RESEARCH WORK

Value chains of farming products in six municipalities of Cuba. II. Experiences of their application

Miguel Suárez-Castellá¹, Gilberto Hernández-Pérez¹, Carlos Roche-Hernandez¹, Marisol Freire-Seijo², Osmel Alonso-Amaro³ and Maybe Campos-Gómez³

¹Facultad de Ingeniería Industrial y Turismo, Dpto. de Ingeniería Industrial, Universidad Central Marta Abreu de Las Villas (UCLV), Ministerio de Educación Superior (MES) Carretera a Camajuaní km 5 ½, Santa Clara, Villa Clara, Cuba
² Instituto de Biotecnología de las Plantas, UCLV, Santa Clara, Villa Clara, Cuba
³ Estación Experimental de Pastos y Forrajes Indio Hatuey, Universidad de Matanzas, MES, Matanzas, Cuba
E-mail: miguelsc@uclv.edu.cu

ABSTRACT

The objective of this study was to define the value chains per farming product according to the integration among the participating actors (farmer-scientific centers-decision makers-technical services-population) in productive entities (PE) of the Matanzas and Villa Clara provinces, inserted in the International Project Coinnovation. For such purpose the methodology proposed in part I of this paper was used, which considers the vision of the farmer's integration with the other actors of the chains, the general model of value chains of farming products at local level, the generic and specific maps of each chain and farmer with their corresponding process handbooks, as well as the results of the diagnosis made and the critical points present in the chains. The results of the application of such methodology allow to conclude that the methodological procedure used, which is based on novel and valuable aspects for the design of value chains of farming products at local scale (general model, generic and specific maps per product and farmer), as pilot test within the framework of the Coinnovation project, allowed to design 64 specific maps of value chains per product and per farmer with their 28 process handbooks, taking into consideration the results of the previous diagnosis in the PEs (with the detection of the existing problems) and the definition of the critical points of the value chains, as well as the strategies for their implementation. This constitutes a recommendation for the country to consider and promote at municipal level.

Key words: agriculture, diagnosis, rural development.

INTRODUCTION

The benefits provided by the use of productive and value chains for food production is an aspect that is acknowledged as transcendental by the international scientific community. Hence their design and implementation constitutes a viable alternative to guarantee the satisfaction of the population's food demand with competitive products.

An authentic concept of value chains is defined as: the itinerary or process followed by an agricultural, livestock, forestry or fish product through the production, processing, conservation and transformation activities until reaching the final consumer; this chain also includes the supply of inputs (funding, insurance, machinery, seeds, fertilizers, among others) and important equipment, as well as all the support services that have a significant incidence on the development of such activities (SAGARPA, 2001; Hernández-Pérez, 2012; Hernández-Pérez and Suárez-Castellá, 2013).

In the case of the current Cuban economy, according to the above-mentioned statements, barriers are acknowledged for the implementation of the value chains (Díaz and Torres, 2011), because the Cuban market, small in nature, is institutionally and territorially fractionated; the support activities are multiplied throughout the country with low efficiency levels; no alliances are promoted among national organizations that generate productive synergies and linking, with predominance of vertical and hierarchical relations; an institutionally or territorially focused culture prevails, reinforced by a short-term vision that generally is analyzed per parts, without integration of sectors and without an approach of productive linking.

However, Bu and Rego (2007) as well as Acevedo (2012a, 2012b) acknowledge that the changes in Cuban economy contribute special peculiarities for the design and implementation of value chains, such as: presence of multiple production management forms which widen the aspects that could be influencing the value chains; multiple variants for the commercialization of farming productions; concentration of the fundamental technological inputs in the hands of the State, and presence of actors of the value chains who operate under a budgeted system, and who simultaneously perform state and entrepreneurial functions, among other aspects.

On the other hand, many of the experiences recorded in literature propose productive chains of farming products which integrate actors associated to wholesale or retail enterprises that commercialize them and which, in general, have national reach and do not consider the local environment as a scenario for the development of the chains. Innovation is acknowledged as one of the basic elements (Gomes de Castro, 2015), but its insertion in the methodological tools for the design and diagnosis of the chains is not evident yet, and even less are they are supported by scientific results generated and endorsed by research institutions.

Thus, the objective of this study was to define the value chains per farming product in accordance with the integration among all the actors who participate (farmer-scientific centers-decision makers-technical services-population) in the productive entities (PE) of the Matanzas and Villa Clara provinces, inserted in the international project Coinnovation.

In the foundations to conduct this research the estimated result about the integrated management system of the value chain of farming products, included in the Coinnovation project, was taken into consideration.

