Fresh supply chains for sustainable destinations: case study in La Fortuna
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Sustainable Communities Review
Fresh supply chains for
1. Introduction
sustainable destinations: case
Sustainable supply chain management
study in La Fortuna in agriculture is particularly important since
sustainable agricultural products mean better
Mercedes Montero1 standards of living for rural communities
(United Nations 2015) and healthier products
for an increasingly conscious tourism
La Fortuna, Costa Rica, has population (European Commission 2013,
high potential for becoming a Giovannucci et al. 2012).
Agri‐food supply chains are complex and
sustainable destination
further research can improve competitiveness
according to international GSTC
of host regions, especially when these can be
standards; however, it lacks local sustainable destinations. Sustainability can
sourcing of fresh agricultural also be encouraged by a tourist‐driven
goods, even tough, some of them perspective. In this regard, the Global
there are locally grown. This Sustainable Tourism Council (GSTC) in 2013
research describes the agri‐food introduced a new certification especially
produce supply chain of four designed for sustainable destinations (GSTC
selected products in the region 2014) since there is growing consumer
demand for sustainable tourism.
and addresses governance
Matarrita‐Cascante et al. (2010) addressed
mechanisms, price gaps and
sustainability in La Fortuna and suggested
overall limitations for an several criteria by which this tourist region
effective supply chain. may be considered sustainable. Local
Results provide an insight on sourcing and local prosperity are
the supply chain mechanism and fundamental aspects for sustainable tourism.
main limitations of actors to However, Canedo‐Rivas (2012) analyzed how
create win‐win partnerships agricultural farmers are not included in the
resulting in large price gaps local supply chain and local restaurants do
not source from local farmers.
among supply chain links and
Regional competitiveness is a key aspect
procurement inefficiencies.
of competitive supply chains especially if the
agri‐food supply chain can provide wider
benefits to producers and consumers at the
same time. Since sustainability in supply
chains is improved by enhanced
1
Escuela de Economía Agrícola y Agronegocios, relationships among partners (Seuring and
Universidad de Costa Rica; mercedes.montero@ucr.ac.cr
Müller 2008), this research focused on the
60Sustainable Communities Review
characterization of the food supply chain in the highest proportion corresponding to fresh
this region and the analysis of governance agricultural products (Zevallos 2013).
mechanisms toward the creation of a La Fortuna is located in the region of San
sustainable destination in La Fortuna. Carlos (Figure 10), which is the largest canton
Integration of supply chains, as well as in Costa Rica with 3347,62 km2 and 6.5% of
the adoption of sustainable practices, has the national territory. San Carlos includes
proven to increase performance goals in the these districts: Ciudad Quesada Florencia,
manufacturing industry (Zhu and Sarkis Buena Vista, Aguas Zarcas, Venecia, Pital,
2004) and in the food industry (Vasileiou and Fortuna, La Tigra, Palmera, Venado Cutris,
Morris 2006 Schiefer 2002, Berno 2006). Monterry and Pocosol (Local Goverment of
Nonetheless, management faces problems San Carlos 2016). La Fortuna is the only one
when integrating the first links of the chain of these districts considered to be a tourist
(Stoian and Gotret 2011) in an upstream flow, destination—all other are more agriculture‐
which in this case are agricultural ones. centered.
According to Seuring and Müller’s 2. Literature Review
theoretical framework (2008), the supply Supply Chain Management
chain is organized by the focal company and Stoian and Gotret (2011) have
supply chain decisions are based on characterized the differences between a poor
governance structures. This research performance in a supply chain and what is
addressed these aspects in a descriptive considered determinant for high
study of selected products grown in the performance. These are usually called value
region by small and medium farmers. The chains or sustainable supply chains. These
main goal of this research was to gain in‐ differences are presented in Table 1.
