Ten Years later: A Comparison of Results of Simulation Scenarios under a Systems Dynamic Approach and the Actual Economic Performance of Small-Scale Agro-industries Supported by Brazilian Agro-industrial Development Programs

Abstract

Agro-industrialization promotion is a policy option to aggregate value to a primary product and increase revenues for small farmers. However, experience has shown the vulnerability of small-scale agro-industries (SSAI) when facing a competitive environment under the constraints of several technological, institutional and managerial bottlenecks. A system dynamics model was built to simulate the financial performance of agrifood processing enterprises promoted by Brazilian SSAI development programs after the mid 1990s. Under different optimistic, conservative and pessimistic hypotheses related to SSAI operations and their business environment, model simulations allowed the identification of conditions for long-term financial sustainability. Ten years after the modeling exercise, the results of this analysis could be confirmed through a comparative assessment of the financial performance of selected enterprises supported by two of the promotion programs. The results of the original SD model could be mostly corroborated by the comparison between simulations and the observed enterprise performance. The relatively high SSAI survival rate over the ten-year period analyzed suggests the strong potential of these programs for agribusiness development promotion.