مدیریت ریسک و تامین مالی به همراه زنجیره ارزش کشورهای در حال توسعه شامل جزیره های کوچک. مدارک و شواهد از کارائیب و اقیانوس آرام

The paper analyses agricultural risks and risk management in selected Small Island Developing States which are part of the African Caribbean Pacific country group. Focus is on the value chains of fruits, vegetables and spices. A survey was conducted in Grenada, Jamaica, Fiji and Vanuatu, aimed at identifying sources of risk which are most important to value chain stakeholders; the nature and quality of existing and potential risk management mechanisms; and the possibility of enhancing them in view of improving the functioning of the value chains. The sample included farmers, processors, traders, retailers, extension agents, Government officials and private services providers. Results reveal limited ability to handle price and production variability, due to lack of both horizontal and vertical co-ordination along value chains, reduced use of support services, notably credit and underinvestment in equipment. In addition, lack of demand contributes to make insurance markets incomplete and characterised by undersupply or lack of customised products. Promoting light forms of vertical and horizontal co-ordination, such as production contracts and producers’ associations, as well as value chain-based credit and finance may address some of the issues highlighted.

Diversifying agriculture and supporting business development is the centrepiece of a number of rural development programmes in several countries and in many Small Island Developing States (SIDS) belonging to the African Caribbean Pacific (ACP) group. In these countries, long standing efforts are underway to overcome the economic regime shaped by trade preferences and promote an increased integration of agriculture into wider business chains. Taking a value chain perspective implies looking holistically at all activities leading from primary production to consumption. Value chains have been recognized as effective entry points to support small holder farmers, and promote their incomes through better market integration and value addition. The development of value chains in SIDS can be hindered by several constraints: thin domestic market, scarce natural resources and high level of strategic imports such as food and fuel; inability to influence international prices; uncertainty of supply due to remoteness and insularity; lack of economies of scale and vulnerability to natural disasters (Briguglio, 2003; Commonwealth Secretariat, 2000). Despite differences among countries, most SIDS are characterised by high transaction and communication costs that may prevent a full use of potential comparative advantages (Winters and Martins, 2004, FAO, 2005 and IFC, 2009)1. Vulnerability to natural disasters is also more significant in SIDS compared to other countries, especially in terms of potential damage per unit of area and, due to the small size of the territory and high recovery costs per capita which may impact negatively on the economic resilience in the aftermath of a disaster. Increasingly complex value chains entail both increased opportunities and risks for the economic agents involved – we shall refer to them as stakeholders – and especially for farmers, which are normally more numerous and physically more dispersed. They often operate on a relatively small scale and tend to be among the most vulnerable in the value chain. Common risk sources that can affect farmers and other stakeholders include price, production and personal risks. These can produce permanent negative effects on revenues, as well as hinder the organization of value chains: in the absence of appropriate mitigation and management tools, risky events can disrupt business relationships that may take a long time to rebuild. To further complicate matters, risks can affect stakeholders along the value chains in different ways and to different extents. A production loss experienced by farmers may not be a problem for processors, as long as they can source raw agricultural products elsewhere. In fact, value chains normally incorporate more or less formal and effective arrangements aimed at managing risks, which are also defined by the institutional environment. Policies too can be ultimately conceived as tools to manage risks, typical examples being protection, subsidies or price stabilisation for farmers. This paper aims at shedding light on risks and risk management mechanisms in selected SIDS which are part of the ACP country group. Specifically, those that are striving to diversify their agriculture, are switching from the traditional agricultural economy based on sugar and bananas, or that are driven by trade preferences, to the development of more complex value chains such as those based on other fruits, vegetables and spices. Reviewing risk management mechanisms was identified as an important element of this process. Participatory processes undertaken within the All ACP Agricultural Commodity Programme (AAACP), financed by the EU, highlighted that several difficulties encountered by farmers and other stakeholders in organizing production and marketing along value chains and maintaining organizations through time can be framed as risks, and possible solutions as risk management mechanisms. Consequently, an exploratory survey was organized on risks and risk management along value chains in selected SIDS countries. Primary information was collected in Grenada, Jamaica, Fiji and Vanuatu on risk considered in a broad sense, taking into account simultaneously elements that contribute to shape it along value chains. Policies and access to credit were considered as factors affecting farmers’ and other stakeholders’ ability to cope with expected price variability, along with technical capabilities, the availability of expertise and advice and the participation in associations, commodity groups and other more or less formal organizations. The next section offers a review of the basic concepts employed in the paper concerning risks and risk management along value chains, and discusses risk layering. The following section describes the survey and the methods applied to analyse the data collected, while the results of the analysis are illustrated in the fourth section. The last section concludes and discusses areas for further investigation and action.

