Trade Agreements and their Possible Effects on Grace, Kennedy

One of the effects of competition is that it forces players who wish to remain in the market to improve their level of efficiency.   This improvement in efficiency usually leads to greater productivity.  As we become more efficient, enjoying greater levels of productivity, we should see the effects the Company’s bottom line, that is, greater profitability. With the full implementation of the various trade agreements that are currently being proposed, our Company should be enjoying the spoils of these agreements.  This can be achieved providing that we continue to strive for high levels of efficiency and productivity, while ensuring that we maintain exceptionally high standards so that we are at least one step above the competition.  

Who do we judge ourselves against?

In the early years of the Company’s existence, we used to judge ourselves against our Jamaican counterparts.  Our aim then was to be better than our local competitors.  As trade increased between Jamaica and our Caribbean counterparts, we found our products increasingly being pitted against those from countries such Dominica Republic, Trinidad and Tobago and St. Lucia. As our market become even more open, we have to now base our standards not just against other developing countries within CARICOM but against first world countries in this hemisphere and elsewhere. 

This has not been without benefits. Because we have raised our standards to effectively compete at the international level, unintentionally we have become so competitive in the local market that we are now enjoying an even greater market share.

In relation to our business goals, the trade agreements can definitely work in our favour. One of the stated objectives in realizing our 2020 Vision is to earn at least 50% of our profits outside of Jamaica by the year 2005. In 1995, the base year of the 2020 Vision, our earnings outside of Jamaica were approximately 10% of the total. Indeed, our progress has doubled between  1995 and 2000. Since we still have our 2005 goal insight, it means that we need to continue our concerted drive to dramatically increase international earnings. We therefore stand to benefit from the trade agreements if we can improve our access to markets in this hemisphere, in terms of both goods and services.

With the aim of the FTAA being to promote unrestricted or ‘free’ trading between countries within North America, the Caribbean, Central America and South America, we must be in a position to capitalize on this.

In my next newsletter I will address actual developments regarding the Free Trade Areas of the Americas (FTAA) arising from the series of meetings in Quito, Ecuador.