Standard and regulation in Agribusiness
Standard and regulationin Agribusiness
• Risk-averse.• Limited internal
resources.• Poor access to external
resources.• “Shock”-sensitive –
low threshold. • Poor or non-existent
business skills.
• Risk-takers.• Adequate internal
resources.• Able to access external
resources.• Shock-proof - buffer
systems in place.• Proven survival
business skills.
Real DifferencesSMALL HOLDERS AGRI-BUSINESSMEN
Real DifferencesSMALL HOLDERS AGRI-BUSINESSMEN
• Inaccessible markets.• Independent decision-
makers – household.• Planning flexibility
limited to < 1 week.• Reluctant to
cooperate.• Input supply, land
tenure, food security.
• On their doorstep.• Corporate decision-
making.• Extended planning
time 6 – 12 months.• Require cooperation
and organization.
SECTOR TRENDS & IMPACTS
General:
• Emphasis on market-driven systems;• Role of private sector important;• Smallholders becoming commercialized; &
• Agribusiness & agro-industry policy reforms & investment accelerating pace of AA development.
SECTOR TRENDS & IMPACTS
Agrifood Systems:
• Soaring food prices - primary production more viable
• Higher incomes – demand for high value commodities
• Technological changes - value addition
• Trade liberalization - cross border demand
• Urbanization - product quality & delivery standards
• Changing diets - more meat, fish & fruits
• More women earning - processed or pre-prepared
• Global manufacturing - value addition
SECTOR TRENDS & IMPACTS
Organizational & Institutional Changes:
• Growing concentrations - retail & processing
• Larger agribusiness enterprises - economies of scale
• Increasing private sector standards – food quality & safety
• Food transactions - increasing use of contracts
• Retailers/manufacturers - rely on specialized procurement/dedicated wholesalers
• Sale of food - supermarkets replacing local markets
SECTOR TRENDS & IMPACTS
Positive effects:
• Increases value addition opportunities.• Agro-processing stimulates demand & market
size.• Exporters/agro-processors provide crucial inputs
& services.• Agro-industries stimulate innovation.
• Encourages productivity & improves quality.
SECTOR TRENDS & IMPACTS
Negative effects:
• Standards and contracts difficult for small-holders.
• Small-scale agro-processors unable to compete with large scale manufacturers.
• Traders in local markets squeezed out by specialized procurement practices & certified products.
SECTOR TRENDS & IMPACTS
Agribusiness Development is context-specific & dependent on:
• The product sector & market requirements; • Development stage of the country;• Ag’ sector policies, institutions & services;• Government action to promote A&A
(If agribusiness is to play a key role in reducing poverty, Government needs to create enabling conditions, while monitoring & taking steps to protect & enhance farmers & others most likely to be affected by agri-business)
POLICY REFORM & INSTITUTIONAL STRENGTHENING
POLICY REFORM &INSTITUTIONAL STRENGTHENING
The business environment is an important driver for domestic & export agro-enterprises, but it is not very conducive to A&A. Many countries have:
• Complex laws & regulations governing business,• Ineffective intellectual property rights;• Inadequate commercial services;• Lack of infrastructure;• Ineffective local governments; & • Weak information & communication systems
POLICY REFORM &INSTITUTIONAL STRENGTHENING
Policy environment requires:
• Legal & regulatory frameworks that define rules & determine rights with respect to resources and business operations;
• Strengthen public sector cooperation with the private sector;
• Commodity, regional industrial & professional based associations inc’ producer ass’ & cooperatives;
• Trade-offs between pace & nature of agro-industrial development & poverty; and
• Institutional mandates for influencing, regulating & supporting PS investment in AA.
POLICY REFORM &INSTITUTIONAL STRENGTHENING
Legal & Regulatory Frameworks:
• Covers rules, rights & obligations for resources, assets & business operations.
• Level of protection of intellectual property rights.• Legal or procedural preferences favoring
government owned/assisted enterprises.• Employment/contractual conditions & distribution
of benefits from agri-business development.
POLICY REFORM &INSTITUTIONAL STRENGTHENING
“P-P-P” Cooperation:
• Requires communication/cooperation between public and private sector;
• Public investment support of private sector innovation/product development mobilizes assets, knowledge & capacities of A&A;
• Policy attracts foreign investments & access to technologies; &
• Enhances effectiveness of regulatory framework & PS compliance.
POLICY REFORM &INSTITUTIONAL STRENGTHENING
Institutional Support:
Commodity, regional, industrial & professionally-based associations, including producer organizations & cooperatives play a key role in:
• Connecting producers and clients;• Vocalizing view points;• Taking collective actions;• Networking & facilitating linkages;• Providing training, technology & legal support.
POLICY REFORM &INSTITUTIONAL STRENGTHENING
Trade-Offs include:
• Rapid agro-industrial development can displace small farmers, processors, stores and traders.
• AA policies unlikely to address food insecurity and poverty by themselves.
