Subsidisation and Sustainability Impacts on Contract Producers

Abstract

Production subsidies tend to be provided as government development support instruments. This paper examines their potential impacts on lower-tier producers. Those impacts are partly elucidated by a mixed-methods study of small-scale fish producers of Seychelles targeting foreign fish markets. Scale disadvantages tend to prevent such producers from overcoming the entry barriers of foreign markets without government assistance, including subsidisation. In the study, a screening survey helped assign a group of 34 randomly-selected fish producers to a Managed Value Chain (MVC) – buyers and producers engaging in supply-demand matching coordination, and another 32 randomly-selected fish harvesters to an Open-market Value Chain (OVC) – comprising buyers and harvesters without intentional supply-demand matching coordination. Using 5 months of production-related data, the study first compared the means of the production capacity, level and efficiency of the producers. Four highest-producing MVC producers subsequently gave an interview on their operations. Results inter alia indicate that a gradually increasing range of fisheries subsidies have been helping MVC producers to raise their production capacity, standard and level. However, the subsidies have also been indicatively decreasing the productivity of commercial stocks. The study inter alia suggests that unless marine biological resources are carefully managed, export-oriented production subsidies threaten their environmental sustainability.