A paradigm is a theoretical model which explains a type of phenomenon, or some social or economic behavior. It comprises the whole context and schema within which a thing or phenomenon is perceived, conceptualized, realized, validated and evaluated, with reference to an image or perception of reality, at any given moment or time, in any given social, economic or technical domain (Heylighen, 2003). Under the current circumstances of the world economy and those of Latin America and the Caribbean, new and innovative approaches may need to be developed for small agroindustries in developing country agrifood chains, perhaps even new paradigms. This paper proposes the possibility of revising the older paradigm on strategies for efficient, effective action to meet priority needs, enhance quality and competitiveness in the small food industries in Latin America and the Caribbean, and promote agricultural development. The strategy and action thus generated will in turn promote food security, and may be helpful as a guide or reference for other regions as well.
Our present state of knowledge indicates that progress in any given country, whether developed or developing, is directly linked, among other factors, to progress in the production sector. Sector development, success and sustainability are in turn directly linked to competitiveness. As mentioned, quite apart from the specific characteristics of the organizations, institutions, individuals or products involved, competitiveness is demonstrably dependent on both microeconomic and macroeconomic factors (Porter, 2003). Improving some aspects while ignoring others will not necessarily lead to substantially and sustainably increase competitiveness, and may indeed even lessen the capacity to compete. This is especially critical for developing country agricultural sectors. Isolated efforts such as increased investment, new political and institutional frameworks, renewed access to diversified markets and enhanced national infrastructure, are, though essential, simply not enough. They need to be backstopped by action targeted at productive agents in the food chain. Efforts need to be directed at pinpointing the principal systems components and how they interact in terms of competitiveness.
Defining the appropriate strategies, lines of action and operational practices for a positive, sustainable, environmentally friendly and human development oriented impact on competitiveness should be tailored to economic and social development and specific needs within the different countries. For a given country, our reasoning is based on the following premises:
Agricultural development contributes to a country’s social and economic development.
Greater prosperity and higher living standards are essential for agricultural development.
Heightened competitiveness in the agrifood chains can boost prosperity for all actors in these chains.
Factors affecting chain productivity, seen as systems components, must be improved to increase competitiveness.
Factors affecting productivity are multiple in nature at macro and microeconomic levels, interacting and interrelating in dynamic ways in agrifood chains as parts of complex and dynamic subsystems.
According to Porter (2003), effective action depends equally on improving the quality of the macroeconomic business environment and on developing (enhancing the capacity and effectiveness of) enterprise strategies and operations, mindful of the multidisciplinary nature of enterprise components.
Food quality and safety, cost-effectiveness and commercial success are all indicators of productivity. They can be enhanced by improving enterprise development and the economic climate. These indicators may represent the aggregate effects of the system in making a given output or performance more competitive.
Some countries have postulated various lines of thought and action to promote and develop agroindustry, including state policy and mechanisms, expanding available resources, and improving available technology and training (Tratado de Cooperación Amazónica, 1995). We may hope to see individual enterprises boost capacity by themselves, benefiting participants, but such isolated acts cannot reasonably be expected to have a significant and sustainable bearing on competitiveness in the food chain even at the local level, much less at the country level. A frequent item on the agenda for discussion in many developing countries is the impact of international food safety regulations and their impact on the ability of these countries to meet these standards and still be economically efficient. In any way, the promotion of food quality policy and actions schemes that take into account the widest possible context, with participation and consultation between economic actors, government, technology and information providers, and the social community (Interministerial Food and Agriculture Committee, 2004).
A systems analysis aimed at reaching an acceptable level of competitiveness needs to focus on boosting the key determinants of technical, scientific, commercial, economic and institutional capacity. The overall approach should be founded on an analysis of food quality systems within a systems analysis of competitiveness. This means using the systems analysis to identify the specific context, components, relationships, priorities and key factors which can efficiently and truly bring about a sustainable increase in food quality and competitiveness.
Figure 12 presents one way of visualizing the implementation of more effective strategies and action for a country, both at the macroeconomic and microeconomic levels. This systems model is based on identifying and attending to needs, understanding that they are complex and systemic in nature, then seeking opportunities, and next defining systems objectives and critical systemic factors for enhanced food quality and safety. This leads to the definition of integrated, feasible, effective strategies and actions to boost competitiveness. In the concept illustrated in this model there is no room for the traditional a priori decision approach stating that isolated, one-off, action at the microeconomic (or even the macroeconomic) level, or the application of “one size fits all” solutions, can be appropriate or adequate ways of boosting competitiveness. On the other hand, catalyzing approaches are advisable, such as fostering local participation, adaptation of approaches to local conditions, consideration to cultural ways and priority needs, empowering of leaders at significant cluster and chain levels, and providing required support with view to provide a flexible and enabling business environment.