depth understanding of agricultural supply According to Pagell and Wu (2009), a
chains and their dynamics within a sustainable supply chain has good standards
potentially sustainable destination. on traditional measures as well as in the
Costa Rica has emphasized its tourism other dimensions included in the definition
attractions in terms of natural amenities, of sustainable development: social and
including La Fortuna, whose economy has environmental aspects. Seuring and Müller
increasingly shifted towards tourism in the (2008) define sustainable supply chain
past 30 years and whose economy and management as the material, information and
population have shown rapid growth (Acuña capital flows as well as cooperation among
and Ruiz 2000). La Fortuna’s most important companies while achieving goals in the
sectors in terms of economic shares are economic, social and environmental
agriculture, tourism and trading/services. As dimensions of sustainable development,
for agricultural production in the Huetar considering that these come from client and
Norte region of Costa Rica; 15% is stakeholder requirements.
transported to the rest of the country and
21% is targeted for the export market—with
61Sustainable Communities Review
Table 1. Characterization of poor and high performance of a supply chain
Poor performance/supply High performance/sustainable
Criteria
chains supply chains, value chains
System competitiveness and long‐
Purpose Competitiveness of actors
term vision
Orientation Guided by the supply Guided by the demand
Maximize earnings and
Add value through productivity,
minimize costs without
Objective quality, traceability and
considering aspects other than
differentiation
the economic ones
Commercial relationships and
Commercial relationships and
supply of products in medium or
Vision supply of products in short or
long term, with win‐win
medium term
strategies
Organizational
Independent actors Interdependent actors
structure
Medium to high level of
Type of Low level of cooperation and
cooperation and trust; clear and
relationships trust among actors
transparent definition of norms
Relevant and timely for effective
Low and limited to
Information flows development of actor
commercial transactions
relationships
Source: Bourgeois and Herrera (1999), Stoian and Gotret (2011)
smallholder agriculture in the new forms of
From these definitions, two predominant agri‐food governance can be a challenge.
issues can be highlighted. The term Peculiarities of smallholders sustain that
sustainability includes managerial decisions no single model for strengthening their
on economic, environmental and social supply chains can apply universally (IFC
criteria and sustainable supply chains 2013). The characteristics of actors, products
demand collaboration among actors of the and governance mechanisms (Gereffi et al.
supply chain. 2005) partially define the dynamics,
possibilities and strategies for successfully
Supply chains and governance mechanisms coordinating with actors along the supply
Traditionally, smallholders are chain.
recognized as having partial integration in Alternative coordination mechanisms
the market as well as limitations for need to be created so that small farmers are
operating under market principles included; however, these always creates
(Friedmann 1980). The new form of agri‐food costs—transaction costs. Therefore, the
governance is buyer‐driven and has objective of new institutional economics,
developed sophisticated participation rules founded by Coase (1937) and followed by
(Vorley 2001); therefore, the implications for Williamson (1985), is to study conditions
62Sustainable Communities Review
under which firms (or supply chains) are Gereffi et al. (2005) then also classified
more transaction‐cost efficient than markets. hybrid structures as follows:
Supply chain partner selection is based 1. Modular value chains: The ability of
on transaction costs between both parties codifying product specification is less
(Hitt 2012). The process of getting to an complex than the products themselves.
agreement among actors generates frictions Product specifications are codified
and higher transaction costs that are the through a common understanding
result of asymmetries in access to between buyers and suppliers, so that
information, bounded rationality and they only have to work though codified
opportunistic behavior among actors products instead of analyzing the
(Wiliamson 1979). Transaction costs define product each time the transaction occurs,
the relationships created among supply reducing transaction costs.
chains. 2. Relational value chains: These take place
Gereffi et al. (2005) suggest a governance when specifications of a product cannot
typology in global value chains, bounded to be codified, transactions are complicated
the structural transaction‐costs theory and the capacities of suppliers are high.
proposed by Williamson (1991), which In these cases, information flows and
divides supply chains into constant communication among partners
1. Market structures: This is the lowest level of is needed and therefore, changes in
cooperation between actors in which the partners can create high costs.
