Mainstreaming agribusiness incubation for inclusive development

SVCDC - KenyaIDPA - UgandaCURAD - UgandaCAF - MaliAgBIT - Zambia CCLEARr - Ghana

Ralph von KaufmannUniBRAIN Facility Coordinator

Forum for Agricultural Research in Africa

8 February 2012 NIABI 2112, New Delhi, India

MAINSTREAMING AGRIBUSINESS INCUBATION FOR INCLUSIVE DEVELOPMENT

MAINSTREAMING AGRIBUSINESS INCUBATION FOR INCULSIVE DEVELOPMENT

Food price and security projections

Why the African context matters to the world

Dare to hope that Africa can and will respond

Creating an enabling environment for agribusiness incubation

- what the public and private sectors have to do separately and jointly and what the development partners ought to do

Quotes from recent authoritative reports

Conclusions

CONTENT

FOOD PRICE AND SECURITY PROJECTIONS











FAO Indices March 2010 to 2011

Food Prices (FFPI) + 37% Cereal Price Index + 60% Dairy Price Index + 37% Oils/Fats Price Index nine

months consecutive rise

Demand for animal source foods and cereals will rise

rapidly due to: increasing populations rising incomes

increased urbanisation



• The consequences of changing demographics, world markets and climate, etc. are:

• Hunger is most severe in Africa, despite abundance of human & natural resources

• Undernourishment is responsible for 25,000 deaths each day. Responsible for stunting physicaly and mentally in 150m children – the fabric of national development is impaired


DARE TO HOPE THAT AFRICA CAN AND WILL RESPONDAfrica accounts for:

•1/5 of global land area (80 x the size of Japan)

•1/6 of world’s forested area and diverse ecologies (biodiversity)

•1/4 of the world’s arable land

•Huge deposits of important minerals• 1/6 of global population (44% under 15 years

in 2006)


http://strangemaps.files.wordpress.com/2006/11/africa_in_perspective_map.jpg

DARE TO HOPE THAT AFRICA CAN AND WILL RESPOND

• Comprehensive Africa Agriculture Development Programme (CAADP) goal is 6% per annum increase in agricultural production:

• to meet the needs of rapidly expanding populations

• achieve MDG 1 of halving extreme poverty and hunger

• while also ensuring environmental sustainability MDG 7

• The failure to meet these challenges will:

• fuel conflicts, swell the numbers of internally displaced persons, increase economic migrants, threaten global security and environmental stability

• The application of new knowledge (R&D) is required to achieve Africa’s vision for agriculture

• ‘D’ i.e. The application of new knowledge depends on the private sector and the private sector also does a lot of ‘R’ research


DARE TO HOPE THAT AFRICA CAN AND WILL RESPONDCommon perception!

• Food production in Africa is declining, the landscape is blighted and efforts to bring about improvements are doomed to failure

• WRONG!

• “ There are per capita problems in keeping food production in line with population growth, but there are regions where over the last few decades Africa has outperformed the world and particularly Europe.” *



1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

0

50

100

150

200

250

Figure 1. The usually quoted dataChanges in per capita net agricultural production

(1961-2007)

Asia

South America

World

Africa

Per

cap

ita

foo

d p

rod

uct

ion

(19

61=1

00)

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

0

100

200

300

400

500

Figure 2. less quoted data Changes in net agricultural production (1961-2007)

Asia

South America

Africa

World

North America

Europe

Fo

od

pro

du

ctio

n (

1961

=100

)


DARE TO HOPE THAT AFRICA CAN AND WILL RESPOND• 40 projects in 20 countries involving

10 million farmers yields roughly doubled over last few years

• But yield is only one measure e.g. new sweet potato variety allows two plantings per year

• The important point is that across Africa, many efforts to innovate are “working well”

• But more and better investment in research and capacity strengthening is needed to accelerate innovation to get ahead of the demographic curve



To the UniBRAIN - Afri Banana agribusiness incubator

THEY ARE ALSO: FRESH FRUIT

FRUIT JUICE

VACCUUM PACKED MATOKE

CHARCOAL BRICKETTES

COOKING GAS

NATURAL SUGAR SYRUP

WINE

VINEGAR

AFORDABLE SANITARY PADS

BIODEGRADABLE PAPER BAGS

FIBRE


BANANAS ARE NOT JUST BANANAS

CREATING AN ENABLING ENVIRONMENT FOR AGRIBUSINESS INCUBATION

JOHANNESBURG DECLARATION ON ENGAGING THE PRIVATE SECTOR IN FURTHERING AFRICA’S AGRIBUSINESS, FOOD SECURITY AND NUTRITION AGENDA 19 OCT. 2011

• AWARE that further engagement with and support of the private sector, especially Africa’s agribusiness and agricultural corporate community, is needed to successfully implement the public sector commitments and initiatives

• REALISING that a historically unique opportunity exists to align the agricultural development agenda of the African Union and its member states, with the business expansion and market based opportunities that are increasingly being pursued by the private sector in Africa


CREATING AN ENABLING ENVIRONMENT FOR AGRIBUSINESS INCUBATIONHEREBY URGE THE PUBLIC SECTOR TO:

• Incorporate private sector stakeholders in agriculture policy, design, development and programme implementation efforts -

• Expand policy development efforts that support transformation and value addition in the agriculture and agribusiness sector

• Ensure that comprehensive efforts are made to support the economic development of rural populations, in addition to providing them with technical agriculture/agribusiness support interventions

• Promote increased public investment in agriculture-supporting infrastructure (e.g. roads, electricity, warehousing, irrigation and distribution) to reduce costs and increase the competitiveness of agricultural value chains;


CREATING AN ENABLING ENVIRONMENT FOR AGRIBUSINESS INCUBATIONHEREBY URGE THE PUBLIC SECTOR TO:

