microReport #37: Competitive Strategies for Agriculture-Related MSEs: From Seeds to Supermarket Shelves

This microREPORT aims to inspire the implementers of agriculture and agribusiness projects to develop competitive business strategies which are inclusive of micro and small enterprises (MSEs). The authors review the economic rationale for supporting small agriculture-related firms and the evolution of approaches in two related fields: agricultural development and small enterprise development. Current trends and their implication for developing country MSEs are discussed, including global competition, the concentration of ownership in the agribusiness sector, and the rise of consumer awareness and private industry standards.

The document offers a categorization of agricultural products ranging from those typically dominated by large enterprises to those dominated by small business units. This exercise shows how important some product characteristics can be in determining what size of enterprise is most viable for a given sector; and illustrates that there are a number of ways in which developing country MSEs can participate in competitive agribusiness value chains. Opportunities for MSEs are not limited to the production stage – in local markets especially there are opportunities for MSE producers, aggregators, transporter, and distributors.

The second half of the microREPORT addresses the question of how agriculture programming can be inclusive of MSEs without sacrificing competitiveness. Four ‘critical success factors’ are identified, which program designers and implementers will want to address – the business environment, horizontal and vertical linkages, upgrading, and sustainable supporting markets. The authors recommend using a ‘value chain’ lens as a way to understand the complex dynamic relationships in markets and among firms, and as the basis for developing and implementing solutions to the problems facing agriculture and agribusiness in developing countries. Effective solutions will need to include both firm-level and system-wide activities; if program impacts are to be sustainable, solutions will need to be commercially viable.