buying‐selling rules are clear and of common 3. Captive value chains. These occur when
understanding. Transactions are simple and the ability to codify and product
there is no need for a structure to make any complexity specifications are high but the
kind of transfer: the transactions are made in capacities from suppliers are low. These
markets. There are low transaction costs so face changing prices and the buyer,
actors do not tend to deal with any kind of rather than the seller, is the most
institutional arrangements. significant actor in the decision‐making
2. Hierarchy: Product and transaction process.
requirements are very specific and because of
that, enterprises and supply chains tend to 3. Methods
integrate vertically. Generally, there are In‐depth interviews were carried out
larger controls over production and with important institutions in the region,
commercialization due to asset specificity. including La Fortuna’s Development
3. Hybrid structures: These are structures that Association (ADIFORT), the regional
are not located in any of the extremes Ministry of Agriculture (MAG), the National
presented above. Due to differences in asset Bank of Costa Rica, the Costa Rican National
specificity, products characteristics and Chamber for Ecotourism and Sustainable
transaction complexity, these structures are Tourism (CANAECO) and the Costa Rican
defined as hybrid (Williamson 1991). Chamber of Restaurants (CACORE). These
63Sustainable Communities Review
interviews were intended to address the national scale. Taro was also included in the
region’s plan for development as well as analysis because it is produced in La Fortuna
sustainability’s triple bottom line and and it represents an opportunity for
development perspectives. promoting local food in restaurants targeted
to tourists. This is one of the objectives of the
Methods for data collection: farmers National Plan for Healthy and Sustainable
The district of La Fortuna was Food promoted by the Costa Rican Chamber
established as the site for analysis because of of Restaurants (CACORE 2015).
its sustainable destination framework. To get an approximate number of
Although the borders of the wider supply farmers in the region, geographical
chain spread to the international market, the information on people dedicated to
focus for analysis and the farmers’ sample agriculture was obtained from INEC, as well
was estimated according to the geographic as desegregated demographic, social and
limits of the district, since one of the economic data. All other information was
objectives of sustainability is to source locally obtained from field research.
and the goal of the research is to address this In an exploratory phase, pilot interviews
specific topic. were carried out in training sessions
In 2014, INEC conducted the agricultural organized by MAG‐La Fortuna. Three visits
census, but there is no accurate information were planned in order to identify the main
about this study’s population target since regions and to validate the information
farmers dedicated to agricultural products provided by INEC and the selected products
were not identified on a regional scale before interviewing farmers and restaurants.
(district) but on a wider canton scale. A stratified sample was estimated
Information about the exact number of according to the proportion of people
farmers dedicated to the selected products dedicated to the agricultural sector of the
was not available. economy in the district. Six communities
Meetings with La Fortuna regional MAG within La Fortuna were considered for the
were the basis for product selection. Products sample selection: Agua Azul, Sonafluca, Tres
suggested by the regional director were esquinas, La Perla, Los Ángeles, El Tanque
papaya (Carica papaya), yuca/cassava (Manihot and San Jorge. Sample size for farmers was
esculenta) and plantain (Musa balbisiana, Musa estimated on a 90 percent confidence interval
acuminata or a mix of these) (Hernández and 108 farmers were interviewed in these
2015). However, pineapple (Ananas comosus) communities.
and taro (Colocasia esculenta) production were Direct questionnaires were applied from
also included in the questionnaire. Pineapple September to December 2015 in several visits
was included because it can be produced in to the region. All routes were designed
this region; in fact, 47 percent of Costa Rica’s according to INEC’s map, previous visits and
pineapple production is located in the information about important farmers in the
northern region of the country (CANAPEP region and others farmers had previously
2015) and because it is widely consumed on a mentioned. All houses in the selected regions
64Sustainable Communities Review
were visited, and those identified as small Input sources
and medium farmers were interviewed. There are two main agricultural input
suppliers in La Fortuna: El Colono and
Methods for data collection: hotels and Almacen Agroveterinario Dos Pinos, which
restaurants are private institutions. Farmers often get
For selection of the hotels and their inputs from these as well as either from
restaurants, a list of hotel and restaurant governmental institutions (especially papaya
licenses was requested from the San Carlos seeds) or from their buyers, who often
local government. From this list, a total of 325 provide some inputs if their sellers are
licenses were active; however, several committed to a longer‐term agreement.
belonged to the same management. For Institutions such as MAG are often
example, if a hotel had three restaurants, committed to supporting farmers to getting
there would be four different licenses, one for their inputs at lower prices; however, 10
the hotel and three for the restaurants farmers mentioned how input prices are high
although procurement and managerial and they believed the government should
decisions were taken by the same person. support them in lowering at least the main
There were several hotels on the list that did agrochemical inputs. There were no farmer
not include restaurants and therefore these organizations in this region to strive for
were not interviewed. In addition, some policy reforms that could eventually lead to
small restaurants and hotels had closed by structural policy changes that could lead to
the time the research was conducted; lowering input prices.
therefore, the population was reduced to 53.
