Project assistance completion report [: Caribbean agricultural Trading Company]

The project paper was overly optimistic and did not anticipate the considerable developmental costs required to improve the intermittent supply and poor quality of produce in the region. As a result, CATCO's gross income from sales in 1987 was about $443,000, compared with the predicted amount of $31.5 million. A considerable amount was spent on extension work with small farmers, since existing extension and research services lacked the expected capacity to provide improved technology and information. Additional false assumptions were that Trinidad and Tobago markets would be more open and that the demand for bananas would be greater. Furthermore, CATCO was unable to profitably market farm inputs as originally planned because of existing arrangements held by other trading companies. CATCO's situation began to improve markedly in 1985 under new management by FINTRAC Consultants. By seeking extra-regional and niche markets, FINTRAC was able to stem increasing losses and develop a favorable reputation in the European market. Export earnings and the volume of produce traded increased by more than 8 times since 1984, and the compound annual rate of sales growth for FY87-FY89 was about 60%. Nonetheless, because of the level of development still required to elicit larger volumes of produce, the company continues to have difficulty in meeting the burden of the USAID loan, and must borrow at commercial rates to pay it off. Overall, project impact has been positive. CATCO has become the only truly regional agricultural trading company in the Eastern Caribbean and has demonstrated that the successful export of agricultural produce in the region requires that the trader be involved in applying recommended production packages, as well as in the processes of harvesting, packing, and shipping. The company has thus had an important demonstration effect at a time when Eastern Caribbean governments have been seized by the need for agricultural diversification away from bananas. The most important lesson learned is that financial projections based on assumed availability of a tradeable volume of agricultural produce is extremely important for any project of this type.