Abstract

The purpose of this study was to identify and rank the relative relevance of important con
straints faced by stakeholders involved in the development of representative fruit (papaya 
and breadfruit) and vegetable (head cabbage and tomatoes) value chains in Samoa. Its pur
pose is to serve as a foundation for the development of actionable actions in support of th
e Fruit and Vegetable Sector Strategy (FVSS), which was launched under the EU
funded All ACP Agricultural Commodities Programme (AAACP).

Although one of the study's primary goals was to evaluate the limits, the lack of data on
crucial sectors of agriculture for various types of farmers.  This was unattainable due to
production and marketing constraints. Consequently, the research efforts to describe and
analyze "generic" chains for four different types of chains fruits and vegetables that are
representative and conceptualized on the basis of a collection of assumptions about the
costs and returns of new technology investments in the production of important crops on
a small, but growing, scale scale commercial. Using a combination of value chain
mapping and gross margin analysis analysis, the study aims to determine the relative
importance of several factors. by calculating the value lost to the chain as a result of the
constraint the existence of these restrictions. Despite the fact that the projected values are
influenced by the assumptions made,They provide a guidance to the types of constraints
that are most likely to stymie the development of the respective value chains when
combined with focused surveys of key stakeholders.The relative importance of the
various restrictions under each category varies by crop variety, which indicates where to
focus early operations to ensure that constraints are alleviated in a timely and effective
manner. Export markets for fruits (papaya and breadfruit) offer the potential to boost
production returns. However, I the lack of consistent quality volumes of fruit to take
advantage of sea freight options, which would greatly cut costs, and (ii) the current
capacity to cure fruit for export, severely limit these potential. Significant value added
opportunities exist for breadfruit in domestic markets, while papaya has the potential to
substitute for temperate fruit imports, particularly in tourism-related market segments.
While initiatives to overcome the severe export limits are addressed, these domestic
market potential may give a more viable option for enhancing returns in the medium
term. However, production restrictions (soil suitable for papaya, availability of seedlings,
and harvest equipment) need to be evaluated further, especially given the difficulty in
obtaining funding to cover investment and working capital needs. Gross margin analysis
suggests large returns on investment for supply to domestic markets for vegetable items
(head cabbage and tomatoes).

The study offers activities that are in keeping with these findings.
with the Fruit and Vegetable Sector Strategy, which was developed with EU funding
Agricultural Commodities Programme for All ACP Countries.
The study also provides extensive and up-to-date gross margin evaluations.
helps to close a big data gap discovered throughout the research process
strategy formulation, as well as a foundation for more in-depth feasibility studies.
investigations into the actions outlined in the FVSS implementation plan.
Chapter I

Introduction

Stakeholders involved in the production, during the first half of 2009,

Samoa took part in a workshop on the processing and marketing of fruits and vegetables.
sector diagnosis and strategy development procedure. The results of the strategy
document and an implementation plan were created as part of the process. An identified
key intervention areas aimed at easing critical restrictions to the sector's continued
development. A key flaw that was identified throughout the strategy's development. The
limited understanding of the project and its implementation strategy specific fruit and
vegetable product value chains' existing functionality, a a situation made worse by the
scarcity of available information of essential criteria including production levels, prices,
and domestic and international trade Market demand from abroad. In order to establish
specialized actions in support of the a considerably enhanced ope rationalization of the
implementation plan knowledge of the present value chain structure and the restrictions
that it faces enhanced functionality, particularly in terms of how the chains interact with
and affect one another is necessary for smallholder producers.

Objectives
The objectives of this study are therefore to:
• identify representative fruit and vegetables for analysis
• develop product specific value chain maps, depicting key activities and actors and
populated with available information on production, trade and marketing activities
• on the basis of the maps, to identify critical constraints to value chain development,
including key deficiencies in information availability
• assess alternative potential activities in support of the implementation of specific
components of the Fruit and Vegetables Sector Strategy (FVSS) and which address the
key constrains to sector development.
Scope and Delimitation
This study is limited to all farmers of Canlaon City. This study is focuses on the
Supply chain analysis for fruits and vegetables. The participants are the Farmers of
Canlon City which has estimated population with the total of 50 farmers, generally it
composed of 20 females and 30 males.