All restaurants were contacted; however, Farmers
the response rate was 50 percent of the The population in La Fortuna is 73%
population. Interviews were carried out from rural and 27% urban (INEC 2015) and most
September 2015 to January 2016 in previously farmers live in rural regions, close to their
requested meetings with the procurement farms. Socioeconomic development (SD) is
managers; 30 complete questionnaires were divided into the five categories, shown in
filled out by restaurants in La Fortuna. Table 2.
Most of the population (82%) has a low,
4. Results medium‐low or medium SD; however, the
largest percentage (68.4%) is considered as
Supply chain analysis medium while only 1 GMU is considered as
This section characterizes the main actors high and 9 as low. In farmers’ households,
of the fresh produce supply chain and there were an average of 3.91 people per
addresses their dynamics and governance household (SD = 1.60), the mean, median and
structures. mode were all rounded to four people per
household, following a normal distribution.
The national average of persons per
65Sustainable Communities Review
household for 2014 was 3.30. National averages per quintile go from 3.57 members (fifth) to 3.10
members (first). In La Fortuna, 35.6% of households had more than four members, which is
slightly higher than the fifth quintile in national terms
.
Table 2. Socioeconomic levels of La Fortuna’s population, 2015
Socioeconomic level Frequency Percentage Cumulative
(%) percentage (%)
Low 9 5.9 5.9
Medium‐low 12 7.9 13.8
Medium 104 68.4 82.2
Medium‐high 26 17.1 99.3
High 1 .7 100.0
Total 152 100.0
Source. INEC, 2015; N = 152 (GMU: geographical minimum units: INEC’s
measurement of minimum geographic measurements for analysis)
Most of the population (82%) has a low, with a minimum of two years and a
medium‐low or medium SD; however, the maximum of 62, therefore there is high
largest percentage (68.4%) is considered as variation (SD = 13.943). While some have
medium while only 1 GMU is considered as worked as farmers their entire lives, some
high and 9 as low. In farmers’ households, others changed recently shifted to
there were an average of 3.91 people per agriculture, since the construction sector
household (SD = 1.60), the mean, median and deteriorated in the region a few years ago.
mode were all rounded to four people per Both, agriculture and construction jobs are
household, following a normal distribution. considered non‐skilled labor and workers can
The national average of persons per switch easily from one activity to the other.
household for 2014 was 3.30. National Some farmers (eight) that have recently
averages per quintile go from 3.57 members moved to agriculture, mentioned how they
(fifth) to 3.10 members (first). In La Fortuna, were forced to shift from other tourism‐
35.6% of households had more than four infrastructure related jobs to agriculture as a
members, which is slightly higher than the consequence of the recent economic crisis of
fifth quintile in national terms. 2008–2009.
The number of household members was In terms of agricultural dependency for
usually negatively correlated with per capita economic performance, 63% of farmer
income. Therefore, lower national per capita households depend only on agricultural
incomes can be expected in La Fortuna; production, while 37% do not. As for their
however, income and agricultural incomes proportional income distribution, 73%
are not the focus of this research. mentioned all of their income comes from
Farmers have a mean of 25.26 years of agriculture and farming.
experience working in the agricultural sector,
66Sustainable Communities Review
Table 3. Income from agriculture and education level of farmers, La Fortuna, 2015
Income from agriculture
Education level
100% 75% 50% 25% NA Total
17 1 3 2 1 24
Less than 6 years
70.8% 4.2% 12.5% 8.3% 4.2% 100.0%
45 4 4 5 0 58
6 years
77.6% 6.9% 6.9% 8.6% 0.0% 100.0%
12 0 1 0 0 13
Less than 11 years
92.3% 0.0% 7.7% 0.0% 0.0% 100.0%
4 4 1 1 0 10
11 years
40.0% 40.0% 10.0% 10.0% 0.0% 100.0%
2 1 0 0 0 3
Higher education
66.7% 33.3% 0.0% 0.0% 0.0% 100.0%
Total 80 10 9 8 1 108
74.1% 9.3% 8.3% 7.4% 0.9% 100.0%
achieved some kind of higher education.
