Improving competitiveness in South East Europe's food and beverage sector

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Presented at the 1st Meeting of the Food and Beverages Processing Expert Group, OECD Investment Compact for South East Europe. 4 March 2014, Paris, France.

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Improving competitiveness in South East Europe's food and beverage sector

  1. 1. Next Generation Competitiveness Initiative First Meeting of the Food and Beverages Processing Expert Group Paris, March 4th 2014 With the financial assistance of the European Union
  2. 2. Agenda 1 Provide project context and explain NGCI 2 Propose and explain methodology 3 Adopt mandate for the Food and Beverages Processing Expert Group 4 Decide on work plan and key activities for 2014 2
  3. 3. The Organisation for Economic Co-operation and Development (OECD) Who we are The OECD is an international organisation with 34 member countries: • USA, Canada, Japan, Australia, New Zealand, Europe (20 of EU-28, Switzerland, Norway, Iceland) • Chile, Mexico, Israel, Korea, Turkey …and a growing number of key partners • Brazil, Russian Federation*, India, Indonesia, China, South Africa, Colombia* totaling more than 80% world GDP and 64% of the world’s population. The OECD’s mission is to promote policies that will improve economic and social wellbeing *in accession process What we do Sharing of good policy practices, peer review and policy dialogue in: • • • • • • • • • • • • • • • • • Anti-corruption Competition and Financial markets Corporate governance Development Economic growth Education Environment Employment and labour markets Governance Health and social care Industry and Entrepreneurship Investment Private Sector Development Regional, Urban and Rural development Science, Technology and Innovation Tax policy Trade, etc. Setting international standards on domains ranging from agriculture and tax to the safety of chemicals 3
  4. 4. The OECD Investment Compact for South East Europe Objectives To support governments of the region to improve their investment climate and foster private sector development Geographical Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo*, FYR Macedonia, Republic of Moldova, Montenegro, Romania and Serbia coverage 1 2 Political support Ministerial Conference SEE 2020 Vision 3 Policy dialogue Regional working groups: • • • Innovation Human capital Competitiveness Policy assessment Competitiveness Outlook SME Policy Index 4 Policy prioritisation Next Generation Competitiveness Initiative sector component SEE 2020 national policy prioritisation * This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo declaration of independence. Hereafter referred to as Kosovo. 5 Support for implementation Regional Competitiveness Initiative pilot projects EDIF Triple Helix Partnership projects 4
  5. 5. The Next Generation Competitiveness Initiative (NGCI) Funding and implementation Geographical coverage • Project funded by the European Union • Implemented by the OECD Investment Compact Albania, Bosnia and Herzegovina, Croatia, Kosovo*, FYR Macedonia, Montenegro and Serbia • Objectives Rationale for a sector focus • • Enhance competitiveness by addressing key constraints to growth in high-potential sectors Foster co-operation across the SEE region Support enhanced value creation • Allows to generate greater interest and involvement from the private sector • Useful approach to understand obstacles to doing business • With limited resources, a sector-specific approach can have impact 5
  6. 6. The NGCI sector work encompasses five project steps Current/future work focus 1 • Identification of highpotential sectors for further analysis Analysis of main economic sectors regarding: - Economic attractiveness (turnover, growth, employment, exports, RCA, FDI) - Potential for regional cooperation (supply chain complementarities) - Potential for increasing value added (patents, innovation clusters) Outcome: • 2 high-potential sectors selected: Food and Beverages Processing; Tourism 2 Initial sector analysis and identification of policy barriers to sector development • Initial analysis of priority sectors • Identification of strengths, weaknesses, opportunities and threats • Identification of growth constraints and prioritisation of policy barriers Development of policy recommendations to foster sector development 3 Addressing policy barriers to sector development • Review of international good practices addressing priority policy barriers • Development of recommendations 4• Increasing value added Development of strategy to increase value added • Development of recommendations to transfer key competencies from declining sectors to FBP 5 Outcome: • Prioritisation of policy barriers to sector development Regional integration of selected (sub-)supply chains • Development of strategy to better link selected subsupply chain stages in SEE region • Development of strategy to better tap synergies across selected supply chains Outcome: • Development of action plan and definition of pilot actions for three workstreams The Food and Beverages Expert Group (FBEG) as the high-level forum for guiding and supporting the work effort 6
  7. 7. In light of their development potential, SEE Food and Beverages Processing as well as Tourism have been chosen for the NGCI Sector Work 1 2 1 Turnover Employt. Exports RCA World growth FDI VC complem.* Patents Basic metals XXX XX XXX X XXX XX XX XX XXX XX XXX XX XXX XX X XXX X Coke, petroleum XX X XXX XX X XXX X Electrical machinery XX X XX XXX XX XX X XX XX Fabricated metal products XXX XXX XX XXX XXX XX XX X XX Food, beverages and tobacco XXX XXX XXX XXX XXX XXX XX XX XXX ICT manufacturing X X X X X X X XXX Machinery and equipment nec X XX XX XX XX X X XXX Motor vehicles, trailers X X X X XX XXX X XX Rubber and plastics XX XX XX X XXX X X X Textiles, apparel and leather XX XXX XXX XXX X XXX X X XX X XX X X XX XXX XXX XXX XXX XXX X XXX XX XXX X X XXX 1 X Chemicals inc. Pharmaceuticals 3 Clusters Selected results from the analysis 1 Sectors Wood and wood products Travel/ tourism ICT (services) X X X * There are 2 crosses when SEE economies cover at least 2 stages of the supply chain Sector performance/potential among all SEE sectors XXX= top third; XX= middle third; X=bottom third X XXX XX 7
