Livestock Exports and a Few Matters of Facts

Livestock Exports and a Few Matters of Facts

Having been in the news for roughly three to four weeks, the new-found barrier placed before livestock producers and exporters has certainly caught the nation’s attention. This is to be expected, because on the one end the country—like most jurisdictions worldwide—is facing one of the deepest recessions in history, while on the other end the farmers tell us that they may have to dispose of the cattle if they cannot export them to Guatemala. That level of “waste” without earning a single dollar for the Belizean economy is difficult to rationalize at a time like this.

Under the weights of the ongoing pandemic-induced recession, the Central Bank of Belize (CBB) estimates Belize’s Gross Domestic Product (GDP) may decline by approximately 19% (returning us to a GDP level last seen about 13 years ago). Consequently, every lost dollar is income that the country desperately needs at this time, and it behooves all relevant stakeholders to avoid unnecessarily obstructing economic activity.

There are a couple facts that have to be raised here, of course. The first is the well-known status of these exports. While on the Belizean side of the border most of the farmers satisfy the formal requirements of the Belize government, for Guatemala the goods entering their economy is very much informal. For this reason, this livestock trade via the western crossing has been described as being “informal”. The President of the Belize Chamber of Commerce and Industry (BCCI) Nikita Usher acknowledged this fact in his letter to the Prime Ministry and COVID-19 National Oversight Committee:

“The [BCCI] has been an ardent advocate for the decades-long informal exports of livestock into Guatemala to have been formalized…This continues to be our position. However…Farmers discarding livestock without earning a single dollar for the Belizean economy during one of the deepest recessions this country has ever faced is impractical and imprudent. Therefore, while our principled call for the formalization of this process remains intact, we must grant greater weight to livelihoods in a time like this, with measurable controls to ensure safety of our people and that the relevant taxes are indeed paid into the Government of Belize.”

Another fact that has to be underscored is that in the three weeks since the farmers have been unable to export the cattle, they have lost approximately BZ$1.8 million. Furthermore, estimates from the Belize Livestock Producers Association (BLPA) show that the farmers would lose an average of BZ$2.4 million per month for the rest of 2020 if the current standoff with the Bullet Tree Chairman continues. Consequently, all things being equal, the sector is looking at a loss in revenue of close to BZ$ 20 million from which salaries as well as taxes to the Belize government are paid.

Fact number three is this: The Central Bank of Belize (CBB), as alluded to earlier, has estimated that Belize is looking at about a 19% decline in real GDP. That’s a double-digit decline, which in real terms essentially returns us to a level of real GDP last seen in 2007 (which was closer to $2.24 billion BZD). When viewed from nominal GDP, the 19% drop yields a figure closer to where the Belizean economy was back in 2012 (which was $3.05 billion BZD).

This CBB projection of a 19% plunge in Belize’s economic activity should give us pause for several reasons, including the impact that this has on things like our debt-to-GDP ratio. When the Prime Minister gave his budget speech back in March, this statistic was reported at 98.1% when GDP was estimated to be closer to BZ$3.8 billion, and total debt was about BZ$3.7 billion. Interestingly, without active renegotiation efforts on our part, the debts (especially the external ones) do not change simply because our economy has been hit. Besides, are we not still borrowing to rightfully help those in need at this time? So, yes, the debt is high and (necessarily) climbing at a time when the economic activity is screeching to a virtual halt. As a result, Belize’s debt-to-GDP ratio, if the grim CBB projections are realized, will be well above 100% when the curtains fall for 2020.

Taking the foregoing points into consideration, one would be hard-pressed to able to justify why livestock (or any produce as a matter of fact) should be simply discarded, especially when the blockade is illegal. This brings us to the final fact: The measures by the Bullet Tree Chairman to virtual block the livestock producers from passing through his village unless a toll is paid runs contrary to the provisions of Section 24 of the Village Council Act, which states:

“24(1) By-laws and regulations made by a council shall be submitted to the Clerk of the National Assembly, who shall cause them to be examined and certified as being legally constructed for presentation to the National Assembly and shall be subject to affirmative resolution of the National Assembly.”

As shown above, if this was something the Chairman wanted to do, it could have only been implemented via bylaws or regulations that are approved by the National Assembly, and, of course, Gazetted. Additionally, even if the Chairman had gone to the National Assembly, it cannot be ignored that nowhere in Section 23  of the Act—which outlines the powers of village chairmen to make bylaws—does it speak to the ability to institute tolls over any road, especially public roads, which are the epitome of the definition of public goods.

When all these facts are weighed together, it is no surprise that the BCCI President concludes in his letter as follows:

“Consequently, the BCCI calls on your good office [of the Prime Minister] to intervene into this matter with the objective of allowing business to continue. This unnecessary loss cannot be countenanced at such economically depressed circumstances. Loss on this trade will also impact tax revenues, as our farmers do pay their domestic taxes to the Government of Belize.”