Most farmers received almost all their However, even when education increased,
income from agriculture‐related activities farmers still received most of their income
whether these were solely crop production or from agriculture ( .
farming; some farmers also combined it with Around half of farmers in this region
other jobs such as drivers, agriculture usually grew more than just one product
machinery rentals, apartment rentals or (44.4%), while 55.6% stuck to one product.
security guards. These were the jobs Most popular crops were cassava (55%),
mentioned most and their working relatives papaya (38%), plantain (35%) and plantain
work mostly in beauty salons or as (30%). Farmers do not rely only on one
elementary schoolteachers. product—they mentioned prices fluctuate
Most of the jobs farmers mentioned are significantly during the year and having
non‐skilled labor or low‐skilled labor. This more than one product allowed them to
situation corresponds with farmers’ low increase their financial stability. Some
academic profile; since 75.9% only have farmers grew a mixture of these products or
elementary school education, including mixed them with less popular products such
22.2%, which who did not complete it. Only as ginger and sweet potato (Figure 1).
three people from the sample (2.8%) had
67Sustainable Communities Review
Figure 1. Frequency distribution of selected products for La Fortuna, 2015
Although there is much research on the which farmers understand as buyers who
importance of written contracts to enable offer better prices.
farmers to increase their development goals, In terms of association and
especially for economic stability, in La organizational skills, only 39 farmers (36%)
Fortuna, most farmers worked with their mentioned they belong to some type of
supply chain partners without a contract farmers’ organization; however, these are no
(69.4%), while 23.1% used a verbal contract local cooperatives or farmers’ associations
and only 7.4% had a written one. According but rather larger countrywide associations.
to their responses, this situation occurs Most farmers sold their produce to
because they preferred to choose from the intermediaries and packing companies (Table
market if there were any buyers who would 4), although they often mentioned they were
pay a higher price than the last uncomfortable when asked about why they
person/company that bought their product. chose to work with them; however, these
Creating trust among supply chain actors were the only ones who would buy
partners is fundamental to sustainable their entire production and collect it at the
supply chain performance; however, there farm gate. Restaurants bought mostly from
were no risk‐sharing mechanisms for farmers intermediaries (Table 5), reasons being they
to rely on their buyers, and therefore they already know their suppliers or because of
were constantly searching for better options; ease of the transaction.
68Sustainable Communities Review
Table 4. Frequency of supply chain partner selection for farmers, La Fortuna, 2015
Type of buyer Frequency Percentage (%)
Intermediary 53 49
Factory 39 36
Farmers’ market 10 9
Supermarket 5 5
Restaurant 1 1
n= 108 100
Table 5. Frequency of supply chain partner selection for restaurants, La Fortuna. 2015
Type of seller Frequency Percentage (%)
Intermediary 19 63
Both 7 23
Farmers 4 13
n= 30 100
Rican National Chamber for Ecotourism and
Local buyers Sustainable Tourism, supports business
Restaurant decision makers had a mean linkages, for example as well as sustainable
of 9.84 years of experience, with some initiatives and training courses; however,
mentioning less than a year of experience and there are only five hotels affiliated with this
the maximum respondent mentioned 30 institution in La Fortuna (Carballo 2015).
years of experience (SD = 7.761). In spite of sustainability promotion and
Educational level of restaurant managers the national certification for hotels,
or procurement managers was higher than restaurants and tour operators, only seven
farmers, which was expected; 43.33% of them restaurants claimed they are part of the Costa
had gone on to higher education (college) Rican Sustainable Tourism Certification
and 46.66% had between six and 11 years of (CST), three other respondents claimed they
high school education. These are significantly have strived for it in the past but did not
higher than the educational level of farmers, continue to pursue it since it has very high
although farmers have more experience. standards and they were not sure if it is
Also, 60% had received training courses worth it.
while working in the tourism or sourcing In terms of contract mechanism, 50%
sectors. worked with their fresh produce suppliers
Farmers’ lack of organization replicated without a contract, 40% with a verbal
in the restaurant sector: 73.3% did not belong contract and 10% with a written contract.
to any type of organization either in the This situation had a similar pattern in the
tourist sector or in the sourcing sector. previous stage of the supply chain since most
Tourism organization is a common topic in farmers did not work with a written contract;
the country, especially when dealing with however, most restaurants worked directly
sustainability issues. CANAECO, the Costa with intermediaries rather than farmers.
