Agri11 session iv - nepad business foundation h. minaar
Improvement of Regional Value Chains AgriBusiness Forum Johannesburg Henri A. MINNAAR 18 October 2011www.thenbf.co.za
Value Addition in Agriculture - Agenda1. Introduction2. NBF-Agricultural Program3. Development Corridor Methodology4. Constraints: Trade & Agriculture5. Upgrading Value Chains – Why & How?6. Lessons & Recommendations: Policy Frameworks7. Conclusions: Industrial Policy for upgrading
NBF & the Agricultural Program• NEPAD’s expected outcomes: – Economic growth, development & increased employment – Reduction in poverty & inequalities – Diversification of productive activities & increased exports – Enhanced competitiveness in international market & improved terms of trade – Increased African integration• NBF: Chamber of Business for Development supporting NEPAD ideal• Agricultural Program: – Main focus: Linking small farmers & local SMEs to commercial value & supply chains - national, regional & international markets – Private sector & Market-driven: Alongside multi-national corridors – Identify & Address: Trade & other barriers to agricultural development
NBF-Agri Program: A Cross-Cutting Approach• Improve Investment Climate to support PSD – Contracting Arrangements for inclusive & equitable development – Identification & mapping of constraints – Southern Africa Agricultural Development Platform – Trade Facilitation Study• Capacity Development – Empowerment of Rural Women in Agriculture – Supply Chain Entrepreneurship Development• Development Projects – Fresh Produce Hubs & Agro-Processing Centres – Renewable Energy for Last-Mile Power Solutions – Promotion of Applied & Value Addition Technologies
Value Chains & Development CorridorsWhy?• Target areas with inherent economic potential: Natural resources (minerals, agriculture, eco-tourism & forestry)• Extractive industries (a wasting resource) attracts large investments – opens up opportunities via trunk infrastructure for sustainable development (agriculture)• Promote PPPs where feasible (possible trunk infrastructure-not ancillary)• Fiscus & ODA to provide feeder roads & other ancillary infrastructureHow?• Densification: Facilitation of development at the local economy• Linking local commercial partners & develop value/ supply chains• Configure investments to ensure infrastructure viability via sustainable revenue streams• Crowd-in private sector investment• Secure political commitment & provide requisite conducive environment
Beira Corridor Beira Agricultural Growth Corridor Prima land High potential Tanzania Rail and road link Primary road City or major town Malawi Mozambique Lilongwe NacalaZambia Lusaka Tete Blantyre Harare Zimbabwe Chimoio Beira Bulawayo South Africa 0 100km
Constraints on Value Chain Activities• Weaknesses in macroeconomic environment & trade regimes• Deficiencies of trade-related infrastructure (Hard & Soft)• Unstable market opportunities related to production variability• Relatively small markets and no economics of scale• Agricultural domestic support & export subsidies• Product standards & technical regulations• High and escalating tariffs & Restrictive rules of origin• Dependence on limited export commodities• Inadequate transport, storage and marketing infrastructure• Poor market development (Domestic, Regional & International)
Value Chains: How do they work & Why are they important?• New urban markets: Higher quality products• Infrastructure & mining firms: Demand local quality produce• Entry of supermarkets: Local fresh supplies• Farmers and processors: Participate in local value chains• Global value chains: New opportunities & offer handsome profits• Stimulate Private Sector: New Agri-Businesses & Jobs
Upgrading Value Chains – How?• Product upgrading: Move to more sophistication (e.g. semi-processed)• Process upgrading: Improve Standards & Environmental & Social impacts• Functional upgrading: Primary processing – on-farm• Inter-sectoral/chain upgrading: Competencies from one to another• Other: Strict logistics, lead times, homogeneity, large volumes, etc.
Lessons & Recommendations?• Steep upgrading trajectories are possible in Africa: – Global & regional value chains• ‘Best’ upgrading trajectories: – Not necessarily these that wants to obtain highest value added• Optimal outcomes – mix of strategies: – Increase higher value products & – Maintain lower value added high volume products
Lessons: Agribusiness Policy Frameworks• Standards provide a good starting point• PPPs: Industry associations & regulation are crucial• First-Mover advantage is important• High risk & Vulnerability in global value chains• Mixing upgrading & downgrading strategies• Value Chain Restructuring & ‘Regrading’• Different tools needed for upgrading in local value chains
Conclusions: Industrial Policy for upgrading• There are no fixed sets of features: Improved processing, branding, labelling, geographic areas, etc• Threats: Global buyers/producers; Incoherent national policies; Resistance in local consumer preferences• Policies: Value chain specific, end-market specific & time- bound• Policy Fit: One size does not fit all• Ongoing Process: Existence Overall Industrial Policy & Value Chain Fora – examining & support initiatives
Thank You Henri Minnaar Manager: NBF-Agri Programme email@example.com www.thenbf.co.za
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