Modeling dynamic systems for sustainable supply chains : a case study in La Fortuna, Costa Rica 

Abstract

La Fortuna, Costa Rica, is a region with high potential for becoming a sustainable destination according to international Global Sustainable Tourism Council (GSTC) standards; however, it lacks local sourcing of fresh agricultural goods, even though some of them there are locally grown. This research describes the agri-food supply chain of four basic selected products (cassava, papaya, plantain and taro) in the region and addresses governance mechanisms, price gaps and overall limitations of an effective supply chain. Price gaps between farm-gate prices received by small- and medium-scale farmers (SMFs) and purchase prices by restaurants demonstrate large differences, ranging from 41% in the case of plantain to 333% in the case of papaya, possibly representing significant additional income for farmers. Governance structures are led by buyers, with farmers playing a price-taker role. Therefore, instead of participating as active members of the supply chain in terms of strategic decision making, they are restricted to the production stages of the supply chain. Small- and medium-scale farmers represent a vulnerable sector of most economies. Since there is often a close relationship between agriculture and poverty, development agendas frequently encourage the capacity of smallholders to identify and produce for niche markets to obtain higher prices and therefore, improve their standards of living. A total of 108 small- and medium-scale farmers were interviewed in La Fortuna, a northern region of Costa Rica, to analyze their supply chain structure, to obtain their perception on fairness of prices and to analyze their partner-selection strategies and overall possibility to strive for sustainable supply-chain management. From the demand perspective, 80 tourists were also interviewed to assess their willingness to pay for sustainable products and organic food. Results show farmers’ perceptions of fairness of prices are neither dependent on farmers’ education nor the type of negotiation (written contract, verbal contract or no contract) but on the type of buyer. Kruskall Wallis tests showed significant differences in perceptions only dependent on the type of buyer (p-values =0.033, 0.004, 0.043) for three of the four variables of analysis, suggesting there are important differences in their perceptions of fair distribution and prices according to their supply chain partner.