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FIGURE 12
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The different approaches to the analysis of agrifood systems have been extensively reviewed recently (Castro and Gutman, 2003). One example of a specific methodology for evaluating competitiveness in food chains is found in the work of Da Silva and Batalha (1999). These authors propose selecting the leading factors in competitiveness and their links, and then evaluating their impacts and the extent and kinds of control which can be exerted over these factors. One case concerned the livestock chain. It identified the sub factors involved in breeding, rebreeding and fattening technologies, inputs, enterprise management, market links, market structure and the institutional setting. Here the factors broken down into two separate categories in Figure 6 are presented as one. Another good example is the agrifood sector analysis methodological review done for the beef sector in Brazil, where the advantages and disadvantages of various methodologies were addressed (Henry et al., 1999). A methodological review and proposal for chain analysis methodologies was also performed recently, focused on European food chains (Attaie and Fourcadet, 2003).
We need the systems approach to explain new developments arising out of the new global context and the value it places on quality. We need to consider this from the standpoint of economic, commercial and institutional interaction within the enterprise environment, and managerial, financial and technical factors within the enterprises. We need to analyse the origin of the forces behind the demand for quality, and understand whether the various requirements and trends truly represent consumer demand, or whether the driving force behind them is the national and international industrial firms (including the big supermarket chains), and how their new supply, sales and advertising practices and massively bankrolled and aggressive sales strategies can influence the market.
Lastly, it is also important to know how food chain subsystems are evolving under the drive for better quality. We should not forget that dynamism is a systems property of the food chain. We see this in the way its components interact in tandem and sequentially, creating a vast web of simultaneous interactions among components and subsystems. This may well increase the complexity of the system and how it operates, producing constant change and new properties. In this context, safety regulations and quality specifications governing trade and sales exert pressure from one side while production, processing, management and marketing costs for a given level of quality press from the other. This can produce a sort of cyclical domino effect whereby no subsystem is prepared to absorb the potential cost increases due to higher quality standards or parameters. And that may give rise to a paradox wherein many people may desire or even demand quality products and advocate the value of quality, but are not necessarily prepared to pay for them. On the enterprise side, it is a known fact that production costs and hence competitiveness have been affected by the new international regulations (OECD, 1999), which force entrepreneurs to make choices between complying with standards and getting profits.
These considerations suggest that quality implies much more than just a standard or some verification methodology traditionally referred to as “control”. It suggests that looking at quality as a systems objective means grasping the inherent magnitude and nature of the system and its subsystems, interrelationships or concatenations, as well as the technical, managerial, economic and social implications. It is natural to view quality as a systems product and essential component of competitiveness, and as an objective aimed at heightened competitiveness. This is why the systems analysis needs to be made in terms of the systems objective, and why isolated action that disregards the eventual repercussions, the linkages among and nature of systems factors, and the systems trends and adjustments operating within the food chain is doomed to irrelevance.
By implementing the proposal summarized in Figure 12, using approaches such as those illustrated in this work to identify probable areas of action, and mindful of the complex nature of quality as illustrated in Figures 9 and 11, we should arrive at a definition of concrete lines of strategy to tackle the issues of quality and competitiveness. The procedure will use various tools ranging from basic surveys based on observation, inspection or interviews, to groups of experts and analytical and discussion workshops, to descriptive historical analysis, to cost and value chain analysis. It may employ more elaborate methods such as, perhaps, sampling and control via statistical designs and methods, dynamic observation of processes for the construction of empirical or mechanistic models, response surfaces based on factorial models, time series as part of statistical control and variation studies of quality, multivariable analysis, and evolutionary operations studies (Box et al., 1978). It may even encompass highly advanced quantitative operations research techniques, econometric analysis and decision models (Schimmelpfenning and Norton, 2003). Private sector actors may decide that they need to use a host of management, marketing and quality-safety surveillance and control tools to reach their business objectives. One of those may be traceability systems, oftentimes considered as one essential element for a safe, high quality and efficient food supply. These systems are in general aimed at improving supply management, facilitating traceback for food safety and quality, and differentiating quality attributes of foods for different markets, all within a cost-benefit framework for the enterprises involved (Golan et al., 2004). All these tools have been widely covered in numerous specialized studies, publications and documents, which can be consulted directly for greater detail which is not relevant to our discussion here. The approaches may be adopted for use in networks of small-scale food industries, but of course the concepts are applicable to one or more enterprises of any scale.
As a check list of items for multi-disciplinary, multi-sector, multiinstitutional participatory analysis teams, presented below are selected examples of possible areas of action designed to modify the critical factors as a typical result of a systems analysis for constructing strategic frameworks applying the reasoning expressed in Figure 12.
Consideration of the following with reference to quality in the macroeconomic environment (food industry systems) is recommended:
Strengthen the technical, managerial and commercial capacities of food chain actors in all major food system aspects concerning enhanced quality and competitiveness, including the development of decisional information support systems for management.
Increase productivity through the correct use of available technology and develop effective and beneficial links among producers, processors and traders, and with other actors in food subsystems.
Strengthen institutional, economic and policy capacity as needed, including:
- policy formulation and the establishment of institutional capacity and services for rural agroindustry;
- develop basic social services including the financial aspects, communications and transport, and most of all education, as components of rural development programmes;
- develop technological infrastructure, including research and development capacity aimed at technology transfer and efficient extension services. This includes improving institutions that can contribute to economic development, such as universities, technical schools, regulatory and standard-setting bodies and the extension services. Relations with the private sector also need improvement.
