Chapter 2
Agribusiness linkages in cases studied

There are two important aspects for evaluating agribusiness linkages. One is the type of linkage that could emerge in the next few years as a result of the globalization process, and the other is how the content of the existing agribusiness links has varied. The first part of this chapter describes and comments on the type of link of agribusinesses encountered in the case studies. In the second part, concrete cases are presented, and the content of agribusiness linkages and its evaluation are discussed.

Case studies and the macroeconomic environment

Characteristics of the case studies

In this section, reference is made to cases developed for this research, in particular, concerning the following aspects: (i) development of the linkages of agribusiness and associative factors; (ii) impacts of agribusiness links on each of the participating parties; and (iii) the impact of the agribusiness linkages on the producers' living standards

Table 1 shows some basic characteristics of the cases analysed. Of the 12 cases selected, 8 relate to fruit and vegetables, 2 to milk-product processing and 2 to indigo and chilli; 6 concern intermediate raw materials for subsequent industrial processing, and 6 relate to final markets. This composition is indicative of the advances in the last 20 years in domestic and foreign markets for dairy products, fruits and horticultural crops, which generally show greater dynamism than other products of traditional consumption such as cereals or tubers. In addition, Table 1 also shows market developments towards selling products of agricultural origin with greater added value.

The cases studies are classified by type of market: 6 products are intended mainly for export, with vegetables, fruit and products for special market niches (such as lemon, cassava starch and indigo), 5 for domestic consumption, and 1 for the domestic market and exportation.

All the products undergo some kind of process after collection, either in adaptation and packaging, pre-preparation or processing. In 9 of the 12 cases, there had been explicit intervention in assimilating the experience either by government, international cooperation or religious communities. Private enterprises have played the leading role in only 3 of the 12 cases. In one case (Argentina), a joint initiative between government and producers is considered. Although the cases selected may not represent the entire range of agribusiness experiences, they illustrate the difficulty in initiating and consolidating agribusiness experiences with small-scale producers without any kind of exogenous support.

Five types of organizations are identified in the cases analysed: (i) first-degree cooperatives (5 cases); (ii) second-degree cooperatives (2 cases); (iii) producer associations (2 cases); (iv) private enterprises of processing and trade (2 cases); (v) and community business (1 case). The most frequent body corporate is the cooperative (7 of the 12 cases). Next in importance is the producers association, which frequently does not provide any benefit for the organization but rather for its members. The importance and impact of each of the cases analysed may be determined by the extent of its activity and the number of direct or indirect beneficiaries involved.

TABLE 1
Agribusiness linkages - selected cases

All the producers associated to the various cases share features such as proximity. In some of the cases, there are rural agro-industry conglomerates, as in FECOAGRO, the Salinas dairies, cassava processors in Ecuador, and Azules in El Salvador.

Table 2 presents indicators of impact, size and potential according to the number of direct and indirect beneficiaries of each of the cases analysed. The total value of production of the case studies is at least US$15.5 million annually. Beneficiaries include 3 327 direct producers, and at least 22 000 people benefit indirectly.

Argentina, Chile and Colombia account for most of the value generated by the organizations analysed, with about 62 percent. The direct beneficiaries of these linkages in these three countries are about 47 percent of the total of the population studied.

Of the cases selected, about half emerge from situations of high social and economic pressure that have led to interventions by government or international cooperation. For example, in Chile, cooperatives were created by the government of Eduardo Frei as part of the agrarian reform process. The Cuatro Pinos cooperative was initiated in Guatemala within the framework of a reconstruction process following the 1976 earthquake. Experiences in El Salvador and one in Guatemala originated in response to the concern about poverty.

TABLE 2
Agribusiness linkages - some indicators of the selected cases

¹ Corresponds to the profits of the associative organization.

