Transcript HAITI-CARICOM Agricultural Export Market Opportunities

REGIONAL DEVELOPMENT BRIEFING # 2
Strengthening the Caribbean Agri-food Private Sector:
Competing in a globalised world to foster rural development
Caribbean Week of Agriculture
Grenada
October 18, 2010
Two major factors have been having significant
influence on business sectors worldwide:
1.
Globalization and deregulation of markets;
2.
Information
and
Communication
Technology (ICT) revolution.
Resulting in increased competition
Not
just
business
entities
competing
independently, but the system of producers-
packers-exporters
of
country
A
competing
against the business system of Country B
(Nitchke and O’Keefe, 1997).
As a result of the changing and increasingly competitive business
environment, business philosophy, the specific characteristics of
enterprises, and the nature of interdependencies amongst
enterprises is changing significantly.
But the changing environment is also encouraged new forms of
cooperation and collaboration among small and medium size
enterprises (SME’s)
The agricultural sector is one of the sectors
affected and rural and remote areas are facing
significant problems in adjusting to the demands
of the changing environment
In the context of the Caribbean, an important
feature of the agricultural sector, is the fact that
small and medium size units or enterprises
(SME’s) make up the predominant institutional
type.
These size units have many difficulties in
reaching economies of scale, and in managing
efficiently all the activities taking place in their
supply chain. They are often unable to adapt,
and flexible enough to respond to the
challenges, and thus gradually lose their
competing ability.
In Europe, (where CTA has its headquarters)
cluster-based policies have been recognized as
a very important tool for achieving economic
success in local, regional and national level.
Cluster-based policies are now supported by
European Union (European Commission, 2002)
and have replaced the traditional sector
approaches, as being the most appropriate in
achieving
development
and
enforce
competitiveness (DTI, 2001; OECD, 2001).
The presence of this concept of CLUSTERING
among companies that cooperate and
collaborate,
with
different
types
of
interdependencies, can be traced back in
history (Piore and Sabel, 1984)
Porter’s (1990) idea on industrial clusters was
introduced in the beginning of nineties.
However due to multidimensionality and vague
character of Clusters, a precise set of principles
for delimitation of clusters is or appear to be
somehow missing in much of the cluster
literature (Maskell, 2001)
This poses problems of theoretical and empirical
definition.
Porter (1998) defines clusters as:
“geographic concentrations of interconnected
companies,
specialized
suppliers,
service
providers, firms in related industries, and
associated institutions (for example universities,
standards agencies, and trade associations) in
a particular field, linked by commonalities and
complementarities”.
The conceptual framework which is built on the
theories of economic geography, transaction
cost economics and the classical Marshallian
externalities (Krugman, 1991; Dalum et al., 2002)
focuses on the linkages and interdependencies
among value chain actors, going beyond
traditional horizontal networks, operating more
as cross-sectoral networks consisting of dissimilar
and
complementary
firms,
which
are
specialized around a specific stage in the value
chain (Roelandt et al., 2000; Maskell, 2001).

The critical mass that companies can have,
allows for increased options in choosing input
suppliers and distributors and moreover, it
allows companies to conduct much of the
business activities that were previously
conducted by firms at the regional/national
level.