- develop market infrastructure, including market information;
- develop macroeconomic and trade, investment and trade, and agroindustrial production and export policies, together with the corresponding financial programmes and management and information systems designed to favor competitiveness;
- develop conglomerates to promote productive initiatives by groups of food chain agents and motivate innovation and integrated development. This will call for policy support for the growth of highly qualified economic actors with better strategies through the promotion of incentives, rivalry and trade interdependency.
Protect the environment through sustainable interventions and promote the use of renewable energy sources and the reduction of greenhouse gas emissions.
In the microeconomic environment (food industry and related network or cluster), with reference to improving the management aspects:
Carry out systems studies on the economic and policy aspects of food safety and quality.
Develop managerial tools for success in modern markets which demand high quality.
Conduct feasibility studies for reengineering agroindustrial production to ensure quality and boost competitiveness.
Develop and implement total quality control systems.
Develop business tools for cost-effective compliance with regulations and standards.
Conduct training in quality and food safety culture, including the technical, economic and commercial aspects.
Carry out market and consumer studies on food quality and safety demand trends.
Generate and disseminate food safety and quality information, and contribute to awareness-building.
Also in the microeconomic environment (the small food industry itself), with reference to development of the technological aspects:
Promote improved and hygienic practices and technologies in classification, processing, packaging, transport and storage.
Conduct design, construction and sanitary utilization of equipment and installations
Conduct development, maximization, validation, analysis and control of processes with prevention-oriented quality assurance approaches.
Improve and guarantee raw materials quality including the application of Good Agricultural Production Practices.
Apply combined preservation techniques.
Improve and guarantee in-process and finished-product materials quality and safety through the application of Good Manufacturing and Handling Practices.
Develop and apply effective, low-cost, environmentally-friendly preservation technologies and packaging materials.
Improve non-microbiological quality factors.
The heart of this document is to propose ways on how to be able to evolve from a process directed to devise sound strategies, using the systems approach, to the hands-on process of implementing cost-effective actions, that will assist small food industries and their networks to improve their performance, deliver high quality and safe foods to markets, increase their competitiveness, and contribute effectively to national productivity and development. Therefore, it is convenient to present some experiences related to different implementation modalities that would illustrate how to put forward the approach presented through these lines. The information that follows, coming from different contexts and periods and all except one from real life cases, is intended to give a rapid overview and examples of interventions from the global, macroeconomic international and national levels (in which agroindustrial systems are immersed) to the microeconomic level of specific food industries or in general postproduction stakeholders and their networks at local levels. Therefore, cases demanding comprehensive frameworks may be contrasted with very concrete and practical situations and the successful ways in which, through the application of the concepts explained herein, effective actions have been or may be put forward.
Given the identified need of many developing countries to compete in markets, and their limitations due to limited trained human resources, inefficiency within the sector, a competitive global environment and lack of appropriate governmental support, a strategic framework was developed recently. The Food and Agriculture Organization of the United Nations (FAO) has led an important strategy development effort regarding the post-harvest sector, collaborating with key partners and country stakeholders to develop a global strategic framework (FAO, 2004b). This is “A Global Post-Harvest Initiative. Linking Farmers to Markets - A Strategic Framework”. The purpose of this initiative is to improve the livelihoods of poor people by enhancing agrifood systems through sustainable and equitable post-harvest interventions. The FAO, the Global Forum on Agricultural Research (GFAR) and the Global Post-harvest Forum (PhAction) were the partners in this effort, with participation o a number of stakeholders. This framework originated on three supporting initiatives developed over the years 2000-2003: the Global Initiative on Post-Harvest (by FAO and GFAR), the Linking Farmers to Markets Initiative (by PhAction), and the Agro-based Small and Medium Enterprises and Markets in Developing Countries programme (by GFAR). The framework has a strong regional and subregional basis, obtained through a series of workshops and consultations in all regions, which culminated with the endorsement in October 2003 at an International Workshop at FAO Headquarters. These activities were led by an FAO team composed mainly of post-harvest systems specialists.
As a result, the framework has four strategies, namely, developing appropriate policies, strengthening institutions, developing competitive and equitable agrifood systems, and fostering networks. Each strategy is divided into collaborative action areas, expressed in terms of concept notes. While food crops are the primary focus, it may also cover non-food crops, livestock, non-timber forest products and marine resources relevant to the regions. Examples of the concept notes that will serve as a basis for the development of collaborative action-orientated projects are: development of a tool kit for market-oriented decision-making; enhancing rural agroenterprises through integration of supply chains and effective business support; improving the quality, nutritional value and safety of food from smallholder producers and small and medium-scale agro enterprises; and enhancing performance, equity and environmental sustainability of commodity chains. The Strategic Framework will facilitate resource mobilization, and monitoring, evaluation and impact assessment of projects implemented under the framework. The Framework is to be implemented by supply-side agencies in collaboration with beneficiaries.
