The World Bank

FO}R OtMCIAL USE ONLY

Repsit No- 5375-HA

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HAITI

AGRICULTURAL SECTOR STUDY

VOLUNE I

MAIN TEXT

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June 14, 1985

Projects DepartmentLatin America and the Caribbean Regional Office

This documet as a restricbd dtsibuton md may be ausd by recpies o"ly in the performance oftheir okidl fdutes Us contes my n othewise be discoed witwot Wodd Bank muhordation.

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CURRENCY EQUIVALENTS

Currency Unit: Gourde (G)US$1.00 = G 51/

G 1.00 = US$0.20

WEIGHTS AND MEASURES

Metric System

1 kilogram (Kg) = 2.2 pounds (lb)1 hectare = 0.78 carreaux1 carreau = 1.29 hectares

ACRONYMS

BCA = Agricultural Credit BureauBNC = National Credit BankBNDAI = National Bank for Agricultural and Industrial DevelopmentBRH = Bank of the Republic of Haiti (Central Bank)CCSA = Capital Consult S.A.CEPAL = Economic Commission for Latin AmericaCPI = Consumer Price IndexCIF = Cost, Insurance and FreightCRDA = Center for Agricultural Research and DocumentationFAC = French Fund for Aid and CooperationFAO = Food and Agrirulture OrganizationFAVM = Faculty of Agriculture and Veterinary MedicineHASCO = Haitian American Sugar CompanyICO = International Coffee OrganizationIDB = Inter-American Development BankIMF = International Monetary FundIHS = Haitian Institute of StatisticsMARNDR Ministry of Agriculture, Natural Resources and Rural

Development aMinoterie = Flour MillOAS = Organization of American StatesOCEAR = Haitian Office for Marketing Aromatic OilsODN = Organization for Development in the NorthODVA = Organization for Development of the Artibonite ValleySENASA National Service for Improved SeedsSODEXOL = Societe d'Exploitation d'OleagineuxUPAN = Agriculture and Nutrition Planning Unit, Ministry of PlanningUSAID = U.S. Agency for International DevelopmentUSDA = U.S. Department of AgricultureUSND = National Sugar Company of Darbonne (Leogane)USMN = National Sugar Company of the North (Citadelle)

GOVERNMENT OF HAITI

FISCAL YEAR

October 1 - September 30

I/ Since 1919, the gourde has been pegged to the U_S. dollar at G 5 = US$1.

FOR OFFICIAL USE ONLY

HAITI

AGRICULTURAL SECTOR STUDY

Table of Contents - Volumes I and II

VOLUME I - MAIN TEXT

Page No.

EXECUTIVE SUMMARY

Basic Data .............................................Resource Base and Farm Structure . ......................Nutrition ..... .................................. iiSources of Past Growth ..................... . iiPricing Policies .... . iliPublic Sector Support ... iiiComparative Advantage . .. ivStrategies for Future Growth . . .ivPrincipal Short- to Medium-Term Reco.mnendations _ vLonger-Term Recommendations . . .vi

I. INTRODUCTION .1

II. THE RESOURCE BASE AhND PRODUCTION TECHNOLOGIES .... ......... 1

Crops and Land Conditions ..... ............... IStructure of Land and Property ......................... 2Irrigation. ................................... 2Labor and Wages ........................................ 3Land Prices and Rentals ................................ 4Mechanization.. 4Seeds, Fertilizer and Pesticides. 4

- Production Technologies .. 4

III. INSTITUTIONS AND FINANCIAL RESOURCES. 5

Agricultural Policies .. 5Organization of Ministry of Agriculture . . 6Extension, Research and Training . . 6Public Sector Expenditures .. 7Agricultural Credit 8.......8

IV. THE RULRAL ECONOMY OF HAITI ALND S?MALLHOLDER BEHAVIOR . .9

Background. .. 9Forms of Land Tenure .... 10On-farm Consumption and Marketable Surpluses .11

V. AGRICULTURAL PRODUCTION COSTS ALND COMPARATIVE ADVANTAGE ... 12

Introduction ........... 12Estimates of Production Costs .12Estimates of Comparative Advantage. 14

.This ocument iN*nretricted ditibuton and maybe used by reclpicnt onlyIn theperformanceoftheir oMr. dutlos.Its contents may not otheri nbe disclsd witihout Worid Bank authorization.

Table of Contents - VOLUM1E I (Cont'd)

Page No.

VI. INCOMES AND PATTERNS ..................................... 15

Income Distribution .............. ...................... 15Rural Employment and Wages ..... ........................ 15Patterns of Consumption and Nutrition ............... ... 16Improving Nutrition and Farm Incomes ................ ... 17Food Price Trends and Substitution Effects .......... ... 17

VII. THE SUGAR SUBSECTOR ... 8.................................... i

Cane Production ....... ...................... 8........... iCentrifugal Sugar Production ..... ...................... 19Traditional Cane Processing Industries .............. ... 20Sugar Supply and Distribution ..... ..................... 20Price Formation and Taxes .................... . . ......... 21Recommendations ........................................ 22

VIII. THE WHEAT FLOUR SUBSECTOR .23

The Minoterie of Haiti ... 23Flour Production . . .23Production Costs . . .24Domestic Flour (Ex-Factory) vs. Imported Flour ... 25Minoterie Revenues and Costs ........................... 25Price Policy ... 25Flour Sales .... 26

IX. AGRICULTURAL EXPORTS POTENTIAL .. 26

Coffee ... 26Mangoes ... 28Cocoa ... 29Sisal ... 30Essential Oils ... 30

K. THE FISCAL AND PRICING SYSTEMS FOR AGRICULTURE .31

Overview..... 31

Haiti's Agricultural Fiscal System . .33Trade Related Policies .. 34

XI. SUMMARY OF RECOMMENDATIONS .35

Table of Contents - VOLUME I (Cont'd)

Tables 1. Distribution of Agricultural Land, 19712. Production, Areas and Yields of Principal Crops (1978)3. Staffing of MARNDR by Directorates and Location4. Sectoral Allocation of Public Investment Expenditure

by Years (1972-1982)5. Public Investment in the Mlain Agricultural Projects, 1982-19836. Operating Budget of MARNDR7. Haiti's Agricultural Production Systems by Smallhclders8. Comparative Annual Yields by Crop, 19789. Cost Estimates for Maize Production

10. Cost Estimates for Rice Production11. Cost Estimates for Coffee Production12. Cost Estimates for Sugarcane Production13. Field Costs for Raw Sugar Production14. Cost Estimates for Banana Production15. Comparative Advantage Indicators16. Cost Effectiveness of Different Foods in Providing Calories and

Protein17. Indices of Consumer Prices of Basic Foods, Port-au-Prince18. Hinoterie: Structure and Evolution of the Production Costs19. Minoterie: Sales Price Structure and Evolution20. Minoterie: Flour Sales, Costs and Revenues21. Flour: Per Capita Consumption and Real Prices22. Contributions to GDP and Exports by Sector23. Coffee Exports and Total Exports24. Coffee Supply and Distribution25. Annual World Market Prices and Farmers' Prices for Coffee26. Domestic and Border Prices for Selected Agricultural Products27. Implicit Taxes (-) and Subsidies (+) in Agricultural Pricing

Policy28. The Agricultural Fiscal System29. Consumer Price Indices in Haiti and the United States, 1953-83

Figures 1. The Coffee Marketing Systems2. Distribution System for Export of the Francis Mango

Map

VOLUME II - ANNEXES A - F

Annex A - SUGAR SUBSECTORAnnex B - WHEAT FLOUR SUBSECTORAnnex C - RESOURCE BASE AND AGRICULTURAL POTENTIALAnnex D - CRISIS IN SMALLHOLDER ECONOMYAnnex E - AGRICULTURAL EXPORTS AND POTENTIALAnnex F - AGRICULTURAL PRODUCTION, ITS COST STRUCTURE AND COMPARATIVE

ADVANTAGE

VOLUME III - ANNEX G - STATISTICAL ANNEX

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This report is based on the findings of an agricultural sector mission thatvisited Haiti in May/June 1984. Mission members comprised Mr. J. Tellez andMrs. S. Ono (Bank), and Messrs. M. Mazoyer, Dufumier, G. de Rincquesen,D. Lafontant, R. Norton and S. Oliver (Consultants). The sector mission wasconfinanced by the French Fund for Aid and Cooperation (FAC) and technicalcontributions were made by their representatives, Messrs. Sabatie andBrochet. USAID field staff shared with the mission the conclusions of their1984 sector review and participated in mission trips and meetings. IDB fieldstaff also participated in meetings. Mr. R. Hanan (Bank) took responsibilityfor processing the report following the departure of Mr. Tellez from LAC atend August 1984. Mrs. T. Ruhter (Consultant) assisted with editing thereport.

HAITI

AGRICULTURAL SECTOR STUDY

EXECUTIVE SUMMARY

Basic Data

1. Uatil the late 1970s, the agricultural sector generated the largest-sectoral share of GDP. Since 1980, the tertiary sector has becomepre-eminent. Similarly, the agriculture sector's contribution to exports hasdeclined, from over 60% between 1975 and 1977 to 40% between 1981 and 1983.The emerging industrial sector, especially the assembly industry, hasincreased its contribution to total exports over the period from 25% toalmost 60%.

2. In real terms, the value of agricultural production has declinedslightly over the past 10 years. The value of agricultural exports, however,has declined sharply, by an average of 3% per year from 1975-77 to 1981-83.Per capita GDP for the country in 1983 was US$334, but for the rural sectorthe figure was around US$125. The stagnation or decline of the sector'scontribution to growth has become a major concern of the Government.

3. The country's estimated total population is 5.3 million (1983).Around 4 million, or 75%, reside in rural areas. Net population increase is1.9% per year; 1.8% and 2.4% in the rural and urban areas, respectively.With the limited employment creation in urban areas, the mounting populationpressures have led to a net migration abroad of some 25,000 people per year;16,000 from rural areas and 9,000 from urban areas.

Resource Base and Farm Structure

4. With temperatures averaging 24°C, Haiti enjoys a tropical climate.Rainfall is irregular, varying from 600 mm to 2,000 mm per year, depending onlocation, and is exacerbated by periodic severe droughts and sometimes byhurricanes. Only about 15% of the land area is reasonably flat. Most of thecountry is mountainous and steep; 50% of the land area has a slope greaterthan 40' and is suitable ecologically for forest cover only. Increasingpopulation and felling of forests have led to serious erosion. From around900,000 ha presently under cultivation, it has been estimated that 10-15,000ha are being lost to soil erosion annually. Almost 1.1 million ha have beendenuded of soil, becoming essentially wilderness with little or novegetation.

5. Around 85,000 ha have been served with irrigation systems.Around 40,000 ha benefit from full water control, allowing double andsometimes triple cropping. The remaining 45,000 ha allow single cropping orare non operational. Most systems are in disrepair. With 180,000 haconsidered irrigable, there is considerable scope for rehabilitation ofexisting schemes and investment in new ones.

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6. Superimposed on the above resource base is a predominantlysmall-scale farm structure. Between 1950 and 1971, the proportion of thenumber of farms with more than 4 ha fell from 16% to 5%. The average size ofthose with less than 4 ha was 1.1 ha in 1971, fragmented into an average of1.7 parcelles each, and covering 73% of the cultivated land area. Manyproperties are now too small to support family subsistence requirements.

7. Most smallholders have customary rather than legal rights to theirland. The Government leases much of its land to individuals, charging themconsiderably less than market rates. The land is often then sub-leased toothers at market rates, with the increment (economic rent) remaining with theoriginal lessee.

8. Throughout most of the country, farm technologies are rudimentary,simple hand tools being the norm. Rural wages, around US$1.40 per eight-hourday, reflect the low productivity of labor. Fertilizer use in 1982 was only7 kg/ha of cultivable land, compared to around 90 kg in Jamaica and 125 kg inKenya. Pesticides use in 1982 was only 165 metric tons.

Nutrition

9. Malnutrition in Haiti is widespread, especially in rural areas.Recent estimates show a nationwide calorie deficit of 14% and a proteindeficit of 32%, compared to FAO/WHO recomended levels. These deficitsincrease to 40% and 50%, respectively, in rural areas, and are reflected inhigh rates of mortality, especially of infants.

Sources of Past Growth

10. Traditionally, Haiti's principal crops have been maize, sorghum,coffee, beans, rice, bananas, mangoes, pigeon peas, cassava, sweet potatoesand sugarcane. Livestock, particularly goats and chickens, have also beenimportant. Since the 1950s, the production of maize and sorghum hasdeclined, while rice production has more than doubled. Production of sweetpotatoes, beans and bananas has also increased. Increasing quantities ofwheat are being imported, much of it under US PL480 concessional aid.Notwithstanding earlier trends, the production of almost all commodities hasstagnated or declined since the late 1970s.

11. The main cash crop, and source of growth, has been coffee. Inaddition to providing a cash income for up to 50% of the rural population, ithas been the main contributor to exports. Coffee production, however, hasnot increased over the past 25 years; its contribution to the value ofagricultural exports in 1981-83 had fallen to 52%, or 20% of all merchandizeexports. Similarly, the export tax base has been declining, constitutingonly 7% of Government revenues between 1981 and 1983, compared to 13% between1976 and 1979. An encouraging exception to the above production and exporttrends is mangoes, whose export value increased from US$3.5 million in 1983to around US$6 million in 1984.

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Pricing Policies

12. A major constraint to growth of the agricultural sector has beenthe Government's pricing policies. Farmgate prices of coffee havedeteriorated relative to those of staple crops, especially maize, sorghum andrice. Prices of wheat flour, moreover, have been controlled at levelsincreasingly below the consumer price index, and substantially below thedomestic free market levels for maize and sorghum. The Government's policyof restricting imports of staple cereals has helped force up prices of thelocally produced crops. In effect, their prices at the farmgate are being*supported- above world prices. The contrary applies to coffee and cocoaprices because of export taxes.

13. These and other price distortions, e.g., producer prices of seedcotton have generally been maintained below import parity, have generatedincreasingly negative consequences, in terms of production and growth, lossof non-renewable resources and distribution of welfare. Maize and sorghumcompete with coffee for scarce land in many smallholder areas, andindications are that farmers have been replacing their coffee trees withthese crops. Planting grains rather than coffee on steep slopes hastens theprocess of soil erosion. Farmgate prices, therefore, have provided producerswith signals contrary to the country's comparative advantage, and, not least,have contributed to the serious erosion problem.

14. The problems of the sugar industry deserve special mention. Sugarproduction has fallen from 55,000 tons per year in 1967-69 to 44,000 tons peryear in 1982-84. With two sugar mills in production in 1967-69 and fourmills in 1982-84, the capacity utilization of the mills has declined over theperiod from 88% to less than 40%. Concomitantly, the farmers' share ofproduction costs of raw sugar has fallen from 50% in 1970 to only 29% in1983. These figures contrast with an accepted international standard for anefficient sugar production enterprise of a 70% share for cane and 30% forprocessing. The controlled price of US$ 13 per metric ton paid to producersfor their cane constitutes a clear disincentive to sell the cane to the sugarfactories. Rather, an increasing proportion of cane is being sold to thetraditional guildives for production of potable alcohol.

15. Pricing policy for the sugar industry has been self defeating asinadequate cane prices have led to lower cane supplies and further pressureon prices. As a result, sugar production has declined and Haiti has gonefrom a position of a net exporter until the late 1970s to a net importer;production between 1981 and 1984 averaged 46,000 metric tons per year and netimports averaged 23,000 metric tons. In addition to the relatively low caneprices, the Government imposes a hefty excise tax of US$8c/lb, culminating ina controlled retail price for raw sugar of US$34c/lb. This price is wellabove the costs of production of reasonably efficient sugar producers inother countries and constitutes a considerable cost to consumers' welfare.

Public Sector Support

16. The Life President of Haiti expressed concern publicly in 1984about the relative inefficiency and ineffectiveness of the Ministry ofAgriculture (MARNDR). He stressed that the country's future economic growthwill depend significantly on the agricultural sector, and that MAIRNDR must

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improve the quality and quantity of its assistance. Indicative of MARNDR'sproblems are that more than 50% of higher-levcl staff are located in thePort-au-Prince headquarters, many of them in administrative positions. Keystaff have changed frequently; there has been eight changes of Ministers inas many years and few people have viewed employment with the Ministry as apermanent career path. It has also suffered from a persistent shortage ofoperating funds, for fuel and maintenance of vehicles, supplies and even forstaff salaries. Compounding the difficulties, the Ministry has an impossiblyheavy workload, with almost 100 foreign-financed projects, 65 of which areunder implementation.

17. Notwithstanding some encouraging improvements recently, theMinistry and foreign aid organizations have been unable to plan and executeeffectively public investment in the sector. For example, in FY83, only 22%of the G 31.5 million budgeted for the Ministry was allocated by the Ministryof Finance and only-18% was actually spent. Worse, only 43% of the latterfunds were spent on actual investments, the remainder being redirected tofinance salaries (42Z) and goods and services (15%).

18. Only 10-15% of the rural population has access to institutionalcredit. The main sources are the Agricultural Credit Bureau (BCA) and theNational Bank for Agricultural and Industrial Development (BNDAI). BCA, witha portfolio in 1983 of US$3.9 million, provides loans to some 19,000smaliholders, or 2.5% of rural households. The BNDAI, with a portfolio in1984 of US$13.5 million, is geared towards mediumr- and larger-sized farms,especially those producing rice. It also lends to around 12,000smallholders, including 4,000 cotton producers. For most improvedtechnologies, credit is essential, but it is unlikely to be effective unlessaccompanied by the above-mentioned pricing policy reforms to improve farmerinvestment and production incentives.

Comparative Advantage

19. A comparative advantage analysis was undertaken of five key cropsunder different production conditions; traditional and improved methods,intercropping, crops rotations and monoculture. The analysis showed thatbananas under improved cultivation have the greatest comparative advantage.They are followed by monoculture coffee, irrigated rice, improved maize andsugarcane. The results indicate that at world prices, Haitian agriculture,even under traditional technologies, tends to be reasonably competitive,especially in coffee and bananas. It is also competitive in the productionof sugar cane, assuming a world price of US$0.15 per lb, and sugar producersreceiving at least 60% of the value of raw sugar produced (para. 14).Economic viability improves markedly with improved technologies. Pricing andtrade policies, supported by technical services and credit, should beoriented towatds providing farmers with effective incentives to respond tothe potential of economically viable crops.

Strategies for Future Growth

20. Five criteria were used to guide the acceptability ofgrowth-oriented recommendations for the sector. Measures should contributeto: (a) increasing productivity, production and exports (or decreasing

imports); (b) improving nutrition; (c) preserving non-renewable resources,particularly inhibiting erosion and destruction of forests; (d) increasingthe Government's fiscal revenues; and (e) improving equity and welfare. Inaddition, the recommendations should contribute to accelerated growth fromthe sector in the short and medium terms. The cumulative effect ofpopulation increase and stagnation has been to place the sector in a crisissituation in terms of nutrition and rural income levels. It is clear thatpast policies have not been sufficient to arrest a worsening trend, and thatstrong departures are needed. Hence, the recommendations in this report arefairly comprehensive.