This model increases the flexibility and
innovation by diffusing organization and
technological information and knowledge.
Finally, another important element in the ACM
is the establishment of relationships of local
agri-business companies with universities,
financial institutions and other associations
such
as
research
and
development
institutions, service providers etc
Basic element in the ACM is the clustering of farmers and
of production.
An agri-business cluster may be a local or regional
network made up of farmers, input suppliers, cooperatives, pack-houses, manufacturers, transporters
etc. with the aim of clustering production, processing,
distribution, logistic and many other activities which will
reduce the current problem related to the existence of
a number of small flows of goods.
The agri-business cluster may also consist of a number of
different organizations, such as: local authorities,
financial
institutions,
universities,
research
and
development institutions, and other associations.
Clusters are:
Based on systemic relationships amongst involved
business partners that:define their missions, roles and
set their priorities and
utilize their region’s resources.
responsibilities,
These relationships can be built on common or
complementary products /services, production and
distribution processes, core technologies, resource
requirements, logistics, education, training and
outsourcing services support.
(Asheim and
Group, 2002):
Flexibility
Ιsaksen,
2000;
Competitiveness
and fast change reaction due - to
extreme specialization
Easy access to specialized suppliers, services and
human resources
Information spillovers
Increase capacity of innovation by diffusing
organizational and technological knowledge
New business formation, as employees become
entrepreneurs in spin–off ventures
The first and most important barrier that deteriorates the
development of agri-business clusters is the lack of the
appropriate co-operative business philosophy among
entities.
For many years, agri-business entities in rural areas were
used to practice their business activity autonomously
and independently.
Given the changing nature of competition, most of
these entities find themselves unable to trust other
entities and, experience difficulties in co-operating with
them. They all lack the appropriate co-operative
mentality.
Several
other factors limit the development of
competitive clusters
The Asian Development Bank, (2001) and
Rosenfeld, (2002) trace these to physical and
technical
infrastructure
deficits
(i.e.
roads,
telecommunication),
By weak infrastructure it is meant deficits in
physical infrastructure which deteriorate potential
capital investments in the future The technology
infrastructure is the mortar for building cluster-based
actions, and its absence is a serious handicap in
growing clusters.
The lack of information flow channels limited use of
the new technology is one of the most important
problems that entities face in rural areas.
In
addition, cluster entities may confront the
problem of how to strike a balance between
internal needs for different organizational and
technological systems and external needs for
connectivity and share-ability of messages, data,
applications and processes (Vlachopoulou and
Manthou, 2002).
Lack
of access to capital and skilled work force
The
limited or total lack of access to capital is also
a very important barrier. It influences the adoption
and the implementation of new technologies,
which are absolutely necessary for building clusterbased economies, and its absence is a serious
handicap in growing clusters.
Absence
of organizational structures,
Rosenfeld
(1997), had underlined the need, for
the actors forming the cluster, of having active
channels for business transactions, dialogue and
information exchange.
The
introduction and the implementation of ICT
applications could act as a catalyst in the
formation of cluster, since business transactions
and information exchanges can be facilitated
and improved.
The
geographical element of clusters remains
important, but not a constrained factor in a
number of activities such as information, data
and knowledge exchange among cluster
members (Gillespie et al., 2001

The use of ICT applications such as e-business
and
e-commerce
can
reinforce
the
organizational structures that already exist but
primarily to electronically interface them in
order to favour cluster-based actions that are
appropriate to these regions transforming
them into a related value –added cluster).
1.
2.
Although cluster formation presents a
number of opportunities and benefits the
development of such a formation is not an
easy process.
It can be argued, that in the case of the
Caribbean, more short-term benefits can be
derived and clusters built starting with the
value chain approach vs the clustering
approach
BUSINESSFORMATION/
FACTOR
VALUE CHAINS
CLUSTERS
Membership
Closed, mainly stable
None required
Relationship
Sequential
Cooperative and
competitive
Basis of Agreement
Mutual arrangement,
Contractual or not
Social norms and
reciprocity
Basis of External
economies
Coordinated functions
and resources
Location/proximity
Major outcomes
Increased sales, profit
and cost reduction
Information and
Knowledge sharing
3.


Cluster
development
is
in
fact
a
Multidimensional and also Diachronic process.
Multidimensional in the sense that there are a
number of reasons energizing the development
of a cluster
Diachronic in the sense that the formation of
cluster requires a long term approach and
under-investments, in a region, may limit future
cluster formation.
4.
Rural communities in the Caribbean region are facing
significant problems, while trying to adjust under the
demands of the new economy. Those problems are
complex, but not unexcelled.
5.
Even if the advantages of clustering are significantly
producers, traders, exporters, processors, service
institutions etc often find themselves unable to actively
take part in such business formations, either as a result of
internal inefficiencies, or as a result of the lack of the
appropriate ‘cluster’ business philosophy.
6.
In both cases, there is a need for an institutional
framework for education, training, technical support,
promoted by local, regional or national authorities, under
an explicit agri-business development focus.