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Conducive Environment & Intervention Model: Agriculture
DAWN PakistanFood and Agriculture Conference
Expo 2016
Shahid Najam, Vice ChairmanDr. Mahmood Ahmad, Advisor
Shahid Javed Burki Institute of Public Policy at NetSol
(5 April 2016)
Sequence Introduction to BIPP
Part I: Context Situation Analysis
Part II: Diagnostics
Part III: Intervention Model
Professionalizing the policy process and reducing rationality deficit;
Transforming institutions to sustainable paradigm;
Producing leaders capable of bringing about a transformative change
We have devoted ourselves to:
Strategic Pillars• Research and Consultancy;
• Think Tank;
• Education and Learning;
• Knowledge Management
Major Strategic Programme Areas• Economic• Social• Environment• Political• Security• Trade• Foreign Policy
Regional and Global Context
Part I: Context Situation Analysis
The challenge ahead 55% (100 million almost) people in absolute
poverty; 23% below poverty line (income of $1-25 a
day); MDGs and SDGs:
MDG 1 – Eradicate extreme poverty and hunger by 50%
MDG 7 – Ensure environmental sustainability SDG 1 - End poverty in all its forms everywhere SDG 2 - End hunger, achieve food security and
improved nutrition and promote sustainable agriculture
SDG 12 - Ensure sustainable consumption and production patterns
SDG 13, 14, 15: Climate Change, Oceans and marine life, ecosystems and forests
Economic challenges:
Macroeconomic: underperforming export sector, high inflation, unstable rupee, FDI decrease;
Unemployment: potential demographic dividend could become liability; 6 to 7% growth required to absorb annual addition to labor force; generate 36 million jobs for next 3 years,
rigid labor market with 40% agriculture! unproductive sector private sector participation High risk country
Global competitiveness 133 outcome of 148 countries Ease of doing business 110 out of 189 countries (2014); 75 in 2010 restrictive trade policies 88th percentile of economies on a scale of
0 ( Singapore) to 16 (Iran) Pakistan at 9.9
Sectoral Share Agriculture 25.5% GDP; 43.7% labour Industry 19%; 22-4% labour force Services 55.5%; 33.9% labour force Exports 23.67 billion (textile, leather goods,
rice, sporting goods, carpets etc.) Imports 45.83 billion petroleum and products,
machinery, edible oil, transportation equip; iron and steel, tea etc)
Preface and Context Specificity
The pathways to development are varied and specific to a country’s historical, political and institutional conditions
Public policy orientation:
• Think of principles first (equity, poverty, inclusiveness, analysis etc.,)• Context specificity (state capacity, political constraints, institutions)• Global governance connectivity: ( numerous challenges: trade,
investment, migration, inclusion of LDCs in governance)
• Research
– Data and Knowledge Systems– Incorporate broader dimensions of HD
People are the Real Wealth of Nations
Part II: Diagnostics
Conditions Precedents Peace and security Development With equity Knowledge based society People centered, rights based
development paradigm Global competitiveness Sustainable human development
World Experience – Success StoriesAustralia Chile India
• Investment in Infrastructure
• High Value Addition (variety)
• Production
Management & Technology
• Investment in Infrastructure
• Value Chain investment
• Interventions by Multinationals, Production Management & Technology, e.g. grapes
• Cooperatives
• Terms of Trade (FTAs, Bilateral etc)
• Investment in Infrastructure
• Institutional Framework
• Processing Industry
Best practices: experiences of other countries
The importance of the legal and regulatory framework (that define rules and determine rights and obligations
Particular attention to strengthen public cooperation with the private sector
The importance of strengthening and supporting the development of commodity, location, industry and profession based associations
A key challenge: Identification and addressing trade-offs between the pace and nature of agri-industry development and poverty and food security
The governmental review of institutional mandates for influencing, regulating and supporting private sector investment in agri-business and agri-industry
Agriculture: Diagnostics & Value Leakages
Pre-production
Agricultural Production
Processing Post Processing Market
• Low quality inputs due to farmers’ lack of knowledge or limited access to input markets, resulting in sub-optimal production• High-cost procurement due to lack of economies of scale, no bargaining power • High energy costs • Inefficient use of water, resulting in salinization and higher costs
• Lack of economies of scale, resulting in higher unit costs
• ineffective crop rotation, resulting in low production• Inappropriate timing of production, leading to lower prices • Inefficient cultivation and harvesting techniques, leading to low production• Inefficient mechanization leading to higher costs
• Lack of advanced processing capabilities, resulting in low value-added