21. The potential for productivity and growth rests much more with thebetter rainfed and irrigated flat lands than with the mountainous areas.Strategies for rehabilitation and growth in the mountainous areas, whileequally if not more important, are necessarily long term. Strategies towardsplanting improved varieties of coffee trees, and improving maintenance ofexisting ones, are medium term. Short- to mediuw-term strategies shouldfocus on pricing, technical support, credit, and rehabilitation and improvedO&M of the existing irrigation systems. Particular emphasis should be givento expanding areas in rice and in developing industrial crops such astomatoes and fresh and processed fruits and vegetables for export. Thesecrops are labor intensive and serve to relieve some of the pressure on landin the mountainous areas.

22. The focus on increasing productivity and output in the shorter termmust not be interpreted as meaning a reduction of emphasis on therehabilitation of the hillsides. On the contrary, reforestation and erosioncontrol measures must be intensified if the alarming loss of soils is toarrested. Success in these activities is indispensable to the longer-termviability of the agricultural sector. In the shorter term, rehabilitation ofirrigation systems and construction of new ones must include stabilizationand rehabilitation of the watersheds that feed such systems.

d

Principal Short- to Medium-Term Recommendations

23. (a) Coffee Tax. The Bank should support the Government's agreementwith USAID to decrease the export tax by a further 15%, thereby culminatingin a 25% reduction over 15 months. The Government and USAID should ensurethac the effects of the tax decrease, particularly on farm coffee prices indifferent localities, are closely monitored.

(b) Fiscal Reform. To offset the recommended reductions in export andexcise taxes, and otherwise to increase fiscal revenues from the sector, theGovernment should: raise rents on public lands to market levels; implementthe constitutional tax on large land holdings; and introduce full usercharges for O&M costs of irrigation.

(c) Oil Seeds. A study should be commissioned by the Government toreview options for making the State-owned soybean extraction and refiningplant, SODEXOL, financially and economically viable. If its viability cannotbe assured, it should be closed.

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(d) Centrifugal Sugar. The excise tax should be eliminated, the savingsbeing passed on to farmers as increased cane prices, and to consumers asreduced retail prices. A system of payment to farmers for cane on the basisof its sucrose content should be introduced. A Government led Working Groupshould be established to review the status and future of the sugar industry.

(e) Wheat. The Government should adopt a clear policy aimed atdecelerating the increase in imports and consumption of wheat.The Minoterie wheat flour plant should not be expanded, and its operatingcosts should be reduced. Also, the Minoterie should be encouraged tosubstitute up to 10% of the wheat flour (in the flour mix) with ground maizeor sorghum.

(f) Irrigation. While longer-term plans for physical rehabilitationare being implemented, full operational and 'ordinary" maintenance costsrecovery through water charges should be introduced. The Government shouldintroduce measures that will help ensure 'extraordinary" maintenance ofirrigation systems, as required to remove siltation brought on by delugesfrom the watersheds. Water users' associations should be estalished tomanage the systems at the local level. These associations should haveresponsibility for management of the proceeds of the water charges, subjectto review by MARNDR.

(g) Credit. Constraints on the availability and terms of ruralinvestment and production credit should be reviewed. Additional creditshould be made available to support increased agricultural production andagroindustrial development. Credit policies should be consistent with therequirements for investments in new technologies.

(h) MARNDR. A planning and monitoring unit should be established inMARNDR. The unit would: plan for new and ongoing investment and establishpriorities, consistent with available resources; monitor and evaluateprogress of ongoing projects; and advise on policy options related to theGovernment's established priorities for the sector.

(i) Cotton. Farmer prices for seed cotton should be adjusted, asnecessary, to ensure the equivalent of import parity.

(j) Export Taxes. All export taxes, excepting for coffee (seepara. 23 (a)), should be eliminated.

Longer-term Recommendations

24. (a) Irrigation. Existing systems should be rehabilitated (in general,before new systems are constructed). Measures to protect and rehabilitatethe watersheds feeding such systems should be included in the projectinvestments.

(b) Soil Conservation. External financing for substantial investmentsin soil conservation programs should be sought.

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Cc) Forestry. Reforestation should proceed both as commercialcropping on selected lands and to help conserve the hillside soils within

appropriate farming systems.

(d) MARNDR. Besides establishing a planning and monitoring unit,MARNDR's overall capability should be strengthened through further reductionsin excessive staff, increases in salaries and improvements to research,extension, seed multiplication, soil conservation, reforestation andlivestock development. Increased attention should be given also to adaptiveresearch on dryland and saline-tolerant crops, and to drainage of salinesoils.

(e) Land Reform. Studies should be initiated to determine the statusof land tenure throughout the country. Based on these studies, a program ofland tenure regularization and consolidation should be prepared and supportedactively at the highest levels of the Government.

Cf) Marketing. Marketing infrastructure and information should beimproved to support increases in production of fruits and vegetables,livestock and cereals. The Government should assist the private sector inidentifying diversified export markets and in ensuring access on favorableterms.

Cg) Sugar. Possibilities for diversification of sugarcane lands toother, more economically viable crops should be reviewed.

(h) Information Base. The Government should: (i) conduct a nationwidesurvey on consumption, nutrition and rural households expenditures; (ii)conduct a new aerial photographic survey of agricultural areas; and (iii)establish a system of regular collection and dissemination of farngate andrural markets prices.

HAITI

AGRICULTURAL SECTOR STUDY

I. INTRODUCTION

1.01 The viability of most farms in Haiti is being steadily eroded dueto pressures of an expanding population and a diminishing resource base. Theaverage farm size has been falling. The consequencesVare increasing ruralpoverty and urban migration, transferring the poverty to the perimeter of thecapital city. The cuuulative effect of a long period of virtual stagnationplaces Haitian agriculture in a state of crisis.

1.02 The possibilities for change have been analyzed in severalstudies. Basically, four problems have been addressed: (i) low nutritionlevels; (ii) soil erosion and the displacement of coffee by annual crops onthe hillsides; (iii) insecurity of land tenure; and (iv) inequitable andinefficien; fiscal policies. This report draws on the lessons of thesestudies and utilizes new information in proposing measures that shouldstimulate improvements in overall sector performance. The measures recom-mended relate mainly to institutional reforms and revisions of fiscal,pricing and trade policies. Priorities for public investment in the sectorare also identified, as are improvements for agricultural research andextension.

1.03 Some of the recommendations present difficult cboices for theGovernment. The crisis in Haitian agriculture, however, deserves a frank andthorough assessment. Increased productivity, production and exports from thesector, as well as improved resource conservation, Income distribution andnutrition, are fundamental for long-term growth of the sector and of theeconomy as a whole.

II. THE RESOURCE BASE AND PRODUCTION TECHNOLOGIES

2.01 Located between latitudes 180 and 21°N, Haiti has an essentiallytropical climate. The terrain is relatively mountainous, with some 50% ofthe total land area having slopes greater than 40°. Only about 15% of thearea is relatively flat. Rainfall is irregular and sometimes intense, con-tributing to severe erosion. Periodic hurricanes also cause serious damage.

Crops and Land Conditions

2.02 Around 1.4 million ha (50% of the total land area) is suitable foragriculture. Some 900,000 ha are cultivated, with the remainder in naturalpasture. Satisfying domestic food requirements is absorbing increasing areasof land, at the expense of cash crops such as coffee, cocoa and sisal. Mixedcropping by smallholders using traditional methods is widespread.

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2.03 Occupying about 15% of the agricultural land, the humid mountainareas are located at altitudes between 500 m and 1,600 m. They have moderateslopes and an average annual rainfall of 1,500-2,000 mm. Beans, maize andcoffee are predominant in these areas. Vegetables have been introduced nearthe urban perimeters.

2.04 The dry mountain areas comprise 25% of the agricultural land. Theyhave variable rainfall (800-1,700 mm) and chalky or basaltic soils. Maizeand sorghum are the principal crops. The exploitation of forests forconstruction and fuel has led to considerable erosion.

2.05 The semi-arid and arid plains are the most important economically.Occupying 45Z of the agricultural land, they have a variety of soil types,scant rainfall and variable water retention capability. Widespreadcultivation of cereals and other crops has replaced cattle and forestry.

2.06 The humid plains, with altitudes of less than 100 m and more than1,600 mm of rainfall, comprise 10% of the agricultural land. Principal cropsare maize, beans, plantain, cocoa, fruit trees and sugarcane; rice, bothrainfed and irrigated, is a recent introduction.

Structure of Land and Property

2.07 Of more than 600,000 farms in Haiti, more than 90% have less than3 ha. This predominance of small farms results largely from the customarylaw on division of property upon death and the amount of land held by theState. The proportion of farms classified as microfundia-farms of onecarreau (1.3 ha) or less-increased from 39% in 1950 to 71% in 1971 (45% ofthese farms had less than 0.3 ha). Correspondingly, the proportion of farmswith more than three carreaux decreased from 16% in 1950 to 5% in 1971. TheState is the largest owner of real property, although most of its holdings(estimated at 1.5 million ha in 1928) were not reflected in the census data.

Irrigation

2.08 Around 85,000 ha are equipped with irrigation systems. Thiscompares with 180,000 ha (13% of the agricultural land) that is consideredpotentially irrigable. The four main types of 'gravity flow- systemscomprise:

(a) The Artibonite Valley system. With about 30,000 ha presently underirrigation, it is the largest, most efficient system. Thepredominant crop is rice. About 7,400 ha are planned forrehabilitation with IDB financing by the late 1980s;

(b) Medium-sized systems. Twelve such systems, with between 1,000 haand 9,000 ha each cover 35,000 ha in the plains of Cul de Sac,Duvalierville/Archaire, Leogane, St. Raphael and others (seeAnnex C, page 21);

(c) Small-sized systems. Some 30 systems, each with up to 600 ha,cover 5,300 ha; and

(d) Artesian wells and surface wate-r pumping stations. Roughly 200 ofthese stations are scattered over the country.

2.09 Irrigation Deficiencies. Of the 65,000 ha served by the Artiboniteand medium-sized systems, around 40,000 ha are capable of delivering morethan 95% of water requirements for a number of crops, enabling thereby doubleand sometimes triple cropping. Most systems are in need of repair. Theavailability of water is often limited' to areas near headgates and maincanals because of the absence of functional tertiary canals.

2.10 Operation and Maintenance. Inadequate or non-existent 0&M,exacerbated by periodic, severe silting from deluges from the watersheds, arethe primary reasons for deterioration of the irrigation systems.Rehabilitating all the Artibonite and medium-sized systems (at a cost ofUS$2,000-3,000 per ha) would cost about US$140 million, without any assurancethat the facilities could be operated effectively. New investments cannot bejustified unless they include appropriate protection of the source water-sheds. There must also be assurances that the new or rehabilitated schemescan be properly operated, maintained and funded.

2.11 Water Pricing and Cost Recovery. The costs of operation andordinary maintenance of the systems should be differentiated from theextraordinary costs of removing large-scale silting that results from theperiodic deluges from the mountains. Where O&M systems have been operating,water charges have been well below variable costs, which typically arebetween US$100 and US$500 per ha. MARNDR 1/ should consider measures andidentify sources of funds that will provide for the removal of thelarge-scale silting. It would be unreasonable to expect individual farmersto bear the full cost of such removal. The costs of operation and -ordinary'maintenance, however, should be covered in full through water charges to thefarmers. Underpricing of water leads to transfers of rent from the Govern-ment to the private sector and to misallocation of resources. It alsoinhibits the creation and maintenance of water users' associations.

Labor and Wages

2.12 Haiti's total population of around 5.3 million is growing at 1.9%per year. The rural population is around four million (75% of the totalpopulation) and the agricultural labor force 1.4 million. Life expectancyis short: 53 years for males and 56 for females, compared to 61 for malesand 65 for females in the Dominican Republic. In rural areas, the expectancyis less by some five years.

2.13 The daily wage in rural areas averages US17c per hour, or US$1.40for eight hours, including a mid-day meal. This compares to the legalminimum of US$3.00 per day elsewhere in the economy. Wages are higher inareas with more progressive agriculture and agribusiness. They also tend tobe higher on farms near cities, given the competitive alternative of urbanemployment.

1/ Ministry of Agriculture, Natural Resources and Rural Development.

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Land Prices and Rentals

2.14 The pressure on land, a scarce resource in a country of very smallfarms, helps explain the high values of land and tenant rents. The marketvalue for poor lands has been increasing at a aominal rate of about 15%annually, while that for fertile lands close to towns has been increasing byrather more. -Generally, the low-altitude plains command higher pricesbecause of their accessibility, the availability of water and the presence offruit trees. The Collections Bureau, charged with the management of Statelands, collects an annual tenant fee. This fee is fixed at 6% of theestimated market value of the land. In 'practice, the fee is low, rangingfrom US$3 to US$11 per ha. Tenant fees on private lands are sharply higher,relating more directly to the production potential of the lands (Annex C,Table 6).

Mechanization

2.15 Haitian farmers employ simple tools. Mechanical equipment(tractors, plows and cultivators) is a recent introduction; a massive shifttoward mechanization is unlikely, largely because of the country'stopography. Other factors limiting mechanization include: (a) a lack ofliquidity or access to credit at reasonable rates of interest to purchaseequipment; (b) relative prices of labor and capital that favorlabor-intensive technologies; (c) the small size and non-contiguous locationof farmers' plots making for diseconomies in the use of machinery;(d) farmers' reluctance to accumulate capital as a fixed asset when theirshort-term priority is to remain as liquid as possible; and (e) landinsecurity that tends to discourage tenants and sharecroppers from investingin mechanical technology.

Seeds, Fertilizer and Pesticides

2.16 Farmers' seed supplies come mainly from (a) retention from previousharvests, tb) purchases from rural markets, and (c) exchanges withneighbors. MARNDR supplies quality seeds at the agricultural districtlevel. Imports, primarily from the United States, make up for shortfalls inlocal production. Fertilizer use, averaging only 7 kg/ha of cultivable area,is minimal. It compares to 90 Kg in Jamaica and 125 kg in Kenya. Pesticideuse is also minimal, although quantities rose from 85 mt in 1970 to 166 mt in1982; around 30% of the amount has been distributed by the public sector,which sells it at cost through BNDAI2/ credit schemes or at subsidized pricesthrough MARLNDR.

Production Technologies

2.17 The low levels of technology employed seriously limit agriculturalproduction. A brief description of the technologies used in the productionof selected crops follows.

9/ National Bank for Agricultural and Industrial Development.

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2.18 Food Grains. Rice, harvested year-round, is milled by hand aftersun-drying. In the Artibonite Valley, yields of 2.5 t/ha could be increasedeasily to 4 t/ha. Naize yields average around 0.8 t/ha, or about one-thirdof what should be possible with locally adapted, improved varieties andmethods. Because maize is the country's most widely grown crop, improvementsin yields would have a major impact on food availability and farmer incomes,especially smallholder incomes. Sorghum, which accounts for 25% of totalcereal calories, has similarly low yields, around 0.8 t/ha. Improved yieldswould come partly from development of short-season varieties that should alsohelp to ensure reasonable harvests in dry years.

2.19 Mangoes. Naturally abundant throughout Haiti, mangoes are notcultivated per se. Resistance of the mango tree to long, hot dry spells anddry soils accounts for its persistence. Pulses. Red beans, pigeon peas andcowpeas are the most important. Their protein is basic to rural diets.Yields could be increased by introducing improved varieties from theinternational agricultural research centers in India and Nigeria. On-farmstorage should be improved to minimize losses from pests.

2.20 Coffee. Coffee, the most important cash crop, provides 50% of therural population's cash income. It is frequently intercropped with maize,sorghum, beans or bananas. At 200-250 kg/ha, yields are only one-half ofthose in the Dominican Republic and one-quarter of those in Brazil. Treestend to be overcrowded, too shaded and unweeded. Harvesting techniques arecrude. Cocoa. Cocoa, which is restricted to humid locations below 300m,occupies only one percent of the cultivated area. Yields are about300 kg/ha. Like coffee, it competes for land that often has higher valuealternative uses. Introduction of improved technologies could lead to agradual shift from coffee to cocoa in lowland areas.

III. INSTITUTIONS AND FINANCIAL RESOURCES

Agricultural Policies

3.01 The Government's broad policy goals for agriculture are to:(a) increase production of basic food and export crops; (b) improve theagricultural trade balance; (c) increase rural employment; (d) improve livingconditions in rural areas, and (e) protect the environment through theprotection of watersheds and rational use of renewable natural resources. AnEmergency Development Plan designed to guide economic activity from October1984 to September 1986, accords high priority to agriculture and industry.Emphasis is placed on the private sector for the production of agriculturaland industrial goods and services. Policies for the agricultural sector areto:

(a) improve marketing channels to help producers receive higher prices(construction of storage facilities and roads in rural areas);

(b) increase support for institutional credit;

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(c) encourage the use of private capital and producer self-financing toenable maintainance of public expenditures at levels similar to thepast;

(d) subsidize the distribution ot inputs to farmers;

(e) create a national organization for irrigation;

(f) extend agricultural techniques that have worked well, and

(g) reinforce existing rural organizations.

3.02 Institutional support for these policies has been weak. Littleplanning has been undertaken and it is not uncommon to find limitedagricultural services duplicated between different service units, thusutilizing scarce qualified staff and budgetary resources inefficiently. Inrecent years, MARNDR has followed a policy of accepting 'large- projectssupported by foreign financial resources. Smaller projects, includingtechnical assistance projects, are now being given more attention.

Organization of Ministry of Agriculture

3.03 MARNDR recently reduced the number of directorates at itsheadquarters from 13 to five. Total staff in June 1984 were 2,050, of whom420 (20%) were professionals (only four were veterinarians), 1,015 (49Z) wereparatechnicians or middle level agricultural graduates, and the remainderwere in administration (Table 3). While MARNDR is overstaffed as a whole,there is a shortage of qualified technicians in the field. More than half ofthe high-level professionals (52%) are located in headquarters, many of themin administrative positions. The overall effectiveness of MARNDR has beenseverely compromised also by the shortage of operating resources forvehicles, fuel, office supplies and other expenses. Exceptions to theseconstraints are the integrated rural development projects, financed bymultilateral or bilateral sources, where investments and operating expensesare funded separately and concentrated at the field level.

3.04 Key agricultural staff have changed frequently. MARNDR has hadeight ministerial changes in the last eight years and few people viewemployment with the Ministry as a permanent career path. Increased effortsmust be made to: (a) reduce the numbers of staff, principally throughattrition; (b) increase salary levels; (c) eliminate double and tripleassignments; and (d) promote greater job satisfaction. Compounding thedifficulties, the Ministry has an unrealistically heavy workload: 95foreign-financed projects, of which 65 are under implementation and 30 are inthe planning stage. MARNDR should drastically reduce the scope of its tasks,giving priority to projects under implementation before launching new ones.The Ministry accepts these criticisms and is embarking on a period oftransition as it attempts to introduce the needed reforms.

Extension, Research and Training

3.05 Of 175 extension staff, 120 are assigned to the field and 55 toheadquarters. Paratechnicians (i.e., junior extension agents and homeeconomists) comprise the majority of the extension staff. The ratio of

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farmers to extension staff is an alarming 2,800:1, assuming that the agentswork full-time on extension. In practice, their duties often include otheractivities such as crop reporting and seed distribution.

