By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has been urged to step back from direct involvement in the agriculture sector amid a "disconnection" between policy goals and budget spending allocations.

A newly-published Inter-American Development Bank (IDB) analysis of Bahamian agricultural and fisheries policy has called on the Government to reduce the role it plays in a sector that generates just 1.6 percent of annual GDP and instead "incentivise" the private sector to fill the void.

The report, obtained by Tribune Business, said that despite their relatively small GDP contribution the agriculture and fisheries industries still represented a key source of Bahamian economic diversification if their potential was fully exploited.

It found that support provided to Bahamian farmers was equivalent to 19.08 percent of gross farm receipts between 2012-2014, with government policy resulting in consumers "paying higher prices" for local produce - something it branded as especially "damaging" for low income households.

"State involvement in markets and trade creates an obstacle for development by crowding out private investments," the IDB analysis said. "The procedures and policies for investment incentives are established, but their implementation is not efficient, mainly due to excessive regulations and a lengthy process for obtaining the benefits. Excessive administrative obstacles must be identified and removed for farmers to access incentives."

Government support for Bahamian farmers "is mostly financed by consumers who pay higher prices for farmers' output", the report said, adding: "Consumers pay higher prices for local output as a result of government policy, which is damaging for low-income populations and limits local demand for agricultural and fisheries production.

"The continued reduction of price support to producers (MPS), which is the most distorting and not the most efficient form of support, will benefit consumers and does not directly require additional fiscal resources, although it implies a decrease in tariff revenues."

The IDB analysis then called for greater efficiency in Government spending on agriculture through the introduction of performance monitoring programmes for particular policy initiatives.

"There is a disconnect between the goals and budgeting of agricultural policy planning in The Bahamas, as major mid-term planning documents do not include budget projections," the IDB report warned. "The structure of budget classification includes only broad categories that do not allow any detailed analysis of spending.

"The majority of the Ministry of Agriculture and Marine Resources (MAMR), Department of Agriculture (DOA) and Department of Marine Resources (DMR) budgets go to administration - mainly salaries and building maintenance - and are not allocated to any particular projects or programme."

It continued: "Although the government's short-term development goals are detailed in the Budget communication documents, agriculture is rarely mentioned in such documents. Agricultural development is considered in the framework of the human capital development strategy (BAMSI) and the development of small and medium-sized enterprises.

"The list of the 'measures' included in Vision 2040 [the National Development Plan] is comprehensive. However, they lack specific actions and often describe the Government's best intentions without spelling out the actions and resources required to achieve them."

The IDB report said the absence of long-term agriculture planning, especially when it came to vital industry-supporting infrastructure, was creating uncertainty for farmers and making them reluctant to invest.

"Agricultural access roads, harbours, irrigation, as well as post-harvest infrastructure in The Bahamas are areas that should receive more attention from the Government," it urged.

With the absence of data and information making it hard for the Government to make "informed policy decisions", the IDB report's authors added: "Measures focused on the profitability and productivity of the sector, such as enhanced research, development and extension support, creation of efficient post-harvest value chains, pest, disease and quality management systems, and risk management support programmes will help create a possibly small but efficient agricultural sector and exploit some specific competitive advantages in a few niche sub-sectors."

Some 3 percent of the Bahamian workforce is currently employed in agriculture but, while the sector has room form growth in niche markets, the IDB document said this nation had to bow to the inevitable and realise it "will still have to rely on imports for most of its food supplies.

"Agricultural land is concentrated on the New Providence, Abaco, Andros, and Grand Bahama islands, while consumption takes place mostly on New Providence and Grand Bahama islands, making the efficiency of inter-island transportation crucial," it added.

Fisheries, though, played a key trade role for The Bahamas by accounting for 15 percent of total merchandise exports even though this had declined from $90m in 2013 to just over $60m two years later.

"Fish and crustaceans account for over 90 percent of agri-food exports and are exported to the European Union (EU), US and Canada," the IDB report said. "The Bahamas is a net importer of agri-food products: The country imports meat and dairy, fruit and vegetables, prepared food and beverages. The agri-food import bill increases constantly, reaching $623 million in 2015.

"Support to producers averaged 19.08 percent of gross farm receipts in 2012-2014, and a significant share of support (29 percent ) was provided in the form of transfers to general services. At the same time, total transfers arising from agricultural policy reached only 0.28 percent of the national GDP.

"Reducing barriers to trade, reducing regulations and streamlining access to incentives for farmers, and improving information services will help increase the efficiency and competitiveness of the agricultural sector."