EU Preferential Partners in Search of New Policy Strategies for Agriculture:
The Case of Citrus Sector in Trinidad and Tobago
Abstract
The paper assesses the competitive position of T&T’s citrus industry and explains the declining
productivity. It covers supply chain and agricultural trade policy issues and involves assembling two
Policy Analysis Matrices, either with full cost of production or excluding establishment costs.
Domestic and trade policy support shows significant for the sector. Production is internationally
competitive, or possesses comparative advantage, only if costs of establishment are excluded. These
results suggest that free trade agreements under the FTAA and the ACP-EU would work against the
planting of new orchards and reinforce the decline of the sector.
Keywords: Competitiveness, Policy Analysis Matrix, Agricultural Trade Policy, Citrus Industry
JEL: Q12 - Q13 - F13
1. Introduction
Caribbean countries are fairly open economies, with agricultural performance (production,
employment, foreign exchange earnings) heavily influenced by a few export commodities traditionally
directed to the European Union (EU) and by trade protection (mainly tariff measures) of some domestic
products. However, recent international trade developments - WTO liberalisation, EU domestic and trade
policy regime changes - have fuelled efforts for agricultural diversification, as the performance and
prospects of the traditional export commodities, such as sugar, bananas and rice, are declining.
Diversification strategies, however, must take account of multilateral liberalisation and new
reciprocal deals potentially embodied in the Economic Partnership Agreements (EPAs) negotiations with
the EU and Free Trade Area of Americas (FTAA) negotiations with North and South American countries.
These developments can cast pressures on those agricultural commodities usually considered main
avenues for diversification strategies targeting both domestic and export markets. Prospects for preserving
the contributions of agriculture to regional development are then increasingly contingent on the
agricultural sector becoming more efficient and competitive. This, in turn, often implies complex policy
strategies, dealing with the peculiar characteristics of production, trade and marketing of Caribbean
countries. These elements are to be considered when defining both national policies and contents of EU
cooperation under EPAs framework.
From the mid ‘90s, the citrus sector in the Caribbean has been experiencing a significant expansion -
mainly in Belize, Jamaica and the Dominican Republic. Such a growth has been supported by specific
policies and by the expansion of the large scale private sector, encouraged by deregulation and
liberalisation. Other Caribbean Island States, such as Trinidad and Tobago, are not major regional player
in the citrus sector. However, also in these cases the sector is considered a traditional component of
Caribbean agriculture, significant for its contribution to GDP, employment and exports (FAO, 2002) and
gathers a relatively important policy effort.
The paper’s objectives are to provide an overview of key policy and marketing issues for the
development of the citrus sector in Trinidad and Tobago (T&T), as well as an assessment, through a set of
indicators, of the competitive position of orange production.