Significance of the Study

This study is about Supply chain analysis for fruits and vegetables in Canlaon
City. This research work is beneficial to the following people:
Consumer. This study will help them know the information about the things
against the supply chain of fruits and vegetables, for them to know the sovereignty of
their choice of goods guaranteed.
Farmer. This study will help them manage their decision making and help them
in planning the things needed to meet their requirements and quota supply.
Future Researcher. The result of this study can serve as basis for further study
on supply chain analysis for fruits and vegetables.
Retailer. The purpose of this study is to help them enhance their service and
boost supply chain speed by improving upstream and downstream processes.
Supplier. The result serves as the bases for their strategic plans.
Wholesaler. This study will help them to be make a steps on what are the things
needs to be consider especially the prices.
Definition of Terms
The following terms will be defined both conceptually and operationally for the
purpose of this study.
Consumer. a person or organization that uses a commodity or service
Farmer. a person who owns or manages a farm.
Retailer. is a person or business that sells goods to the public.
Supplier. is a person or company that provides you with goods or equipment.
Supply Chain. is all of the various stages, in order, of a
product's progress from raw materials through production and distribution of
the finished product, until it reaches the consumer.
Wholesaler. is a person whose business is buying large quantities of goods and
selling them in smaller amounts, for example to shops.
 Chapter II
Review Related Literature

