Agroindustrial project analysi

AN OVERVIEW 17focus than indicated by the definition of agribusiness given above,it is necessary to maintain a broad, systems perspective for agroindustrialproject analysis. Because agroindustries are the centerof the agricultural chain, it is essential to examine both the farmthesource of raw material supply-and the market-the outlet forthe processed products. In effect, systems analysis aids the overalldesign and implementation of agroindustrial projects by examiningthree operating activities of an agroindustry: marketing, procurement,and processing.Before the discussion proceeds, the importance of systems analysiscan be illustrated by a situation reported to the author by anofficial of a West African government. The government had adoptedan industrial development strategy aimed at maximizing the valueadded of the nation's agroindustrial products. The country hadbeen exporting cottonseed for many years; hence, the governmentaccepted a proposal for a cottonseed-oil extracting plant becauseit was consistent with the value-added development strategy.The plant was constructed, but the minimum capacity of theequipment required more cottonseed than was available, necessitatinga program to increase cotton production. The subsequentproduction program included land redistribution, farm reorganization,and extensive technical assistance, and the increased plantingsstimulated the construction of a textile mill. Cotton productiondid increase greatly, but apparently the risks of planting cottonwere too great or the benefits too low: the farmers continued toplant subsistence crops to which they gave harvest priority. Thiscreated a labor shortage for picking the cotton, and large amountshad to be left in the fields. As a result, the oil plant and textilemill operated below capacity. The textile mill was forced to importcotton yarn from Pakistan to meet its need for raw material. Inaddition, more cottonseed oil was produced than the local cookingoilrefinery could process, thereby necessitating the export of theunrefined oil. Similarly, the nation lacked a domestic market forthe cottonseed meal because the animal-feed and livestock industrieswere not at a stage of development capable of absorbing thisby-product. An important protein source had to be channeled intothe international market at low prices, while at the same time costlyanimal protein products were being imported.This example reveals the disadvantages of a narrow view ofagroindustrial projects. The project illustrated was seen as one