L'économie d'Haïti

W.H. 26-b RESTRICTED FiLE Copy This report is restricted to use within the Bank.I INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT THE ECONOMY OF HAITI August 5, 1954 Department of Operations Western Hemisphere Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized CURRENCY UNIT - GOURDE U.S. $1 Gs. 5 Gs. .1 * U. S. $0.20 Gs. limillion . U. S. $200,000 ThBLE O' COVTHPIS Page BASIC DATA SUlNDRY .i. I. THE COUmTRY AND TilE P-5XPLE 1 TI. ECONOMIC DEVELOFQPikET 2 III. AGRIITJL 7 PJRE 5 General 5 Subsistence Crop and Livestock 6 Coffee 7 Sisal 8 Sugar 9 Bananas and Other Crops 9 Prospects 10 IV. IiNTuS2RY 12 ,ining 12 Tourism 13 V. TEA,S?ORTATION 13 Ports 13 Railways 14 Roads 14 VI. . ONY AND B 'ANKING 15 General 15 Banking System 16 Proposed Mionetary Reform 17 Savings and Internal Capital Market 18 VII. PUBLIC 'KINAEJCE 19 Government Spending Programs and Policy 21 Debt Position 22 VIII. BALANCE OP PP1rcNrsM 24 TABLIZ OF C07§2:'p,!JTS (cont'd) STAT:STTCL ¢JJ_APP)-IX Table 1 - Summary of External Public Debt Table 2 - Estimnated Contractual Service on the External Public Debt Table 3 - Exports by Main Commodities and Preas Table 4 - Volume of Exports Table 5 - Imports by 1'ain Commodities and Areas Table 6 - Number of Tourists in Haiti Table 7 - Recorcd3Budget Expenditures and Revenue Table S - Budget Revenue Table 9 - Public Investment Table 10 - National Bankc Table 11 - Domestic Mgoney Supply Table 12 - Loans and Advances 1952-53 of Institut Haitien de Credit Agricole et Inaustriel (IIECAI) 21.IC DATA Area 10,700 squiare miles Population (1950 census) 3,112,000 Approximate yearly increase 1.5 % Trade 1951-52 1952-53 (in U.S.$miTllion) Exports 52.9 37.8 Imports 50.7 _5-1 Balance + 2.2 - 7.3 Foreign Exchange Reserves Central Bank In U.S.Ž. million (30th September) 12.6 6.5 In % of imports 27.9% 1b.L% Principal exports Coffee (% of total exports) 62% 65% Sisal t 19% 12% Sugar t 6% 6% Budget Revenues (in TJ.SA * million) 29.3 27.3 'External Public Debt A.s of Dec. 31,1953 Total (in U.S.S million) 28-75 Eximbank loans (disbursed and undisbursed) 17.75 Internal loan 3,99 Hell by National Bank 3. f9 Held abroad O. ho Other 7.01 1. Haiti is to be singled out among the Latin American Republics for a number of characteristics: it has an almost completely negro population; formerly one of the richest colonial territories, it has probably now the lowest standard of living, income per capita, as well as the lowest per capita trade and proportion of urban Dopulation; it has few big estates but innumerable small peasants' holdings spread over a mountainous countryside; and it is the only country of which French is the official language. 2. The density of population is the highest in all the American Republics; but while population is growing, land resources are shrinking ovwngr to soil erosion and exhaustion. Income per capita has been more or less stationary for many years. The apparent postwar improvement of Haiti's economic position is almost entirely due to a considerable improvement in the terms of trande as a result of high coffee prices, and not to any real increase of output. 3. Coffee, which grows more or less wild on the highland slopes, is the principal export crop, follovwed by sisal and sugar. Domestic food production is insufficient to support the 3.5 million inhabitants, and food represents no less than 20% of the country t s imports. Some progress is being made, however, through the extension of irrigation and the growring of rice made possible by Point Four technical and financial help, and by the Artibonite Valley irrigation and reclamation project financed largely by a ;ilh million Export-Import Bank loan. Nevertheless, it is apparent that, if substantial progress is to be made, better techniques and more abundant credit -are not enough and that funda- mental changes will have to be made in the structure of Haitian agriculture. 4. The monetary system, as it has functioned since the American occupation (1915-1934), has assured internal and external stability, but to some extent at the expense of economic development. The gourde note issue is usually more than one hundred percent covered by gold or dollars, and the total money supply varie closely with the movement of exchange reserves. vith very little scope for internal borrowing, the Government has to balance its budget on average. Thlis absence of budgetary and monetary elasticity hlas prevented inflation and serious balance of payments crises. 5. However, since 1951 when the Government began to play a more active role in economic development by launching an investment program, things have begur to change. Heavy Governmnent spending led to a budget deficit in 19q1-52, and in 1952-53, bad crops and a fall of prices led to a balance of payments deficit and a further large budget deficit. These deficits wiere covered oy short-term borrowving from the National Bank, and from foreign contractors and foreign banks. 6. The big increase in coffee prices in 1953-54 will considerably help a return to balanced accounts. However, the 1951-53 crisis has shown that even a slight departure from conservative policies can lead to serious imbalance. Proposals for currency and central banking reform which would introduce greater monetary flexibility are now under discussion. These proposals could lead to financial instability, but much would depend on the way in wghich the Government managed the new system. If these proposals were adopted, their workcing should be closely -watched. - ii - 7. If, as is generally expected, the price of coffee remains htgh for the next twvo or three years, the present moment offers HIaiti an exceptional opportunity to stimulate much-needed economic development. Both Government and private investment resources should increase significantly and if these resources can be effectively channelled into productive use, lasting benefit to the economy would result. The prudent absorption rate for foreign loans will depend greatly on Government policies and investment programs in this new situation. Thle coffee price rise is quite recent, and indications that efforts to date do not Dromise large results are not necessarily discouraging. 