Market Research on Agro-tourism Products and Services

73 Pages·2009·0.4 MB·English

Market Research on Agro-tourism Products and Services

FINAL REPORT

MAY 19, 2006

Inter-American Institute for Cooperation on Agriculture (IICA) Office
in Jamaica
P.O. Box 349, Hope Gardens
Kingston 6

Submitted by:

Carolyn E. Hayle
Senior Programme Officer
Matthew Harvey, Consultant
Kwame Emmanuel, Consultant
Institute for Hospitality and Tourism
University of the West Indies
Mona, Kingston 7
Table of Contents

Executive Summary Page 4

Introduction – Agro-tourism 9

Definitions 11

Scope of the project 17

Methodology 17

Gap Analysis 20

Potential for Agro-tourism 29

Barriers to development 39

Stakeholders’ perspective 42

Marketing Analysis 48

Recommendations 49

Conclusion 52

Appendices 55

Bibliography 72

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ABBREVIATIONS

CARICOM Caribbean Community
CFNI Caribbean Food Nutrition Institute
CTO Caribbean Tourism Organisation
EU European Union
FAO Food and Agriculture Organization
FOS Friends of the Sea
HUDO Hills United Development Organization
JAMPRO Jamaica Promotions Ltd.
JBDC Jamaica Business Development Centre
JOAM Jamaica Organic Agriculture Movement
ICT4D Information Communication Technology for
Development
IICA Inter-American Institute for Cooperation on
Agriculture
MBCC Montego Bay Community College
MOA Ministry of Agriculture
MTEC Ministry of Tourism Entertainment and Culture
NPI Natural Products Institute
PCJ Petroleum Corporation of Jamaica
RADA Rural Agriculture Development Agency
SDC Social Development Commission
TIES The International Ecotourism Society
TPDCo. Tourism Product Development Company
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Executive Summary

Small island nations, such as those in the Caribbean, have to find new points of
competitive advantage in an increasingly complex and dynamic international market
place. Lack of scale and transport costs effectively preclude many options, but tourism,
which is now the Caribbean’s largest industry, has considerable scope for further
expansion. As the Region’s dependence on tourism is likely to increase, it is critically
important that the industry should serve as an engine of a wider process of development,
and that negative environmental and social costs are minimized (Hayle, 2005). The issue
of increasing dependency on tourism is vital for a number of developing countries that
have relatively few alternatives for economic development. This is a cause for concern,
as any down-turn in the tourism sector then has a markedly negative effect across the
entire economy

It is therefore critically important that the developing countries that find
themselves in this position learn to operate more effectively in increasingly complex,
diverse, competitive tourism markets to develop an understanding of the implications of
the shifting patterns of global development and trade, and devise effective strategies for
becoming increasingly competitive. This requires a much more sophisticated and
pragmatic understanding of the global tourism system.

Liu (1994) also points out that four elements, generating markets, transit route,
destination and industry, comprise the tourism system and all four are interwoven in
functional and spatial relationships. A good business model requires an understanding of
the entire global tourism system. This is partly because it is important to understand both
the demand determinants that push a tourist into a travel decision, and the supply
variables that pull the tourist towards choosing a particular holiday destination. Liu (ibid)
also argues that tourism has a clear business cycle that is usually about 6 or 7 years long,
and is fairly well correlated to the world economic cycle, making it essential to
understand the larger pattern of economic development and change in order to be able to
effectively manage the industry. The acknowledgement of a 6-7 year cycle linked to
global patterns underscores the need to decrease dependency on tourism and create
strategies that would reduce any cyclical shocks. The Caribbean is increasing its
dependency on tourism with one in four jobs predicted to come from this industry by
2014. Liu’s comments therefore are of significance.

Given those constraints, a basic tourism system requires specific interventions in
effective and efficient systems at both the macro and micro levels to detect, manage and
analyze shifts and changes in market demand, consumer profile, consumer behavior and
general shifts in international trade (this also assumes that appropriate strategies are in
place to manage the detected changes). Creating sustainable livelihoods, an objective of
this exercise, also requires a link between the macro and the micro environments.

Research revealed that there had been a study of the link between agriculture and
the hotel sector conducted in 1996. It was estimated then that the total value of food
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purchased by the hotel sub-sector of the tourism industry was J$2.3 billion (Source:
MOA, 1996). This study had not been updated. However, an interview with a doctoral
candidate investigating the subject of agro-tourism indicates that currently there are no
formal structures and systems in place. This was also confirmed through face to face and
telephone interviews with hoteliers and farmers. The doctoral candidate notes, however,
that there are three types of linkages between farmers and hotels: informal arrangements,
contract farmers, and non-contract farmers. There is no formal system that links the
communities to the hotels. The interviewee confirms that relatively little has changed
since the 1996 report. Of importance, is the fact that the 1996 study reviewed only the
hotel industry and not the wider tourism sectors and, therefore, did not give a full picture
of the link between agriculture and the tourism system.

