Improving competitiveness in South East Europe's food and beverage sector

Next Generation Competitiveness InitiativeFirst Meeting of the Food and Beverages Processing Expert Group

Paris, March 4th 2014

With the financial assistance of the European Union

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Agenda

Provide project context and explain NGCI

Propose and explain methodology

Adopt mandate for the Food and Beverages Processing Expert Group

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Decide on work plan and key activities for 20144

The Organisation for Economic Co-operation and Development (OECD)

The OECD is an international organisation with 34 member countries:

• USA, Canada, Japan, Australia, New Zealand, Europe (20 of EU-28, Switzerland, Norway, Iceland)

• Chile, Mexico, Israel, Korea, Turkey

…and a growing number of key partners

• Brazil, Russian Federation*, India, Indonesia, China, South Africa, Colombia*

totaling more than 80% world GDP and 64% of the world’s population.

The OECD’s mission is to promote policies that will improve economic and social well-being

*in accession process

Who we are Sharing of good policy practices, peer review and policy dialogue in:

• Anti-corruption• Competition and Financial markets• Corporate governance• Development• Economic growth• Education• Environment• Employment and labour markets• Governance• Health and social care• Industry and Entrepreneurship• Investment• Private Sector Development• Regional, Urban and Rural development• Science, Technology and Innovation• Tax policy• Trade, etc.

Setting international standards on domains ranging from agriculture and tax to the safety of chemicals

What we do

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The OECD Investment Compact for South East Europe

Objectives

Geographical coverage

To support governments of the region to improve their investment climate and foster private sector development

Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo*, FYR Macedonia, Republic of Moldova, Montenegro, Romania and Serbia

* This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the ICJ Opinion on theKosovo declaration of independence. Hereafter referred to as Kosovo.

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Ministerial Conference

SEE 2020 Vision

Regional working groups:

• Innovation• Human

capital• Competitivene

ss

Regional Competitiveness Initiative pilot projects

EDIF Triple Helix Partnership projects

Competitiveness Outlook

SME Policy Index

Next Generation Competitiveness Initiative sector component

SEE 2020 national policy prioritisation

Political support

Policy dialogue

Policy assessment

Policy prioritisation

Support for implementatio

n

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The Next Generation Competitiveness Initiative (NGCI)

Funding and implementation

• Project funded by the European Union• Implemented by the OECD Investment Compact

Geographical coverage

Albania, Bosnia and Herzegovina, Croatia, Kosovo*, FYR Macedonia, Montenegro and Serbia

Objectives

• Enhance competitiveness by addressing key constraints to growth in high-potential sectors

• Foster co-operation across the SEE region• Support enhanced value creation

Rationale for a sector focus

• Allows to generate greater interest and involvement from the private sector

• Useful approach to understand obstacles to doing business

• With limited resources, a sector-specific approach can have impact 5

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The NGCI sector work encompasses five project steps

Identification of high-potential sectors for

further analysis

Initial sector analysis and identification of

policy barriers to sector development

Development of policy recommendations to foster sector development

• Analysis of main economic sectors regarding:- Economic

attractiveness (turnover, growth, employment, exports, RCA, FDI)

- Potential for regional co-operation (supply chain complementarities)

- Potential for increasing value added (patents, innovation clusters)

Outcome:• 2 high-potential sectors

selected: Food and Beverages Processing; Tourism

• Initial analysis of priority sectors

• Identification of strengths, weaknesses, opportunities and threats

• Identification of growth constraints and prioritisation of policy barriers

Outcome:• Prioritisation of policy

barriers to sector development

Addressing policy barriers to sector development• Review of international good practices

addressing priority policy barriers• Development of recommendations

Increasing value added• Development of strategy to increase value added• Development of recommendations to transfer key

competencies from declining sectors to FBP

Regional integration of selected (sub-)supply chains• Development of strategy to better link selected

sub-supply chain stages in SEE region• Development of strategy to better tap synergies

across selected supply chains

Outcome:• Development of action plan and definition of pilot

actions for three workstreams

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The Food and Beverages Expert Group (FBEG) as the high-level forum for guiding and supporting the work effort

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Current/future work focus

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In light of their development potential, SEE Food and Beverages Processing as well as Tourism have been chosen for the NGCI Sector Work

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SectorsTurno

verEmployt.

Exports

RCA

World

growth

FDI

VC complem

.*

Patents

Clusters

Basic metals XXX XX XXX X XXX XX XX XX X

Chemicals inc. Pharmaceuticals XXX XX XXX XX XXX XX X XXX X

Coke, petroleum XX X XXX XX X XXX X X

Electrical machinery XX X XX XXX XX XX X XX XX

Fabricated metal products XXX XXX XX XXX XXX XX XX X XX

Food, beverages and tobacco XXX XXX XXX XXX XXX XXX XX XX XXX

ICT manufacturing X X X X X X X XXX

Machinery and equipment nec X XX XX XX XX X X XXX X

Motor vehicles, trailers X X X X XX XXX X XX

Rubber and plastics XX XX XX X XXX X X X

Textiles, apparel and leather XX XXX XXX XXX X XXX X X XXX

Wood and wood products X XX X XX X X XX XXX

Travel/ tourism XXX  XXX  XXX XXX X XXX  XX XXX

ICT (services)     X X XXX     X XX

* There are 2 crosses when SEE economies cover at least 2 stages of the supply chain Sector performance/potential among all SEE sectors XXX= top third; XX= middle third; X=bottom third

Selected results from the analysis

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Example Ukraine – to improve access to finance for agri-business SMEs a credit guarantee scheme is being created

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TARGETING

PARTNERNSHIP

PRICING

RISK MANAGEMENT

What is the objective of the scheme?