Relationships between and within great systems, such as the agriculture, education or health systems of a given country, or managerial problems of national programmes, have also been analysed and improved using the systems-based method known as qualitative operations research (Mata et al., 1989; Montealegre et al., 1989; Montealegre et al., 1990). This term can be understood as synonymous with or equivalent to systems analysis, and basically consists in the analysis of big and complex systems and of the problems, risks and decisions inherent in running and managing such systems, utilizing various quantitative and/or qualitative methodologies (Heylighen, 2003).
This approach was applied in Central America and Panama by a multidisciplinary team of the Institute of Nutrition of Central America and Panama (INCAP/PAHO/WHO), at the end of the decade of 1980 (Mata et al., 1988; Quintana et al., 1988). Group feeding programmes, with nutritional, health, social development or post-emergency-relief objectives were the subject of improvement processes. Many of theses programmes have as a basic operative design the participation of small local food industries and networks, to supply food products to the programme. Medium and large food industries participate as well in some countries, and several programmes also operate based on donated food products, where a food chain from the port inwards is established.
The methodology consisted first in forming a core project team. This team, however, was flexible in terms of its members, according to the system under analysis and according to the phase of the study. In general, the core team was composed by a systems and information engineer (leader), a public health management specialist (leader when dealing with health- and nutrition-related feeding programmes), a public education management specialist (leader when dealing with school feeding programmes), a public sector management specialist, a private sector management specialist, a food systems specialist (leader for the analysis of food chains), a community organization specialist, a informatics and computing systems specialist and a facilitated operations research events specialist. This core team was supported by the required technical, administrative and logistics personnel, usually provided both by the project and by the government institutions involved. Furthermore, since in some instances confidential, financial or politically sensitive information would be handled, an explicit agreement between the technical assistance institution (INCAP) and the concerned Ministry was signed, and pertinent institutional collaboration and participation was promoted and even secured (in some cases in the form of a Minister’s decree, as needed).
Then, key programme-based teams with representatives of different types and levels of stakeholders were integrated. Those included top policy makers (even at the Minister, Vice-Minister or General Director level in a given Ministry), top managers in the programme, administrative and technical executing officers at central level, their counterparts at regional and local levels, and service point level (food warehouse, food service, school, health center, extension center, public works center, etc.) director and personnel, family representatives, suppliers of goods and services, supporting NGOs and international institutions representatives, donors, and the participants, men and women, themselves. Agricultural producers, transporters, handlers, warehouse managers, food preparation personnel, quality control technicians, accountants, primary health workers, teachers, and household heads are typical examples of participants.
Those teams worked through facilitated workshops, first to define the processes through which the different tasks and programme functions were executed, from each stakeholder’s point of view. The chains corresponding to the flow of food products either from the field or from the ports, and the supply of other products and services were studied and thoroughly characterized. Core team members participated in the workshops. Processes were then modeled and the whole system was represented through different modeling aids, including operations, inputs, outputs, components and relationships. The objectives, resources, procedures, results, efficiency and cost-effectiveness were estimated, leading to characterizing priority problems and possible feasible solutions. The required actions at different programme levels were then identified. The actions were grouped according to place, time and level of application in the programme, and an implementation plan was prepared, agreed upon and presented to authorities.
Political support was obtained through parallel promotion and awareness raising activities, and budget and resources were dully allocated. The solution packages, as they were called, were then applied, and after a consolidation phase and continuous operation, a series of cross-sectional evaluations were done. The whole implementation process was done following a quasi-experimental type of statistical design, for evaluation purposes. Another series of workshops with the original participants whenever possible was carried out in order to evaluate the whole qualitative operations research process and make adjustments to the solution implementation. The higher authorities in the Government considered this as a worthwhile process, which overall lasted between six to twenty four months, depending on the system under analysis. No doubt that management quality, support and commitment, both on the technical assistance institution and on the government highest levels, as well as effective and positive participation of all stakeholders, were essential factors for the success of those system analysis and improvement projects.
Given the need to comply with Article 18.2.a of the Cartagena Protocol on Biosafety, the Government of Argentina requested from FAO a project to assess the existing situation of production, harvesting, in-farm postharvest handling, storage, logistics, transport and export of grains, mainly maize and soybeans. The capacity to establish segregated chains with traceability for non-GMO (genetically modified live organisms) grains would also be appraised. Responding to the official request, FAO designed the technical cooperation project TCP/ARG/2901 (A), approved in 2003 and to operate for 13 months, in which several technical services of FAO Headquarters would participate as part of a core multidisciplinary team strengthened by international consultants and a very strong national project team. The Seed and Plant Genetic Resources Service acted as the Lead Technical Unit with the close support of the Agricultural and Food Engineering Technologies Service, and the administrative support was provided by FAO Regional Office for Latin America and the Caribbean, located in Santiago, Chile.
Among the specific objectives of the Project were the evaluation of operations, infrastructure, capacity and logistics for handling, storage, transport, loading/unloading, and export of maize and soybean grains, including those arising from varieties produced through modern biotechnology, in each of the regions and provinces where they are cultivated. The project was also designed for the identification of needs for adaptation, improvement and modernization of post-production chains in order to be able to implement the identification, segregation, traceability and handling of those grains according to national and international norms especially what is established in the Cartagena Protocol on Biosafety. The strategies, costs, investments and policy and legal framework to achieve that objective would also be delineated (SAGPyA and FAO, 2004).
