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Strengthening Supply Chains through Value Additions and Enterprise Development
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Strengthening Supply Chains through Value Additions and Enterprise Development

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www.fao.org/sids …

www.fao.org/sids

The presentation will be made in the context of the Regional Preparatory Meeting for the Caribbean towards the Third International Conference on SIDS 2014. FAO is hosting a special event: "Addressing major threats for improved livelihoods and sustainable development in the Caribbean SIDS"

Published in: Education, Business, Technology

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  • 1. Strengthening Supply Chains through Value Additions and Enterprise Development Agriculture, Fisheries & Related Sectors Ranjit H Singh
  • 2. 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
  • 3. 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?
  • 4. 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 ?
  • 5. 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
  • 6. 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
  • 7. 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 partnership o Power -Have a say in the business of the partnership o Transparency – information on the business is shared o Better access to finance (business partners provide leverage and guarantee) o Partner may provide technology and training o Enhanced market power o Larger capital base collectively among partners & capacity to fund innovation EXAMPLES?
  • 8. 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
  • 9. 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 & growth o How they work o Critical success factors 3. Government acting as a third party facilitator to: o Organize the industry into supply chain business clusters o Facilitate the formation of IBMs in key clusters o Becoming an small owner /equity holder where desirable o As a guarantor of small farmer & SMEs business risks o Provision of Business support services (including capacity building)
  • 10. 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.
  • 11. Thank You