Resource Agricultural Sector Support in Suriname
Type Policy Paper
Last update: 31/03/2019
Type: Policy Paper
Language English
Year of publication: 2013
Citation: This report was prepared for the IDB by the team of the Monitoring African Food and Agricultural Policies initiative (MAFAP) in the division of Agricultural Development Economics of FAO.
Authors: FAO MAFAP study
Target countries: Suriname
Download: 2,690kb
Summary This report analyzes government support to agriculture in the Republic of Suriname. The relative importance of agriculture in Suriname’s economy is declining, primarily as a result of the stronger growth in other sectors, most notably mining. The sector’s share in GDP fell from around 15% in 1990 to 9% in 2012. Nonetheless, agriculture remains an important sector because (i) it is a major source of employment in rural areas, (ii) it provides around 5% of the country’s generation of foreign exchange and (iii) it is responsible for the production of the population’s main staple food, rice. In trade terms, developments have been more positive. Total agricultural exports, which are dominated by rice and bananas, have shown an upward trend over the last five years and grew from USD 69 million in 2007 to USD 115 million in 2011. This growth has been driven by the restructuring of the banana sector and higher international market prices of fish and shrimp. Livestock commodities, including beef, poultry, pork and dairy, are all net imports.

Agricultural policy in Suriname is guided by an Agricultural Policy Note and a set of sub-sector white papers presented in 2009.
The implementation of the earlier 2005 – 2010 Agriculture Sector Programme was suspended in 2009 following the cessation of official development assistance of The Netherlands, a major funding source of the ASP. The main institution implementing agricultural policy is the Ministry of Agriculture, Animal Husbandry and Fisheries.
The Ministry’s budget has shown significant fluctuations over the last years. Faced with the drop in development assistance and decreasing bauxite revenues, the Ministry of Agriculture’s budget was reduced from SRD 120 million in 2009 to SRD 67 million in 2011, which mainly affected programme costs.
Today, agricultural policy in Suriname consists of a range of general and commodity- specific measures that create transfers to the sector. The instruments applied include traditional trade policy measures, such as import tariffs, but also direct payments to producers, state ownership, tax exemptions for inputs, subsidized credit, price policies, food subsidies, and government support for rural infrastructure, irrigation, research and training. Because of its importance, the rice sub-sector traditionally receives most attention from policymakers. On all rice exports, a levy is applied, of which a share is used as a funding source for the Anne van Dijk Rice Research Centre., while the remainder is captured by the Ministry of Agriculture as
Agricultural Sector Support in Suriname, a non-tax revenue. In 2013, the Government implemented a production subsidy to compensate rice producers for increased fuel taxes.
Following the collapse of the banana subsector in the early 2000s, the Government of Suriname pursued a strategy that aimed at a restructuring of banana production to increase its competitiveness. Bananas are produced under a monopoly held by the state-owned Stichting Bananenbehoud Suriname (SBBS). Following important investments in infrastructure under the EU’s Banana Accompanying Measures programme, the Government is currently negotiating the privatization of SBBS.
Agricultural policy also plays a key role in the milk subsector, the most regulated subsector of Surinamese agriculture. The Melkcentrale Paramaribo (MCP) is a parastatal that is bound to buy all raw milk offered by farmers at a fixed price. Retail prices are also set. Though the objective of price setting at retail level is to protect consumers and ensure access to milk, in reality consumers in Suriname are strongly penalized by this policy measure. Households pay more for their milk than in the United States or Europe, which have far higher labour and mechanisation costs.
Livestock imports are subject to a 20% import tariff. This tariff rate also applies to poultry, making the country’s poultry market the most open in the region.
An important general policy measure that creates transfers to agricultural producers is the Agricultural Credit Fund (AKF), a fund that provides subsidized credit to agricultural producers. It is managed by the state-owned Landbouwbank. In July 2013, the total fund portfolio consisted by 191 loans for a total amount of SRD 19.4 million. The rice subsector is the main beneficiary of the fund.
As our analysis for the period 2006 – 2011 shows, individual policy measures together result in an overall policy framework that creates positive transfers to the agricultural sector in Suriname. In other words, agricultural policy in Suriname results in support to producers, who are getting higher prices and budget transfers that increase their gross receipts.. The total support estimate (TSE) amounted to 1.31% of GDP on average over the 2009 – 2011 period, which is higher than in OECD, EU, Brazil, USA and Ecuador, but average for the Latin America and Caribbean region and close to the levels of Colombia.

Support is driven mainly by policies that affect price levels (so-called Market Price Support), while budgetary transfers sum up to less than 10% of total support to producers. The market price support can be explained only partly by explicit policy measures, such as the import tariff for poultry products or the Government-set minimum producer prices for milk. As is the case in many developing countries, price gaps between international reference prices and domestic farm-gate prices are also the result of the structure and development of the value chain.
Though overall support exists, the differences between subsectors are significant. Rice producers received positive market price support in 2010, and negative market price support in other years. However, the negative price gap that rice producers face is largely offset by government expenditure to the sector, particularly in areas that generate long-term effects and positively affect its competitiveness (such as infrastructure and research). In general, livestock products receive higher levels of support than crops. The most supported commodity in total value terms is poultry.
The share of support provided to agriculture in the form of general services is about 40% of total transfers to agriculture, which is higher than in most Latin American and Caribbean countries, and close to the levels in Chile and US. Investment in general services, and especially in market and rural infrastructure, enhances competitiveness of domestic production and promotes long-term economic growth. The majority of these services consist of investments in irrigation infrastructure. The analysis shows that additional investments in other areas of general services, such as research, credit and extension, are needed to increase the sector’s competitiveness in the long run.

The variety of agricultural policy measures applied in Suriname creates space for ad- hoc and discretionary policy measures. These should be avoided. In turn, the Government should focus on creating a reliable and transparent policy environment that triggers private productivity-enhancing investment and that enhances the sector’s competitiveness.

A number of potential policy changes are identified by this report. These include (i) the substitution of production subsidies for the rice sector with investments in infrastructure, access to credit and research; and if a production subsidy is given, enhance its targeting to smaller farmers; (ii) avoid increases of tariffs to protect poultry producers; instead, focus on increasing the production of quality feed components to lower the subsector’s cost levels; (iii) reconsider the framework of price policies in the dairy sector in order to incentivize market-led organization of the subsector; (iv) reduce government intervention in the sector through state-owned companies and foundations, and focus on ease of doing business to increase private investment, and (v) strengthen the Government’s capacity to monitor the effects and coherence of its agricultural policies, in order to make government policy more effective and evidence-based.
Role Organisation
Author Organisation organisation details Food and Agriculture Organization-HQ
Funding Organisation organisation details Inter-American Development Bank
Network Organisation organisation details Food & Nutrition Security-Suriname netwerk
List Keywords
1.1 Socio- economic Sector (OECD) 311 Agriculture  
1.2 Institutional dimension Policy Development  
1.4 Target group(s) 5. Decision makers/Policymakers