3.06 Research is normally coordinated by the Center for AgriculturalResearch and Documentation (CRDA). CRDA was transferred in 1983 fromMARNDR's Agricultural Research Service to the Faculty of Agriculture andVeterinary Medicine (FAVM) of the State University of Haiti. Nationwide,CRDA's small but well-trained staff consists of ten agronomists, twoagricultural technicians and one agricultural agent. From its inception,CRDA has been plagued by insufficient operating funds. Its transfer to FAVMshould help improve the quality of research, since its operating budget isnow linked to the university system.

3.07 Between 30 and 50 scholarships, financed by bilateral sources, aremade available each year to Haitian graduates for studies abroad. Althoughmost graduates return, almost none have remained in their field of training.Within a year of their return, they have often been appointed toadministrative or executive positions. iMARNDR is taking measures to resolvethis problem.

Public Sector Expenditures

3.08 Between 1971 and 1979, the average ratio of total investment to GDPin Haiti was 122. The ratio of about 50% private to total investment wasrelatively low; many developing countries have sustained 60 to 70%. Since1980, total investment has increased somewhat: by 1984, it had increased to15.8% of GDP, although private investment had dropped to 36%.

3.09 Agriculture's share of total budgeted public investment increasedfrom 10% between 1972 and 1976 to 17% between 1977 and 1981 (Table 4).Notwithstanding this increase, actual expenditures have been limited byamounts allocated by the Ministry of Finance and by MUARNDR's capacity todisburse the funds received. A detailed analysis for FY82/83 (Table 5) showsthat only 22% of the G$ 31.5 million budgeted was allocated and only 18% wasactually spent. Higher expenditure rates were recorded by thetransportation, power and communications sectors over the period.

3.10 Investment and Operating Budgets. A large share of MARNDR's publicinvestment budget has been redirected to pay salaries. In FY82/83, 43% ofinvestment funds were spent on actual investments; the remainder was spent onsalaries (42%) and goods and services (15%). The central operating budgetcomprised 91% for salaries, 8% for operating expenses and 1% for transfersand subsidies. The ra:io of salaries to the total operating budget has been50% higher than in Government administration as a whole (Table 6). At leasttwo factors have been responsible for this high ratio: overstaffing and ashortage of operating expenses. The disproportion has limited employees'

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operational effectiveness and the Ministry's efforts to increase investment.As noted in para 3.04, staff turnover has been high, especially at higherlevels, and morale has been low. Rationalization of MARNDR's budgeting andexpenditures is essential. The Ministry plans to hire a consultant in 1985to give guidance on effective investment and policy planning, as well as formonitoring actual investment and operating expenditures, and physicalprogress of investment projects.

Agricultural Credit

3.11 The main sources of institutional credit for agriculture and ruralbusiness are the Agricultural Credit Bureau (BCA) and the BNDAI. In additionto funds lent by BCA and BNDAI, rural credit is extended by several regionaldevelopment organizations, most of which began operating within the past sixyears. Only 5%-10Z of the rural population has access to formal credit.This is because of the difficult logistics and high costs of extending creditto large numbers of small and scattered farmers. The weakness of theagricultural economy and the lack of appropriate technical packages have alsocontributed to the limited demand for institutional credit.

3.12 BCA. Established in 1959 as a Government agency within MARNDR, BCAprovides credit to about 19,000 smallholders, or 3% of all farmers. It isadministered by a seven-member board, headed by the Minister of Agriculture.BCA's resources come from budgetary allocations, financed in part by IDA,USAID and other bilateral donors. The bulk of BCA's subloans are short termto Agricultural Credit Societies (SACs), in kind and in cash for inputs orsmall tools. A SAC has a maximum of 15 members with less than 2 ha each;loans are guaranteed jointly by all members. BCA occasionally lends toindividuals with larger farms, 300-400 subloans annually.

3.13 Operating through seven regional offices and 46 local agencies, BCAselects its clients primarily according to their ability to repay theirloans. During the late 1960s and early 1970s, BCA's loan portfolio was small(US$60,000), but since 1974 it has increased steadily, to US$3.9 million in1983. The annual interest rate for a SAC is 12%; 2% is added for administra-tive expenses and an additional 2% of the loan amount is withheld. Thesecharges compare to an inflation rate of about 10%. Subloans to individualscarry interest at 21% per annum. Arrears stand at about 25% of the oneportfolio.

3.14 BCA should: (a) adopt measures to protect its capital base againstinflation and bad debts; (b) avoid occasional lending to Governmentemployees, a group clearly beyond BCA's target group; and (c) reduce itsheadquarters staff by 50%, thus significantly lowering its operating costs.

3.15 BNDAI. Established in 1961, BNDAI's agricultural lending isgeared primarily to medium- and larger-sized farms engaged in (relatively)capital intensive production, especially of irrigated rice. About 12,000small-scale farmers, including 3,000-6,000 cotton producers, also benefitfrom BNDAI's agricultural programs. In 1984, BNDAI's portfolio was aroundUS$13 million.

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3.16 Regional Development Agencies. Some small-scale rural developmentschemes have provided credit to farmers directly. These channels have beendeveloped because BCA and BNDAI have been unable to administer the creditdemand. BCA and BNDAI are gradually taking over these credit operations.

3.17 Traditional Sources of Credit. Loans for consumption expendituresconstitute the largest demand for rural credit. Traditionally, moneylenderscharging high effective rates of interest (often over 100% on an annualbasis) have been the main source of this credit. The demand for productioncredit is much smaller because most smallholders rely on family labor andpurchase few, if any, inputs or equipment.

IV. THE RURAL ECONOMY OF HAITI AND SMALLHOLDER BEHAVIOR

Background

4.01 Haiti's rural economy is unique. Its development can be traced tothe breakdown of the French colonial system in 1804 and the subsequentemergence of a new rural bourgeoisie. To escape slavery under new plantationowners, freed Haitian laborers fled to the mountains and established a simplerural economy: communities of small family farmers who owned their land aswell as some livestock and a few tools. Their numbers rose from less than500,000 at the beginning of the nineteenth century to over one million by theend of the century, and to over 3.5 million today.

4.02 A smallholder subsistence farm consists typically of a homeoccupied by the main wife, and sometimes other complementary homes, occupiedby concubine wives and their children. These farms employ family labor(including children) to produce food to meet basic family needs, and amarketable surplus to cover cash needs (e.g., for schooling, clothing, andsalt). These marketable surpluses are directed to the domestic market, e.g.,animal products, fruits and vegetables, or for export, e.g., vetiver, cocoa,and coffee. Nearly all smallholders engage in some rural trade.

4.03 Around the main home, the smallholder family cultivates severaltypes of crops in distinct ecosystems. These include, in decreasing order ofintensity and fertility:

(a) Fruit tree plantations: banana, avocado, citrus, coffee and cocoa,usually grown around the house;

(b) Annual crops in enclosed gardens: roots, fibers and vegetables (nofallow), heavily fertilized by animal manure and organic residues;

(c) Open field cropping: maize, sorghum and beans, characterized byminimal or no fertilization and by fallow periods during whichspontaneous regeneration is grazed by animals;

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(d) Poor pastures: used for browsing by goats, with no fertilizationor control of erosion; and

(e) Ravines: usually dry and eroded, although occasionally plantedwith breadfruit or coffee.

4.04 Although smallholders enjoyed relative prosperity until the early20th century, cash income from coffee and other food crops has always beenlimited because the low levels of technology have prevented farmers fromproducing large marketable surpluses. Much of the equipment used is the sameas in the colonial period: hoes, machetes and pickaxes. The few tools usedare imported and there is practically no expertise in rural areas to repairthem.

4.05 Ia addition, marketing charges, formal and informal taxes, highinterest rates for informal credit and the high cost of surveyors' serviceshave all kept a lid on discretionary income. With real farm income actuallyhaving declined over the last decade, smallholder agriculture finds itself inworsening crisis. Unless effective production incentives and otherconstructive measures are introduced, smallholders are likely to earnprogressively less in real terms because of stagnant technology, furtherfragmentation of landholdings and possibly less favorable terms of trade.

4.06 Under these circumstances, farmers have opted for cropping patternsthat have enabled them to harvest food crops throughout the year, thusminimizing the risk of poor harvests and the need to sell and buy food. Theycultivate parcels in several different ecosystems, sometimes by leasing plotsfrom neighbors. The intensity of effort and types of production on differentplots are a function of tenure status and distance from the home.

Forms of Land Tenure

4.07 The smallholder farm provides the basis for tenancy and itsvariations, including polygamy, and for employment of landless farmers. Mostsmallholders have customary ownership to the land they farm (which a relativesome day might contest). Smallholders cannot normally afford the legal andtitle fees necessary to secure their claims. With subdivision uponinheritance, many farms have become too small to meet family needs.Inheritance traditions provide that all children, legitimate or not, aregiven a plot of land. Increasing population pressure on the land has been amajor cause of urban migration.

4.08 The main forms of tenure are:

(a) Owner operated. This predominates in the hills, where 60% of theland is occupied under customary ownership and less than 5% of thepopulation is landless. Farmers who own insufficient land to meetfamily requirements tend to emigrate to other areas.

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(b) Undivided land. It is often not feasible to allocate minisculeplots of land claimed by several lines of inheritance. Such plotstherefore remain undivided; they are not regularly cultivated,deteriorate rapidly and receive little, if any, investment;

(c) Share cropping. A 50:50 share in the harvest between owner andshare cropper is most common. In the hills, the owner is usually alocal farmer and the share cropper a neighbor with either littleland or a desire to complement his cropping activity;

(d) Leasing. The length of leases and amounts of rent vary widely. Alease arrangement is usually for one harvest period (six months toa year);

(e) -Potek" or mortgage. This is a type of long-term lease, whichcovers several years for a fixed and rather low fee paid at thetime of sale of produce; and

(f) Government land. Individuals may lease Government land on along-term basis. The arrangement can be passed on throughinheritance. Lease fees are low and lessees often sublease theland to others or engage in share cropping.

4.09 Insecurity of tenure tends to discourage investment in the land.Together with smallholders' high priority for short-term income, it alsodiscourages-good soil conservation practices. Livestock raising is the onlytechnique employed to help restore fertility. Animals are grazed on distantplots (where ownership is less secure) and the residues are returned to plotscloser to home. Residues are also used for fuel, as fuelwood reservesdiminish.

On-farm Consumption and Marketable Surpluses

4.10 Despite the lack of statistics on the quantities (and values) offarm production consumed and sold, some conclusions can be drawn fromavailable studies such as those by MARNDR, FAC and UPAN. The rural economyof the hills and mountains is based on systems that combine on-farmconsumption and marketable surpluses (Table 7). Home consumption bysmallholders comprises: (a) roots and tubers (cassava, sweet potatoes);(b) fruits and vegetables (plantains, mangoes, avocados, breadfruits); and(c) dry legumes and cereals. Cash, for purchases of cereals and other goods,is generated by sales of: (a) coffee and vetiver; (b) animal products (pork,goats and cattle); and (c) whatever additional surplus is available (fruits,green legumes or cereals). Animal protein from domestic livestock has becometoo expensive for home consumption. Farmers have turned increasingly to drylegumes for both home consumption and a growing domestic market, puttingfurther pressure on cultivated land.

4.11 The disappearance of the swine population has hurt the ruraleconomy because pigs have been a major source of protein, cash and manure andhave served as a savings mechanism for which farmers have no substitute.MARNDR should continue to give high priority to ongoing projects to rebuildthe pig population, financed by USAID and IDB.

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V. AGRICULTURAL PRODUCTION COSTS AND COMPARATIVE ADVANTAGE

Introduction

5.01 Estimates of agricultural production in Haiti vary, but there is aconsensus that food production per capita has been declining. The results ofa nation-wide aerial photography survey, conducted in 1978, provide the mostreliable estimates to date of areas cultivated and production (Table 2). Interms of areas cultivated, the most important crops are, in order: maize,sorghum, coffee, beans, rice, bananas, pigeon peas, cassava, sweet potatoes,and sugarcane. Yields for all major crops are among the lowest in theCaribbean region. Coffee yields are particularly low; in El Salvador,Guadalupe and Mexico, they are 3 to 3-1/2 times higher and in Cuba andNicaragua, more than two times higher. Maize yields also are low by regionalstandards (Table 8).

5.02 The purpose of this chapter-is to review the comparative advantageof a few key crops. The analysis can serve as a useful guide to pricing andother strategies for increasing production. Initially, unit costs ofproduction were determined for each crop. The data were then applied tomeasures of comparative advantage. An explanation of the three measures ofcomparative advantage employed in the analysis (para 5.10) may be found inAnnex F.

Estimates of Production Costs

5.03 Maize. Detailed cost estimates for three different farmingregimes-traditional monoculture, traditional crop associations and improvedmethods-are shown in Table 9. Unit production costs are lowest for improvedtechnologies using fertilizers, agrochemicals and some mechanization. Theyalso are lower for crop associations than for monocultures under traditionalmethods. As may be expected, labor and land comprise the bulk of productioncosts, especially in areas using traditional methods.

5.04 In all production regions, Haitian maize can be produced at a lowercost than imported maize. Production costs of traditional monoculture maize(the most costly production regime), for example, was $205/ton in 1982,compared to $220/ton in 1982 and $249/ton in 1983 for imported maize, c.i.f.in bags Port-au-Prince. Without detailed information on consumption andmarketing patterns (including transport costs), the most relevant comparisonof price should be c.i.f. versus producer, or farmgate prices. (Both c.i.f.and farmgate prices represent essentially the same point in the marketingchain: wholesaling and retailing costs must be incurred before the productreaches the consumer). Using this comparison, Haitian maize seems to becompetitive with imported maize, even at the low yields typical oftraditional cultivation methods. This conclusion differs from that of otherstudies, which have based their reasoning on a comparison of c.i.f. anddomestic retail prices (rather than c.i.f. and farmgate prices).

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5.05 Rice. Cost data for rice production are shown in Table 10. Themost striking fact about these costs is the extent of variation between theproduction regimes-irrigated, swamp land and rainfed rice. Unit productioncosts/ton under traditional techniques are as much as three times those undermodern techniques. The price of rice also varies greatly between localitiesand over time. According to Muskin (1983), the c.i.f. price of imported ricein 1982 was US$420/ton and in 1981 US$576/ton, with a 1973-82 average priceof US$486/ton. These figures indicate that irrigated rice, in Haiti,especially that grown in the Artibonite (US$263/ton), would be competitive atworld market prices, but that swamp rice (US$754/ton) and rainfed rice(US$794/ton) would not. Labor's proportionate share of production costs islower for rice than for maize, while the proportionate share for land ishigher. This reflects a higher opportunity cost for land in rice areas,varying from US$115 to US$190/ha.

5.06 Coffee. Cost estimates for coffee are given in Table 11. Yieldsvary considerably, depending on cropping techniques, but are low byinternational standards. Nevertheless, Haiti remains a competitiveproducer. The world market price, f.o.b. Haiti, in 1981 and 1982 averaged$2,375/mt while prices received by Haitian producers in those years averaged$1,175/mt. (Export taxes accounted for about half of this difference.)Although fertilizer has been available at subsidized prices for use oncoffee, in practice it has been diverted largely to other crops where itgenerates a higher marginal value return. Land and labor, therefore, accountfor nearly all production costs. For the farmer, an important advantage ofgrowing coffee is that its harvest-may be sold in advance to raise cash. Thepractice creates an implicit discount on the price of coffee, encouragingfarmers to grow it when they might not if the sole consideration wereprofitability.

5.07 Sugarcane. The field cost of Haitian raw sugar, i.e. the cost ofcane divided by the percentage sucrose content, ranges from US$120/mt toUS$150/mt (Table 12). Compared to other cane-producing countries, Haiti is arelatively low-cost producer, at least in monoculture cultivation(Table 13). Sugarcane competes with rice in irrigated areas and with bananasin rainfed areas. This competition is reflected in land rentals. Whichevercrop may have a comparative advantage, the choice is complicated by twoexogenous factors. The first is soil erosion. Sugarcane is less laborintensive than rice. Rice, therefore, offers greater employmentopportunities, as well as contributing to the basic food supply. There iscorrespondingly less pressure on the land and on marginal farmers to displacecoffee by planting more food crops on steep slopes. The second factorconcerns the susceptibility of bananas to theft. Undernourishment is such inHaiti that crop theft has become widespread, especially in the north. Due tothe nature of bananas, they are easily stolen for immediate consumption,whereas rice and sugarcane are not.

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5.08 Viewing the sugar production process as a whole, Haiti isconsiderably less efficient in processing cane than it is in producing it.An important conclusion of the cost analysis is that, at least formonoculture technologies, it would be economically justified for Haiti toattempt to expand its cane production, provided the increase were such as toexpand significantly the utilization of existing mill capacity_ Anyexpansion should be sought through increases in yields rather than in areascultivated, and through diversion of cane to the mills from the traditionalguildives (para 7.08).

5.09 Bananas. Cost estimates for bananas are shown in Table 14. Likeother crops, bananas have been cultivated using traditional and improvedtechniques; both are profitable at local and border prices with the improvedtechnique being the more profitable of the two. Land costs form a highproportion of total unit costs, so bananas constitute a relatively efficientuse of land resources. They are also one of Haiti's more profitable cropswhen evaluated on a profit per man-day basis.

Estimates of Comparative Advantage

5.10 As detailed in Annex F, this report employs three measures ofcomparative advantage: Ca) net economic profit, including all imputed costsof land and family labor; (b) the domestic resource cost (DRC) of earning orsaving a dollar of foreign exchange; and (c) the nominal protectioncoefficient (NPC), which is the ratio of the domestic price to the borderprice of a good. For each crop, the measures have been applied to thedifferent techniques or regimes of cultivation. The results of thecalculations are shown in Table 15.

5.11 Because estimates of domestic producer prices are rather crude, theNPC is a less reliable indicator of comparative advantage than the economicprofit or DRC measures, which rely on estimates of costs of production. Byboth these latter measures, bananas under improved cultivation techniquesshow the greatest comparative advantage of any Haitian crop. According tothe DRC measure, monoculture coffee is next, followed by irrigated rice,improved maize and sugarcane. Coffee, however, is not normally grown as amonoculture crop, and little maize is grown with improved techniques. Takingthis into account, the crop rankings should be: bananas, irrigated rice,coffee, sugarcane and maize. Bananas and rice are sufficiently profitable tohave export potential. Sugarcane also is sufficiently profitable thatfulfillment by Haiti of its share of the US sugar quota may be economicallyjustified (assuming a substantial increase in capacity utilization of thesugar mills and that the sugar quota continues as a substantial marketoutlet).

5.12 The rankings by profitability per ha differ in that sugarcane andimproved maize move ahead of coffee. These rankings are based on classifyingland as the most scarce factor in Haitian agriculture. They also helpexplain why coffee production appears to be in decline, even though it has afavorable DRC.

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5.13 The calculations in Table 15 show that at border prices, Haitianagriculture tends to be relatively inefficient under traditional techniquesof cultivation. With improved techniques, however, efficiency increasesmarkedly- This is evident particularly for rice and maize. In other words,for a number of crops, Haiti has the potential to be competitive inter-nationally. The main surprise from the analysis is that Haiti is arelatively low-cost producer of sugarcane. It may, though,be a relativelymore efficient producer of other crops, including maize and rice, onsugarcane lands. Also, a change in policy to encourage increased productionof export grade bananas is indicated.