The project was executed in a country where grain production went from 20 million tons in the decade of 1960, to 70 million tons at the beginning of the new Millennium, and grains and derivatives account for near to 40 percent of total exports, contributing significantly to national income, employment and tax revenues. The international context determined the need for the country to be prepared to comply with international normative frameworks, especially Article 18.2.a of the Cartagena Protocol, and to compete under dynamic trade conditions from exporting and importing countries including different separation thresholds and labeling requirements. Besides, the country counts with a solid policy and legal framework regarding GMOs, and enough technical capacity and experience regarding grain chains of all dimensions and also segregated chains according to different quality factors and marketrelated standards.
In this context, the project was divided into two main phases: one of analysis and one of estimating and postulating the actions and resources required for implementing segregated chains. Figure 13 shows an interpretation by the author of the project’s approach.
For the analysis phase the first step was conceived as a consultation, carried out in terms of a multidisciplinary, multi-sector Analysis Workshop, in which the situation and recommendations for improvement were discussed by stakeholders who are expert in grains chains in Argentina. With approximately 50 specialists in the distinct components of maize and soybean chains and networks, form both the public and the private sectors, the basic characteristics of the chains were discussed, the main issues that would have to be faced for implementing segregated chains were identified and discussed, and recommendations were proposed in relation to the best way to execute the field study. The workshop had the objective of doing an integrated analysis of segregated grain chains in Argentina, in order to identify the required modifications/additions, to identify the required information for segregated chains with traceability, and to establish general guidelines for the field study. The systems approach was proposed as the basis for the Workshop, and in general for the whole project, and it is summarized as follows (Cuevas, 2003):
Identification of the essential components of the system
Characterization of the relationships among the components
Knowledge of the properties of the system, considering that it is dynamic, evolving, complex, and with a general common objective.
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FIGURE 13
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The integrated analysis of food chains would therefore be also a multidisciplinary, multi-sector, consultative effort, aimed at organization of priority information to be used for decision making. A methodological innovation proposed in this project by the author as part of the systems analysis approach, was to utilize the Hazard Analysis Critical Control Point (HACCP) method, a widely accepted food safety management system to assure the safety of food (FAO, 1998) and also based on food chain approaches (FAO/WHO, 2003), as a framework to analyse segregation and traceability for GMO and non-GMO maize and soybean chains in Argentina. This could also be applied to any other country wishing to perform such an analysis. Basically, the methodological proposal consisted on the following general HACCP-based principles, as applied to maize and soybean chains:
Assemble the systems-analysis project team.
Describe target grain products and identify intended use and trade requirements according to Cartagena Protocol, trade standards and current thresholds.
Construct flow diagrams of the chains (Analysis Workshops) and on-site confirmation of flow diagrams and of current and potential capacity and operational procedures.
List and analyse all potential hazards associated with each part of the grain chains, conduct a hazard analysis for contamination of non-GMO grains with GMO grains, and consider any measures to control identified hazards.
Determine critical control points, that is, where loss of segregated property may occur.
Establish critical limits for each critical control point, based on current or potential market conditions and trade requirements or regulations, that is, define or adopt a set of thresholds.
Establish a monitoring system for each critical control point and for the whole chain, where traceability would be a key element.
Establish corrective actions, that is, what to do to secure segregated chains and compliance with thresholds.
Establish verification procedures, based on current up-to-date GMO detection technologies.
Establish documentation and record keeping, again, based on a traceability system.
The last seven bullets above constitute the principles of the HACPP system. It was very important to find that in the country some international certifying institutions have been applying similar approaches for commercial segregated chains by private companies, mainly for maize.
Based on the specific suggestions form the workshop participants a field assessment was done, in which the different grain chains from production to export were visited and appreciated, complemented with interviews, visits and searches in national institutions related to those chains, in order to gather primary and secondary information, and then propose feasible actions for improvement of those chains and/or adjustment in order to be able to meet regulatory and market requirements. In other words, the project would propose the best possible options for producing, handling, trading and exporting segregated non-GMO and GMO maize and soybeans. Practical aspects of the type of information to be gathered during the field study would be the identification of:
good practices of segregation and traceability;
bottle-necks in the different stages of grain chains;
critical control points (point in the chain where control measures should be established and standard parameters of action and performance followed to secure the efficiency of segregation procedures)
strengths and weaknesses of current systems; and
opportunities and needs for improving, complementing, adjusting, innovating or increasing the current capacity of grain chains.
