| Sometimes, Producers can also act as operational Value and Supply chains, as in the case where farmers sell their produce directly to the consumers. However, the fundamental market structure remains. In previous columns, where we discussed the value and supply chains, we emphasized how broken and sometimes even wholly missing they are in the agro sector of developing economies. In other columns, we discussed market creation innovation, which can turn smallholders into consumers of agrotech solutions and premium markets into consumers of produce grown by smallholders. But what about the Producers, i.e., farmers, in the agro sector of developing economies? Due to smallholders' low socio-economic status, there is little interest in them as Producers per se and more in pulling them out of poverty and hunger. As leaders, humanitarians, decision-makers, and business people, is it helpful and constructive to think of smallholders and subsistence farmers only in terms of “How should we take care of them?” or “How to manage the problem of poor farmers?” For decades, we have tried to "manage" poverty, but with little success, which is why, in 2023, there are still 550 million smallholders in poverty. If “managing” poverty doesn’t work, it is because we tried to manage the wrong thing: poverty. It is time we start managing prosperity, where the focus is on creating and producing added-value products and services! TYPES OF PRODUCERS In agriculture, we distinguish between two groups of producers, each having distinguished characteristics - Professional-industrial-business farmers (i.e., the Professionals) – above all, this group is characterized by farmers having a high income per hectare and or many hectares. In addition, they are typically internally highly organized and have an extensive business network. Usually, they specialize in a few crops. They have access to advanced inputs with the ability to purchase those and access to premium markets, which make them part of the Prosperity cycle. This group constitutes about 5% of global farmers. Smallholders, subsistence farmers (i.e., the Non-Industrial) – this group is characterized by small cultivated areas and low income per hectare, resulting in a low income per day and person. They often grow many crops and domestic animals (e.g., chickens, goats, and sheep) without specializing in any. They have no access to advanced technologies and services and can’t afford to buy them. They also lack access to premium markets. This group constitutes about 95% of global farmers. If you live in a developed country, it is most likely that what you eat is produced by Professional farmers, other than cocoa, coffee, and tea, which are most likely produced in developing countries by smallholders whose daily income is less than $1.9 per day. Today, there is a situation where we purchase most of our food from a small group of farmers, i.e., The Professionals, including those in developing economies. It would only make sense to ask, “Why don’t we buy from smallholders and subsistence farmers?” We will get the answer to this by looking at agro-producers, e.g., fruits and vegetables, through the eyes of the purchase manager of a supermarket chain. His job is simple: to put on the shelves enough produce every day of the year and to ensure it stands up to the supermarket and national standards, pricing, and demand. Think of a hypothetical situation in which the purchase manager needs to purchase and supply 20 tons of 10 crops daily, e.g., apples, mangos, bananas, tomatoes, cucumbers, etc. Now, let’s focus on just one crop, e.g., mangos. The manager can get to 20 tons daily by purchasing from 200 smallholders, 100 kg each, or 20 tons from one professional farmer. This was one crop; now multiply the complexity by ten crops (or more) and add the challenges of dealing with many suppliers, logistic companies, various qualities, and lack of uniformity. Then, there is a complicated purchasing process from each farmer, QA, logistics, documents, etc. When the purchasing manager can buy from one professional farmer versus 200 smallholders, which option do you think he would choose? For these reasons, most business people and traders prefer to work with professional farmers in large, organized farms. If everybody prefers purchasing from professional industrial farmers, does it mean that smallholders cannot compete and are doomed to poverty? Taking the point of view of the purchase manager, i.e., the value/supply chains, can you find an advantage in working with smallholders compared to professional farmers? PURCHASING FROM 'NON-EXISTING PRODUCERS' If you are over 40, you can still remember when everything you bought came from big organized importers/traders who worked with big corporations/producers. In those days, we purchased nothing Made In China. Then came companies like Amazon, eBay, and AliExpress that allowed us to buy directly from any producer, anywhere, whatever we wanted. Millions of small and medium-sized enterprises, i.e., producers (SME), could rapidly develop their businesses. The ones that primarily benefited from those novel trading models were the SMEs and global consumers, not the big corporates producing and buying, which already had existing channels to do so. From their smartphones, my kids order goods from shops/producers all over the globe, and one to 30 days later, they get it. Intuitively, we understand that it is better for us the way things are now versus how they were in the 60s and the 70s when you had access only to a few grand brands sold in your city/village shops. Now let's look at this situation not from the producer or buyer perspective but from the value chain, the trader, e.g., Amazon. Amazon could suggest its customers purchase products produced only by US American Corporate producers. That would make the lives of the Amazon team much easier. Instead, Amazon embarked on a journey to enable any producer, anywhere in the world, regardless of what they produce (other than fresh agro products), to sell their products using a sophisticated value chain from the producer warehouse or dedicated shop to the consumer. Amazon turned thousands of small and medium enterprises (SMEs) into global giants; Amazon and Amazon-like companies energized millions of businesses in China and East Asia that took advantage of the novel business channels. Amazon-like companies turned those local “non-existing producers” into a global borderless economic superpower, jump-starting the economy in many developing economies, e.g., China, and creating hundreds of millions of jobs for better salaries. Today, those “non-existing producers” are spread all over the world. In contrast, Corporate America-like companies depend on a few key suppliers to efficiently produce components for their factories, which leaves them vulnerable to producers and supply chain issues. For instance, during the COVID-19 pandemic, semiconductor factory closures and slow logistics caused a shortage of ships, impacting the automotive industry's production. Meanwhile, a value chain and consumer markets working with an Amazon-like platform, which works with millions of SMEs (i.e., producers) spread globally, are nearly immune from such extreme "unexpected" events now becoming the new norm. If you need more time to think, consider Toyota's profits following the earthquake and tsunami versus Amazon's profits during the COVID-19 pandemic. | 
