The main objective of the project "Strengthening agribusiness linkages between the farmer and agribusiness" is to identify the agribusiness linkages and the key factors associated with them at the socio-economic and institutional levels. The project will also identify the main trends in socio-economic development and regulatory policies designed to increase agribusiness linkages. Finally, the limitations and opportunities will then be evaluated.
To this end, 12 cases of agribusiness linkages in 7 countries are analysed - in Argentina, Chile, Colombia, Costa Rica, Ecuador, El Salvador, and Guatemala. The cases refer to small-scale producers who participate in an associative way with the intervening organization in either the processing or trade of the production of agricultural origin. Nine of the 12 cases relate to fruits, dairy products and horticultural crops. The other three cases relate to special market niches.
The study defines agribusiness linkages such as the expansion of businesses of the agriculture and rural sector and its chains. It starts from the relationships involving contractual structures, alliances and associations (mainly implemented by the private sector) by long-term sustainable producers in the agriculture sector. In addition to a joint association of farmers, the study also examines different exogenous agents and agro-industrial chains, which may or may not include support from public policies.
The study shows that it is feasible for associative organizations of small-scale producers to promote the development of agribusiness linkages. The main linkages include associative organizations with producers, government, international cooperation, and not-for-profit and for-profit private enterprises. The objectives of the linkages are related to the technical development of the activity (technology transfer, training, and technical assistance), quality control, trade and market development, business management, and improving the living standards of families.
In general, linkages with government satisfy the technical requirements. Linkages with international cooperation aim at promoting both production and families. Linkages with for-profit private enterprises emphasize trade and market development, such as quality; and those with not-for-profit private enterprises support development, business management and information management.
This study identifies emerging linkages, such as very new ones that enable adaptation and progress in a competitive environment. Emerging linkages are those that promote business management, seen in the careful planning of production in accordance with market agreements in terms of quantity, quality and opportunity. There are also linkages aimed at developing productive factor markets and chain services, such as collective negotiation to access better conditions for land property, credit, agricultural machinery and inputs. Furthermore, there are those that enable qualitative improvements in products and negotiation conditions. Finally, there are linkages that have recently been emerging from the development of new links in the productive chains or through the processes of vertical integration that exist in organizations.
The following are included among the socio-economic and environment variables that allow for the promotion of agribusiness-linkage development:
technical improvement in artisanal, industrial and combined processes; organizational development of a hybrid nature that combines the entrepreneurial perspective with producers' practical experiences;
better levels of education and skills, which directly affect managerial and negotiation capacity;
solid domestic markets and expanding markets whose remunerative prices permit innovations and enable new skills to be developed;
explicit policies of public and private cooperation.
The main limitations of agribusiness linkages are:
lack of direct linkages of associative organizations with the sources of technological, organizational and institutional innovation (with profound impacts on the fabric of agribusiness relationships);
low levels of education and skills of the rural population; conditions of poverty and misery for most of the rural population, which prevent accumulation and investment and frequently cause a part of the linkages of associative organizations to subsidize deficiencies in health, housing, nutrition and infrastructure;
lack of an active interaction that establishes synergies between the public and private sectors for the benefit of small producers;
a prevalent informality that benefits many private agents to the detriment of associative organizations;
the crisis and vulnerability caused by depressed international markets and macroeconomic management that leads to revaluation of the national currency and to high rates of unemployment.
An explicit policy for promoting and developing agribusiness linkages is recommended. Linkages with greater potential for innovation and support to the competitive position of organizations and producers are endorsed, e.g. those that improve technical functioning, entrepreneurial and organizational management, as are services to the chains and the development of intermediate and final markets. The promotion of agreements between the public and private sectors is also recommended. This does not signify complementarity, but rather active interaction of the two parties, with objectives, goals and commitments.
Finally, support is recommended to associative organizations and participating producers in developing entrepreneurial skills, management and negotiation. Four important fields are identified: (i) planning production using information on final markets with which the development process deals; (ii) trade development at domestic and foreign level, which, in addition to final production, incorporates collective negotiation on production factors; (iii) the design and use of control mechanisms and risk prevention for producers as well as the associative organization; and (iv) the management and negotiation of agribusiness linkages according to priorities, costs and benefits. In these four fields, the use of the computer and its technical instruments is required in a relevant and timely fashion. The design of methodological instruments for analysing and evaluating the agribusiness linkages is also recommended.
