Grahame Dixie Agribusiness AdviserWorld BankJune 26th

Benchmarking the Business of Agriculture

Using Indicators to inform better Agricultural Policies : an opportunity for a partnership between the WBG & and

the UK Development Sector

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Benchmarking the Business of Agriculture Components

Deep Dives Studies

BBA components

Doing Business in Agriculture

Agribusiness Indicators (ABI) Doing Business

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Doing Business Project

Results show strong convergence across economies since 2005

Benchmarking the Business of Agriculture (BBA) as part of the larger “Agricultural Transformation Index

(ATI)

ATI ATIATIATI

Productivity

BBA

Sustainability Gender Etc..

Overview of Benchmarking the Business of Agriculture (BBA)

Objective: “To inform & to leverage policy reforms which lead to a more modern agriculture sector, built primarily on the basis of commercially viable family farms”

Key elements– Focusing on 8 strategic areas: inputs, finance, transport, energy,

communication, markets, land & water – Will benchmark countries on short term regulatory and

implementation issues, plus longer term policy, investments & important metrics

– Program will operate over a purposeful sample of 80 countries,

1st year pilot : will fine tune the process & indicators in 10 countries, prior to large scale roll out

What is Doing Business in Agriculture (DBA)?• Focuses on laws and regulations affecting the business of agriculture and their

enforcement• Provides actionable indicators, which are consistent over time and comparable

across economies• DBA indicators allow countries to benchmark their agricultural regulatory

framework on the books and in practice

• Builds on the lessons from Agribusiness Indicators (ABI) project on productivity, market access, and policy environment for agriculture

• Take a broader and longer term view , beyond regulatory items aim to shape future policies

• Identify presence or absence of key policies and the policy setting process, • Generate key metrics which to enable policy makers to better understand, measure &

benchmark their county’s position & tracks change over time• Highlight successful examples of positive policy induced change

What are the Deep Dives?

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Benchmarking Business of Agriculture - Transporting Agricultural Goods

Integrated approach

Licensing of trucking operations

Restrictions on foreign transport competition

Legislative framework for rural road financing

….Doing Business in

Agriculture

Access to quality rural roads

Public expenditure on road maintenance

% of rural population within a certain number of hours to urban market

….

Deep Dives Studies

new actionable indicators on rural transport

Synergies

INPUTSSeedsFertilizersMechanization

MARKETSContract farmingDist. Infrastructure“Regional’ trade

PUBLIC GOODSWaterElectrificationRoads

ENABLERSTransportationFinanceICT

LAND

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The agro-industry supply chain helps understand key drivers for a commercial agricultural sector in the future

Project Plan

Policy Priorities: Facilitating access to Market Opportunities, Needs strong, competitive, professional, & market orientated

farming base,

Effected by:A country’s position on the path of transition from agriculturally based to urban based economies.

Source WB, FAO CIA

Ag based

Trans. 1

Urbanizing

Developed

Trans. 2

agriculture role as an engine of

growth& poverty reduction

Encourage growth in agriculture &

the rural non-farm economy

Agriculture’s role direct producer/ agribusiness relationships & creating

good jobs

Country segmentation based on agriculture’s role in the national economy, provides deeper insights into the transformation of the agro-industry

WB Development Report 2008

Source; BBA team calculations 12

Regions are at very different stages of agro-industry transformation – SSA, and to a lesser extent EAP and SA, are at the earliest stages

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Source WB, ILO and FAO

Non Farming Rural Pop

Urban Pop

Source: WB, USDA; NOTE: 2000 data

Growth in Agri-Industry

Static growth in Farming

Farming Pop

Global food demand on agro-industry supply chains will be shaped by urbanizing populations & richer diets in developing regions

~ +70% 2050 VS 2010

FAO

Global Food Demand

Urban food demand will be the predominant challenge for future agro-industry supply chains in developing regions

Source: BBA Team extrapolation of UN population and FAO per cap kcal forecasts

17FAO, multiple research papers

Who will supply this demand: the need to segment Smallholder farmers as they are not a homogenous supply base, but when area farmed plus marketable surplus are overlaid, the large and medium scale small holders offer the greatest potential

80% +

10 -15%

30-50%

Marketable surplus

Large SHF

Medium SHF

Small SHF

The urban food market provides an exciting opportunity but:

Without a strong & competitive supply base:

Producers increasingly distanced from urban demand:

Poverty will increasingly be an urban issue:

The key driver is outside the control of agriculture:

Key elements in the improving enabling policy environment

• Capable and competitive farm base - credit for investment, access to improved inputs, greater skills, mechanisation

• Market Insights - market knowledge, strengthened producers organisations,

• Market access infrastructure – roads, distribution, market places• Land, water, energy availability - regulations to facilitate a secure &

efficient land market, access to irrigation, electricity • Agribusiness capability - enabling business environment, access to

finance, electricity, water, contractual relationship for raw material • International, regional market capability – facilitating trading across

borders, harmonised quality standards,

Time Line :

Preparation

Field Work

Analysis

Expert Review

Dissemination

Feed back

July Sept March JuneDec

• Country selection, • Refinement of indicators, additions, refocus,• Local collection of information,• Creation of cadre of country respondents,• Capacity building program, use of indictors to inform policy

& empirically based policy dialogue

And if you have been . . .