Who does the scheme target?

How to identify partner banks?

How to cover administrative costs?

How to assess risks?

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• Objectives• Financial Sustainability

• Identification of partner banks

• Identify relevant segments• Eligibility criteria

• Link to risk• Average fees

• Coverage ratio• Payment• Monitoring

MISSION

SHORT TERM ACTIONS

OPERATIONS AND GOVERNANCE

How to set up, run and supervise the scheme?

• Supervision• Roles6

MEDIUM TERM DIRECTIONS

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Credit guarantee scheme currently

being imple-mented

by Ukrainia

n National

Bank

Increasing focus on

sub-supply chains for

specific work

streams (e.g.

regional supply

chain inte-gration)

• Retail services

The FBEG work effort will cover the entire food and beverages processing value chain with a focus on food and beverages processing

Farm InputsFarming and production

First Processing

Second Processing

Third Processing

Distrib. and retail

• Feed suppliers

• Veterinary services

• Commercial farms

• Individual farms

• Cooperatives

• Retailers• Food services

• Export

Simpl. value-chain

Examp. of

Actors

Primary Focus: Processed foods and beverages

Sources: National Analytical Center (NAC) Kazakhstan, KazAgroMarketing, OECD analysis

• Genetics, breeding stock

• Medicinery

• Supplies

• Farm equipments/ machines

• Fertilisers

• Production of grain

• Production of fruit and vegetables

• Poultry, beef, pork, sheep meet

• Production of raw milk

• Flour production

• Syrop production

• Fresh and refrigerated meat

• Fresh milk

• Pasta, Bread

• Beverages

• Steaks

• Milk powder and yogurt

• Glucoses and fermented products

• Meat based meals

• Cheese, butter, Ice creams

Examp. of

products

• Food Processors• Food Processor

s

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Illustrative

• Identifying challenges and policy barriers to competitiveness of SEE food and beverages processing sector

• Developing policy recommendations and pilot-scale actions to improve competitiveness of food and beverages processing sector

• Reviewing and developing sector-specific measures in food and beverages processing in context of SEE 2020 Strategy implementation

• Formulating sector-specific recommendations and action plans addressed to policy makers in SEE region

Mandate of the SEE Food and Beverages Processing Expert Group

• FBEG to consist of two representatives from public administration and two private sector representatives from each SEE economy

• Public administration representatives to encompass official participating in SEEIC Working Group on Competitiveness and representative of Ministry in charge of food and beverages processing

• Private sector to be represented by sector-specific associations/clusters and company representatives

• FBEG to invite other regional partners, organisations and stakeholders to attend the meetings

Tasks Composition

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For approval

• SEEIC to co-chair the FBEG meetings

• RCC Secretariat and OECD IC to jointly prepare meetings of FBEG

• FBEG Co-Chairs to prepare minutes of the meetings

• FBEG, with agreement of SEEIC, to set up sub-groups to examine specific questions

• FBEG to meet two times annually

• FBEG established for duration of two years

Organisation & Reporting

Upcoming activities for the FBEG – your involvement is essential

Q1 2014 Q2 2014 Q3 2014 Q4 2014

Key

activ

ities

Key

mee

tings

1st meeting of the FBEG: barriers to sector development – 4 March

2nd meeting of the FBEG: increasing value added in food and beverages processing – beginning of July

3rd meeting of the FBEG: validation of key recommendations + pilot projects – mid November

Initial analysis of the food and beverages processing sector

Identification and prioritisation of barriers to sector development

Development of strategy to transfer competencies from slow-growing segments of the SEE economies to the food and beverages processing sector

Review of international good practices in addressing barriers to sector development

Development of recommendations addressing key barriers to sector developmentProposal for pilot projectsIdentification of

levers for creating synergies with other supply chains

Identification of levers for creating synergies between different food and beverage sub-supply chains

Proposal for pilot projects

Development of strategy to increase value added in FBP

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Explorative surveys involving FBEG

• OECD to reach out to FBEG to participate in explorative surveys

• FBEG to leverage individual networks to involve additional experts in to explorative surveys

Explorative online surveys using Futurescaper to:

• gather expert input from larger groups and tap into knowledge networks

• facilitate expert interaction to identify levers for value creation and supply chain integration

• prioritise and rank recommendations to maximise impact

• create visual summaries of expert inputs and recommendations

Explorative surveys will be supported by an interactive online tool requiring the FBEG’s involvement

Futurescaper question based online platform - Example

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!

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• Identification of strengths, weaknesses, opportunities and threats in the SEE food and beverage processing sector

• Identification of main barriers to the development of the SEE food and beverage processing sector

• Agreement on next steps

Further objectives of this meeting