SMAEsCompetitiveness

Roundtables

By Florence Tartanac

and Pilar Santacoloma,

AGS, FAO

Background and rationale

Scope :

� SMAES: Small and Medium Agro-Enterprises

� Small: 10 to 50 employees

� Medium: 50 to 100 employees

� Not micro-enterprises

Background and rationale

Constraints for SMAEs:

� business and operational management practices,

technologies and logistics not competitive versus larger firms

� weak policy and institutional support because they fall

between agriculture and commerce ministries

� not well represented by private sector federations and

organizations (dominated by larger firms)

Roundtables objectives

� Clarification of AGS strategies and priorities for

working with SMAEs and supporting their

development

� Sub-regional refinement of strategies

� Concrete information to feed into COAG 2011

� Launch networks of potential collaborators

� Provide information for a FAO publication on

SMAE development

Roundtables at regional level

� Africa: May 2010

� Central America: June 2010

� Asia: December 2010

� South America: 2011

� West Africa: 2011

� Eastern Europe: 2011

Roundtable methodology

� Only SMAEs managers

� Between 15 to 30 participants

� Grouped by clusters

� Small introduction for each issue identified

� Working groups and plenary sessions

Overview of SMEs in Central America

� Micro-enterprises 900 828

� SMEs 98 528

� Employment generation : 3 238 596

SME’s Employment generation in Central America

Agro-industrial export sectors from

Central America

OTROS PRODUCTOS

AGROINDUSTRIALES; 701.5 ;

18%

AGUA Y BEBIDAS NO

ALCOHOLICAS; 101.0 ; 3%

CARDAMOMO; 105.7 ; 3%

CARNE DE BOVINOS; 160.0 ;

4%

PREPARACIONES

ALIMENTICIAS; 279.3 ; 7%

ACEITE VEGETAL; 294.3 ; 8%

AZUCAR Y MELAZA; 473.8 ;

13%

CAFÉ; 1,266.2 ; 33%ALCOHOL, AGUARDIENTE Y

BEBIDAS ESPIRITUOSAS;

119.4 ; 3%

PRODUCTOS DE PANADERIA,

PASTELERIA O GALLETERIA;

134.9 ; 4%

JUGOS DE FRUTAS O DE

HORTALIZAS; 138.7 ; 4%

SMEs participants

Sect or

SME

Coffee Milk products

Fruits & Vegetables

Corn products

Individual X X X

Association X X X

Cooperative X X X

Issues discussed

� Procurement from small farmers

� Innovation, differentiation, branding

� Quality management and standards compliance

� Supply chain management and logistics

� Associations & alliances

Procurement from small farmers –

Trends

� Modalities vary with the type of value chain : at

collection points (coffee, export vegetables), at farm (domestic vegetables, milk), at the plant (coffee),

intermediaries (coffee)

� Contract farming : Coffee & export vegetables only –

Most of them rely on verbal contracts and loyalty

� Procurement planning : Based on previous year

purchases and production

Procurement from small farmers –

Challenges

� Side selling –lack of confidence

� Difficulty to adjust volume for export

� Quality deterioration due to lack of appropriate

transport means

Innovation, differentiation, branding

Trends

� Most SMEs differentiate products through

organic, fair trade, natural products (low sugar)

and/or DO certification and/or branding and

packaging – except dairy products

� Associations and cooperatives have common

brands and labels

� Many have multiple brands

� Many are subcontract suppliers

Innovation, differentiation, branding

Challenges

� Lack of information on technological and

marketing services

� Certification costs are high even using collective

schemes

� Lack of linkages with universities and

technological centers

Quality management and standards

compliance – Trends

� All SMEs apply GMP and some HACCP –

Government support

� Export Vegetables SMEs are GlobalGAP

certified

� Traceability requirements help in building

internal control systems

� Some feel they have to develop own laboratory

for quality control

Quality management and standards

compliance – Challenges

� Public regulations are non-adapted to SMEs

� Overlap in safety control organizations and

bureaucracy makes compliance expensive

� Financial costs to upgrade infrastructure and

equipment (GlobalGAP)

� Lack of laboratories prevents self-control

Supply chain management and

logistics - Trends

� Use of production planning and buyer

information

� Procurement at farm to reduce damage and

save energy costs

� Use of modern machinery save input costs

� Inventory reduction by planning production and

processing according to orders received

Supply chain management and

logistics - Challenges

� Implementation of cold chains in the dairy sector

� Rationalize collection and distribution routes

� Information and availability of appropriate

technologies and services

Associations & alliances

� All SMEs are members of some type of

association

� Chambers of commerce or industry are

dominated by large entrepreneurs

WAY FORWARD

� There have particular strong interest in alliances

� Agree they need some type of regional SME

association

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