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Effective Farm Business Strategy for Local Commodities in Haiti; Case of Maize

Une stratégie d’entreprise agricole efficace pour la production locale en Haïti : étude de cas du maïs
Estrategia agroempresarial eficiente para la producción local en Haití: caso del maíz
Rival Valcin et Tomohiro Uchiyama

Résumés

Une faible productivité semble être le problème majeur auquel fait face l’agriculture haïtienne. Des études antérieures parviennent à la conclusion que cela est dû spécifiquement au fait que les agriculteurs utilisent notamment des intrants de mauvaise qualité ou de façon inadéquate. La condition économique des planteurs ne leur permet même pas de respecter le calendrier cultural. Cette étude propose une amélioration de l’investissement agricole au moyen de contrat agricole. Celui-ci aura pour effet de donner aux agriculteurs l’accès à un paquet technologique adéquat, ce qui constituera une stratégie efficace pour sortir de la situation actuelle. Les résultats montrent que le Paquet technologique a une influence significative sur la productivité. Parallèlement, les agriculteurs manifestent une grande volonté à accepter le contrat agricole, bien que cette pratique soit actuellement peu développée en Haïti. De plus, les planteurs ayant un faible revenu annuel ou cultivant de plus grandes superficies semblent être plus disposés à accepter le contrat agricole.

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Texte intégral

1. Introduction

  • 1 Food, Seed & Industrial

1“Increases in agricultural production may be achieved through expanding the area under cultivation or through improving the productivity of existing farmland” (Bray, 1994: 27). “Haiti has 438,000 hectares of agricultural land (less than 20% of the country’s total area estimated at 27,750 km2), while around 750,000 ha are already under cultivation” (Joseph, 2017: 3). The maize is the most cultivated crop in Haiti. In 2018, 312, 000 ha were used to produce maize for a total production of 260, 000 MT (FAOSTAT, 2020). “Maize is the second most important cereals in the Haitian daily diet; as human food, represents eighty percent of FSI1 consumption. It is used in four forms: cornmeal, sweet corn, corn flour, and akasan (a popular Haitian beverage)” (USDA, 2020: 14).

1.1. Competitiveness of Haitian farming

2The implementation of the structural adjustment program in Haiti as it has been done in other places in the world, lead to the liberalization of the Haitian market (McGuigan, 2006: 3). Thus, this process of liberalization put the Haitian farmer in competition with other farmers in the region, such as the Dominican farmer and the American farmer. (Fréguin et. al., 2006; Cohen, 2013: 2). However, recent studies show that there is a low competitiveness from the Haitian side of the principal staple cereal crops (Daméus & Valcin, 2020).

3This lack of competitiveness can be explained respectively by the low productivity and the poor investment in the agricultural sector (Mullen, 2007). Thus, how a strategy based on boosting the investment can improve productivity and therefore the production of Maize in Haiti? What could be an effective alternative for this aim (improved productivity)?

1.2. Investment as strategy

4“There is no shortcut to increase agricultural production and productivity; long-term and sustained investment is the key to achieve that goal” (Abate et al., 2015). Beyond relying on government subsidies or NGO support, as it is often the case in Haiti, “farm businesses should adopt strategies that may allow them to be more competitive and outperform rivals” (Christopher et al., 2002). “The Investment as strategy is suitable for both large and small farms” (Sgroi et al., 2014). Therefore, even though Haitian farmers are in majority smallholders; investing is an excellent way of increasing productivity and their competitiveness

5This study will propose an integrated investment strategy for farming in Haiti as a resolution to the problem of low productivity. Given that the farmers are not able to invest on their own, targeted alternative will be by contracting agreement with agribusiness companies. In other words, the contract farming will be analyzed as a sustainable option to give farmers access to an improve package of technology. The study will be focus on partnership between farmers and national agribusiness companies; however, the results will also provide information to international agribusiness companies interested to invest in the Haitian farming system.

