promoting agricultural value chains in the oic …promoting agricultural value chains in the oic...
TRANSCRIPT
Promoting agricultural value chains in the OIC member countries
Bart Slob, Ankara, October 8, 2015
Part I: Global agricultural value chains, trends and success stories
Bart Slob, Ankara, October 8, 2015
Contents
3
Part I
• Objectives and methodology of the study
• Global agricultural value chains
• Trends
• Success stories
Part II
• Agricultural value chains in the OIC
• Recommendations for value chain development
4
Objectives and methodology
Objectives
5
- Assess the present situation of agricultural value chains
of OIC countries in terms of institutional frameworks,
market access, infrastructure and governance
mechanisms.
- Provide policy recommendations in the areas of
increasing efficiency, accessing new markets, adding
value for all chain actors and promoting collaboration in
agricultural value chains.
Methodology
6
- Comprehensive literature review
- Cross-country data collection, including interviews with
country representatives and experts
- Case studies in specific OIC member countries
Global agricultural value chains
Concepts
8
- A value chain is the entire system of production,
processing and marketing of a particular product, from
inception to the finished product and its end use. A
value chain consists of a series of chain actors, linked
together by flows of products, finance, information and
services.
Concepts
9
- Chain actors are the individuals or organisations (e.g.
firms) that produce the product, or buy and sell it, and
thus own the product at some stage in the chain.
Concepts
10
- Chain supporters may provide various services to the
chain actors, such as financial services, including loans,
insurance, accounting and savings services, as well as
a wide array of non-financial services, which
encompass input supplies, farm labour, transport,
grading, processing, storage, packaging, advertising,
research, training, advice, organisational
strengthening, and so on.
Concepts
11
- The chain context includes the larger economy,
currency exchange rates, government economic policy
and governance, tax, regulatory and legal frameworks,
influence by advocacy movements and by social
structures. This context may help the performance of
the chain, for example through targeted policies that
support business, or it may act as a constraint by
imposing restrictions and barriers to trade.
Actors, supporters and context
12
Value chain approach
13
Look at five dimensions:
1. Institutional framework and public policies
2. Standards
3. Infrastructure and logistics
4. Governance and value chain actors
5. Trade
Global trends (1)
14
Need for increased agricultural outputs to feed the world:
necessary increase of 70% in food production by 2050 to
meet the growing demand (FAO)
Global trends (2)
15
Shifting governance structures and roles of the public
and private sectors:
- Liberalization of markets for agricultural products
- Reduced role of the state
- Privatization
- Influence of modern retailers and supermarkets
- Private product and process standards
- Vertical coordination by large buyers
Global trends (3)
16
Geographical shifts and the growing importance of
emerging economies:
- China, India and other emerging economies have
become major players
- Increased demand for protein-rich, processed and
ready-made food
- Power shift in global value chains
Global trends (4)
17
New consumption patterns and consumer demand
shaping agricultural value chains:
- Western, protein-rich diet gains popularity in many
parts of the world
- Stricter food safety standards and higher quality
standards
- Demand for more sustainable products
Global livestock consumption
0
20
40
60
80
100
120
140
160
180
200
2011-13 2023 2011-13 2023 2011-13 2023 2011-13 2023 2011-13 2023
Poultry Pork Beef Sheep Fish
Million t
onnes
Developed Developing
Global trends (5)
19
Corporate social responsibility and sustainability:
- Proliferation of sustainability standards
Sustainability standards on the rise
0
5
10
15
20
25
30
35
40
45
Coffee Cocoa Palm Oil Tea Cotton Bananas Sugar Soy Beans
Perc
enta
ge
2008 2012
Global trends (6)
21
Agricultural innovation and biotechnology:
- Mechanization, irrigation and fertilizer application
- Genetic modification in some parts of the world
Global trends (7)
22
Innovation in ICT to support value chain development:
- ICT applications for production management
- ICT for market access
- ICT services that improve data visibility and
traceability, and coordinate transportation to markets
- ICT for financial inclusion of small-scale farmers
Mobile-broadband subscriptions
83,7
32,0
21,1
0
10
20
30
40
50
60
70
80
90
2007 2008 2009 2010 2011 2012 2013 2014*
Perc
enta
ge
Developed World Developing
Success stories
25
Dutch “top sectors”
Enabling environments: Top Sector policy in the Netherlands
26
- 2010: policy framework to support key economic areas
and enhance competitive strength in the global market
- Included: agriculture & food, horticultural &
