The current orientation of the whole agribusiness and agro-industry sector in Eastern Europe and Central Asia (EECA) is highly driven by the need to comply with the European Union and the World Trade Organization regulations in order to access more diversified markets. In spite the very different transition patterns and political, demographic, climatic and geographical conditions significant changes occurred in the food chain and related market relations throughout the region during the last decades. The competitiveness of agriculture and the weakness of the food industry is a concern, most of all to farmers and the small and medium-sized enterprises. Major changes in production standards and in the quality of supply are noticeable. Despite recent recovery, profitability remains low and there is excess capacity in many countries, particularly in the primary processing sectors, such as meat and dairy processing and grain milling. Limited access to finance, the uneven quality and volume of supplies from primary producers and significant arrears in payments from retailers and wholesalers contribute to the industry's difficulties.

The development of competitive agribusinesses and agro-industries has been recognised as crucial for creating employment and income opportunities as well as for enhancing the demand for farm products. Agro-industry and rural enterprise development has the potential to provide employment for the rural poor in the form of off-farm activities such as handling, packaging, processing, transporting and marketing of food and agricultural produce. Unfortunately, there are also risks and trade-offs in agro-industrial development, often affecting the most vulnerable countries and people. It is important therefore to build on the experiences of countries that have developed competitive agro-industries in order to improve the understanding of trends and contribute to the formulation of sound policies and strategies for fostering agro-industries and rural enterprises.

In much of the Region there is still a critical gap in establishing effective relationships between policies, institutions and farm-household systems. On one hand this is due to the lack of adequate data and information, while on the other hand, there is still significant lack of capacity for the effective analysis, design, implementation and monitoring of the effects of policy measures on farm performance. Finally, improved exchange of existing information about local realities, especially between all stakeholders, is required.
The agro food value chain now requires more planning and coordination, and in particular improved linkages between farmers, agribusinesses and retailers. Agribusiness managers, not only must posses the basic skills of finance, marketing and operations, but need to improve their skills in cooperation and relationships with farmers. Farmers also need to improve their management skills in an effort to create stronger and more durable linkages with agribusiness enterprises. The objective is to enhance and transform supply chains into harmonised integrated value chains through (i) identification of agri-food chains with clear comparative advantage and proposals of possible measures to improve their competitiveness, in the perspective of further market liberalization, (ii) reinforcement of communication and cooperation between private sector firms, foundations and other institutions active in agribusiness and agro-industry development, (iii) reinforcement of capacity of farmers, processors and traders, and Government institutions for identification, analysis and management of agri-food value chains for higher value products including branding and certification.

There is substantial scope for both agricultural growth and poverty reduction in the Region. The challenge is to provide an enabling environment involving public-private partnerships, building of local linkages and institutions supporting innovation and investment in agricultural knowledge-based technologies to support diverse livelihoods, as well as improved management skills for market-oriented agriculture. The business environment represents one of the most important drivers of competitiveness for domestic and export-oriented agro-enterprises and agro-industries. Although many countries in EECA have implemented major policy reforms over the past two decades, the business environment today is often far from being conducive for agribusiness and agro-industries. Farmers in EECA are faced more and more not only with constraints originating from their micro and neighbouring environments, but also with macro-level constraints. Low efficiency of agriculture is largely affected by weak links with the markets. Response to the market demand is in many cases could be improved provided there is better vertical coordinatation between farmers, processors, traders and retailers.