Wednesday, July 8, 2009
MAKING BELIZE STRONG THROUGH EXPORTING
Belize Jam Exports to Venezuela proposed as government to government project with Petro Caribe.
MAKING BELIZE STRONG THROUGH EXPORTING
By Ray Auxillou, June, 2009
Belize is a very small country, more poor than Honduras, Guatemala, Mexico, or Salvador. The reason is a low population density. This can make us self sufficient, on a low survivalist type scale. As our population continues to grow, we need to find things for our young people to do, to earn a living. Giving everybody a government job is impractical. Living the hunter gatherer life style is still workable in parts of our rural districts, but does not satisfy the cash flow, tax revenue requirements of a government bureaucracy and political apparatus. We have 5000 graduates of higher education this year, who lack the innovative imagination to see their way to get rich, or live middle class.
The answer as we see it right now is to increase exports. Exports right now are mainly sugar and bananas, as the mainstays of our economy. We cannot do much about bananas, as that is an internal cycle type of business that is inter-locked. We could not for instance find another export market for our bananas. The reason being the transportation system, which is part and parcel of the whole growing, transportation, supply to wholesale chain. All segments of the banana industry rely on each other to exist and work.
Sugar is a different story. We can theoretically at least, sell sugar anywhere else in the world and sugar lends itself to value added processing, packaging marketing. Some of our marketing has expanded to other country markets, giving us a small measure of stability for the industry. A lot more in the marketing and value added processing packaging field in sugar is needed. There is certainly room for entrepreneurial activity in the buying of sugar locally wholesale and creating private businesses for diversifying the sugar product exporting markets. How do we do that with our 5000 graduates this year who are looking for jobs, or better yet should be looking for entrepreneurial value adding processing ideas and starting export companies?
The government has picked up on the marketing knowledge information problem, and lack of telecommunications and internet service around the nation. Most of the problems involved with entrepreneurial activity, is coming from the rural districts, but they lack the internet and decent workable telephone system to function properly. There has been a shuffle of bureaucratic deadwood in BELTRAIDE and now we read of efforts for BELTRAIDE seeking markets for possible future made value added processed products, in Taiwan and New York. The Ministry of Natural Resources seem to be funding the Agriculture Department to do this also. The challenge facing the bureaucracy is in communicating with the public at large, the experiments and knowledge they play around with internally, but do not disseminate to the general public, where the export entrepreneurial activity is generated. The Ministry of Natural Resources have been NOTORIOUS for decades, in their inability to communicate the exploratory experiments and fact finding knowledge to the general public. Yet with a dissemination system of knowledge, much of the factual experiments they have diddled with, on the internal bureaucratic and political level, could have produced entrepreneurial activity by somebody in the private sector, if anybody had known of it. Neither bureaucrats or politicians are very good judges of what makes a successful profit business. This is the role for private for profit, risk venture capital. You never know what silly idea the Ministry of Natural Resources has tried and discarded, which might have grown into a small viable industry in Belize. I have to mind, the potters wheel and the Cinva Ram, two man, brick making machine of decades ago. I wanted to do both in my youth and wrote about them at the time, the Ministry of Natural resources bought the machines, passed them around from office to office to play with and they got lost, or stolen. Twenty years later, I heard they had actually bought and imported the small cottage industry machines I was interested in, but never knew about it. Lost ideas, lost opportunities and lost industries, all because the government bureaucracy cannot disseminate information to the public at large. The government needs to solve this problem of dissemination of knowledge.
There are other ideas for export industries on this Western Belize news blog. Nearly all such ideas will start in somebody’s back yard, or kitchen as a family entrepreneurial risk venture, trial pilot project. Such businesses must expand by increments. They have to pay their way. Here is another idea, in this case this idea is a partnership between government and the entrepreneurial cottage industry private sector.
This business is to do with value added processing, packaging and marketing. The market is there! It is in the organization that work is needed to make the pilot project work. PETRO CARIBE and Venezuela ALBA bank have told us they will work only on a GOVERNMENT to GOVERNMENT basis. They will not work with the private sector. Indeed the attempt to sell shares to ALBA in a new internal CARICOM airline failed out of Belize, because it was not supported by our Belize Government.
Let us analyze the problems involved. We have a market! The market is Venezuela. The method of payment is trading oil imports for food products, of which Venezuela has a shortage. Most socialist and dictator run countries have this problem. They cannot feed themselves. The trick, or organizational problem is encouraging on the local scene a vast expanding set of cottage home industries in food products. We can start with fruit jams for example. Marie Sharpe at Melinda is doing this successfully to Europe, but most home makers do not have the technology or volume to copy this example. What we need is a government department that will supply a 20 foot container to start with, and a program of buying various fruit jam jars from individual cottage industry home wives in rural districts. They may also have to supply jam jar type containers, preferably plastic. Maybe they would even have to put in a manufacturing extruder jar making machine, for jams to sell to home owners in the business. Let’s say the Government department buys jars of home made fruit jams, puts them in cartons and pays for them with CASH, at whatever the local market rate is in the rural districts. Say $6 to $10 bz., per jar right now. They then load the 20 foot container, ( the pilot project ) agree on the price with Venezuela, FOB ( free on Board at the port in Belize ). Payment would have to be oil and fuel credits from Petro Caribe for our imports. The first cry you hear from both politicians and bureaucrats is MONEY. They have no money. Lets think about this for a bit. All obstacles have a solution. That is what being a successful entrepreneur is all about.
Suppose the government department in charge of buying the fruit jams in jars, to fill a 20 ft container, to ship to Venezuela got money from an issue of TREASURY BILLS at a fixed rate of interest. Not sure what that is right now, but around 7% or so. The oil we import from Venezuela is owed on 25 year loans at 1% per annum. Far better the naïve politicians and bureaucrats would say at first glance, to forget it and leave it to the private sector. Why take a 6% loss in interest? FALSE conclusion! You add on $1 bz., ( 10% ) to the price of every jar of fruit jam in that container, to cover costs in operating this scheme by the government department. The loss of 6% between getting CASH from an issue of treasury bills to implement the scheme and the cost of 1% loan money is covered. If you have no faith in a government department to do this, then farm it out as a middle man packager/exporter, for a commission percentage of your $1 bz., per jar extra fee.
What do you accomplish? You accomplish EXPORTS, you accomplish a payment received method and reduce your debt on importation of PETRO CARIBE oil. The negotiations are conducted on a government to government level, which satisfies ALBA, the Venezuelan market. You get a whole lot of people working as entrepreneurs. Suddenly you have a thousand, or more, kitchen jam producers who start figuring out other things to sell, like sausages, or some other value added processed product. Then maybe you get a better price and buyer in China, or someplace. You expand the knowledge base and some of those thousand kitchen cottage self employed workers will evolve into bigger companies and larger goals. The economy becomes robust and money is flowing through Belize again.
Just an idea, try it, you might like it.
For more articles and photos of enterprise opportunities in Belize, read the Western Belize Happenings news blog at: http://westernbelizehappenings.blogspot.com