propagating stock + seven other sectors
- Combination of generic financial instruments and
emphasis on cooperation
- Result: government’s role changed from management-
by-subsidy to network management: consortia make
decisions
27
Ethiopia’s flower sector
Value chain promotion: Ethiopia’s cut flower export industry
28
- Ethiopia is now the 2nd largest flower exporter in Africa
after Kenya
- Formation of Ethiopian Horticulture Producers and
Exporters Association (EHPEA) in 2002
- 2007: 5-year action plan
- Government made state-owned land available and
invested in infrastructure
- Incentives for domestic and foreign investors
- More than 100,000 jobs created
Red Tractor scheme
Private sector standards: Red Tractor scheme in the UK
30
- Intensification of food safety and animal welfare
regulations in the 1990s
- Establishment of independent Food Standards Agency
to enforce regulations
- Specific British Farm Standard launched in 2000
- Full traceability
- Market recognition of 64% among UK consumers
- Criticism of low animal welfare standards
Ready meals
Changing consumer demands: the rise of ready meals in the UK
32
- Changing demographics, busy lifestyles and time
scarcity
- Frozen meals popular in 1960 and 1970s
- 1979: Marks & Spencer introduced first “chilled” ready
- Sector now worth £ 10 billion per annum, 13% of food
retail market
- Hazard Analysis Critical Control Point (HACCP) needed
- Impact on health unclear
Part II: Agricultural value
chains in OIC member
countries and
recommendations
Bart Slob, Ankara, October 8, 2015
Agricultural value chains in the OIC
Importance of agriculture
35
- Roughly half of the total population of OIC member
countries lives in rural areas (51%)
- In Somalia, agriculture accounted for 60.2% of GDP in
2013; in Kuwait and Qatar around 0%
- Agriculture plays more significant role in the African
group than in the other two groups
- Four member countries – Indonesia, Nigeria, Turkey
and Pakistan – account for 51% of the OIC agricultural
GDP
Rural population in the OIC, 2013
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Uganda
Nig
er
Chad
Afg
hanis
tan
Tajikis
tan
Com
oro
s
Guyana
Burk
ina F
aso
Sudan
Bangla
desh
Mozam
biq
ue
Yem
en
Kyrg
yz R
epublic
Uzbekis
tan
Guin
ea
Mali
Pakis
tan
Som
alia
Togo
Sie
rra L
eone
Maurita
nia
Senegal
Egypt
Mald
ives
Guin
ea-B
issau
Benin
Turk
menis
tan
Nig
eri
a
Kazakhsta
n
Indonesia
Cote
d'Ivoire
Cam
ero
on
Azerb
aijan
Alb
ania
Syria
Moro
cco
Gam
bia
Iraq
Tunis
ia
Iran
Surinam
e
Om
an
Turk
ey
Mala
ysia
Alg
eri
a
Bru
nei D
aru
ssala
m
Djibouti
Lib
ya
Saudi Ara
bia
Jord
an
United A
rab E
mir
ate
s
Gabon
Lebanon
Bahra
in
Kuw
ait
Qata
r
African Group Arab Group Asian Group
GDP per capita versus share of agriculture GDP in the OIC, 2013
Kuwait
Quatar
Somalia 0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
0 10 20 30 40 50 60 70
GD
P p
er
capita (
US$)
Share of country's GDP (%)
African Group
Arab Group
Asian Group
Participation in global value chains
38
- Engaging in global value chains is accompanied by
higher GDP growth rates (UNCTAD)
- Highest GDP growths are recorded for countries that
that have a high participation in global value chains
and, at the same time, manage to increase their
domestic value added in exports (median GDP growth
of 3.4%)
Participation in global value chains
39
Low GVC participation + low domestic value addition
High domestic value addition without increased participation in GVCs
Integration in GVCs without increase in domestic value added
High GVC participation + high domestic value addition
OIC countries in global value chains
40
- Best performers are Malaysia (0.8% of value added
created by participation in GVCs) and Indonesia (0.6%)
- More regional trade in OIC is desirable:
• Growing demands in OIC member countries
• Common relationship networks and cultural norms
facilitate trade
• Fewer requirements and less stringent standards
Low participation in global value chains: why?
41
Policy focus on self-sufficiency and domestic production
of food security crops:
- Producer subsidies
- Fixed prices for certain crops
- Government control over key parts of the value chain
- Import duties on key commodities
- Some countries: export restrictions
- Donor support
Low participation in global value chains: why? (2)
42
- Vast majority of producers are smallholders without
access to formal value chains
- Public budgets for agricultural R&D are declining and
private funds are short in supply, which leads to:
• Low productivity
• Water scarcity
• Inefficient irrigation
• Climate change
Low participation in global value chains: why? (3)
43
- Infrastructure for value chain development and agro-
processing
- Investment climate for value adding activities and
exports
- Trade costs and policies
Ease of doing business, 2015
44
188
18
126,29
Mala
ysia
United A
rab E
mir
ate
s
Tunis
ia
Saudi Ara
bia
Qata
r
Bahra
in
Turk
ey
Om
an
Alb
ania
Moro
cco
Kazakhsta
n
Azerb
aijan
Kuw
ait
Bru
nei D
aru
ssala
m
Kyrg
yz R
epublic
Lebanon
Egypt,
Ara
b R
ep.
