Responsible investment in agricultural value chains and

enhancing the impact of AR4D

GFAR Stakeholder Workshop onTracking Investments in AR4D

Berlin, 20 January 2012

Karim Hussein, Technical Advisor

Africa Partnership Forum Support Unit/OECD

www.africapartnershipforum.org

Overview

i. Responsible investment and agriculture

ii. Value chains in agriculture and AR4D

iii. Recent developments on responsible investment and agricultural value chainsin a G20 context

iv. Principles for responsible investment in agricultural value chains

v. The OECD Policy Framework for Investment and its application regarding agriculture in developing economies

vi. Diverse tools for tracking public investments: Examples from the OECD

vii. Issues in developing an AR4D investment tracking system

Responsible investment and agriculture

• RI in agriculture is recognised as critical to avoid potential negative effects of investment

• RI can provide an enabling environment for AR4D and innovation, shaping priorities and generating greater development impacts

• Most development funding tracking systems focus on public / government sources (e.g. ODA, international research centre funding, national budgets…). Private funding for agriculture, research and innovation is also significant (pension funds, multinationals, major regional private sector operators). All these investments should be ‘responsible’

• RI needs to be considered in tracking funding for AR4D given the large private and public flows to AR4D

Value chains in agriculture and AR4D

Interagency G20 work on responsible investment in agriculture takesa value chain approach

Defining a “value chain” (VC):

The full range of activities and services required to bring a product or service from its conception to sale in final markets – whether local, national, regional or global. VCs include input suppliers, producers, processors, transporters, buyers, distribution and trade. They are supported by a range of technical (incl. agricultural research and extension), business and financialservice providers. Adapted from USAID, IFAD, OECD definitions

AR4D has key roles in agricultural VCs:

- Upstream: technology, input and innovation development and dissemination- Downstream: analysis / recommendations concerning marketing and trade  Investment in AR4D at different points in specific VCs can be tracked

RI in agricultural value chains in a G20 context

The G20 Seoul Summit Multi-Year Action Plan on Development (2010)encouraged "all countries and companies to uphold the Principles for Responsible Agricultural Investment” and asked international agencies to develop options to promote responsible investment in agricultural value chains.

Seven PRAI were developed covering all types of private investment, including between principal investors and contract farmers, both large-scale and smallholder farmers, and by implication, between investors and agricultural research agents.

These principles are intended to provide a framework for national regulations, international investment agreements, global corporate social responsibility initiatives, and individual investor contracts.

The principles are being piloted with governments and companies. Consultations are ongoing. Indicators for measuring and maximizing economic value added and job creation arising from private sector investment in value chains are being developed and tested by international agencies.

Seven PRAI principles

1. Existing rights to land and associated natural resources are recognised and respected

2. Investments do not jeopardize food security but rather strengthen it

3. Processes relating to investment in agriculture are transparent,monitored, and ensure accountability by all stakeholders, within a proper business, legal, and regulatory environment

4. All those materially affected are consulted, and agreements from consultations are recorded and enforced

5. Investors ensure that projects respect the rule of law, reflect industry best practice, are viable economically, and result in durable shared value

6. Investments generate desirable social and distributional impacts and do not increase vulnerability

7. Environmental impacts of a project are quantified and measures taken to encourage sustainable resource use, while minimizing the risk/magnitude of negative impacts and mitigating them

PFIA: a tool to enhance national policy design and assist monitoring of investments in the sector

• Proposes guidance in nine policy areas for creating an environment attractive to all investors and for enhancing the development benefits of agricultural investment to society especially the poor

• Flexible instrument that governments can use in evaluating and designing policies for agricultural investment

• Already applied by Burkina Faso, Indonesia, and Tanzania• Requires coordination by ‘host’ country governments, given the range and

variety of relevant measures involved – enhancing policy coherence• Provides an instrument to facilitate donor dialogue, harmonisation and alignment

around developing country priorities for agricultural investment

PFIA recommendations on R&D from Indonesia 

OECD Policy Framework for investment in agriculture

Diverse tools for tracking public investments: Examples from the OECD (1)

• MRDE – one tool for mutual accountability and tracking investments regularlyacross sectors in Africa – agriculture & food security included (little on AR4D)

• Creditor Reporting System (DAC) – Tracks reported DAC ODA with sector breakdowns. CRS code for agriculture includes AR4D, but funding for research can be distributed across sectors – consider recommending to the DAC adding anew CRS code for AR4D?

• L’Aquila Food Security Initiative – Tracks commitments and disbursements of ODA to respond to AFSI Pledge 2009-2012

• OECD-FAO Monitoring African Food and Agricultural Policies (MAFAP) – Tracks government policies and allocations on food and agriculture at country level, including Agricultural Research (5 African countries to summer 2012)

Diverse tools for tracking public investments: Examples from the OECD (2)

Issues for tracking investments in AR4D :

- Lengthy process to establish agreed methodology with partners;

- Coverage limited to selected countries;

- Access to data and analysis slow and difficult in some contexts;

- HR capacity to collect and analyse data variable, depending on country / institution;

- Private investment in AR4D is difficult to monitor...

Developing an AR4D investment tracking system: Issues (1)

• Role of AR4D in fostering innovation to respond to key challenges (FS, CC…): Need to track investments within an innovation perspective. How?

• Decide coverage: type of research; type of investor; geographic coverage. Limit to selected countries, regions or global? Build on initiatives such as CAADP?

• Agree core simple indicators that give an economically meaningful classification: informed by PRAI, Busan, DAC CRS data, MAFAP, ASTI etc…

• Build on existing data and systems where possible (CRS, PFIA, MAFAP etc): avoid duplication; quicker set up; comparability

• Partner with relevant global / regional / national and VC actors. Principles of consultation and inclusion – including producers / users?

Developing an AR4D investment tracking system: Issues (2)

• Allow for lengthy processes to establish agreed methodology with partnersand access to data and analysis slow and difficult in some contexts

• Build HR capacity to collect and analyse AR4D data at country/institution levels

• Aim to provide realistic periodic updates

• Foster policy coherence in AR4D through tracking tools among development partners and across government

• Private investment in AR4D is difficult to monitor, but important to get complete picture. How can this be done in a cost-effective way?