  8. 8. Example Ukraine – to improve access to finance for agribusiness SMEs a credit guarantee scheme is being created 1 2 3 1 1 1 SHORT TERM ACTIONS What is the objective of the scheme? 1 Who does the scheme target? • Objectives • Financial Sustainability MISSION 2 How to identify partner banks? • Identify relevant segments • Eligibility criteria TARGETING 3 PARTNERNSHIP • Identification of partner banks MEDIUM TERM DIRECTIONS How to cover administrative costs? How to assess risks? 4 • Link to risk • Average fees PRICING 5 How to set up, run and supervise the scheme? RISK MANAGEMENT 6 Credit guarantee scheme currently being implemented by Ukrainian National Bank • Coverage ratio • Payment • Monitoring OPERATIONS AND GOVERNANCE • Supervision • Roles 8
  9. 9. The FBEG work effort will cover the entire food and beverages processing value chain with a focus on food and beverages processing Illustrative Primary Focus: Processed foods and beverages Simpl. valuechain Examp. of Actors Farm Inputs • Feed suppliers • Veterinary services Examp. of products • Genetics, breeding stock • Medicinery • Supplies • Farm equipments/ machines • Fertilisers Farming and production • Commercial farms • Individual farms • Cooperatives First Processing • Food Processors Second Processing Third Processing • Food Processors • Production of grain • Flour production • Pasta, Bread • Production of fruit and vegetables • Syrop production • Beverages • Poultry, beef, pork, sheep meet • Fresh and refrigerated meat • Steaks • Production of raw milk • Fresh milk • Milk powder and yogurt • Retailers • Food services • Export • Retail services Increasing focus on sub-supply chains for specific work streams (e.g. regional supply chain integration) • Meat based meals • Cheese, butter, Ice creams Sources: National Analytical Center (NAC) Kazakhstan, KazAgroMarketing, OECD analysis • Glucoses and fermented products Distrib. and retail 9
  10. 10. Mandate of the SEE Food and Beverages Processing Expert Group Tasks • Identifying challenges and policy barriers to competitiveness of SEE food and beverages processing sector • Developing policy recommendations and pilotscale actions to improve competitiveness of food and beverages processing sector • Reviewing and developing sector-specific measures in food and beverages processing in context of SEE 2020 Strategy implementation • Formulating sector-specific recommendations and action plans addressed to policy makers in SEE region Composition For approval Organisation & Reporting • FBEG to consist of two representatives from public administration and two private sector representatives from each SEE economy • SEEIC to co-chair the FBEG meetings • Public administration representatives to encompass official participating in SEEIC Working Group on Competitiveness and representative of Ministry in charge of food and beverages processing • FBEG Co-Chairs to prepare minutes of the meetings • Private sector to be represented by sector-specific associations/clusters and company representatives • RCC Secretariat and OECD IC to jointly prepare meetings of FBEG • FBEG, with agreement of SEEIC, to set up sub-groups to examine specific questions • FBEG to meet two times annually • FBEG established for duration of two years • FBEG to invite other regional partners, organisations and stakeholders to attend the meetings 10
  11. 11. Upcoming activities for the FBEG – your involvement is essential Q1 2014 Key activities Initial analysis of the food and beverages processing sector Identification and prioritisation of barriers to sector development Review of international good practices in addressing barriers to sector development Q2 2014 Development of strategy to transfer competencies from slow-growing segments of the SEE economies to the food and beverages processing sector Development of strategy to increase value added in FBP Key meetings Proposal for pilot projects 1st meeting of the FBEG: barriers to sector development – 4 March 2nd meeting of the FBEG: increasing value added in food and beverages processing – beginning of July Q3 2014 Identification of levers for creating synergies between different food and beverage subsupply chains Q4 2014 Development of recommendations addressing key barriers to sector development Proposal for pilot projects Identification of levers for creating synergies with other supply chains Explorative surveys involving FBEG 3rd meeting of the FBEG: validation of key recommendations + pilot projects – mid November 11
  12. 12. Explorative surveys will be supported by an interactive online tool requiring the FBEG’s involvement Explorative online surveys using Futurescaper to: • gather expert input from larger groups and tap into knowledge networks • facilitate expert interaction to identify levers for value creation and supply chain integration • prioritise and rank recommendations to maximise impact • create visual summaries of expert inputs and recommendations ! OECD to reach out to FBEG to participate in explorative surveys • Futurescaper question based online platform - Example • FBEG to leverage individual networks to involve additional experts in to explorative surveys 12
  13. 13. Further objectives of this meeting • Identification of strengths, weaknesses, opportunities and threats in the SEE food and beverage processing sector • Identification of main barriers to the development of the SEE food and beverage processing sector • Agreement on next steps 13

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