By Sebastián Valdés Lutz
Posted on 02/21/2022
Revista El Campo – Diario El Mercurio
The links in the agrifood chain are almost never symmetrical. Somewhere between the producer and the consumer someone adds enough volume to get additional benefits from scale. A large producer, which represents a significant portion of the national supply of a given variety; a large exporter, which markets the production of many farmers; a large wholesaler, which supplies an important area of ​​a country; a large retailer, which has a significant share of final consumption.
Scale is the prized prize that makes investments in human capital, infrastructure and technology profitable. Good managers, technicians and professionals can only be achieved with scale. Large, innocuous spaces that allow an efficient flow of supplies and products can only be achieved with scale. Robotization, automation, electronic selection, artificial intelligence, can only be achieved with scale.
The company that is a small link in the agrifood chain, and does not enjoy the benefits of scale, is more exposed to the inherent risk of the market in which it operates, its future cash flows are more uncertain, and its company value is not far from the value of net liquidation of its assets. Surely, if it stops growing, the obsolescence of its operation, administration or government will condemn it to death in a few years.
The agricultural entrepreneur usually generates the growth project of his business by hand. Whether due to excessive zeal over information, overvaluation of one's own, following stereotypes, or simple lack of creativity, it does not consider divergent options to anticipate the benefits of scale in an inorganic way, as any form of associativity would be.
Unfortunately, excessive atomization not only reduces the international competitiveness of companies, but also of the agro-industries to which they belong, leaving the Chilean agricultural sector at a disadvantage compared to its peers.
It is worth exploring ways to promote the generation of large companies that can compete globally, without neglecting the stimulus for innovation inherent in entrepreneurship. Growth promotion, scales, mergers, acquisitions, alliances, associations, are a way to diverge, and you have to dare to diverge.
Bigger is more competitive. More is More.