MPA IV Master of Public Administration Program in Governance

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1 Institute of Social Sciences MPA IV Master of Public Administration Program in Governance Government Intervention and Sustainable Development in the Horticulture Sector of Suriname By Reshmi A. Ramdjielal FHRISS: Paramaribo, November 2011 Word count: This paper is submitted in partial fulfillment of the requirements for obtaining the degree of Master of Arts in Public Administration in Governance (MPA) at the aforementioned Institutes. ISS Institute of Social Studies F.H.R. Lim A Po Institute for Social 1

2 ACKNOWLEDGEMENT TABLE OF CONTENT LIST OF ABBREVIATIONS CHAPTER 1: INTRODUCTION Background Research objectives Research questions Relevance and justification Research methods Limitations Chapter overview 12 CHAPTER 2: LITERATURE REVIEW Introduction Determinants of low production and low productivity in the agriculture and in the horticulture The role of government in the agriculture sector Conclusions 17 CHAPTER 3: THE AGRICULTURE SECTOR POLICIES IN SURINAME, WITH EMPHASIS ON HORTICULTURE Introduction The performance of the agriculture and the horticulture sector since Conclusions 23 CHAPTER 4: DETERMINANTS OF LOW PRODUCTION AND LOW PRODUCTIVITY IN THE HORTICULTURE IN SURINAME Introduction Determinants of low production and low productivity in the horticulture The Agricultural Extension Service of the Ministry of Agriculture, Animal Husbandry and Fisheries: the promotion of the Suri-Sombra greenhouse as a new technology 28 2

3 4.4 Research findings for government response towards productivity increase Conclusions 32 CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS Conclusions Recommendations 34 BIBLIOGRAPHY 38 LIST OF TABLES AND FIGURES TABLE 1 SURI-SOMBRA GREENHOUSE- AND OUTSIDE CULTIVATION YIELDS 21 TABLE 2 COMPARING COST PRICES OF TOMATOES AND PAPRIKA (OUTSIDE AND GREENHOUSE CULTIVATION) 27 FIGURE 1 VEGETABLE PRODUCTION IN TON FIGURE 2 THE PRODUCTION OF VEGETABLES, PADDYAND BANANA (INDEX FIGURES) FIGURE 3 LAND CULTIVATION (HA) IN THE BANANA AND VEGETABLE SECTOR FIGURE 4 LAND CULTIVATION (HA) IN THE RICE SECTOR FIGURE 5 FIGURE 6 PRODUCTION OF VEGETABLES VERSUS PRODUCTION OF OTHER SUBSECTORS IN AGRICULTURE (INDEX FIGURES) IMPORT AND EXPORT QUANTITY OF VEGETABLES IN TON FIGURE 7 VEGETABLE PRODUCTIVITY TON/HA FIGURE 8 FARM PRICES OF VEGETABLES IN SRD/KG FIGURE 9 TOMATO CONSUMER PRICES IN SRD

4 ANNEX 1: FARM PRICES OF AGRICULTURAL PRODUCTS ANNEX 2 AVERAGE CONSUMER PRICES OF AGRICULTURAL PRODUCTS ANNEX 3 FLOOR PLAN OF THE SURI-SOMBRA GREENHOUSE 48 ANNEX 4 COST CALCULATION TO CONSTRUCT THE SURI-SOMBRA GREENHOUSE 49 ANNEX 5 LIST OF INTERVIEWEES 50 ANNEX 6 QUESTIONNAIRE FOR THE FARMERS 51 ANNEX 7 THE ORGANIZATION CHART OF THE MINISTRY OF AGRICULTURE, ANIMAL HUSBANDRY AND FISHERIES, THE DEPARTMENT AGRICULTURE 55 4

5 ACKNOWLEDGEMENT The "Master of Public Administration in Governance and Policy Making" course has given me many relevant insights, which I can use to support and define good government policies. I am also able to provide better advice to the Ministry of Agriculture, Animal Husbandry and Fisheries, who is also responsible for the food safety and the food security in the country. I thank Mr. Lim A Po Hans for supporting my admission to the course and for his motivational words. A special word of thanks goes to my supervisor Nicholas Howard for his critical guidance. I would also like to thank the colleagues of the Ministry of Agriculture, Animal Husbandry and Fisheries for their support. I dedicate this paper to my family, especially my mother, my brother and my sisters, who have always supported me. 5

6 LIST OF ABBREVIATIONS AIDS ACQUIRED IMMUNE / IMMUNO DEFICIENCY SYNDROME AMC ASSET MANAGEMENT IN CONTROL CARICOM CARIBBEAN COMMUNITY CSME CARIBBEAN SINGLE MARKET AND ECONOMY FAO FOOD AND AGRICULTURAL ORGANIZATION OF THE UNITED NATIONS GNP GROSS NATIONAL PRODUCT HA HECTARE HACCP HAZARD ANALYSIS CRITICAL CONTROL POINTS HIV HUMAN IMMUNODEFICIENCY VIRUS KG KILOGRAM MAAHF MINISTERIE VAN LANDBOUW, VEETEELT EN VISSERIJ (MINISTRY OF AGRICULTURE, ANIMAL HUSBANDRY AND FISHERIES) NGO NON-GOVERNMENTAL ORGANIOZATION N.D. NO DATE N.V. NAAMLOZE VENOOTSCHAP (LIMITED COMPANY) OECD ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT Rs. INDIAN RUPEES SIBTA BOLIVIAN AGRICULTURAL TECHNOLOGY SYSTEM SRD SURINAMESE DOLLAR 6

