A short presentation to ZWARFA women group of farmers on an export seminar organized for them by ZimTrade. The buzz word of the presentation is Upgrading. How can small to medium-scale farmers upgrade their products, processes and functions to target export markets? The presentation explains briefly paths and means by which these farmers can upgrade.

1. TURNING YOUR FARMING
VENTURE INTO AN EXPORT
BUSINESS
Upgrading Your Farm Business
Enterprise
Guest presentation
by
Dr Daisy Odunze
ZWARFA- N Export Awareness Seminar

2. Introduction
⚫ What is the number one element required to turn your
farm venture into an export business?
⚫ You must first turn it into a profitable local agri-business
venture.

3. Introduction
⚫ How do you become a profitable local agri-business venture ?
⚫ Constantly creating value in your product offerings in a manner
that makes you a price maker, not a price taker.
Entrepreneurial mindset.
You are not just a farmer. You are an entrepreneur.

4. Entrepreneurship
The phenomena of value creation within new or
existing businesses.

5. Different Dimensions Of Entrepreneurship
Innovation
New Product,
New Method,
New Market,
New Source of
supply
New organization
Innovation
Creativity
Exploiting
profitable
business
opportunities
Entrepreneurship
Sustainable Economic Development

6. Introduction
⚫ How do you create value within your existing business?
By upgrading
⚫ An entrepreneur always finds ways to increase and / or
maintain their profits by constantly upgrading their
business operations.

7. Upgrading To Target Export Market
⚫ Upgrading refers to innovation or improvements among a firm
or group of firms that increases value added and/or
competitiveness of a product.
⚫ Upgrading focuses on;
⚫ increasing the competitiveness of all activities involved in the;
⚫ production,
⚫ processing and/or
⚫ marketing of a farm product

8. Upgrading To Target Export Market
⚫ As a farmer-entrepreneur, in order to respond effectively to
export market opportunities, you need to upgrade to add value
to products and to make production and marketing processes
more efficient.
Why?
⚫ Upgrading provides many opportunities to firms that range
from increased efficiency and outputs, to access to new market
channels and industry knowledge.

9. Upgrading To Target Export Market
⚫What upgrades or improvements can be made
in your farm business?

10. Upgrading To Target Export Market
⚫ Upgrading paths (and possible combinations of paths) can be
characterized as follows:
⚫ Process upgrading
⚫ Product upgrading
⚫ Functional upgrading
⚫ Channel upgrading
⚫ Inter sectoral upgrading

11. Upgrading To Target Export Market
New Method
• Process
upgrading
New Product
• Product
upgrading
• Functional
upgrading
New Market
• Product
upgrading
• Functional
upgrading
• Inter channel
upgrading
New
Organization
• Process
upgrading
• Product
upgrading
• Functional
upgrading
• Inter channel
upgrading
• Inter sectoral
upgrading

12. Process Upgrading
⚫ Process upgrading; increasing the efficiency of
production by reducing per-unit cost of production either
through;
⚫ better organization of the production process
⚫ the use of improved technology and/or
⚫ improving standards in quality management.
⚫ Driven by the need to cut costs and/or increase output.

13. Product Upgrading
⚫ Product upgrading: improving product quality and increasing
value for consumers.
⚫ Based on increased efficiency.
⚫ Involves moving into more sophisticated products with increased unit
value, or with more complex content, or that match more exacting
product standards
⚫ Stems from changes in customer preferences, or the desire for higher
value added, higher quality, and consequently more profitable
products on the part of farmers.
⚫ Requires knowledge of what the end consumer wants.

14. Functional upgrading
⚫ Functional upgrading: acquiring new functions that
increase the skill content of activities and/or improve
profitability.
⚫ Moving into value-added activities beyond the farmgate;
⚫ Moving from production only, to production and primary
processing.

15. Functional upgrading
⚫ Example
⚫ No rule says that a tomato farmer must sell his/her tomatoes
fresh in the farmers markets or to brokers. Farmers can wash,
slice, dry and package the dried tomatoes into consumer ready
packs and sell to supermarkets.
⚫ Dried tomatoes is used as salad toppings by high-end
restaurants and consumers.
⚫ Easier to target an export market with dried tomatoes than with
fresh tomatoes which is highly perishable.

16. Channel Upgrading
⚫ Channel upgrading; Moving to a new market channel,
i.e., selling to large retailers or export brokers rather than
local markets.
⚫ Requires knowledge of exact product specifications.
⚫ SMEs must have some access to this information as well as
the ability to comply.
⚫ Participating in a range of market reduces producers' risks.

