ALTERNATIVES TO SUGAR CANE IN ST. KITTS: COMPETITIVENESS STUDIES OF 4 CROPS IN ST. KITTS/NEVIS

Abstract

The sugar industry in the island of St. Kitts came to a close in 2005 and so too did a long period of monoculture and possibly a culture and lifestyle of a people that affectionately refer to their country as Sugar City. Sugar was cultivated on approximately 4,500 hectares and there is now a dire need for replacement commodities that fit within the social, economic and environmental landscape of the country. Sugar cane cultivation and sugar production provided good-paying jobs and was the main source of income for many households. The crop provided a high degree of soil conservation and was a boon to the tourism industry. In addition, sugar was a substantial source of foreign exchange and provided some diversification to a tourism dependent economy. In selecting alternatives to sugar, the social, economic and environmental considerations must take into account the issues presented by globalization and trade liberalization. The Government has started the process by approving an externally funded Stevia project and announcing plans for methanol production and co-generation of electricity from sugarcane. However, attention also is being drawn to some non-sugar commodities that were grown in St. Kitts on a small scale during the sugar dominant period. It is felt that these may be competitive on the international market thereby providing employment and foreign exchange, while catering to the needs of the rural population. This research aims to assess four of the non-sugar agricultural commodities, for which there is cost of production data to determine profitability, international competitiveness and comparative advantage. The research also will aim to provide policy recommendations towards a more conducive environment for the identified competitive commodities. The main hypothesis of this research is that commodities of (i) Pumpkin, (ii) Peanut (iii) Sweet Potato and (iv) Onion grown in St.. Kitts/Nevis conditions are internationally competitive and present good diversification alternatives to sugar. The main research tool was the Policy Analysis Matrix (PAM). This was used to assess the four commodities for international competitiveness and comparative advantage. The research also involved the collection of secondary and primary data to input into the matrix and determine the relative importance of these four commodities in St. Kitts. The results of the assessment show that all four commodities are profitable, competitive and have comparative advantage. These characters are highest for the export commodities of Pumpkin and sweet potato and lowest for the import-competing products of onion and peanuts. The level of government support to gross farm revenues is 4% for pumpkin and sweet potato, 3% for peanuts and 12% for onions. Referencing the level of value-added to per-capita GDP indicates that peanuts are not an attractive diversification alternative. Policy recommendations are for an expansion of the production of the commodities of pumpkins, sweet potato and onions, together with efforts to reduce the impediments to market penetration.