Another remarkable aspect of the experiences analysed is that almost all could be considered recent (from the 1990s) as regards the progress of agribusiness linkages. The oldest experiences, such as those in Chile, cassava processing in Ecuador, the Cuatro Pinos cooperative in Guatemala, and Moras del Oriente in Colombia underwent drastic reorganization prior to changes in their business environment.

Some characteristics of beneficiaries reflect conditions of their environment, which are described later on in this paper. The great majority have very low levels of schooling. The members of the Chilean cooperatives are an exception, with a relatively large proportion of skilled producers (18 percent). In Andean countries, the prevalent level of education is primary schooling. Beneficiaries in Guatemala and El Salvador have the lowest levels of education as they have only recently overcome illiteracy and reached the level of reading and writing.

The primary users of beneficiary producers are characterized by diversification. In almost all cases, the commercial product is cultivated in a plot or specialized area of the farm (one which is already destined either for pasture, plant or fruit cultivation) that permits the application of a more intensive technology. However, the rest is used for more diverse crops, selling to local intermediaries, and self-consumption.

Macroeconomic aspects of selected countries

All the information analysed in this section and presented in the tables has been sourced from the Comisión Económica para América Latina (CEPAL). Macroeconomic and environment aspects could influence progress in agribusiness linkages through the magnitude of the domestic market, the pattern of productive growth, the development of its social and human capital, and exchange relationships with other countries.

TABLE 3
Macroeconomic and environment variables, 20001

¹ 1995 prices.

TABLE 4
Macroeconomic and sectoral variables, 20001

¹ 1995 prices.
² Different from basic services.

The information in Tables 3 and 4 shows that the potential market size, defined by gross domestic product (GDP) and GDP per inhabitant, is quite heterogeneous in all the countries analysed. The country with the largest economy, Argentina, has a GDP that is 24 times greater that of the smallest economy, El Salvador. These differences continue up to the GDP level per inhabitant, which is an indicator of individual consumption potential. It is five times higher in Argentina that in Ecuador, the country with the lowest GDP per inhabitant.

Three groups of countries analysed are remarkable for the size of their economy and consumption potential. The first group belongs to the Southern Cone countries, such as Argentina and Chile. They are characterized by having a higher GDP per inhabitant. The second group, the intermediate one, consists of Costa Rica and Colombia. The third group, with the lowest levels of GDP per inhabitant, comprises Ecuador, El Salvador and Guatemala.

The patterns of economic development differ from one country to another, without necessarily corresponding to the size of the economy. For example, primary activity has a greater emphasis in Guatemala, Chile, Colombia and Ecuador (Table 4), in the last three because of the influence of mining, where Chile dominates.

On the other hand, Ecuador and El Salvador dominate in terms of industry as a value-generating sector, while Argentina and Colombia head the services sector.

All the countries except Costa Rica export mainly goods from the primary sector (Table 5). Ecuador and Chile have the highest proportion of exports in the primary sector owing to the significance of their mining exports. Services represent a dynamic export line for some countries. Central American countries have the best positioning in this respect inasmuch as they export services such as tourism and maquilas, mainly for the northern hemisphere.

TABLE 5
Variations in macroeconomic and environment variables, 2000

¹ 1990-99.
² 2000; including farming and mining.

In general, because of a persistent revaluation of their national currency in the 1990s, the competitive position of most Latin American countries was affected, mainly by factors such as speculative capital flows and high domestic interest rates. This phenomenon occurred between 1987 and 1994, mainly affecting the economies of Argentina, Chile, Colombia and Ecuador.

Finally, the most recent trends in economic growth could run counter to the trajectory observed in the last decade. This is the case in situations of stagnation or economic recession as observed in Argentina, Colombia and Costa Rica in the last year or two. Central American economies have recorded a positive performance since the 1990s, encouraged by an expanding foreign sector, from activities in maquila and assembly for the United States of America, as well as the sale of other services.

