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EGK 2011: Agriculture 03 ATA b


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EGK 2011: Agriculture 03 ATA b

  1. 1. Opportunities for Public Private Partnership in Ethiopia ’s Agriculture
  2. 2. Ethiopia on the move … <ul><li>Sustained economic growth – 10%+ GDP growth and 8%+ per capita income growth over the last five years (has added more to its GDP & pci in the last 5 years than in the last 5 decades) </li></ul><ul><li>Ranked by the Economist as among the top five fastest growing economies in the world </li></ul><ul><li>A regional giant – in nominal terms, has surpassed the Kenyan economy; a large consumer base – population of 80million and growing </li></ul><ul><li>Massive public investments in infrastructure and human development – power generation (hydro) has grown from 400mw to over 2,000mw in 5yrs. Expected to reach 10,000mw by 2015 </li></ul><ul><li>Ernst & Young forecast for Ethiopia’s economy in 2025: </li></ul><ul><li>GDP (PPP): US$490 billion </li></ul><ul><li>GDP/capita (PPP): US$4,000 </li></ul><ul><li>3 rd largest economy in SSA </li></ul><ul><li>Population projections: </li></ul><ul><li>120 million (2020) </li></ul><ul><li>278 million (2050) </li></ul>
  3. 3. Agriculture as a driver of growth for Ethiopia <ul><ul><li>Huge potential to increase production by closing the productivity gap </li></ul></ul><ul><ul><li>GDP per smallholder can be increased by 95% by 2025, contributing USD 19 bln to country GDP </li></ul></ul><ul><ul><li>Export value could reach USD 8 bln </li></ul></ul><ul><ul><li>Weak actors across most critical value chains (e.g. lack of entrepreneurial aggregators) </li></ul></ul><ul><ul><li>Underdeveloped irrigation potential (less than 5%) </li></ul></ul><ul><ul><li>Unrealized potential for cultivable land </li></ul></ul><ul><ul><li>Gaps in enabling policy environment and infrastructure (financing, transport, communication) </li></ul></ul><ul><ul><li>Social and physical constraints: soil degradation, land fragmentation, vulnerability to droughts, gender disparities </li></ul></ul>...yet a number of critical challenges to overcome Agriculture is a key driver for Ethiopia ’s development... ... with a significant growth potential... <ul><ul><li>Economy focused on agriculture (43% of GDP, 80% of export value, 83% of population dependent for income) </li></ul></ul><ul><ul><li>Consistent growth of over 8 to 10 percent per annum over the past decade </li></ul></ul><ul><ul><li>Sector driven by smallholder farmers (95% of total production) </li></ul></ul>
  4. 4. A snapshot of the the agricultural production landscape … Source: Ethiopian Central Statistical Authority, 2011 Key Crops Hectares under cultivation Production (quintals) Cereals 9.7m 177.6m Teff 2.8m 34.8m Maize 2.0m 49.9m Wheat 1.6m 28.6m Barley 1.0m 17.0m Pulses 1.4m 19.5m Chick Peas 208.4t 3.2m Lentils 77.3t 809t Oilseeds 774.5t 6.3m Nueg (Niger) 247.6t 1.4m Sesame 384.7t 3.3m Fruits 54.6t 4.8m Bananas 31.9t 2.7m Coffee 498.6t 3.7m
  5. 5. Ethiopia ‘ s vision on agricultural transformation Food security Enhanced environmental conservation Improved gender inclusion and equity Ethiopia aspires to transform its agriculture into a sustainable market-led sector and achieve : Part of country ‘ s aspiration to achieve middle income status by 2020 SOURCE: Ethiopia ‘ s PIF, ATA team
  6. 6. AGP activities offer potential entry points for private sector involvement (1/3) potential entry points for private sector Strategic objectives Reduction in degradation and improvement in productivity of natural resources Achievement of a sustainable increase in agricultural productivity and production Achievement of universal food security and protection of vulnerable households from natural disasters Acceleration of agricultural commercializa-tion and agro-industrial development Natural Resource Management Productivity and Production Disaster Risk Management and Food Security Rural Com-mercialization AGP ATA Potential entry points for pubic private partnerships