8. Haiti's debt record has been good. At present, the total external commitments of the country are not unduly high. The current and next few years are burdened with repayment of short term commitments incurred in 1951-53, but the high exchange and fiscal receipts to be expected from no"; on vill make it possible to meet them and also to make fairly large investment expenditures. By 1957, the only external commitments outstanding should be two Export-Import Bank loans, on which amortization will then begin in full; internal indebtedness if any, will probably be small. T. THE COCRNTRY A ITD TE PEOPLE 1. The Republic of Haiti occupies the western third of the island known as Rispaniola, Santo Domingo or Haiti, second largest of the Caribbean islands. The country is very mouintainous, .:ith ranges of nearly -,00O feet, and the low- lands comprise less thatu one-fifth of' the whole country. The principal plains, all near the sea, are the Northern Plain, facing the Atlantic, the Artibonite and Cul-de-Sac Plains, facing the sheltered (konave Gulf, and. the Ca-,es Plain, in the south; to these should be added the undulating expanse of the Central Plateau. 2. iVt/holly within the tropics, Haiti has two wet seasons, from Mlay to June and from September to iNovemlber, and a major dry season from December to April. Except for the Worth and South Coasts, the country faces west. It is thus out of the path of the m.ore dangerous hurricanes, and also sheltered from the pre- vailing trade winds. Althouah the country receives on the whole a fair amount of rain, distribution varies greatly from one place to another; several parts of the country receive less than 50 inches a year, which with the prevailing temperatures means semi-aridity in the absence of irrigation; this is notably the case of lower Artibonite and, to a lesser extent, the Cul-de-Sac Plain. 3. The Haitian people are descended from the slave population oF this one time French colony, which achieved independence in 180L. Possibly 90% are of pure African origin. Pest estimates put the present population at 3.3 to 3,5 million neople, which in this country of 10.7thouseno square miles, the size of Belgium or TMlaryland, gives a density of over 300 per square mile, the nigh- est in all the Latin rAmerican republics - although somewhat low.er than in Puer- to Rico and some other small islands. L. Both birth and death rates are high. Estimates of the rate of popula- tion increase very widely; the fip-ure of 1.5% per annum, which appears a fair one, is definitely lowrer than in most other countries of' the area. However, this is big enough for so densely populated a countrr with virtually no outlet for emisration. The improvement of sanitary standards, clearly noticeable in recent years,means that the rate is more likely to increase than to decrease. The great bulk of the Tiaitians are country dwellers. A distinctive feature of Haiti is the nearly complete absence of large estates and the un- usual degree of occupancy oP the nighilands. This makes Haiti unique in the Caribbean. There are few villages in the usu.al sens; of the word, but scatter- ed settlements are -round everywhere. The contrast i: most marked with the nei½hboring Dominican Republic, vhere the density of population is onlyr one- third of that of' Haiti and the great bulk of the people is concentrated on the lowlands. 6. Illiteracy is estimated at 855. The problem of illiteracy is compli- cated by the fact that, whereas French is the official language, 80 or 9&% of the population speaks only Creole, a corruption of French based on the Norman French of seventeenth century sailors whi-ch has also borrowered from Spanish, En- glish and sometimes African sources. Taking this fact into account, and on the grounds that there can be no real progress if education is not spread throughout the country, various efforts have been made in recent years, sponsored notably by UNEtSCO, to raise Creole to the status of a wvritten language and so to by-pass French. Although a final conclusion is pre- mature, the experiment does not appear to have met with much success so far. Mieanwhile the Government and Government-sponsored Catholic institutions are pursuing their efforts to spread education through the medium of French. Progress, however, is still slow, at least as far as primary education is concerned. 7. Haiti is a centralized republic. It has never shown great political stability. The present constitution, the thirteenth, dates from 1950. Executive power is vested in a President elected by popular vote for a term of six years and not eligible for immediate re-election. The term of office of the present President is due to expire in 1956. The legislature, composed of two houses, is usually in session from A.pril to June or July. In practice, the C.ongress neither proposes nor votes any changes in the budget submitted to it; nevertheless the importance of members individually and collectively is far from negligible. The President is assisted by the Council of the Secre- taries of State, who as heads of the individual de;Cartments reoort exclusively to him; the Secretaries have only a limited power of decision and are usually changed more frequently than the President. In the last ten years, the Army has regained most of the political influence which it enjoyed prior to the Prmerican occupation of 1915-1934. II. ECONOTIC DEVELOPMENT 8. Haiti is economically backvard. Available statistics show an income per capita of around !64 for 1952, the lowest in Latin Xmierican countries; the trade per capita comparison puts Haiti in the same rank--all the more striking as the smallness of the country and its location in one of the active commercial areas of the world should tend to put it higher, all other things being equal. Laborer's wages are the lowest of the wrest Indies; legal daily minimum wages, which are probably not far from the actual averages: are set at $0.70 in agriculture, and tl for Government employed workers. Food consumption per day has been reported very low in terms of calories - although it has sometimes been said that the variety of the Haitian peasant t s diet compensates in part for its overall deficiency. All measurements and observations confirm the existence of a lowr standard of living and of a very limited degree of development. 