1SIDO 2010 CHALLENGES OF SMES IN FOOD PROCESSING ON SUPPLYING AFLATOXIN/MYCOTOXINS FREE FOOD PRESENTED AT THE ABT ASSOCIATES/TFDA AFLATOXIN STAKEHOLDERS WORKSHOP, 3-4 DECEMBER 2012 BY LINUS C GEDI TRACEABILITY (T) LIMITED- DAR ES SALAAM

LCG Defining SMEs Defining SMEs SMEs can be defined quantitatively, qualitatively as well as by their level of entrepreneurship; 1.Quantitatively-size of labour force, level of investment, turnover Category Micro Small Medium Employees 1-9, , , Turnover $M - >6.5, 8.4 >26, 48 Balance Sheet - >3.2, 6 >13, 32

LCG Defining SMEs… Defining SMEs… 2.Qualitatively- owner enterprise relationship Management is independent Capital is supplied by the owners Area of operation is primarily local, even if the market is not The business is small in comparison with larger competitors in its industry A small business is one that is independently owned and operated and is not dominant in its field of operation.

LCG Weakness and Strength i) Weaknesses Disadvantages in economies of scale, difficult to mass produce and usually have higher proportion of fixed costs compared to large corporations. Limited access to capital markets due to owner(s) preferences and market requirements. Uses expensive bank loans. Personnel resources in management and functional experts constrained by limited financial resources. Success and market position depend on vision and entrepreneurial talent of owner(s).

SIDO Weakness and Strength… ii) Strength More flexible than bigger firms and better at exploiting market segments with limited volumes that are unattractive to larger firms. Long-term perspective due to limited influence by outside financial stakeholders. Simple structure and few levels of hierarchy encourage community like culture & aids technology transfer. Stable relationships and high degree of continuity. Niche markets and niche strategies are often tackled by entrepreneurs with depth of knowledge in the field.

LCG SMEs & Economic Growth The importance of SMEs in Tanzania include:- It is estimated that about 30% of Tanzania’s GDP originates from SMES About 20% of Tanzania’s labour force is engaged in SMEs Potential for absorbing new entrants into the labour market, the formal sector employs hardly 10% of the new labour entrants, the rest of the 700,000 (565,000 are primary & secondary school leavers) most end in the micro/small enterprises. Play a complementary role to large establishments, but this area is less developed in Tanzania. Ease of deploying one’s skills and establish own business as the most direct and effective way out of poverty. About 2/3 of manufacturing firms are SMEs and at least 50% are micros (URT/UNIDO 2006), this way are important players under MKUKUTA.

SMEs & Economic Growth… SIDO “Because of its high degree of interdependence with forward and backward activities, agroindustry can play a very important role in accelerating economic activity” (FAO, 1997: 8). The FAO also pointed out that agro-processing was suited to developing country contexts due to the fact that processing plants are not always scale dependent. Small operations, they argued, may be as economically efficient as larger plants which can take advantage of economies of scale (FAO, 1997).

LCG SMEs in agro-food industry SMEs in the this category comprise of; Primary producers-farmers Post harvest handlers-warehouse/storage, processors, marketing ……………………… Aflatoxin/mycotoxins concerns are on grain/flour based commodities that supply food/raw materials For the feed and food industry

Aflatoxin/Mycotoxins concerns SIDO Contamination by Molds and Mycotoxin Formation Possible in Any Point of the Supply Chain- both in Production and Post Harvest Steps Mold Growth and Synthesis of Toxins Dependent on Agro climatic, Ecological and Physiological Conditions Detoxication of Contaminated Commodities Difficult and Sometimes Impossible (CIARD)

LCG SMEs Challenges Limited technology-processing and quality assurance Operating in inadequately regulated supply chain Competing to access markets with high standards and compliance requirements Lack of awareness and knowledge on aflatoxin/mycotoxins and mitigation measures Inadequate financial resources-capital investment and working capital Enabling infrastructure for investment by SMEs, e.g. regulations, premises, quality control, Marketing and R&D facilities.

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