1.
Infrastructure and Agricultural Productivity in Asia
ISSUES AND POLICY OPTIONS
Richard Vokes
Senior Advisor
Agrifood Consulting International
Sept 2013

2.
Infrastructure and Agriculture
“ The importance of infrastructure…is widely recognized, although
not easily quantified.” ADB, 1993
“…few MDGs will be reached unless the infrastructure deficit is
bridged” (C. Kingombe, 2011)
poor access to infrastructure services is “the greatest impediment to
growth of agribusiness”. (DFID,
“A major, if not the major, component of competitiveness in
agriculture value chains is access to affordable physical
infrastructure.” FAO/ODI, 2008)

3.
Infrastructure for Agriculture
Physical structures that aid the competitiveness of the productive
agricultural sector-
- as well as related organisational systems that support planning, design,
construction, regulation, operation and maintenance. (FAO/ODI, 2008)
A subset of rural infrastructure:
 Supports on-farm production: irrigation, energy, transport, storage;

4.
Infrastructure for Agriculture
 Ensures efficient trading and exchange: telecoms, covered markets;
 Adds value to domestic economy: agro-processing and packaging;
 Enables rapid and efficient movement from farm –gate to processing
and on to wholesalers: transport and bulk storage;
Both hard physical infrastructure and the ‘software’, including regulatory
framework.

5.
Infrastructure for Agriculture
 Irrigation: Dam and Canal, tube wells, sprinkler, drip;
 Energy: For irrigation and agro processing. Grid and off-grid;
 Roads: rural roads/farm to market roads + key components of
national network;
 ICT: Telecoms for market information; internet for extension and
training;
 Agro-processing and agri-business services.

6.
Status of Infrastructure for Agriculture in
CLMV Countries
 Serious infrastructure deficit in 1990s due to war damage,
neglect and lack of resources;
 Progress since then in CLV-but remoter areas of Laos and
Viet Nam still poorly served;
 Myanmar still faces a serious infrastructure deficit across all
aspects of infrastructure;
 Potential for investment in infrastructure to drive agriculture
development-Thailand and China

7.
The Infrastructure Deficit
Substantial underinvestment in infrastructure by both public and private sector,
especially in rural areas. (World Bank, 20??)
Reasons for underinvestment in agriculture infrastructure:
 Fiscal Constraints: structural deficits, although these can be eased by
external assistance;
 Mis-investment: Excessive spending on private goods-e.g subsidies, including
agricultural subsidies;
 Urban/modern sector bias in government investment plans;
 Perception of agriculture as a sunset sector;

8.
Community-Based Agriculture Investment
Community built and managed infrastructure can ease constraints on
rural/agricultural infrastructure:
Irrigation: Farmer-managed irrigation schemes;
• Energy: Scope more for individual development-e.g biogas and solar, but
limited use beyond household level;
• Rural roads: considerable scope for community involvement in
construction and management through adoption of labor intensive
techniques;
• ICT: Development of networks has to rely on public or private sector but
scope for community management of ‘technology centers’;
• Agro-processing: Cooperatives/Farm organizations quite often involved,
albeit with mixed results. Range of technologies allows for SME
investment.

9.
Advantages of Community-Based Infrastructure
Viet Nam: Community Based Rural Infrastructure Project (World Bank, 2001)-
Implemented between 2002-2009. Covered water supply, schools, health
stations, roads, irrigation and markets;
Cambodia: Improving the Livelihood of Poor Farmers (ADB supported, 2002)-
covered small-scale village infrastructure, such as community ponds and tree
plantations.
All helped to
• build capacity of local communities in decision making and developed
institutional structures for participation
• Ensured infrastructure constructed met needs of community
• Generated substantial local employment
• Strong sense of ownership which helps to ensure sustainability
•

10.
Role of the Private Sector and PPPs
Growing involvement of private sector in infrastructure provision.
Can private sector help to ease rural/agriculture infrastructure deficit?
Benefits of private sector participation:
• Crowd in resources;
• Responsive to local needs;
• Bundling of design, construction and operation;
• Cost savings;
• Risk transfer;
• Improved efficiency;
• Strengthened human capital.

11.
Factors Limiting PPPs in Agriculture Infrastructure
Low population densities;
Remote locations;
Weather dependent production;
Limited capacity for cost recovery

12.
Factors Influencing Private Sector Decision-Making
Sources of revenue;
Scale: is it sufficient to justify sunk costs of project
development and bidding;
Income growth potential;
Confidence in regulatory environment and sanctity of
contracts

13.
Policies to Attract PPPs in Agriculture Infrastructure
Making the unbankable bankable:
• Sharing or managing the commercial risk;
• Subsidies-grants, concessional loans, guarantees;
• Shadow tariffs;
• Infrastructure Bundling to broaden revenue stream
• Community participation;
• Clear and transparent regulation

14.
Public vs PPP Investment in Infrastructure
Limited scope for stand alone private sector investment in
agriculture infrastructure.
Choice therefore between standalone public investment
and PPPs.
Conditions when public support to private sector is
justified:
• Proposed investment delivers on broader public interest;
• Investment not possible in absence of private
participation;
• Involvement of private sector brings better ‘value for
money’

15.
Public vs PPP Investment in Infrastructure (con’t)
Private sector participation not a panacea;
Does not always yield better value;
Effective regulatory framework is critical to protect public
interest;
Development partners have key role in supporting PPPs in
agriculture;
Substantial resources available to support PPPs

16.
Thank You