Mainstreaming agribusiness incubation for inclusive development

8 February 2012 NIABI 2112, New Delhi, India

Ralph von Kaufmann
UniBRAIN Facility Coordinator
Forum for Agricultural Research in
Africa

AgBIT - Zambia CAF - Mali CURAD - Uganda CCLEARr - Ghana IDPA - Uganda SVCDC - Kenya

MAINSTREAMING
AGRIBUSINESS
INCUBATION FOR
INCLUSIVE
DEVELOPMENT

MAINSTREAMING AGRIBUSINESS INCUBATION FOR
INCLUSIVE DEVELOPMENT
CONTENT
• Food price and security projections

• Why the African context matters to the world

• Dare to hope that Africa can and will respond

• An emerging African agribusiness incubator network

• What is needed to create an enabling environment
for agribusiness incubation and commerce

• Conclusions

FOOD PRICE AND SECURITY PROJECTIONS

INCULSIVE DEVELOPMENT

• FAO Indices March 2011 to
2010:
Food Prices (FFPI) + 37%
 Cereal Price Index + 60%
Dairy Price Index + 37%
• Oils/Fats Price Index nine months
consecutive rise
• Demand for animal source foods
and cereals will rise rapidly due to:
 increasing populations
rising incomes
 increased urbanisation


• The consequences of changing
demographics, world markets and
climate, etc. are:
• Hunger is most severe in
Africa, despite abundance of
human & natural resources
• Undernourishment is
responsible for 25,000 deaths
each day. Responsible for
stunting physically and
mentally in 150m children – the
fabric of national development
is impaired

DARE TO HOPE THAT AFRICA CAN AND WILL RESPOND
Africa accounts for:

• 1/5 of global land area (80 x the size
of Japan)

• 1/6 of world‟s forested area and
diverse ecologies (biodiversity)

• 1/4 of the world‟s arable land

• Huge deposits of important minerals

1/6 of global population (44% under 15 years in 2006)

• Comprehensive Africa Agriculture Development Programme
(CAADP) goal is 6% per annum increase in food production:
 to meet the needs of rapidly expanding populations
 achieve MDG 1 of halving extreme poverty and hunger
 while also ensuring environmental sustainability MDG 7
• The failure to meet these challenges will:
 fuel conflicts, swell the numbers of internally displaced
persons, increase economic migrants, threaten global security
and environmental stability
• The application of new knowledge (R&D) is required to achieve
Africa‟s vision for agriculture
• „D‟ i.e. The application of new knowledge depends on the private
sector and the private sector also does a lot of „R‟ research

CAADP encourages investments in agriculture in four mutually reinforcing
priority areas (pillars):

• Pillar I: Improving land and water management

• Pillar II: Improving rural infrastructure and trade-related
capacities for improved market access

• Pillar III: Increasing food supply and reducing hunger

Underpinned by:

• Pillar IV*: Agricultural research, technology development and
dissemination with crosscutting human and
Institutional capacity building

*FARA is the Lead Institution for CAADP Pillar IV


Conclusion

• Food production in Africa is
declining, the landscape is blighted
and efforts to bring about
improvements are doomed to failure

• WRONG!

• “ There are per capita problems in
keeping food production in line with
population growth, but there are
regions where over the last few
decades Africa has outperformed the
world and particularly Europe.” *

Figure 1. The usually quoted data Figure 2. less quoted data
Changes in per capita net agricultural production Changes in net agricultural production (1961-2007)
(1961-2007)

250 500

Asia
Asia

South America
South America

Food production (1961=100)
Per capita food production (1961=100)

400 Africa
200 World

World
Africa

North America

300 Europe
150

200
100

100

50

0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010


• 40 projects in 20 countries
involving 10 million farmers yields
roughly doubled over last few years

• But yield is only one measure e.g.
new sweet potato variety allows two
plantings per year

• The important point is that across
Africa, many efforts to innovate are
“working well”

• But more and better investment in
research and capacity
strengthening is needed to
accelerate innovation

AN EMERGING AFRICAN AGRIBUSINES INCUBATOR NETWORK

BANANAS ARE: NOT JUST BANANAS

THEY ARE ALSO:
VACCUUM PACKED MATOKE
CHARCOAL BRICKETTES
COOKING GAS
 WINE
 VINEGAR
 ROPE
BIODEGRADABLE PAPER BAGS
 AFORDABLE SANITARY PADS


UniBRAIN‟s development objective is:
• to contribute to enabling African
countries to create jobs and raise
incomes through sustainable
agribusiness development.
UniBRAIN’s Immediate Objective, which is
also its value proposition, is:
• to enable universities, business and
agricultural research institutions to
commercialise agricultural technologies
and produce graduates with
entrepreneurial and business skills
through agribusiness incubator
partnerships.

