Caribbean Agrifood Business Session n°6

Traditionally, the Caribbean region has exported a handful of primary products (i.e. banana, sugar) without any value-addition which have been subject to market volatility and competition from large producing countries which have lower producing costs and cheaper labour. Latin America and Caribbean (LAC) Small and Medium Enterprises (SMEs) that do export tend to sell only a few products to a very small number of markets. It is therefore difficult for Caribbean producers to reach economies of scale and cost efficiencies in producing large quantities for mass markets. Due to the smallness of the Caribbean market and the low volumes of agricultural food produce, especially in small island states, producers are constrained to keep small-scale production on a limited number of products. In addition to land constraints, the declining attractiveness of agricultural employment is an issue.

Diversification within the agricultural sector through increased processing (i.e. chocolate, coconut oil) has happened to some extent with significant investments on infrastructure, markets, and finance. Moving up the value chain and increasing incomes for value chain actors requires to be present in added-value sectors, processing goods and better finished products which can be found in the shelves of high-end markets.

Moreover, exporting increases firm productivity, boosts the sophistication of business capabilities, and loosens credit constraints, all of which are key factors for enabling SMEs to grow into large firms that drive trade and job creation. SMEs that export on a sustained basis are also critical for introducing new products to their countries’ export baskets, and thus play a critical role in export diversification.

It is necessary for local small and medium size companies to develop high value-added, quality and specialty niche products in demand in high-end markets to be able to compete globally. In this context, specialized and niche markets with higher margins are an attractive option for Caribbean producers.

In exports, regional or tourism-related markets, quality of products is key and offers to Caribbean companies new opportunities. However, the high-end industry often indicates common problems of sourcing, inadequate quality, regularity of supply, reliability, standards or volumes, exacerbated by poor transport and logistics. The evolution of costumer’s tastes and expectations needs a constant attention and investment. Companies need budgets for marketing and advertising, often neglected.

Selling to high-end local or foreign markets involves market research, developing marketing channels, adapting products and packaging, meeting quality standards and labelling requirement, dealing with new administrative procedures and regulatory requirements and having access to distribution to diversifying customers.