9. But the economic picture in Haiti not only shows a low level of development; it also shows very limited progress over the years. As a matter of fact, it is not certain that output has matched population increase. The 1948 U.N. mission estimated that there had been no increase in the per capita income from 1927-28 to 1947-48, if not an actual decrease. The increase in the volume of exports in the past twenty or thirty years, if any, has been very small. Comparative surveys of the Caribbean area, although not fully reliable, generally tend to show that only Haiti is in such a position, 10. Not only has progress been slight, but there has been nothing uniform or steady about it. For instance, exports of practically every Hlaitian commodity, including coffee - the major export crop - have been at one time or anotner in the present century much higher than they are now. mTe p)ostwar period alone has seen a marked decline in the export of sisal, bananas, sugar, essential oils and handicraft articles. MTis, of course, is partly due to the very versatile nature of the Haitian agricultural system of small hold- ings and has its advantages; following price movements, crop diseases, or any, other causes, there is a quick switch from one crop or trade to another. Foo> growing is usually the main substitute; in numerous cases, how,!ever, once prosperous crops have fallen into decay without ever being really replaced. 11. The country's present economic condition and progress are in great contrast with what has been recorded in the past. As a colony Haiti, then called Saint-Domingue, was very prosperous, some contemporary writers even went so far as to say "astonishingly" so; this vwas within boundaries whichs from 1697 when Spain recognized France's right to the western third of the island, up to now, have changed only little. At the end of the 18th century Saint-Doningue was France's richest colony, the "pearl of the Antilles". Cultivated under a plantation economy, the island was devoted to the producti, of several then very valuable tropical products 0 The export of sugar, of which it was the world's foremost producer, with probably over one-third of the estimated world total, was nearly double what it is now; that of coffee about the same; that of cotton slightly superior; indigo, which has nowr disappeared, was another important oroduct, balancing more or less, together with smaller amounts of cacao, mahogany and logwood, the new export products which have appeared since. '!fith one-seventh of the present population, the country then produced a volume of exports much above the present level, and received for them, especially for sugar, a relatively higher price than now. This was the result of very efficient cultivation. Extensive irrigation works had been carried out, notably in the Cul-de-Sac plain, once described as the most valuable piece of land on earth, and to a lesser degree in the krtibonite plain and other parts of the island. The northern plain, which was colonized first, was less in need of water. Today, one of the most distinctive features of the Haitian countryside is to be found in the massive stonework of sugar-mills, aqueducts (sometimes still in use) and, more rarely planterst stately mansions, all more or less well preserved relics of the colony. 12. The real economic impact of independence, won in 1804, came from tlhe splitting up of estates into a great number of small holdings. This was not deliberate policy, for the maintenance of large estates wTas even attempted for a while in the North. The State, which had acquired for itself a conside able part of the land, was gradually compelled not to interfere with the de facto seizure of the land by the former slaves. As a result, even today, the ownership of land is far from secure and few landowners can produce unassail- able title deeds. 13. This insecurity of land tenure is one of the main obstacles to progress in agriculture. Other obstacles to development are limited educatioi the low level of savings and investment; coupled with inadequate programming and ,maintenance of the investm-ents actually made, wihich result usually in a very low return to the country. The smallness of the country, its small natural resources, and the extreme narrowness of the internal market give it very little attraction for industry or indeed for foreign ventures of any kidr -4 - 14. In 1915, following a period of intense troubles, Armerican troops occupied the country. The decision to withdraw them in 1934 was largely due to President Roosevelt's deep personal interest in Haiti. The American occupation changed the picture very little. The country acquired a well-managed financial system, but this was used mainly for the purpose of paying back the external debt, and only little economic progress was made. One of the lasting results ol the occupation, however, was the abolition of the law preventing foreigners from owning the land. This permitted the establishment of a few big estates, notably of a 28,000 acre sisal plantation in a dry and hitherto uncultivated part of the northern plain. 15. A new attempt to reintroduce big estates and plantation crops was made in 1941 wvhen Haiti entered the war on the side of the U..S.; the govern.nent declared various parts of the country as strategic areas, thus enabling a specially created Atmerican-Haitian company (SHADA) to amalgamate large tracts oX land by means of pre-emption. Rubber and si.sal were the principal crops raised. The experiment had given disappointing results and only losses had been incurred when, in 1952, the Company's assets were turned over to the Haitian Government in return for assumption by the latter of the `$ million P1 xport-Impnr Bank loan which had been made to SHADA. 