UniBRAIN’s objectives will be realised by:

Output #1: Commercialisation of agribusiness innovations
supported and promoted.

Output #2: Agribusiness graduates with the potential to
become efficient entrepreneurs produced by tertiary
educational institutions.

Output #3: UniBRAIN’s innovative outputs, experiences
and practices shared and up-scaled.

UniBRAIN agribusiness incubators
Agribusiness

(jobs –
UniBRAIN
CCLEAr
UniBRAIN
CURAD
Agribusiness
(jobs – wealth)
• The Consortium for enhancing University
wealth)
UniBRAIN UniBRAIN
Responsiveness to Agribusiness
IDBPA

Development (UniBRAIN-CURAD) focusing
SVCDC
Agribusiness
Agribusiness
(jobs –
wealth)
UniBRAIN UniBRAIN
(jobs – wealth)
on plantation cash crops Specific
value chain: Coffee
CAF AgBIT

•
Agribusiness

Agribusiness
(jobs – wealth)
(jobs – wealth)
The Incubation and Diversification of
UniBRAIN
Banana Products for Agribusiness
(UniBRAIN-ABP or Afri Banana) focusing
Global
Agribusiness
Malaysian
Agribusiness on staple food and cash crops Specific
Incubator
Incubator network

(GABI)
network
value chain: Banana
• The Sorghum Value Chain Development
Indian
agribusiness
Indian network
of Agribusiness
Incubators
Indian
agribusiness
Incubator
Consortium (UniBRAIN-SVCDC) focusing
Incubator
NIABI on smallholder dry land food grains
Specific value chain: Sorghum

• The Creating Competitive
Agribu sin ess
CCLE Ar
Livestock-bias Entrepreneurs in
Un iBRAIN Un iBRAIN
CURAD
Agribu sin ess
(jobs –
wea lt h )
Agribusiness (UniBRAIN-CCLEAr) (jobs – wea lt h )

Un iBRAIN
IDBP A focusing on Smallholder livestock Un iBRAIN
SVCDC
Agribu sin ess

(jobs –
wea lt h )
Specific value chain: Livestock Agribu sin ess

(jobs – wea lt h )

• The Innovative Centre for Agro-
Un iBRAIN Un iBRAIN
CAF AgBIT

Agribu sin ess
Agribu sin ess

forestry (UniBRAIN-CAF) focusing
UniBRAIN on agro-forestry products
Specific value chains: non-timber
Ma la ysia n
forestry products, cereals and
Globa l
Agribu sin ess
In cu ba t or net work
Agribu sin ess
In cu ba t or
n et work
fruits
(GABI)

• The Agri-Business Incubation
In dia n n et work In dia n
Trust (UniBRAIN-AgBIT) focusing
In dia n a gribu siness
a gribu siness
In cu ba t or
of Agribu sin ess
In cu ba t ors In cu ba t or
on tropical fruit Specific value
NIABI

chain: Mango


UniBRAIN CAF

UniBRAIN CCLEAr

UniBRAIN AgBIT

CREATING AN ENABLING ENVIRONMENT FOR AGRIBUSINESS
INCUBATION
JOHANNESBURG DECLARATION ON ENGAGING THE PRIVATE SECTOR IN
FURTHERING AFRICA‟S AGRIBUSINESS, FOOD SECURITY AND NUTRITION
AGENDA 19 OCT. 2011

• MINDFUL of the resolve taken by the members of the G8 Countries during their
2009 Summit in L’Aquila, Italy to develop the $20 billion L’Aquila Food Security
Initiative to take decisive action to free humankind from hunger and poverty through
improved food security, nutrition, and sustainable agriculture;