As a result of the workshop and the field study, the project team prepared an agro-economic zone division of national grain agriculture, according to type of grains cultivated, density per grain, production and chain characteristics. Working hypothesis regarding quantities, thresholds and zones for segregated chains both for maize as for soybeans were postulated. It was established that the main logistic options for segregated maize and soybean chains are:
Production ® Harvesting ® In-farm storage ® Long transport ® Port
Production ® Harvesting ® Short transport ® Grain elevator in zone ® Long transport ® Port
Production ® Harvesting ® In-farm storage ® Short transport ® Grain elevator in zone ® Long transport ® Port
Each chain was analysed according to the advantages, disadvantages, requirements and characteristics. Additional capacity needed for storage and handling, costs of segregation and national capacity for traceability actions were likewise estimated. As an example, for segregation certification at a threshold of 0.9 percent, the strategic points for control of segregation and traceability would be:
Traceability at the seed producers, once audited by a certifying body. Sampling and analysis is required for seed batches to be utilized.
Inspection of areas planted with certified seeds. Identification of critical points. Eventual sampling in neighboring fields.
Sampling of each truck on unloading. Sampling by field, batch and silo, with controls for each truck.
Analysis on loading of first complete storage lot of segregated grain, based on samples taken on trucks unloading.
Sampling and analysis of each transport unit from storage to preboarding at export port.
Sampling and analysis on filling of each silo at pre-boarding site.
Sampling and analysis on filling of each warehouse of the ship.
The required investment to segregate non-GMO maize and soybean were estimated, mainly related to the storage capacity, automatic sampling systems, stakeholders training, and institution development. Annual costs for segregated handling were also estimated, both overall as well as per each subsystem in the whole chain. Different scenarios based on various potential situations in international trade and application of Cartagena Protocol on Biosafety were analysed in the project, and a set of recommendations were given to the Government, regarding investments, costs, and export requirements and conditions for segregated maize and soybean chains (SAGPyA and FAO, 2004).
Any analysis of the component factors of these indexes easily leads to the conclusion that application of the systems approach to the analysis of competitiveness is highly appropriate. Taking the food system as represented in Figure 3, for example, we can establish the criteria for evaluating competitiveness at each link in the chains in accordance with the various aspects listed in the earlier table, and, of course, through the utilization of appropriate tools and methodologies for each evaluation objective. Table 11 shows a hypothetical case in the fruit chain of a given country, put together by the author for the purpose of illustrating the use of simple tools for identifying weak areas and improvement opportunities in agrifood chains.
TABLE 11
Analysis of global competitiveness factors in
the fruit chain
|
Factors of competitiveness |
Production and harvesting |
Handling fresh product |
Storage |
Transport |
Processing |
Distribution and retail |
|
Technological development |
L |
L |
H |
L |
L |
M |
|
Absorption of technology |
L |
L |
M |
L |
M |
M |
|
Technology transfer |
L |
L |
M |
L |
M |
M |
|
Innovation |
L |
M |
M |
L |
L |
M |
|
Production process |
L |
M |
M |
L |
M |
L |
|
Market and consumer-oriented plans |
L |
M |
L |
M |
M |
H |
|
Total quality control |
L |
L |
L |
L |
L |
M |
|
Financial management |
L |
M |
L |
L |
M |
H |
|
Managerial capacity |
L |
M |
L |
L |
M |
H |
H = high; M = medium; L = low (with respect to the position percentile of other countries or other chains, for example)
Irrespective of the purpose of any systems analysis, the factors and their corresponding sub-factors as required will appear in this way in the headings on the left. Qualitative and quantitative criteria can also be used to characterize the situation and performance of specific productive bodies of different subsystems, with reference to productivity, and hence competitiveness. The result in this hypothetical case would be that in general the production, harvesting, handling, storage and transport subsystems of this chain are the ones with the lowest competitiveness, production and harvesting being the worst. Is probable that this case describes a country where the processing and distribution/retail subsystems are accommodating themselves rapidly to changing conditions in the market. As an example, this example could refer to the situation where supermarkets and medium food industries are responding to urban and big-city consumer demands, and therefore have modernized themselves and improved the competitive capacity. They might be driving a process of change backwards in the chain, as recently described for the Central American countries (Berdegué et al, 2003).
The underlying idea of this table can be used as a guide for the formulation of technical support strategies, policies and even concrete action to boost specific capacities, as these have been shown to boost competitiveness in the macroeconomic environment. Obviously, priorities can be established, focusing on those boxes in the table which received an “L” for low. A similar analysis should be made at the microeconomic level of the enterprises involved and their business environment.
Small food industries play a very important role in the economies of rural communities in Latin America and the Caribbean. Many of these industries use energy intensively, mainly in terms of fuelwood and other biofuels to manufacture traditional products of high cultural value and wide demand in national markets. Examples of these are tortillas (maizebased unleavened bread) in Central America and Mexico, arepas (maizebased unleavened bread) in Colombia and Venezuela, fruit preserves, cassava products, panela (raw sugar from sugarcane), smoked fish and meat, etc. Fuelwood, as a source of a potentially renewable source of bioenergy, could be a key factor for fostering sustainable management of natural resources in those agroindustries, if it is used in an efficient and clean way. Also, food quality and safety, profits and overall business competitiveness may be improved through better practices.