Indonesia
Mald
ives
Jord
an
Guyana
OIC
Mozam
biq
ue
Pakis
tan
Iran,
Isla
mic
Rep.
Yem
en,
Rep.
Gam
bia
, The
Sie
rra L
eone
Uzbekis
tan
Pale
stine
Gabon
Mali
Cote
d'Ivoire
Togo
Uganda
Benin
Alg
eri
a
Djibouti
Iraq
Cam
ero
on
Com
oro
s
Sudan
Senegal
Surinam
e
Tajikis
tan
Burk
ina F
aso
Nig
er
Guin
ea
Nig
eri
a
Bangla
desh
Syria A
rab R
epublic
Maurita
nia
Guin
ea-B
issau
Afg
hanis
tan
Chad
Lib
ya
African Group Arab Group Asian Group OIC Average
Ease of agricultural investments, 2015
45
Kyrgyz Republic
Malaysia Uzbekistan
UAE
Chad Yemen Suriname Uzbekistan
0
20
40
60
80
100
120
140
160
180
200
Starting a business Getting credit Enforcing contracts Trading acrossborders
Countr
y r
ankin
g
Best OIC average Worst
Average tariff rates for agricultural products
46
12,5
13
13,5
14
14,5
15
15,5
16
16,5
17
OIC average Other developing World average Developed
Perc
enta
ge
Case studies
Dates in Saudi Arabia
Dates sector in Saudi Arabia
49
- 2nd most important agricultural commodity in quantity
after milk, and 3rd most important in value after poultry
and milk
- Over 400 date palm varieties, of which 25 are
commercially significant
- Production mainly for the domestic market, only about
7 to 8% is exported
Top five date producers, average 1993 - 2013
50
0,0
0,2
0,4
0,6
0,8
1,0
1,2
Egypt Iran (IslamicRepublic of)
Saudi Arabia Iraq Pakistan
Million t
onnes
Date production in Saudi Arabia
51
0
0,2
0,4
0,6
0,8
1
1,2
Million t
onnes
Date exports, 2007 - 2013
52
0
20
40
60
80
100
120
2007 2008 2009 2010 2011 2012 2013
million U
S$
Date value chain in Saudi Arabia
53
54
- Supporting institutional framework, with enabling laws
and several research institutes dedicated to date palm
- At production level, high incidence of pests and
diseases
- Informal marketing channels: few incentives exist to
enhance quality
- Processing facilities operate under capacity
- Export levels remain low, generally to volatile markets
Findings
55
- Organic date production: use newly established
infrastructure for organic certification
- Product diversification: processed and manufactured
date products
- Focus on quality management to reduce bacterial
contamination
- Use modern integrated marketing channel
Opportunities
Milk in Egypt
Milk value chain in Egypt
57
- Most milk consumed in Egypt
- Per capita consumption of diary products is at 21 kg
per year (world average is 50 kg per year)
- Low average productivity: Egypt is still a net importer
of dairy products
- Sector dominated by smallholders
Fresh milk production in Egypt
58
0
0,5
1
1,5
2
2,5
3
3,5
Million t
onnes
Buffalo Cow
Milk value chain in Egypt
59
Exports and imports of milk and cream
60
0
20
40
60
80
100
120
140
160
180
200
220
240
260
280
2005 2006 2007 2008 2009 2010 2011
Million U
S$
Exports: Milk and cream (not concentrated, no added sugar)
Imports: Milk and cream (not concentrated, no added sugar)
Exports: Milk and cream (concentrated or with added sugar)
Imports Milk and cream (concentrated or with added sugar)
61
- Egyptian dairy sector is growing
- High degree of fragmentation at production level
- Basic product hygiene is a concern for milk consumed
raw (85% of total)
- Public research institutes focus on increasing milk
output
- Support from the international donor community
- Logistic and infrastructural problems are impediment to
development of the sector
Findings
62
- Growing population and changing consumption
patterns: growth opportunities in the processing and
manufacturing segments for local consumption
- Export opportunities to Arab and African countries, but
also to the EU
- Integration of smallholder dairy farmers into formal
and processing and marketing channels
Opportunities
Red meat in Turkey
Red meat value chain in Turkey
64
- Majority of red meat is consumed domestically
- Sector is growing driven by population growth and
changing consumption patterns
- Smallholders use different breeds with different
productivity
- Use of outdated or inappropriate rearing techniques by
smallholders hampers growth
- Unregistered slaughtering of 40% of livestock
Red meat value chain in Turkey
65
0
5
10
15
20
25
30
35
40
45
Million h
eads
Cattle Buffaloes Sheep Goats
0
5
10
15
20
25
30
35
40
45
Growth and projections
66
870 930
1200
1300
1400
1500
0
200
400
600
800
1000
1200
1400
1600
2012 2013 2014 2015 (est.) 2016 (est.) 2017 (est.)