69Sustainable Communities Review
Exports and the Costa Rican market and so this is a new market. From these
In farmers’ interviews, seven mentioned selected products, cassava is the most
they own their means of transportation and important product in the foreign market. The
therefore they sold directly to the local main market for cassava is the United States
farmers’ market, in street sales and in three since it has been about 70% of total exports
cases they transported directly to the for the past 10‐year span.
National Center for Food Supply and
Distribution (CENADA), located 125 km Supporting actors
away. In cases in which farmers sold to The University of Costa Rica (UCR),
intermediaries, once these products left their Costa Rica’s Technical Institute (TEC) and
farms, most farmers did not know where or CATIE (Tropical Agricultural Research and
to whom products were sold; only five Higher Education Center) are universities
farmers who sold to intermediaries knew that farmers recognize because they have
where their products were finally consumed. received previous support from them in the
Production from farmers who sold form of research and improving their
directly to factories was turned into either production capacity. The National Institute of
frozen products or chips (especially in the Learning (INA) is a teaching center widely
case of plantain and cassava). Papaya was recognized by small and medium farmers
also exported either fresh or frozen. There are and hotels and restaurants because they have
four factories in La Fortuna, which can received training courses from this
absorb the local supply and usually buy all of institution, such as. Food‐handling courses
the farmers’ harvest, which is a valuable asset and agricultural technical courses.
from the farmer’s perspective; two of these ADIFORT, La Fortuna’s development
factories sold their produce exclusively to association has a major influence on a local
foreign markets and the other two sold scale because of its economic capacity and
mainly to the local market, at least as first good organizations skills; it works from two
tiers. main pillars—social projects and economic
According to FAOSTAT (2015), Costa projects (Román 2015). ADIFORT is involved
Rica exports fresh plantains to North in the organized farmers’ market, which is
America and the European Union (EU); held every Friday.
however, exports significantly reduced from The main source of income and social
2006 to 2009 and have remained low since mobility for families in La Fortuna is tourism
then. Dry plantains were first exported in or tourism‐related activities; but the second
2006 and exports have increased most important sector is agriculture (Román
significantly, especially from 2010 on. Fresh 2015, Hernández 2015). As for financing,
papaya is mainly exported to Canada, since most loans were related to tourism; however,
papaya from Costa Rican is banned from in recent years, these have decreased and
entering the United States. Taro is exported people in the region have searched for
to North America and to the EU in small financing for other types of businesses,
quantities however’, exports began in 2012,
70Sustainable Communities Review
including agriculture and farming projects (Carballo 2015). There is not enough
(Rodriguez 2015). information to ascertain why hotels and
From the perspectives of tourism and restaurants do not participate as members of
restaurants, the Costa Rica Tourism Institute these institutions; however, there are low
(ICT) plays an important role in promoting organization skills and a lack of willingness
the country as a sustainable, green and to associate among both sectors in the region.
authentic destination; however, restaurants Procomer, which is the national
and hotels in the region are more acquainted institution in charge of promoting
with ICT because of the CST certification exportation of goods and services, assesses
program, which is the national certification all companies interested in exporting;
for sustainable tourism. including those who export agricultural
CATUZON is the Northern Region goods. It provides guidance to new exporters
Tourism Chamber, which is a community and those who already export; Procomer also
organization that promotes tourism, provides international market information;
especially linked to the northern part of the however, this institution works on a national
country; 43 businesses are affiliated with this scale.
chamber (ICT 2016), including hotels, The graphic representation of the supply
restaurants, tour operators and chain can be observed in figure 2, were
transportation agencies. In terms of tourism supporting actors are located outside the
promotion and support, only five institutions supply chain structure.
are currently affiliated with CANAECO, the
main advocate of sustainability and tourism
Figure 2. Supply chain of selected fresh agricultural produce, La Fortuna, 2015
71Sustainable Communities Review
Price analysis ranges according to type of buyer are
Farmers sell their produce to different significantly different for papaya and
types of consumers, classified in five cassava, but not for plantain or taro.