POLICY REFORM &INSTITUTIONAL STRENGTHENING
Institutional Mandates:
• Very few government department mandates cover all issues that enable/inhibit AA.
• Mechanisms are required to strengthen linkages among public agencies responsible for policies, institutions and services impacting on AA
AGRO-INDUSTRY & VALUE CHAINS PROGRAMS
AGRO-INDUSTRY & VALUE CHAINS PROGRAMS
An increasing need for value chain programs that:
• Improve delivery of services;• Create value addition for small farmers; &• Help farmers respond to changing markets and
consumer requirements.
These programs should complement AA policy reforms and institutional strengthening.
AGRO-INDUSTRY & VALUE CHAIN PROGRAMS
The programs should be designed to complement AA policy reforms and institutional strengthening through:
• Business linkages;• Reducing transaction costs;• Aligning capacities of farms & firms;• Ensuring fair governance within chains;• Improving market practices, strengthening
producer organizations; & • Upgrading technologies.
AGRO-INDUSTRY & VALUE CHAIN PROGRAMS
Key lessons – Strategies & Interventions:
• PPP must ensure that specialized PS management skills & technical expertise is directed at benefiting small farmers & processors.
• Entrepreneurial capacities of small farmers must be strengthened to understand/meet timing, quality & safety requirements of the supply chain. Capacity building must address start-up, financing & development of small/medium agro-processing enterprises.
• Value chain programs should facilitate and support FBO & producer organizations – they provide economies of scale & platform for small farmers to do business. But they must be profitable & business management & governance very important.
AGRO-INDUSTRY & VALUE CHAIN PROGRAMS
Key lessons – Strategies & Interventions:
• Financial & business services to small farmers & processors important – reduces costs and expands operations, especially where transaction costs-to-output high. Contractual arrangements critical.
• Reduce vulnerabilities by building capacities of chain participants to innovate, diversify or exit as markets change.
• Comparative advantage & investment appraisals before implementation & monitoring of impacts & benefits essential to reduce vulnerabilities.
• Public-Private sector engagement ensure AA are rules-based & non-discriminatory & committed to good governance, development & poverty reduction.
INDUSTRY STANDARDS & QUALITY REQUIREMENTS
INDUSTRY STANDARDS & QUALITY REQUIREMENTS
Industry standards:• Manage risks relating to product safety & quality;• Enable comparisons of prices between suppliers,• Reduce transaction costs; &• Strengthen consumer confidence & loyalty.Branding & labels can differentiate products.Certification informs consumers about supply chain
practices.Standards ensures consumer protection & provides both
incentives and sanctions for improvement of product quality & safety.
INDUSTRY STANDARDS & QUALITY REQUIREMENTS
Unlikely poorer countries can keep up & benefit from advances in product specification & certification requirements, without access to sophisticated technologies, efficient & low-cost communication & information systems, adequate infrastructure & supportive institutions & services. Need to initiate dialog on standards between P&P on:
• Strengthen compliance & certification & reduce costs;• Reform of institutions & legal frameworks;• Investments in physical facilities, labs, equipment, infra’;• Support institutions responsible for food safety, control of
fraud, animal & plant health;• Technical assistance to establish PPP
RESPONDNG TO CHALLENGES
RESPONDING TO CHALLENGES
Information & Analysis:• Analysis of trends, changes & factors affecting
transformation of agri-food systems;• Characterization & appraisal of structure of agro-
industries and value chains;
• Analysis & benchmarking to identify strategies for agro-industry &value chain development; and
• Development of information & knowledge management systems for A&A as well as small-scale producers and processors.
RESPONDING TO CHALLENGES
Enabling Policies, Institutions & Services:• Strategies for improving AA policies, legal and regulatory
frameworks, institutions & services;• Incorporation of AA strategies and actions into country-level
program frameworks & strategic plans for agricultural development;
• Reinforce communication & cooperation with PS firms, foundations and NGOs active in AA development;
• Reinforce compliance & certification systems for food safety standards and industry quality requirements;
• Reinforce market information services & financial institutions & services for market-oriented farmers and agro-enterprises; and
• Provide basic infrastructure to improve market access and reduce business costs.
RESPONDING TO CHALLENGES
Support to Agro-Industries & Value Chains:• Appraise market & agribusiness opportunities & develop sound
methods for prioritizing agro-industries & value chains;• Facilitate innovative arrangements linking smallholder farmers
with commercial farmers, exporters or agro-processing firms in long-term relationships
• Identify innovative micro-financing products that facilitate the participation of small farmers in agribusiness ventures;
• Design & implement initiatives that improve entrepreneurial capacities of smallholder farmers and small agro-enterprises to participate in value chains for high-value products, including branded and certified products; and
• Identify & use innovative mechanisms to link public funding with private sector resources.
Question
1) Explain the challenge face in ensuring the standard and regulation
been imitate?
2) The issues of falsify label in food product, describe the solution?