There are a number of factors that prevent an effective strategic
network/partnership between the industries of tourism and agriculture and impact
negatively upon the activities of the key stakeholders. The end result is stymied potential
for socio-economic gains that can result from these networks. Currently, there is no
established durable dynamic for agro-tourism despite the availability of the resources, the
interest of the key stakeholders and the increasing demand for the goods and services to
be supplied from this synergized industry. More importantly, there is no leader for the
cause. This is reflected in the list of obstacles affecting the development of a true agro-
tourism product. Other reasons for the stagnation are categorized, outlined and illustrated
in the diagram below:

• The absence of policies linking the sectors
• Lack of an agriculture policy
• Ineffective and inadequate policy relating to internal coordination within
agencies
• Poor coordination between and among related agencies and between
individuals and organization and financing agencies
• Poor access to finance and machinery
• Ineffective marketing
• Poor communication
• Illiteracy
• Inconsistent supply
• Lack of formal contractual agreements
• Poor business practices
• Poor understanding of the international markets and trade regimes
• Poor understanding of marketing and consumer behaviour in the tourism
market place.
• Poor understanding of the use of the tourism system as a tool for development.

5
Sustained Dynamic for Agro Tourism

Institutional
Consistent
competence and Effective
supply of
training Marketing
inputs
Governance of
Adequate institutions
Financing
Effective
Effective Sustained Communication
Data base Dynamic for
Agro-Tourism
Effective
Consented
Information
shared vision
Technology
Understanding
Culture of
of the dynamic
Linkage among cooperation
relevant institutions
Matthew Harvey 2006

If the key drivers are not adequately actualized, the result will be a failure to
establish a durable dynamic for Agro tourism. These drivers also reflect the negative
impacts on the system from the factors which prevent an effective strategic
network/partnership between the industries of tourism and agriculture.

Notwithstanding the preliminary findings, there are products that represent the
potential for agro-tourism but they are in isolated pockets. Three possible products
(broadly defined) exist that can lead to agro-tourism defined in a Jamaican context.
These are:

(cid:190) the provision of raw produce to several elements of the tourism sector,
rather than just one;
(cid:190) the provision of minimally processed products that result in convenience
products for the tourism markets, the Diaspora and the domestic markets;
and
(cid:190) value added products that can yield a continuous stream of revenue for the
country.

To achieve full potential a multi-sectoral strategically managed approach is
required based on:

1. Using a matrix management approach, identify a leader that can manage
the development of agro-tourism for a specific period until having become
accepted in both sectors and generally it can sustain itself.

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2. Crafting and articulating a definition that reflects the intent of agro-
tourism in Jamaica.

3. Repositioning Jamaica as a healthy lifestyles destination to create a new
image and new tourism product which will attract both the foreign and
domestic market segments and built on synergies between agriculture and
health.

4. Crafting an agro-tourism policy with input from the Ministries of
Agriculture, Tourism and Health.

5. Revisiting policies aimed at micro-enterprise development with a view to
encouraging more people to participate in the creation of small business
relating to agro-tourism.

6. Creating policies that address financing for research and development.

7. Reviewing the potential of the Tourism Enhancement Fund for financing
long term sustainable linkages with sectors other than tourism but which
yield new and vibrant tourism products.

8. Restructuring the working relationships between and among agencies to
yield a dynamic stakeholder group.

9. Restructuring of the players in all three potential market segments (raw
produce, minimal processing and end-product) to create new trading
partnerships aimed at local and global competition.

10. Creating a long term sustainable link with agriculture and tourism
focusing on value added products.

Product:

A suggested definition for agro-tourism is:

Agro Tourism in Jamaica is the strategic utilization of the tourism system to
reposition Jamaica as a healthy lifestyle destination based on value-added
products (raw, minimal and end process) derived from inputs from its unique
biodiversity (terrestrial and marine), strategic clustering of the supply chain and
empowerment of the micro-enterprise sector in both the agriculture and tourism
sectors.

The specifics of the three distinct products and potential markets are:
1. Raw Products (fruits, vegetables, meats, seasoning etc.). Potential
target markets: Hotels (large and small), festivals and attractions.

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Organic farming can be used to create gourmet niche markets in up-end
properties.

2. Minimal process products (raw products packaged for convenience)

Potential target market: large properties, festivals, attractions, the domestic
households and the Diaspora. The ultimate goal is to reacquaint the Diaspora with
Jamaican foods, conveniently packaged to fit their lifestyle, as a first step in
creating the need for these products in the mainstream markets within the
generating markets.

3. End point processing (raw products processed to finished goods ready for
export)

Nutraceuticals, functional foods, ethno-pharmacology and cosmetics.

Potential target market: domestic and export markets. The goal is to create large
industries with the capability of supplying the global market with goods made
from indigenous Jamaican species (terrestrial and marine).