1.3. Agricultural investment in Haiti

6The current situation is that only 1 of 10 Haitian farmer having access to adequate seed stock, irrigation or fertilizers; and only 4% of rural households – generally farmers, have savings accounts, and only 11% of report receiving credit (Barjon, 2011).

7The agricultural sector presents various development possibilities for Haiti as it has set itself the goal of joining the ranks of emerging economies by 2030, the lack of investment is one of the biggest challenges faced by this sector over the years (Barton-Dock, 2016).

8There is in Haiti what we call a National Plan for Agriculture Investment (PNIA); however, the part for agriculture in the annual national budget is generally less than 5%, moreover the greatest part of this budget is from donations (Giordano, 2016). The country needs sustainable private investment to develop the agricultural sector and the country generally. Haiti’s path to prosperity does not run through the halls of aid agencies, but from seed to Harvest (Barjon, 2016).

9Certainly, “Haitian farmers overwhelmingly lacked the economic resources to purchase necessary supplies to accomplish their farmer duties; but when Haitian farmers made requests for money, they often stated that they wanted money “not as gift, but as loan” (Albert et al., 2017). Therefore, there is evidence that “Haitians themselves are quite sure of what they want. Respondents to an Oxfam America survey of people affected by the earthquake ranked support for local food production among the 4 most important assistance interventions (along with job creation, education and shelter)” (Barjon, 2016).

1.4. Factors behind the decline in production yields in Haiti

10The USDA’s point of view is that the main factors behind the decline in production yields in Haiti are: lack of maintenance of irrigation infrastructure, lack of access of producers to inputs; due to a lack of working capital, farmers cannot even meet the crop calendar (Saint-Pre, 2018).

11In 2010, the MARNDR mentioned that the low yield of rice production in Haiti is caused by using poor-quality seeds due to the dysfunction of the National Seed Service (SNS) which is responsible for ensuring the quality control of seeds produced in the country or imported (Dimanche, 2018).

12All these factors can be classed into two categories: lack of investment in agriculture and the obsolescence of practices and agricultural techniques (Beaucejour, 2019). To these factors can be added the degradation of the environment which is part of a vicious cycle represented by what Smolinowski called the scheme of decapitalization process (figure 1).

Figure 1 – Scheme of the decapitalization process of small holding

Figure 1 – Scheme of the decapitalization process of small holding

Source: (Smolinowski, 1993, p232)

1.5. Alternative of investment

13When the farmer himself cannot perform the needed strategy, one alternative giving many results for smallholders in developing countries around the world is the Contract Farming (CF).

1.5.1. The Contract Farming

14“Contract farming is one of the agribusiness investments projects widely implemented throughout the world; it is a fully defined “2 + 3” agreement in which the farmers invest in labor and land while the investors invest in technology (further knowledge regarding production) and production factors, then purchase the farmed products with a guaranteed minimum purchase price” (Chaovanapoonphol et al., 2018). “Contract Farming arrangements have the potential to address market failures, improve technology adoption, and productivity; and it can be used as a win-win strategy to increase agricultural productivity of small farmers” (Ragasa et al., 2018). “Contract farming can also increase land productivity by enabling farmers to shift from low value-added varieties to high-value-added variety” (Khan et al., 2019).

15“Elements of contract farming, such as a pre-agreed supply contract between farmers and buyers, deliver better access to markets, improved market information, affordable credit, inputs and technologies, reduced market risk, and increased household capital assets” (Woods, 2015). It also confirms that contract-farming can improve farmers access not only to inputs, credit, and technology, but also ultimately benefits farm productivity and incomes (Maertens et al., 2017).

16“Finally, it appears that participation in contract farming has a significant impact on welfare in that it significantly increases total household income and household income per adult equivalent. It also appears that it does so indirectly via spillovers on other sources of income” (Bellemar, 2011).

1.5.2. Modalities of contract farming and types of contract:

17Eaton and Shepherd (2001) identied ve models of CF.