VI. INCOMES ANXD PATTERNS

6.01 With a 1983_per capita GDP of US$320, Haiti ranks lowest in incomeamong countries in the Western Hemisphere. Although per capita GDP roseslightly during the 1970s, fluctuations rather than steady growth have beenthe rule. Agriculture's large share of GDP (40%) has been declining slowlyand the small industrial sector has been growing. The service sector, inpart a subsistence sector, accounts for most of the income shift fromagriculture_ With the increasing number of urban poor in recent years,poverty is no longer an exclusively rural phenomenon.

Income Distribution

6.02 According to an unpublished socioeconomic survey conducted in 1970by the Haitian Institute of Statistics (IRS), more than 80% of the populationhas very low incomes. The top 2% of the population received 16% of incomeand the top 13% received 44%. According to the survey, income distributionsfor rural and urban areas were roughly comparable. A household surveyconducted by IllS in 1973 provides additional evidence on incomedistribution. Per capita income nationwide was estimated at US$163 per year,while for the poorest 83% of the population, it was only US$52 per year. Thecorresponding 83X figure for the rural sector was US$45 per year. The 1973survey showed also that 4% of the population enjoyed a per capita income ofmore than US$1,540, accounting for 35% of all family income; 0.4% of thepopulation had per capita incomes of more than US$6,000.

Rural Employment and Wages

6.03 The following table shows the distribution of the r-ral workingpopulation by economic sector and geographic region in 1982. It indicatesthat there is little economic activity in rural Haiti other than theproduction and marketing of agricultural products. Because the latter iscarried out almost exclusively by women, there are few employmentopportunities for rural men other than farm labor.

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Distribution of the Rural Labor Force byEconomic Sector and Region, 1982

Sector West South Transversal North Nation X

Agriculture 471,705 337,515 578,412 219,186 1,606,818 82Industry 28,685 19,425 30,182 9,957 88,249 5Construction 4,774 2,124 3,327 988 11,213 1Commerce 63,218 26,870 44,656 25,706 160,450 8Transport and

Communication 2,615 583 844 280 4,322 -

Services andOthers 22,734 21,592 26,674 10,320 81,320 4

Total 593,731 408,109 684,095 266X437 1,952,372 100

Source: Ministry of Plan and ILO, Bureau of Territorial Planning, June,1984.

6.04 Despite large reserves of agricultural labor, seasonal shortages dooccur. Peak demands vary from region to region, and are pronounced for laborintensive crops, e.g., coffee, sugarcane, cassava, rice, vegetables andtobacco. The degree of spatial mobility of the rural labor force suggeststhat wages approximate market equilibrium rates. They are not pushed upwardby the official minimum wage, and the fact that there are seasonal surplusesof labor suggests that rural wages are not biased downward either. While itmay be argued that family labor has limited mobility and may be prepared towork for less than the market wage, the market wage essentially is at asubsistence level and family labor could not normally work for less. Hence,it is reasonable to value rural labor at the market wage, plus thetraditional meal. For the usual eight-hour agricultural day, this means awage of US$1.00 + US$0.40 = US$1.40.

Patterns of Consumption and Nutrition

6.05 Nutritional studies dating back to the 1950s suggest thatmalnutrition is significant and widespread in Haiti, especially in ruralareas. In keeping with the slow growth of per capita incomes, per capitaintakes of calories and proteins have also increased slowly over time.Recent estimates show a nationwide calorie deficit of 14% and a proteindeficit of 32%, compared to nutritional levels recommended by FAO and WHO.The deficits are greater in rural areas-40X and 50%, respectively-and arereflected in high rates of morbidity and mortality, especially among infants.

6.06 Rural diets consist mainly of: cassava, maize, sweet potatoes, rawsugar, sorghum, beans, mangoes, bananas and vegetables. Meat and dairyproducts are consumed principally in urban areas, where rice and wheat flourare replacing cassava and sorghum and, to a lesser extent, maize. Given theneed to improve nutrition, a detailed national household survey of income andconsumption patterns should be undertaken.

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Improving Nutrition and Farm Incomes

6.07 Programs for improving nutrition should focus on the products that -give the greatest nutritional improvement per unit of expenditure and oncrops that show the greatest promise for increasing yields. Agronomistshave identified two potentially high-yield crops-high lycene maize and a newvariety of pigeon (congo) peas. Both could contribute significantly towardeliminating the nutritional deficits.

6.08 High lycene maize. In the past, high lycene maize has beenunacceptable to consumers. With the recent identification of new varietiesin Mexico, however, field cultivation and consumer acceptance tests should beconducted. If the maize proves acceptable, then MARNDR should sponsorpropagation of the necessary seed.

6.09 New bean varieties. Agronomic and economic analyses carried out atthe Levy Farm near Les Cayes show that photosensitive varieties of pigeonpeas (beans), which have a shorter growing season, give much higher yields.An adequate extension program should be mounted to promote the new bean (andmaize) varieties.

6.10 Rice. Yields of rice could be increased substantially with morefertilization. Surpluses for export are a reasonable possibility. Rice isnot as effective as maize in contributing to nutrition, however, sinceproduction costs per calorie and per gram of protein are higher. But itcould be an important vehicle for improving farm incomes (thus indirectlyimproving nutrition) and earning foreign exchange.

6.11 Table 16 compares the calorie and protein content of various foodsin Haiti per unit of consumer expenditure. Maize ranks first, even withoutaccounting for the possibility of high lycene varieties. Wheat flour andrice are considerably less cost effective (at Haitian prices) than maize andsorghum. The relative cost efficiency of maize and sorghum becomes morepronounced, moreover, if one takes the costs of production as a basis ratherthan consumer prices. The data imply that pricing policies (para. 5.02)should recognize that maize, sorghum and beans are among the most costeffective products for increasing the intake of protein and calories.

Food Price Trends and Substitution Effects

6.12 Progress towards achieving better nutrition in Haiti has beenimpeded by the rising prices of most basic foods relative to the prices ofother foods. Consumers, therefore, have been encouraged to eat lessnutritious food. This is especially evident in the case of wheat flour whoseprice, although slightly high by international standards, has been fallingrelative to prices of maize and sorghum. Table 17 shows that recently,prices of all principal foods except wheat flour have risen more rapidly thanthe consumer price index. The price of rice also has declined relative toprices of maize and sorghum.

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6.13 Because the Minoterie authorities3/ are aware of the tendency tosubstitute wheat flour for domestic grains, they have been experimenting withnutritionally reinforced flour and are planning to investigate demandsubstitution effects. The mission conducted its own inquiries on thissubject and found that flour consumption does appear to be affected by therelative prices of ground maize and wheat flour.4/ Given that maize is morenutritionally cost effective, these results suggest that: (a) the Einoterieshould strengthen its programs aimed at fortifying wheat flour; and (b) theGovernment should reverse the relative price trend, thereby encouragingincreasing consumption of maize relative to wheat.

VII. THE SUGAR SUBSECTOR

7.01 Centrifugal sugar production in Haiti has declined to the pointwhere the country has become a net importer, while the capacity utilizationof its production facilities has fallen to less than 40Z. At present, theimpact of this low level of production on the balance of payments is notserious because imports are being effected at the prevailing low world pricesand exports to the US are receiving the US market stabilization price ofUS 20.7c per lb (c.i.f. New York). This arbitrage effectively provides thecountry with -free sugar. In the medium- to longer-term, however,fluctuations of the world price and uncertainty surrounding the level ofquotas to the US market, may lead to foreign exchange losses and/orreductions in imports.

Cane Production

7.02 The main growing areas for centrifugal sugar are the coastal.,alluvial areas of the Plaine du Nord, Plaine des Cayes, Plaine de Leogane andthe Plaine du Cul-de-Sac. Traditional cane processing industries compete for

3/ The Minoterie is a State owned enterprise established in 1969 to importwheat and operate the milling plant.

4/ For the 1966-83 period, the following regression results were obtained:

Ln F = 4.606 + 1.791 Ln GNP - 0.339 Ln (PF)(5.420) (3.005) (-2.297) (PM)

R2 = 0.8930, D.W. = 1.2308, F = 58.39

T-ratios are shown in parentheses

F = flour consumptionGNP = real GNPPF = consumer price of flourPM = consumer price of ground maize

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cane in these locations. With the exception of the HASCO mill inPort-au-Prince, the mills are completely dependent on farmers' production.The mills have begun to experiment with new cane varieties and to promoteimprovements in cane cultivation and in the provision of extension and creditservices. A great deal remains to oe done, however.

7.03 The total area under cane is about 45,000 ha. Average yields arelow-approximately 35-40 tons/ha for a total production of around1.7 million tons of cane. The large number of smallholder cane producers istypical of the land ownership pattern of Haiti as a whole. Many larger landholdings are also devoted to cane, in part because cane has advantages overother cash crops, particularly for absentee landlords.

7.04 Cane production in Haiti employs a relatively low level ofagricultural technology. Inter-cropping with food crops in the newly plantedratoons is a comon practice because of the priority for subsistencerequirements over cash crops. To analyze cane production costs, threebenchmark systems have been defined: traditional, semi-improved andimproved. The average total variable costs are estimated at $6.60 per ton,giving a gross margin (at the fixed controlled price of cane) of$6.40 per ton.

7.05 One of the sugar industry's major problems has been the absence ofconstructive Government support. Extension and credit in the growing areashave been lacking, as have appropriate maintenance of irrigation and drainagesystems and roads. The mills, farmers and consumers, moreover, have not beenorganized or coordinated. They have been able to discuss their problems andrequirements only on an ad hoc basis with the relevant Government agencies:the Ministry of Commerce, MARNDR and Ministry of Finance.

Centrifugal Sugar Production

7.06 The four centrifugal sugar factories operating in Haiti (twoGovernment and two private) have a capacity of 10,750 tons of cane per day(TCD), yielding about 114,000 tons of sugar per year. The centrifugalprocess, however, absorbs less than 50Z of the cane produced because ofcompetition from traditional industries, in particular from those thatproduce clairin (potable alcohol) from fermented cane juice, cane juice syrupand molasses. Despite the increase in installed capacity over the years (anew mill at Leogane, began operating in 1984), there has been no increase insugar production. HASCO, the first modern sugar mill, produced more sugar byitself in 1950 than all four mills combined in 1984. HASCO has alsoexperienced a more rapid decline in production over the past tea years thanhave the other mills.-

7.07 Detailed information on cane milled and sugar produced from 197D to1984, by mill, is in Annex A, Table 4. The average data for 1970 to 1974 and1980 to 1984 show marked declines in production and yields:

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Cane Ground Sugar Produced Yield(t/year) (t/year)

1970-74 810,766 65,194 8.0%1980-84 694,943 45,778 6.6%

Traditional Cane Processing Industries

7.08 In addition to clairin (alcohol), the traditional cane processingindustries produce heavy syrup and crude open-pan sugar. Clairin is-by farthe most important product, however. Open pan sugar, which is producedlargely on the Plateau Central, serves as a substitute for centrifugal sugar,as does syrup. Clairin is produced in "guildives,- a term covering thesmallest- to the largest-scale stills. The guildives operate for a longerperiod of the year than the centrifugal mills. They are registered with theBureau of Revenue (BC), which levies a modest tax based on capacity, butkeeps no records of and charges no excise duty on the clairin produced. Nodata on the amount of cane used to produce alcohol are available.

7.09 Some guildives, especially the smaller ones, are crude andinefficient at fermenting and distilling, whereas the larger ones withsteam-heated stills obtain good yields of up to 15 gallons of alcohol per tonof cane. According to mission estimates, the installed capacity of theclairin industry is around 70,000 gallons per day, which would require atleast 4,600 tons of cane per day. This is equivalent to 43% of the installedcapacity of the centrifugal sugar industry. At 200 days of operation peryear, total production would be about 14 million gallons of clairin from930,000 tons of cane. Given that the centrifugal sugar industry used lessthan 600,000 tons of cane in 1984 and has never exceeded 862,000 tons (1980),such a volume of cane used in alcohol production is consistent with theestimate of total cane production (1.7 million tons) mentioned in para 7.03.

Sugar Supply and Distribution

7.10 Formerly a modest exporter of raw sugar, Haiti has become a netimporter (refined sugar). From 1970 to 1972 exports averaged 21,000 tonsper year; from 1977 to 1982 net imports averaged 4,500 tons per year, risingto 19,300 tons in 1983 and 1984.

Production, Exports, Imports, Consumption(m.t./year)

1970-72 1981-84

Production 64,900 43,800Net exports 21,600 -Net imports - 12,700Consumption 43,300 56,500

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7.11 Data on sugar supplies and distribution have been compiled fromdo.mestic and international sources, including the International SugarOrganization and USDA. Consumption, the sum of production plus imports minusexports, is now around 60,000 tons per year. Responsibility for importingsugar, through competitive bidding, rests with the Central Bank (BRH). TheDepartment of Commerce also plays a role in sugar marketing by collectingdata on mill production.

7.12 There has been considerable smuggling of refined sugar into Haiti,particularly from the Dominican Republic, because of lower (controlled)Dominican sugar prices and an exchange rate that has favored Haiti.

Price Formation and Taxes

7.13 The absence of a constructive policy for the sugar subsector isnowhere more evident than in the formation of prices. Although theGovernment sets the farmer price of cane as well as the ex-factory, wholesaleand retail prices of sugar, the criteria by which it does so are not clear.In most cane sugar producing countries, the sales proceeds of sugar andmolasses are split between the cane growers and the factories according tomutually agreed formulas. A 60:40 or 65:35 split between farmer and factoryis accepted as an equitable division of rewards for producing the cane andextracting the sugar and molasses. But in Haiti, the farmer/factory splithas declined from 51:49 in 1970 to 39:61 in 1976 and to 29:71 in 1984. Animportant effect of this low relative price of cane is the reduction in canesupplies to the mills, which puts pressure on their unit fixed costs ofproduction. The supply response that would be achieved if the cane pricewere a more equitable proportion of the sugar value can only be guessed.

7.14 The ex-factory price of sugar is augmented by an excise tax. Theprice structure for raw and refined sugars, in effect since 1980, is asfollows:

Price(USc per lb)

Raw Refined

Ex-factory 24.00 28.00Excise duty 8.00 8.00

Wholesale 32.00 36.00Retail margin 2.00 2.00

Retail 34.00 38.00

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7.15 Consumption taxes on sugar raise some US$8 million per year,based on the excise duty of US$8 per 100 lbs and total consumption of around60,000 tons. In addition, duties on imports of sugar (to replace exportedsugar and augment domestic prodaction) amount to between $3 million and$5 million per year, depending on quality and classification. By contrast,the major user of cane-the domestic alcohol industry-is barely touched bytaxation; refined sugar retails at US$0.38 per lb, while clairin of 590 G.L.retails at US$4 per gallon.

Recommendations

7.16 There is little incentive for farmers to produce more and betterquality cane because the price received for it is low relative to the priceof alternative crops, e.g., maize. Furthermore, the present method ofpurchasing cane, which is based on weight alone, cannot be expected toencourage improved cane quality even if the price were to be raised. Thus,it is essential that purchases of cane be based on cane quality (sucrosecontent) and on an equitable price formula for sharing the revenues fromsugar and molasses sales between the cane growers and the factories.

7.17 The Government should eliminate the excise tax on the centrifugalsugar industry. The corresponding savings should be directed to increaseprices to farmers for cane sold to the centrifugal mills and to reduce pricesto consumers. Measures should also be considered to increase taxation of thetraditional alcohol industry, for fiscal reasons and to support an effectivepolicy to redirect cane to the centrifugal mills.

7.18 Because the problems of the sugar subsector are complex (much moreso than the purview of this report), the Government should establish aWorking Group to define objectives and policy for the subsector. The Groupshould comprise representatives from the Ministries of Commerce and Finance,MARNDR and the mills, assisted in specific areas by specialists.Notwithstanding the measures designed to increase farmers' allocation of caneto the mills, the fundamental distortion between installed cane processingcapacity and the amount of cane available is expected to remain. The WorkirgGroup should review, as a priority issue, the future prospects of the sugarindustry. The new mill at Leogane is illustrative of the problem. To operateat full capacity, this mill would require a cane area of around 6,000-7,000ha, compared to a cultivatable area of around 8,000 ha in the Leogane Plain.Yet, in excess of 2,000 ha are devoted to vegetable farming and manytraditional alcohol producers are absorbing about 50% of the roughly 5,500 hapresently under cane. Covering the financial deficits of the Leogane Mill,as well as of the Usine Du Nord Mill (formerly La Citadelle) in the north,constitutes a considerable burden on the Government's development budget.The Working Group should develop proposals for a permanent system forcollecting technical and financial data for cane, sugar and molassesproduction as well as for alcohol and syrup production.

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7.19 Notwithstanding this discouraging scenario, the Government believesthat yields of cane and sucrose can be increased in Leogane and Usine DuNord, and in the other two sugar areas. This, together with fiscal measuresto help redirect cane from the guildives, and expansion of arrangements forthe mills to sell molasses to the guildives for their alcohol production, mayincrease capacity utilization sufficiently to render the mills financiallyand economically viable. In the meantime, MARNDR should be given sufficientresources for expanding the multiplication and adaptive testing of newvarieties of cane. These functions should be handled by a new divisionwithin MARNDR, which should work in the main cane growing areas in closecooperation with, but independently of, the mills. These research -

activities, as well as technical support for the proposed Working Group,could be the focus of a multi- or bilateral aid package.

VIII. THE-WHEAT FLOUR SUBSECTOR

The Minoterie of Haiti

8.01 Wheat milling is an important activity in Haiti. It produces flourfor home consumption and generates revenues from flour taxes. It alsoimpacts upon prices and production of competitive substitutes, includingmaize, rice, sorghum and fruits. The Government administers the floursubsector through the State-owned Minoterie Mill, which has a monopoly onimports of wheat, processing it into flour and selling the flour wholesale atspecific distribution points. Outside consultants provide management andtechnical assistance to the mill. Retail flour sales are by the privatesector.

8.02 Established in 1969, the Minoterie mill is located nearPort-au-Prince and has access to a wharf. After two plant expansions, itspresent production capacity is about 135,000 tons annually. Storage capacityfor wheat is 32,000 tons (about four months' requirements), but for flour itis only 2,250 tons (50,000 45-kg sacks), which is about one week of sales.Due to the high grade of wheat imports and the use of additives, most of theMinoterie's output is good quality, nutritious bakery flour. Purchasers takedelivery the flour and bran at the Minoterie. Much of the bran is nowexported because domestic demand has fallen as a result of the African swinefever eradication program.

