Tag Archives: Peter Webster

Diversification of the Barbados Agricultural Sector

Mr. Peter Webster kindly presented on the topic of “Diversification” of the Barbadian agricultural sector, with a very informative review of some of what has been done in the past and what is possible for the future.

Below are links to bother the presentation and accompanying notes.
Diversification Presentation
Diversification – notes

A SWOT of Sugar by Peter Webster


More than 40 years ago one of our Caribbean political leaders declared that the sugar industry in the region was a “dead horse” and another expressed the wish to see the day when there was not a “cane blade” in Barbados.  The reality is that the sugar cane in particular, and agriculture in general, remains critical to the agro-industrial output of Barbados and has the potential to be a modern prop for our 21st century economy.

The contribution of agriculture to an economy is often undervalued since the agro-industrial activity related to the agriculture is seldom recognized.  An agro-industrial complex includes input manufacturing, distribution, marketing and supply together with the agricultural product storage handling, processing, transport, marketing and distribution.  In such a complex the agricultural or farm gate value itself is seldom more than 20% of the total market value.  The value added is four times that of the agriculture itself, but without the agriculture there can be no value added. Research has shown that a dollar spent in agriculture is recycled on average six times in an economy which is more than that in any other sector.  This is why the developed countries have no problem supporting and subsidizing their agriculture.


Barbados covers 166 square miles or just over 106,000 acres.  About 70,000 acres of this were formerly suitable for agriculture (arable) of which about 10,000 of those arable acres were in the Scotland district.  The other 36,000 acres were mostly “rab” land, swamps, coastal pastures and built on.

At the peak of the sugar industry in Barbados (1970) as much as 65,000 acres of the agricultural land were cultivated in sugar cane of which roughly 50,000 acres were harvested annually with the remaining 15,000 acres in food and other crops being rotated on fallow sugar cane lands.

Agricultural land has been the least expensive of all the land with development potential and therefore the target of developers and “changed in use” for building and other “development” purposes.  In 2007 a Town and Country Planning Department report indicated that, up to that time, change of use permission had been granted for about 30,000 acres of agricultural land leaving about 40,000 acres for agriculture.  This was misleading because several sub-divisions of agricultural land for small farms had not been counted as “changed in use” but had since become housing developments (Sandford, Rowans, Cottage, et al).

In any case, there was still about 30,000 acres of agricultural land available for agriculture at that time.

In 1971, the Government of Barbados approved legislation titled the Sugar Industry Act (1971) which gave it the power to surcharge/tax/huff all windfall profits in the industry and to legislate wage levels for the industry, both of which it subsequently did.  The tax of windfall profits in 1974 and 1981 amounted to more than $50 million (at a time when $1.00 could buy more than 10 times what it could buy today) and wage levels were increased by more than 100% in 10 years.

At the same time, the Government’s agricultural policy promoted crop diversification from sugar cane and the Ministry of Agriculture withdrew its support for the sugar industry.

Without the windfall profits, which had previously kept the industry alive, coupled with the increasingly high operating costs, all private investment in the industry dried up and by 1990, 26 of the sugar plantations were heavily indebted to the Barbados National Bank.

In 1992, the Government established the Barbados Agricultural Credit Trust (BACT), a state corporation, to which it transferred the huge sugar industry debt from the Barbados National Bank.  The Government also established the Barbados Agricultural Management Company (BAMC), another state corporation, to manage the industry.  BAMC subsequently leased the 26 “heavily indebted” plantations so that they could continue to cultivate them in sugar cane rotated with other crops.  BAMC also took over the management of the six sugar factories operating at the time.

Since then, the debts of 23 of the heavily indebted plantations have been cleared by the owners.  This leaves a residual debt that cannot justify the continued existence of BACT and in 2007 recommendations were made to the Government that BACT, which has a significant annual operating cost should be closed.  BACT is still in existence.

All through the 1960s, Barbados production averaged over 30 tons of cane, or about 4.0 tons of sugar, per acre.  This productivity has declined continuously since then and now averages less than 20 tons of cane or 2.0 tons of sugar per acre.  Two sugar factories are still being kept in operation at great, unnecessary expense as one would suffice.  The factories are operating inefficiently with upwards of 50 % down time resulting in significant sugar losses.


Sugar Cane is a grass, ideally suited to Barbados soils and climate (variable rainfall and temperature) with great soil erosion control which serves to improve the soil and control weeds, more so than any crop (i.e. other than another grass).

No other crop which can be grown in Barbados at the potential scale (> 10 thousand acres) of sugar cane can earn the equivalent in external/border value (equivalent foreign exchange) per acre.