The methodological procedure used was the one proposed by Suárez-Castellá et al. (2016), which contemplates four phases and takes into consideration the vision of integrating the farmer with the other actors of the chains, and in which the following stand out: the general model of value chains of farming products at local level, the generic maps of value chains of farming products derived from that model, the specific maps of each chain and farmer with their corresponding process handbooks, as well as the results of the diagnosis and the critical points present in the chains.

For the collection and analysis of the information the techniques enunciated by the above-mentioned authors were used.

The eight most outstanding farming products were selected, for the design of their corresponding value chains, of their specific maps and of the process handbooks.

RESULTS AND DISCUSSION

The first results reached when applying the methodological procedure proposed by Suárez-Castellá et al. (2016) for the design of value chains of farming products at local level were the technical-organizational and training intervention measures, among others, which were required in each PE, after the technical-productive diagnosis and before the technology transfer process.

Regarding phase I, the values that are added per each chain component were identified, which were in correspondence with the ones that generated the forty technologies transferred to the farmers, along with the adaptations or arrangements (coinnovations) they made to guarantee the success of their introduction. An example of the values generated by some introduced technologies, determined through surveys to farmers, is shown in table 1; it is also indicated that the technologies add values in the products as well as in the processes (technological and commercialization ones).

Such process of adding value generated by innovations has not been considered by different authors. Thus, for example, Jeppesen et al. (2004), Pietrobelli and Rabellotti (2005), Riisgaard et al. (2010) and Companioni (2011) stated that the addition of value in the final products of the chains (from the primary to the transformed farming product) only occurs in finished products. However, according to the result obtained the value addition is also possible in any process of the obtainment of the final product, criterion that coincides with the report by Mairich and Melgar (2006), Monreal (2009), Hernández-Pérez and Suárez-Castellá (2015). In addition, it was defined that the necessary inputs and technical services also add value to the final product in the different links of the chain, and they also contribute improvements in the form of presentation and quality of the product (for example, products processed, packaged and/or processed in mini-industries, among other possible ones).

As last step of this first phase the elaboration of a general model proposal of value chain for farming products at local level stands out (fig. 1), which takes into consideration the new changes that occur in the Cuban agricultural sector, a part of the implementation of the Guidelines of the economic and social policy of the Party and the Revolution (PCC, 2011) from the municipality to national level, which include: the conception of development from the municipalities; the decentralization of economy and the generation of incomes for their utilization at that level; the integral programs of municipal development as tools of medium- and long-term strategic projection, where feeding the population is the main aspect; the priority given to the municipalities for the substitution of imports through the supply to tourism areas; the leasing of idle lands to farmers and cooperatives which change the farming productive matrix of the country; the widening of self-employment; the presence of new figures and new forms of product commercialization; as well as the policy of price benefits for purchasing farming products; which was identified by Suárez-Castellá et al. (2014b).

This model is a necessary methodological tool for the design of value chains in Cuba, because it allows to identify clearly the actors and links of the chains, which constitutes one of the novel aspects, as most specialists do not use this tool for its being restricted to the scenario where it is developed; among them are Briones and Laborde (2008), Coursaris et al. (2008) and Di Giacomo and Patrizi (2010).

In phase II the main current problems in the production and commercialization of farming products at municipal scale were identified, by all the farmers benefitted by the project and the six groups of municipal officials who work with the food sector; among which are:

• Deficiencies in the necessary logistics for the production and commercialization of farming products with the required quality, especially in the design and fulfillment of the purchase-sale contracts between farmers and state marketers, as well as in the detailed definition of the obligations of the parties, in the schedule for each commitment and in the lack of significant penalties for contract breaches by both parties.
• The real definition of the quality of the products delivered by farmers, which is very often arbitrarily defined by the buyer, which, along with the inexistence of a coherent policy per class of quality, causes significant economic losses for the farmers, with their subsequent discouragement in the fulfillment of the commitments with the State.
• Farmers have very limited offers of their products (only fresh, in their natural state), which causes significant losses when there are high yields or they are in the productive peaks, as a result of seasonality.

