibia’
http://www.nab.com.na/controlled-crops/horticulture/
(6) Namibia Economist, ‘Protect market for potatoes and onions’, 20 March 2015
https://economist.com.na/11110/headlines/protect-market-for-potatoes-and-onions/
| Comment and Analysis Governments of in many small ACP countries face serious problems with the seasonal management of imports, when trying to create space for local producers. This is a particular challenge for small ACP countries in close proximity to far larger economies. The situation of Belize (population 331,900) and its neighbour Mexico (population 122.300,000) is similar to that of Namibia (population 2,303,000) and South Africa (population 52,980,000).In this context the government of Belize could usefully benefit from Namibia’s experience of the seasonal management of imports under its highly successful Namibian Market Share Promotion scheme, which forms part of a broader Horticulture Development Initiative (HDI) (see companion article, ‘Namibia’s Retail Sector Charter and the Strengthening of Local Supply Chains’).Work on the HDI began in 2000 with the promotion of close consultations between producers, traders and retailers, and a detailed assessment of economically sustainable local production capacities. It sought to promote a greater willingness on the part of traders and retailers to enter into firm commitments for the purchase of locally produced horticultural products. The consultations undertaken took time, with the HDI only being launched in 2002.Under the HDI, contacts between producers, traders and retailers were strengthened through the establishment of a dynamic computerised data base on local supply and demand developments. This included the provision of daily market price information. However the HDI also included mutually agreed targets for local sourcing of specific horticultural products, which were formalised into the Namibian Market Share Promotion scheme.This set local procurement targets for each individual retailer and trader for the purchase of a specified % of their turn-over of specific horticultural products. These targets were initially set relatively low, based on the current average level of local sourcing, but were progressively increased. Compliance with these local sourcing targets was incentivized by the design of the review process, introduced for the allocation of import licenses for horticultural products. Key to the operation of the system was a transparent process of allocation of import licences, with an appeals process, if local supply conditions (volumes or quality issues) made it difficult for traders and retailers to meet local procurement targets. Over a 12 year period the HDI and the associated Namibian Market Share Promotion scheme expanded the local share of consumption of targeted horticultural products from 5% to 49% in the 2014/15 season (end March to beginning of April). Specifically in regard to the potato sector under the Namibian Market Share Promotion scheme a Special Potato and Onion Scheme was launched in 2011. This scheme makes provision for ‘all importing retailers, wholesalers and caterers to purchase all their potato and onion needs from local producers’. Only once the local supply of potatoes and onions has been exhausted, are import permits for potatoes and onions issued, up to the level of consumer demand. (4, 5, 6) Critical to the success of this scheme has been the November 2013 ‘Special Potato and Onion Agreement’ concluded between the Potato and Onion Producers Association (POPA) and the Namibian Association of Traders in Fresh Produce (NATFP), which came into effect on 1 April 2014. Information on the specifics of how this scheme was designed and implemented could usefully be shared, in order to enhance the effectiveness of government efforts in Belize to strengthen the functioning of local horticultural supply chains. This could then build on current government efforts to promote dialogue between producers, traders and importers to resolve the current potato market crisis. |
| Key words: Functioning of supply chains, Belize, Potatoes Area for Posting: Caribbean EPA, Southern Africa, Horticulture |