different types of buyers, and the mean price
paid per buyer is shown in Table 6. Price
Table 6. Prices received by farmers per type of buyer of fresh products, La Fortuna, 2015*
Type of buyer
Products Farmers’ market Sig (0.95%)
Restaurant Small markets Factory Intermediary
/street sales
Papaya 143 155 155 325 0.009
Cassava 161 156 160 304 0.000
Plantain 120 108 121 123 118 0.923
Taro 217 282.61 262.56 229.97 543.47 0.564
*Prices in Costa Rican colons (price equivalent 544 colons = $USD 1, 30 May 2016).
Papaya, cassava and taro: prices per kg; plantain price per unit.
Restaurants were also asked about the differences in this case; means prices are the
mean price of these products, results are same, regardless of the supplier.
shown in Table 7. There are no significant
Table 7. Prices paid by restaurants per type of seller of fresh produce, La Fortuna, 2015*
Type of seller
Products Sig (0.95%)
SM farmer Intermediary Both
Papaya 613.75 671.25 650.83 0.982
Cassava 445 449.58 427.78 0.959
Plantain 165.25 173.73 144.29 0.426
*Prices in Costa Rican colons (price equivalent 544 colons = USD 1, 30 May 2016.
Papaya, cassava and taro: prices per kg; plantain price per unit.
Price sold by farmers to intermediaries
and price at which restaurants buy from 5. Discussion
intermediaries were as follows: papaya Gereffi (1994) defines governance as
333.065%, cassava 180.988% and plantain “authority and power relationships that
41.243%. Taro was not considered for this determine how financial, material and
analysis since the proportion of restaurants human resources are allocated and flow
who regularly bought taro was too small. within a chain.” Governance is based on the
complexity of the information between actors
in the chain, how the information for
72Sustainable Communities Review
production can be codified and the level of consumed. Bullwhip effects would certainly
supplier competence (Gereffi et al. 2005). affect negatively on farmers’ incomes since
According to Gereffi’s hybrid structure there is no market‐risk information. This is a
classification, the fresh agri‐food supply problem in the sense that farmers would not
chain of La Fortuna classifies as a captive adapt to changing trends fast enough because
governance structure since suppliers of their lack of awareness of market trends.
(farmers) depend on a small numbers of According to Seuring and Muller (2008),
buyers who “wield a great deal of power” (G. first tiers of the upstream sustainable supply
Gereffi 1994), while small‐ and medium‐scale chains would adapt to changing consumer
farmers (SMFs) are dependent on the demands either through certification systems
conditions established by their buyers. or by focal companies. In this case, focal
SMFs do not have any type of farmers’ companies are the only source of market
organization; all of them negotiate sale of information for most farmers and therefore
their produce on their own. This system would base their farming decisions on these.
limits their bargaining power since they are Certification systems, however, are not
SMFs and cannot exert any type of market popular in the region; none of those
power through price and volume control. All interviewed had enrolled in any type of
farmers have a positive perception of a certification system.
potential SMF organization; however, no one Those who make sourcing decisions in
has launched any initiative yet, perhaps restaurants are aware of the importance of
because of lack of organization skills. sustainability and local sourcing—they often
Most farmers sold their produce either to explained their good relationships with
intermediaries or to factories, which SMFs. They know their target market and are
determined prices. Usually, quality of informed of changing trends in clients’ needs.
agricultural products is encoded, but quality Since tourism is gravitating toward
standards for agricultural products in this sustainability and corporate social
region are not stable; according to responsibility, hotels and restaurants
interviewed farmers, price and quality are expressed willingness to follow these
relative terms. When agricultural supply is patterns.
high, quality standards are very strict; On the other side of the supply chain,
however, when supply is low, buyers do not farmers were willing to sell their produce to
take into account their quality standards, buyers other than intermediaries and
often buying produce they would not factories because most of them felt prices
normally buy. Nonetheless, farmers are price paid for their products were not fair.
takers. However, the first problem in linking these
There is a lack of backward information two is quantity: if all restaurants in La
along this supply chain. When farmers were Fortuna bought all of their products locally,
asked if they knew where their produce was they would purchase only 14.2% of plantains,
sold, most did not. In only five cases farmers 0.4% of cassava and 2.5% of papaya grown
knew exactly where their produce was by SMFs.