A wide range of products can be manufactured from the sugar cane (sugar, candy/confectionaries, molasses/ethanol/rum and electricity) which can all be marketed and consumed locally in Barbados.  In addition, there is a product flexibility which allows the quantities to be adjusted to market demand.  

Barbados has a familiar tradition of growing sugar cane and processing it into sugar and a resulting wide knowledge base in its production.  There is already a significant investment in the production infrastructure for the sugar cane and sugar but it urgently needs a change in focus from an export market to the local market.  This can be achieved by a simple downsizing with a focus on improving productivity of what is already there.

The sugar cane is a great supporting crop for most other crops which can utilize the sugar cane infrastructure while being rotated with the cane.  In effect, the sugar cane has been the foundation of Barbados agriculture.


In the past the Barbados sugar industry has been focused on bulk sugar for export with a molasses bi-product consumed locally in the manufacture of rum. However, the vulnerability of the Barbados sugar industry to world market conditions and the reality of the loss of the EU Preferential Quota regime (in 2007?) have necessitated urgent action for product diversification within the industry and a change in focus from export to the local market.  This has not happened yet.

High operating costs and low productivity currently characterize an industry with high financial losses (>$100 million per year) and low morale that is still operating under the “draconian” 1971 Sugar Industry Act.

The industry has had little to no research support and lots of talk but little effort has been made in recent years to improve productivity.

The sugar industry is being managed by a state owned corporation and “quasi-civil servants” whose compatriots were described 40 years ago as an “army of occupation”.  Despite continuous complaints by the general public, this “army” has made no effort to improve productivity, with the Government’s top down “reform” attempts achieving little more than cosmetic changes and a disheartened Reform Unit.

The quasi-civil servants in BAMC, far from promoting productivity, have moved to remuneration based on “time” in an industry where remuneration is based worldwide on productivity.

BAMC is currently producing sugar cane at twice the cost of independent/private growers in Barbados and the cost of sugar production is more than five times the import cost.


The sugar cane is the world’s most efficient crop in converting solar energy to stored energy.  Only maize/corn and other grasses utilize the same or a similar carbon pathway in photosynthesis.  The high costs of fossil fuels now boost the potential value of the sugar cane to higher levels not only for its bio-mass in co-generation but also for bio-fuel (ethanol) to power motor vehicles.

Sugar cane produces more bio-mass (mainly cellulose) per acre than any other crop (including river tamarind).  Since cellulose is a polysaccharide consisting of a linear chain of thousands of linked glucose units (the basic chemical building block of ethanol from fermentation by yeast) the future potential of cellulosic ethanol from sugar cane is great – in theory bagasse can produce more than ten times the amount of ethanol as the equivalent amount of sugar (sucrose).

The technology for cellulosic ethanol has however not yet been developed to a financially feasible point and is unlikely to be achieved in the near future.  Even then the patents of the developer will be too costly to make it financially feasible in the foreseeable future.

Brazil currently achieves yields of 400 liters of ethanol from a ton of bagasse utilizing an acid hydrolysis process to release the glucose units in the cellulose for fermentation.  This volume of ethanol is roughly the same as can be produced (fermented) from a ton of sucrose.  Unfortunately, the acid bi-product in the Brazil process is proving very expensive to dispose of and is environmentally unfriendly.

It is understood that an element of the private sector has made a preliminary offer to the Government to take over the management of the industry in Barbados.  It is likely that this would involve a realistic downsizing but could result in a significantly more financially viable operation with reduced costs to the taxpayer.


The International Society of Sugar Cane Technologists (ISSCT) at its twenty-fifth International Congress held in Durban, South Africa in 2005, identified the smallest financially viable sugar industry in the world as one which cultivates 10,000 hectares or 25,000 acres in sugar cane.  This suggests that there is a “minimum critical mass” requirement for a sugar industry which will vary depending on productivity, costs and prices, but we can safely assume that it is at least 25,000 acres for Barbados.

The concept of a minimum critical mass, with built in economies of scale, applies to each and every crop. Crop diversification failed in Barbados because markets are simply too small to justify anything near the minimum critical mass for any crop, other than sugar cane, unless there is an attractive export market.

It was for this reason that the 1994-2008 Government administration was committed to guaranteeing the sugar cane growers $100 per ton of cane in order for them to be encouraged to increase sugar cane cultivation from the 2007 level of 22,000 acres (of which 18,000 acres were harvested annually) to 30,000 acres in order to achieve the needed economies of scale and minimum critical mass.

Since 2008, sugar cane cultivation has shrunk to less than 18,000 acres of which about 10,000 acres were harvested this year (2013) and this area is continuing to shrink, with little or no attempt made by the Government to arrest it.  The price paid to growers has also been cut and several promises for an additional cane payment have not been honoured.