Other variables that could affect the agribusiness environment relate to the population and its socio-economic characteristics. The largest population is in Colombia, followed by Argentina. However, the low value-generation per person and the unequal distribution of income considerably restrict their consumption capacity (Table 6).

The three groups of countries that have already been considered for the analysis have a corresponding similarity in terms of the socio-economic characteristics of the population at the level of development. The Southern Cone countries have a lower proportion of rural population, whose growth is very low or negative. The illiterate population is less than 5 percent. More than 90 percent of the rural population have more than five years of education. Poverty affects at least 25 percent of all the rural inhabitants.

TABLE 6
Distribution of household income

¹ Initial year: 1994.
² Initial year: 1995.
³ Initial year: 1989.

With respect to these variables, Colombia's performance resembles the poorest countries, reflecting the problems of violence and the high concentration of income. Colombia, El Salvador and, above all, Guatemala have a high percentage of malnourished people (Table 7). Illiteracy is particularly critical in Guatemala, El Salvador and Ecuador. Almost half of the rural inhabitants of Colombia, El Salvador, Guatemala, and probably Ecuador have not had more than five years of formal education. In these countries, rural poverty and misery affect most people.

In all the countries, particularly those that have suffered conflicts and wars and that have entered into peace agreements, such as Guatemala and El Salvador, decentralization policies have recently gained in importance. Greater participation by the regions in defining and/or carrying out policies has been promoted.

Finally, the intensity of exchange is also a variable that could affect the progress of agribusiness linkages. Table 8 shows indicators of the degree of economic openness, such as the relationship between exports and GDP, and between imports and GDP. The highest import-exchange indices correspond to countries with the highest mining orientation, such as Chile and Ecuador, as well as Central American countries that excel in selling services and at the same time import consumer goods and sustainable goods.

Trade blocs are a possible way of expanding market potential. According to the CEPAL, the trade bloc in Central America, the Central American Common Market (CACM) represents 23 percent of the total exportation of member countries. El Salvador, Guatemala and Costa Rica stand out as exporting countries, supplying mainly chemical and food products. The Andean bloc accounted for 9 percent of exports for member countries; Colombia and Venezuela dominate as exporting countries. Finally, MERCOSUR captured21 percent of total exports of its members, with a large share represented by Argentina and Brazil. Chile does not belong to any regional integration agreement. In contrast to most of the countries analysed, Chile's largest market is not the United States of America, but the European Union.

TABLE 7
Rural population variables, 2000

TABLE 8
Trade-related variables

¹ Initial year: 1994.
² Initial year: 1995.
³ Initial year: 1989.

Almost all the cases analysed that show good economic results are explained by the fact that products aimed at very specific market niches are not affected by depressed international prices for basic products (as with indigo, uchuva, dehydrated lemon, cassava starch and vegetables) or dynamic domestic markets (dairy products, and fruit). However, the products with the greatest exposure in international markets for basic products, such as fruit and grains, have had to face negative effects, such as low prices and currency revaluation.

The depression in countries' domestic markets, resulting from low economic growth rates, is also an adverse condition for the development of agribusiness linkages. Low demand negatively affects the economic results and the possibility that agribusiness linkages will persist in the long term.

The other variables that affect agribusiness linkages are the level of education and the degree of social and social development. Under precarious circumstances, as in most of the countries analysed, part of the agribusiness linkages are directed towards carrying out redistributive and equitable labour, with the consequent administrative surcharges. The very benefits from agribusiness linkages consist in remedying part of this precariousness in living conditions through programmes to improve nutrition, health, housing, etc.

The level of education directly influences the possibility of progress in developing technical agribusiness linkages and business management, as Chile illustrates. In the two cases in Chile, the producers have the highest levels of education and skills, which enable them to use information for implementing controls and careful monitoring of product quality, as well as planning supplies. For the same reason, they are more capable of including technology transfer, information supply and exchange, and quality control in their business-agreement linkages.

