Agro-based clusters in developing countries: staying competitive in a globalized economy

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An agro-based cluster is a concentration of producers, agribusinesses and institutions that are engaged in the same agricultural or agro-industrial subsector, and interconnect and build value networks when addressing common challenges and pursuing common opportunities. Cluster approaches recognize that all the actors in the agricultural value chain are often more innovative and successful when they interact with supporting institutions and other actors in the supply chain. By promoting v ertical and horizontal links between local agricultural enterprises, as well as supporting relationships between them and facilitating organizations (e.g. local governments, research institutes and universities), cluster policies promote the diffusion of innovation, as well as the use and generation of important local externalities. Agro-based clusters can also enhance access to markets and information. Cluster policies are argued to be crucial for small-scale farmers and agribusiness, a s they enable them to engage in higher productivity, and more market-oriented and higher value-added production. Accordingly, central and local governments have discovered that cluster promotion is a valuable tool to support agricultural enterprises in their territory and help them link to global agricultural value chains in a more efficient and sustainable manner. The present paper presents existing literature and methodologies on agro-based cluster development, and provides insights into cluster promotion in Latin America, Asia and Africa. It offers as well a series of best practices recommendations to ensure that governments and other facilitating institutions provide effective support to agricultural clusters in the developing world.

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