As a result of the diagnosis made of each of the actors of value chains at municipal level (farmers-technical services-financial services-government-National Association of Small Farmers (ANAP)-input providers), the following deficiencies were detected:

• The services closer to the farmer, precisely those provided by cooperatives of credits and services (CCS) and the municipal farming enterprise (machinery, agricultural tools, processing plants, among others), frequently cannot be provided because the equipment is overexploited, for which the existing demand is not satisfied.
• The existing technical services in the municipality (farming enterprise; CCS; directions of Plant Health, Soil and Veterinary; bank of credit; state insurance; Labiofam entrepreneurial group; among others) show serious limitations in their functions and performance; for example, the Soil and Plant Health entities have multiple state, regulating and entrepreneurial functions, which limit their offer to the farmers. Besides, the budgeted character of the economies of those entities and the serious infrastructure, equipment and transportation as well as trained personnel problems, also hinder the offer of a service with the required quality.
• The financial services also show limitations, because there is not a credit and insurance culture in the farmers, and most of them do not know about their existence. In addition, the excessive regulations and restrictions to have access to them constitute an obstacle.

On the other hand, in phase III the generic maps of the value chains for the most representative products among the farmers who participated in the project (of two or three products, as average, per farmer), were elaborated, derived from the general model of value chains for farming products at local level (fig. 2).

Among the criteria that were used to define the most representative products, the following were delimited:

• The most significant products for the farmer due to the production they reach or their value.
• The products benefitted by the project, especially those produced with technologies to which resources were allocated.
• The products that are processed in mini-industries.

The eight most representative products of which the generic maps of value chains were elaborated were: pork, cow milk, grains, vegetables, roots and tubers, fruits, eggs, pastures and forages. In such maps all the actors who should intervene in the chains from the initial production process to the final consumer are visualized.

An example of generic map of value chains elaborated by Suárez-Castellá et al. (2014a) is shown in figure 2.

These generic maps of value chains per product also constitute a novel aspect, because there are several authors who define the specific value chains without going through the generic maps (Mancero, 2007; Nova, 2009), and such maps are a valuable tool for the specialists who design the chains.

Derived from these maps of generic value chains, the specific maps per product and for each farmer (64 in total) were defined, in which reference was made to the relations among them and the existing gaps were indicated. Figures 3a and 3b show two examples of these maps, where the continuous lines represent the material flow between actors and the discontinuous ones, the financial flow.

From the specific maps the process handbook of each value chain per product and per farmer were elaborated, in which the fundamental processes are described in detail, and their internal structure included:

• process map
• executive summary
• description of the processes of production contracting, production (which includes the contracting of inputs and services), and of distribution and commercialization.

Each one of the processes is described step by step and the inputs, activities that compose it and their outputs are detailed. As an example, the content of the process handbook of the value chain for a given crop, in this case the guava tree, is described below in a summarized way:

1. Product: guava

2. Offer: fresh, packaged in boxes

3. Main destinations of the product that reaches the population:

3.1 Fresh product:

3.1.1 Storage Enterprise

3.1.2 Supply and demand market:

- Sale points of the CCS

- New self-employment figures (private cargo driver, street vendor, commercial fairs, private gastronomy, gastronomy cooperatives, among other possible ones)

4. Providers:

- Municipal farming enterprise

- Laboratory of Plant Health (CREE)

- Farming supplies enterprise

- Research centers (CIAP/UCLV)

- MINCIN

5. Technical services

- Plant Health laboratory

- Municipal farming enterprise

- CCS

- Research centers (CIAP/UCLV)

- FONADE

Finally, in phase IV the critical points that persist in Cuba for the implementation of value chains were determined, which are listed below:

• There are no concrete studies about the food demands of the population at municipal scale. The annual demands for the provincial and national balances are not accurately indicated.
• The municipal development plans do not always constitute a work document for municipal governments.
• Absence of stimulation mechanisms to an actor for being part of a chain.
• Inexistence of a regulating framework that promotes value chains.

It was also determined that the implementation of the value chains for the farming productions at local level should be developed in two stages: a first one, in which the integration of the corresponding demands in the annual planning of each actor of the chain is achieved (if a coherent plan is reached among the actors of the chain, an integration higher than 50 % and, thus, a sensitive decrease of losses in the production and post-harvest, an increase in the farmers' yields and incomes, and hence a higher satisfaction of the food demands by the population), and a second one aimed at the optimization of these relations through an integrated logistics.

The methodological procedure used, which is based on novel and valuable aspects for the design of value chains of farming products at local scale (general model, generic and specific maps per product and per farmer), as pilot test within the framework of the project Coinnovation, allowed to design 64 specific maps of value chains per product and per farmer with their 28 process handbooks, taking into consideration the results of the previous diagnosis of the PE (with the detection of the existing problems) and the definition of the critical spots of the value chains, as well as the strategies for their implementation. This constitutes a recommendation for the country to consider and promote at municipal level.