• Redouble efforts to create a conducive investment environment and to improve the ease of doing business on the continent

• Implement policies that help improve access to finance within the agricultural/agribusiness sector, especially for smallholders and small and medium enterprises (SMEs)

• Develop and promote inclusive economic growth strategies that support the incorporation of smallholder farmers into local, regional and international agribusiness value chains

• Encourage and guide bilateral and multilateral development partners to support national and regional related efforts to engage and develop the private sector in the agricultural and agribusiness sector, particularly around national and regional agribusiness value chains



HEREBY URGE THE PUBLIC SECTOR TO:

• Strengthen efforts to remove all barriers to intra-African trade

• Establish and engage in public private dialogues and action-oriented platforms, at the pan-African, regional and national levels to further public private partnerships and collaboration

• Reinforce capacities to develop skills, technologies and mind-sets that improve and empower entrepreneurship and productivity in food production, processing and related agribusiness activities



URGE THE PRIVATE SECTOR TO:

• Expand inclusive business models to create new jobs and income-generating opportunities within the agribusiness/ agriculture sector

• Review the African Union Commission agribusiness and agricultural regional development programmes to explore areas of potential alignment, collaboration, and investment with these national and regional value chain development initiatives


CREATING AN ENABLING ENVIRONMENT FOR AGRIBUSINESS INCUBATIONURGE THE PRIVATE SECTOR TO:

• Engage with the African public sector through sustained dialogue to see how best policy makers, regulators and administrators can support private sector led efforts to establish agribusiness corridors, incubation facilities, aggregation and market centres, regional growth clusters, processing facilities and zones, and export programmes

• Accelerate efforts to mobilize private capital in support of value chain development, along with important technical assistance to improve smallholders and SME’s capacity to produce quality products in a timely manner

• Promote capacity development, technology transfer and innovation, including the expansion of shared risk financial facilities, mobile money solutions, cellular communications applications, and improved storage and transport capacity


CREATING AN ENABLING ENVIRONMENT FOR AGRIBUSINESS INCUBATIONURGE THE PUBLIC AND PRIVATE SECTOR JOINTLY TO:

• Support the development of the African food industry through inclusive market and value chain development

• Pool financial and technical resources to establish more finance facilities that support agribusiness development, particularly among SMEs and small holders

• Accelerate efforts to collaborate to increase food production to meet the continent’s growing demand

• Develop local, market based food nutrition solutions that support small farmers and leverage available resources to make a sustainable impact in reducing hunger and poverty

• Support follow-up activities of key agribusiness development stakeholders



REQUEST AFRICA’S DEVELOPMENT PARTNERS TO:

• Increase the resources deployed and programmes initiated to support inclusive private sector development in Africa in the agriculture, agri-food and agribusiness sectors and related value chains,

• Increase support for catalytic financing mechanisms and matching grant facilities to promote the development of inclusive models and inclusive markets

This Declaration was adopted by the High Level Public Private Dialogue on Engaging the Private Sector in Furthering Africa’s Agribusiness and Food Security Agenda on 19 October 2011




WEF 2012 New Vision for Agriculture initiative

Prepared in collaboration with McKinsey & Company

CREATING AN ENABLING ENVIRONMENT FOR AGRIBUSINESS INCUBATIONPutting the New Vision for Agriculture into Action:

A Transformation Is HappeningA report by the World Economic Forum’s New Vision for Agriculture

initiative

Element 3: A Concrete Investment and Entrepreneurship Pipeline

• A lasting agriculture transformation is one that is ultimately supported by real market forces

• Bringing new and existing innovations into the system requires market stimulus to induce potential entrepreneurs and investors to take on a defined set of initiatives

• Transformation leaders need to define “bankable” investment opportunities across the chain, including their location, value and size — farms and nucleus farms, distribution, processing, inputs and supporting services, outgrower schemes, and aggregation mechanisms – to drive farmer competitiveness and link them to the market




Element 3 (cont.): A Concrete Investment and Entrepreneurship Pipeline

• Best practice transformations engage the right groups and organizations to participate in these opportunities, and the incentives to motivate them.

• Who would be the likely people or organizations to drive breakthrough solutions?

• Who will be our entrepreneurs, and how will they aggregate, leverage and empower the target region’s smallholders in a fair and efficient






Growing out of poverty: A UK Parliamentary Inquiry into supporting and developing African agriculture, on behalf of the All Party Parliamentary Group on Agriculture and Food for Development

Quotes in section on focus on the private sector

• Farmers are entrepreneurs, and by partnering with companies they can get the access to the markets, financing and technology they need.

Chengal Reddy, co-chair of the Indian Farmers and Industry Alliance

• Business can help transform agriculture, but we can’t do it alone...by working collaboratively with farmers, governments and others, we can achieve our common goals of increasing health and prosperity while protecting the planet.

Paul Polman, CEO Unilever


Final word:

Patient capital makes markets work for the poor by balancing seemingly competing aims:

it is an investing approach with long time horizons;

it’s about building systems that encourage – indeed demand – real, sustained, and honest engagement with low income people as active participants

it uses markets not to maximise profits but as a listening device, because when someone has the choice to pay for a product (even at a subsidised price) she has the chance to have a say about what she desires, what she feels is worthwhile, what she does and does not want.

Jacqueline Novogratz, Acumen Fund



There is huge demand for increased food production

The food production targets can be met if there is an enabling policy environment

Creating that environment requires concerted action by the private and public sectors separately and jointly reinforced by the Development Partners

The needs and means are highlighted by recent authoritative reports that recognise the indispensible role of the private sector

Successful agribusiness incubation on a large scale is the only means to achieve the required contribution from the private sector before it is too late to avoid demographic catastrophe

Conclusions


Thank you

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