• AWARE that further engagement with and support of the private sector,
especially Africa‟s agribusiness and agricultural corporate community, is needed to
successfully implement the abovementioned public sector commitments and initiatives;

• CONSCIOUS of the on-going food crisis which has been characterised by a
continued rise in food prices, combined with intermittent food shortages, and climate
change effects that reduce food security and results 2 in increased malnutrition - as
currently manifested in drought in various parts of Africa, and famine in the Horn of
Africa;

INCUBATION
• RECOGNISING the importance that has been placed on
agriculture as a development catalyst on the African continent
towards achievement of the Millennium Development Goals

• NOTING the increasing efforts of private agribusiness
companies in Africa to work with small holder farmers and
expand their backward and forward linkages within national,
regional and international value chains;

INCUBATION
• ACKNOWLEDGING Africa‟s increasing
urbanisation, rapid economic growth, the fact that
the continent accounts for more than forty percent of
the world’s available arable land, increasing global
food security concerns, increasing global food
demand, and noting that these factors have spurred
increased private investment interest in Africa’s
agriculture sector;

• REALISING that a historically unique opportunity
exists to align the agricultural development agenda
of the African Union and its member states, with the
business expansion and market based opportunities
that are increasingly being pursued by the private
sector in Africa, including targeted public-private sector
collaboration to help improve nutrition amongst the
most vulnerable and to reduce structural deficiencies in
Africa’s food systems;

INCUBATION
HEREBY URGE the Public Sector to:

• Incorporate private sector stakeholders in
agriculture policy, design, development and
programme implementation efforts -
particularly to unlock private sector
investments in regard to the implementation
of CAADP investment plans and toward the
development of value chains for strategic
food commodities;

• Expand policy development efforts that
support transformation and value addition in
the agriculture and agribusiness sector;

INCUBATION

• Ensure that comprehensive efforts
are made to support the economic
development of rural populations, in
addition to providing them with
technical agriculture/agribusiness
support interventions;

• Promote increased public
investment in agriculture-supporting
infrastructure (e.g.
roads, electricity, warehousing, irrig
ation and distribution) to reduce
costs and increase the
competitiveness of agricultural
value chains

INCUBATION


• Redouble efforts to create a conducive
investment environment and to improve the
ease of doing business on the continent;

• Implement policies that help improve access
to finance within the agricultural/agribusiness
sector, especially for smallholders and small
and medium enterprises (SMEs);

INCUBATION
•Develop and promote inclusive economic growth strategies that
support the incorporation of small hold farmers into
local, regional and international agribusiness value chains;

•Encourage and guide bilateral and multilateral development
partners to support national and regional related efforts to
engage and develop the private sector in the agricultural and
agribusiness sector, particularly around national and regional
agribusiness value chains ;

INCUBATION

• Strengthen efforts to remove all barriers
to intra-African trade;

• Establish and engage in public private
dialogues and action-oriented platforms,
at the pan-African, regional and national
levels to further public private
partnerships and collaboration;

• Reinforce capacities to develop skills,
technologies and mind-sets that improve
and empower entrepreneurship and
productivity in food production,
processing and related agribusiness
activities;

INCUBATION
URGE the Private Sector to:

• Engage in public private dialogues and platforms, at the pan-
African, regional and national levels to explore and further public
private partnerships and collaboration;

• Expand inclusive business models to create new jobs and income-
generating opportunities within the agribusiness/ agriculture sector;

• Review the AUC agribusiness and agricultural regional
development programmes (e.g. CAADP Pillar II, ACTESA, 3ADI,
AIDA) to explore areas of potential alignment, collaboration, and
investment with these national and regional value chain
development initiatives;

MAINSTREAMING AGRIBUSINESS INCUBATION FOR INCLUSIVE
DEVELOPMENT
CREATING AN ENABLING ENVIRONMENT FOR AGRIBUSINESS INCUBATION
URGE the Private Sector to:

• Engage with the African public sector through sustained dialogue to see how
best policy makers, regulators and administrators can support private sector led
efforts to establish agribusiness corridors, incubation facilities, aggregation and
market centres, regional growth clusters, processing facilities and zones, and
export programmes;