Without sufficient education, the ability to cope with new situations or a profoundly changing environment by applying technology and knowledge is lacking. The processes remain at an artisanal level, which progresses in isolated productive units, as in most cases in Ecuador. The Salinas dairies project is of great importance because of its redistributive intervention.

Sectoral policy and linkage development

In all the countries analysed, the sectoral policies of support to the agriculture sector have been similar since the end of the 1980s. These policies have involved reduced direct government intervention in order to promote greater participation of private enterprises in activities that had long been the responsibility of the public sector. In this way, basic research activities, technical assistance, training, marketing and subsidized credit have been affected.

Overall, promoting greater opening of economies and better integration of world markets has been attempted through a reduction in tariffs and the elimination of import quotas, protection mechanisms and administered prices. At the same time, preferential trade agreements have been extended either by blocs or bilaterals that affect the size of demand. The main blocs that different countries belong to or actively participate in are: (Chile and Argentina) in MERCOSUR; Ecuador and Colombia in the Andean Bloc; and the Central American countries in the trade bloc of Central America, in addition to many agreements by countries and on products.

In restructuring the financing policies of the agriculture sector, priority was given to balancing the treasury, and subsidies were withdrawn. The governments in the region began to enter into other services, such as supplying information about international markets, with the aim of lowering transaction costs. Other policies that were generally encouraged in the different countries were: price ranges; financing storage and marketing mechanisms for the private sector; developing contract agriculture; and the transfer to private agents of services such as technical assistance and support to organizations.

Previous policies that had attempted redistribution in accessing assets such as land were weakened in order to provide a greater role for market relationships. However, the balance of access is quite weak to those producers with fewer resources through these mechanisms. This is because they have generally proved poor from a practical, operational point of view in terms of granting the poorest people access to productive resources. In most countries analysed, there have not been structural modifications, for example, in the structure of distribution and land tenure.

Different analyses concur that, in general, a polarized model of development has intensified in Latin American countries with a few leading, modern and competitive activities standing out in terms of their entrepreneurial aspects. These activities are directed towards export while agricultural products that use family labour and are intended for the domestic market remain at a low technical level and lose competitiveness.

With respect to the cases analysed, the impact of sectoral policy on agribusiness linkages is shown in the weakening of services needed for development and in the continuance of activity, such as promotion credit, technical assistance and technological transfer. For example, the credit service has not been substituted by the supply of private agents, who also encounter high risks in this kind of investment. Technical assistance was often the responsibility of input-distributing companies, whose main goal is trade.

There are some exceptions to this overall pattern of behaviour of weakening in the use or quality of services. This may be explained by transfers from either government or international cooperation that enable organizations to maintain and even improve the quality of services, such as in Chile and El Salvador. Chile's sectoral policy is an exception to that of most of the countries. This is because it explicitly promotes development of new agribusiness linkages, with the active participation of private firms and governmental organizations that aim at implementing technological innovations and entrepreneurial management.

Other interesting exceptions are observed in the cases of the Salinas dairies and Moras del Oriente in Colombia. Here, the private agents have met the need for services in technology transfer, technical assistance, training and credit. Regional universities and other horizontal organizations, such as service cooperatives, play an important role in this respect. The lack of financing has been supplemented by associative arrangements. In the two cases, there are precedents of associative tradition, led by the church or private agents. In Antioquia, Colombia, there is a history of cooperation inherent in the colonizing population of Spanish origin, who are free of all master-slave relationships.

In a positive light, new spheres of direct or indirect government intervention have influenced agribusiness linkages through promotion and development at a commercial level. Governments in general have supported efforts to develop international markets, as well as the use of information to reduce the risks to and vulnerability of producers. Chile shows this kind of evolution in agribusiness linkages with strong intervention from the government or entities that participate in these kinds of programmes backed by the government. This has led to the use of new entrepreneurial skills by producers and organizations in planning production, purchases and, similarly, requirements in inputs and other services.