17. Channel Upgrading
⚫ Example
⚫ Sorting a heterogenous mix of avocado fruits into high
quality whole punnets targeted to the fresh fruit export
market and lower-quality fruits targeted to oil producers
for local consumption allows a farmer to separate
markets, practice price discrimination, earn additional
income and reduce wastage of product that cannot
compete in higher-value channels.

18. Inter-sectoral Upgrading
⚫ Intersectoral upgrading is the entry of a firm into a
completely new value chain or industry using knowledge
acquired through production of another product or a
specialized service.
⚫ Diversifying crops or substituting high-value crops for
traditional production.
⚫ Facilitates acquisition of more skill, knowledge, or
technology specific to the new product.

19. Where to start?
⚫ Process and product upgrading
⚫ The easiest to accomplish
⚫ Represent the first upgrading strategies farmers must pursue
if they want to turn their business in to a profitable export
venture.
⚫ Simply involves doing the same task, but more efficiently or
differently).
⚫ Requires access to capital, equipment and information which
can be acquired through vertical or horizontal linkages.

20. Where to start?
⚫ Functional upgrading
⚫ More difficult, and at the same time more desirable to
attain.
⚫ Farmers move from simply producing to more
“intangible” activities, such as processing, packaging,
branding and marketing.
⚫ Identified as the biggest barrier to African farmers
accessing more profitable local and international
markets because knowledge-based skills are needed for

21. Where to start?
⚫ Channel upgrading
Might or might not require a farmer to change at all, rather the
farmer maintains the same position but takes on an additional role
by introducing its product to a new geographic (local or export)
market.
Intersectoral upgrading
Typically seen as the last stage of upgrading because it requires
diverse product and market knowledge and sometimes high
capital investment

22. Product
upgrading
Channel
upgrading
Intersectoral
upgrading
Functional
upgrading
The various types
of upgrading are frequently
connected.
Product upgrading may be a
requirement for entering a new
market channel (channel
upgrading), can open the door for
firms to apply their new product to
other value chains (intersectoral
upgrading) or “move up” the value
chain vertically to new functions
(functional upgrading), such as
marketing and branding based on
the unique, sophisticated
attributes of the product offering.

23. Factors that condition farmers’ response
to upgrading opportunities
⚫ Profit; what net returns will you get?
⚫ Risks; what chances are there of incurring loss?
⚫ Time; when will benefits become apparent?
⚫ Sustainability; implications for future?
⚫ Access to resources; information, technical assistance,
markets?
⚫ Enabling environment; support, services, institutional, legal
and policy frameworks.

24. Means of Upgrading
⚫ Impediments to farmers upgrading come from social,
educational and geographic boundaries.
How do we overcome this and upgrade to turn our local
businesses into an export venture?
⚫ Inter-firm linkages; where assistance is provided by lead
firms via vertical linkages or through collective
efficiencies realized through horizontal linkages.

25. Means of Upgrading
⚫ Vertical linkages: Developing relationships among
actors between nodes.
⚫ Horizontal linkages: Development of relationships
among actors within functional nodes‟
⚫ Some authors also consider linkages as a form of
upgrading, most see them as a means of upgrading.

26. Means of upgrading
⚫ Horizontal linkages
⚫ Horizontal linkages can facilitate collective learning, which can
drive innovation, increase demand and grow markets through
product diversification, new product development, and
movement into higher value products and markets.
⚫ Organizations that support horizontal relationships (producer
groups and associations like yours) can increase farmers
bargaining power, promote effective collaboration, and
(particularly in remote rural areas) reduce isolation.

27. Means of upgrading
⚫ Vertical Linkages
⚫ Linkages between farmers and lead firms (firms that play a key
role in the chain due to their size, dominant position or
influence) tend to be especially important for upgrading.
⚫ Lead firms drive upgrading by offering incentives, creating
favorable conditions and providing the information and
technical assistance that enable farmers to upgrade;
⚫ Access to finance and inputs
⚫ Transmission of information

28. Conclusion
⚫ The empirical reality is that farmers that already export
are often the most productive within an industry and are
likely to have been the most productive within an
industry before they started exporting.
⚫ This implies that exporters self-select into markets.

29. Conclusion
⚫ You can participate in export trade by linking with larger, more
established and more productive producer/exporters, so-called
“lead firms”.
⚫ You can also export on your own as a horizontal linkage group
by upgrading to meet trading standards with certification for
compliance, such as food quality and safety standards.
⚫ Whatever means you choose; YOU MUST UPGRADE.

30. The end
Thank you
ZWARFA- N Export Awareness Seminar