• Accelerate efforts to mobilize private capital in support of value chain
development, along with important technical assistance to improve smallholders
and SME’s capacity to produce quality products in a timely manner; and

• Promote capacity development, technology transfer and innovation, including the
expansion of shared risk financial facilities, mobile money solutions, cellular
communications applications, and improved storage and transport capacity;

INCUBATION
URGE the Public and Private Sector
jointly to:

• Support the development of the African
food industry through inclusive market
and value chain development;

• Pool financial and technical resources
to establish more finance facilities that
support agribusiness development,
particularly among SMEs and small
holders;

• Accelerate efforts to collaborate to
increase food production to meet the
continent’s growing demand;

INCUBATION

• Develop local, market based food nutrition solutions that support small
farmers and leverage available resources to make a sustainable impact
in reducing hunger and poverty;

• Support follow-up activities of key agribusiness development
stakeholders, such as the United Nations Development Programme’s
(UNDP) African Facility for Inclusive Markets (AFIM) - as a regional
platform to support inclusive market development in Africa, in
collaboration with other UN agencies and other development partners

INCUBATION
REQUEST Africa‟s Development Partners to:

• Increase the resources deployed and programmes initiated to support
inclusive private sector development in Africa in the agriculture, agri-food
and agribusiness sectors and related value chains,

• Increase support for catalytic financing mechanisms and matching grant
facilities to promote the development of inclusive models and inclusive
markets; and 3. Advance development effectiveness by working
collaboratively and in an aligned and coordinated manner with African
recipients of development resources.

This Declaration was adopted by the High Level Public Private Dialogue on
Engaging the Private Sector in Furthering Africa’s Agribusiness and Food
Security Agenda on 19 October 2011.

INCUBATION
Putting the New Vision for Agriculture into Action:
A Transformation Is Happening
A report by the World Economic Forum’s New Vision for Agriculture initiative
Prepared in collaboration with McKinsey & Company

MAINSTREAMING AGRIBUSINESS INCUBATION FOR INCLUSIVE
DEVELOPMENT
CREATING AN ENABLING ENVIRONMENT FOR AGRIBUSINESS INCUBATION
• Element 3: A Concrete Investment and Entrepreneurship Pipeline

• A lasting agriculture transformation is one that is ultimately supported by real
market forces. Bringing new and existing innovations into the system requires
market stimulus to induce potential entrepreneurs and investors to take on a
defined set of initiatives.

• Transformation leaders need to define ―bankable‖ investment opportunities across
the chain, including their location, value and size — farms and nucleus farms,
distribution, processing, inputs and supporting services, out-grower schemes, and
aggregation mechanisms – to drive farmer competitiveness and link them to the
market.

• Best practice transformations engage the right groups and organizations to
participate in these opportunities, and the incentives to motivate them. Who would
be the likely people or organizations to drive breakthrough solutions? Who will be
our entrepreneurs, and how will they aggregate, leverage and empower the target
region’s smallholders in a fair and efficient

INCUBATION

Growing out of poverty: A UK Parliamentary Inquiry into supporting and
developing African agriculture, on behalf of the All Party Parliamentary
Group on Agriculture and Food for Development

FOCUS ON THE PRIVATE SECTOR
• Farmers are entrepreneurs, and by partnering with companies they can
get the access to the markets, financing and technology they need.
Chengal Reddy, co-chair of the Indian Farmers and Industry Alliance

• Business can help transform agriculture, but we can’t do it alone...by
working collaboratively with farmers, governments and others, we can
achieve our common goals of increasing health and prosperity while
protecting the planet.
Paul Polman, CEO Unilever

INCUBATION

Patient capital makes markets work for the poor by balancing
seemingly competing aims: it is an investing approach with long
time horizons; it’s about building systems that encourage –
indeed demand – real, sustained, and honest engagement with
low income people as active participants; it uses markets not to
maximise profits but as a listening device, because when
someone has the choice to pay for a product (even at a
subsidised price) she has the chance to have a say about what
she desires, what she feels is worthwhile, what she does and
does not want.
Jacqueline Novogratz, Acumen Fund

Mainstreaming agribusiness incubation for inclusive development

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