In addition to the above-mentioned aspects, there new forms of public and private agreement for the modernization and competitive advance of agro-industrial chains that have directly or indirectly affected the progress of the agribusiness linkages. This has occurred in agreements and tables of competitiveness by chains (such as in Colombia) or by segments (as in the agro-industry in Chile), as well as with alliances for productivity and competitiveness. New instruments have been created for this purpose, such as competitiveness funds or parafiscal funds. Promotion policies have been adopted, favouring added-value processes with transfers of taxes to innovation programmes and development of the agro-industrial chain.

Because of these processes, initiatives to fill gaps in the supply of credit have emerged. They have done so through the development of savings and local credits, such as in the Salinas dairies and Moras del Oriente, or through direct negotiation with international cooperation programmes, as in FECOAGRO. Other emerging agribusiness linkages in a context of reduced government involvement are: the leasing of machinery; the selling of services - processing (Chile and Argentina cases), informative, accounting and legal consultancy (in Chile and El Salvador); and redistributive programmes, such as buying land for collective use in Ecuador and Argentina.

Commercial development from the agribusiness linkages deserves special mention. The organizations that have emerged or that have persisted in the last ten years should explicitly consider commercial policy in order to facilitate access to markets. Practically speaking, this need has been a driving factor for associative organizations. In the cases analysed, the commercial development achieved by cooperatives in Argentina, Chile, El Salvador and Guatemala stands out.

In sum, macroeconomic and sectoral policies, as well as the external surroundings, have been predominantly adverse for the development of agribusiness linkages in which small producers participate. This has been a consequence of the revaluation of national currencies, the loss of competitiveness for most countries, and the loss of value of their export products. Another reason is that governments have reduced their intervention in essential aspects of production such as financing for development, research, technology transfer and technical assistance, without any compensation for this deficiency by private agents.

In all the cases studied, countries with a clear development policy, such as Chile, have managed to become successful and overcome adverse conditions through wide international cooperation that supplements government deficiencies. These countries have approved advances planned by the same sectoral policy to enlarge the private sector's role.

In six of the cases studied, some products have targeted market niches that support the product value or that satisfy the domestic demand that could not be met by imports. They have been successful both in their impact and at economic level. At the same time, forms of organization with cultural influence (through religious intervention or associated heritage) may help offset the effects of adverse policies.

Agribusiness linkages in sectoral policies, and the cases studied

In different countries, there are degrees of variables relating to agribusiness linkages with sectoral policies. In general, all of the countries agree on maintaining some level of support at the technological level for primary production. This is shown in a higher frequency of agribusiness linkages between productive organizations with government entities that provide this kind of service through technical assistance and, mainly, training.

It cannot be affirmed that all of the countries have a clear and defined policy with regard to the support and promotion of agribusiness linkages. As mentioned above, countries have attempted to advance competitiveness agreements and public and private alliances for the main agriculture and agro-industry sectors. In order to consolidate organizational experiences, many countries have approved some or many of the designed instruments.

Chile is an exception among the countries analysed. Consultants find that Chile has had a solid macroeconomic environment in the last 20 years that has enabled the efficient operation of sectoral support instruments such as the Production Promotion Cooperation (CORFO). This has reintegrated exports from the Trade Promotion Board (PROCHILE), provided cofinancing for medium-scale and large irrigation works, cofinanced promotion programmes, developed the port infrastructure, and modernized customs and bank procedures.

In Chile, these are cases that have benefited from a clear political and economic definition of support to agro-industrial processes within the framework of commercial opening. This is demonstrated in the development and drive of agro-industrial chains and linkages with small producers. To this end, the Institute of Agricultural Development (INDAP) promotes specific programmes to stimulate contract agriculture. Agrochile, an organization created in 1999, has emerged as a platform of entrepreneurial support for small producer organizations.