The supply chain of fruit and vegetables is characterised by a large number of

participating agents and consequently with a wide range of different distribution
channels. In the following chapter the different agents of the supply chain and the
importance of their distribution channels will be described in detail (see Figures 5 and
6)4. Based on official statistics and other publications, some calculations have been done
in order to illustrate the product flow in the supply chain between the different agents.
Difficulties regarding data availability in particular for the wholesale level and producer
organisation
made it necessary to conduct two surveys. The first was carried out under the 127
member companies of the German fruit trade association (DFHV). The questionnaire was
returned by 22 wholesale companies. The second survey addressed the 57 member
companies of the federal association of producer organisations for fruit and vegetables
(Bundes Vereinigung der Erzeugerorganisationen für Obst und Gemüse). So far, 19
producer organisations have returned the questionnaire. The response rates of 17 and
33% respectively do not allow representative conclusions, but give valuable information
on both the wholesale trade and the producer organisations. The chapter is structured
according to the position of the different agents in the supply chain. It starts with the
inputs for the producers and ends with the final demand of consumers.
This is a horizontal quality assurance system, the abbreviation stands for
European Retailer Produce Working Group Good Agricultural Practice. The system
defines different standards with regard to production, environmental, social and hygienic
aspects. Important criteria which have to be fulfilled are the safeguarding of a flawless
production, the reduction of pesticide applications, use of integrated production methods,
protection of the natural resources and use of traceability systems of the production. The
food retailers generally view the EurepGAP as a minimal standard (ROTHER, 2004,
p.11f). Another important horizontal quality assurance system is the IFS (International
Food Standard). It was founded in 2001 to develop some international security standards
for businesses, which supply the retailers with private brands. The IFS is compatible to
the DIN EN ISO 9001 and comprises of the following chapters: 1) requirements for the
quality assurance system, 2) responsibility of the business management, 3) management
of resources, 4) production process, 5) measurements, analyses and improvements. The
auditing is carried out by accredited consultants (ROTHER, 2004, p. 14).
Contract farming is frequently mentioned as a
substitute for poorly functioning or absent markets. Contract farming is an
agreement between a farmer and a firm – either a simple verbal commitment
or one based on written documents – where the farmer produces a fresh or partially
processed product and t h e f i r m i s c o m m i t t e d t o b u y i n g i t u n d e r c e r t a i n
stipulated conditions (Glover and Kusterer 1990;Grosh 1994).
C o n t r a c t f a r m i n g s e r v e s a s a n e c o - nomic institution operating between
spot markets and vertical integration (Grosh 1994; Key and Runsten
1999), and arises as a response to the selective or simultaneous market failures for
credit, insurance,information, factors of production or products (Key
and Runsten 1999). Contracts are one of the various ways of coordinating
economic activities between a farmer and a processing firm, thus enforcing a
certain type of the supply chain management for the given commodity
(Hobbs 1996). There are a numb er of ty pes of contractual ar-r a n g e m e n t s w h i c h
c a n d i f f e r i n t h e c o n d i t i o n s o f price and payment, the services provided, the
quality and production requirements and the input supply provisions (G rosh
1994). The choice of a contract depends on the characteristics of the
parties and the market where they interact.The effectiveness of contract
farming can be con-sidered from the perspective of the farmer and of the
trading firm. Firms can use a variety of institutional arrangements to obtain
raw products for processing or marketing, relying on different degrees of
vertical co-ordination and the related governance structures. One extreme is the
spot market, where the transaction takes place among several actors and the
price is set during the transaction. The firm does not participate at all in the
production process and all other aspects of the transaction (i.e. quality,
quantity, and timing) are non-negotiable. In this situation, there is no real
supply chain management (Hobbs 1996). The other extreme position is the full
vertical integration, where there is a continuous flow of products and informa-
tion during different stages of the supply chain and th e t ra ns ac ti on s fo ll ow
a co rp or at e- ba s e d s c he me rather than a negotiating party’s scheme. Here,
thefirm has a complete control over production Contract farming takes an
intermediate position allowing the firm to participate and thus to exert dif-ferent
levels of control over the production process without formally owning or operating
the farms. It is mainly a way to distribute the activities in the supply chain and
the corresponding risk between the firm and farmers. The farmer bears most of the
production risks and the firm most of the processing and market-ing risks. The exact
allocation of risk depends on the specifications of the contract. The firm chooses an
optimum contract considering the transaction costs and profit (Key and
Runsten 1999), depending on the prevailing market uncertainty related to the
transac-tion, the degree of the asset specificity (influencing its bargaining
position), the frequency of the transactions (Hobbs 1996), and the monitoring
costs surrounding the production process (Singh 2002).In general, contracts can
be classified into three cat-egories which are not mutually exclusive :( 1) Market
specification contracts, (2) production management contracts and (3) resource
providing contracts (Minot 1986; Williamson 1991; Hobbs 1996; Key and Runsten
1999; Singh 2002). Market specification or procurement contracts are simple pre-har
vest agreements where the firm commits to provide a market outlet for the farmer
(Hobbs 1996). Usually, there are stipulated the conditions regarding price,
quantity, quality, and timing (Singh 2002). The farmer reduces the market
a n d p r i c e u n c e r t a i n t y a n d t r a n s f e r s i t t o t h e f i r m without losing the
control of the production proc-ess (Hobbs 1996). Production management
contracts require the farmer to adopt specific growing prac- tices, input
regimes and post-harvest management practices under the technical
supervision of the firm. Resource-providing contracts require the firm not only to
provide a market outlet for the farmer’s produc-tion, but also to deliver specialized
input packages and supervision to the production process. Hence, the firm
obtains a full control of the farm and the
farmer almost becomes an employee.Resource-providing contracts are the closest
situa-tion to the full vertical integration (Hobbs 1996; Key
and Runsten 1999; Singh 2002). The selection of any of these contractual forms
varies according to the type of commodity, the characteristics of the agents, and
the market conditions for the given period of time (H i l l a n d I n g e r s e n t 1 9 8 2 ; K e y
a n d R u ns t e n 1 9 9 9 ) . However, there are many different variants of con-tracts that
can be derived from the aforementioned three main categories, and
empirical analyses have focused on the specific situations rather than on a
generic contract institution (Singh 2002).While the firm decides on its
organizational strat-egy, the farmers, in turn, can choose to engage in a
c on tr ac t o r to s el l th e h ar ve s t by s o me ot he r w ay .
The decision of farmers to accept a contract typi- cally depends on their
attitude towards risk and on the specific market failures that they face. Since the
contract guarantees the farmer an outlet, marketing
risks are reduced. Contracts have the potential to provide the mecha-nisms for
the incorporation of small and low income farmers into the market economy
(Glover 1984; Key and Runsten 1999). However, several authors argue
that contracts could also lead to the market segmen-tation and exclusion, thus
generating more negative than positive effects on farmers (Glover and Kusterer
1990; Grosh 1994; Little 1994; Porter and Phillips- Howard 1997; Torres
1997; Siddiqui 1998).
Contract farming reduces marketing risk and sta-bilis es the farmers ’
income, and, in this sense, the agribusiness partner provides a form of
ins urance (Featherstone and Sherrick 1992; Watts 1994; Jackson and Cheater
1994; Runsten and Key 1996; Flaskerud and Klenow 1999; Martin 1999;
Sofranko et al. 2000). Marketing risk is reduced as a result of the agribusiness
contract to purchase the output of the farmer and the income is stabilized because
of the repetitive nature of required deliveries and payment. At the same time
contract s may simplif y production and marketing decisions thus improving the farmer’s
effectiveness. The reduction of marketing risk through the demand
assurance embodied in a contract is also appealing to farmers producing products
where the markets are thin (Hudson 2000).
 Chapter III

RESULTS AND DISCUSSION

The empirical results and discussions are presented

in the following two subsections. In the first subsec-tion, the descriptive
analysis was used to summarize the profile of respondents. The next section
provides an analysis on the actors that motivate the contract farmers to
engage in contractual arrangements.

