Challenges and opportunities for inclusive value chains of niche forest products in small island developing states: Canarium nuts, sandalwood, and whitewood in Vanuatu

Abstract

Small Island Developing States (SIDS) are a distinct group of nations with unique development challenges, such as skill shortages, lack of economies of scale, high transport and energy costs, poor infrastructure, small domestic markets with a heavy reliance on a few distant external markets, and limited opportunities for private sector growth. A development strategy based on natural resources where local and regional producers can secure some level of intellectual property value has been recommended for Pacific SIDS to break out of commodity and low value-added trade. This paper explores the potential for developing niche forest product value chains that are inclusive of small-scale producers in the island nation of Vanuatu. Using existing academic and grey literature and on- site research for three forest products, the paper describes the current situation with the industry and then proposes inclusive value chains (IVC) that improve on the business-as-usual scenario. Our results indicate that although market analyses confirm the potential for smallholders to benefit from participating in niche product value chains, difficulties inherent in sourcing from smallholders, which are aggravated in SIDS, must first be overcome. Problems such as small production volumes in numerous dispersed plots with difficult access, high transport costs, low technical know-how, difficulties in accessing inputs and finance, unreliability of supply in terms of quality and quantity, and lack of reliable information about the resource base hinder IVC development. Increased vertical and horizontal coordination within the value chains address many of these issues, but in the Pacific context, some forms of coordination may be more feasible than others. The Pacific region does not have a strong cooperative tradition, so temporary horizontal coordination, long-term agreements, and contracts between producers, processors, and buyers may be necessary to make IVCs for niche island products achievable.