  • “Centralized: an agribusiness company buys produce from many smallholders (small-scale farmers) with tight control over quality and quantity.

  • Nucleus estate: an agribusiness company combines CF with direct involvement in plantation production.

  • Multipartite: farmers sign contracts in a joint venture established between an agribusiness company and a local entity.

  • Informal: more informal verbal purchase agreements are signed on a seasonal basis, with inputs provided by the company often being restricted to seed and fertilizer.

  • Intermediary: an agribusiness company may have contracts with intermediaries who then sign contracts with a larger number of farmers. Overall, the literature categorizes contracts into two types: formal written agreements, and informal verbal understandings” (Glover,1994; Bijman, 2008; Sreymom & Pirom. 2015).

1.5.3. The Contract Farming in Haiti

18The CF is not really developed in Haiti. Some cases of CF have been identified, but they have been small in scale, informal, and limited in time. They were generally some projects implemented for a certain period (Table1).

Table 1. Some cases of contract farming in Haiti

Area

Company

Product

5 departments

BRANA

Sorghum

Artibonite dept.

CARRIBEX

Rice

Plain Les Cayes

ORE

Maize

West dept.

Comme il faut

Tabac

West dept.

Agriterra

Cane sugar

Plain Les Cayes

Moulin d’Haïti

Maize

Plateau central dept.

Acceso

Peanut

Source: CIRAD (Pressoir et al., 2016)

19Any specific research regarding the contract farming in Haiti has been found, although this type of agribusiness project seems to be one of the most suitable investment alternatives due to the financial condition of the Haitian farmer. Therefore, this study aims among other things to put such information available for further decision-making.

1.6. Target of the Investment

20The major factor targeted by that investment is an improved package of technologies.

21The package of technologies
Agricultural research has produced various technological packages for farmers to increase their productivity and profitability (Keadzo, et al. 2010). The package of technologies can imply fertilizer, irrigation, improved seeds, pesticides, mechanization, technical advice… Inorganic fertilizers and improved maize varieties are indeed yield-increasing; the technologies, however, perform best when adopted as a package (Nyangena, 2014).

22In the case of maize, Northern Tanzanian producers for example show a difference in yield and profit for farmers at different levels of adoption of improved maize seed and fertilizer (Nkonya et al., 1997). “Therefore, Productivity improvement among smaller farms can be made through increasing their ability to access advanced technologies, rather than simply expanding their scale” (Sheng et al., 2015).

23“Haitian small-scale farmers preview themselves, perceived a link between traditional agricultural practices and low productivity; and were eager for training in and support to use modern agricultural practices” (Dor, 2016: 5). Farmers themselves are not satisfied of the current yield for Maize; they need agronomists be able to test the soil and provide guidance for limiting and fertilizer use; as they rely mostly on their intuitive perception of soil quality in deciding about fertilization (Molnar et al., 2015: 38).

24Right close to Haiti, from 1961 and 2007 among developing regions, Latin America and the Caribbean show the highest agricultural productivity growth; especially due to improvements in efficiency and the introduction of new technologies (Carlos, 2010). It appears evident that an improved package of technologies is the best tool for changing the trend of the farm productivity in Haiti.

1.7. Agricultural potentiality of Haiti

25“In Haiti, the agriculture represents 1/4 of the GDP, occupies 45% of national production and creates 54% of jobs” (MARNDR, 2010; Saint-Fleur, 2020).

26Potential productivity of Haiti for Maize:
“The experience of producers benefiting from development projects such as the Taiwanese project demonstrates that under the right conditions, Haitian producers can achieve yields of 3 tons per hectare or more” (Cochrane, 2016).

27Although holding the lowest yield/ha (0.84 TM/ha according to FAO), Haiti is the second consumer of maize among the Caribbean countries; however, a recent study realized exactly in the same research area concluded that its yield can reach 4TM/ha if farmers use the good package of technologies (De Marinis et al., 2019). Two local varieties were compared with introduced varieties; the results revealed that introduced varieties have smaller yield than the local ones (Aristil et al., 2019: 1).