Flour Production

8.03 About 75% of wheat imports comes from commercial sources (US andArgentina) and 25% from US PL480 and other'donations. At a cost of US$25-30million annually, wheat is the largest agricultural import, accounting forabout one-third of the trade deficit. The evolution of processing andimports is summarized below (see Annex B for further details):

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TotalFlour Extraction Flour Flour

FY Produced Chaff Rate Imported Supply('000 sacks) Z ('000 sacks)

1976 1,409 493 74 36 1,4451977 1,661 583 74 306 1,9671978 1,397 477 75 109 1,5061979a/ 900 348 72 827 1,7271980 2,059 813 72 217 2,2761981 2,248 954 70 272 2,5201982 2,032 813 71 44 2,0761983 2,614 973 73 0 2,614

a/ The mill was shut down for plant expansion in 1979.

Production of flour has increased three-fold from an annual average of711,000 100-lb sacks in the sixties to an average of 2,240,000 between 1980and 1983. Production reached a maximum in 1983; additional demand can be metonly by imports. Despite improvements in the last two years, the Minoterie's73% extraction rate is below world industry standards because of outdatedequipment and a shortage of qualified technicians. In France, the industrystandard is 76X and Nigeria achieves 80% with wheat imported from the US.One percentage point increase in the Minoterie's extraction rate would beequivalent to an annual increase in plant profits of US$600,000 at currentlevels of operation.

Production Costs

8.04 The structure and evolution of production costs is illustrated inTable 18. In the last three years, the cost of producing flour has remainedrelatively stable. At the same time, the cost of wheat as a proportion ofall production costs of flour has decreased from 80% to around 72%. Theincrease in other production costs has been due to:

(a) a decline in the extraction rate;

(b) increased charges in financing purchases-annual interest rateshave reached 20%;

(c) increasing costs of purchased inputs; and

(d) increasing costs of administration and personnel. The latterincreased from US$2.2 million in 1980 to US$3.4 million in 1983, anominal increase of 55%.

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Domestic Flour (Ex-Factory) vs. Imported Flour

8.05 The cost of financing flour imports is a key factor in determiningprice relationships. If the imports are paid for in cash upon delivery, thecosts can be 20% to 30% less than for flour from domestically milled wheat.But when flour imports are financed on credit, the costs may be higher thanthose for the domestically milled product. In general, however, the costs ofdomestically milled flour are 10 to 20% higher than direct imports, dependingon the terms and conditions of import financing. If the Minoterie'soperations were streamlined-by increasing the extraction rate, decreasingexcess employment and purchasing wheat more prudently-the ex-factory costsof flour production would be reduced and the differential with border pricescould be lessened or eliminated.

8.06 Domestic Flour Price Structure. The Ministry of Finance sets theex-factory selling price for flour, which includes an excise tax. The pricestructure from 1969 to 1984 is shown in Table 19. The proportion of the saleprice retained by the Minoterie increased from 56% in 1969 to 87.5% in 1984,while the percentage of the sale price taken by taxes decreased from 42% to12.3%. In nominal terms, taxes have stayed relatively constant betweenUS$3.15 and US$3.37 per sack since 1981, or 12% and 14% of the ex-factoryselling price. The increasingly high proportion that the Minoterie retainsof the ex-factory selling price explains its substantial profits.

Minoterie Revenues and Costs

8.07 The Minoterie's revenues and costs are shown in Table 20. Fiscaltax revenues have varied from US$6-8 million annually. From a loss ofUS$1.4 million in 1979/80, profits increased to US$10.8 million in 1982/83,and were expected to reach US$17 million in 1983/84. These high profits wereto accrue from a record volume of sales, purchases of low-cost wheat andimproved milling productivity. All of the Minoterie's profits are passed tothe State, except for management fees and provisions for investments.

Price Policy

8.08 The Ministry of Finance establishes the selling price of flouraccording to two implicit objectives:

(a) To ensure a healthy financial position for the-Minoterie. Theamount the Minoterie pays the State in rent for the mill facility(US$600,000 in 19B2/83) does not correspond to its full assetvalue. When compared to an industry standard of 1% profit onsales, the Minoterie's 17% profit was excessive. This profit wasafter provision of US$2.5 million for an investment program(1982/83); and

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(b) To provide financial resources to the State. In 1983, the Minoterie'sprofit constituted about 30% of net profits accruing to public sectorenterprises. Among che five leading parastatals, the Minoterie has beenthe only one to show a profit. It represents an important source ofcash for the Central Bank, where in 1983 it held deposits ofUS$13 million.

Flour Sales

8.09 The Minoterie's records show it has about 220 clients, although about65% of sales value goes to only 32 of them. Because little is known aboutsubsequent distribution and pricing at the baker level, the Minorerie hasinitiated a marketing study to analyze distribution channels and consumptionpatterns. The Minoterie also plans to diversify its range of products andintroduce wheat substitutes in flour.

8.10 Based on time series sales and price data (Table 21), the priceelasticity of demand for flour in Haiti has been estimated at -0.86, while thelong-term price elasticity for wheat in developing countries has been estimated at-0.51. The income elasticity of demand for flour in Haiti has been estimated at2.1, and the cross elasticity between the price of maize and sales of flour at0.84. Thus in Haiti, the estimated response of flour consumption to price andincome changes is high relative to that in many other developing countries.

IX. AGRICULTURAL EXPORTS POTENTIAL

9.01 Until the late 1970s, agriculture had been the main production andexport sector. Major changes in sector contributions have taken place recently.Table 22 shows that in the six years from 1975-77 to 1981-83, the tertiary sectorhas become the major contributor to value added, while the emerging industrialsector, especially the assembly industry, is now contributing around 60% of totalexport value. Agriculture's share of total export value has not only declinedfrom 60-70% th-:ough the mid 1970s to below 40%, but its contribution in real termshas also declined, by an average of 3% per year from 1975-77 to 1981-83. Thesector's disappointing contribution to growth and exports has become a majorconcern of the Government. The remainder of this chapter reviews the prospectsfor the country's main agricultural exports.

Coffee

9.02 Coffee is the major product of the economy. Jesuits introduced itin the north in 1725; by the end of the eighteenth century, there were morethan 3,000 coffee plantations in the northern and northwestern provinces.After independence in 1804, the large coffee plantations were gradually

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replaced by small, family-owned holdings. While estimates of the number ofcoffee growers vary widely, from 150,000 (World Bank, 1961) to 380,000(USAID, 1974 and 1978), there is no doubt that more than a million peopledepend on the crop for their livelihood. Coffee is also Haiti's leadingexport product, although its percentage contribution to total export valuehas declined since the 1950s and 60s (Table 23). The tonnage exported, whilefluctuating with production cycles, has declined by about 20% over the period(Table 24).

9.03 Production Conditions. Coffee is grown on foothills and mountainslopes, at altitudes between 300 m and 1650 m. Most coffee farmersinterplant food crops and shade trees with their coffee trees. Cultivationpractices are rudimentary and yields are low-approximately 250 kg/ha/year.Fertilizer is rarely applied; weeding and cultivation are undertaken in Julyonly. Crude methods of harvesting lessen the coffee quality. Harvest isAugust to October in areas with less than 500 m altitude, and one month laterin cooler areas. Since 1975, MARNDR has been promoting the replacement ofold plants with seedlings of improved varieties, including Bourbon, Caturra,Villa Lobos, and the hybrids Catuai and Catimor. The impact on total coffeeoutput, however, has been slight. USAID's recently approved PL 480 Title IIIfinancing (US$45 million) includes a component for coffee production,processing and training.

9.04 Processing and Marketing. Ninety percent of the coffee crop isprocessed by the traditional 'dry' method, which limits its quality butoffers distinct advantages to farmers, including processing and storage ofdried beans at the farm, and reduced weight for transport and sale. Althoughmiddlemen pay a somewhat higher price for washed coffee, this incentive isinsufficient to outweigh the advantages of the dry method. Allocation ofproduction to the local market has increased gradually-from 27% in the 1950sto 33% in the 1960s and 41% in the 1970s. Incentives to increase investmentin coffee are low because food crops generate a faster and better return.Yet, despite these disadvantages, coffee serves as an important sect,:ity itemfor farmers. It requires less labor than food crops and guarantees a minimumincome at old age.

9.05 The domestic system for marketing coffee exports is complew (seeFigure 1). Besides the producer, many agents are involved: some27 exporters, almost 750 licensed intermediaries, known as -speculators orwholesalers, and an unknown number of unlicensed intermediaries knowl. as-submarines.

9.06 Oligopsony Controversy. Exporters, wholesalers and submarinestogether enjoy a marketing margin estimated at 24% of the f.o.b. coffeeprice. The State deducts another 24%. In the end, the producer receivesabout half of the f.o.b. (international) price, although this observation issubject to some dispute. Girault (1980) believes that the average price mostproducers receive actually may be less than 50%. The market shares of thethree largest exporters and their intermediaries have been around 40% oftotal exported volume over the last 30 years. Therefore, the authorconcludes that the domestic market for coffee exports is oligopsonistic. Arecent study by Capital Consult S.A. (1983) argues that there is strong

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competition in the market_ This view is based on the absence of classicalbarriers to entry, such as cost advantages, product differentiation andeconomies of scale.

9.07 Notwithstanding their differences, the Girault and Capital Consultstudies recognize that producer prices for coffee are too low to stimulateincreased production. High prices for food products ia recent years, due inpart to urban growth, inflation and droughts, have encouraged farmers toswitch from coffee to maize, cassava and beans, despite low yields of thelatter crops on steep slopes and the resultant erosion. With coffeeproduction remaining essentially stagnant and domestic consumptionincreasing, Haiti faces a dilemma in meeting its Iaternational CoffeeOrganization (ICO) entitlement, set at 421,000 bags (25,340 mt) for 1985.The Government made a symbolic 10% reduction in the coffee export tax,effective for the 1984 harvest. It has also agreed with USAID under TitleIII (para 9.03) that the coffee tax will be reduced by a further 15% for the1985 crop. Under the circumstances, this agreement seems reasonable, and theresults, especialUy the effect of the measure on farmer prices in differentlocations, should be monitored closely.

Mangoes

9.08 Haiti is the world's sixth largest producer of mangoes, thirdlargest in the Americas, according to Food and Agriculture Organization (FAO)1980 data. Domestic production in 1980 was escimated at 326,000 tons. Mangotrees are abundant in the arid parts of the country and at altitudes below2,000 feet; those from the plains are of better quality, selling at higherprices domestically and abroad. Mango trees are raised primarily bysmall-scale farmers. (The only large-scale mango plantation is in theArtibonite.) Cultivation techniques are simple; neither fertilizers norpesticides are used. The main export variety is the Francis (or Haiti)mango. The main harvest season runs from April to September.

9.09 A high percentage of the Francis mangoes from the plains and asmaller percentage of those from the mountains and plateaus are exported tothe US. Distribution channels are illustrated in Figure 2. Producer pricesin 1984 ranged between US$0.30-US$0.60 per dozen fruit, depending largely onquality. Exports are controlled essentially by one company, ASDEK, which hasbeen the main promoter of mango exports for the past 15 years. In 1982,ASDEM accounts for around 70X of all mangoes shipped to the US. Mangotransactions yield high product margins; risks are high because the fruit isperishable (only one to two weeks of life after harvest) and fragile. Pricevariations in the US market introduce further risks, depending in part oncompeting supplies from Florida or other exporting countries, includingBrazil and Mexico.

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9.10 Mango exports exceeded 6 million kg in 1983 and 1984, for a valueof US$3.5 million and US$6 million, respectively. This compares to exportsin 1974 of 135,600 kg for a value of only US$13,190. Prices have risensteadily, from US$0.10/kg in 1974 to US$0.54/kg in 1983 (see followingTable).

Recent Trends in Haitian Mango Exports

Year Volume Value Unit Price(kg million) (USS) (US$/kg)

1973-1974 135,625 13,190 0.0971974-1975 1,107,861 203,699 0.1841975-1976 967,774 184,173 0.1901976-1977 3,325,980 691,189 0.2081977-1978 2,491,530 615,679 0.2471978-1979 2,292,648 789,688 0.3441982-1983 6,600,000 3,564,000 0.5401983-1984 6,545,000 6,000,000 a/ 1.090

a! Estimate

Sources: Administration Generale des Douanes, CCSA 1982; AGRICORP 1984.

The outlook for this market was promising until recently when the Food audDrug Department of the USDA banned EDB, a fumigant used to treat the fruit.The ban is to become effective in September 1985. Because the alternativecobalt irradiation method is unlikely to be acceptable to US consumers andbecause of its high cost (roughly US$1.5 million for an irradiation locker),the Government is concerned that mango exports may disappear completely.Possibilities for treating the fruit with hot water are currently beingstudied.

Cocoa

9.11 A tropical plant, cocoa requires a warm and humid climate andelevations no higher than 500 m. It is also sensitive to wind. The crop isgrown primarily in the northern and southwestern parts of the country and,like coffee, is cultivated on small plantations ranging in size from 0.5 to1.5 ha. Haitian farmers grow a criollo variety, which is usually mixed witha forastero type of cocoa.

9.12 Due to substantial increases in international cocoa prices in themid 1970s, the value of cocoa exports rose from US$1.2 million in 1974 toUS$6.7 million in 1979. Since then prices and export values have declined(US$2.2 million in 1982). As with coffee, the volume of cocoa production hasremained essentially stagnant in recent years. Furthermore, cocoaconsumption in Haiti's four principal customers-the US, Holland, France andGermany-is stagnant or falling. This coincides with structural changes in

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the cocoa processing industry worldwide. While confection industries inwestern countries are making greater use of substitute products, theprocessing of cocoa beans is moving to the eastern countries and to theproducing countries themselves.

9.13 Haitian cocoa is marketed through the same channels ascoffee-i.e., producer-wholesaler-exporter. Four companies currently controlcocoa exports: Wiener, Madsen, Bennet and Novella. Until 1978, one company,HAMASCOSA, had a monopoly on cocoa purchases. There may be oligopsonisticpower on the part of these four exporting firms.

Sisal

9.14 Sisal is grown primarily as a monoculture on an 8,000 ha plantationowned by the Haitian American Development Company in the northeast of thecountry. Exports have been declining, both in volume and value. They fellfrom 12.2 million kg to 3 million kg from 1974 to 1983, while the value fellfrom US$4.6 million to US$2 million. Expansion of the local sisal processingindustry is oue reason for the reduction of fiber exports. By the end of the1970s, the local market was taking an average of 65% to 70% of the volume ofsisal produced.

9.15 Opportunities for exporting sisal in raw form are expected todecrease, considering the following trends in the international raw sisalmarket: competition from synthetics and reduced imports by consumercountries, in particular the US; excess supplies worldwide fro'u a wave ofreplantings, mainly in Africa and Asia; and the transfer of raw fiberprocessing to the producer countries. Haitian sisal exports have beenreplaced in part by sales of finished products (e.g. twines) and handicrafts(e.g. bags and small carpets). Exports of twines amounted to approximatelyUS$1 million in 1979. If sisal production in Haiti remains controlled by asmall group of companies that (a) has solid contacts with foreign firms and(b) can secure a stable market, then increased exports of more finishedproducts should compensate for declining shipments of raw fiber.

Essential Oils

9.16 Excluding partially processed coffee and cocoa, essential oils arethe most important agroindustrial export from Haiti. Vetiver accounted for54% of essential oils exports in 1982 (US$5.7 million), followed by lime,28%, and amyris, 12Z. Vetiver grows spontaneously in tropical andsubtropical countries. Although it adapts to poor soils, it prefers clear,light, well-drained and slightly sandy soils because they enable the plant tospread out better. Vetiver is an ideal crop for Haiti's poor soils. It isgrown in locations where rainfall is moderate to abundant-1,200 mm to morethan 2,000 mm per year-as well as in the dryer regions. Cultivation isdispersed among small farms, most of which are no larger than one carreau.Fertilizer is not generally applied and cultivation methods result inconsiderable soil erosion.

- 31 -

9.17 Responsibility for exporting essential oils lies with the oCEAH5/,which has had monopoly rights on exports since 1975. Three countries, theUS, France and Guadelcupe, purchase almost 99% of Halti's essential oilexports. Unfortunately, the country's share of the US vetiver oil market hasdropped from around 75Z in 1978 to only 40% in 1982. The loss of marketshare has been the result of aggressive marketing by Indonesia and China,despite the fact that the Haitian oil is considered to be of superiorquality. Besides over-pricing and relatively uncompetitive marketing on thepart of OCEAR, the Government imposed a relatively small tax of around 10% onvetiver and the other essential oils. This tax was abolished in early 1985_Given the competitive position of Haiti in producing good quality vetiver andamyris oils, the Government should try to ensure that the OCEAH becomes moreactive in market diversification and penetration, possibly with greaterparticipation of the private sector in its marketing policies.

X. THE FISCAL AND PRICING SYSTEMS FOR AGRICULTURE

Overview

10.01 Agricultural prices are influenced by fiscal, monetary and tradepolicies. Fiscal policy in agriculture includes taxes, subsidies andGovernment regulatory interventions that create rents for the public andprivate sectors. Monetary policy in the sector involves guidelines forcredit allocation and interest rates. Trade policy refers to tariffs, importlicensing, export taxes and exchange rates.

10.02 The prices of a small number of agricultural products areadministered by the Government. The producer price of sugarcane for thecentrifugal mills is fixed, while that for the traditional guildives is notsubject to control. The producer price of cotton is also fixed. Consumerprices are established for flour, sugar, vegetable oil, milk and lard, noneof which are major items in the Haitian rural diet (see Chapter VI).According to UPALN, the annual consumption of wheat flour is 2% of total foodintake by weight; sugar consumption (excluding alcohol, syrup and open-pansugar) is about 3% of total weight intake. Milk and lard consumption isnominal. For most products, supply and demand (affected in some cases bytrade policies) determine prices, e.g., for cassava, maize, sweet potatoes,sorghum, rice, legumes, vegetables and fruit. Overall, price controls arenot as important in Haiti as in many countries, although prices for a fewproducts have departed considerably from border price levels; ex-factoryprices of flour, sugar and vegetable oil have been above international norms,while producer prices of cotton have generally been below.

5/ Haitian Office for Marketing Aromatic Oils.

- 32 -

10.03 Fiscal policy has a much greater impact than credit on agriculturalpricing. High export taxes reduce producer prices in gourdes, particularlyfor coffee, but also for cocoa and sisal. Taxes on domestic flour andsugar, on the other hand, contribute to the high consumer prices of thesegoods. Higher than equilibrium prices for flour and sugar appear to existprimarily for the purpose of raising revenues from parastatal processingplants.

10.04 The pricing of grains is complex. Flour, which is a substitute fordomestically grown food grains, is priced well above the c.i.f. equivalentand hence does not serve to reduce food prices. Sorghum is unique because itis largely a subsistence crop grown and consumed by low-income farmers inremote areas. Its localized price is higher than the imported c.i.f. pricewould be, but it is unlikely that imports would lead to lower prices due tothe cost of marketing the imported product in isolated areas. Cassava andsweet potatoes are important items in rural diets, as well as partialsubstitutes for sorghum and maize, but there is insufficient price data toevaluate them.

10.05 The average producer price of rice is somewhat higher than it wouldbe under conditions of free trade. Foods processed in Haiti (flour, sugar,edible oils) also have high prices. The high consumer price of sugar,however, is not reflected in producer cane prices (para. 7.13); theproducer-consumer price ratio for sugar is pernaps the lowest in the world.Aad since all wheat is imported and Haiti produces only small quantities ofedible oils (mainly cottonseed oil), the Government rather than producersbenefits from the high administered prices.