Thanks, for listening

Area Priority Policy Outcomes

Access to Markets

•Ability of farms & firms to respond to domestic urban demand growth • Enablement of producer organizations to participate in domestic market supply• Maximization of regional trading opportunities

Land • Ability for farm land consolidation & expansion• Certainty & enforcement of tenure security and rights

Access to Finance

• Lender flexibility to serve small/medium farms &firms sufficient protection for loans • Increased collateral flexibility for small farms and SME agro-enterprises t• Increased availability of institutionalized credit support services

Transport • Access to quality rural and trunk road infrastructure• Efficient transport services for agricultural goods• Reduced transport prices and time-distance to markets

Water • Adequacy of farmer access to irrigation • Efficient use and equitable affordability of irrigation• Adequacy of industrial water supply

Electrification • Adequacy of farmer & agribusiness access to electricity• Efficient use and equitable affordability of power supply• Reliable and consistent power supply

Area Priority Policy Outcomes

ICT Communication

• Expansion of ICT services to farmers & agro-enterprises• Increased innovation in ICT services & expanded applications for agriculture & agribusiness

Seeds • Systematic ‘refreshing’ of quality commercial seed varieties • Ability to source & access best commercial seeds from all potential supply sources (including foreign suppliers)• Favorable business environment conducive for private sector participation

Fertilizer • Affordable access to soil testing • Adoption of appropriate nutrient programs , macro & micronutrients • Sufficient; accessible and affordable nutrient supply for all commercial farmers

Mechanization • Affordable, access to mechanization services for all farmers• Ability to sustainably achieve expected performance • Increased innovation in locally relevant mechanization

Topic Equitable free market agriculture

Smartly supported SHF agriculture

State defined agriculture

Sustainable agriculture

LAND• Land title, registration• Recognition of customs, international guidelines• Tenure security, esp.VGs*

• Sustainable mgmt. of common property resources

WATER

• Infrastructure $$• Water use policies• Governance of private water resources• ‘Land grab’ implications on water rights• VG H2O rights protection

• Development of on-farm water management and water harvesting technologies

INPUTS , CREDIT

• Access by women farmers• Recognition of SHF voice

• ‘Smart’ SHF support (e.g. smart subsidies)

• Parastatal access to inputs

SEEDS• Rights to access own seeds• Right to breed freely• Support to entrepreneurs

• Access to ‘climate smart’ seeds

FERTILIZERS• Incentives for wide(st) fertilizer distribution and advisory services

• ISFM R&D• ISFM supply incentives• Smart subsidies for agro- eco technologies

CREDIT

• Incentives for innovative products (e.g. contracts as collateral)

• Incentives for SHF financial literary training• Incentives for SHF friendly products (e.g. agricultural development banks)

* VGs – Vulnerable Groups – women, other disadvantaged

ASFG Pillars: Recommended Policy Focus - 1

Topic Equitable free market agriculture

Smartly supported SHF agriculture

State defined agriculture

Sustainable agriculture

MARKETS• Boost local demand• Fair international trade (West’ subsidies, tariffs, production incentives)

• Public extension service training on contracts, international markets participation

• Preferential procurement of SHF output, especially VGs

R & D

• % Ag budget for R&D• Incentives for private sector R&D• SHF recognition in R&D agenda

• R&D for sustainable agriculture

EXTENSION SERVICES

• Up to date extension curriculum, e.g. climate smart, gender, mkt access• Public extension service coverage, incentives for private alternatives

COLLECTIVE ACTION

• Governance of producer organizations• Protection of ‘non-legal’ cooperatives’ rights• Recognition of VGs*

• Incentives for SHF collaboration and collective action

• Legal requirement and incentives to include VGs in producer organizations• Legal requirement to assess SHF impact of economic reforms

ASFG Pillars: Recommended Policy Focus - 2

* VGs – Vulnerable Groups – women, other disadvantaged

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Benchmarking the Business of Agriculture: integrated approach

Integrated approach

benchmarks of regulatory environment 0n business of agriculture

Comparable across economies over time

Doing Business in Agriculture

In-depth metrics of a broader range of factors

Comparable across countries, but greater flexibility

Deep Dives Studies

new actionable indicators for policy makers, public officials, and private sector investors; Leverages policy change

Synergies

The urban food market provides an exciting opportunity but:

Without a strong & competitive supply base: easily lost to imports , Agri-processing cannot establish without raw material suppliers,

Producers increasingly distanced from urban demand: Market servicing becomes more important, & difficult, Transport and post harvest gain greater significance, As does quality, quality standards , food safety & changing demand , Market Knowledge is vital

Poverty will increasingly be an urban issue: provision of staple foods at sensible prices ever more critical, absolute need secure & stable supplies

The key driver is outside the control of agriculture: The money in the system – growth in larger economy