  7. 7. ... with clear targets for each element Productivity and Production Rural Commercialization Natural Resource Management Disaster Risk Management and Food Security <ul><li>Increase productivity in major crops by 29% </li></ul><ul><li>Increase amount of cultivable land by 8% </li></ul><ul><li>Increase land with fertile soil by x17 </li></ul><ul><li>Increase export of coffee by x3.5 </li></ul><ul><li>8% annual increase in rural income </li></ul><ul><li>10% annual increase in the number of farmers with access to financial services </li></ul><ul><li>Increase the number of trained farmers from 14 to 450 ths </li></ul><ul><li>12% annual increase in level of investment in agribusiness </li></ul><ul><li>Increase in mobile penetration from 9 to 45% </li></ul><ul><li>Introduce land planning and management system to additional 181 woredas* </li></ul><ul><li>8% annual increase of arable land irrigated </li></ul><ul><li>Increase major crop production by 40% </li></ul><ul><li>Decrease the number of people chronically food insecure form 7.1 to 1.4 million </li></ul>* Administrative unit of Ethiopia (equivalent to a district) SOURCE: Ethiopia ‘ s Agricultural Sector Policy and Investment Framework, GTP Agriculture Policy Matrix SELECTED TARGETS
  8. 8. Approach to transformation <ul><ul><li>Creating enabling environment </li></ul></ul>Holistic, integrated programme covering priority focus areas through key levers: <ul><ul><li>Improving industry structure and engaging private sector </li></ul></ul><ul><ul><li>Improving frontline extension quality </li></ul></ul><ul><ul><li>Scaling irrigation and better land management </li></ul></ul><ul><ul><li>Increasing productivity of smallholder farmers </li></ul></ul>NATIONAL TRANSFORMATION NATIONAL TRANSFORMATION SOURCE: Ethiopia ‘ s PIF, ATA team
  9. 9. Investment platform for increasing agricultural productivity and market access in key value chains in targeted high potential areas Developments so far: key transformational interventions in support of agricultural growth Dedicated independent unit to support and monitor implementation, reporting to the Prime Minister AGP ATA ECX A first of its kind national multi-commodity exchange that provides low-cost, secure marketplace trading services
  10. 10. Key features of the AGP Key commodities using a value-chain approach identified for each cluster Main beneficiaries small- and medium-scale farmers Focus on selected geographic clusters Bottom up, decentrilized planning approach to identify key interventions at a local level (83 high potential areas) <ul><li>E.g. AGP-AMD </li></ul><ul><li>project supported by </li></ul><ul><li>USAID selected 8 key </li></ul><ul><li>value chains in 6 </li></ul><ul><li>clusters: </li></ul><ul><li>Wheat </li></ul><ul><li>Maize </li></ul><ul><li>Sesame </li></ul><ul><li>Pulses </li></ul><ul><li>Coffee </li></ul><ul><li>Honey </li></ul><ul><li>Meat and dairy </li></ul>Adoption of new technology and changing behaviour and mindsets AGP ATA SOURCE: USAID, ATA team
  11. 11. 83 woredas in 20 clusters in four of the largest regions <ul><li>Selection of geographic clusters </li></ul><ul><li>Access to markets (access to cities of 50,000 population or over in less than 5 hours) </li></ul><ul><li>natural resource endowment (rainfall distribution with annual average of 700 mm or over soil types suitable for crop and fodder production </li></ul><ul><li>potential for development of small-scale irrigation facilities </li></ul><ul><li>institutional capacity (public staff number and skill base; institutional plurality of service providers, including good basis and growth of viable cooperatives and farmer groups); and </li></ul><ul><li>willingness and commitment to participate (supportive policy environment; performance of projects/programs supported by other donors; existing partnership engagements with private sector). </li></ul>
  12. 12. AGP: example of a targeted geographic area <ul><li>Focus area (4 woredas) covers population of 0.5 mln </li></ul><ul><li>Wheat is one of prioritized crops: potential to increase yield by 120% and double farmer ‘ s income </li></ul><ul><li>Main levers include: </li></ul><ul><ul><li>Improving competitiveness </li></ul></ul><ul><ul><li>Access to finance </li></ul></ul><ul><ul><li>Enhanced fertilizer use and adoption of new technology </li></ul></ul><ul><ul><li>Investment in storage facilities </li></ul></ul>Southern Tigray AGP area AGP ATA SOURCE: World bank, ATA team
  13. 13. AGP activities offer potential entry points for public private partnerships (1/3) potential entry points for private sector Strategic objectives <ul><li>Adoption of improved technologies for processing and production </li></ul><ul><li>Strengthening marketing and processing of select commodities </li></ul><ul><li>Engagement with private sector </li></ul>Agricultural production and commercialization AGP ATA Small-scale rural infrastructure development and management <ul><li>Construct/rehabilitate/manage small-scale rural infrastructure for increased productivity </li></ul><ul><li>Improve efficiency of key value chains through improved access to markets </li></ul>
