Agroindustrial project analysi

2The Marketing FactorTHE VIABILITY OF AN AGROINDUSTRIAL PROJECT requires soundness ineach of the project's three basic component activities-procurement,processing, and marketing. Although this is the operationalsequence of the components from the standpoint of the externalenvironment, the marketing factor is the logical starting point forproject analysis: unless there is adequate demand for a project,it has no economic basis.Primary ElementsA marketing analysis examines the external environment's responseto a firmn's product by analyzing consumer characteristicsand the competition. Such information helps the firm to designprocurement and processing strategies and construct a comprehensivemarketing plan. This process is illustrated in figure 2.A prerequisite as valid as market demand is the agronomic capacityto grow the raw material upon which the agroindustry willdepend. The agroindustrial system obviously requires both marketsand supplies for project success. A production bias, however,has historically dominated agricultural and agroindustrial projectanalysis, and markets were considered secondary issues. Yet Say'sLaw is not always reliable; supply does not necessarily create itsown demand.' Too often projects have failed because of a mismatchof production and marketing. 2 Because agronomic feasibility1. Benjamin Higgins, Economic Development (New York: W. W. Norton,1968), p. 68.2. A community-run small-scale industry (ssi) in Mexico became very successfulonly after it reviewed consumers' needs and eliminated several productsthat had been produced only because the production skills existed; UnitedNations Industrial Development Organization (UNIDO), "Case Study on thePeople's Collective Industries of Jalisco," in Industrialization and Rural Development(New York, 1978), p. 28.27