7 Chapter 1 Introduction 1.1 Background This study investigates the Surinamese government policies in horticulture. The horticulture sector is one of the core sectors of welfare (substantial and sustainable income), food safety, -security, -availability and -accessibility and economic growth in a country. This production factor is thus very important. Suriname has 16 million hectare of land of which 1,5 million hectare is appropriate for agriculture. Approximately hectare is in application of which circa hectare for horticulture. The agricultural contribution to the GNP was circa 6,9% in 2009 (Ministry of Agriculture, Animal Husbandry and Fisheries (MAAHF) 2011a). Horticulture in Suriname consists of various subsectors such as fruits, vegetables, legumes and tubers. According to the Annual Report of the MAAHF (2009a), there were circa jobs in agriculture of which approximately in horticulture, most were part-time farmers. Different crops such as tomatoes, eggplant, cabbages, okra, pepper, pumpkin, round eggplant, bitter gourd and bitter carillas are cultivated. In this study the emphasis will be on vegetable production in the period Figure 1 shows a decrease in the total production of vegetables (excluding banana and rice). According to the Executive Director of the MAAHF the production of horticulture products has decreased due to circumstances such as limited market and less planted areas. Figure 1 Vegetable production in ton Source: Data MAAHF , graph developed by researcher In comparison with the production of rice and banana (Figure 2), the vegetable production in Suriname is very low. The production of rice has decreased with just 1%, while the production of banana has increased with 15% in 2010 (MAAHF 2011b). 7

8 Index Figures (1993 basic year) Figure 2 Production of vegetables, paddy and banana (index figures) Vegetables Paddy Banana Source: Data MAAHF , graph developed by researcher Land cultivation in the vegetable production has also decreased compared to that in the banana and rice sector (Figures 3 and 4). Notable is that the last two mentioned sectors received large donor investments, which resulted in larger planted areas. These sectors concern only one type of crop, while in the horticulture there are different types of crops. The issue of low production has been raised in several studies of agriculture and horticulture, but has not resulted in corrective policy measures. Figure 3 Land cultivation (ha) in the banana and vegetable sector Source: Data MAAHF , graph developed by researcher Figure 4 Land cultivation (ha) in the rice sector Source: Data MAAHF , graph developed by researcher 8

9 The MAAHF introduced new techniques such as irrigation systems and greenhouse cultivation (Hydroponic greenhouse under Nutrient Film Technique, a closed system with water pipes and the Suri-Sombra greenhouse technique, a shadow greenhouse) to increase the production in horticulture. This study will refer to the Suri-Sombra greenhouse as a new technique, which has been experimented for tomatoes and paprika. Notable is that not much can be stated, due to the lack of long-term data. However, the greenhouse is crucial in the context of new technologies to increase productivity. The production of different varieties of vegetables is higher when cultivated in the greenhouse than outside cultivation. For example, the yield of tomato hybrid 61 is almost 200% more than outside cultivation, that of tomato headmaster is almost 70% more and that of paprika giant bell is 340% more. This indicates that an increased production in horticulture can be obtained through the use of this new technique with higher yields (Resort Leader Wanica 2011, personal interview). Other benefits of the Suri-Sombra greenhouse include cost efficiency, higher quality crops, less use of fertilizers and weed control. According to the resort leaders and farmers there is no adequate dissemination of this technology. Furthermore, the construction costs are found to be too high. Nationwide there are only two farmers cultivating in such a greenhouse and only one is doing this successfully. While the production and planted area have decreased, the proceeds from the sector are increasing, due to high farm prices for the crops. They showed an increase from the 1990 s up till now (Annex 1). Other factors with a depressing effect on production are high petrol prices, poor infrastructure and high transport costs, which lead to increase of prices. Furthermore farmers can produce only in certain periods due to change in the weather seasons and the use of old technologies. At extreme rainy or dry weather conditions, farmers make little profits, which lead to price instability. During these periods, exporters face difficulties meeting their export quota due to scarcity and high prices. Resort leaders stated that if the government guarantees sales and fixed prices, then the farmers will be motivated to produce more. Farmers declared that the officials of the Agricultural Extension Service of the MAAHF lack knowledge of the new techniques, the skills and the agronomic practices: They do not know anything, especially about (new) chemicals and fertilization one farmer shared. This can lead to shortages or surpluses of food, effecting mostly the poor and the economy. There are only a few capable senior officials in the districts. Many junior officials lack the required education. Therefore the Agricultural Extension Service of the MAAHF is not functioning optimal. 9