With the support of the INDAP, COOPEUMO funded a strategic study for the organization of smallholder production and a market study to support the marketing of smallholder production. Through technology transfer programmes and as a result of the market study, a point of direct sale for fruit marketing was established, with the partial financing of fruit and vegetable packing. With the CORFO, a project dedicated to fruit marketing was approved. With the support of PROCHILE, the cooperative undertook an export mission to the United States of America and also increased its efforts to promote direct foreign trade.

In turn, the Chacay Cooperative participated in a programme of Promoción de Alianzas con Agroindustrias (Promotion of Agro-industrial Alliances), led by the INDAP in the 1990s. This programme created a favourable environment for the creation of agro-industrial linkages between private-sector businesses and smallholder organizations. The producers joined in this network, which facilitated the implementation of agreements and alliances with agro-industries that process frozen foods.

Another case with a clear policy of agribusiness agreements is Azules from El Salvador. The public sector promoted a set of actions through the Ministry of the Economy and the support organization for small and medium businesses. In turn, the Ministry of Agriculture promoted a reconstruction programme and restructuring of the agriculture sector, with indigo as one of the main lines of promotion. As well as various institutions and development projects, private enterprises expressed their interest by reviving indigo cultivation. In this way, a support group was formed with the participation of public and private organizations and international cooperation. Institutions for negotiation and trade were created through this support group.

Colombia also has a clear formulation of agreement policies and commitments to competitiveness at the chain level. However, such agreements have been carried out with different levels of priorities and commitment. In the cases analysed, the competitiveness agreements are recent. They generally deal with localized efforts in which producers and recognized processing and marketing enterprises participate.

In the Colombia cases, the enterprises link with Proexport, an organization that includes export promotion programmes for small and medium enterprises through Expopyme. Within the framework of this programme, the development of foreign markets is promoted and credit provided.

In other cases, sectoral policies have supported agribusiness linkages less clearly. For example, the National Institute of Agricultural Technology (INTA) in Argentina has played an important role in creating FECOAGRO, and in the skills-building, training and learning policies in various social and productive fields. Two state programmes have enabled the basis of support to be created for FECOAGRO: Unidad de Minifundio and the Pro Huertas. Both programmes intervene in three fields supporting cooperatives, namely: technology, organization and trade.

Similarly, in 1987, the Unidad de Planes y Proyectos de Investigación y Extensión para Productores Minifundistas was created. This has formulated a support project for cooperatives from San Juan. The Pro Huertas programme supplies food in suburban areas that lack basic essentials. Within the framework of this programme, FECOAGRO designs and trades collections of different seeds.

Another interesting policy supporting FECOAGRO is "tax deferment". This entails using fiscal resources to acquire lands for cooperatives. The Law of Industrial and Agricultural Promotion envisages the possibility that added value and income tax be invested in agriculture projects, as in this case, and in land purchases for productive use.

Finally, in the cases of Ecuador and Guatemala, the greatest involvement has been shown by international cooperation, and in a complementary way, by the respective governments. The main motivation is to combat the serious problems of poverty, misery and malnutrition. This aim is also shared by governments through their sectoral policies.

Types of agribusiness linkages in the case studies

Table 9 shows the kind of linkages observed in the case studies. As expected, all cases have basic linkages between the producer and the formal or informal organizational structure. In 3 of the 12 cases, this structure is mainly commercial, that is, for export. In eight cases, there are structures that mainly carry out some kind of processing prior to trade, and in one case, the structure focuses principally on providing production services.

The second type of agribusiness linkage generalized for all cases is between the organizational structure and the following link in the chain, which could be either the processing or the domestic or foreign trade of the product. With the exception of one case, most do not participate in this link at the property level. These are relationships established through the market or occasionally through the mediation of promotional organizations at national or international level.

