Development of Agribusiness Enterprises - Asian Productivity ...

Governments should not be undertaking activities that they are not good at doing.
Governments are good at providing public goods, avoiding inequality, ameliorating
externality, and enforcing competitiveness in the market through the regulation of
monopolies and monopolistic markets. Therefore, a government should be establishing
marketing infrastructures such as marketing information, rural market facilities and
agribusiness terminals. In addition, it is commonly argued that of the total consumer
expenditure on food, only a small percentage accrues to farmers. There is no substantial
evidence supporting this argument. Theoretically, however, this might be correct as the
structure of the farm market is close to being perfectly competitive while marketing firms are
basically oligopolistic or monopolistic. To gain more bargaining power, farmers should be
organized. Strong farmers’ organizations are important in balancing the monopolistic or
oligopsonistic structure of buyers (mostly large enterprises). Governments should also
provide training for small-scale enterprises in order to help them understand the market and
quality requirements as well as improve their product quality.
The promotion of farm and processed products through advertising and public relations
appears to be effective in creating demand, especially for processed products. However, for
farm products, advertising might be not be as effective as for processed products, since farm
products are homogenous and can only be advertised generically. On the other hand,
advertising works through creating product differentiation, which can minimize the free rider
problem. For these reasons and for the reason of equity, the promotion of farm products and,
to some extent in many developing countries, processed products should be carried out by
the government. This can be done through public television programs and other channels
such as public school food programs.
Improving Productivity/Management of SMEs in the Agribusiness Sector
– a Practical Approach from the Perspective of a Large Enterprise (Raymond C. Tan)
Many quality and productivity (Q&P) programs are now being promoted and peddled
in the market. We have been swamped by acronyms (e.g., TQM, 5S, ISO, GMP, HACCP,
QIT, MRP, ERP and WMS) and technical jargon (i.e., quality function deployment, business
process re-engineering, change management, seven basics habits and shareholder value).
Thus, it becomes difficult and confusing for a layman or a small-scale enterprise to decide
what is the most appropriate, cost-effective and optimal intervention for a particular business.
Improving productivity or management per se should not be viewed as a goal in itself,
but rather as a means towards an end, i.e., being able to survive, compete and grow in the
brutal world of business. For small- and medium-sized enterprises (SMEs), this could mean
going up against large companies and conglomerates with their vast resources and clout.
That, in turn, could become either a very profitable foray or a fatal step for a small company.
A quick look at various industries, whether agriculture-, industry- or service-oriented, will
reveal the typical domination by big enterprises and the “corpses” of fallen companies
including SMEs.
Simplistically speaking, the options that are open to a small business when confronted
by heavyweight competitors are to: (a) battle it out head on; (b) aim at “niche” marketing;
(c) collaborate as a business partner; or (d) call it quits and liquidate the business. Q&P
improvement programs are just tools and interventions used to bring an enterprise to fighting
form to face these challenges. However, many of these programs have been short-lived,
costly in terms of wasted resources, demoralizing to employees and counterproductive for
some companies. On the other hand, they have been successful for other firms. So what
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