10 Shortly after the set up of the model greenhouses by offices of MAAHF, there were successful experiments with crops like broccoli, paprika, lettuce, Chinese cabbage, tomatoes, cauliflower and celery. Fewer experiments are performed due to the bad condition of most greenhouses currently and they need to be reconstructed. (Resort Leaders 2011, personal interview). From the above it seems that there are many opportunities for achieving high productivity and increase production such as input of technical skills, new technologies, pesticide and chemicals, provision of current market information, lowering production costs, improving agronomic practices and products of high quality. 1.2 Research objective There is relatively low production and limited increase of productivity in the horticulture in Suriname. The main objective of this thesis is to provide an explanation for the poor production performance in the horticulture sector by identifying the factors, which have contributed to this poor performance and deriving relevant required policies from these findings. The focus will be on horticulture out of which especially vegetables. 1.3 Research question Which factors contribute to the low production in the horticulture of Suriname, especially the vegetable production? Sub-research questions - Does lack of technology influence the low productivity in horticulture? - Does lack of skills influence the low productivity in horticulture? - How can government policy contribute to the production in horticulture? 1.4 Relevance and justification Food is necessary to stay alive and everyone has the right to healthy food. A healthy population contributes to economic growth of the country. Fruits and vegetables are seasonal horticultural crops and basic elements for a healthy life. Policy makers of the MAAHF are concerned about the low vegetable production in horticulture. That is why since 2010 agricultural policies are concentrated on production increase. Transformations are intended in terms of the use of new technologies to increase production, especially vegetable production. The result of production increase is income increase for farmers, particularly in rural areas. The rural families will gain a better livelihood : said the Executive Director of the MAAHF 10

11 (Executive Director of MAAHF 2011, personal interview). In depth academic studies on the low vegetable production in horticulture, which are necessary for the policy-making are lacking. Sound policies and their execution are necessary for developing the horticulture. According to Poerschke (2010), the government has developed several policies after Suriname s independence, but still there is little development in the horticulture and this is a big problem. The government of Suriname is concerned about the low production and the President declared in the Government Policy Statement ( Kruispunt ) the need to develop the agriculture sector. The vision is to do this in collaboration with Brazil, who has a big agricultural tradition. The objective of the current Surinamese government is to become a food barn for the Caribbean (Cabinet of the President 2010). 1.5 Research methods Information for this research was retrieved through interviews, by using a questionnaire for farmers (5 with an outside cultivation and 2 with a real Suri-Sombra greenhouse) and interviews with the management staff of the MAAHF (the Executive Director, 2 Department Managers, 3 Region Coordinators, 11 Resort Leaders and the Head of the Agricultural Extension Service) and the composer of the Agricultural Sector Plan. The list of interviewees is in Annex 5. Determinants of low production, the functioning of the Agricultural Extension Service, production (knowledge of new technologies, skills) and sales (markets and prices) were accentuated. Literature review and statistics examination were also part of the research. First, there was a literature study of the determinants of low production and low productivity in agriculture in general and specifically in the horticulture. Then the study was focused on government intervention in the agriculture sector, looking at issues such as government intervention with production increase, productivity increase, greenhouse cultivation, prices and sales markets. Documents, reports, government policy statement, policy documents and outcome of market studies of the agriculture in general and the horticulture sector in Suriname were also reviewed. Statistics and relevant data were accumulated from the Agricultural Statistic Division, the Resort Offices and the Agricultural Extension Service of the MAAHF and the Foundation General Bureau of Statistics. 11

12 1.6 Limitations A limitation for this study was the unavailability of relevant literature on this topic. Only a few books, some specific articles on internet and some studies were available. Many articles were studies of other developing countries. The second limitation was the delay in appointments with some staff members of the MAAHF and some farmers. The third limitation was the unavailability of the greenhouse cultivation data at most resort offices of the MAAHF. Due to the lack of knowhow, current bad condition of the greenhouses and lack in guidance about the greenhouse, most resort leaders did not experiment enough and therefore lack statistics of greenhouses cultivation to compare with outside cultivation. The fourth limitation was the absence of productivity data, because farmers lack interest in these statistics, so they never record data. The research will focus only on the production of vegetables and not on fruits, legumes, tubers and other horticultural products, due to the time and cost aspect, lack of related research and extension data and the comprehensiveness of the indicated subsectors. The banana and rice sectors have only been used for some comparison with the vegetable sector, but will not be considered further in this thesis. The period that this research on horticulture takes into account is 1993 until Reliable data is very important in order to draw the correct conclusions, but data available from Suriname s statistical institutions (General Bureau of Statistics and MAAHF) have their limitations; thus the agricultural statistics used in this thesis are anticipated to have their limitations due to irregularities in data collection. 1.7 Chapter overview Chapter 2 concerns the literature review of the determinants of low production and low productivity in the agriculture and in the horticulture, the role of government in the agriculture sector and the importance of technology and developed skills for the increase of productivity. Chapter 3 is a review of the agriculture sector in Suriname, with emphasis on horticulture. It shows the performance of these sectors since independence up till now. Chapter 4 describes the determinants of low production and low productivity in the horticulture in Suriname. The Agricultural Extension Service of the MAAHF and its promotion of the Suri-Sombra greenhouse as a new technology will also be discussed. Research findings for government responses to these issues will also be examined. Chapter 5 states conclusions and policy recommendations. 12