73Sustainable Communities Review
Finally, restaurants need at least a innovation in business models of these
weekly supply of fresh produce, while supply chains.
farmers harvest in a six‐month period for Although it is a popular characteristic in
cassava and taro and do not stagger their agricultural supply chains for farmers to
harvest in order to offer their produce depend on buyers, this is still a challenge,
consistently to local restaurants. Prior since SMFs would sell their produce
coordination is necessary so farmers plan whatever the price, having no control over
their harvest according to their potential any decision‐making procedures aside from
buyers’ needs. their harvest; there are no bargaining
mechanisms, and conditions are set only by
6. Conclusion and recommendations buyers.
The fresh product supply chain is very Collaboration among SMFs and local
complex and since there is no farmers’ restaurants would help the tourism sector not
organization, their decision‐making process only to comply with sustainable certification
in selecting partners is scattered among standards but also to provide an enhanced
different buyers. In some cases, farmers even experience for tourists by offering local food,
sell to intermediaries who transport products which has proven to increase tourist
all the way to the country’s urban area. On satisfaction in other locations (R. Sims 2009).
the other hand, farmers buy from Governance mechanisms from the tourism
intermediaries who travel from this urban sector that push this type of initiative are
area to La Fortuna. essential since the agricultural sector of the
Since restaurant owners and managers supply chain lacks organization skills.
are aware of the importance of buying CACORE’s national plan for local food in a
locally, especially in the agriculture sector, possibility for supply chain enhancement;
there is a possibility for these to collaborate. however, incentives for restaurants to
Also, farmers would find prices paid by participate should be promoted in order to
restaurants significantly higher than those obtain higher policy implications and better
they currently receive from their buyers, standards of living for the rural areas.
therefore there is an incentive for both sides. Promotion of this type of initiative can
Nonetheless, this potential trading promote development in rural areas, creating
mechanism would only include a small opportunities for people to prosper and
proportion relative to the number of fresh reducing socioeconomic problems that occur
products harvested in the region. with rural to urban migration. Generating
The education level and socioeconomic possibilities for development in rural areas is
conditions of farmers are still a challenge in key to sustainable development in a region in
this region; investment in these aspects could which most of the population is located in
exponentially increase their possibilities for rural areas, often with lower standards of
engaging in high‐value global chains—to living.
engage in value‐added products or promote This research provides a characterization
of the fresh product supply chain and
74Sustainable Communities Review
emphasizes the main issues of farmers’ lack Bourgeois, R., & Herrera, D. (1999). Enfoque
of bargaining power and market knowledge. Participativo para el Desarrollo de la
The asymmetry of information among these Competitividad de los Sistemas
two groups of actors was expected because of Agroalimentarios. San José, Costa Rica:
other empirical results; however, this IICA.
research provides a full characterization of CANAPEP. (2015, December 8). Cámara
the supply chain and of its governance Nacional de Productores y Exportadores de
mechanism. Further research on how to Piña. Retrieved from
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in association and organization skills are Director CANAECO. (M. Montero,
needed to extend benefits from supply chains Entrevistador)
and promote rural and local development. European Commission. (2013). Extracts of the
Specific programme for Horizon 2020 societal
Acknowledgements challenge 2. Retrieved from establishing
This research was possible thanks to the the specific programme implementing
financial support of MICITT (Ministerio de Horizon 2020 ‐ the Framework
Ciencia, Tecnología y Comunicaciones) and Programme for:
CONICIT (Consejo Nacional para http://ec.europa.eu/agriculture/research‐
Investigaciones Científicas y Tecnológicas) of innovation/events/2014‐06‐‐
Costa Rica, through a partial scholarship brussels/h2020‐specific‐programe‐
provided by the Fund of Incentives FI‐0087‐ extracts‐sc2‐agri_en.pdf
2013. I am also grateful to the small‐ and Friedmann, H. (1980). Household production
medium‐scale farmers, restaurant managers and the national economy: Concepts for
and stakeholders of La Fortuna for allowing the analysis of Agrarian formations. The
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