16. As elsewhere, the postwar period has seen the birth of new efforts. C-reat emphasis has been put on the technical and educational side, to which the United Nations and the U.S. "Point Fourlt program have contributed. Both maintain large permanent missions in Haiti. 17. The International organizations have devoted substantial attention to Haiti. There were first the UNTSC0O experiment in fundamental education, wvhich has been going on for several years. There was then the U.N. General Ilission Survey, the first of its kind attempted by the U..,7 which resulted in a report published in 19L9. Since then, U.N. experts, some of them resident and some of them visitors, have lent their services to a great number of activities in Haiti They have been assisting to establishl technical schools for engineers, hotel trade, tanning, etc., and have advised on various problems of agriculture, on the establishment of cooperatives, on statistics, on Government finance, etc. The American experts of the U.S. Foreign Operations >.dministration, some of the? who have been in the field somewhat longer, have been iiorking on very similar lines. 18. Since 1950, investments have risen to a sizeable level. The bulk of private investment, which roughly forms about half of the annual total, is directed into building, practically all in the Port-au-Prince area; most of the remaining private investment consists of reinvested business profits, while very little caoital goes into new enterprises. Public investment is on the whole more directly connected with developm-ent. In the past two years, much of it has been financed by funds borrowed abroad. 19. The projects now under way are very large in relation to the wealth of the country. For instance, the cost of the nximbank-financed Pntibonite river project, by far the most important under way, was estimated in 1950 at `320 mil- lion which was equal to the wyhole of the Government budget for that year (and the final cost will probably be very much higher). Ilowever, the structure of - 5 - the Haitian economy is such that these investments are not likely to yield returns as high as rnight be expected. in the case of the Artibonite Valley, ahicch is already 2. peopled area, the difficulties arise from the necessity Df consolidatin, the peasants t holdings in more orderly, lots and of iLmproving techniques and education. If all the present efforts are to bear frmuit, i+ bill be through their indirect educatLonal and. other effects rather than throwu,h their direct contribution to outpuvt. 20. A s compared with prewar, economqic conditions in iTaiti showr progress mainly insofar as price relations are novr extremely favorable to the country. In 1951-52, t err.s of trade (computed on a post-war basis) vwere nearly two and a half tinLes more favorable than in 1937-38, and abaout 60K` more favorable than in 19h7-L8. This results mainly frorm the high price of coffee, which has been constantly appreciating in the postw.ar period. In 1952-53 the termLs of trade fell somewhat with the decline in the price of sisal an: sugar, but in i953-4, with the rise of coffee prices to uinprecedented levels, theyr are to become more favorable than ever before. In ,Tay, 1954 the price of Haitian coffee in -New Y'ork stood at 0o.86 per lb., compared writh 0.56 the year before. Coffee w,aill form nearly 8Q} of Haiti's exports this year. 21. The present coffee boon is a challenge to Haicti. Bringing high export earnings anid highi budget receipts, it offers an exceO'tiornl opportunitV to stimulate much needed developmien't. This should be done throuh -adoption of a coherent clevelopyrient policy in Thich structural changes in agriculture should have hi|hl priority. This opjportunity has to be seized nov; in two or three years time coffee prines may fall, and it will be too late. IIIT, AGRTc wU-LTRE CGeneral 22. Lgriculture is by far BaitiTs most important activity. In conrtrast with colonial timles, sabsistence is its first goal, although the oroduction of export amps for moneyr plays by no means an inconsiderable role in the peasant economy. Cultivated land forms only a small fraction of the total area; this) of course, mainly reflects the fact that maniy parts of the country are barren or consist of mountainsides regularly burnt over by the peasants to make temporary pasture. However, in spite of the great pressure and dispersion of population, not all of the arable land i s actually tilled; even in the richest plains, there appear to be large tracts which remaLn uncultivated for many years in successioxi. The adnis try of A.griculture and the kAgricultural rnca are making some ef -forts to restore them to cultivation. 23. Agricultural equipment is vrery primitive. The use of the plough and the ox-drawn cart is nearly unk-;rno,n; transport ny mule is still a semi-luxary. Fertilizers are not used. In contrast, where American - 6 - sponsored projects are under vfay, the most modern machinery is to be found. The gap between modern and Haitian techniques is too great to be easily bridged. For instance, in places where SCIPA (Service Cooperatif Interamerica.in de Production lgricole), an organization which is jointly financed by Haiti and the United States, has introduced rice cultivation with the help of improved irrigation and mechanized methods, the peasants, who are not organized in machinery pools, soon relapse into crude methods of production and the increase in production is not as large and as durable as it could be. 24h. Mlost of the colonial irrigation works wiere allowred to fall into decay in the nineteenth century, but great efforts are being made today to improve irrigation facilities. Out of a total plain surface of 500,000 hectares (I hectare - 2.4 acres), it was estimated in 1927, probably conservatively, that 125,000 could be put under irrigation. The aggregate surface irrigated by the various networks in 1952 amounted to 41,000 ha.; work has been done on about 5,000 ha. in the last five years, mainly by SCIPA. However, most of the existing works are in poor condition. The Artibonite river project, which will not be completed before l156, by far the biggest single project in Haiti, aims at reclamation, irrigation, drainage and redistribution of tenure of over 30,000 hectares. Atn important part of this was already under irrigation, although only as a result of irregular floods. In 1951, Eximbank's loan for this project, initially 04 million, was increased to t1h million when it was realized that a big dam much higher up on the valley was necessary for flood control. 