• Lack of semi-skilled workforce, leading to low levels of productivity• Lack of workforce with advanced skills, preventing innovation• Lack of financing, decreasing profitability• Lack of quality control, causing smaller market share
• Lack of Packaging, sales in bulk, lower profits
• Lack of product diversification, less resilience to market shocks and less responsiveness of market demands
• Lack of Eco-designs, less value-added
• Lack of traceability, less consumer confidence, less sales
• Lack of understanding different segments of domestic and foreign markets, leading to smaller market share
• Lack of anticipation of consumer needs, leading to less sales,
policies
Support services
institutions
+
+
Establishment of setting
Farm/Enterprise
(Environment ofBusiness)
Driving Factors
Part III: Intervention Model
Intervention ModelFinance
Marketing Intelligence and Information System
Capacity Development
Territorial participatory approach/ territorial development and value chain development
Physical Infrastructure
• Innovative financial services for small and medium farmers and SMEs –
– Mobile phones – m-banking, pay for purchases, transfer funds
– Branchless banking—stores, gas stations, and input providers to reach rural customers at low cost
• Value chain finance - financial intermediation through interlinked agents (input suppliers or output processors)
• Rural leasing - government and donor funds to jumpstart operations
• Credit ladders - mechanisms for credit and saving histories
Demand for Agricultural Finance
Retailers/Exporters /Wholesalers
Rural Households
Non-Agricultural Rural BusinessesOff-farm
Microenterprises
Processors
Input Suppliers
Farmers / Producer Groups
Local Traders & Processors
Multiple
economic
actors in
rural space
Intervention Model
Physical Infrastructure
Marketing Intelligence & Information System
Capacity Development
Territorial participatory approach/ territorial development and value chain development
Agri-malls
• Warehousing for fertilizer, seedpesticide etc.
• Infrastructure for diesel & lubricantsale
• Agriculture Machinery Farm Equipment
• Agriculture Credit Support Services
• Grain Storage
• Marketing Facility
Finance
Intervention Model
Physical Infrastructure
Marketing Intelligence & Information System
Capacity Development
Territorial participatory approach/ territorial development and value chain development
Strategy
• Market Information System
• Market Intelligence, Early Warning & Rapid Response
• Management Model: IT/ communication infrastructure; Vital info displayed on daily basis; Market committee office reorganized for service delivery; Participatory monitoring; Client feedback & grievance redressal; Reporting & analysis
• Supply Management
Finance
Intervention Model
Physical Infrastructure
Marketing Intelligence & Information System
Capacity Development
Territorial participatory approach/ territorial development and value chain development
sowing
Crop Transition
Harvest
Marketing
Int’l Market
Web
site
cell
Data
base
sM
IS
Information, dissemination
Info Analysis:Projections
Early WarningOperational
Plans
Policy Decisions
Finance
Intervention Model
Physical Infrastructure
Marketing Intelligence and Information System
Capacity Development
Territorial participatory approach/ territorial development and value chain development
Government Agencies
• Marketing and business development;• Projects and investment portfolio
development;• Facilitation for private sector growth;• KM, communication and advocacyStrengthening of Extension
Services• MFAL staff• Private Agricultural ConsultantsProducer Organizations/ Agro food
Industry• producers, entrepreneurs and their
organizations• Farmers, women
Finance
Intervention Model
Physical Infrastructure
Marketing Intelligence and Information System
Capacity Development
Territorial participatory approach/ territorial development and value chain development
Project and Investment Portfolio Development
• Policy framework (coordinate w/CG)• Identify Projects (coordinate w/ dept’s)• Investment documents (Advise dept)• Financing strategy (Advise dept)• Marketing strategy (Advise dept)• Identify key investors (Advise dept)• Develop timelines
Price and Regulatory Support• Agriculture Sector Trade Flow• …need business models• …and Venture Capital• Farm Service Center
Finance
Agriculture Strategy framework based on global Experience
It is a fact that agriculture sector is a risky enterprise with inherent price and volume risks.
The goal of such a policy option should not
necessarily to maximize the growth of production in any particular sub-sector/commodity
but to create the necessary and sufficient
conditions for the agricultural sector/farmers to adjust to a more competitive environment.
What needs to be done
Adjustment capacity requires :
sound management information systems, flexible rural factor markets (labor, land, water, and finance) as well as a competitive agribusiness sector, adequate infrastructure, technology development,
And most importantly, more human capital
(education research and training).
Thank you