Mainstreaming agribusiness incubation for inclusive development

8 February 2012 NIABI 2112, New Delhi, India

Ralph von Kaufmann
UniBRAIN Facility Coordinator
Forum for Agricultural Research in
Africa

AgBIT - Zambia CAF - Mali CURAD - Uganda CCLEARr - Ghana IDPA - Uganda SVCDC - Kenya

MAINSTREAMING
AGRIBUSINESS
INCUBATION FOR
INCLUSIVE
DEVELOPMENT

MAINSTREAMING AGRIBUSINESS INCUBATION FOR INCULSIVE DEVELOPMENT

CONTENT
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


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 RESPOND
Africa accounts for:

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

• 1/6 of world‟s forested areaand
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)


• 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


Common 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.” *


Figure 1. The usually quoted data Figure 2. less quoted data
Changes in per capita net agricultural production Changes in net agricultural production (1961-2007)
(1961-2007)

250 500

Asia
Asia

South America
South America

Food production (1961=100)
Per capita food production (1961=100)

400 Africa
200 World

World
Africa

North America

300 Europe
150

200
100

100

50

0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010


• 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
BANANAS ARE NOT JUST BANANAS
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

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


HEREBY 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;


• 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




• 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

URGE 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


URGE 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

Putting the New Vision for Agriculture into Action:
A Transformation Is Happening
A 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



Creating an enabling environment for agribusiness incubation

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


Creating an enabling environment for agribusiness incubation

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


Conclusions
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

Mainstreaming agribusiness incubation for inclusive development

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