The following linkages in order of importance were set up between the organizational structure and government and third parties, other than traders. Although it was hoped that in all cases there would been some kind of linkage with government, this did not take place in two of the cases. In the other cases, the linkage is not equally intense; in at least four cases, it is a weak, sporadic and tangential relationship. Mainly, it is with the cooperatives and the initiatives that have to deal with catastrophes, as in Central America, where linkages with government are strongest.

For-profit organizations generally resort much less to government support and even that of private enterprises. In some cases, this is because there are policies of minimum administrative expenses, whereby producers have to address their own needs.

Linkages of the organization with third parties are established to complement the provision of services to beneficiaries, mainly in programmes of technology transfer, technical assistance, training and financing. On occasion, this involves complex linkages that are carried out simultaneously, for example, between a mixed organization that provides services or promotes a programme, the government and the organization. This type of agreement is established, as in Chile, to bring progress to new aspects that require an experimental component, as in commercial or quality development.

TABLE 9
Types of agribusiness linkages

Considering the competitive environment and globalization, there should have been a great number of feasible, desirable or even more necessary linkages between the organization and government or third parties. Some examples are:

• a financing strategy according to the needs of producers;
• increased integration between links at the level of property;
• the design and negotiation of new contractual forms with enterprises certifying quality;

• enterprises that supply labour services or commercial organizations in export-driven countries.

However, these kinds of completely new linkages are more complementary or tangential. Most of the basic or nodal linkages are already routine. It is their content that has been more clearly modified.

An active option for development and promotion in agribusiness linkages would be the explicit promotion of those linkages that are the most promising, with the greatest potential for exchange in the chain. Within the conceptual framework, these are called "matrix linkages".

Agribusiness linkages and leadership

In the different cases analysed, one questions the role represented by leaders in the development of agribusiness linkages. The role of leaders is more striking in cases where regional chaining has an important role. It is feasible that there are areas in which there are previous exchanges of a social or associative type, and that a favourable environment is created for the role of leaders. The main examples are the Salinas dairies and Moras del Oriente; in each, one of two leaders are described who have been able to channel latent social efforts in the community for their productive use.

A different leadership situation is seen in the case of FECOAGRO (Argentina). The leadership has emerged less spontaneously than in Ecuador or Colombia because it deals with INTA technicians, who began to work with a small number of unemployed and landless workers in 1983. The nucleus of the cooperative organization came out of this group of rural workers, landless farmers and INTA technicians.

Other cases deal with governmental or religious initiatives in which it is not the leader's profile that is outstanding, but rather the capacities in logistics, organization and implementation of the organizations that have inspired such initiatives.

Agribusiness linkages with governmental organizations

Table 10 shows agribusiness linkages of the organization with governmental organizations. It considers governmental organizations, public entities and national, local and regional institutes that have established relationships in some way with the organizations analysed. The most frequent linkages are established by two groups of countries: (i) those with a clear promotion and development policy in agro-industrial and commercial programmes, such as Chile; and (ii) the Central American countries in association with or complementary to international cooperation, which acquires a prominent role.

TABLE 10
Linkages with governmental organizations

TABLE 11
Linkages between the producer and the private sector

The main support provided by governmental organizations is in the fields of training, technology transfer, technical assistance and financing. Frequently, this support is not provided directly, but rather is funded through transfers to the organization so that they themselves contract this type of service with third parties. Quality control, information, market development and business management are new fronts of governmental support. The most explicit management as it applies to training and the development of private agents has been in Chile.

Agribusiness linkages of the organization with the private sector

Agribusiness linkages with the private sector mainly cover two fronts: technical and entrepreneurial. Two kinds of private enterprises participate: (i) other service organizations such as cooperatives and private enterprises; and (ii) other organizations that support rural development and rural populations, such as regional universities, technology centres and NGOs.

At the technical level, private enterprises participate in agreements with the organizational structure in order to provide inputs, technical assistance, training and technology transfer (Table 11). Commercial support responds to organizations' demand either for development and openings into new markets or for serving established markets.

