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Innovative business models for small farmer inclusion

Background paper for The State of Agricultural Commodity Markets (SOCO) 2020










Michelson, H.C. 2020. Innovative business models for small farmer inclusion. Background paper for The State of Agricultural Commodity Markets (SOCO) 2020. Rome, FAO.



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    During the process of transition in many countries, many small farms are left at the side of the road by bigger food processors, retailers and exporters. This is also the case in Serbia, and in light of this, the objectives of this study are: to better understand the importance of small family farms and SMEs in Serbian agriculture, to better understand the main food sub sectors and the institutional environment, and to try to identify effective forms of vertical cooperation. The methodologies us ed to achieve these objectives include: literature reviews, use of published data, interviews with managers of SMEs and large food processing companies and retail chains, and case studies.
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    In transition countries small-scale farmers and households are effectively excluded from direct participation in markets. In general, they face pressures from larger processors and retail chains to supply raw materials in required quantities and quality. These demands often pose a great challenge for integration into value chains. At the same time, local, often small and medium-sized processors, challenged by global and regional competition and the need to comply with international regulations, are also experiencing difficulties in establishing their position in the supply of multinational retail chains. This paper explores these small and medium-sized food processors and proposes recommendations for policy and support options that can contribute to establishing group based producer-processor linkages. It also aims to identify driving factors that can improve small farmer processor business linkages, and contribute to the improved competitiveness of small agri-processors.
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