Descriptive analysis

Two hundred and eight farmers were interviewed, o f w h i c h f o r t y -

o n e f a r m e r s w e r e i n v o l v e d i n c o n - tract farming. Table 1 shows the
demographic profile of the contract farmers from seven selected states. Table 1
illustrates that more than one third (36.6%) o f t h e f a r m e r s w e r e i n t h e
a g e c a t e g o r y b e t w e e n 41–50 years. 26.8% of the farmers were from 31–40
years old category, while about 17.1% of the farmers were from the age
category of less than or equal to 50 years. The finding shows that about 63.4% of
the farmers from the age category of 31–60 were actively involved in farming
in the Peninsular Malaysia. In terms of gender, 38 (92.7%) were male and
3 (7.3%) w e r e f e m a l e . R e g a r d i n g t h e i r e t h n i c s t r u c t u r e , 3 0 (73.2%)
were Malay farmers, 8 (19.5%) were Chinese farmers, 2 (4.9%) were
Indians.In terms of education, the findings showed that 2 (2.4%) of the
farmers have never been to school, 12 (29.3%) of them passed primary education,
21 (51.2%) of them went to secondary school and 6 (14.6%) of them had
tertiary education. A total of 37 (90.2%) farmers were involved in full
time farming, while 4 (9.8%) of them were part-time farmers.In t er ms of
e xp er ie nc e, 1 2. 2% of th em ha d be en involved in farming for 1–10 years.
31.7% were in-volved for 11–20 years. Only about 2.5% of the farm- ers had
been farming for more than 41 years. About 31.7% of the respondents were
involved in farming for 11–20 years.
In terms of the types of contract, the majority of the farmers were
involved in marketing contract and about 26.8% of the farmers involved in
production contract. A total of 73.2% of the farmer dealt verbally
with the sponsors and 26.8% of the respondents signed formal contract
arrangements.With 82.5 million inhabitants, Germany is the largest market for fresh
fruit and vegetables in the EU. Due to natural production limitations 50% of fresh
vegetables and 80% of fresh fruit have to be imported from foreign countries. Until now,
most of the imports are from other EU-countries. In case of further liberalisation between
the EU and the Mediterranean countries in the framework of the Barcelona-Agreement,
big market opportunities exist for Mediterranean countries with comparative
advantages in the production of fruit and vegetables. One of the most important driving
forces for the consumption of fresh fruit and vegetables is their healthy image and the
resultant promotion in modern lifestyles. It is expected that the consumption of fruit and
vegetables will further increase in the next years. Nevertheless not all fruit and vegetables
will gain from this. Especially dynamic products are considered to be nectarines, grapes
strawberries, lemons and pineapples for fruit and paprika, onions, courgette and chicory
for vegetables. Less demanded products are mandarins and bananas for fruit and
cabbages and lettuce for vegetables. Two demographic trends (aging of the German
population and the decrease in household size) are also expected to influence the demand
for fresh fruit and vegetables. As it could be already observed in the last years, the share
of processed or frozen fruit and vegetables will continue to rise and also out of home
consumption will grow in importance. Exporters of fruit and vegetables to Germany are
well advised to carefully explore the changing consumption patterns and the supply
requirements of this market channel. Another demand driven change in the supply chain
of fruit and vegetables is the increasing importance of quality assurance systems for all
actors in the supply chain. As consumer awareness with regard to food quality and food
safety has risen dramatically in the last years, politicians and food retailers have reacted
by the implementation of mandatory quality systems for the suppliers and traders of fruit
and vegetables. The fulfillment of quality systems like EurepGAP, IFS or Q+S will soon
be a pre-condition for the market entry in Germany. At the moment the supply chain of
fruit and vegetables in Germany is characterised by its complexity. Unlike in the
Netherlands and the UK, a large number of different actors and marketing channels exist,
though the amount of information on the flow of products is very limited. Using different
secondary sources and the results of an own survey we were able to identify the main
market channels. One major trend in the supply chain is the growing importance of
retailers at the expense of the wholesale trade, resulting in a similar situation like in the
UK and the Netherlands. In the long run, the integrative approach of supply chain
management will certainly become more important, though specialized marketing
channels will always co-exist and can be another way for exporters to enter the market in
Germany. Nevertheless, the already started concentration process at all levels of the
supply chain is very likely to increase. Until now, there is a large number of small
enterprises engaged in every level of the supply chain. The concentration process at the
wholesale level will also affect the producers of fruit and vegetables. Already the traders
and retail chains are requiring large, uniform and certified supplies, a trend which will
also increase the pressure on producers for cooperation and/or growth.