28Those studies are some examples confirming in a clear manner the potential of Haiti for maize productivity under appropriate conditions. In other words, implementation of actions to improve access to finance by farmers and other actors; improved technologies and making inputs available and accessible are some good strategies that can improve productivity (Musabanganji, 2017).

29The principal objective of this study is to determine an effective farm business strategy for maize. Specifically, the study aims to: evaluate the level of openness of Haitian farmers to the contract farming; determine the type of partnerships that producers are willing to contract and develop an integrated strategy for farm business regarding Haitian local maize. In accordance with the objectives above, we assume that: Haitian farmers are willing to do contract farming and through an effective farm business strategy, Haiti could overcome its self-sufficiency in maize.

30In the next section, we will present the methodology used, the relevant findings, the conclusion, and some recommendations.

2. Methodology

31The research is conducted in the Southern (Sud) department of Haiti (figure 2). A sample of eighty (80) maize farmers have been randomly selected among 800 former beneficiaries of a subsidy for maize production to conduct a survey.

32The t-test and the Wilcoxon rank sum test with continuity correction have been used to confirm the significance of the willingness of the farmers to accept Contract Farming. In addition, a multiple regression model based on the Syllo Labinis function of Productivity was used to find out which factor (among area cultivated, package of technologies, annual income and investment/ha) has a better influence on the productivity in the case of Haiti. The productivity (π) has been expressed as a function of the annual Income (α), Investment (γ) per hectare, the area cultivated (δ) and the Technical package (θ).

π= f(α,γ, δ,θ) and the mathematical expression on the model will be:

πi= a0 +a1αi+ a2γi + a3δi+a4θi+ εi

a0, a1, a2, a3, a4 are the parameters of the model and εi the error term.

Figure 2. Map of the 10 Department of Haiti

Figure 2. Map of the 10 Department of Haiti

Source.odapsa.org

33Data analysis software such as Excel, language R has been used in the estimation process of the parameters. The level of the Package of Technologies was determined as ranked from 0 to 10 based on the type of seed, the use of fertilizer, the frequency of irrigation and reception of technical advice (Table 2). Microsoft Excel and Language R were used to analyse the data.

34Determination of the Willingness
The willingness of the farmer to do contract farming is determined based on three indicators: the expression of will, the expression of need, and the expression of collaborative attitude. The expression of will be illustrated in table 3. 

Table 2. Estimation of the Package of Technologies (Level)

 Components

 Indic.

 Score

Standard

Improved Seed

Yes

1

 (+)

No

0

Fertilizer (quantity/ha)

≥405kg

3

540kg

225-315

2

--180

1

0

0

Irrigation (Number)

≥5

3

8 of 30mns

[3,4]

2

[1,2]

1

0

0

Weed control

2

2

2

1

1

0

0

Technical Advice

Yes

1

 (+)

No

0

Table 3. Qualitative variables (Willingness determination)

Table 3. Qualitative variables (Willingness determination)

3. Results

3.1. Characteristics of the sample

35Gender 
The number of farmers already surveyed is 80. Of this amount, 22.5% are women and 77.5 % are men (Table 4).

36Education Level
The great majority of the farmer, 70 % have done elementary school. 28.75% of them have done high school and only 1.25 % of them reach university level (Table 4).

37Experience in CF
Only 8.75 % of the surveyed farmers has previously experienced the Contact Farming (Table 4).

3.2. Willingness to do Contract Farming

3895 % of the farmers surveyed show willingness to do the contract farming. However, among those who are willing, only 78.75 % are ready to sell 100% of their harvest to the agribusiness company.

Table 4. Willingness/and farmer characteristics

ITEM

Characteristics

Respondent %

Willing to do C. F.

P-value

Gender

Male

77.5%

95.17%

< 2.2e-16

Female

22.5%

94.45%

= 2.784e-05

n=80

76/80

Education Level

-Elementary

70%

94.64%

< 2.2e-16

High School

28.75%

95.65%

= 1.57e-09

University

1.25%

100%

----

n=80

76/80

Experience in C.F.