Organizations with a weak or no relationship with government are those that establish most relationships with private enterprises. This kind of link does not always signify explicit contributions for the organization. Rather, they usually incorporate trade agreements in which both parties benefit jointly by participating in the agribusiness linkage, as occurs with private investors that have temporary companies or with traders that receive commission for their services.

Chile behaves rather differently from the other countries. In the cases analysed, there is significant participation of both governmental organizations and private enterprises. In this case, government favours joint action between organizations, cooperatives and private agents. Such cooperation ranges from providing inputs, infrastructure and technological aspects, to trade development and quality control.

Linkages of organizations with international cooperation

International cooperation should be highlighted because of its importance in some countries. This support usually emerges after extreme situations of poverty and violence, as in Central American countries. Up to a certain point, international cooperation manages to counteract the breakdown of direct state intervention as its support extends to supplying donations to promote programmes for improving living standards and directly supporting production.

In three cases analysed, international cooperation played a leading or prominent role in creating associative organizations. With this goal, it provided support to creating organizational structures, financing for infrastructure and resources for producers.

The scope of the research does not allow for the precise evaluation of changes that have occurred in the linkages with international cooperation. However, the cases analysed reveal that there have been modifications in order to privilege entrepreneurial management. For this reason, international cooperation currently emphasizes support for collective negotiation, business management, the use of information tools, training and trade development.

FECOAGRO is significant for its synergies between international cooperation and small producers. In 1993, this organization directly negotiated a financing agreement and technical cooperation with the Inter-American Development Bank (IDB), which resulted in a microentrepreneurial credit system. However, it is necessary to evaluate the sustainability of these direct agreements in a critical macroeconomic situation as is currently the case in Argentina.

Owing to time and budget limitations, the study could not examine other consequences of international cooperation, such as the religious nature of many of these organizations and their likely impact in terms of values and culture on the schemes and on own perceptions and the development of agribusinesses.

Linkages of the producer with the organization

In the cases studied, the most important relationships to the producer are those formed with the organization. The organization could be more or less inclusive, as it offers a large range of services and possibilities to its partners. As shown in Table 12, the most important service and the one that almost all organizations offer their beneficiaries is marketing. The other services in order of importance are: technology transfer, technical training and technical assistance.

The organizations that offer the greatest diversity of services to beneficiaries are the cooperatives in Chile, thanks to their closer and more comprehensive public-private interaction. Ranking second are organizations that have developed associative and regional linkages, as in the Salinas dairies, the cooperatives of Argentina and the blackberry producers, and those that provide their services in an endogenous manner, on location. Next in importance are organizations that benefit from special assistance programmes and national and international support, as in Central America. Finally, there are private organizations that produce cassava, uchuva, chilli and lemon.

Innovations in agribusiness linkages are generally transmitted from an organization to beneficiary producers. New services offered include: information; support to production planning according to the market; access to a redistributive land market; and legal and accounting support.

Quality control deserves to be highlighted. To the extent that markets are becoming more demanding or that production is targeting the international market, the organization has a greater role in product quality, from the raw material to the final presentation. Accordingly, there has been progress in the development of the necessary incentives (laboratories for quality analysis), in standards and in a system of incentives and sanctions. Prominent cases in this sense include FECOAGRO, Chacay, uchuva and Azules.

Linkages established directly by producers

Services that should be given by the organizational structures to producers are obtained partially through third parties. In these agreements, innovation is virtually non-existent between producers and third parties. Services are used to supply the essentials for production, such as financing, inputs, technical support and marketing (Table 13).

Given that particular use of services usually incurs great costs to producers, supply is restricted, occasional, or not always favourable to the producer (e.g. in agreements with dealers). As occurs with some cooperatives, e.g. COOPEUMO, sales from members to private traders have a negative effect on organizations because they break established trust agreements.

TABLE 12
Linkages between the producer and the organization

TABLE 13
Linkages established directly by producers