Strengthening Agricultural and Market Value Chains

Transcription

1 Strengthening Agricultural and Market Value Chains by Chuma Ezedinma UNIDO-Regional Office-Nigeria November

2 Agriculture/Market Value Chains Agriculture value chains empowers farmers to shift from subsistence farming to an entrepreneurial business, it gives them the tools they need to take ownership of the process and build sustainable markets. Market-oriented agriculture encourage farmers to invest in their fields in order to increase yields while decreasing production costs. The input value chain encompasses those involved in the steps leading up to the harvest. These include agro-dealers, who sell farmers agro-inputs and provide information on their use or producer organizations that help farmers learn more effective farming techniques. The output value chain encompasses all the steps that an agricultural product takes, from its point of origin to the consumer. 2

3 Typical organizational Value Chain models Model Driver of organization Rationale Producer-driven (Association) Buyer-driven small-scale producers, especially when formed into groups such as associations or cooperatives large scale farmers. processors; exporters; retailers; traders, wholesalers and other traditional market actors. access new markets; obtain higher market price; stabilize and secure market position. assure supply; increase supply volumes; supply more discerning customers meeting market niches and interests. Facilitator-driven Integrated NGOs and other support agencies; MARKETS, IFAD, etc national and local governments. lead firms; supermarkets; multi-nationals. make markets work for the poor ; regional and local development. new and higher value markets; low prices for good quality; market monopolies 3

4 1. Value Chain: Improving Coordination, Cooperation and Efficiency

5 Farmer Cooperation in Agricultural Production With too many small scale farmers at the agricultural production level, cooperation is key to improve marketing power 5

6 US$/ton 2. Cost Reduction Strategies at the Farm Level: Example in Cassava Production % 13.6% 11.6% 27.9% 40.5% 29.4 Traditional system 25.4 Improved varieties 26 Mechanized planting 21.2 Mechanized planting and harvesting 17.5 Mechanized planting &harvesting &improved varieties Use of Improved inputs and mechanization is the key to improve efficiency at the farm level

7 3. Improving Value Chain Financing

8 Buyer Driven Model Commercial Banks /Financial institutions prefer to support small farmers where the market risks can be controlled 9

9 Ware House Receipt Model 10

10 Regional Office Nigeria 2015 Retreat 4. Innovative Financing is key to growth in modern agro food value chains Significant gaps in financing systems Financing working and investment capital for input supply, non-farm assets, and industrial property has to be at core of financing agenda for industrial development Multiple financial products to meet emerging needs e.g. timeliness, low cost (< 5%) and long term (15 20 year) loans for internal and external infrastructure development in agro industrial parks Strengthen risk assessment and lending criteria Adopt modern technological innovations to improve financing services 11

11 Using ICT to improve Agricultural Financing Abara Obodo 9. Nsukwa. 2. Abudu 10. Onicha Ugbo 3. Afor Ozoro 11. Onuobo 4. Edum Afor 12. Oyoko 5. Igbesi 13. Utenim 6. Iselle-Uku 14. Ebelleh 7. Koko Junction 15.Ogwashi-Uku 8. Nkwo Uromi 16. Ukokpo Agbor 6 20% 40% 7 Asaba 10% Onitsha 8 40% M-PESA, originally designed as a system to allow microfinance-loan repayments to be made by phone, reduces the costs associated with handling cash and making possible lower interest rates. It has been broadened to become a general money-transfer scheme in Kenya Umunede 70% No. Market Name Agbor Asaba Umunede 1. Abara Obodo 25% 25% 50% 2. Abudu 20% 20% - 3. Afor Ozoro 50% Edum Afor 30% 10% 40% 5. Igbesi 30% 20% 50% 6. Iselle-Uku 100% - 50% 7. Koko Junction 30% 20% 20% 8. Nkwo Uromi 30% 20% 50% 9. Nsukwa. 20% 30% 40% 10. Onicha Ugbo 20% - 40^ 11. Onuobo 40% Oyoko 20% 10% 30% 13. Utenim 20% 20% 40% 14. Ebelleh - 20% 30% 15. Ogwashi-Uku - 10% 60% 16. Ukokpo - 30% 50%

12 Marketing Marketing is a business function that identifies consumer needs, determines target markets and applies products and services to serve these markets. It also involves promoting such products and services within the marketplace. Marketing is integral to the success of a business, large or small, with its primary focus on quality, consumer value and customer satisfaction. The "Marketing Mix" Strategy is a tool made up of four variables known as the "Four P's" of marketing. Products are the goods and services that your business provides for sale to your target market. In developing a product consider quality, design, features, packaging, customer service and any subsequent after-sales service. Place is in regards to distribution, location and methods of getting the product to the customer. This includes the location of the business, shop front, distributors, logistics and the potential use of the internet to sell products directly to consumers. Price concerns the amount of money that customers must pay in order to purchase your products. There are a number of considerations in relation to price including price setting, discounting, credit and cash purchases as well as credit collection. Promotion refers to the act of communicating the benefits and value of your product to consumers. It then involves persuading general consumers to become customers of your business using methods such as advertising, direct marketing, personal selling and sales promotion. 13

