fostering transition in the agribusiness sector sam fankhauser director for policy studies and...
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Fostering Transition in the Fostering Transition in the Agribusiness SectorAgribusiness Sector
Sam FankhauserSam Fankhauser
Director for Policy Studies and Sector StrategyDirector for Policy Studies and Sector Strategy
Office of the Chief Economist - EBRDOffice of the Chief Economist - EBRD
Berlin, 4 May 2006Berlin, 4 May 2006
OverviewOverview
1. The EBRD Agribusiness Portfolio- Commitments, regions, segments
2. EBRD’s Approach: Transition Impact- Methodology and selected investments
3. The Way Ahead- Achievements and remaining challenges
● Overview о Portfolio о EBRD approach о The way ahead о Conclusions
1. EBRD’s Agribusiness Portfolio1. EBRD’s Agribusiness Portfolio
62
101
273
232
352
298
409
481
324
425
150
207
0
50
100
150
200
250
300
350
400
450
500
94 95 96 97 98 99 00 01 02 03 04 05
EBRD annual commitments in Agribusiness 1994 - 2005 (million EUR)
Regional Projects
18%Early and
Intermediate35%
Russia28%
Advanced countries
19%
Distribution & retail
Edible oil
Food manufacturing
Commodity programmes
Food packaging
Other
о Overview ● Portfolio о EBRD approach о The way ahead о Conclusions
Source: EBRD 2005
2. Transition Impact in Agribusiness 2. Transition Impact in Agribusiness projectsprojects
Structure and Extent of Markets– Competitive pressure
– Market expansion
Markets Institutions and Policies– Private sector participation
– Institutions, laws and policies
Market-based Conduct, Skills and Innovation– Transfer and dispersion of skills
– Demonstration effects
– Corporate governance and business conduct
о Overview о Portfolio ● EBRD approach о The way ahead о Conclusions
Selected investments: Structure and Selected investments: Structure and extent of marketextent of market
о Overview о Portfolio ● EBRD approach о The way ahead о Conclusions
Bunge (Ukraine) EUR 43.8 million working capital
loan to finance seasonal purchases of sunflower seed
Bunge is the world’s largest oilseed processor, with sales of US$ 25 billion.
DOEP edible oil plant producing branded bottled refined sunflower oil with a leading market position in Ukraine and Russia.
TRANSITION IMPACT: Increase in competition in the edible oil crushing sector, market expansion through upward linkages to farmers by providing physical inputs and training
Selected investments: Market Selected investments: Market institutions and policiesinstitutions and policies
Frikom (Serbia Montenegro) EUR 10.1m long-term debt
facility One of the good examples of
regional expansion of key local players
Supports local farmers - increased demand of quality inputs including vegetables and milk
о Overview о Portfolio ● EBRD approach о The way ahead о Conclusions
TRANSITION IMPACT: supporting the recent privatisation of the largest frozen food manufacturer in Serbia Montenegro
Selected investments: Market-based Selected investments: Market-based conductconduct
о Overview о Portfolio ● EBRD approach о The way ahead о Conclusions
Marbo (Regional)
• EUR 10m long-term debt plus EUR 3m follow-on
• One of Serbian success stories in the agribusiness sector
• Constant capacity increase which leads to increased demand of quality potatoes
TRANSITION IMPACT: improvements in corporate governance
None
Minimal
Moderate
Significant
Very significant
0
1
2
3
4
Est
on
ia
Hu
ng
ary
Kyr
gyz
Rep
.
Lat
via
BiH
Bu
lgar
ia
Cze
ch R
ep.
Geo
rgia
Lit
hu
ania
Po
lan
d
Ro
man
ia
Cro
atia
Ru
ssia
Kaz
akh
stan
Ukr
ain
e
1991-2000 2000-2005
о Overview о Portfolio о EBRD approach ● The way ahead о Conclusions
EBRD’s impact on Agribusiness
3- How have we done so far?3- How have we done so far?
Source: TIR
Determinants of performanceDeterminants of performance
Country’s reform progress Resource allocation (EBRD staff hours) Synergies with IFIs /donors (e.g., SEE, EU, FAO) Additionality constraints (especially CEB) Article 1 constraints (BL, TU, UZ)
о Overview о Portfolio о EBRD approach ● The way ahead о Conclusions
What’s left to do in the sector? What’s left to do in the sector?
0 1 2 3 4
CEB
SEE
CIS
Structure Institutions Conduct
= negligible = small = medium = large
о Overview о Portfolio о EBRD approach ● The way ahead о Conclusions
Average size of the remaining challenges
Source: ATC
Concluding remarks: remaining Concluding remarks: remaining challengeschallenges
о Overview о Portfolio о EBRD approach о The way ahead ● Conclusions
CE
B
Development of active land markets Promote farm restructuring and rural developmentDevelopment of market-based food distribution/packaging ind.Restructuring of some of the remaining state-owned enterprisesPromotion of new agricultural finance schemes
SE
E
Land privatisation and farm restructuring Privatisation and restructuring of agro-processing companies and
development of related services (retail, distribution, packaging) Appropriate financial schemes for agriculture, including improved
collateral services
CIS
Land privatisation and farm restructuring; Development of agibusiness and related services (such as retail
and packaging) Provision of credit to the agricultural sector
Source: ATC
Fostering Transition in the Fostering Transition in the Agribusiness SectorAgribusiness Sector
Sam FankhauserSam Fankhauser
Director for Policy Studies and Sector StrategyDirector for Policy Studies and Sector Strategy
Office of the Chief Economist - EBRDOffice of the Chief Economist - EBRD
Berlin, 4 May 2006Berlin, 4 May 2006