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By Anthony Wood
As a former Minister of Agriculture and Rural Development in the Owen Arthur administration (from January 1999 to May 2003) and Chairman of the Board of Directors of the Barbados Agricultural Development and Marketing Corporation (BADMC) under the Mia Mottley administration (from July 2018 to April 2020), I read with interest the contents of the article captioned Hot Wings published in Nation News on Monday, May 15, 2023.
In the article, Mr. James Paul, Chief Executive Officer of the Barbados Agricultural Society (BAS) and a long-standing member of the Board of Directors of the BADMC, complains that the high levels of imported chicken wings by BADMC are undermining the expansion of the local poultry industry. Conversely, the Minister of Agriculture, Food and Nutritional Security, Mr. Indar Weir indicates that in more recent times, BADMC has increased its periodic imported quantities by one container as a precautionary measure due to the bird flu outbreak in some source countries.
While Minister Weir’s explanation might seem reasonable to the unsuspecting mind and uninformed person, one needs to examine the issues at play to understand the source of Mr. Paul’s frustration.
As a state trading enterprise, BADMC has been placed in an exclusive position with regard to the importation of chicken wings. The quantity of imported chicken wings is based on a consensus-derived, monthly quota, which is set at a level that does not undermine the local poultry industry and guarantees BADMC at least 70 per cent of its revenue. Thus, once BADMC imports quantities in excess of the monthly quota, the possibility exists that the local poultry industry will be affected negatively.
The key for BADMC to respect the investments made in the local poultry industry and not have to import in excess of the quota is for the corporation to manage its expenditure properly.
During my tenure as Chairman of the Board of Directors of BADMC, there was no conflict between the revenue requirements of BADMC and the interest of the local poultry industry. The corporation respected the quota, which allowed it to generate enough revenue to meet operational expenses.
Between July 2018 and April 2020, the price of a case of chicken wings was maintained at $132.25, which was well within the reach of the less well-off households, itinerant food vendors, and other clients of the corporation. Also, there was a distribution policy that catered adequately to the smaller establishments, food vendors, and households.
In recognition of the financial stringencies of the Government and the expressed need to cut expenditure at the corporation, a retrenchment programme was implemented that resulted in an annual saving of around $2 million in wages and salaries. Further, since the decision was taken by the administration to discontinue the bank overdraft enjoyed by the corporation, a rigorous system of expenditure control was introduced to streamline overtime and other expenditures.
Since my resignation as Chairman on April 30, 2020, a number of changes have taken place at the corporation.
Firstly, shortly after my departure, the price of a case of chicken wings increased to $160.00, then $198.00, and today, it has reached $231.00 per case. These movements represent an increase of $98.75 (or 75 per cent) per case in three years. This oppressive pricing policy works to the disadvantage of the smaller establishments, food vendors, and struggling households.
Secondly, there has been a drastic increase in staff at the corporation. A conservative estimate of the net addition to staff in the last three years is 25. This increase in the staff numbers has taken place despite no expansion in the work programme of the corporation. The obvious implication of padding the staff numbers at BADMC is that considerably more revenue is required to meet the escalating payment of wages and salaries.
A comparative analysis of the financials for BADMC indicates a spike in revenue in the financial year 2022-2023, mainly from the sale of chicken wings. Indeed, the revenue increased by over $4 million dollars compared to the previous financial year. The financial information also revealed that a substantial percentage of the annual savings of approximately $2 million in wages and salaries, which was achieved prior to March 31, 2020, was wiped out during the last financial year. Another astonishing feature of the financials for 2022-2023 is the sizable increases in other items of expenditure, including overtime payments. Indeed, overtime costs reached around $130 000 during the last financial year.
The above information places in context the complaint by Mr. James Paul relating to the harmful effects that high levels of imported chicken wings by BADMC are having on the local poultry sector. Is the source of Mr. Paul’s grouse that BADMC is importing in excess of the monthly quota or the inability of the corporation to import less than the monthly quota despite the large increase in the price of chicken wings sold to its clients? Irrespective of the reason, as a member of the Board of BADMC, Mr. Paul should be aware that the corporation needs to generate enough revenue to finance its runaway expenditure and inefficiencies.
There is hope on the horizon for Mr. Paul and the local poultry industry. The implementation of the delayed restructuring programme for the state-owned enterprises should address the overstaffing problem at BADMC and result in a leaner, more focused entity. At that time the financial requirements of the corporation will be reduced, thereby obviating the need to import quantities of chicken wings which will undermine the local poultry sector. In the meantime, Mr. Paul should encourage his fellow directors to reintroduce the rigorous expenditure control system which was in place under my chairmanship.
Anthony Wood is a senior economist, former lecturer in Economics, Banking and Finance at the University of the West Indies, Cave Hill Campus. He is also a former Barbados Labour Party Cabinet minister.