13 CHAPTER 2: LITERATURE REVIEW 2.1 Introduction This chapter provides insights on what the literature states on determinants of low production in agriculture and in horticulture. Some determinants are controllable by the farmers, some by the government and some are acts of God. There will be a closer look at the government role in the agriculture sector in general. It will be a reflection of the importance of government intervention as a major contributor to development of the sector. In this regard (new) technology and high levels of skills are significant government areas. The interaction between technology and production will also be discussed. This will be illustrated by the outcome of various studies of developing countries. At last conclusions are drawn. 2.2 Determinants of low production and low productivity in the agriculture and in the horticulture The agriculture sector plays an important role in terms of food production for the population in a country. According to Hall and Taylor (1991), Froyen (1986) and Gordon (1981) the output of production is determined by the inputs such as labour, capital and machines and the productivity (effectiveness of use) of these inputs. Low agricultural growth may have various determinants such as (Boserup 2003): 1) No availability and poor utilization of land; 2) Lack of cultivation methods; 3) Lack of capital (to invest in for example new tools, machines and seeds), 4) Lack of (new) agricultural technologies and high levels of skills; 5) Inappropriate social structures of agrarian communities; 6) Lack of knowledge of agronomic practices (soil fertilization, plant methods, use of pesticides etcetera); 7) Climate change; 8) Insufficient labour. Bamidele (2008) indicated that these determinants are also important to increase production through productivity increase. He demonstrated this with a study in cassava production in Nigeria. In his study he indicated that there is a relation between land, labour, education and use of fertilizers to achieve a higher production through productivity increase. 13

14 Maunder et al. (2000: 64) indicated that low agricultural growth is also caused by price fluctuations. The fluctuation in price has formed to be a disincentive for farmers to increase production with a negative effect on productivity. According to Tronstad (2008) market size also has an impact on agricultural output. Small markets suffer from a lack of economic scale. Therefore, distribution of the products to places where there is a large demand should be pursued. The above mentioned determinants can be categorized as manageable and non manageable factors. Manageable factors are controllable by farmers and some of the determinants are controllable by the government. Non Manageable factors are acts of God (extreme weather conditions). Since the focus in this study is on horticulture, it is necessary to look at the determinants of low horticultural output. These determinants are (Wasilwa 2008): 1) Lack of advanced technologies and high levels of skills; 2) Lack of knowledge of agronomic practices; 3) Ineffective cultivation and irrigation systems; 4) Poor quality seeds; 5) Lack of market information; 6) Lack of credit facilities; 7) Lack of research and development; All these factors are related to each other and are also determinants for low productivity. Controllable factors for the farmers are point 2, 3 (the basic infrastructure), 4 (the choice to purchase) and 5 (own research). Controllable factors for the government are point 1, 3 (the secondary infrastructure), 6 and 7. Higher productivity and thus higher production leads to higher income for small farmers, poverty alleviation and employment increase for a sustainable livelihood. Referring to the above mentioned determinants for horticulture, Gitu (2004) also indicated that these determinants are important to increase production through productivity increase. He demonstrated this with a study of agricultural development and food security in Kenya. In his study he indicated that modern technology, credit facilities and research and extension are important to achieve higher production through productivity increase. Denning et al. (2009) also supports this. He indicated further that availability of appropriate high-yielding varieties and infrastructure are also important. Bamidele (2008) indicates beside these determinants other ones such as limited access to land, lack of water, lack of energy and climate factors. The first three are manageable by the government and the last one are acts of God. 14

15 According to the AMC Project (Group 166, 2005) technology, high level of skills, market information, agronomic practices, together with labour and capital can increase production through productivity increase. This study indicates the greenhouse cultivation for tomatoes as a new technique in Bolivia, which is still in a pilot phase, but can become a big success. Important factors for a successful execution are social, economic (income, marketing) and health factors (the use of agricultural chemicals). There is also a potential market for selling the crops. This study indicated that the use of this new technique will lead to higher production, higher profits and farmers will have the ability to invest in new technologies and skills with higher yields. Notable is that these determinants differ per country, because of the agricultural circumstances, the type of land and the climate. Productivity increase is of decisive importance in the agriculture and horticulture sector, because it has to do with efficiency and effectiveness to increase the production for a sustainable livelihood. The effective use of capital and labour through advanced technology and developed skills is crucial for the increase of production. Growth in Total Factor Productivity (TFP) depends mainly on public investment in infrastructures (irrigation, electricity, roads), agricultural research and extension and efficient use of agronomic factors such as water and plant nutrients (FAO 2002:24). Bamidele (2008) also supports this view. These examples indicate that government intervention is crucial for the development in the sector, which will be discussed in the next paragraph. 2.3 The role of government in the agriculture sector In most developing countries such as Suriname, Kenya and India, the horticulture consists of small-scale farmers with a low-income. According to Maunder (2000: ) government intervention in agriculture is important. Price levels are determined by demand and supply. In free markets, farmers have to deal with unstable prices and income. The annual fluctuations in weather and production also lead to price instability, when the government does not intervene. In developed countries, governments have taken finance measures to increase production and guarantee price stability such as: 1) Price support: prices are fixed for farmers, but the government has to manage the surplus stocks that arise as a result of these measures. Examples of price support are introduced after the Second World War: a guaranteed price support was introduced in the United Kingdom and in 1973 a target price system in the United States; 15