25. There is probably little risk that such an important project will not be kept in good condition, but this does not hold good of the smaller water works. The case of a small canal completed two years ago is typical. ReDairs to a small cement structure would cost less than 1,500, but they have not yet been done, and this has resulted in the loss of several crops of rice on over 100 acres. The poor maintenance of existing hydraulic works and the extent of land, little if at all, cultivated, indicate that, in spite of the great pressure of population, there is considerable waste of resources. 26. In the highlands, the main problem is soil erosion, resulting from deforestation and intensive grazing, and which is already very far advanced. Prevention of this by means of contour ditch ploughing, reafforestation, and fencing in of animals is spoken of, but little practiced yet except in a very few places. Subsistence Crops and Livestock 27. Main subsistence crops are millet, sorghum, corn, peas, beans, plantains, sweet potatoes, mangoes and avocados. The cultivation of rice, with a high output per acre, is very desirable in Haiti. Production has increased considerably recently throuth the extension of irrigation, dis- placing nearly all imports; although consumption is increasing it is hoped that the country may becomne a net exporter. In the flat parts of the highlands, temperate crops and vegetables, for which the demand is increasing with the development of tourism, can be introduced successfully. One of the main problems of Haitian agriculture is the storage of crops,whlnh pay every year a heavy toll to rats, insects, rain and thieves. Although production on a typical small holding is very diversified, trade between peasants is highly developed and the IHaitian economy, wvith its picturesque market places all over the country, is much more of a money economy than might at first be supposed. 28. Animals are reared haphazardly, and although numerous, do not contribute much to the wealth of the country. However, somne parts of the country are potential cattle-raising districts, notably the so-called Central Plateau, in the interior. There is a lack of protein in the people's diet, and efforts are now being made to develop fresh and salt- water fisheries, following one of the conclusions of a 19b9 UN survey. Home production of food is supplemented by imports of wheat flour, fish, lard, oils, nilk, meat and many otlher items representing altogether 20• of Haiti's imports; all of these, except wheat flour, could -vuell be produced within the country. Coffee 29. Since Haiti became independent, coffee has constantly been the chief export. The carefully maintained plantations of the Cibnilperid have given place to coffee trees grown wrild, intermingled with other sDecies. They reproduce haphazardly, and vezy little planting is ever done. It is said that plantations in regular rows mingled with no species other than the usual shade-giving trees do not amqount to 10 acres in the whole country. Coffee, essentially a peasant product, is scattered throughout the country, and is exported from nine different ports. 30. The yields are probably mruch under 1 lb. per tree per year, which is definitely lower than in most other coffee-grovwing countries. The area covered remains fairly constant. Immediately before the mar, when prices were particularly low, some trees were replaced by subsistence crops; this happened again during the SH.ADA program of planting ruboer and sisal during the war. In recent years, some replanting has been going on. On the ,hole, export statistics - the only accurate ones - show a declininig trend. A maximum was reached with exports of 4S,0J0 metric tons in 1918-19 and 42,000 in 1932-33; maximum postwar exports were 31,000 tons only in 1951-S2 (390,000 bags of 80 kzs., as used in Haiti, or S20,000 bags of 60 kgs.) - a level which it is expected to maintain this year. However, the reduction in exports partly reflects a big increase in internal consumption, which is at present estimated at over 1h,000 tons; this puts total production at 46,000 tons, probably one of the highest levels ever recorded. 31. The M,linistry of Agriculture forecasts that, wlth the continuation of g,ood prices, production within the next Live years could increase by over 20S (from 570,000 to 700,000 bags of 80 kgs.); if consumption remains stable, exports could increase in a somewhat higher ratio. However, this simply means that the export average of the early thirties would be regained. The increase in production is to come in small part only from expansion on new land, or at the expense of other crops; the administra- tion's minimum prograim for planting in the next five years is only 5,000 hectares (which compares with a total area under coffee of so-enthing around 100,000 hectares); direct planting by the peasants may be somtewhat more important. But most of the increase would have to come from higher yields throlugh the improvement of existing plantations. The administration's improvement program is to cover about 15,000 hectares. 