Improving Livelihoods Through Floriculture Out-growing Scheme – The Koroipita Village in Fiji

This study discusses the case of a South Pacific island village, the Koroipita village in Fiji, where several aid projects work around local conditions and cultures for the least advantaged. In the context of management, the South Pacific leadership style is more paternalistic. This study argues that a mix of an out-growing scheme with a style of paternalistic interaction exists between the flower out-growers and the wholesaler in the floricultural supply chain under study. This supply chain was harnessed for industry development as well as for income generation for the village growers. When viewing the contracting relationship between SSO and the Koroipita out-growers, there is a relatively fair share of value added in the value chain. This case study shows that the out-grower scheme has led to a significant rise in living standards when several other means of improving livelihoods have failed. The findings of this study are based on interviews with floricultural supply chain stakeholders and grower/florist focus group discussions conducted between 2010 and 2011. The results of this study might be relevant to other Pacific Island nations with similar cultural backgrounds and aid donors that aim for improving livelihoods for the least advantaged. INTRODUCTION South Pacific nations are geographically dispersed, prone to natural disasters, relatively isolated and remote from world markets. Aid money has poured in for the last decades, yet change has happened very slowly. For example, Fiji received near USD200 per capita of net official development assistance between 1997 and 2011 (World Bank, 2012). This study discusses the case of a South Pacific settlement, known as the Koroipita village in Fiji, where several separate aid projects work around local conditions and cultures. These projects include funding from the Fijian government, like the Model Town Charity Fund, resource (funding and human resources) from the Rotary Club network, like Rotahomes and from the Australian and New Zealand governments, such as AusAID (Australian Agency for International Development), ACIAR (Australian Centre for international Agricultural Research) and NZAID (New Zealand Agency for International Development). Model Town Charity Fund and Rotahomes provided low cost housing to the squatter population. Foreign official development assistance included various activities, such as sewing, craft making and floriculture, as income generation schemes. There are some early positive outcomes of the combined projects and the case helps to exemplify the manifold nature of socio-economic development and change. Contract farming refers to a system where a firm purchases the harvests of independent farmers and the terms of the purchase are arranged in advance through contracts. In a normative sense, much of the development literature on contract farming is polarized. Briefly, the Harvard Business School approach considers contract farming to be an opportunity to the smallholder to enter the market with minimal risk. The Food First school (Lappe and Collins, 1977) is critical of contract farming, and considers it in a dependency theory framework (Baumann, 2000). Little and Watts (1994) argue that the unequal power relationship as well as market fluctuations often make contract farming unsustainable in the long term. Given the diversity of contract relations, they suggest that, it is better to focus on the motives and power relationships of contracting parties. The diversity of literature on contract farming indicates that the success of each contracted commodity is associated with specific conditions of production and labour regimes, which affect its potential to generating local development. This article shows that the mix of an out-grower scheme with a paternalistic style of interaction exists between the flower out-growers and the wholesaler in the floricultural supply chain under study and that was harnessed for industry development as well as for income generation for the village growers. Paternalistic leadership means an evident and powerful authority that shows consideration for subordinates with moral leadership (Fan, 2000). It has been shown that paternalistic leadership has a significant and unique effect on subordinate responses in business organisations (Cheng et al., 2004). The findings of this study are based on interviews with floricultural supply chain stakeholders and grower/florist focus group discussions conducted between 2010 and 2011. Several interviews were conducted with SSO and its out-growers (both Koroipita growers under aid projects and general out-growers unrelated to any project). Multiple indepth interviews with supply chain actors allow some hint of the motives of both the wholesaler and out-growers. Focus group participants include all Koroipita orchid outgrowers. Open-ended questions were deemed appropriate to use. For methodological validity, the researcher and