Author: Rendell de Kort, Economist
How can Aruba nourish its population and over 1 million stay over tourists annually through sustainable practices?
Food systems are relatively poorly developed and like in many Small Island Developing States (SIDS), Aruba largely depends on imports to meet its needs. This means that food production, transportation, processing and waste are putting unsustainable strain on environmental resources.
But there is hope for boosting the sector domestically: sustainable agriculture in Aruba promises to simultaneously deliver food security, environmental sustainability and economic opportunity. Efforts to achieve these goals and transform the agriculture sector are already underway, and can further be boosted by leveraging market-based approaches through a coordinated effort by all stakeholders, including farmers, government, civil society and the private sector.
Where we are coming from
In modern times, agriculture and other economic activity have largely been crowded out by tourism. This was particularly evident since Aruba obtained its autonomous status within the Kingdom of the Netherlands in 1986 and tourism development really took off. In terms of relative contribution of travel and tourism to GDP in 2017, 87.7% of Aruba's economy had the tourism industry to thank for while currently less than 0.5% of GDP is obtained from the Agricultural sector.
It should not come as a surprise that the Agriculture sector became marginalized when we compare the conditions between the two industries. Agriculture was quite labor intensive and with a booming tourism industry stimulated by increasing disposable income levels in the U.S., labor was in short supply. The strain on the labor market lead to relatively high wage levels when compared to the region.
It really made little sense to have people working in a labor intense sector with low productivity versus earning significant tourist dollars in an industry that Aruba obviously had a comparative advantage in. In short, the reliance on food imports was a natural result of the sector being truly uncompetitive.
However, despite a growing tourism industry, the IMF notes a slowdown in economic growth in Aruba since the 1990s largely to falling total factor productivity (TFP). The report concludes that the economy’s reliance on the labor-intensive tourism industry could lead to lower growth in the future. In the absence of a clear driver for productive growth in the future, long term growth and rising living standards depend crucially on Aruba’s ability to successfully diversify its economy.
The Venezuela factor
In more recent years trade with Venezuela has played a significant role: In some ways a curse, but for the optimists a blessing in disguise.
According to the Financial Times, last year, in Venezuela consumer prices rose 2,500 per cent, by far the highest rate in the world. This year, they are expected to soar 13,000 percent. The monthly minimum wage is now 2,550,000 bolívares, or less than three dollars. This made the sales of fruits and vegetables as export to Aruba a profitable endeavor, while Aruban consumers have come to rely on cheap and bountiful access to Venezuelan produce. From the perspective of local farmers in Aruba, Venezuela was effectively dumping produce below market prices and of unverifiable quality standards.
he situation changed abruptly in 2018 when Venezuelan president Nicolas Maduro ordered a unilateral border closure with Aruba, Curacao and Bonaire, temporarily leading to shortages. In Aruba the agriculture sector rejoiced. The geo-political tension further reminded consumers that food security and sovereignty are not to be taken for granted. Whether this will serve as the tipping point for the local agricultural sector remains to be seen, but if Aruba's history is an indication it is when we have our back against the wall that collective action is spurred to diversify the economy.
The future looks appetizing
The previously mentioned developments are happening in a global environment that is being disrupted by acceleration in technology. Some call it the fourth industrial revolution, and its characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.
Although Aruba has yet to see the likes of robotics and vertical farming being applied, more commercially proven technology like hydroponics and indoor farming have already begun reshaping how we produce food. The land farm and startups like 297 farm, Happyponics and Cunucu Fresh are leading the way in producing fresh local produce in controlled environments, with higher efficiency and lower labor and water consumption intensity.
On the demand side recent trends also appear incredibly favorable for local organic produce as healthy diets and environmental sustainability are gaining greater emphasis.
This has not remained unnoticed and recent interactions tell me stakeholders are coming together in Aruba with initiatives propelled by the public sector, civic society and entrepreneurs. Apart from the economic incentive, local actors are also increasingly being moved by the opportunity to shift businesses and consumers away from the linear import-consume-dispose model of resource use, towards a transition to the circular economy.
Agriculture and Tourism: A natural marriage?
Tourism remains the mainstay sector for many SIDS, but islands like Jamaica, St. Kitts & Nevis and Trinidad & Tobago have been successful in connecting two traditionally disconnected sectors. For traditional farms, diversifying their activity provides welcome supplemental income and provides a promising avenue to ensure sustainability. Indeed, on a national level, economic diversification is often seen as a branching process in which countries develop new industries or technological domains by staying close to their existing capabilities. In other words, by developing new businesses in shifting pockets of value in existing sectors.
With over one million visitors every year, the millennial generation will increasingly set consumer trends. With many looking for authentic local experiences, there certainly is no lack of demand in Aruba and opportunities abound to bundle complimentary tourism experience initiatives.
Goshen Sustainable Development Corporation VBA, is a social enterprise already pursuing the concept of offering a tourist experience. Apart from offering a refreshing cucumber smoothie at a kiosk on the farm to tourists, it is preparing an area which will be designated to offering a true farm to table experience in cooperation with a local stakeholder in the tourism industry.
Conclusion
It is evident that a few major obstacles that traditionally hampered the agricultural industry are no longer there. A new era of entrepreneurs are getting their hands dirty and giving a fresh (organic) boost to the agricultural sector by working smarter, not harder. With responsible and responsive leadership, transformation at the national level can be pursued to overcome remaining obstacles, including: reaching sufficient production scale, quality standards, access to financing and access to affordable water.
But ultimately, as entrepreneurs are making the push to diversify the economy, the sector promises to both develop financially sustainable businesses while delivering on promoting food security and sustainable consumption and production, respectively Sustainable Development Goals number 2 and 12.
This article benefited greatly from discussions held at workshops facilitated by the Exprodesk, COSME and the Department of Economic Affairs.
References
Lacle, F and de Kort, R (2018) Agriculture. In The Wolfs Company, The Economics of Ecosystems and Biodiversity, Aruba (pp. 100-108). Retrieved from: https://www.wolfscompany.com/wp-content/uploads/2018/04/TEEB-Aruba-Main-Report.pdf
WTTC (2018). Retrieved from: https://www.wttc.org/-/media/files/reports/economic-impact-research/countries-2018/aruba2018.pdf
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