The appetite of developers for cheap agricultural land continues unabated and the Town and Country Planning system in Barbados has not demonstrated the courage (or the integrity?) to resist the developers’ greed.  Instead Barbadians have been fed the argument that a developed acre of land is worth many times the value of an acre of agriculture.  This is misleading because it cherry picks the one option of agriculture or development, but this is not the only option.  What about agriculture and development?  We need to develop the thousands of acres of the non-agricultural land instead.  The result is likely to be a continuing of the trend of dwindling availability of lands for agriculture in general and the sugar industry in particular.

Furthermore, the political concern that sugar must not be seen as “dying under our watch” could also cost the taxpayers of Barbados millions in a vain attempt by the Government of the day to keep it alive if only in intensive care.


Can Barbados justify the huge investment needed ($400 million) to diversify the sugar industry given the limited and shrinking area available for cultivation of sugar cane and the poor productivity that exists?

What is the likelihood that the quasi-civil servants managing the industry can increase productivity after twenty one years of decline under their management?

Will the Government have the courage to “improve” the legislation under which the industry operates and/or allow the private sector to take it over?

The answers to these questions will determine the future of the sugar and agricultural industries in Barbados.

Peter Webster


Note:  Peter Webster is a retired Portfolio Manager of the Caribbean Development Bank and a former Senior Agricultural Officer in the Ministry of Agriculture.


Should We Produce Our Own Food? by Peter Webster

I was amused by the recent comments of a World Bank economist reported in the news on Friday 25, January, 2008 that “It may be better for small states such as the developing countries of the Caribbean to de-emphasise agricultural production, import food and focus their attention on reducing poverty”.  These comments were nothing new as some of our regional economists have been saying the same misguided thing for years, but they reminded me of former USA President Ronald Reagan’s description of economists as “People who see something actually working in reality and still question whether it would work in theory”.

The developed countries of Europe and North America have subsidised their agriculture for over a hundred years.  Such direct subsidies currently amount to the equivalent of almost a trillion United States Dollars annually in the countries of the European Union, and the United States of America is not far behind. At the same time they also provide market protection for their producers. Why?  Subsidies keep their farmers gainfully employed on their land, promote food security, minimize food costs and contribute substantially to their country’s economy which is not drained by the cost of importing all of their food.  Research has also shown that every dollar spent in agriculture is recycled, on average, six times in the economy which is more than that occurring in any other sector.  The high multiplier effect of agriculture in an economy results from the fact that food is a necessity for everybody and agriculture largely involves the rural poor who may be described as the base of the economy. It also results from the value added component of agro-industry that would not exist in the absence of agriculture.

Agricultural production subsidies, especially for local markets, cannot be faulted whether in developed or developing countries.  Similar subsidies are now an accepted norm in many other sectors including education, health, housing, water, et al. Why not agriculture (food production)? The problems come with the surpluses the subsidies tend to produce and the implication that countries producing such surpluses are more efficient producers than anybody else – a myth. However, when these surpluses are dumped on the world market at half of the actual cost of their production, the destructive effect on farmers in countries without such subsidies or market protection is worse than any terrorist bomb.  This helps to explain why there are mountains of food in storage in some countries while millions are starving in others.

The continent of Africa was a net exporter of food up to the time (1960s) that economists started telling the new popular leaders of emerging African Nations the same nonsense quoted in the opening paragraph.  They imported cheap, subsidised food for their masses at the expense of their local farmers who then added to their countries’ problems by vacating their farms and moving to the nearest urban areas in search of jobs.  In so doing, the African countries were drained of scarce foreign exchange – the imported food may be cheap but it still costs foreign exchange – and they were also saddled with the attendant problems of increased rural poverty and servicing the urban spread.  Africa, once a “bread basket” for the world, now has starving millions, imports more than half of its food and is mired in debt and poverty despite a wealth of human and natural resources.  

The exceptions to the foregoing, South Africa and Zimbabwe, support the argument that the African countries’ agricultural decline was a major cause of their economic problems and not just poor leadership and corruption as popularly thought i.e. before Robert Mugabe destroyed his country’s farming community. Please note that the foregoing has been documented by many researchers.

A related issue is that the farm gate price of food is seldom more than 50% of the market price. Handling, transport, packaging, storage, distribution and marketing of food can account for 80% of the market price.  This value added is seldom recognized by commentators discussing food prices when they target production costs.

All of this at a time when the United Nations has been promoting the concept that if you “give a man a fish you may feed him for a day but if you teach him how to fish you feed him for a life time”.  In other words if you “give a man food you may feed him for a day but if you help him to feed himself you feed him for a lifetime”.