10.06 Consumption taxes are applied to rice, centrifugal sugar, flour andedible oils. Rice plays only a small role in the diet of the poor, becauseit is a costly source of nutrition. (Rice is two to three times moreexpensive than maize per calorie and per gram of protein;-see Chapter VI).Overall, pricing policies impose a considerable burden on consumers.Table 26 compares domestic and border prices for selected products, whileTable 27 provides estimates of the net tax or subsidy for each productimplicit in pricing policy. The latter table shows that the combination ofpricing policies has a greater adverse effect on consumer than on producerwelfare. These observations contrast with the situation in many developingcountries, where consumption, particularly urban consumption, is oftensubsidized. They are noteworthy also because Haiti's nutrition levels arethe lowest in the hemisphere. Thus, consumers and producers are both taxedby a combination of pricing and trade policy instruments.

10.07 Estimates of the distributional consequences of pricing policy arenot available, but some observations can be noted. First, on the consumptionside, taxes fall largely on urban groups. In rural areas, a high proportionof the sugar is consumed in the form of open-pan sugar, raw cane and alcohol,for which little, if any, taxes are imposed. While wheat flour products havepenetrated some rural areas, their share of the average diet is much higher

- 33 -

in urban areas. And very little rice is consumed by the poorest groups.Second, on the production side, while most coffee and cotton producers aresmallholders, they are not the poorest farmers. The poorest, essentiallysubsistence, farmers grow sorghum or cassava and small amounts of legumes orvegetables. Hence, pricing policy taxes tend to spare the very poorest. Theburden of rural taxes is carried largely by the lower-middle and middleclasses, and revenues go to the Government directly, or implicitly to therural entrepreneurial classes via policy induced rents (para 10.09). Thepricing system, therefore, is regressive for roughly the top two-thirds ofthe income strata, but does not materially affect the lowest strata.

Haiti's Agricultural Fiscal System

10.08 Haiti's fiscal system is under pressure to generate more revenues.Close examination reveals considerable potential for flexibility in theagricultural part of the system. Agricultural tax revenues can be groupedinto eight categories: export taxes, taxes on luxury foods and alcohol,taxes on cigarettes, import tariffs, lease fees on public lands, irrigationwater charges, agricultural marketing taxes and the profits of parastatalfood processing plants. About half of these revenues are generated by twosources-coffee export taxes, and profits and taxes from the Minoterie flourmill.

10.09 The final element of the fiscal system is what may be called"policy-induced rents,- which accrue to both the Government and certainprivate sector interests as a result of public licensing or regulatoryarrangements. The largest of these rents is the income earned fromsub-leasing public lands leased from the Government. Because the Governmentlease fees are well below market value (para. 2.14), lessees normallysublease the land at higher rates. The second category of rent accrues tothe use of irrigation water, which is priced well below the reasonable O&Mcosts of the systems. A third category is ad hoc exemptions from exporttaxes, and a fourth is mandated supernumerary employment by parastatalentities, e.g. the food processing plants. The mission estimates that thisexcess employment transfers annually US$1.5 to US$3.0 million from theGovernment to private hands. Finally, there is the failure to implement theAugust 1983 constitutional provision for taxes on large landholdings.This tax could generate additional revenues of at least US$5.0 million peryear. All together, these policy-induced rents, which essentially areforegone revenues to the Government, amount to about 50% of budgetaryrevenues actually collected from the sector. Table 28 provides estimates ofthe value of all main components of the agricultural fiscal system.

-10.10 There is considerable potential for expanding Government revenuesthrough capturing the above policy-induced rents. Moreover, incorporation ofthese rents and the extra budgetary revenues into the regular budget wouldsupport pricing policy reforms in terms of improving production incentivesand efficiency. First, the additional revenues would enable a reduction ofexport taxes which, as noted, distort relative producer prices. Second,higher lease fees '-or public lands and higher irrigation charges, for fee

- 34 -

increases up to the marginal value product of the resource, would have nodirect effect on product prices. Similarly, the taxing of large landholdingswould have no direct effect on product prices. And third, a reduction ofsupernumerary employment in the parastatals would enable a reduction incosts, translating into increased revenues to the Government. Thus, theproposed fiscal reforms should increase net revenues but have neutral orpositive effects on prices. It should be pointed out that some of theexisting pricing policies are self-defeating over the longer run. The coffeeexport tax has probably contributed to stagnating coffee production anddeclining exports, and hence to a decline of the revenue base for the tax.And the low producer prices of cotton, designed to favor the textileindustry, are probably responsible for the declining cotton production.

10.11 The distributional effects of fiscal reforms, including thetransfer to the Government budget of the policy-induced rents, should also bepositive. The net effect would be an increase in economic welfare for thelorar-middle and middle income strata, a more equitable sharing of the taxburden by large landholders, an increase in Government revenues and priceincentives towards increased investment and production of export (or importsubstitution) crops.

Trade Related Policies

10.12 Apart from export taxes, the trade-related policies that have thegreatest impact on prices concern restrictive import licensing, especiallyfor rice, wheat flour and sugar. Agricultural experts agree that Haiti hasconsiderable potential for raising rice yields. With improved technologies,the country should enjoy a significant comparative advantage in rice (seeChapter V). Accordingly, the existing producer price incentives for riceshould be maintained, over the medium term, to help develop that potential.In the case of maize, the picture is less clear, although nutritionally it isan important crop. There appears to be no justification for departing fromthe present policy of importing maize for poultry and animal feed. Adeceleration or reduction in wheat imports should increase demand for, andthus producer prices and production of maize, especially under improvedtechnologies on better quality lands, leading to increased rural income, andimproved nutrition. Imports of maize and rice by the private sector shouldbe permitted, initially under licencing arrangements and with a protectivetariff. The tariff need not be high, say 20%, in order to protect producerincomes and price incentives for these crops and generally to ensure marketstability in the short- to medium-term. Greater imports under a tariff,morecver, would generate additional fiscal revenues. In the longer term,maize and rice prices should fall as production increases from thedissemination of improved varieties and technologies. Restrictions onimports of edible oils do not-appear justified economically. Their onlyapparent justification is fiscal: protecting the profits of the parastataloil processing plant.

- 35 -

XI. SUMMARY OF RECOMMENDATIONS

11.01 Recommendations are listed under short- to medium-term, andlonger-term recommendations. An attempt has also been made to list them insome sort of priority, although given their complementarity, prioritizingthem may be academic. Several of the recommendations could be supported withexternal financial and/or technical assistance.

Short- to Medium-term Recommendations

11.02 (a) Coffee Tax - The Bank should support the Government'sagreement with USAID to decrease the export taxby a further 15%, culminating in a 25%reduction over 15 months. The Goverrment andUSAID should ensure that the effects of the taxdecrease, particularly on farm prices indifferent localities, are closely monitored.

(b) Fiscal Reform - To offset recommended reductions in export andexcise taxes, and to otherwise increase fiscalrevenues from the sector, the Governmentshould: raise rents on public lands to marketlevels; implement the constitutional tax onlarge land holdings; and introduce full usercharges for O&M costs of irrigation facilities.

(c) Oil Seeds - A study should be commissioned by theGovernment to review options for making theState-owned soybean extraction and refiningplant, SODEXOL, financially and economicallyviable. If its viability cannot be assured, itshould be closed.

(d) Centrifugal Sugar - The elimination of the excise tax should bepassed to the farmers and consumers asincreased cane prices and reduced retailprices, respectively. A system of payment tofarmers for cane on the basis of its sucrosecontent should be introduced. A Government ledWorking Group should be established to reviewthe status and future of the sugar industry,including the merits of divesting the Statefacilities to the private sector, diversifyingsugar lands for production of other (possiblymore economic) crops, and increasing taxationlevels of the guildives.

- 36 -

(e) Wheat - The Government should adopt a clear policyaimed at decelerating the increase in importsand consumption of wheat. The Minoterie'splant should not be expanded. The efficiencyof its operations should be streamlined andinclude a major reduction in numbers of itsstaff. Otherwise it should be closed.

(f) Irrigation - This subsector should be the lynch pin of theGovernment's plans for accelerating growth fromagr:culture in the short to medium term. Wherepossible, while plans for physicalrehabilitation are implemented, fulloperational and ordinary' maintenance chargesfor water deli'rery should be introduced. TheGovernment should introduce measures that willhelp ensure extraordinary maintenance ofirrigation systems, as required to removesiltation brought on by deluges from thewatersheds. Water users' associations shouldbe established to manage the systems.

(g) Credit - The Government should review constraints on theavailability and terms of investment andproduction credit, especially for the farmingenterprises with greater short- to medium-termpotential. The need for increased investmentcredit for the sector should be supportedthrough external funding. Projects shouldinclude provision for tne employment byagricultural credit institutions (e.g., BNDAI)of technical experts in the field ofagro-industrial development. Credit policyshould be consistent with the requirements forinvestments in new technologies.

(h) MARNDR - A planning and monitoring unit should beestablished within MARNDR. The unit would:plan for new and ongoing investments andestablish priorities, consistent with availableresources; monitor and evaluate progress ofongoing projects; and advise on policy optionsrelated to the Government's establishedpriorities for the sector.

Ci) Cotton - Farmer prices for seed cotton should beadjusted,as necessary, to ensure the equivalentof import parity.

- 37 -

(j) Export Taxes - Notwithstanding the cautious approachrecommended in para (a) for reducing coffeetaxes, all export taxes on agriculturalproducts should in principle be eliminated.

Longer-term Recommendations

11.03 (a) Irrigation - Projects for rehabilitation of existing systemsshould be prepared and implemented. Measuresto protect and rehabilitate the watershedsfeeding such systems should be included inproject investments.

(b) Soil Conservation - The Government should continue to seek externalsupport for substantial investments in soilconservation programs.

Cc) Forestry - Reforestation should proceed on two fronts: ascommercial -crops on selected lands under goodmanagement to help satisfy the demand for fuel(charcoal) and construction timber; and on thehillsides to help conserve (rehabilitate) thesoils within appropriate farming systems.The Government should actirely encouragefinancial and technical support from bilateraldonors and NGO's for both these activities.

Cd) MARNDR - In addition to establishing a planning andmonitoring unit, MARNDR's overall capabilityshould be strengthened. A plan should bedeveloped to reduce substantially the excessivenumbers of staff and increase salaries.Priority should be given to strengthening theMinistry's applied research (e.g., of highlysine maize varieties), extension andtraining, and to supporting the Ministry'spromotion of seed multiplication anddistribution, soil conservation, reforestationand livestock development.

(e) Land Reform - Land Reform. Studies should be initiated todetermine the status of land tenure throughoutthe country. Based on these studes, a programof land tenure regularization and consolidationshould be prepared and supported actively atthe highest levels of the Government.

- 38 -

(f) Marketing - The Government should review constraints toexpanding production of fruLts and vegetables,livestock, and cereals (including maize) forlocal consumption because of inadequatemarketing infrastructure and disemination ofinformation (e.g., producer and wholesaleprices). For export products, the Governmentshould assist the private sector in theidentification of markets and in ensuringaccess on favorable rerms.

(g) Sugar - The Government should consider the merits ofsystematically diversifying the use ofsugarcane lands for production of other, moreeconomically viable crops (see comments onsugar under the short-term recommendations).

(h) Information Base - The Government should: (i) conduct a nationwidesurvey on consumption, nutrition and ruralhouseholds expenditures; (ii) conduct a newaerial photographic survey of agriculturalareas (in support of the cadastre mentioned insub. para. (d) above); and (iii) establish asystem of regular collection and disseminationof farmgate and rural markets prices.

- 39 -Table 1

HAITI

AGRICULTURAL SECTOR STUDY

Distribution of Agricultural Land, 1971

Farm Size No. of Z of Cumula- Area in X of Cumula-(carreaux) Farms Farms tive Z Farms Area tive %

0.01- 0.08 16,820 2.7 2.7 850 0.1 0.1

0.09- 0.16 36,050 5.9 8.6 4,495 0.7 0.8

0.17- 0.25 107,480 17.4 26.0 27,410 4.1 4.9

0.26- 0.38 28,485 4.6 30.6 10,220 1.5 6.4

0.39- 0.50 104,890 17.0 47.6 51,045 7.6 14.0

0.51- 0.78 68,260 11.1 58.7 49,270 7.4 21.4

0.79- 1.00 76,010 12.3 71.0 74,585 11.1 32.5

-1.01- 1.55 65,920 10.7 d1.7 89,710 13.4 45.9

1.56- 2.00 44,340 7.2 88.9 85,320 12.7 58.6

2.01- 2.33 9,260 1.5 90.4 21,160 3.2 61.8

2.34- 3.00 27,370 4.4 94.8 75,010 11.2 73.0

3.01- 3.87 8,440 1.4 96.2 30,070 4.5 77.5

3.88- 4.00 4,300 0.7 96.9 17,150 2.6 80.1

4.01- 5.00 7,810 1.3 98.2 37,200 5.6 85.7

5.01- 7.75 6,440 1.0 99.2 39,310 5.9 91.6

7.76-10.00 2,660 0.4 99.6 22,610 3.4 95.0

10.01-15.00 1,285 0.2 99.8 15,480 2.3 97.3

15.01-20.00 590 0.1 99.9 10,260 1.5 98.8

More than 20.00 300 0.1 100.0 8.240 1.2 100.0

Total 616,710 100.0 100.0 669,395 100.0 100.0

SOURCE: Haiti, IHS (1973:38-41); reported in Zuvekas 1978.

Note: 1 carreau = 1.29 ha.

HAITI

AORICULtt5AL SECIOR STLiY

Production, Areas. end Yields of Principal Crops 419781

TRANSVERSAL SOI TN EST NORTH COWUtNICROPS AREA YIELD PROOUCTiON AREA IELD PRCOUCTION AREA YIELD PRODUCTION AREA YIELD PROUCTION AREA PROICTION AVERAE YIELD

h M5 t h 1/h t h t/h t h i/ha t bt t

Maize 74,456 0.62 61,039 49,95S 0,46 45,222 33,016 0," 52,484 36,534 0.61 24,344 233,743 183.143 0.78Sorghum 66,487 0,84 56,011 58,0S1 0.62 23,524 41,902 0.96 40,226 10.055 0.33 3.S16 156,195 123,065 0.79

RICe 29,660 4.00 118,7201/ 5,920 1.50 9,80 4,680 1.40 6,552 42.800 1.80 11,040 83,060 211,192 2.54Beans 21,554 0.60 1293i2 23,3)6 0,47 11,190 28,460 0.59 16,191 16,128 0.72 11,612 89,671 52.524 0.59Pigeon Peas 24,629 0.40 9,932 18,561 0,51 5,641 17,744 0,36 6,384 7,240 0.46 3,471 U, 360 23,446 0.31

Vigna Beans 14,029 0,55 4,910 6,420 0.35 2,243 9,639 0.29 2,853 6,6 6 0.45 4,000 59,174 14,006 0.56

Bananas 22,164 6.55 145,114 25,369 5.07 133,641 14,953 6.71 101,232 19,006 6,90 131,141 61,492 511,188 6.21ISvat Potatoes 18.119 4.34 78.691 16,427 4.30 10,491 15,715 4.16 65,574 12,209 9.08 49,613 62,530 264,375 4.23

Cassava 19,474 3.90 75.948 15.845 3.93 62,351 12,152 4.00 50,926 14,909 4.50 64,109 62,9E0 253,336 4.02Yams 6,779 1.77 IS,446 11.909 3.69 43,926 6,118 3.44 21,252 6,771 2,56 17,349 33,643 97,977 2,91 ASugarcane 25,d61 41.90 1,000,614 8,110 49.90 401.,65 14,450 60.50 874,225 12,610 56.50 711,321 59,171 2,995,643 50,6Coltt. 16,196 0.25 4,S49 45,697 0.25 11.414 40,041 0.25 10,012 33,619 0.25 6,420 131,619 34,455 0.25

Cocoa 178 0.25 45 3.105 0.30 932 18U 0.25 47 632 0.25 ISI 4,103 1,162 0.29Cotton - - - 2,619 0,37 1,031 4,419 0.36 1,5171 13.4 0.36 463 7,251 3099 0.43Sisal le,78 1,00 10,150 1,960 1,00 1,760 1,740 1.00 1,140 15,320 1.50 22,960 35,600 43,260 1.22

latlthr - - 5,180 2,00 10,360c - - 5,180 10,560 2,00Peanuts 8,672 0.77 6,831 7,110 0,85 8,629 11,M60 0.70 12,292 12,660 0.65 6,102 47,062 33,654 0.72

Coca * - 1.,00 - - 49,645 - - 10.159 --1,36 * 62.440Mangoes - - 156,151 - - 61,491 - - 63,129 - - 55,156 - 336,527Oranges - - 10,020 - - 1,10 - - 7,969 - - 29,551 - 61,150Graplefult - - 7,573 - - 25,999 - - 51,120 * - 20,212 - 85,504

jj P4ad rleo,kT Tons at vntiver roots.

Sources «ltl, l4lalstri of Plan, OATPE, Schauc d'Ame_ tnt. Cosplex Prlmire, 1984,

- 41 -Table 3

HAITI

AORILwURL SECTOR Sni

Staffing of MAWROR By Dlrectorates and Location

(Facal Year 19e451)

Agricultu- Other Pars- Aiudnistra

ralist. Enginmrs Proftraimla Tchnician tive Support Others Total

_ffMnsene F H F HI F HO F H1 F HO F HO F

- B~~~ureau of Minister nid

Secretary of State 4 1 1 - 7 - - - 44 - 2 - SB

Directorate General 4 3 - - I 7 _ - - 12 3

Direcrate of Agriculture 12 67 - - I - 5 2Z1 17 - 1 - 36 288

Dlrectorte of Naturl Resowrces 24 - 5 4 4 7 4 166 35 - - - 72 177

Agricltural Dlstricts (20) - 94 - 11 - 2 - 96 - 102 - 7 - 314

Direct.rate ofProraming 8 1 - - 2 - - - 13 - - - 23 1

Dlrectorab of Rural Econmy - 4 - - 19 5 - - - 22 19

Directorab of Llvestck 15 1 - - 1 - 9 64 17 7 6 - 46 92

Olrectorat of Rural Engiering - - 31 - 3 - 5 81 16 3 - - SS 84

Dir.ctorste of Aduniltration 2 - - - 16 - 33 - 106 - 68 - 245 -

Directerat, of Financial Affairs - - - - 14 - 13 - 19 - - - 46 -

Olrectorteo f State Farm 2 4 - - - - - - 5 - - - 7 4

Dlrectoratb of Decentralized Units 1 - - - 4 - 69 - 12 - - -_ 6 -

Directorate of Orgenization and

Prowotion of Rural Caomnitls 4 1 - - I - 21 120 2S - 3 - 55 121

Directorate of Reerch ad Training

(Facnity of Agroauy and Veterinary

Medecine) 32 5 1 - 8 3 11 4 31 24 13 7 96 67

TOTAL 112 176 38 15 67 12 178 837 353 136 113 14 861 1,190

a/ HO - Heedquartors, F - Field.