+E

8.75%

100%

= 0.000315

-E

91.25%

94.52%

< 2.2e-16

n=80

76/80

Farmers’ UAA

UAA<1ha

53.75%

100%

< 2.2e-16

UAA≥1ha

46.25%

89.19%

= 1.871e-09

n=80

76/80

Annual Income

<2000 USD

15%

100%

= 1.868e-07

Є [2000 ;4000] USD

36.25%

96.55%

= 7.616e-16

>4000 USD

48.25%

92.30%

= 4.893e-10

n=80

76/80

Annual Investment

<600 USD

33.75%

88.89%

= 2.38e-06

≥600USD

66.25%

98.11%

< 2.2e-16

N=80

76/80

Productivity

Π<3

50%

98%

= 2.467e-10

Π≥3

50%

94%

< 2.2e-16

N=80

76/80

TOTAL of FARMER

80

76/80

< 2.2e-16

Mann-Whitney

= 2.57e-16

Source: field survey, 2020

39The four-quadrant model:
Qualitative data analysis shows that the high willingness of the farmers to accept contract farming is specifically dictated by their great need (of support). Otherwise, among all the respondents’ characteristics, only the annual income and the area cultivated, seem to have a significant influence on the “willingness of the farmers to accept the contract farming. Thereby, the results show that the farmers with a lower annual income or a greater area cultivated are more likely to accept the contract farming (fig. 3).

Fig. 3. Four quadrant-model (Annual Income/Area cultivated)

Fig. 3. Four quadrant-model (Annual Income/Area cultivated)

A: High annual Income & small Area cultivated
B: High annual Income & large area cultivated
C: Low annual Income & small area cultivated
D: Low annual Income & large area cultivated

P-values: annual Income (0.0417 *); Area cultivated (2.43e-07 ***)

Source: field survey, 2020

3.3. Modality and Type of Agreement

40Modality: The farmers seem to prefer the Nucleus estate model; in other words, they will accept the agribusiness company to be involved in the production process, by doing monitoring and providing advice at each stage of the production.

41Type: The farmers express their preference for a written agreement instead of a non-formal oral contract.

42Conflict Management
Among the farmers who are willing to do contract farming, 67.5% find it normal to impose a sanction or even sue a farmer who failed to his commitment.

3.4. Integrated Strategy

43Our linear model shows that the annual income and the Package of Technologies and the area cultivated have a positive influence on productivity. Furthermore, an increase in the area cultivated seems to be corresponding significantly with a decrease of the Investment per hectare while improving the land productivity. As specified by the model:

πi= -0.52 +0.000065αi - 0.000045γi + 0.14δi+0.5θi+ εi (see table 5)

Table 5. Model’s Coefficients

Variables

Estimate

Std. Error

t value

Pr(>|t|)

Sig.

(Intercept)

-5.283e-01

7.058e-01

-0.749

0.45666

Annual income

6.506e-05

4.296e-05

1.514

0.13441

Investment/ha

-1.454e-05

4.677e-06

-3.109

0.00271

‘**’

Area cultivated

1.433e-01

2.393e-01

0.599

0.55112

Package of technologies

5.041e-01

9.499e-02

5.307

1.25e-06

‘***’

Signif. codes : 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1
Residual standard error: 1.154 on 70 degrees of freedom
Multiple R-squared: 0.3906, Adjusted R-squared: 0.3558
F-statistic: 11.22 on 4 and 70 DF, p-value: 4.339e-07

44Implication: The cycle of decapitalization leading to low productivity can be broken by giving the farmers access to a valuable source of income. This would supply their income need and cause two specific changes:

  1. Less pressure on the natural resources

  2. Adequate package of technologies and regularity in the crop calendar. See the figure below:

Fig.4- Breaking the cycle of decapitalization and enhancing the productivity of smallholdings

Fig.4- Breaking the cycle of decapitalization and enhancing the productivity of smallholdings

Conclusion and Recommendations

45This study was focused on the determination of an effective strategy for the purpose of solving the productivity issue which is in full swing in Haitian farming. To this end, the study suggests that providing an alternative source to meet the need of income faced by the Haitian farmer through the means of contract farming, will strengthen their ability to apply an adequate package of technology on their field. Which will have the effect of enhancing the productivity and the agricultural production generally.

