POLICY POINTERS Case studies highlight characteristics of value-chain development in the Caribbean and Pacific The Caribbean and the Pacific regions have much in common. All the nations in the Pacific are island nations with relatively small populations, as are most of the nations in the Caribbean. Both regions have sought to promote intra-regional agricultural trade, but with limited success. Both are increasingly dependent on food imports, in some cases with negative impacts on nutrition. Both have witnessed sizable emigration and, as a consequence, have large diasporas that offer potential markets for products from the islands. At the same time, they encounter significant sanitary, phytosanitary and logistical problems when trying to supply those diasporas and other extra-regional markets.
KEY POINTS • Monitor and promote awareness of developments that may increase or reduce demand on domestic or export markets. • Develop and implement regional trading arrangements. • Build trust by creating mechanisms for two-way exchange of information between value-chain actors and policy-makers. • Promote dialogue and learning between farmers and buyers to create market linkages and encourage more downstream participation of famers in the value chain. Provide incentives for other stakeholders to contribute to this process through capacity development. • Provide infrastructure to support value chains, including roads for intraisland transport, ports for inter-island transport and market hubs, including storage facilities to help reduce postharvest losses. • Create an enabling environment that facilitates doing business. • Formulate and implement policies that encourage local processing to generate jobs and capture a larger share of the final price of products.
“Value chains cannot afford to rely on a single market if they are to survive and prosper”
MAIN FINDINGS • In all cases where there was an obvious trigger for the establishment of a value chain, the trigger related to demand, not a change in the quantity or nature of domestic production. • All of the chains were established principally at the initiative of the private sector, albeit often with donor support, rather than at the behest of donors or the public sector. • Adoption of new technologies can be a key factor in value-chain development and, in some circumstances, may be a necessary condition for such development. The adoption of new technologies in the case study value chains allowed lost export markets to be re-established, new high-value products to be manufactured viably on a small-scale, waste products to be turned into valuable goods, and products to be processed that replace imports and expand domestic sales. • Market forces drove the use of green investments and practices and the adoption of organisational structures that have green outcomes. This is because: – in farming, natural resources are an essential factor of production and the long-term viability of production consequently depends on their conservation – many means of raising profitability also incidentally conserve natural resources2 – green processing and transport practices are used as marketing tools to expand export sales and raise export prices.
The small size of many island states means that there is little land or fresh water available for agricultural exploitation and agriculture must compete against other uses, particularly tourism. Agricultural growth and diversification are also hampered by low levels of foreign direct investment, little or no access to services that are critical to agricultural development such as finance, insurance and research, and weak institutional and policy frameworks. Developing commercial value chains against this background faces many challenges, but recent studies from the Pacific and the Caribbean1 show that these
constraints can be overcome. The studies, covering nine value chains that supply domestic, regional and international markets, demonstrate approaches that are inclusive of smallholder farmers and promote appropriate and sustainable production systems. The nine chains, all established through private-sector initiatives, cover a wide range of crops, products and countries and aim at both domestic/regional markets and export markets: Citrus in Belize, cocoa in Grenada, eggs and hot peppers in Jamaica, mangoes in Haiti, taro and papaya in Fiji, vanilla in Vanuatu and flowers in the Solomon Islands.
• The integration of small-scale farmers into value chains can have mutually beneficial outcomes both for the farmers themselves and for other value-chain participants. By engaging with processors and end-users, farmers can learn the requirements of their clients, both in terms of physical characteristics and of reliability and timing of supply, and adjust their production systems to meet these. Processors, traders and other chain participants, in turn, can provide farmers with information, finance and training in order to secure their supplies both in terms of quality and quantity.
• Value chains cannot afford to rely on a single market if they are to survive and prosper. Many agricultural value chains in the Caribbean and especially in Pacific Island countries depend on a single foreign national market or on export markets with similar and often stringent sanitary and phytosanitary requirements. This makes them vulnerable: a single unpredictable event could result in the loss of their entire market. Therefore they need to diversify and promote intra-regional trade. • The unique agroclimatic, physical and cultural characteristics of the case study countries have enabled them to successfully exploit niche export markets through being able to: (a) supply goods when prices are high in their target markets; (b) provide products with unique physical qualities; and (c) differentiate their products through marketing that emphasises their origin and uniqueness.
“Agricultural growth and diversification are also hampered by low levels of foreign direct investment ” • Preferential access to international and regional markets protected by common external tariffs can enhance the development of agricultural value chains. • The diasporas of small island nations provide important export markets for traditional agricultural food commodities and products that are not produced in their adopted country. But countries that do produce these commodities and products are likely to have adopted protective measures that are extremely difficult for the exporting country to challenge successfully.
ABOUT THIS POLICY POINTER
ABOUT CTA
This policy pointer was prepared by the Technical Centre for Agricultural and Rural Cooperation (CTA) as a contribution to policy discussions at the Caribbean Week of Agriculture 2014. The aim is to highlight policy actions needed to encourage and support uptake of findings of work supported by CTA and its partners.
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Notes 1 Westlake MJ. 2014. Developing sustainable, green and inclusive agricultural value chains in the Caribbean and the Pacific islands. Based on case studies by Robert A. Best (Caribbean) and Koko Siga Pacific (Pacific Islands). Wageningen, The Netherlands: Technical Centre for Agricultural and Rural Development (CTA) and Rome: Food and Agriculture Organization of the United Nations. 2 Many practices, such as planting seeds at the correct depth at the correct time, can increase output significantly without the need for additional resources, thus contributing to protecting the environment. Domestic processing of export crops that reduces weight and/or volume is of itself a ‘green’ activity in that it reduces the amount of polluting transport required for shipment to foreign markets. This should be borne in mind when evaluating the importance of explicit green measures.