Source: Ministry of FInance and MAWROR Payrolt Recerde

May, 1984

HAITI

ArGRIaJiL'IUL SECTOR SIUDY

Sectoral Allocation of Public Inveatmnat EUTiture by Years (1972-1982)(X of Tbtal)

BudgetActual Data Eatimate

Sectors 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982

Agriculture 9.3 12.1 12.9 9.0 8.6 10.8 15.7 27.0 16.1 15.0 23.4Mines and Quarrim? 0.8 - 0,6 0.2 0,7 0.8 1.1 1.5 1.1 0.9 1.4Industry and crafts 5.7 1,5 2.7 3.5 2,3 1,1 2.0 7,9 6.7 7,0 6.7Power 19.2 16.7 10.3 5.5 6,0 21.9 13.8 11,1 7.9 23,7 5.6Drinking water 2.3 1.1 1.0 1.9 7.7 1,8 0.5 0.7 1.0 2d7 2.6 1Tourism 0.7 0.9 0.7 0.6 0.2 0.1 0.3 0.4 0.5 0.3 0,2 4.Transport 15.7 8.U 24.2 47.6 46.6 36,7 38.5 25.2 26.7 18.1 20.9Coamunications 8.0 13.2 18.2 10.1 7.4 3.3 1.9 3.5 8.6 2.3 3.7Urban development, hwusing - - - 0.7 0.2 0.1 0.1 0.4 1.0 3.0 6.0Education 2.7 9.1 4.1 7.3 3.7 4.2 4.2 9.3 10.4 10.0 8.1Healthi 15.3 17.1 7.5 5.8 3.1 5.7 6.3 6.4 9.7 8.3 7.9Social affairs - - - - - - 0.1 0.1 0.4 0.1 0.2Cmmunlity development 11.3 9.1 12.1 3.5 10.4 9.9 11.7 4.2 7.3 7.2 8.9Admnistration 9.0 11.3 5.7 4.3 3.1 3.6 3.8 2.3 2.6 1.4 4.4

Total; 100.0 100.0 100.0 10T00.0 100.0 100.0 100.0 100.0 100.0 10. 100.0Realization (X) 80.6 69. 1 87.7 101.3 84.2 79.3 85.-3 72.7 57.8 51.9 -

I F3

Source: INRD, Current Econamic Positicn and Prospects of lHaiti, Dac. 22, 1978. Budget 1980 and informtion from Planming Ministry, Dapart1frit of Evaluation and Control.Hission estimates.

, ...........

-43- Table 5

HTr

ALCUUaL n SIE¶DY

Paiblic Iuvestnt in the Min AXrJ0ilturl. Projects, 1982-1983(G TOO0)

Code Budgeted AUlocated Disbuxsed ZNo. Title of Prgign or Project local Foreiga Total 1 2 2/1

01V05 Productim of Minor Livestodc 800 0 800 914 138 1501V16 Producim of Catle 400 3,205 3,605 4 - 001'V04 ErractcatiLo of ein ELwer and Livstodc

D Ielopiat 800 57,000 57,800 766 602 79OIAOI Sbpport tu the Ministry of Agriculture 8,000 0 8,000 5,002 4,807 9601A02 Development of AgrLc. Prcgra_"g 300 0 300 876 399 46O1A04 Staff trining 866 1,514 2,380 456 455 9901A05 Nbtional Cbaters of Agric. Documenta-

nix aad laformatiom 250 0 250 64 54 84OlVil irtrated 1gional Dev. at Asle 400 7,105 7,505 1,697 481 28OlV12 Agri. Dav. of Rviere Blanche 700 7,105 7,805 5,235 3,742 7201V18 Tntegrated Pegixoal Dav. at Petit

Coave and Petit TrU de ?ppes 1,300. 0 1,300 2,519 1,256 5901V32 OrgaizatiCm for the Dev. of the

Artiborite Va1ey CODVA) 2,00D 7,563 9,563 2,183 1,281 5901V33 Org. for the De. of the Qxa-ives Plaine 1,000 2,701 3,701 1,407 3,184 22601VO9 Org. for the Dev, of the Nbrth (OC) 900 9,000 9,900 108 2,365 2,190O1V07 WatershedDevelop. (SWAMARI 1,700 935 2,635 2,587 1,172 4501VO2 Productix of Basic Food Crops 2,000 1,525 3,525 1,618 1,125 70O1IVO8 Agricaltural Credit to BCA 5,000 5,000 10,000 4,150 4,190 100OIVOI Coffee and Coc,a Production 2,500 750 3,250 L22 122 10001V30 aabahilitatia: aad Extemsimn of

(Igatr system 1,500 0 1,500 334 220 66OIPOl 1ietory of Water Psurces and

HtereolW 400 1,100 1,500 516 211 4101V03 Ai-ml Bealth 400 48 448 308 168 5501V26 r ses veoent 300 0 300 184 60 33OV27 lirct of eting Structures L50 1,202 1,352 928 661 7101%V13 lItegated Agric D1velp. (PDAI) 1,500 15,350 16,850 432 206 48OIP)5 Research Sipport to Agric. Prod. (ADS II) 1,500 4,000 5,500 1,858 922 50

34,666 123,103 159,769 34,268 27,781 81US $ Mfilliam 6.9 24.6 31.5 6.8 5.6

SOURCE: Hfission calculations fram MARIR, Qiarterly Reports o the Progress of Agriacltural Projects,October 1982-S epeer 1983.

HAITI

AGRICULTURAL SECTOR STUDY

Operating Budget of MARNDR(Current G '000,000)

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Ministry of Agriculture 14.0 14.9 15.3 16.6 20.8 '9.4 34.0 33.4 29.2 27.8of which (%)

Salaries 90.8 91.8 92.2 86.7 93.7 89.5 70.3 77.0 84.9 90.8Operating Expenses 5.3 4.6 4.6 N.A. 5.5 4.4 21.5 15.2 10.6 7.9Transfers and Subsidies 3.9 3.6 3.2 N.A. 0.8 6.1 8.2 7.9 4.5 1.3(No. of employees) 3,204 3,275 3,300 3,392 3,613 1,887 2,938 3,104 2,259 2,051

Other Ministries 133.0 155.4 172.9 196.2 251.5 326.7 528.6 557.6 513.5Subtotal 147.0 170.3 188.2 212.8 272.3 346.1 562.0 586.8 541.3

Agriculture/AllGovernment (M) 9.5 8.9 8.2 7.8 8.3 5.6 5.9 5.0 5.1

ExtraordinaryAllocations 3.0 29.4 72.5 20.6 1.9 3.5 N.A. N.A, N.A. n.a

Grand Total 150.0 199.7 260.7 233.4 274.2 349.6 562.0 586.8 541.3of which (X)Salaries 50.0 62.9 65.5 59.5Operating Exp 41.2 25.6 21.1 24.4Transfers 8.8 11.5 13.4 16.1

Sources: 1974-75, Plan Annuel FY 1978/80, Secretariat du Plan, Aug. 1980, p. 54 and Le Moniteur, ExtraordinaryIssue, Years XVII, XVIII, and XIX of MASI p. 25.1976-1979, Plan Annuel, FY 1980/81, Secretariat du Plan, September 1980, pp 75-76.1983, Le Moniteur, FY 1982/83.

- 45 -

Table 7

HAITI

AGRICULTURAL SECTOR STUDY

Haiti's Agricultural Production Systems by Smallholders

Types of field Vegetal products Animal products

FruitsHome orchard Bananas Creole pork

Avocadoes PoultryCafeCitrusBreadfruitGiromon

Roots and TubersRome orchard Alata yams a/ Creole porkIntensive garden Cayennensis yams and corralsenclosed and Cassava for cattlefertilized Sweet potatoes

Fresh vegetablesVetiver b/

Dry Vegetables-Open fields Beans All animals:with fallow Vines - pork

Peas - cattlePigeon peas - goats

CerealsOpen fields Maizewith fallow Sorghum

Uncultivated land Goats('raks, woodedareas, paths)

a/ Cultivated both in home orchards and enclosed gardens.b/ Cultivated both in enclosed gardens and open fields.

- 46 -

Table 8

HAITI

AGRICULTURAL SECTOR STUDY

Comparative Annual Yields by Crop, 1978

Country Rice Maize Beans Sugarcane Coffee

Cuba 2.09 1.25 0.71 53.29 0.54El Salvador 3.51 2.14 0.81 77.48 0.89Guadalupe - 1.20 - 47.89 0.95Haiti 2.54 0.78 0.59 50.63 0.25Mexico 3.28 1.33 0.59 71.87 0.75Nicaragua 2.92 0.92 0.77 60.79 0.66Dominican Republic 2.67 2.10 0.82 62.35 0.31

Units: MT/Ha.

Source: Schema d'amenagement du Territoire, Ministry of Plan, Haiti, andTable 5.1.

4 47 -Table 9

HAITI

AGRICULTURAL SECTOR STUDY

Cost Estimates for Maize Production

ImprovedFarming,

Traditional Farming, North MonocropMonoculturea/ Associations D/C/ All d/ Cul-de-Sac

Cost/ton 205 162 173 146

Yield/ha 0.54 n.a. n.a. 4.06

Labor inputs:a) Total per ton 141 132 134 36b) Per ha:

total 79 52 59 146harvest 14 12 13 25other 65 40 46 121

Shares of costs (Z):Labor 84 82 83 5rLand 13 14 14 11

Profit/ha:1) at local output prices 6 22 17 1672) at border prices et 6 25 19 300

Profit/man-day atborder prices eJ .08 .48 .32 2.07

Cost/ton with labor at80% of market wage 171 129 140 130

n.a. = not applicable.

Units: Cost/ton and profit in SUS.Yields in tons/ha.Labor inputs in man-days.

a/ St. Raphael, Plaine du Nord, Dondon.~/ In the crop associations, unallocated inputs and costs are assigned to maize

in proportion to maize's share in the total revenue of the association.c/ St. Raphael, Plaine du Nord, Terrier Rouge, Dondon.WJ The averages for traditional farming are calculated with weights of 75% for

crop associations (which are predominant) and 25% for traditional farming.e/ At a border price of US$220/ton.

Sources: Compiled from ODN and FAC (1983) and ONAPI (1982).

- 48 -

Table 10

HAITI

AGRICULTURAL SECTOR STUDY

Cost Estimates for Rice Production

Traditional Farming, North 1983 Irrigated CultivationArtibonite

Swamp Rainfed North ValleyCultivation a/ Cultivation b/ 1983 cl 1982

Cost/ton 754 794 473 263Yield/ha 0.61 0.65 1.36 3.83

Labour inputs:a) Total per ton 277 380 196 49b) Per ha:

Total 169 247 266 186Harvest 36 31 77 69Other 133 216 189 117

Shares of Costs (%):Labor 66 65 57 55Land 25 23 26 18

Profit/ha:1) at local output

prices 37 -47 354 4522) at border

prices d/ -110 -154 14 702

Profit/man-day atborder prices d/ _0.49 -0.62 0.05 3.59

Cost/ton with laborat 80Z of market wage 654 691 419 234

Units: Costs and profit in US$.Yields in tons/ha.Labor input in man-days.

a/ Plaine du Nord, Camp Louise, Dondon, Haut Maribaroux.b/ Camp Louise.c/ St. Raphael.T/ Using the 1973-82 average border price of US$486/ton.

- 49 -

Table 11

HAITI

AGRICULTURAL SECTOR STUDY

Cost Estimates for Coffee Production

In Crop AssociationsCoffee a Coffee aMajor crop Minor crop Monoculture

Cost/ton -b 364 851 430Yieldsha _/ .16 (2.11) .03 (0.39) 0.14 (1.84)Labor inputs: c/a) Total per ton 375 433 337b) Per ha:

Total 60 13 47.2Harvest 44 7 25Other 16 6 22.2

Shares of costs (%):d/Labor 51 61 60Land 49 39 40

Profit/ha:a) at local output

prices 37 6 163b) at bordcr prices eJ 46 9 105

Profit/man-day at borderprices e/ 0.77 0.69 2.22

t

Cost/ton with laborat 80% of market wage 327 747 378

Units: Cost/ton and labor rent/ha in US$.Yields in tons/ha.Labor inputs in man-days.

a/ Including the annualized cost of planting.b/ Annualized yields (over 13 years) are given first, and then total yields

over the plant's life are given in parentheses.c/ Annual, including annualized planting labor.d/ Shares of annualized costs.e/ At a 'border price" (for producers) of $1,175/ton.

- 50 -

Table 12

HAITI

AGRICULTURAL SECTOR STUDY

Cost Estimates for Sugarcane Production

Quartier Morin Plaiue du Nord Les Cayes(North) a/ (North) b/ (South) b/

Traditional Semi-Improved Improved

Cost/ton 8 8 10Yield/ha 42 46 65Labor inputs:a) Total per ton 2.7 3.7 1.9b) Per ha:

Total 113 169 124Harvest 54 60 85Other 59 109 39

Shares of Costs (Z):Labor 52 56 20Land 14 10 27

Profit/ha:a) at local output

prices 210 232 186b) at border

prices ct 312 335 314

Profit/man-day atborder prices c/ 2.76 1.92 2.53

Units: Cost and profit in US$.Yields in tons/ha.Labor input inputs in man-days.

a/ From ODN and FAC (1983); Costs are based on monoculture.b/ From ONAPI (1982); costs are based on monoculture.c/ Evaluated at a 'border price' of $15.40 per ton of cane. This corresponds

to an f.o.b. price of sugar of 14c/lb. (15c world price), a 12:1 cane-to-sugar conversion ratio, and the assumption that under normal conditionscane growers would receive 60% of the value of the sugar contained in thecane.

Note: Annex A, Table 3 reports some other cost calculations based onmonoculture cane; they range from $6 to $7 per ton.

- 51 -

Table 13

HAITI

AGRICULTURAL SECTOR STUDY

Field Costs for Raw Sugar Production(US$Jmt)

Malawi US$114St. Kitts 120Kenya 129South Africa 139Mauritius 150Fiji 153Brazil (center-south) 155Australia 158

Source: W. McNally, W. David, and D. Flood, Sugar Study, draft,World Bank, July 1984.

- 52 - Table 14

HAITI

AGRICULTURAL SECTOR STUDY

Cost Estimates for Banana Production

ImprovedCultivation,

Traditional Cultivation, North Plaine deMonoculture a/ Associations D/ l'Arcahaie c/

Cost/ton (US$) 96.9 59.1 84.6

Yield/ha (tons) 4.06 1.85 15.4

Labor inputs (US$):a) Total per ton 37 28 n.a.b) Per ha:

total 93 32 n.a.harvest 26 8 n.a.other 67 24 n.a.

Shares of Costs (X):labor CI% 42% 32%land 31% 56% - 14%

Profit/ha:a) at local output

prices 330 148 1,750b) at border prices d/ 384 170 1,811

Profit/man-day at borderprices 4.13 5.31 n.a.

Cost/ton with labor at80% of market wage 85.1 54.1 79.2

a/ Bord de Mer/Limonade, Quartier Morin, Plaine du Nord.Source: ODN and FAC, 1982.

b/ Dondon, Grande Riviere/Bahon, Grison Garde, Grande Bassin.Source: ODN and FAC, 1982.

c/ Source: ONAPI, 1982.d/ Since bananas are potentially an export crop, the relevant border price is

the f.o.b. price reduced by a marketing margin. In this case, the f.o.b.export price has been taken to be 12.5c/kg ($2.07/bunch) on the basis ofinformation from the Dominican Republic. The marketing margin isestimated at 25% of the export price. That leaves a producer-equivalentborder price of 9.4C per kg.

HAITI

AGRIQJJ'URAL SECIOR SlUDY

Coaparative Advantage Indicators

Maize Rice Bananas Coffee SugarcaneIrrigated, Traditional, In Quartier lea

Traditional Improved 9mp Artibonite Mbxoculture Improved Association Mbmoculture Mbrin Cayes

Profit/ha 19 300 -110 702 384 1,811 46 105 332 374

Profit/nan-day 0.32 2.07 -0.60 3.59 4.13 n.a. 0.77 2.22 2.94 3.01

DRC 0.88 0.57 1.57 0.47 0.51 0.29 0.56 0.36 0.57 0.64

N1C 1.25 1.25 1.20 1.20 n.a. n.a. 0.5 2.0 0.84 0.84

Source: Tablee 9, 10, 11, 12 and 14.Nbte: Valuations are at border prices.

I-jLn

- 54 -Table 16

HAITI

AGRICULTURAL SECTOR STURY

Cost Effectiveness of Different-Foods in Providing Calories and Protein a/

Calories per Grams of Protein0.05 Gds. of per 0.05 Gds. of

Consumer ConsumerFood Expenditure Food Expenditure

Maize (dry grain) 201 Maize (dry grain)' 5.2Maize (moulu) 130 Beans 4.2Sorghum 107 AK-lOOob/ 3.2AK-1000 b/ 86 Maize (moulu) 2.8Wheat flour 76 Sorghum 2.8Brown sugar 74 Wheat flour 2.2

.White sugar 74 Whice bread 1.9Vegetable oil 70 Kid 1.8Rice 69 Whole milk 1.8Beans 65 Beef 1.7Sweet potatoes 64 Rice 1.4White bread 61 Yams 1.1Yams 45 Pork 1.0Avocadoes 43 Sweet potatoes 0.7Bananas (plantain) 41 Eggs 0.7Whole milk 31 Evaporated milk 0.6Bananas 30 Potatoes 0.6Mangoes 27 Avocadoes 0.5Potatoes 25 Bananas (plantain) 0.3Beef 23 Bananas 0.3Pork 21 Mangoes 0.2Kid 16 Brown sugar 0.1Evaporated milk 13 Vegetable oils -Eggs 9 White sugar

a/ At Haitian prices of 1978.

b/ AK-1000 is a gel of maize and beans.

SOURCE: Ministry of Plan, UPAN, Diagnostic de la Situation Alimentaireet Nutritionelle de la Population Haitienne, 1980, 1982.

- 55 -

Table 17

HAITI

AGRICULTURAL SECTOR STUDY

Indices of Consumer Prices of Basic Foods, Port-au-Prince

ConsumerGround Wheat PriceMaize Sorghum Rice Plaintain Beans Flour Index a/

1970 100 100 100 100 100 100 1001971 140 186 104 110 109 100 1101972 145 107 112 86 136 100 1131973 290 175 122 109 172 100 1391974 270 182 119 100 215 130 1601975 410 282 222 253 221 150 1861976 315 246 220 390 224 150 1991977 460 293 218 400 246 150 2141978 335 232 203 216 234 150 2081979 430 339 257 265 299 150 2281980 581 381 294 n.a. n.a. 150 2691981 650 421 359 355 313 181 3121982 181 337

a/ Weights: food, 68.5%; clothing, 19.5%; housing, 11.9%.

Source: Haitian Institute of Statistics.

