Value and Supply Chain Assessment of Dominica’s Hot Pepper Industry

Globalization and trade liberalization have created both challenges and opportunities for small island states like Dominica. Post 1995, the removal of preferential access to EU markets for Dominica’s banana resulted in increased competition and subsequently loss of market share to larger efficient producers. However, the liberalization of trade also presented opportunities for the marketing of nontraditional crops. Hence, Dominica embarked on diversification programmes establishing among others a hot pepper industry as a replacement to bananas to supply fresh hot pepper to local, regional and extra regional markets. While the industry may be attractive in terms of prices and volume demand, Dominica has been challenged to meet current market demands, and at competitive prices. This study assessed the competitiveness of Dominica’s hot pepper industry in a major extra regional market (Miami Wholesale Market) using the Export Competitiveness Coefficient Model (ECC). Value chain analysis was used to analyze the segments of the supply chain’s contribution to production, processing and marketing. The study found that Dominica’s hot pepper industry was not price competitive at current levels of productivity (4lbs per plant) and the average market price. However, at higher levels of productivity (> 4lbs per plant), Dominica’s hot pepper industry would be price competitive at all market price levels. In addition, the study found that productivity of hot peppers in Dominica using irrigation was 50% higher and profitability 25% higher than rainfed technology. Finally, the study found that lack of information sharing and communications among key stakeholders were major constraints along the supply chain.