Feed the Future
This project is part of the U.S. Government's global hunger and food security initiative.

3.3.3. Plan to Sustain Competitiveness

Plan to Sustain Competitiveness

The guidelines for developing an end-market competitiveness strategy and an upgrading plan focus on achieving competitiveness at a single point in time. Sustaining competitiveness over the long term requires a willingness and ability to continuously adapt to changes in consumer preferences, the availability and scope of supporting markets, competitors' capabilities, enabling environment policies and regulations, etc. Strategy designers must integrate an interactive process into end-market and upgrading development strategies to ensure chain actors can continue to adapt and remain dynamic. Monitoring changes in the following areas and integrating sustainable responses to these changes is essential if an industry is to achieve sustainable competitiveness.

  • Changes in the end market—The demand for products, concern for the way they are produced (natural/organic, sustainable, ethical, fair trade) and operational characteristics (branding, quality, customer service, price) change, often with startling rapidity. Value chain actors must establish multiple sources of market information that include feedback from end markets and proactive market resarch so that they can adapt their strategies as market demands change and new market opportunities arise.

When the Ghana TIPCEE[1] project began, the export market for the smooth cayenne pineapple was moving away from that variety to the MD2 (golden papaya) variety. Ghana had no more than 10 hectares of MD2 in production and needed to shift a very complex industry from one variety to another and to adopt new husbandry techniques in order to stay relevant in the marketplace. Working with the full range of value chain actors, the government and the private sector established a program to develop plantlets, multiply them as suckers, map the nurseries that were multiplying the suckers, disseminate the suckers, map the smallholders receiving them and educate them in proper crop husbandry. The result was more than 5 million MD2 plantlets produced by local tissue-culture labs and distributed to smallholder nurseries, which generated and distributed 32 million suckers to 1500 smallholders who planted 1200 acres. The industry made this move without leaving behind the smallholder, who is now adding value to the value chain by providing a reliable supply of GlobalGAP-certified pineapples.

  • New constraints and opportunities—Addressing key constraints and upgrading products and/or processes can give rise to new opportunities or impediments, aggregation points and leverage sources. Strategy designers can help industry organizations, lead firms and other catalytic actors to adapt incentives, shift relationships and foster innovation so they can respond to these and other types of market changes on a sustained basis.
Lead firms play a key role in the chain because of their size, dominant position, influence, etc. while catalytic actors have the incentives, resources and willingness to 1) contribute to increased competitiveness, 2) drive upgrading throughout the chain, and, importantly, 3) include MSEs in the chain.

The EDEM[2] project facilitated the export of Albanian watermelons to regional and EU markets by offering marketing and technical assistance including inward trade missions for buyers from Croatia, Serbia, Germany and Holland and advising producers to size and package the melons. These simple upgrading procedures added significant value and made a big difference in the price they obtained in those markets and others in Greece, Kosovo, Switzerland, Bosnia, and Macedonia. Producers soon realized, however, that high value markets present moving targets in which consumer demand changes constantly. To continue shipping melons to these markets, producers would need to develop trusting relationships with buyers able to provide ongoing information on the sizes and types of melons consumers want. The building of such relationships is critical to any competitiveness upgrading strategy.

  • Characteristics of the business enabling environment (BEE)—Designers must weigh the costs and risks associated with an unfavorable enabling environment during the value chain analysis and design of end-market and upgrading strategies. They also need to consider the opportunities a stable BEE provides, particularly when competing against industries in countries having a less favorable business climate. Private sector actors need to understand the importance of the BEE and use their ability to lobby for improvements in the business environment directly related to opportunities and constraints that can have the greatest impact on the industry.

The Cambodia MSME program [3] evaluation[4] found that the project is fostering public sector accountability by encouraging interest groups and helping them petition political leaders to address economic injustices. In one instance, a provincial governor responded to advocacy efforts by eliminating illegal slaughterhouse fees that saved meat traders an estimated US$75,000 per year and forced agriculture and health ministry officials to conform to the law. In another case, a petition put forth in the highly publicized context of the National Public-Private Sector Forum not only convinced Cambodia's Prime Minister to embargo the smuggling of (often diseased) pigs from Vietnam, it demonstrated that rural interests could represent themselves effectively in national fora and obtain redress of their grievances.

  • Internal dynamics—Industries must identify internal constraints to competitiveness such as the use of predatory practices or a lack of quality control resulting in low quality products. Developing means of regulating through industry standards and codes of conduct and by encouraging self-certification can help industries prevent and address these types of problems.

The Zambia PROFIT program took a leading role in driving an industry-wide campaign to create public and government awareness to reduce the damaging impact on the cotton industry of the predatory practices and pirate buying and side-selling of several new industry entrants. The relative success of that campaign prompted the industry to seek further assistance with public and producer awareness campaigns designed to ensure compliance with cotton seed certification and distribution requirements and other issues that threatened the long-term integrity of the industry.

Footnotes

  1. The USAID/Ghana TIPCEE Project: Smallholder Participation in the Value Chain
  2. Enterprise Development and Export Market Services (EDEM)Project
  3. The Cambodia MSME Project
  4. Cambodia MSME Project Final Evaluation