46According to the results of previous technical experiences related in the paper, the new productivity level reached through this strategy will allow the country to overcome its self-sufficiency for maize.

47In this same perspective, some recommendations are provided relatively to what is necessary for better effectiveness of the proposed strategy and in accordance to the information collected from farmers:

  1. The increase of the area cultivated is necessary for a greater impact on the productivity, in addition, that will also lead to a decrease in the investment/ha.

  2. The government and the institutions must consider investing in research and development in other to develop indigenous package of technologies.

  3. The implementation of this strategy requires the involvement of the government in terms of policies (law) elaboration and as a guarantor of the smooth running of this new institution.

  4. The Agribusiness companies must prioritize the farmers with at least one (1) ha of area cultivated. Therefore, a cooperation system between several small-scale farmers whose plots are adjacent is suggested.

  5. Regularity in the payments and close monitoring is highly recommended to avoid any pretext and attempt to violate the contract.

  6. As far as possible, the company must be reassured that the farmer will find irrigation water during each cycle and that the field is not too vulnerable to natural disasters due to its position.

  7. Regarding the price fixation, it will be better to set it up before each season. However, the company can provide some fringe compensation when it appears unfair due to the market reality.

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Notes

1 Food, Seed & Industrial

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Table des illustrations

Titre Figure 1 – Scheme of the decapitalization process of small holding
Crédits Source: (Smolinowski, 1993, p232)
URL http://journals.openedition.org/etudescaribeennes/docannexe/image/21669/img-1.png
Fichier image/png, 96k
Titre Figure 2. Map of the 10 Department of Haiti
Crédits Source.odapsa.org
URL http://journals.openedition.org/etudescaribeennes/docannexe/image/21669/img-2.png
Fichier image/png, 253k
Titre Table 3. Qualitative variables (Willingness determination)
URL http://journals.openedition.org/etudescaribeennes/docannexe/image/21669/img-3.png
Fichier image/png, 98k
Titre Fig. 3. Four quadrant-model (Annual Income/Area cultivated)
Légende A: High annual Income & small Area cultivatedB: High annual Income & large area cultivatedC: Low annual Income & small area cultivatedD: Low annual Income & large area cultivated
URL http://journals.openedition.org/etudescaribeennes/docannexe/image/21669/img-4.png
Fichier image/png, 272k
Titre Fig.4- Breaking the cycle of decapitalization and enhancing the productivity of smallholdings
URL http://journals.openedition.org/etudescaribeennes/docannexe/image/21669/img-5.png
Fichier image/png, 79k
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Pour citer cet article

Référence électronique

Rival Valcin et Tomohiro Uchiyama, « Effective Farm Business Strategy for Local Commodities in Haiti; Case of Maize », Études caribéennes [En ligne], 49 | Août 2021, mis en ligne le 30 août 2021, consulté le 19 septembre 2021. URL : http://journals.openedition.org/etudescaribeennes/21669 ; DOI : https://doi.org/10.4000/etudescaribeennes.21669

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Auteurs

Rival Valcin

Master Student at TUA; E-mail address: rivalcing7@gmail.com

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Tomohiro Uchiyama

Tokyo University of Agriculture (TUA), Department of International Agribusiness Management, http://dbs.nodai.ac.jp/html/100000956_en.html

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Les contenus d’Études caribéennes sont mis à disposition selon les termes de la Licence Creative Commons Attribution - Pas d'Utilisation Commerciale 4.0 International.

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