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FAO Agribusiness Roundtable: Small and medium agri-processing enterprises competitiveness challenges in central and Eastern Europe

17-20 April 2011, Budapest, Hungary








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    Agro-industries are the enterprises, activities and institutions that deliver material inputs to the farming sector and transform, distribute and otherwise add value to agricultural and food products targeting an identified market demand. Benefits of agro-industries include providing employment in off-farm activities such as processing. Agro-industries also add value to, and increase demand for, farmers’ products, thereby reducing poverty and food insecurity and stimulating economic growth. The many challenges faced by small and medium agro-industries in developing countries include poor infrastructure such as roads and electricity supplies, lack of inputs such as packaging, lack of technical expertise, and inadequate policies and weak institutional support. These challenges reduce the profitability, competiveness and ability of the sector to fully exploit the market opportunities arising from rapid population growth, urbanization and changing lifestyles and consumer preferences.
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    Formal and informal small and medium agro-enterprises (SMAEs) account for a large share of rural jobs and contribute significantly to total value added in the agro-industry sector. With their extensive knowledge of local resources and supply patterns, SMAEs can constitute an important source of local supplies and services for larger buyers. They also represent an important source of innovation in developing new products or services and exploring innovative sourcing and distribution mechanisms. S MAEs can thus have a positive role in modern value chains while linking farmers to markets and creating employment opportunities for the rural poor.
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    A case study on chili, cabbage and shallot
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    Food loss and waste within Indonesia's supply chains present significant challenges to both environmental sustainability and efficient natural resource utilization. This pervasive issue spans from food production to retail, affecting the ability of supply chain stakeholders to invest in essential infrastructure improvements. Food waste, in particular, accumulates at various stages, including retail, catering services, and households, further straining natural resources and exacerbating climate change impacts.In Indonesia, the reduction and prevention of food losses assume strategic importance as it directly impacts food availability, accessibility, and the well-being of consumers. Additionally, it alleviates pressure on natural resources, supports the growth of agribusiness, and enhances the livelihoods of farmers and other actors along the supply chains. Key factors closely linked to addressing food losses in Indonesia include finance, technology, knowledge, and market dynamics. Alarmingly, horticultural commodities, especially vegetables, experience losses exceeding 60 percent. Minimizing food losses not only bolsters productivity for agripreneurs but also improves food security and nutrition for all, from vulnerable smallholder farmers to micro, small, and medium-sized enterprises (MSMEs).To address these challenges, Indonesia has enacted national law No. 13/2020 on horticulture, encompassing fruits and vegetables, with the aim of creating jobs, enhancing production, productivity, quality, added value, competitive advantage, and market share. In a recent study conducted between June and December 2022, the Food and Agriculture Organization of the United Nations (FAO) and the Center of System, a logistics research institution, analysed food losses in chili, cabbage and shallot supply chains. These commodities, predominantly cultivated by smallholder farmers, play a vital role in stabilizing food prices, controlling regional inflation, and ensuring food availability and accessibility. The study not only identifies the extent of quality and quantity losses but also provides practical solutions for their reduction.Crucially, enhancing the implementation of hazard analysis and critical control points (HACCP), good manufacturing practices (GMP), and good hygiene practices (GHP) is emphasized, particularly during harvest, transportation, handling and storage. Recommendations include establishing post-harvest technical assistance facilities, agrologistic centres, and value-added processing facilities to mitigate losses due to quality degradation. Furthermore, the abstract underscores the need for innovation in technology, private-sector investment, and raising public awareness as decisive elements in substantially reducing food loss. In conclusion, addressing food loss is paramount for enhancing food security, supporting sustainable livelihoods, and fortifying the overall food system in Indonesia.

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