When questioned as to “why they think that the developed countries can justify their heavy agricultural subsidies but the developing countries cannot”?  Economists have responded simply that the developed countries can afford it but the developing countries cannot.  There can be no doubt why the developed countries can afford the subsidies while developing countries cannot and are unlikely ever to be able to afford it.  One builds while the other bleeds.

Can developing countries (large or small) afford not to subsidise their own food production?  The answer lies in how we classify the sector.  Is it productive or social?  It is understandable why there is a difficulty in justifying subsidies of activities in the productive sector, including export crops, but food production and related food costs are so closely associated with the social sector and poverty that the classification and justification is de facto.  Besides, the reported comments can only apply where there is full employment in more productive activities than food production and this has not yet happened in any country – developed or developing, large or small.

Peter Webster

Note:  Peter Webster is a retired Portfolio Manager of the Caribbean Development Bank and a former Senior Agricultural Officer in the Ministry of Agriculture.

A TSUNAMI OF HUNGER by Peter Webster

The World Food Programme estimates that there are currently around One Billion undernourished people on Earth.

The Barbados Sugar Industry has reached a major cross-road with growers’ costs being way more than what they are receiving for their product. Sugar Cane farmers are incurring heavy financial losses and many have reached the point where they have no option but to cease cultivation. Furthermore, they realise that such a decision is almost irreversible as the additional costs to restart operations will be prohibitive. Experience throughout the Caribbean and elsewhere is that once sugar cane operations cease they are seldom ever restarted.

This likely cessation of sugar cane production in Barbados along with the concurrent reduction in food crops is occurring at a time when experts around the world are predicting a “storm in food prices” that could generate a “tsunami of hunger”. Food prices that have risen by more than 50% over the last decade could reach exorbitant levels with more and more of the world’s poor being unable to afford food. There is and will still be enough food to feed everybody but it is the high prices and unaffordability of food to the poor that results in hunger.

Food price increases are currently being driven by six causes. These are:

  1. Increased demand through general population growth (the world’s population has more than doubled in the last fifty years) coupled with increasing food consumption which has doubled in the last thirty years;

  2. Reduction in agricultural subsidies in developed countries as a result of pressure from the United Nations Congress of Trade and Development (UNCTAD) and the United Nations Food and Agriculture Organisation (FAO). These institutions have claimed that subsidies result in unfair trade in agricultural products (food). Unfortunately, it is not the subsidies themselves that have seriously damaged farmers in developing countries who have no support or protection, but the dumping of surplus food produced by the subsidies on the world market at prices that are below production costs. Cessation of the subsidies will not necessarily stop the dumping and in any case is occurring fifty years too late after agricultural production throughout developing countries has been seriously damaged;

  3. Ongoing development worldwide has short-sightedly taken place mostly on agricultural lands reducing the availability of land for agriculture and ultimately depressing food production. That this has also occurred in other countries should not be a comfort to Barbadians. This reduction in available agricultural land has been balanced by improving technology (improved varieties and pesticides et al) that has resulted in increased yields and production. Unfortunately, this improved technology comes with a price tag that further adds to the production cost and increased prices;

  4. The high cost of energy has inflated production and distribution costs while creating a demand for alternative energy sources which is promoting a switch from food production to bio fuels;

  5. Developing countries’ inability to produce food after being damaged by cheap dumped food prices over the last fifty years is taking longer than expected and cannot be restored overnight. It will take many years for the “culture” and expertise that was formally handed down from generation to generation of farmers is recovered. One of the fallacies in the Caribbean is that almost anyone can be a farmer. In fact, project after project in the Caribbean (including Spring Hall Land Lease and the Land for Landless programme in Barbados) have shown that 80% of those who have tried farming have failed; and

  6. Increasing conflict worldwide is not only hampering food production but more importantly is affecting food distribution. Such conflict is at a higher level than at any time since World War II (1944) and the looming global conflict between the Judean/Christian peoples and Islamists, which is prophesied in the Christian Bible, could prove to be a catastrophe for food distribution. Note: 80% of the Biblical prophecies have come to pass so far and none of the rest has been proven wrong!

Unfortunately, such “doom and gloom” predictions have been with us for a long time and are largely ignored by our leaders (political and economic) who are now immune to what they consider to be emotional arguments. They now need more tangible evidence before they will take action to make preparations to avert the hunger crisis for the poor. In other words the disaster has to actually happen before they will start – too late – to prepare for it.

Peter Webster

Note: Peter Webster is a retired Portfolio Manager of the Caribbean Development Bank and a former Senior Agricultural Officer in the Ministry of Agriculture.