16 2) Guaranteed price system: farmers are certain of a fixed price determined by the government. The government decides a fixed price, which is above the market equilibrium price. This creates a discrepancy between the two prices, which the government has to pay (subsidy per unit). Guaranteed prices result in more resource utilization, higher domestic produced output, more consumption of local products and a bigger market share compared with import products; 3) Farm-support system: Through this system, imported products are imposed for taxes and levies. The consumers are being charged instead of the taxpayers, because they are free in their choice to buy products (Maunder et al. 2000: ). In Africa, most of the people live in rural areas and earn their living particularly from agriculture. Due to very bad harvests (low productions) during the last ten years, the Malawi Government took an extensive and rather successful offensive to reduce hunger. A national input subsidy program, corresponding with better rainfall supplies, made the maize production multiplied with two in 2006 and almost tripled in In 2005, Malawi had a 43% national food shortage, but in 2007, a 53% surplus was gained. Export to neighbouring countries was possible. A decrease of the maize price expressed significant benefits for lowincome urban and rural families (Denning et al. 2009). The use of (new) technologies and high levels of skills are also important areas for the government. According to Blanchard (2003) technological progress, together with capital and labour, results in a higher effective labour (increase of the productivity per worker) and a higher production. The economy of Hong Kong and Singapore developed very fast. In Hong Kong, it was due to the technological progress and minimal government intervention, while in Singapore it was government intervention with little technological progress, because Singapore progresses too fast from industry to industry. In addition, because of their quick development there was no time to experience how to produce effectively. Sreenivasta et al. (2009) indicated in his study (India, Karnataka) about tomatoes production that technology and high level of skills are important to achieve higher production through productivity increase, especially in the tomato production. The study included data of small, medium and large farmers. The medium farmers have been found to have best steps of technical efficiency due to land, labour productivity and education resulting in higher yields. Nevertheless, the small farmers were price-efficient producers, because their production costs were low and they got higher prices. 16

17 Both above mentioned studies indicate that government intervention in technology and high levels of skills to achieve higher production through productivity increase is very important. 2.4 Conclusions Labour, capital and technology are necessary for production output. Some determinants for low agricultural growth are no availability and poor utilization of land, lack of cultivation methods, lack of capital for investment in new tools, machines and seeds, lack of (new) agricultural technologies and high levels of skills, inappropriate social structures of agrarian communities, lack of knowledge of agronomic practices such as soil fertilization, plant methods and the use of pesticides, climate change and insufficient labour. Some of the determinants are controllable by the farmers, some by the government and some by nature. The low horticultural determinants are lack of knowledge of agronomic practices, poor quality seeds, lack of market information, ineffective cultivation and irrigation systems, lack of advanced technologies and skills, lack of credit facilities, lack of research and development. These determinants can also be indicated as low productivity determinants, because of their effect on productivity. The first four determinants are controllable by the farmers and the last four are controllable by the government. Infrastructure is controllable by both the farmers and the government; the primary infrastructure by the farmers and the secondary infrastructure by the government. The government, especially in poor countries, plays a crucial role in the development of the agriculture and horticulture sector. The government can intervene in the price and marketing issues by introducing support and guaranteed prices and fiscal measures (taxes and levies) in order to eliminate instability. Other government areas are availability of appropriate technology and high-level of skills to achieve higher production through productivity increase. High production through productivity increase result in better income for farmers, better livelihood and alleviation of poverty. 17

18 CHAPTER 3: THE AGRICULTURE SECTOR POLICIES IN SURINAME, WITH EMPHASIS ON HORTICULTURE 3.1 Introduction This chapter gives a review of the agriculture sector in Suriname, especially the horticulture. It illustrates the performance in the sector and especially that in the horticulture since 1975 up till now. The horticulture has also been suffering from the decline in production as other agricultural subsectors (excluding bananas, fisheries and animal husbandry). Historical account of government policies on agriculture in general and horticulture in particular over the last years will be discussed as well as government policies for will be presented. At last conclusions are drawn. 3.2 The performance of the agriculture and the horticulture sector since 1975 Suriname is a small country with an open economy and mostly dependent on the mining sector namely bauxite, gold and oil for economic contribution. The agriculture sector is however also very important because it provides food for the population. The agriculture sector consists of several subsectors such as fisheries and aquaculture, animal husbandry, horticulture and arable farming. Due to the focus in this study on vegetable cultivation, the performance of it after Suriname s independency in 1975 up till now is considered. Comparisons are exclusively made on farming operations and therefore other sectors are not examined. With regard to the agricultural policies of the government in Suriname, three periods can be identified (Poerschke 2010): The first period, from independence until 2003/2004. There was a Multi Annual Agricultural Investment Plan (MIAOP) for the development of agricultural activities. This plan contained three sub development plans. The first one was the Multi-Purpose Corantyne project in Nickerie regarding the growth and export in the rice sector. The second plan was the growth of the palm oil industry in the east and central south of Suriname and the third plan was the Agricultural Development Plan Commewijne. Although there were millions invested through Dutch aid in these plans, the execution was poor because aid stopped in 1982 resulting in lack of capital after From 1985 until 2003/2004 there were ad hoc policy interventions. The lack of capital funds, poor agricultural policies and deflation in international prices lead to a decline in the sector. With regard to the horticulture, the objective was to increase productivity through production and subsequently 18