  14. 14. Market and Agribusiness development Examples PepsiCo has partnered with a local company to source and produce a chickpea based nutritious food Diageo has expressed readiness to invest in the sourcing and production of barley following its recent acquisition of a major brewery <ul><li>Agribusiness opportunities exist along the value chains of key crops found in AGP geographic clusters: </li></ul><ul><li>– wheat </li></ul><ul><li>– maize </li></ul><ul><li>– chickpeas </li></ul><ul><li>– teff </li></ul><ul><li>– soya bean </li></ul><ul><li>Opportunities also exist in the development of the supply systems of key inputs: </li></ul><ul><ul><li>Seeds </li></ul></ul><ul><ul><li>Fertilizers </li></ul></ul><ul><ul><li>Crop protection products </li></ul></ul><ul><ul><li>Machinery </li></ul></ul>AGP activities offer potential entry points for public private partnerships (2/3) AGP ATA SOURCE: Ethiopia ‘ s PIF, ATA team
  15. 15. Key goals Example of private partnership in agribusiness development - EthioPEA EthioPEA Omega Farms Produce nutritious products made from local chickpeas for low income consumers in Ethiopia Increase yileds and quality of chickpeas to turn it into a major export crop In collaboration with a number of private and public actors Pilot launched in several regions to evaluate potential of productivity improvement through modern irrigation, better seed quality and transfering best practices SOURCE: ATA team, PepsiCo
  16. 16. An emerging public private partnership …. Ministry of Agriculture
  17. 17. Market and Agribusiness development Institutional strengthening and development <ul><li>Investing in and strengthening key public advisory services – e.g. agricultural extension services, soil fertility management services, animal health services – the AGP is creating a conducive environment as well as strengthening the capacity of the public sector to effectively respond to potential interventions by the private sector </li></ul>AGP activities offer potential entry points for public private partnerships (3/3) AGP ATA SOURCE: Ethiopia ‘ s PIF, ATA team
  18. 18. Cold chain supply management <ul><li>Investment in storage, distribution facilities and equipment (e.g. refrigerator trucks) </li></ul>In addition, investment opportunities exist in backbone infrastructure development SOURCE: ATA team Warehousing <ul><li>Investment in warehousing and aggregation facilities for agricultural outputs </li></ul>Financial services Description Transport <ul><li>Investment in transport infrastructure, e.g. roads, rail </li></ul>
  19. 19. Overview of potential setups for private sector engagement Benefits Role MNCs <ul><ul><li>Investment in specific value chains to increase production and quality of crops </li></ul></ul><ul><ul><li>Distribution of inputs </li></ul></ul><ul><ul><li>Supporting pilots to introduce best practices </li></ul></ul><ul><ul><li>Increase in small holder productivity </li></ul></ul><ul><ul><li>Cost reduction through developing local sourcing of supplies </li></ul></ul><ul><ul><li>Improved supply of key commodities </li></ul></ul><ul><ul><li>Link to commercial markets </li></ul></ul><ul><ul><li>Transfer of technology and management skills </li></ul></ul><ul><ul><li>Access to finance </li></ul></ul><ul><ul><li>Sustainable demand for SMEs </li></ul></ul><ul><ul><li>Investment in aggregation and training facilities </li></ul></ul>Social VC <ul><ul><li>Providing catalytic capital to jumpstart infrastructure projects and innovative value chain models until they reach a self-sustaining momentum </li></ul></ul>Others <ul><ul><li>tbd </li></ul></ul><ul><ul><li>Investment in specific value chains and regions </li></ul></ul><ul><ul><li>Investment in aggregation and processing facilities </li></ul></ul><ul><ul><li>Farmers and entrepreneurs capability building </li></ul></ul>National companies Small local entrepreneurs SOURCE: ATA team
  20. 20. Next steps for engaging the private sector Joint public and private identification of areas for private sector engagement Establishment of partnership structures (e.g. projects, committees, industry associations) Development of investment plans for specific initiatives Joint execution and monitoring Focus of today ’ s meeting SOURCE: ATA team