Journal of Agrarian Change, Vol. 11 No. 1, January, pp 29-59 Challies, Edward R. T. and Warwick E. Murray (2011)

The integration of smallholders into global value chains, even for raspberry growers in Chile where there is a natural ‘small size’ bias, necessarily requires public interventions in terms of training and institutional reform that addresses quality requirements and fulfillment.

The globalized world has increasingly witnessed a greater role played by global value chains (GVC) for agricultural and food products in the past few decades.

While it has been argued that farmers in developing countries stand to benefit through integration with the GVCs, the contemporary experiences of agricultural trade points out that there are significant obstacles for smallholders to enter and sustain within GVCs. This bias of GVCs against small and marginal farmers is caused by various factors. Institutional reforms regarding the governance of value-chains are important to successfully facilitate the integration of poor and resource-scare farmers into GVCs.

Challies and Murray in this study of smallholder raspberry growers in Chile try to comprehend the interface between GVCs and rural livelihoods outcomes. While the GVC literature usually focuses more on technical aspects with lesser attention to livelihood implications of those at the upstream of the chain, the livelihood framework that has developed in recent times often takes a view of rural livelihoods in an isolated manner, ignoring the broader macro-economic or social processes. To overcome the shortcomings of the two approaches and to examine how GVCs can genuinely benefit poor farmers in developing countries, it is necessary to build an interface between GVCs and rural livelihoods.

This is attempted by the authors in this paper which is based on a primary fieldwork among raspberry growers and different value-chain actors and participants in the Yerbas Buenas village in Linares province. Semi-structured in-depth interviews were conducted to explore the functioning of the raspberry value-chain for different segments of farmers.

The export of raspberries from Chile gained momentum in the eighties, when the Balkan conflict stopped supplies from Serbia. The entry of latter in the market in the nineties after the conflict was resolved led to tough competition for Chilean growers. Sections of large and medium scale raspberry growers moved out of production due to sharp fall in prices though the smaller growers using household labour survived. Presently, Chile is one of the top exporters of raspberry and had 14.2 percent share in world exports in 2006, one-fifth of which was exported as premium fresh fruits to US and EU and the rest as frozen fruits.

Over time, raspberry cultivation has been increasingly dominated by small-holders, not only due to the labour advantage but also helped by the long harvest season of nearly six months which helps smallholders to get fast returns on their investments. The challenge to their integration in GVCs is that exporting companies prefer to procure most of their supplies from the few large raspberry farms. These large farms are either owned directly by the companies or by their board members. The relationship between companies and large farms are governed by regular contracts and companies prefer this option primarily due to the greater reliability of fruit supplies meeting international quality standards. The regulation of product quality is weaker among the large number of small growers at the upstream of the chain. Though, their overwhelming number means that export companies cannot completely ignore the small farmers while procuring supplies.

While physical investment requirements for raspberry cultivation are not very large which allows the pre-dominance of smallholders, their participation in GVCs requires access to certain qualitative assets. The international standards for exporting raspberry fruit as laid down by GLOBALGAP or ChileGAP (good agricultural practices) are quite stringent. Without minimum education levels, training and extension services, it is difficult for most small raspberry growers to meet these standards. The continuous upgrading of these standards also poses challenges to growers who are already participating in GVCs to sustain that participation.

The fieldwork in Yerbas Buenas reveals the incapacity of smallholders to maintain export quality of their fruits on a sustained manner. Additional investments regarding safety and hygiene of cultivation is required as per the international quality standards. Most farmers depend on the technical experts of INDAP (Instituto de Desarrollo Agropecuario), the arm of the Ministry of Agriculture, for advice on maintaining quality. The INDAP programme, however, excludes those growers with farm-size of less than 0.5 hectares. This forms a bias against major sections of smallholders as the field investigation shows that the optimal size of an economically sustainable smallholder raspberry plot ranges between 0.2 and 0.5 hectares.

The structure of the value-chain for raspberry, for fresh and frozen fruits, in the region shows that roads, transport facilities and access to markets is another major impediment for smallholders to participate in the GVCs. Companies seldom directly buy fruits from smallholders and the latter usually sells them to the intermediary traders (conchenchos), often at prices much lower than the premium price.

The study concludes that though raspberry cultivation is mostly undertaken by smallholders, there are veritable challenges to their participation and integration in GVCs. The necessity of meeting stringent international quality standards and poor access to markets acts as major barriers to sustainable integration of poor farmers in the value chains. The differential access of peasant groups to assets plays an important role in whether they can make the necessary investments to participate in value chains. The authors infer from a livelihood analysis of the raspberry growers that significant institutional reforms are required in the governance of GVCs for smallholders to participate. Further, much-needed government programmes in this regard are presently biased against small farmers and more inclusive extension services can assist smallholders to genuinely benefit from raspberry GVCs.