32. However, present efforts do not appear too promisin,;. The rate at which plants from government nurseries reach the peasant,s at present allows for the planting of only 500 hectares a year, and e-en when speeded up with the help of the proceeds of the new supplementary tax on the export of coffee, part of which is earmarked for that purpose, the replanting m.ay fall short of expectations; moreover doubts may well be entertained of the quality of some of the plants privately distributed, or of the efficiency with which replanting is carried out on the peasants' holdings. A simpler way of improving output w^rould be by better drying of the beans. it has been estimated that 1/3 of the crop is lost through poor drying. Numerous conacrete drying surfaces have been built in recent years, but have not given completely satisfactory results. Piechanical drying htas nov been experimentally introduced. The remoteness of most of the coffee growing districts is one of the main obstacles to imorove-rent. Thle regulations governing the activity of the various traders, processors and exporters also apppear to be an important element in the ni cture. 33. The aroma of Haitian coffee is much appreciated in foreign markets, particularly in Europe. Up to 1935, when the Franco-Haitian trade agree- ment vas terminated, half or more of the production was sold on the rench rnarket. After that date, the Urnted States became the principal outlet, and virtually the only one during and after the war. Nio difficulty was experienced in marketing in the U.S. except thFt better gradirng was required; some improveement in this direction is still neededf. After the war the European market gradually increased its buying again, and Belgium became the chief buyer. For the year 1953, Belgium, France, Italy and the Netherlands took 6Th 6f the coffee exports, the U.S. taking most of the rest. All Haitian coffee is paid for in dollars. Sisal 34. Sisal was introduced to Haiti in the late twenties. In contrast with coffee, sisal is grown mainly on large estates. Decortication is best done with machinery capable of large scale operation; however, especially when the price was high, peasants started sisal growing in various parts of the country. Sisal is an advantageous crop for Haiti, as it grow;s on the drier lands unsuited for other crops; it is also one of the few crops for which consideralble expansion on new lands is still possible (on the other hand, it is a crop that depletes the soil, notably of potash, when no fertilizer is lAsed). Lnfortunately for Haiti, the price has fallen from a maximum of 31 cents per lb. in 1951 to a current price of 11 cents, and is more likely to decrease than to increase, owing to the renewed competition of Far East abaca, and increased production from ?ast Africa. The present price is said to be below the cost of production of some of the producers (not, however, of that of the biggest, the 28,000 acre Dauphin plantation). After reaching a maximum of 33,000 metric tons in 1949-50, exports fell to 20,000 tons in 1952-53; no more than 18,000 tons are expected to be exported for 1?53-54. Most of the crop is sent to the U.S. Sugar 35. Sugar, the mainstay of colonial Haiti, was virtually abandoned as an export during the l9th century. However, the cultivation of sugar cane was never abandoned and it continued to be used, either as a direct food, as a source of primitively processed alcohol, or as syrup. Even now, only a small part of the cane prod-uced goes to the sugar mills. Haiti re-entered the export market with the establishment at the begirning of this century of the large sugar mill of the Haitian-American Sugar Company, near Port-au-PIrince. In recent rears, exports have been running around 30,000 tons, somewhat below the immediate prewar level; in the past ten years in;ternal consumption has doubled to 29,000 tons. 'The present price level on the world market (Haiti has practically no position on the t.A1ericnn market) although lox:, is still considered profitable. Thlree new sugar mills were contemplated, which would have enabled Haiti to fulfi.ll the export quota of 45,000 metric tons it was avwarded in the 1953 Inter- national Sugar Agreement (for the year 1954 quotas have been reduced by 20's, the Haitian quota having been reduced by cnly 101;). The first mill, serving the Cayes plain, was completed a veazr ago, but :,rork on the others has been interrupted recently, in one case because it was found that the supply of cane would be insufficient, in the other - which leaves the potentially highly productive N4orth plain w-lithout a proper sugar mill - because of lack of funds. V-e United Kingdomn was the first customer for some years, then the Netherlands; for the first timie in years a slmall ouota has been granted on the U.S. market for 195h. Bananas and other Crops 36. Exports of bananas rose to a sizeable level betseen 1930 and 1946-h7, vwhen they represented 20% of the total value of exports. The trade was a monopoly of the Standard Fruit C'ompany, wrhich had begun its operation around 1930 and got its supply less Lron its 1,500 hectares plantation in the Artibonite Valley than from peasants producing all over the country. However, after the Government, instead of renewing the Company contract, divided it among Haitian businessmen and politicians Twho had made arrangements with a number of small U.S. imoorters and traders, exports declined drastically (from 7 to 0.L million stems from 1946-47 to 1952-53). Ships and bananas never met at the right time and the peasants, vwho furnished most of the supply, gave up produc tion. The confidence of the peasants in banana growing hias been much shaken and it is said that - 10 - it will be difficult to restore it. A new government-owned monopoly has been set up in 1952 with, hiowever, small ambitions only. Neverless, this is a line where market prospects are good ancl where development should be pressed. 