Based on this background, the Agricultural and Food Engineering Technologies Service of the Food and Agriculture Organization of the United Nations (FAO) organized an Experts Meeting gathering several Latin American professionals related to the small food industry and to the efficient use of bioenergy to analyse in an integrated way the main problems regarding the use of fuelwood as a source of thermal energy and the possible ways to promote the improvement and increased capacity in those enterprises through the efficient use of fuelwood. The design of strategy packages with integrated solutions, able to be adapted to different countries, and aiming to improving quality and competitiveness were part of the Meeting’s objectives. FAO’s partners were a Mexican university (Centro de Investigaciones en Ecosistemas, Universidad Nacional Autónoma de México, UNAM) and an NGO dealing with appropriate rural technologies (Grupo Interdisciplinario de Tecnología Rural Apropiada, GIRA), with participation of experts from the Region, in areas such as food technology, food and nutrition programmes, agroindustrial and rural development, ecology and environment protection, fuelwood utilization, food engineering, post-harvest systems, rural sociology and agroindustrial networks (Cuevas et al., 2004).
The Meeting was developed in two stages: in the first, the experts presented, from their own professional and country perspective, the problems, challenges and opportunities of the micro and small food agroindustry in the Region (one day); and in the second (one and a half days), with an integrating vision and following the methodology of “Logic Frameworks”, discussion workshop sessions were carried out to determine priority problems, solution alternatives and required actions to promote sector development. The “Logic Frameworks” methodology consisted in facilitated sessions going from brain-storming on sector problems, grouping of related problems in families, characterizing the nature and possible context of each family, cause-effect analysis, and finally conversion of problems into objectives for a strategy framework with directed actions, which in fact were the specific solutions to the priority problems. A oneday field visit allowed the experts to review and improve the problem analysis and to share views in a more relaxed atmosphere. The central part of the analysis was the micro and small, traditional, Latin American and the Caribbean food agroindustry. According to the experts, these industries may be identified by a preference to use local resources, the use of fuelwood as an energy source, or the intensive use of any energy source, the small investment rate, the use of simple technology or artisan traditional procedures, the use of family labor including women, and the small size regarding number of workers and total capital invested. The experts considered that these industries are key players in local development, generating a considerable number of posts for non-agricultural employment, contributing to food availability, using agricultural materials, and offering an alternative to migration to the cities. However, the discussions also led to agree on the fact that the industries are affected by a complex series of problems, with general characteristics in common across the Region. Typical problems are that many of these industries still belong to the informal sector, are excluded from institutional programmes, face a very competitive business environment, sell their products at low prices, use manufacturing technologies and practices with low efficiency, cannot comply with quality requirements and use little or non of quality assurance methods, do not have incentives to improve production, have little capacity for investment and to obtain credits, and use bioenergy in highly inefficient ways, contributing to the degradation of forest resources.
It was determined that in order to improve the sustainability of the micro- and small-agroindustries sector in Latin America and the Caribbean, it is required to develop integrated, systemic and participative approaches, sensitive to local cultural differences, and including technical, economic, social, cultural and marketing aspects. A planning matrix was designed, with the objectives and actions organized logically and hierarchically in four theme areas: Institutional, Economical, Environmental and Technical (which includes energy issues). Typical strategy lines to improve competitiveness of the small food agroindustry would be the strengthening of technical and management capacity of human resources, the immersion into technological innovation processes, the improvement of management and negotiation capacity, the promotion of adequate institutional frameworks, and the promotion of environmental protection productive approaches. The application of this Matrix would lead to the improvement of the rural agroindustry in the Region, minimizing environmental impacts and improving the use of renewable resources. Comprehensive project proposals could be prepared as outcomes of this type of systems analysis.
The social and economic problems in Georgia and the severe process of transition into the principles of market relations and economy had a negative impact on the fruits and vegetables post-harvest handling and processing industry. In the beginning of 90s approximately 64 processing factories were functioning in the country as a whole. 600-650 thousand tons of fruits and vegetables were processed annually. The value of the industrial production (960 million containers), in comparable prices, reached up to 785 million GEL (2.066 GEL - 1 USD, average rate of 2001). About 65 percent of the production was targeted for the former Soviet countries, and a definite part was exported abroad. In the decade from 1991 to 2000 a number of investments were incorporated in the field of processing industry, mainly with the intention to provide adequate technical capacity to processing factories. However, there was scarcity of raw materials and the supply of equipment/machinery was suspended, impeding thus the technical progress of the sector. Some of the typical problems in the sector were (Lapachi, 2002):
modern and efficient technologies characteristic of competitive enterprises and global market economies were lacking;
the chains do not operate in integrated ways and the links between fruit producers and post-harvest handlers, transporters and processing factories are nil;
marketing and other information services were not developed;
difficult economical and political situation in the country;
the tax system was not regulated;
there was a non-convenient investment environment.
These and other problems made the field fall in a deep crisis. Despite of the apparent surplus capacity of processing factories, the satisfaction of the market demand regarding processed products was reduced down to 50 - 40 percent and the rate of unused capacity grew to 90 percent in relation to installed capacity, production fell down to 5 - 6 million containers, and only 10 out of 64 processing factories were operating and with low production. The need for a prompt analysis of the sector was identified, and the Government requested FAO’s assistance to assess the possibility for the improvement for existing fruits and vegetables postharvest handling and processing chains. To find feasible solutions to these problems, the Ministry of Agriculture and Food of Georgia and the Food and Agriculture Organization of the United Nations agreed on executing the Fruit Sector Rehabilitation Project TCP/GEO/0065(A).
