The strategic role of the private sector in agriculture and rural development (Part 1)

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Join IFAD and the Global Donor Platform for the launch of the report: The strategic role of the private sector in agriculture and rural development. Jonathan Mitchell (ODI), lead author of Platform …

Join IFAD and the Global Donor Platform for the launch of the report: The strategic role of the private sector in agriculture and rural development. Jonathan Mitchell (ODI), lead author of Platform Knowledge Piece 3 will be joined in his presentation via video by the authors of the Tanzania, Thailand and Vietnam country studies: Frédéric Kilcher, Wyn Ellis and Pham Thai Hung. A Question and Answer session will follow each discussion point.

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  • 1. The strategic role of the private sector in agriculture and rural development Platform Knowledge Piece (Part 1) Jonathan Mitchell Wednesday 28th March 2012 International Fund for Agricultural Development, Rome .
  • 2. Introduction (1) Aims of Platform Knowledge Piece 3The aim of this Platform Knowledge Piece (PKP) is:• to improve our understanding of the role of the private sector in agricultural and rural development; and to• propose practical and operational measures for donors to engage effectively with the private sector to leverage poverty reduction at scale.2
  • 3. Introduction (2) Research methodsActivity Research methodCountry case studies for Tanzania, Primary and secondary analysis byGhana, Peru, Vietnam, Thailand in-country research teamsOverview of public policy towards Country case studies andprivate sector conceptual insights from secondary dataGlobal survey of private sector Secondary dataactivityDonor survey 12 telephone interviews, website searches, evaluationsSynthesis Workshop and desk exercise3
  • 4. Sources of investment in agriculture in developing countries Low & Lower Upper Middle Middle Income Income Bangladesh ArgentinaData sources used in analysis: Bolivia Brazil1. Total agricultural investment in Egypt China agriculture estimated from El Salvador Costa Rica FAOstats on agricultural capital Ethiopia Jordan stock Fiji Kazakhstan2. Public expenditure: IFRI SPEED India Kyrgyz Rep. data for 64 countries Indonesia Mauritius3. FDI: UNCTAD for 31 of the 64 Malawi Mexico countries Moldova Oman4. Official aid: OECD DAC adapted Morocco Panama by PKP2 Pakistan Thailand5. Domestic private sector(s): the Philippines Tunisia residual (i.e. 1 minus 2, 3 & 4) Syria Turkey Uganda Vanuatu Zambia4
  • 5. Results for Developing Countries 200 180 160 140 120US$ Billion 100 80 60 40 20 0 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Domestic Private Sector Investment FDI Public Expenditure ODA
  • 6. Source of investment: Conclusions• Overall value of agricultural investment has risen between 1980 and 2007• International flows are small with tiny FDI increasing fast and small ODA decreasing in share• Domestic private sector investment dominates but it’s share of total investment has fallen from 75% in 1981 to 61% in 2007• Public investment is increasing fast and by 2007 had increased to 35% of total investment• Main conclusion for donors aid is a very small part of picture and leveraging domestic private sector investment is necessary to have impact6
  • 7. Rural areas are in the midst of a profound transformation (1)• Dynamism of agricultural value Numbers of major supermarkets in Thailand chains output growth and non-farm economy• Domestic demand in South is leading to shorter and higher quality supply chains• Vertical coordination (informal and contract farming)7
  • 8. Rural areas are in the midst of a profound transformation (2) Maize, rice, and wheat export prices, weekly from Jan 2005 to Feb 2012 1200• Better informed value Rice, Thai A1 Super chains 1000 Rice, Thai 100% B• Change in balance 800 Maize, US No.2 US$ per tonne Yellow between supply and 600 Wheat, US No. 2 HRW demand 400• Broad based growth 200 through agricultural development 0 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 May-05 Sep-05 May-06 Sep-06 May-07 Sep-07 May-08 Sep-08 May-09 Sep-09 May-10 Sep-10 May-11 Sep-11 Source: With data from FAO ESC8
  • 9. Questions & Answers!9