Strengthening Supply Chains through Value Additions and Enterprise

Development Agriculture, Fisheries & Related Sectors

Ranjit H Singh

Why the Need to Strengthen Supply Chains in Agriculture, Fisheries & Related Industries in the Caribbean?

• The performance of the small farmers , fisherfolks & many SMEs in agriculture have not improved significantly over the years

• With globalization the position of small producers in the region appears to have worsened:

oDeclining incomes oNegative impact on livelihoods

• Climate change impacts would further increase the vulnerability of this group

Performance experience of agriculture in the region and more specifically that of the small producer?

• Yes, we have had growth and development in some subsectors/ industries: e.g. rice, sugar, cocoa, coffee ,citrus, poultry

• Yes, we have had growth and development of larger agribusiness such as processors , marketeers

• However small producers, fisherfolks and SMEs have generally failed to fully capture the potential business benefits. Why?

How could Value Addition & Enterprise Development Help ?

• Value Addition: helps to enhance income of the producer by capturing additional returns through product or service enhancement – requires innovation on the part of the producer

• Enterprise Development: refers to growing the enterprise with respect to key performance indicators:

• Profitability• GROWTH of ASSET BASE• Competitiveness

How could small producers grow their businesses ?

Strengthening Supply Chains through Contract Farming – Weaknesses of Types of Arrangements in

the Caribbean

Benefits• the relationship typically includes a CONTRACT to supply

produce to the processor in fixed quantities and possibly grades at pre-established prices

• In return, processors may provide technology and inputs eg broiler

• Supplies guaranteed in some cases (sugar, rice, citrus, banana)

• Attractive returns to processor

Strengthening Supply Chains through Contract Farming – Weaknesses of Types of Arrangements in

the Caribbean Deficiencies• No sharing of rewards or risk , producer faces all prod’n risks • No sharing of information –asymmetry of information• No transparency• Producer typically is a price taker (where price paid is the residual

after all costs, profits and return to capital) to the processor• No involvement in decisions on the Supply Chain operations

on part of the producers• Tendency for mutual mistrust• Fresh Produce suppliers may divert supplies to

the fresh market when more attractive prices are offered

What Transformative Actions are required to Improve Livelihoods?

• BUILDING INCLUSIVE BUSINESS PARTNERSHIPS along the supply chain to BUILD COMMITMENT & TRUST

• HOW?o Small producer & SME shares in the returns & risks of the partnershipo Power -Have a say in the business of the partnershipo Transparency – information on the business is sharedo Better access to finance (business partners provide leverage and guarantee)o Partner may provide technology and trainingo Enhanced market powero Larger capital base collectively among partners

& capacity to fund innovation

EXAMPLES?

Policy Options for the Caribbean Improving Livelihoods

1. Establishing policies conducive to strengthening the supply chain and a focus on Agro-Industry development including

A shift in current policy:From a policy focus that is small producer/farmer centred to agro-business cluster involving supply chain partners, including large produces and all value added operators along the supply chain

Policy Options for the Caribbean Improving Livelihoods

2. Sensitization of farmers and SMEs in agriculture on IBMs:o What are IBMs ?o Benefits -possibilities for improving profits & growtho How they worko Critical success factors

3. Government acting as a third party facilitator to:o Organize the industry into supply chain business clusterso Facilitate the formation of IBMs in key clusters o Becoming an small owner /equity holder

where desirableo As a guarantor of small farmer & SMEs

business risks o Provision of Business support services

(including capacity building)

Challenges to Building Business partnership in Agriculture & Fisheries in the Caribbean

• A culture of independence: small produces & SMEs• Lack of trust between producers and business entities along the

value chain• Reluctance to share business information• Generally poor experience /negative image of Cooperatives

throughout the Caribbean • Limited experience with government involvement

as joint venture partners in agriculture with small scale operators & SMEs

• Fear of political interference.

Thank You