Vision of an Agro-export Model with Small and Medium Enterprises

Author: Marcelo Cedeño

BUSINESS MODEL VISION

Wará Guayusa

8/26/2021 4 min read

Although today the trend of international help and cooperation is dictated that primary production is one of the links in the production chain that needs the most contribution because of the economic and social issue of the actors that are part of this segment, this scheme has incessantly promoted the aforementioned without a doubt. However, this model has not contemplated the subsequent links of this same chain to achieve a synergy of collaboration and sustainability, with which it has not fulfilled its fundamental aim, which is to achieve an integral cooperation that makes up a bond of trust and that gives as a result, a contribution to the improvement of the economy of a country gradually managed autonomously.

In this context, Ecuador has provided, through international organizations with government entities, support to the population of different marginal areas of the country where agricultural production is one of the main sources of work and income for these families who are engaged in these activities.

Within this support, formidable progress has been made in terms of promoting intermediate cooperation economies in which producers have reached a higher level by forming legally constituted Associations and Collection Centers and become part of the integral economic circuit of the country. Likewise, it has been seen that many times these models have been reinforced in an operative way in the promotion of primary production and all the matters related to the agricultural part to improve productivity and with it a decrease in production costs and increase in the yield of the crops, always taking into consideration environmental sustainability and the reduction of agricultural impact.

And, finally, with infrastructure and equipment for the different industrial production lines that have generated in many cases a supply of value-added products from origin. What this has brought about is a qualitative and quantitative leap in which higher production volumes and organization have been achieved, which has highlighted and strengthened the positioning of these actors within the supply chain of both; raw materials and products with added value ready to be commercialized both for the national and international market. However, all the emphasis that has been placed on the primary part should mesh with the next link in the value chain and it is for this reason that one of the shortcomings of this model is the lack of vision towards the part that continues the next part of the process.

In reference to this, although the associative groups of the primary productive phase have been strengthened and have received constant support, many times the next link that is in charge of being the commercial bond that closes the organizational link of the chain, has not been taken into account of a product in a certain market, and whose great challenge is to capture the attention of the consumer and achieve its final placement. This role has been stigmatized many times by many segments despite the fact that it is one of the most related to achieving a synergy between supply and demand in a certain market. This will determine that the period of the value chain of a product rotates again, promoting the action of each of the links that make up it and therefore a benefit for all of them.

In this same sense, it is logical to point out that the problem is given because in most cases these products are placed in the international market by large companies that in this model are the only ones with export capacity that can do so due to their infrastructure, equipment and its large volumes of purchase and sale. However, an integral work of the entire value chain is not done, and large companies are always the ones that capture the greatest of the revenues, turning this model as not suitable to be replicated since it only benefits a few with the work of many.

Proposal

One of the ways in which the Central Government through its economic measures has tried to curb this problem has always been the imposition of minimum support prices. That, although what they want to do is look after the interests of those most in need, which in this case are the farmers; what they end up doing is distorting the market and aggravating their situation. In order to compete in the international market with quality products and competitive prices, prices must be governed by supply and demand as is done in different markets. Furthermore, it goes without saying that many governments incentivize agricultural production through subsidies, thereby promoting their prices to be more competitive in the foreign market in the same way. At this point, we do not want to mention as a favorable point the subsidies granted directly to producers since this is constituted as DUMPING.

However, in this case the Central Government in conjunction with International Cooperation can promote an openness and a synergy of assistance in which Small and Medium Enterprises (PYMES in Spanish) are taken into account that can fulfill the anchoring function in different countries in the Agro-export vision with the products that were promoted during the primary phase for their placement as raw material or as products with added value in the different markets of the world.

This model should promote the internationalization of the operation and wider openness to small and medium-sized companies that can operate outside the country and that seek such an anchor that allows the commercialization and opening of new markets, the creation of sources of employment in the countries where these are directed and a commercial link that promotes the exchange of products from one country to the other and vice versa in the same way. With this carried out, it would be possible to close the circle of cooperation in which a production and a guaranteed sale are promoted.

The support that is needed from both state and international cooperation is vital to form anchoring networks of products from associative groups of small producers that have already done various organizational work and that have been reinforced with infrastructure, equipment and good practices at the agricultural level. This made with small and medium-sized companies that can attain this offer in international markets in different countries of the world and that have international cooperation and their different marketing support networks that help as "initial distribution or seed" in the search for different Self-service networks that promote equity as the main and contractual binding value within the value chain of the aforementioned model and that maintain its sustainability.

Address

Warsaw, Poland

Contacts

marcelo.cedeno@waraguayusa.com

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