The general objective of the technology capacity assessment component of the project was the preparation of pre-investment baseline study of the fruits and vegetables post-harvest and processing sector aiming at the improvement of the chain including marketing. The specific objectives were to study the characteristics of supply and demand in the fruits and vegetables sector, constraints and main requirements for success including the economic, financial and legal aspects, to identify the alternatives for the sector rehabilitation towards meeting market conditions and requirements; and the identification of the main needs and opportunities for increasing competitiveness in the sector, including the improvement of fruits and vegetables quality and safety.
The methodology was based on the study of the aspects needing rehabilitation or modernization. Close cooperation with the authorities of the relevant sectors including representatives of the processing enterprises, scientists working in the sector, processing specialists, agro-entrepreneurs, and representatives from the retail markets. Aspects of the study related to requirements and constraints on fruits and vegetables supply chains; economic, financial and legal aspects; infrastructure of the sector; priority needs of producers, agro-entrepreneurs and retailers; ways to solve the seasonality in the chain especially as it affects the processing industry; and ways how to assist processors in finding the niche markets. In order to be able to meet project’s requirements and budget constraints, key enterprises had to be selected to be included in the study. Specific enterprise selection factors were used such as the legal and operative status of the enterprise, production capacity, technical base, specialization, functioning state, management style, leadership and commitment to improvement and success. Table 12 shows the general organization of the study, which included both post-harvest handling as well as processing enterprises.
The study concluded, among other things, that the sector faces a number of economic and financial problems, due to the transition related to economic reforms in the country including the privatization processes. The sector has problems in meeting market requirements and being competitive, including financial problems such as those due to the cost of electrical energy. The plants in the fruits and vegetables chains face also a lot of technical problems, including those of obsolescence and lack of spare or substitute parts or pieces of equipment. The enterprises also face marketing problems due to incipient actions in free-market economies, and need the development of marketing capacity and to count on efficient marketing services. The apparent lack of appropriate agricultural and market information also complicates further the situation. The legal aspects also create constraints to the optimal performance of the sector. The study proposed a number of courses of action as possible solutions to the problems. One of the study’s recommendations was that the integration of value-added chains, with appropriate support services including financial aspects and technical assistance, would contribute efficiently to the development of the sector. The study proved that the reasons for the critical situation in the sector are of economic, financial, technical, technological and marketing nature. Their eradication and rehabilitation of the situation would be quite possible if technical and financial assistance could be provided.
TABLE 12
Pre-feasibility study of the fruits and
vegetable sector
|
1. Main definition of the activity |
· Description of the activity |
|
2. Market analysis |
· Market capacity (including unsatisfied
demands) |
|
3. Technical aspects |
· Infrastructure |
|
4. Marketing aspects |
· Co-ordination of financial, trading and
industrial aspects |
|
5. Financial aspects |
· Investments (land, building, equipment,
materials and etc) |
|
6. Management aspects |
· Organization |
|
1. Legal and trading aspects |
· Food laws and regulations |
|
2. Risk factors and profit |
· Cost analysis |
As it is well known, the HACCP system is recommended as a food safety assurance tool, as discussed earlier. When the system was beginning to be widely applied in developed countries, actions started also to develop in Latin America and the Caribbean. As an example, the Institute of Nutrition of Central America and Panama (INCAP/PAHO/WHO) provided technical assistance to the small and medium food processing enterprises that supplied national food and nutrition programmes with ready-to-eat, industrially processed, nutritionally improved food products. The execution of those programmes demanded a high degree of coordination, supervision, quality control, and technical assistance. One way to establish a quality and safety assurance programme at the national level was to develop a dual quality and safety assurance system: on the one side, a supply chain from raw materials to consumers, with inspection, supervision, sampling and training. On the other, a generic HACCP system for food bakeries, which later would be adapted to each bakery’s conditions, requirements and interests, on the basis of training and supervision activities (Cuevas et al. 1989, 1990). Once trained, and a basic (essential steps) HACCP-like system had been agreed upon and implemented, the processing plants would be inspected and supervised on a regular basis. Sampling and chemical analysis and sensory evaluation plans were carried out by a central laboratory. Since the HACCP systems were adapted to the technical, financial and management needs of the small food processing industries, their application was feasible, efficient and effective.
All participant food industries would receive a monthly report on their performance and the quality and safety of their product and consumer acceptance. The best performers would be given public recognition, and not a single health-related illness was recorded in several years of operation. Under performers would be visited, advised, and if recurrent, then an economic penalty would be given to them and eventually they would be removed from the list of suppliers.
Similar approaches have been successfully applied to school feeding programmes where the small, medium or large food industry were the suppliers of special products formulated on the base of specific nutritional objectives, including foods fortified with micronutrients (Cuevas, 1995, 1996).