Results depict a complex situation, which stems from the economic features of SIDS, combined with those of agriculture in the ACP countries and of fruits, vegetables and spices production in particular. The remoteness and the small size of the economy which characterises SIDS calls for business diversification, which takes place both across products, and across value chains, particularly for larger farmers, who tend to integrate vertically and operate also as processors, retailers and traders. At the same time, the small size of the domestic market makes any value chain highly dependent upon foreign demand, for inputs and outputs. The physical and economic accessibility of import and export markets and the degree of competitiveness are hence of particular importance: foreign buyers may easily substitute the source of a small imports quantity supplied by a SIDS economy following small changes in supply conditions. Many of these constraints would not apply to larger-size economies. A larger domestic supply and demand usually imply a wider array of alternatives for marketing products, so that the economic environment along value chains is likely to be more competitive. This facilitates risk pooling along the chains. Moreover, a larger-size supply would justify higher investment in intermediate goods and services. More machinery and equipment can mitigate production risks, while better access to services such as credit helps smoothing income flows and the retention of small risks. Finally, a more diversified economy – those of the SIDS are usually focused on few activities – provides more off-farm employment opportunities, hence allowing income sources diversification. As in every country, the technical characteristics of fruits, vegetables and – to some extent – spice production, push towards vertical integration between different segments of the value chain, especially for exportable products. However, in the surveyed countries, vertical integration seems to be limited to farmers operating also as (small) processors or traders. The more typical tools for lowering transaction costs in perishable products, which are business contracts, are seldom used. Emphasis on equipment and infrastructures as mitigation strategies indicates substantial underinvestment, which generates increased risks of pest and disease outbreaks and makes fresh products more perishable and less safe. The small size of the SIDS and the reliance on few export products that characterised the agricultural economy in the ACP until recently seems to be still preventing the formation of larger and more integrated agri-business operations. The limited degree of ranking among risks and the relatively higher emphasis on price risks speak for a limited ability to cope with “normal” or expected” output and income variability, which seems to be a problem especially for small farmers. Larger farmers and other stakeholders, instead, seem to value – and to some extent make use of – market based risk mitigation strategies, including insurances. The limited use of insurances revealed by the survey appears obvious: especially for weaker stakeholders, demand for products that shield from disruptive events is limited by more pressing issues. If accessing credit to purchase inputs at the beginning of the season is difficult, the allocation of money in insurance seems an unlikely choice. Together with the small size of the market and the high covariate nature of risks, this prevents, or limits, the supply of customised insurance products. Based on these results, it seems that actions to improve risk management and the functioning of value chains may be taken in at least three directions. Firstly, given the evidence of poor vertical co-ordination along value chains, strengthening and stabilising linkages among domestic and foreign stakeholders may be one way to better exploit comparative advantages in products like fruits and vegetables and spices. “Light” forms of vertical integration, such as formal or informal production contracts can probably play a role in income stabilisation. Forward contracts might be complex agreements, through which farmers can reduce the uncertainty on sales prices and market outlets, while receiving inputs and technical assistance by agri-business firms. Usually farmers receive from buyers the required inputs in exchange for a commitment to deliver products by a given date at a given price. In order to promote these types of arrangement, efforts are also required in terms of the definition of incentive-compatible frameworks, and in terms of the legal basis for ensuring enforcement. Secondly, given the evidence of limited ability to cope with small and frequent risks, credit and finance is another area for intervention. Promoting improved access to such services appears to be an important prerequisite for setting up credible business, and promote more coherence and vertical integration along the production chains. On the supply side, diversifying credit products could be part of a strategy aimed at increasing access, by designing customised products that take into account the specific needs of farmers and other entrepreneurs operating along the value chain. As seen from the survey, collateralization is also a major issue, which may be addressed by widening the range of goods and titles accepted by banks. In some countries land property titles are not well defined, or their definition is outdated; and this can be a major problem for accessing credit and finance for investment. For small farmers two different avenues could be explored: the enhancement of horizontal organizations, such as producers groups, on the one hand; and vertical relations along the value chain on the other hand. As seen, producers’ organizations are not particularly involved in providing services, other than extension, in the countries surveyed, and do not seem to play a significant role in managing risks; hence their role in this area could be enhanced. They may subscribe collective commitments with financial institutions, a feature that has proven effective in the micro-credit experience. A necessary condition for this approach to work, however, is the existence of mutual trust, reinforced by repeated transactions, which is not always the case in the country surveyed. Enhancing vertical relations along the value chain could also contribute to ease access to credit. For instance, contracts between farmers and processors may be considered as collaterals. There are examples of similar arrangements which have been successful. Vegetables production in Uganda, for instance (Henson and Jaffee, 2007), or the federation of agricultural cooperatives (FECOAGRO) of San Juan, Argentina (Santacoloma et al., 2005) are relevant experiences. Thirdly, given the widespread evidence of undersupply in insurance markets, efforts may be devoted to remove constraints in this area. Better organized, integrated and technically equipped value chains would allow more efficient handling of expected variability in prices and incomes, and facilitate the use of credit to invest and smooth consumption. In turn, releasing constraints to managing this variability would probably facilitate the management of more disruptive risks, and the emergence of a demand for formal tools like contracts or insurance. Today, insurance markets are incomplete due to lack of both demand and supplies. Also in the insurance market there are examples in which vertical relations and linkages with credit helped developing the market (Angelucci, 2003). In Malawi, for instance, groundnut producers receive loans to purchase hybrid seed along with an index-based insurance against drought. If drought triggers indemnities, part of the funds are directly channelled to banks, in order to settle the loans (Alderman and Haque, 2007). Also collective insurance schemes are not infrequent, as in the cases of organic bananas in Peru and organic cocoa and bananas in Costa Rica, where farmers associations purchased collective insurances against natural disasters and the risk of default from the buyers (Slingerland et al., 2004).