- 56 -

Table 18

HAITI

AGRICULTURAL SECTOR STUDY

Minoterie: Structure and Evolution of the Production CostsCost Price per Sack (100 lbs) in US$

(Flour and Semolina)

1978/79 1979/80 1980/81 1981/82 1982/83

Wheat (less sales ofwheat bran) 11.83 13.49 14.31 12.59 10.79

Sacks and Additives 0.54 1.01 0.87 0.97 1.05Other Variable Costs(electrical & salaries) 0.76 1.00 1.11 1.48 1.47

Fixed Costs of Operation 1.00 0.96 1.11 1.33 1.27Administration Costs 0.40 0.35 0.30 0.51 0.52Financial Costs (0.16) a/ (0.14) a/ (0.06) a/ 0.20 C.05Total Costs 14.37 16.67 17.64 17.08 15.15

Other CostsProvision or revenues (0.15) - 1.58 (0.08) 1.99

TOTAL 14.22 16.67 19.23 17.00 17.14

a/ Exchange bonus.

Source: 1Minoterie d'Haiti (Profit and Loss Accounts).

-57-

Table 19

HAm

M~inotee: Sales Price Strucre and Evolutiat

- -943erlor Flour-- (1969-1984)(US$ per 100 lb)

1969-1972 1973 1974 1975-79 1930 1981 i982 1983 1984(avg.) (avg.) (avg.) (avg.) (avg.) (avg.) (avg.)

Sale price 13.255 13.255 !5.75 i9.90 20.48 24.0G 24.64 24.64 25.90

Minoterie 7.5 8.554 13.42 15.38 16.53 20.54 21.38 21.45 22.66

Z Miterie 56; 64.5% 80% 77% 80.7% 85.5 86.7% 87% 87.5%

Port Admiristi 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05

Special Acccmt - - - 1.14 1.02 0.93 0.93 0.93 0.93

Exc ise Mm a/ 3.38 2.326 1.47 1 1 1 - - -

Greral A&dnistrationof Taxes or Negledes Tabacsa/ 2.225 2.225 2.23 2.23 1.77 1.44 2.38 2.22 2.26

Total Taxes 5.605 4.55 3.70 4.37 3.79 3.37 3.31 3.15 3.19

Percentage of Tas 42.0Z 34.0% 2D.C0 22.0Z 18.5% 14.0Q 13.4% 12.8% 12.3%

Freight b/ 0.10 0.10 .1C 0.10 0.10 0.10 - - -

a/ Excise Tax and ' istration Generale des onmtrihzcions' or legie des Tabacs are taxes. From 1982,these taXes (mainly value added tax of 7% of sales) uere luiped togetber and coLlected through PegLe desTa -s. me Begie Ss abolisbed in early 1985.

bI Fei: 10 cts used to be pEid back to the prchaser for the of the fLour from the

Source: Data fran Mioterie d'Haiti.

- 58 -

Table 20

HAMT

AGRICULTURAL SECTOR STUDY

Minoterie: Flour Sales, Costs and Revenues(in US$'000)

Fiscal Years1978-79 1979-80 1980-81 1981-82 1982-83

Sales a/ b/ 33,902 46,407 56,727 49,987 63,572Taxes a! 5,424 6,543 6,126 4,848 5,785v Taxes 16_0 14.1 10_8 9.7 9.1Special Account a/ 1,932 2,413 2,382 1,914 2,415(in percentages) 5.7 '.2 4.2 3.8 3.8Port - Freight a/ 255 345 372 142 130Revenue Minoterie 26,105 36,987 47,821 43,139 55,244% Revenue Minoterie 77.0 79.7 84.3 86.3 86.9Production Cost 24,420 38,401 43,785 34,645 39,332Other Costs or (Revenues)c/ (248) (1) 3,926 (174) 5,159Profit 1,933 (1,413) 109 8,668 10,752% Profit on Sales 5.7 (3) 0 17.3 16.9

a/ All those figures are estimated and calculations are based on Minoterie's revenues,applying the percentages of distribution of the sale price indicated in Table 19.

b/ In all calculations sales of wheat bran have been deducted from charges. For 1982/83,taxes on sales of wheat bran allocated to the Department of Agriculture should reachabout US$300,000 (US$6 for a short ton).

c/ Other costs or revenues: this heading groups financial revenues and costs outside theprocessing of flour. For fiscal year 1980/81: US$3,926,000 represent a US$365,000 losson the sales of wheat bran, US$181,000 financial expenses, and US$3,742,000 ofnon-identified contingencies. For fiscal year 1982/83: US$5,159,000 representUS$291,000 financlal expenses, US$2.5 million provision for investments, and US$2.95million provision for various debtors, corresponding to a debt of the State to theMinoterie which the latter is recuperating by deductions from profits.

Source: Balance Sheets, Minoterie d'Haiti.

- 59 -

Table 21

HAITI

AGRICULTURAL SECTOR STUDY

Flour: Per Capita Consumption and Real Prices 1,

Flour Sales Population Per CapitaYear (Million lb) (Million) Sales (lb) Flour Prices

1973- 152.5 4.43 34.4 13.31974 129.9 4.51 28.8 14.81975 153.5 4.55 33.8 14.91976 - 150.5 4.58 33.5 14.0L977 191.9 4.75 40.4 13.01978 146.7 4.83 30.4 14.01979 185.3 4.92 37.7 12.11980 249.3 5.01 49.8 9.91981 229.7 5.10 45.0 10.71982 205.3 5.20 39.5 10.41983 273.0 5.29 51.6 9.7

1/ Real prices in 1973 US$ per 100 lbs (high quality flour). Prices taken- from Annex B, Table 12 and converted with Consumer Food Price Index fromTable 9.1 of Statistical Appendix to Haiti: Economic Memorandum, IBRD,1985. Flour sales also taken from Annex B, Table 12.

- 60 -

Table 22

HAITI

AGRICULTURAL SECTOR STUDY

Contributions to GDP and Exports by Sector

GDP (G million, 1976 prices) 1975-77 1981-83

Agriculture 1.636 40% 1,646 34%linerals 75 2Z 44 1%Industry 874 21% 1,134 23%Services 1,541 37% 2,027 42%

Total 4,126 100% 4,851 100%

Exports (current US$ million)

Agriculture 67.6 62% 77.3 40%Minerals 15.3 14% 12.6 6%InLdustry 26.9 24% 104.6 54%

Total 109.8 100% 194.5 100%

Source: IMF; Haiti - Recent Economic Developments, Dlecember 1984.

- 61 -

Table 23

HAITI

AGRICULTURAL SECTOR STUDY

Coffee Exports and Total Exports(US$ '000,000)

Total Coffee Coffee Exp. inYear Export Export Z of Total Export

1950 38.5 20.5 531951 50.4 26.0 521952 53.2 32.7 611953 38.2 25.1 661954 56.7- 43.6 771955 34.9 23.0 581956 46.5 33.4 721957 32.9 20.2 611958 42.1 31.4 751959 25.9 13.0 501960 38.1 20.2 531961 30.3 12.1 401962 40.8 20.7 511963 43.2 16.8 391964 36.0 17.6 491965 37.8 19.4 511966 37.7 20.7 551967 32.0 13.7 431968 36.2 14.6 401969 36.7 13.7 371970 47.3 15.2 321971 55.5 19.0 341972 59.5 15.7 261973 81.7 20.6 251974 110.9 24.0 221975 131.5 18.5 141976 111.9 44.0 391977 137.6 63.6 461978 154.6 62.3 401979 138.6 39.3 281980 212.3 90.9 431981 153.7 33.1 221982 150.6 30.8 20

Source: Various reports of World Bank on Haiti except for 1982:IMF-Haiti-Request for Stand-1 y ArrangementEBS-82-120, July, 1982, Table 18.

- 62 -

Table 24

AaICULTERAL. SCR SUY

Coffee Supply and DLstrih±i

Crop AdjustedSescn Be din Total Domstic

(Jly-June) Stocks Producitm Su;Vly Cmsuiption Export Stocks'000 Et

1949/50 8.4 26.250/51 8.6 25.451/52 8.8 31.352/53 9.0 23.153/54 9.2 31.854/55 9.4 19.655/56 9.6 31.156/57 9.8 17.557/58 10.0 34.658/59 10.3 16.759/60 10.5 28.2 2.560/61 2.5 25.9 28.4 10.7 16.7 1.061/62 1.0 45.0 46.0 10.9 32.6 2.562/63 2.5 36.2 38.7 11.1 26.4 1.263/64 1.2 34.6 35.8 11.3 22.5 2.064/65 2.0 33.3 35.3 11.5 22.6 3.265/66 3.2 36.8 40.0 11.7 24.4 3.966/67 3.9 26.7 30.6 11.9 16.9 1.867/68 1.8 32.0 33.8 12.1 19.5 2.268/69 2.2 33.9 36.1 12.3 18.6 5.269/70 5.2 27.0 32.2 12.5 16.1 3.670/71 3.6 33.7 37.3 12.7 21.5 3.171/72 3.1 36.9 40.0 12.9 23.8 3.372/73 3.3 32.9 36.2 13.1 19.4 3.773/74 3.7 32.7 36.4 13.3 18.7 4.474/75 4.4 36.3 40.7 13.5 17.8 9.475/76 9.4 34.7 44.1 13.7 26.8 3.676/77 3.6 28.2 31.8 13.9 15.6 2.377/78 2.3 32.6 34.9 14.1 19.1 1.778/79 1.7 28.1 29.8 14.3 14.2 1.379/80 1.3 40.5 41.8 14.5 24.9 2.480/81 2.4 29.1 31.5 14.7 14.7 2.181/82 2.1 29.2 31.3 14.9 15.6 0.882/83 0.8 44.0 44.8 15.1 28.1 1.683/84 1.6 34.2 35.8 15.3 19.5(Est) 1.O(Est)

Sources: USCD (1984); Inrernariincl Coffee orgaization (1981, 1982, 1983); and USAID (1983).

- 63 -

Table 25

HAM

AICuLTaRAL SEC1R Stll=Y

Anmual World Market Prices and Farner's Prices for Coffee

World Ybrket Farmers Nt PriceGoffee Price P_ eenue Dlstihbtim $ Ratio

Crop (FCB EHiti) Coffee Marketiig Export Local Export Coffee/Year US$/kg Tax Casts Famnir Coffee Coffee Local Coffee

49/50 .78 16 12 7250/51 1.02 16 11 7351/52 1.04 17 L5 68 .71 .74 .9652/53 1.08 17 15 68 .73 .86 .8553/54 1.37 19 24 57 .78 1.01 .7754/55 1.17 27 14 59 .69 .76 .9155/56 1.07 27 17 56 .60 .71 .8556/57 1.15 27 13 60 .69 .63 1.1057/58 .90 24 19 57 .51 .56 .9158/59 .78 28 19 53 .41 .45 .9159/60 .72 39 26 35 .25 .38 .6760/61 .72 N.A. N.AL N.A_ N.A. N.A_ N.IL61/62 .63 43 20 37 .23 .33 .7162/63 .64 40 20 40 .26 .34 .7663/64 .78 32 18 50 .39 .42 .9364/65 .86 32 28 40 .34 .26 1.3365/66 .85 32 27 41 .34 .29 1.1866/67 .81 34 25 41 .33 .28 1.2067168 .75 36 22 42 .32 .30 1.0568/69 .74 37 24 39 .29 .42 .6969/70 .94 29 22 49 .46 .36 1.2970/71 .88 32 31 37 .33 .40 .8271/72 .84 32 25 43 .36 .33 1.0972/73 1.06 26 23 51 .54 1.08 .5073/74 1.28 24 25 51 .65 .59 1.1074/75 1.04 26 34 40 .42 .68 .6175/76 1.64 21 17 62 1.02 1.78 .5776/77 4.05 24 22 54 2.19 2.67 .8277/78 3.25 26 26 48 1.56 2.14 .7378/79 2.90 24 25 51 1.48 2.21 .6779/80 3.63 26 24 50 1.82 1.89 .9680/81 2.42 26 27 47 1.14 1.50 .7681/82 2.33 26 22 52 1.21

Source: USAID (1983), Table 1.2, 1.5, and 1.6.

- 64 - Table 26

HAITI

AGRICULTURAL SECTOR STUDY

Domestic and Border Prices for SelectedAgricultural Products

(Gourdes/MT, 1982)

DomesticDomestic Price

Product Border Prices Prices Definition

Coffee 2,340 1,732 IntermediaryCacao 9,000 6,372 ExporterCotton Fibre 7,574a/ 4,95 0b/ Producer

Maize c/ 1,100 1,380 Producere/Rice 2,101 2,524 Producere/Sorghum (1981) 1,155 1,558 Producere/

Flour 2,107 2,638 Ex-factorySugar (raw) 1,65 0d/ 3,960 Wholesalef/

a Average of U.S. and Mexican prices.b/ Fibre equivalent price.C! In sacks.

At $0.15/lb./ These producer prices were derived by taking 60Z of consumer prices, toallow for marketing margins; see Roe (1978). For rice, a furtherdeduction was made for processing.

f/ Ex-factory price plus taxes.

- 65 -

Table 27

HAITI

AGRICULTURAL SECTOR STUDY

Implicit Taxes (-) and Subsidies (+)in Agricultural Pricing Policy

(Million Gourdes, 1982)

Producers Consumers

Coffee -92.5 n.a.* Cotton Fibre -7.1 n.a.

Maize 0 0Rice +37.5 -37.5Sorghum n.a. n.a.

Flour n.a. -22.9Sugar -7.2 -142.5

Total -69.3 -202.9

n.a. not applicable.

- 66 -Table 28

HAITI

AGRICULTURAL SECTOR STUDY

The Agricultural Fiscal System

Value in 1982(USs million)

1. Instruments of Budgetary Taxation

1.1 Coffee export tax .............................. 9 .01.2 Flour tax (V.A.T.) ............................. 3.51.3 Flour tax (other) .............................. 1.11.4 Sugar tax ...................................... 5.2a/1.5 Vegetable oil tax .............................. 0.91.6 Taxes on luxury foods and alcohol .... ......... 2.11.7 Cigarette tax .................................. 8.4 a1.8 Profit from flour milling (determined by

administered sales price) ..................... 13.0b/1.9 Government profit from sugar mills (determined

by administered prices of cane and sugar) ..... (negative)1.10 Export tax: cacao ............................. 0.21.11 Export tax: sisal ............................. 0.0051.12 Export tax: vetiver, lime, amyris ............. 0.31.13 Export tax: meat ....... ...................... 0.0161.14 Other export taxes ............................. negligible1.15 Tariffs on agricultural inputs ..... ........... ?1.16 Lease fees on public lands ................. approx. 0.041.17 Irrigation water charges ....................... 0.21.18 Agricultural marketing taxes ................... 7

43.96

2. Extrabudgetary Revenue Sources c/

2.1 Special account tax on flour ................... 1.92.2 Special account tax on sugar ................... 2.62.3 Profit on sugar re-export ...................... 6.0

10.5

3. Policy-Induced Rents (to private sector)

3.1 Rents on public lands .......................... 8.03.2 Rents from irrigation .......................... 6.93.3 Exemptions from e.?ort taxes ................... 1.0- 5.03.4 Supernumerary employment at parastatals

in food processing ............................ 1.5- 3.03.5 Failure to implement constitutional tax

on large land holdings ........... 5.03.6 Profit on coffee re-export ........

22.4-27.9

a/ US$8.0 million in 1983.b/ Includes advance of US$2.9 million to the Government but does not include

capital reserve fund of US$2.6 million.c/ Extrabudgetary taxes were eliminated in early 1985, the revenues therefrombeing included in the Government's regular budget.

Source: Hission estimates.

- 67 - Table 29

HAITI

AGRICULTURAL SECTOR STUDY

Consumer Price Indices in Haiti and the United States, 1953-83

Haiti United1 2 3 States

1953 - 75.4 - 70.41960 76.0 76.5 - 77.61961 78.9 79.3 - 78.81962 78.4 78.9 - 79.31963 81.8 82.8 - 80.41964 89.4 89.9 - 81.71965 91.4 91.9 - 82.61966 98.9 99.4 - 84.21967 96.1 96.6 - 87.01968 97.3 97.8 - 90.01969 98.7 99.2 - 94.21970 100.0 100.0 - 100.01971 109.5 110.0 - 105.21972 113.1 113.7 - 108.71973 138.8 139.6 - 112.71974 159.5 161.1 - 123.31975 186.3 188.1 - 137.81976 199.4 199.2 199.3 147.11977 214.2 213.9 214.0 154.71978 208.0 208.0 207.9 165.21979 228.1 235.0 228.0 180.71980 269.2 276.9 269.1 205.81981 312.3 307.2 291.2 229.91982 337.2 329.5 315.1 249.31983 est. 335.6 258.7

3

Growth rates:

1953-82 5.3%a/ 5.2% 5.1Xa/ 4.5%1960-82 7.0% 6.9% 6.6Za/ 5.4%1965-82 8.0% 7.8% 7.5Za/ 6.7%1970-82 10.7% 10.4% 10. 1fa/ 7.9%1975-82 9.2% 8.7% 7.9% 9.2%1976-83 7.7% 8.4%

Notes and Sources:

The Haitian indices all are estimates of the CPI forPort-au-Prince.1. Series 1 for Haiti is from the Ministry of Plan and Zuvekas; its base

year is 1970.2. Series 2 for 2aiti is from the IRS. Until 1980, its base was 1948; from

1981 to the present its base has been 1980. The IHS does not considerit advisable to link the 1948-based and the 1980-based series, becauseof their wide differences in coverage and data collection methodologies.

3. Series 3 is also from the IHS, with a 1976 base, and with IMF staffestimates.

4. The U.S. index is the all-urban CPI from the U.S. Bureau of LaborStatistics (1967=100).

a/ Using series 2 as the starting point.

- 68 -

HAITI Figure 1

AGRICULTURAL SECTOR STUDY

The Coffee Marketing System

Port-au-Prince

| BUYER | FProvincial Coastal townsProvincial Branch Exporter

_~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Wholesaler

Bagger BrokerMarket towns

Receiving Agent Exporter Agent

Rural areas'Submarine"

Underground Dealer(Illegal System)

PRODUCER

| _______ Movement of Coffee Movement of Credit

Advances without creditUsury Credit

Wholesaler Principal agents in marketing system

Source: Girault 1980

- 69 -

HAITI Figure 2

AGRICULTURAL SECTOR STUDY

Distribution System for Export of the Francis Mango

EXPORTERS (1) l

[ EXPORT AGENTS (2)

l l _ ~~~~~~~MIDDLEMEN/DEALERS (3 )

LOCAL MIDDLEMEN (4)

| PRODUCERS (5)

Source: AGRICORP 1984

4, ~ ~~~ ~ ~ ~~~~~~~~~~~~~~ . 41 d / A N/ I C C. ' f d N

. CU@A, .~P, A Pi_,_ _ I_,. I C *, C I A 11it4

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9~~~~~~~~~~~~~~~~~~~~ A 0 .4A. I I 3P

_ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~1 A5PAt RFON SUI

-- ASPIt OtDI .4 A' I Ps 1 2

St ONJAIIAIt RANGR0\->\ 1

. ,,ADfARltIUUIDR

.................. a ,,, .. 11

P, A Pji '6i

hW ,0 5 aw +P>_/ >._rbl-"~~~~*^w-~ i N

tXle > -PARTMEN 110U5 NDAII, II >S - ,;1N;f..fRNAh0?...... -t :.!......^-b.US WNA;1

I ^^, @;;' its,r,.........Cz ?JB SF"^,_........................._.S.

. 11r ~ . 6^,6 .,? .,,, to,, N=__ =o 0^..