37. lKore cacRo was produced forty years ago than now. in spite of the current high prices, little replanting is being done, and rats are said to destroy a considerable part of the crop. Exports of cotton have declined as the local spinning mills have absorbed more; soon there will be none left f,r export. Exports of essential oils (vetiver, lemongrass) reached somne importance in the years just after the war; the reappearance of lowter cost Far East competitors has caused a setback. roconut trees are numeroas in the south, although production is still insufficient to maintain a re.gular copra trade. There is a small export of castor oil. kl large experiment in castor oil production wras conductedothTe ='lateau Central during the first W1orld WIar, withoat favorable results. Rubber was a similarly unsuccessful ventrure of "orld )-rar II; some small production has been recorded, however, from 1952 on. Prospec ts 38. -Great changes in agriculture are necessary, not only for progress, but even for survival, in view of the pressure of population and the shrink- age of lanid resources through depletion and erosion. These changes have to be structural; the injection of credit would not by itself be a solution. For instance, although little equiprent is used, the size of holdings and the nature of the terrain afford little scope for rmechanization. P11though rural credit is very scarce (current interest rates in the countrysgide are 2 or 3% per month), the extension of rural credit would be ineffective unless coupled with supervision, advice and organization from within or without. 39. There are two schools of thought on the solution to the Haitian problem. nhe first believes in the develooment of cooperative practices on the part of the Haitians theraselvaes. The lHaitian peasants have long had the custom of cooperat-on in the form of "$coumbite', whereby neighbors freely and voluntarily help a neighbor in time of emergency or on special occasions, like building a house. Recent developments include the introduction of rural credit unions (Calsses populaires), now numabering 6, by French-Canadian priest in 1946. They are now supported by SCIPA (Point IV). However, since they make only small short-term loans at l1 per month, they cannot by themselves greatly change the structure of agriculture. Potentially more important are production and sales cooperatives, of which a few havelbeen formed in the Port-au-Prince area. Properly organized, they could be a very effective mediu for introducing better equinmentu, storage facilities, and techmical advice. However, it is apparent that, if strong political support is not given to them, cooperatives will not make much headray. - 1l - 4o. The other school - not necessarily opposed to the first - relies also on the vfidening of rural credit. It believres, howiever, that progress can only be attained on holdinas above the present average size and, by concentrating technical and financial assistance on such holdings, vwould tend to promote their creation. Practically all the agricult'.ral loans of the recently established credit institute (TIHAI) have gone to such holdings. The high price of coffee favors the trend towards slightly larger holdings and in some places there is a noticeable tendency for coffee growing to be concentrated in fewer hands, thus permitting nore efficient cultivation. 41. These two roads to progress are not necessarily opposed. It remains true that the Government has not yet made a clear-cut choice of agricultural policy. But it mrust do so if Haiti is to make real prugress; the peasants cannot improve agriculture without government assistance and instruction. -12- IV. INDUSTRY h.2. Up to the end of the last w.!ar, industry in Haiti vwas mainly confined to the processing of agricultural products (sugar cane, sisal, esse;utial oils, etc.). In the last 'ew years various small-scale industries have been started; on the whole, however, industry is still very limited. O3. Ilost of the industries are to be found in or near Port-au-Prince. They include a vegetable oil plant for processing cotton seed, a spinning ancd weaving cotton mill - a second is in construction which will mean that thie country wvill absorb practically all its cotton production, without howprever being self-slffi- cient in textiles, -and a fevw weaving and apparel work shops. A sisal bag facto- ry and a cement mill, the capacity of this last to be nearly double the countryK, present consumption, are to be completed this year. A soap factory will he the next to be built - soap being a major import. Ui. It should be noted tUhat, although trade and industry are in principle free, it is normally the case that, before setting up a newv industry the would:1-bE entrepreneur makes an agreement mwith the State w1hereby th,e latter concedes such advantages as tax concessions, red.uction of customs duties on machinery and raw material and, if not an actual monopoly, sometimes the guarantee that the same concession will not be civren to a competitor for a certain length of ti½re. This practice, which is not limited to manufacturin7, leads businessmen, both Haitian and foreign, to nesotiate such concessicns long before raising the necessary capi- tal or making any practical stucdy of the venture. Hence there are a great num.- ber of projects of every kind w7hich are talked of but never materialize, and in this way these concessions, intended to encourage investors, may have detrimen- tal effects. L5. Production anH consumption of electricity is extremely low. Installed capacity is about 20,000 kw for the -whole country, of wqhich about half belongs to public utilities companies and the rest to private industry. Sales to the public amounted in 1952-53 to 25 million khvh. Consumption projections (arrived at by the engineering consultant firm) show that lunder present trendIs the total Possibility of productiLon of the Arti'bonite d'qun nowv ilnder construction (11l million kw:ih. norrmel qnd 190 million kwvhh. includling overflo.. prociuction) cotuld not be fully used before 1971. 