Strengthening Supply Chains through Value Additions and Enterprise Development


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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"

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Strengthening Supply Chains through Value Additions and Enterprise Development

  1. 1. Strengthening Supply Chains through Value Additions and Enterprise Development Agriculture, Fisheries & Related Sectors Ranjit H Singh
  2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 11. Thank You