Red meat production (in million tonnes)
67
- Production has increased significantly, still mostly for
domestic consumption
- Efforts by government to modernize the sector and to
raise productivity: legislation and animal husbandry
projects
- Ambitious plans for the sector: formalization is key
Findings
68
- Implement and enforce quality and food safety
standards along the value chain: registered
slaughtering
- Create support structures for small-scale farmers:
producer organizations for training
- Introduce appropriate cattle breeds to replace less
productive indigenous breeds
Opportunities
Groundnuts in the Gambia
Groundnut value chain in the Gambia
70
- Groundnuts is main cash crop: 23% of agricultural GDP
- Exports have declined since 1980s: low productivity
and poor quality
- Sector dominated by smallholders
- Low levels of mechanization, hand-held tools, power
provided by animals, rain-fed production
- Long history of state interventions to improve the
sector
Groundnut production in the Gambia
71
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Tonnes
Groundnut value chain in the Gambia
72
Export of (shelled) groundnuts
73
0
5000
10000
15000
20000
25000
30000
35000
Groundnuts: quantity (tonnes) Groundnuts: value (1000 $)
74
- Efforts by the government to rebuild sector
- Sector can’t keep up with more stringent international
quality requirements
- High aflatoxin levels: too high for export
- Import tariffs are a main policy instrument: groundnuts
are protected by import tariff of 20%
Findings
75
- The Gambia should take advantage of favourable
market access policies for LDCs of the EU, USA, India,
Brazil and South Korea
- Domestic processing industry for export purposes
should be developed: increase value added through
processing
Opportunities
Palm oil in Malaysia
Palm oil in Malaysia
77
- Palm oil has turned into a high value contributor to
Malaysia’s economy
- Steady production increase: average of 3.6% per year
- 5% of GDP
- 39% of global palm oil production
- 40% of output comes from smallholder farmers
- Global demand has grown by 7% in the past 20 years
Palm oil production
78
0
5
10
15
20
25
Million t
onnes
Findings
79
- Both large-scale plantations (usually state-owned) and
smallholder farmers (often integrated in plantation
schemes)
- Well-organized industry with close ties to the
government
- Good public and private infrastructure
- Efforts in the field of sustainability (standards,
replanting schemes)
Opportunities
80
- Continued commitment to sustainability initiatives to
counter deforestation, loss of biodiversity and climate
change
- Expand outside of Malaysia, as the country runs out of
land for palm oil
- Increase of productivity and replanting
- Develop more value added activities in Malaysia:
chemical, food and health-based industries
- Biodiesel from palm oil (?)
Cotton in Pakistan
Cotton in Pakistan
82
- 4th largest cotton producer in the world, 3rd largest
consumer of cotton, largest exporter of cotton yarn
- Cotton, textile and apparel industry employs 40% of
the industrial workforce
- Mostly small holdings of less than 5 hectares
- Slow growth: large pest infestations and cotton
diseases
- Use of substandard chemicals and poor pest control
Cotton production in Pakistan
83
0
1
2
3
4
5
6
7
8
Million t
onnes
Seed cotton Cotton lint
Cotton value chain in Pakistan
84
Cotton exports and imports
85
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1,0
00 b
ale
s (
1 b
ale
= 1
70kg)
Exports Import
Findings
86
- Yields and cotton output have increased in last 20
years
- Seed quality and agricultural practices are generally
poor
- Pest infestations and cotton diseases lead to economic
losses
- Delays in the area of seed law adoption are stalling
development of Pakistani Bt cotton varieties
- General quality standards are lacking
Opportunities
87
- Upgrading of infrastructure (e.g. mills) is needed to
reduce cost per unit
- Focus on developing the ready-made garment sector
(emphasized in Textile Policy)
- GSP Plus status to the EU is expected to result in
considerable push to the sector: export increase and
enhanced private and public investments
Recommendations
Institutional framework and public policies
89
• Increase political commitment and public policies
• Improve agricultural output and sustainability
• Use better crop varieties with more value added
• Use crop varieties and species suited to local conditions
• Develop processing industries
90
• Adopt quality standards and implement quality control
• Identify market opportunities for standard compliance
• Work towards more transparency and traceability
• Collaborate with relevant standardization efforts
Standards
91
• Close the infrastructure gap
• Promote public-private partnerships for infrastructure
development
• Organize chain supporters
Infrastructure and logistics
92
• Develop smallholder agriculture
• Link formal and informal value chains for the benefit of
both
Governance and value chain actors
93
• Facilitate trade
• Pursue regional integration
Trade