46- Special mention should be made of handicrafts and smLall indrustry-, which work principally for export and reached a fair level of activity in the imme- diate post-war years (mahogany, sisal goods). An appreciable setback has been experienced since then, but the tourist trade is now bringing sor..e rev-val. Ef- forts are beina made to develop new lines such as furniture making, tanning and shoe making (the import of shoes has multiplied fivefold betwveen 19L9 to 1053). Mining b7. PlTo thorough survev of the country-'s mineral resources has yet been made but it is knowm that lignite (studies have been made of its possible use for the production Of electricity), bauxite, copper and manganese are present. Traces -13- of rarer metals an= phosphntes have been reported; an oil exploration permit has been granted to a small cormpany. So far, the only development actually un- dertaken is of a bauxite mine near yriragoane, operated by the Reynolds M.,ining Corporation. Exports are to begin in the second half of 1955 and are to reach a yearly level of 300,000 tons (w-ith an approximate value of S 5 per ton). This is low compared with the Guianas or Jamnica (in Pritish Gutiana, 1952 production was 2.3 m.illion tons); it is said that although bauxite deposits are nurmierous, output in Haiti could not develop very much. However, this mine represents an investment of Nd million and it wrill make an appreciable contribution to the Haitian budget in the form of royalties and income tax. Tourism b8. Tourism is about to become T.aiti' s second export industry, following coffee and topping' s-sal. The country's main assets are the beaut,r of its scen- ery and the picturesque way of living of its people, both as yet little "spoiled" by technolonical and general prorress. In four years, from 1958-4? to 1952-53, tourists coming annually to Hiaiti increased from 8,00 to 34,000; further progress was registered in the w:inter of 1953-5b. This increase, how- ever, applied to tourists on sea cruises touchinL' at Haiti (usually staying one day or less) rather than to tourists corming by plane, staying on an average be- tween 5 and 6 days. Under the heading' of tourism are to be included the UI.S. Nary sailors, totalling. 35,000 in 1952-53, from ruantanomo base in Eastern Cuba, who are also visiting Haiti in increasing' numbers on weekends. Lourism receipts (including seamen's exnenditure) are estimated conservatively b-r Government of- ficials at t3.5 million for 1l52-53 an- probably about tl millIon more for the present year (other estimates would put these receipts c; 1 million higher). r,'ost of the tourist traffic is centered in Port-au-Prince and its sub- urb Petionvrille, 1,000-1,500 feet hicher up. The present influx is an outcom.e of t'he construction in recent years of a series Or first-rlass hotels financed throuqh the Covernment-owned Anriculturpl and Industrial -ank. Can Haitien in the Jorth boasts of a fine coast view and is near the spectacular ruin of "La Citadelle"l,X a historical fortress unparalleled in the whole of America. zt hopes to become an important tourist center when work on the airnort iLs finished Another project in the North is the construction, with American Capital, of a resort hotel and beach in an area at present undeveloped. This project would cost about ¢- 0.5 million. V. TRANSPORTATION 50. Transportation facilities in Haiti are still very inadequate. On the other hand, since no part of the country is far from the sea, and since a net- ,ork of' main roads, although i n places in poor condition, has survived from co- lonial times, no region is seriously isolated from the rest of the country or from the outside world. Forts 51. The principal port is Port-au-Prince, which handles 72% of the countryts imports and 47% of its exports (1952-53). Medium sized ships can dock on the pier, but handlinc equipment is inadecuate. A port improvement project has been prepared. Apart from Port-au-Prince, Cap Ha-itien -is the only port where ships can dock at a pier, completed in 1953. All other ports are equipped with small wharves only, so that loading and unloading must be done by lighters. All shipping is foreign, except for a fevw small Haitian ships. Railways 52. The railwvay 'Lines consist of some 50 miles of 30 inch gauge railway be- longing to the Port-au-Prince sugar company, 1 miiles near Cap Haitien belong- ing to SHADA, and a 90 mile line of' '2 inch gauge from Port-au-Prince to Saint- M>'arc and Verrettes in the Artibonite, formerly oa:ned by Americat interests, which is now State owned. Traffic on the latter has declined in recent years, due partly to the reduction in shipment of bananas. The completion of the ce- ment mill at Cabaret betwreen Port-au-Prince and Saint-Larc should somewhat in- crease its tralffic. Roads 53. _Haiti possesses 2,700 kilometers of roads; 1,100 of these are gravel roads, of which 260 are asphalted (30 in 19L3). The improvement of roads was one of the main items of the 5-year development progran lau,nched in 1951; one- fourth of the total planned investment of 0-s. 200 million was earmarked for that purpose. The program included (1) the asphalting of 500 klns of roads lin- king the main cities at a cost of Gs. 32.5 million; (2) the asphalting of 50 kms of a number of short legs of road of special importance \'-s 3.75 million); (3) the construction of 350 kms of penetration roads, mostly in mountainous areas ks,s 15 million). Attention has been mnainly concentreted on (1). Howrever, as a deficit appeared in the public budget from 1951-52 on, the Government be- gan to rely on the financial as well as the technical assistance of foreign con- tractors, and it has become difficult to ascertain how valid the so-called 5-year prograrm still is. In 1952, a contract wras si-ned v,^ith the French ".Socie- te des Grands Travaux de Marseille", which was to carry out most of thie works under (1) above in a 3-year period; this did not become effective as the plans to be arranged by the Societe for an external loan fell through. FinallY, the work on the country's main road, Port-au-Prince to Cap 1-aitien, was diviided be- tween the TMarseille company and thle "Coinpania de Industrias 'HfarLtimasl' incorpo- rated in Cuba but American-ovned, which had also contracted for the port and town improvements of Cap Haitien. At present, about two-thirds of this road has been completed. The asphalting of the 6'0 lms road from Cap Lfaitien to the Dominican Republic border, serhin7 the rich North plain, now virtually com.ple- ted, was done by the Bohama Curacao Constrction Company, a Dutch company; the work was financed by the American-owned Dauphin