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Kapital
Interview with AgBiz Chief of Party
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Interview
Title: James Maxwell, Director of the
USAID’s AgBiz Program
Title: Agribusinesses must understand
market demand
The goal of the AgBiz Program, one of the newest
USAID projects in Macedonia, is to assist local
agro-businesses to make a significant
contribution to sustainable development in
Macedonia. We have talked to the Director, James
Maxwell, about the ways this can be
accomplished.
- You are here about 9 months, so how would you
sum up your perceptions of the development of
the agribusiness sector in Macedonia?
I am here about 9 months, and before that I
worked on USAID-funded agribusiness development
in Columbia and Yemen, significantly different
environments than Macedonia. However, most of my
career has been working for private sector
agribusiness multi-nationals in international
business development. For more than 30 years I
have been assisting agribusiness companies to
expand their businesses in a sustainable manner.
In Macedonia we are focused on increasing the
competitiveness and value of exported
agricultural products. The focus of USAID’s
AgBiz Program is processors and marketers of
agricultural products, not necessarily farmers.
But the Program is working with these processors
and marketers to improve their linkages with the
producers they buy agricultural products from.
The Macedonian domestic market, is small and
processors and marketers of agricultural
products tend to be small family owned
businesses. These businesses are usually focused
on increasing their quantity of production, and
are often not focused on the marketing and sale
of finished products, potential buyers, and even
the issue of what they should produce that they
can achieve a competitive advantage on. They aim
to follow the philosophy of producing
traditional products rather than specifically
what target markets demand.
- What is the situation on the relationship
between processors and farmers?
One of the issues is that there are not enough
organizations of primary producers of
agricultural products, meaning that a processor
has to deal with 500 small farmers that can sell
only minimum quantities of fruit and vegetables
to the processor or marketer. The farmers
somehow do not have a desire to cooperate and
associate. We are striving to improve the
communication between the farmers and the
processors and traders, because here is where
the challenges appear. For instance, it is very
difficult to have the farmers produce the
specific kinds of products that are needed by
the processor or the trader, that are at the
same time different from what they can sell on
the green markets. This makes it difficult for
the processors and marketers to supply the
specific products required by export markets. It
is usually the case that successful
relationships between these two sides is based
on long-term personal acquaintances and past
mutual trust, and this takes quite some time to
develop. We hope to help accelerate this
process.
- How is AgBiz assisting in overcoming these
issues?
We are trying to assist agribusinesses to
understand market demand, and at the same time
we are looking for ways of making their products
more competitive in export markets. The Program
will last for 4 years, our budget is 5.5 million
dollars funded by USAID, we are using
predominantly local consultants, and the main
goal is to simulate sustainable agribusiness
expansion. By sustainable I mean a business that
can be initiated and further developed with our
help, and the owners will be able to continue it
without our involvement. That means that their
business should be sustainable in all aspects,
managerial, marketing, financially and of course
an environmentally sustainabile business. The
Program is new so we are in a phase of reviewing
applications from potential users of this type
of assistance, meaning people that need support
for their business expansion projects and to
whom we may provide technical, financial and any
other assistance to reach those goals.
- What are the sectors that you are
supporting specifically?
We have identified 5 sectors where we will focus
our efforts: fresh vegetables, processed
vegetables, gathered wild food products, bottled
wine and table grapes. We think these are the
sectors that have the greatest potential to be
competitive in export markets.
- What is the maximum amount that you can
provide per project?
The maximum amount that we can allocate to a
project is US$50,000, and we require that the
applicant contributes at least half of the
project total cost, to be sure they are really
committed to the project.
In the last couple of months we have received
more than 30 support applications from
companies. Most of them are requests for
increasing the physical capacity of their
production facilities. But that is the easiest
type of project to do. We are very careful in
assessing these applications, because we want to
make sure that the applicants will take
seriously these issues - whether they can
purchase enough raw materials for their new
production capacity, do they know who they will
sell their products, and whether they are
capable of selling the production quantities
with a sustainable profit margin.
- What else are the agribusinesses interested
in when applying?
Because the harvest season is relatively short,
and prices drop because the offer is big, the
companies are interested in cooling facilities
where they can keep the fruit and vegetables
that will not force them to sell during the
season for low prices. There are companies that
deal with dried vegetables for instance, and
they need centrifuges that separate the water
from the vegetables prior to drying, and that
machine is very expensive. Then there are the
requests for assistance to implementing
standards like ISO, HAACP, GlobalGap and other
certificates needed for exports.
- Do you have any approved projects?
Yes some are in implementation stage. For
example, a winery was interested in using the
Internet to sell its wines. This week we have a
British expert here that is scoring the wines
that will prove the possibility of selling via
this channel. He will assist the company to
understand what are the marketing,
transportation and other costs that will be
incurred so the company can evaluate the
feasibility of selling wine on-line.
Two weeks ago we had a consultant that is an
expert in food specialties, i.e., high value
added products. He came in order to assist a
company that exports dried wild mushrooms in
bulk, that his customers than repack and sell at
a much higher price. Assistance was provided to
the owner of the company to understand how to
market the mushrooms in smaller packaging,
including labeling requirements and prices.
We have also organized companies into groups to
visit trade fairs for agricultural products
abroad, where we assist them in organizing their
stands, printing promotional materials etc. At
the moment we are preparing a group of table
grape producers to visit South Africa to learn
how to produce and pack table grapes that are
being successfully sold to EU Markets.
- According to you, what products or brands
from this sector have the greatest chance to be
sold on foreign markets?
Our basic concern is that Macedonian producers
do not have a sufficiently diversified product
range and products that represent significant
added valued. Processing is based on products
like ajvar and lutenica, products that are also
produced by other Balkan countries. This makes
it difficult to be unique, highly competitive
and achieve better prices. Processors have high
costs for paying farmers, packaging material,
freight, packing etc. and at the same time they
are trying to sell as fast as they can due to
cash flow considerations. They tend to not think
about marketing, branding and similar issues. I
think that the best chance for Macedonian
agribusinesses is a segment of the specialty
vegetables market, but branding of these
products requires specialized skills, not often
present in the smaller owner/operator firms. I
would like the same thing to happen to the ajvar
that happened with salsa on the American market.
It evolved from an ethnic specialty product to a
mass market item, generally accepted by
consumers, and sales volume is greater than a
very traditional item such as catsup. A similar
type of professional marketing expertise is
needed for Macedonian pepper-based specialties.
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