19 Index Figures (1975 basic year) increase exports. After a study of the horticulture sector in fruits and vegetables in 1980, some measures were taken such as the provision of agricultural land at Pomona and Commewijne to increase production. Establishment of co-operations and the so-called Sunday markets at Kwatta, Nieuwe Grond and Highway made it possible for farmers to sell directly to consumers. Yet the horticulture still lagged behind compared to the development of the rice and banana sector. The second period was from During this period there was an Agricultural Sector Plan 2004, which was executed during The objectives in this second period were food security and -safety, income formation, development of entrepreneurship and a larger contribution to the economy, aiming at improved production, employment and export (MAAHF 2009b). Significant aspects of this plan were non-governmental intervention envisaging in primary production, promotion of cooperation, chain management, modern entrepreneurship, producing of more value added products (production and processing) and the improve, modernization and the education of departments in international standards of food and sanitary examination. With regard to horticulture the following measures have been taken: establishment of an integrated laboratory in accordance with international standards (unfortunately burnt down in 2010), provision of training to farmers such as Agricultural Entrepreneurship to stimulate entrepreneurship and increase the productivity, introduction of gap registration (trace back system for the origin of crops at export), establishment of the Agricultural Credit Fund, research in post harvest handling and the provision in training to farmers and government staff in HACCP. Although these measures were taken, the production and planted area in horticulture shows a decline exceeding the overall decline in the production of the agriculture sector (Figure 5). Figure 5 Production of vegetables versus production of other subsectors in agriculture 2,500 2,000 1,500 1, (Index figures) Vegetables All subsectorsof the horticulture without vegetables Source: Data MAAHF , graph developed by researcher 19

20 TON Poerschke (2010) concludes that the agriculture sector is still suffering and that the results of the Agricultural Sector Plan policies are unsatisfactory. There were limitations on different policy levels, which were not handled in a proper way leading to a lack of improvements of effective policy and production efficiency. The agriculture sector shows a systematic decline especially in the last years compared to the years after 1975, except of an increase over the last years due to large investments in rice and banana. The production in the horticulture showed a steady decline over the last 13 years compared with 10 years prior to 1975 in almost all sub-sectors (Poerschke 2010). Suriname can increase the production in the horticulture with its available agricultural land, fresh water and favourable climate and can stimulate the production and the export to foreign markets such as the Caribbean Single Market and Economy (CSME), which provides to increase market size and to overcome the constraints of the local small market. Currently the import of vegetables in Suriname exceeds the export figures (Figure 6). Notable is that import and export data from are not available. Figure 6 Import and export quantity of vegetables in ton ,000 15,000 10,000 5, TOTAL VEGETABLES IMPORT QUANTITY TOTAL VEGETABLES EXPORT QUANTITY Source: Data MAAHF , graph developed by researcher The third period from The agricultural objectives for the new government are (MAAHF 2010a): 1) Achieve and ensure food security for the total Surinamese population; 2) Ensure food safety and agricultural health; 3) Develop a sustainable agriculture sector; 4) Develop the agriculture sector into becoming the food producer and supplier for the Caribbean; 5) Increase the contribution of the agriculture sector to the national economy; 6) Create conditions for sustainable spatial development of the agriculture sector; 20

21 7) Manage the risks and constraints in the implementation of the agricultural policy. With regard to the horticulture the following activities are planned (MAAHF 2010a): 1) Improve the efficiency and productivity of existing businesses by modern production methods and technology (improved farming techniques, better farm management practices). Increase the awareness of farmers on international standards and technology transfer in the areas of Integrated Crop Management (ICM) and Integrated Pest Management (IPM), Good Agricultural Practices (Gap and Global Gap /HACCP). The use of modern technology and skills is expected to reduce the production costs because less labour is needed. Furthermore, reduction of the labour costs and the use of advanced technologies stimulate farmers to produce cost effectively, leading to higher production. An example is the Suri-Sombra greenhouse technique as illustrated in chapter 1, provides better production results than outside or traditional cultivation (Table 1); Table 1 Suri-Sombra greenhouse- and outside cultivation yields CROP VARIETY SURISOMBRA GREENHOUSE CULTIVATION OUTSIDE CULTIVATION TOMATO HYBRID KG/PLANT 4.7 KG/PLANT TOMATO HEADMASTER 8.7 KG/PLANT 5.1 KG/PLANT PAPRIKA GIANT BELL 53 FRUITS/PLANT 12 FRUITS/PLANT Source: MAAHF 2009a 2) Stimulate the production of non-traditional crops (cauliflower, leeks, peppers, carrots and lettuce) and non-traditional production methods (organic farming, greenhouses); 3) Establish a board of stakeholders. The Board may enter into joint ventures with a major agricultural player in Europe and will be responsible for cooling, storage facilities, and the provision of market information. Furthermore, the Board will also plead for better access to credit at competitive interest rates and encourage advocacy of lower freight rates to key markets, organize stakeholders to pressurize the government to implement its policy; 21