collaborators discussed focus group findings until convergence on the observations. The squatter population problem in Fiji Fiji has a population of approximately 850,000. With the rapid onset of urbanisation, low-income squatter settlements have been on the rise in urban areas in Fiji. About 84,000 people live in deprived conditions classed as ‘squatters or shanty towns’. These people are spread over 187 settlements, with an average population of over 450 per squatter settlement (Mohanty, 2006). Squatters are burdened with incidences of natural hazards, cramped conditions, epidemic diseases, collapsing of flimsy buildings and neighbourhood crime. Reasons for squatters to migrate include land insecurity at the original dwelling, job opportunities, children’s education, family disputes and high rents (Mohanty, 2006). Women in South Pacific nations are generally not granted equal status as men. Those women in squatter settlements are especially vulnerable and constantly faced with domestic violence. This is mostly attributed to economic dependency on men and unequal distribution of resources and power. When women make economic contributions to the family, they have less chance of being victimised by their family, partner or husband. Empowering women through economic independence would be envisioned to achieve both improved livelihoods and gender equity. Lautoka is the second largest city in Fiji and is burdened with a squatter problem. To address the poverty and squatter issue in the Lautoka city area, the notion of establishing a model town started around 2002, with funding from multiple sources. The town provides the former squatters a new basic steel shed house, running water, sewerage, a kindergarten and a secure environment for families to raise their children. The model town concept is to build a maximum of 300 houses in stages for each area. It is hoped that these measures will be rolled out to other squatter populations in Fiji. At Lautoka, a total of 81 houses have been built at stage 1. The program is currently at stage 2, which will build 148 houses. Stage 3 will build about 50 houses. Every 15 households have a representative to attend meetings and to manage day-to-day issues. If the model proves viable, it will be replicated in other squatter settlements in Fiji. The first stage of settlement created a new village called Koroipita. Koroipita means ‘Village of Peter’ in Fijian to honour a local Australian expatriate Rotarian, Peter Drysdale, who led expatriate and short-term visiting Rotarian volunteers to physically build each house. Householders are not given a free roof. Villagers are required to pay FJD30/month (FJD1 ~USD0.6) of rent which is used as a ‘body corporate’ pool to cover maintenance. Indo-Fijians comprise nearly half of the Fijian population. Although there are quite a few successful Indo-Fijian businesses, there is a segment of the Indo-Fijians that remain very poor. Regarding the race of squatters around the Lautoka area, about 30% of them are Indo-Fijians. While simple houses were built for squatters, the root issue remains poverty alleviation; i.e., creating an income generation stream for the new residents who have little skills and capital to make a start. To help generate income for the households given shelter, there were programs of helping women to do crafts, cooking and sewing. However, starting their own small business is difficult for women as accessing finance is a big hurdle. This is how growing flowers, with aid project assistance, comes in to provide significant additional income to the residents. USING FLORICULTURE TO IMPROVE LIVELIHOODS FOR THE SQUATTER POPULATION IN KOROIPITA Floriculture is a small, but emerging private sector industry in Fiji. In the past decade, there has been fast growth in the demand for floricultural products spurred by the construction of hotels and resorts. According to Fiji Visitors’ Bureau, in 2010, Fiji had over 600,000 tourists, equivalent to two thirds of the Fiji population (Fiji Islands Bureau of Statistics, 2011). While tourists are only there for a short period, there is ‘derived’ demand for floriculture, particularly potted plants for landscaping for hotels and resorts. Overall, while demand is erratic, there is more demand for floricultural products in the market place than supply except when production is at its highest. Nearly all flower growers in Fiji are small scale backyard growers. The floricultural sector is still in its infancy. A supply chain refers to a range of co-ordinated activities, i.e., value adding activities, which are required to bring a product or service from conception, through the different phases of production and distribution to end users (van Duren and Sparling, 1998; Woods, 2004, Fearne, 2009). By this definition, there is only one stable floricultural supply chain in Fiji that is driven by the wholesaler, which is run by South Sea Orchids (SSO). This wholesaler has both technical and business knowledge and skills in floriculture. In the past, it