Conclusions

The Food and Agriculture Organisation in a discussion on agri-business suggests
that:

“…to distinguish the phase of product of raw materials from the processing and
the transformation phase, the distinction is often blurred by the complexity of
technology and the extent of vertical integration: the industrialization of
agriculture and development of agro-processing industries is thus a joint process
which is generating an entirely new type of industrial sector.” (website: March 22,
2006)

Agro-tourism in Jamaica, inclusive of agriculture and agri-processing, cannot be realized
unless it is strategically managed. This requires a holistic approach from and a shared
vision by all the stakeholders, in particular, the key decision policy makers who are
expected to drive and create the environment necessary to facilitate its development.
Agro-tourism strategically managed at the macro and micro levels by focusing on micro
enterprise development and value added production further strengthens the vehicle for
sustainable development in Jamaica. It is an opportunity waiting to happen.

****************

8
Agro-Tourism

Introduction

Small island nations, such as those in the Caribbean, have to find new points of
competitive advantage in an increasingly complex and dynamic international market
place. Lack of scale and transport costs effectively preclude many options, but tourism,
which is now the Caribbean’s largest industry, has considerable scope for further
expansion. As the Region’s dependence on tourism is likely to increase, it is critically
important that the industry should serve as an engine of a wider process of development,
and that negative environmental and social costs are minimized (Hayle, 2005). The issue
of increasing dependency on tourism is vital for a number of developing countries that
have relatively few alternatives for economic development. This is a cause for concern,
as any down-turn in the tourism sector then has a markedly negative effect across the
entire economy.

The Caribbean is particularly vulnerable. Clayton et al 2004 note that:

“Five Caribbean nations lie in the global top twenty in terms of the percentage of
total employment that is related directly or indirectly to the industry. Antigua and
Barbuda is currently the most dependent nation in the world; some 95% of all
employment is related, directly or indirectly, to the travel and tourism industry.
Jamaica is currently the fifth most dependent economy in the Caribbean (p.4).”

This situation has arisen for positive as well as negative reasons. Climate, beaches,
natural beauty and convenient geographical location have enabled many developing
countries to develop strong, competitive (at least in the short term) tourism businesses.
Tourism is now the largest single source of foreign exchange for many countries. On the
other hand there are significant technology gaps, large capital investment requirements, a
general lack of capacity in administrative and technical skills, tariff and non-tariff barriers
and infrastructural deficiencies all represent significant barriers to entry to other potential
markets, which means that some of these developing countries now depend largely on
tourism as the major engine of economic development and social progress. This prominence
has been reinforced by the decline of traditional export industries such as sugar and bananas
leaving many countries without a viable economic alternative.

It is therefore critically important that the developing countries that find
themselves in this position learn to operate more effectively in increasingly complex,
diverse, competitive tourism markets to develop an understanding of the implications of
the shifting patterns of global development and trade, and devise effective strategies for
becoming increasingly competitive. This requires a much more sophisticated and
pragmatic understanding of the global tourism system.

9
Understanding the Global Tourism System

The tourism system is composed of four elements:

(cid:190) The tourists from the generating regions
(cid:190) The transit routes
(cid:190) The destination
(cid:190) The industry

Several authors support the notion of a tourism system [Liu (1994, p.20) (Ritchie 1993, p.
201); Valayer (1999, p. 47); Richard (1995, p. 317)]. Liu also points out that these four
elements are interwoven in functional and spatial relationships, and that a good business
model requires an understanding of the entire global tourism system. This is partly
because it is important to understand both the demand determinants that push a tourist
into a travel decision, and the supply variables that pull the tourist towards choosing a
particular holiday destination. Liu also argues that tourism has a clear business cycle that
is usually about 6 or 7 years long, and is fairly well correlated to the world economic
cycle, making it essential to understand the larger pattern of economic development and
change in order to be able to effectively manage the industry. The acknowledgement of a
6-7 year cycle linked to global patterns underscores the need to decrease dependency on
tourism and create strategies that would reduce any cyclical shocks.

Given those constraints, a basic tourism system requires specific interventions in
effective and efficient systems at both the macro and micro levels to detect, manage and
analyze shifts and changes in market demand, consumer profile, consumer behavior and
general shifts in international trade (this also assumes that appropriate strategies are in
place to manage the detected changes).

This system provides an opportunity to create tangible outcomes from tourism
for people who usually do not interface with it directly but whose lives are affected by it.
It also provides an opportunity for Jamaica to strategically link two of its major sectors,
agriculture and tourism, in a way that may well provide a vehicle for sustained economic
growth.

In contextualizing the subject of tourism and its link to agriculture it is important
to define the existing terms and then refine these terms to reflect Jamaican realities.
There are a few other reasons for focusing on definitions: historical context and the idea
that development is unique are two such reasons. That is, there are certain perceptions
about tourism which are linked to our past and so in designing a new product this is of
high consideration. Also each country must define its own terms, state and stages of
development.

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