22 4) Expand the production area of priority crops including beans, eggplant, round eggplant, bitter gourd, bitter carillas, okra and pepper. The need for a detailed market study is noted here. The combination of activities 3 and 4 can stimulate the marketing of Surinamese crops in Europe, CARICOM and elsewhere. The implementation of these strategies and the restructuring of the departments of the MAAHF, who is responsible for research, development and education, are prerequisites. In addition, new investors in the sector should be facilitated adequately. The progress of the line in Figure 7 shows that the vegetable productivity is not increasing apart in 2009, despite less planted areas and a low production. The finding is that an increase in price has compensated in the volume per hectare. This means for the farmers better income for less planted areas, which may be a disincentive for increasing production through productivity increase. Figure 7 Vegetable productivity ton/ha Source: Data MAAHF , graph developed by researcher Figure 8 Farm prices of vegetables in SRD/KG Source: Data MAAHF , graph developed by researcher According to figure 8 the prices of crops, have been increasing every subsequent year since 1993 until 2010, for example tomatoes (Figure 9). Table 2 in Annex 2, shows the consumer prices of other crops. 22

23 Figure 9 Tomato consumer prices in SRD Source: Data MAAHF , graph developed by researcher Regarding the planted area of vegetables, we perceive in Figure 3, chapter 1 that the planted areas in the 90 s was higher (with a higher yield); with a drop since 1994 without heavy fluctuations. The productivity nevertheless was stagnant despite fewer planted areas. The planted area s have decreased and the income per ha has risen. The research found that even though the farmer plants less, he receives more money for his crops. This farmer has a satisfaction, for he does not need extra efforts. The full-time farmers are also less in number. Most farmers are part-timers and are engaged in horticulture for extra earnings (Resort Leaders 2011, personal interview). It is clear that less cultivated land influences productivity and production, because fewer areas are planted and the productivity is not increasing. 3.3 Conclusions The horticulture in Suriname is very important, because the production is the basis for food supply and provides in livelihoods for several farmers and directly also to others for example traders. This makes special demands on the food safety and the quality and continuity of the production process. The sector has a great influence on rural development, nature and biodiversity because of the strong spatial dispersion. Looking at how agriculture has been performing since independence and how horticulture has been performing in relation to agriculture it is clear that the agriculture and the horticulture sector both have a decline in production, while some subsectors have an uneven or a moderate growth. There were various governmental agricultural policies. Different measures were taken to develop the agriculture and the horticulture sector, but the execution was not adequate. This led to the need for improvements for effective policy to have production efficiency. The main causes for the low production in horticulture are small planted areas and the productivity which is not increasing viewing the statistics from This can be explained by the fact that the farm and consumer prices of crops have increased through the years. The value ton/ha is covered by a 23

24 higher price. Farmers will not bother to plant more if they have a high price for their crops and they are satisfied with it. Market size plays an important role in production increase. At small markets farmers have inadequate sales and Suriname has the opportunity to produce more by the use of new techniques and skills in order to produce cost effective and stimulate the export to foreign markets, which will enlarge the market size. 24

25 CHAPTER 4: DETERMINANTS OF LOW PRODUCTION AND LOW PRODUCTIVITY IN THE HORTICULTURE IN SURINAME 4.1 Introduction Suriname s horticulture is characterized by low production and stagnant productivity. In this chapter the determinants of low production and productivity are addressed. Furthermore, attention is given to the Agricultural Extension Service of the MAAHF and the promotion of the Suri-Sombra greenhouse as a new technique, with the primary focus on the transfer of technological knowledge and skills of this greenhouse technology. Research findings for government responses for the development of the horticulture will also be discussed. 4.2 Determinants of low production and low productivity in the horticulture Horticulture is a production chain system that contains processes such as cultivation, harvest and post harvest, processing, storage, transport and marketing. Chains and systems can be at operational, tactical and strategic level (Konijn and Van Spijker 2005). The operational level concerns the volume, the flow of time, the direct return (price, costs) and the quality. Tactical- and strategic level requires significant capital expenditures and the skills of those involved. The introduction of for example the Suri-Sombra greenhouse, as a new technique, makes tactically acts possible through special products and "out of season" cultivation and offers the construction of cold storage and the ability to keep products at a higher price on the market (MAAHF 2010a). The problems that are experienced are largely due to bottlenecks in the chain. The horticulture in Suriname, especially vegetables indicate a low production from (Figure 1, chapter 1). The causes for low production in horticulture are small planted area and the productivity per ton/ha (Figure 7), which did not increase much over the years. However, there is a small increase in the productivity in 2008, even when the production (Figure 1, chapter 1) and planted area (Figure 3, chapter 1) remained the same. Not all the determinants for low production in the horticulture mentioned in chapter 2 are relevant for Suriname. Therefore not all of them will be taken into account. 25

