Paepard presentation groundnut financing

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Paepard presentation groundnut financing

  1. 1. Presentation by Francois Stepman CAAST-Net workshop in Arusha, Tanzania 26 October 2012
  2. 2. “The growing global demand foragricultural innovation makes it vitalto assess the characteristics thatseparate effective from ineffectiveinnovation fund mechanisms”DESIGNING AND IMPLEMENTINGAGRICULTURAL INNOVATION FUNDS:Lessons from Competitive Research and Matching Grant Projects© 2010 The International Bank for Reconstruction andDevelopment/ The World Bank
  3. 3. What went wrong withfunding agricultural research for development?
  4. 4.  The absence of well-elaborated national policy,over-compensated by an excess of donor initiatives The unrealistic time frame of donor initiated-development goals The frequent ‘adjustments’ according to the donors’own priorities and the methods and procedures infashion Donors and their aid administrators have shortmemories, repeating the same mistakes
  5. 5.  Too many disorganized, uncoordinated andtechnically weak actors at all levels, resultingin a multitude of fragmented, competing,contradicting, parallel activities which haveoften interfered with the development ofnational institutional capacities by enticingthe best people to come and work for them Low enabling environment for privateinvestments and for farmers to re-invest intheir farms
  6. 6. How to finance innovation ingroundnut?
  7. 7. As agriculture and agribusiness modernize withincreased integration and interdependentrelationships, the opportunity and the need for valuechain finance becomes increasingly relevantIt can improve the overall effectiveness of thoseproviding and requiring agricultural financing.It can improve the quality and efficiency of financingagricultural chains
  8. 8.  Meeting the challenges of consumer trends and thedemand for more processed or value addedproducts requires increased investment inequipment, working capital, and skills andknowledge. Such investment is not only costly for individualvalue chain businesses, but can only be undertakenif there is an assurance from elsewhere in the chainfor supplies, produce or markets.
  9. 9.  identifying financing needs for strengthening thechain; tailoring financial products to fit the needs of theparticipants in the chain; reducing financial transaction costs through directdiscount repayments and delivery of financialservices; using value chain linkages and knowledge of thechain to mitigate risks of the chain and its partners.
  10. 10. Agricultural Value Chain Finance Toolsand LessonsCalvin Miller and Linda JonesPublished by FAO and Practical ActionPublishing 2010195 pages• What is value chain finance, how is it applied andwhat can it offer to strengthen agriculturaldevelopment?• How can financial systems, governments andservices be prepared for the demands of financingmodern agri-food chains?• How does agricultural value chain financing affectinclusion, especially for small producers and whatcan be done to make these systems moreinclusive?• What can governmental and non-governmental(NGO) agencies do to support increased and moreeffective agricultural financing through valuechains?
  11. 11. Value chain financingDonors support more and more FarmerorganisationsPrivate business developmentNational research callsValue chain based funding
  12. 12.  Most businesses focus on managing theiroperations.They are not necessarily focused on howto improve their competitiveness throughinnovation? Many businesses have limited ability to developgood proposals. Developing concept notes andgrant proposals and assembling the requireddocumentation entails transaction costs (time,resources).The private agri-sector may find it verydifficult (or reluctant) to provide time and cash tomatch the grant?
  13. 13.  Limited experience and mistrust make the privatesector reluctant to engage with NGOs orgovernment-“driven” research activities andthereby prevent actors outside the private sectorfrom entering into collaborative arrangements? Besides, the challenges of working withsmallholders in outgrower schemes limits theprivate sector’s interest in submitting proposals

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