Business management for small-scale
agro-processors-A FAO Corporate Document
Peter Fellows and Alexandra Rottger
There is a great diversity of agro-processing
worldwide and in some countries it accounts for
more than 60% of the employment. Many people start
agro-businesses at a small scale, often working
from home and selling to neighbours and friends
via a roadside stall or in a local marketplace.
Characteristically, small-scale production is
labour-intensive as there is rarely sufficient
money to invest in specialized processing equipment.
The quality of products may vary and small enterprises
often do not have consistency of supply and so
cannot cater for wholesalers or retailers who
require guaranteed deliveries of consistent quality.
Small-scale processors also may not have contracts
with raw material or packaging suppliers but buy
materials from local markets.
There are many millions of these businesses in
emerging economies, and with advice and assistance
some of them can develop into larger scale enterprises.
When smallscale processors try to scale up operations
a series of issues may be encountered. For example,
products may be in direct competition with those
of other processors when displayed on retail shelves
and so the quality of the packaging becomes much
more important. Retailers may negotiate lower
prices than processors have experienced when making
direct sales to consumers.
Any scaling up of operations brings new challenges:
typically these businesses employ more people
and the owner must have staff management skills;
more careful control is needed over business finance,
especially production and distribution costs;
business management and financial planning skills
are required to stay ahead of competitors; investment
decisions are needed for both new equipment and
improved packaging. The larger production volumes
require production-planning skills and may create
a need for environmental protection through waste
management. Other issues, such as market research,
product development and the business image may
also increase in importance.