Profitability of a farm enterprise is determined in large part by the value output that is derived per unit of input. Typically, there is significant loss to the enterprise when the farmer makes all the input from investment in equipment, materials, and labor but does not have control over the market value of what is produced and distribution. A significant percentage of profits from farm production lies in the hands of “middle-men” or “turn-hands” and retailers by basically cleaning, packaging, transporting, and displaying them – with time of the seller involved. Other more involved opportunities in the value chain are mainly agro-processing items that would otherwise be wasted, rendering, and specialty or other products that transition from the primary to secondary and tertiary economic sectors. This can occur within the farm from waste conversion to raw material for use on the farm, and also outside the farm and into the marketplace.
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This chapter identifies various opportunities for farmers to benefit from the value chain. After all costs have been paid into land preparation, irrigation, planting, maintenance, and harvesting, etc., an enterprise is expected to benefit from the sale of produce. Post-harvest loss continues to pose high risk to farmers when produce is not sold due to lower market demand. Locally produced foods are also in direct and fierce competition with imported foods. When foods are imported that can otherwise be produced locally, the local economy loses out on the multiplier effect of farming activities. Therefore, it is prudent to build an economy around the primary sector with import substitutes where possible, while reducing dependency on imported foods. However, supermarket owners and some restaurant owners argue that local supply is not consistent and reliable, and also do not have the standards as imported foods, according to interviews of stakeholders in St. Kitts by Naraine in 2005. However, in the interviews of stakeholders during the same period indicated that consumers prefer the richer and fresher taste of locally produced vegetables, melons, and meats in which hormones are not induced as is typically of large volumes of imported foods at the “low end” of the market; it is not necessarily the same for “high end” or premium foods. One relatively low-cost improvement that brings greater value to local produce is presentation so that they appear attractive to be on par or surpass the appeal of imported produce. The perspective that lower cost produce at the point of sale is better does not take into consideration the multiplier effect of locally produced goods and services, but this aspiration is required to include data on related services for imports vs. related services for local agriculture products.
However, the reality of it is that locally produced agriculture products in some instances are more expensive than the same or similar imported produce. This is so because of the local cost of production which is in part due to the low economies of scale and the cost relatively high cost of input in a tourism oriented economy. The diversified-integrated model shows how the cost of production can be accounted for so that the cost of production is more competitive with imported produce, as well as the limited to no benefits in the potential value chain, to which this chapter now turns.