26 According to the interviews with the resort leaders, the region coordinators, policy makers and farmers and review of the outcome of studies in the horticulture and reports of the MAAHF the following relevant main causes and the findings for possible government intervention in order to restrain the obstacles are identified on the following domains: A Financial: there is a lack of price support that creates price fluctuations, which exists for apparently every crop. The price of for example paprika and tomatoes varies in quality, size and product availability. One of the resort leaders stated that: When the price is high for tomatoes particularly in the dry period, the government gives permission to import tomatoes to reduce the price. This is not acceptable for farmers (Resort Leader Kwatta 2011, personal interview). Levies on import products and consumer taxes are also lacking. At the other hand there is no subsidy for inputs like fertilizers and pesticides and there is a lack of credit facilities. The construction costs of the greenhouse and the interest rates of the bank loans are too high, which increases the risk for farmers to set up an expensive greenhouse (Farmers 2011, personal interview). Collaboration with Micro Credit Unit (NGO) and the MAAHF resulted in partial financing, but this is still in process. The Agricultural Credit Funds has some conditions that impose difficulties for farmers in order to get credits. These factors impede the use of new techniques, which will not be discussed in detail. B (New) technology, knowhow and skills: 1) Farmers lack knowledge of new technologies, which increase productivity. They also lack skills and therefore do not know how to cultivate effectively and efficiently in the greenhouse for higher production. This lack occurs due to lack of data and knowledge sharing on tested technologies (Suri-Sombra greenhouse) at resort offices of the MAAHF. Due to this, traditional cultivation methods are maintained from which low production and poor product quality is evident. Most of the resort leaders stated that farmers have a rigid attitude towards applying new techniques. They argue that they are planting the way their ancestors have thought them, who were also successful. There opinion is: Let me see first and give me guarantees for the sales (Farmer 2011, personal interview); 3) Lack of the knowledge of using seeds with a higher yield. There are better varieties of seeds for example the tomato hybrid 61 and headmaster. The Suri-Sombra greenhouse as a new technique to increase productivity shows the importance of using new technologies and the development of skills. Table 1 in chapter 3 and Table 2 in this chapter showed that respectively the productivity of tomatoes and paprika in the 26

27 greenhouse is much higher than outside cultivation and that due to the high productivity the cost price per kg and per piece is lower. For the tomato Hybrid 61 the production cost is circa 48% less in the greenhouse than for the outside cultivated production, while for the paprika Giant Bell it is circa 75% less. Table 2 Comparing cost prices of tomatoes and paprika (outside and in greenhouse cultivation) Crop Outside cultivation costs in SRD Greenhouse cultivation costs in SRD Paprika Giant Bell 0,93 per piece 0,20 per piece Tomato Hybrid 1 2,20 per kg 1,13 per kg Source: Resort Leader Wanica A, Table designed by researcher When a comparison is made of the production of tomatos in the world ( million tons), in India about 7.60 million tons (Sreenivasa Murthy et al. 2009) and in Brazil about 3.58 million tons (Morin 2009), it can be stated that even considering the smaller population, the production in Suriname is very low (circa ton in 2010 MAAHF 2011b). Like other developing countries, Suriname has the possibilities to increase its production. To achieve higher production, the Suri-Sombra greenhouse was introduced in Suriname in 2007, but despite the knowledge of this new cultivation technique, the production is still low. Interviewed farmers confirmed that there is a lack in transferring of information of new techniques and new irrigation methods by the officials of the MAAHF. Only two farmers are making use of the Suri-Sombra greenhouse planting technique and one has been successful with paprika, tomato and mustard cabbage. Purchasers of paprika from Trinidad and Tobago even brought a visit but no deals were made, because of the small cultivation and low production (farmer 2011, personal interview). Another farmer concentrates on the outside cultivation and said only being interested in the greenhouse technique after he had some evidence. His perspective was that the cultivation outside could be expanded to make more profits. Generally, these farmers are satisfied with smaller profits for example 10%; 4) Lack of modern entrepreneurship in terms of management, planning and technological innovation and flexibility with regard to market demand. The 27

28 knowledge of farmers regarding such management and planning skills is relatively low; 5) Research and development at resort offices and the research department of the MAAHF are also lacking. The model greenhouses at these offices need to be reconstructed now and supplied with resources such as pesticides, chemicals and humus by the MAAHF on a regular basis. Due to this there are not enough experiments carried out regarding the greenhouse cultivation resulting in a lack of data to convince farmers and less development. This leads to the next domain; 6) Poor functioning of the Agricultural Extension Service of the MAAHF. This will be further discussed in the next paragraph, because it is related with the transfer of knowledge about (new) technology and higher levels of skills. These two factors are very important for an increased production. Overall, it can be stated that government intervention for the indicated domains is crucial in the development of horticulture. Government policies regarding these interventions will be discussed in the last chapter (recommendations). Information of new technologies, knowhow and higher level of skills are very important, because together they result in higher and effective labour (increase of the productivity per worker) and higher production. Therefore, it is important to look at the functioning of the Agricultural Extension Service of the MAAHF, responsible for the aforementioned issues. 4.3 The Agricultural Extension Service of the Ministry of Agriculture, Animal Husbandry and Fisheries: the promotion of the Suri-Sombra greenhouse as a new technology The Agricultural Extension Service of the MAAHF functions as an intermediary between the six departments of the MAAHF and the agricultural information officials in the field. In Annex 7 there is an organizational chart of the Department Agriculture at the MAAHF. There is an intense relationship between the division, the resort leaders, the officials and external national and international organizations regarding agriculture in order to be up to date with development on various territories (MAAHF 2011a). This division thus plays a key role. Although, the Extension Service has various important tasks, there is a lack in the functioning. All resort leaders have the opinion that this division lacks an efficient and effective executive policy, which has its influences on the whole chain in horticulture. This indicates that there are many bottlenecks such as the shortage of materials, out-dated 28