13 Branding and Packaging are important

14 Market Information: Strengthening Value Chains with ICT Using ICT to improve access to markets 15

15 Impact of ICT Mobile Phones Reduces logistics and transportation costs. Farmers obtain the latest information with a phone call instead of making a long trip to a market. Helps in collection, aggregation and delivery. Improves negotiation power. Farmers increase their power to negotiate, particularly with traders, based on their ability to understand pricing in multiple markets, to cut out intermediaries, and to sell directly to larger-scale buyers. More sophisticated marketing plans based on price information. For example, farmers can modify the date of marketing, product permitting, or switch to alternate markets, transport and regulation permitting. Broader and deeper networks. Farmers communicate by phone with traders and farmers outside of their immediate geography as opposed to making a physical trip. The ability to communicate more easily and to triangulate information creates deeper trust in key trading relationships. Innovative partnerships. partnerships are facilitated and built among groups of producers, or by virtue of direct communication with corporations and traders, or through the ability to supply product based on just-in-time and/or quality needs. Informed use of inputs. Farmers can identify sources of inputs, obtain them more cheaply, and are better able to buy and apply them at the optimal times. Improves farm business management through better information about which inputs to use, new knowledge about grades and standards for produce, and increased interaction with corporations, traders, and other farmers. Need to improve the Growth Enhancement Support (GES) Scheme and the E-Wallet System

16 The Challenge to Agribusiness Sector Development 72% 56% 55% 53% Existing and intending Agroindustrialists blame poor access to Infrastructure, Finance, Secure Feedstock Supplies and exacting Operational Environment 45% 39% 28% 24% 19% 5% Infrastructure Financing Securing Supplies Policy & Regulatory Environment Human Capital Governance Information & Communication Land Government Coordination Competitive Environment Note: Data from 75 investors; 1 Respondents have cited all challenges that are applicable to them 17

17 Agro Industrial Clusters:. a new agricultural investment framework To stimulate private sector investments to drive a market-led agricultural transformation Shift agriculture from government controlled to private sector led Transform the agricultural financial landscape Channel investments in infrastructure and services Strengthen the policy and investment climate

18 SCPZ Delineated area, typically 250 ha., dedicated to driving the facilitation of modern processing capacity ABIR The immediate SCPZ production neighborhood, typically km radius, constitutes the host communities critical to ensuring adequate feedstock supplies 19

19 Business Plan Description Focus crop Additional crops Raw materials required for the SCPZ Growing area required Total area of SCPZ Rice Beans, Cassava, Cocoyam, Maize, Melon, Groundnut and Yam 638,424 MTPA 137,745 hectares hectares SCPZ Internal Infrastructure Details Length of road Total average water demand Wastewater generation MSW generation Power demand 13.72km 5,626 cum/day 3, cum/day 56.91TPD 56.66MVA Combined SCPZ Development Investment Opportunity 1 Investment Opportunities Initial Combined Investment Combined Investment Over Four Years Profit After Tax Site Management: Utilities, roads, and agro-specific infrastructure Power: Bioenergy and distribution Water: Well and pump house, pumping and treatment, and distribution $27.71 million $48.81 million IRR 20.97% Payback Period Year 1: $11.8 million Year 2: $7.9 million Year 3: $6.1 million 4 years

20 Agro Industrial Corridors: Transform the agricultural landscape 21

21 Brings Additional Players into the Value Chain 1 Site/Estate/Infrastructure Investors? Finance 2 Industrialist/Agro Processors Land Devt/Alloc 3 Farmer Coops/Companies Ease of Doing Business 4 Service Providers Ease of Doing Business indicators Starting a Business Dealing with Construction Permits Getting Electricity Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Resolving Insolvency 6 5 Government (Federal, State, LG) Development Partners

22 Building Trade Capacity Three key problem areas that require specialized assistance to enable the expansion and competitiveness of exports from Nigeria: The lack of marketable products for exports; The lack of capacity to conform to international standards; The lack of information on rules of trade, markets and procedures to connect with export markets. The 3 Cs that enables a country to Compete, Conform and Connect. Products to Markets Develop Competitive manufacturing capability Prove conformity with Market Requirements Connect to the Market Compete Conform Connect...by upgrading supply capacities and standards infrastructure Strategic partnerships with international standards measurement and accreditation bodies: International Organization for Standardization (ISO), International Laboratory Accreditation Cooperation (ILAC), International Accreditation Forum (IAF), International Bureau of Weights and Measures (BIPM), International Organization of Legal Metrology (OIML). 23

23 Regional Office Nigeria 2015 Retreat NATIONAL QUALITY INFRASTRUCTURE & INTERNATIONAL LINKAGES Metrology Certification National Quality Infrastructure Testing Standardization Accreditation CODEX 24

24 5 Key Areas Regional Office Nigeria 2015 Retreat 1. Assistance for the promulgation of a National Quality Policy (NQP) and improvements in ensuing legislation for the NQI 2. Establishment of a National Accreditation Body (NAB) and Capacity development for accreditation auditors 3. Establishment of a National Metrology Institute (NMI) 4. Improved Private sector capacity to create and support conformity assessment bodies (CAB) in the NQI Program 5. Extend the use of the NQI services through awareness activities and better trained NQI s workforce. 25

25 Developing SPS Compliance Developing SPS compliance infrastructure involves the following: Help frame legislation and regulations for SPS compliance. Introduce the new ISO for food safety management. Creating a Competent Authority with enforcement power to monitor producers and players in the value chain to ensure conformity to standards. Develop traceability systems that enable authorities to trace problems in exported products through the value chain. Establish or upgrad microbiological/chemical and metrological laboratories with international accreditation for SPS testing. Set up support services with CODEX Alimentarius Committees and a SPS Enquiry Point. Set up national or regional technical support centres for expert assistance to laboratories, government officials, producers and processors. 26

26 Thank You 27