Fourth FAO private sector partnerships

dialogue

Rome, Italy 14 October 2015

Meeting Proceedings

F o u r t h FAO private sector partnerships dialogue – Rome, 14 October 2015

Contents

Acronyms ...................................................................................................................... 4

Executive Summary ..................................................................................................... 5

Morning Meeting with the Director General ............................................................... 9

Session I - Public-private collaboration for agricultural investment mechanisms

in the context of the RAI ............................................................................................ 15

Session II - Innovations in agricultural finance: bridging financial institutions with

value chain actors ...................................................................................................... 20

Plenary Ending Session ............................................................................................ 26

Annexes ...................................................................................................................... 29

Annex I: Meeting agenda ........................................................................................................ 29

Annex II: List of participants to the plenary session ................................................................. 31

Annex III: List of participants to the parallel sessions................................................................ 36

Annex IV: Discussion Guides for the Parallel Sessions ........................................................... 37

4 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015

Acronyms AGS: Rural Infrastructure and Agro-Industries Division (FAO) CAM: Crédit Agricole du Maroc CFS: Committee on World Food Security CFS-RAI: Principles for Responsible Investment in Agriculture and Food Systems DFI: Development Finance Institution EBRD: European Bank for Reconstruction and Development EST: Trade and Markets Division (FAO) FAO: Food and Agriculture Organization of the United Nations FDI: Foreign Direct Investment IAWG: Inter-Agency Working Group IFC: International Finance Corporation IFIF: International Feed Industry Federation JICA: Japan International Cooperation Agency MoU: Memorandum of Understanding NRC: Climate, Energy and Land Tenure Division (FAO) ODA: Official Development Assistance OPC: Office of Partnerships, Gender, Advocacy and Capacity Development (FAO) PSP: Private Sector Partnerships Team SDGs: Sustainable Development Goals TA: Technical Assistance TAF: Technical Assistance Facility TCI: Investment Centre (FAO) VGGT: Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security

5 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015

Executive Summary This report summarizes the 4th FAO private sector partnerships dialogue, which was jointly organized by the Office for Partnership Advocacy and Capacity Development (OPC) and the Rural Infrastructure and Agro-Industries Division (AGS). The title and main theme of the event was ‘’Inclusive finance and investment models in agriculture”. The Dialogue took place at FAO Headquarters in Rome, on October 14 2015. The event was extremely well attended and resulted in concrete points of actions on future collaboration modalities between FAO and the private sector. Participants: The event gathered around 100 private sector representatives from an array of food and agribusiness companies, as well as financial sector enterprises and producer organizations. This represented a notable increase from the previous year’s meeting. See Annex I for the complete list of participants. Methodology: The Dialogue opened with a private sector meeting with the Director General, in which private sector representatives were invited to present examples of their collaborations with FAO, and engaged in a debate on partnerships modalities and opportunities. The meeting was followed by two parallel sessions on: i) Public-private collaboration for agricultural investment mechanisms in the context of the RAI1, and ii) Innovations in agricultural finance: bridging financial institutions with value chain actors, in which panelists engaged in technical debate on the themes of focus. Afterwards, a plenary ending session recapped the main findings from the parallel discussions. See Annex II for the complete agenda. Material: The following additional documents were prepared for the dialogue: • Background Paper to the 4th FAO Private Sector Partnerships Dialogue, prepared by the Agribusiness and Finance Group of AGS. The complete paper can be found at http://www.fao.org/3/a-az567e.pdf • Discussion Guides for the Parallel Sessions, prepared by the Agribusiness and Finance Group of AGS. The documents can be found in Annex IV Main Findings The morning session (‘’Private sector meeting with the Director-General’’) saw representatives of FAO private partner companies giving an overview on their collaboration models with the organization. Selected participants were also invited to express their perspective on issues related to inclusive finance and investment models. The main conclusions of the parallel and the plenary ending sessions are outlined hereunder: Parallel Session I – Public-private collaboration for agricultural investment mechanisms

in the context of the RAI Session I was an extremely productive and interactive discussion between all participants. Participants made significant observations on potential areas of expanded FAO intervention, as well as broader comments on their business activities and experiences on the field. It was agreed by all that FAO has a major role to play in facilitating public-private dialogue for inclusive investment, for example in terms of technical assistance and governmental advisory services. The massive growth of impact investing in recent years was also noted as an important contributing factor for agricultural development. The main issues discussed were:

1 The CFS Principles for Responsible Investment in Agriculture and Food Systems (CFS-RAI) were approved by the Committee on World Food Security in 2014. They are the result of an inclusive consultation process, engaging a wide range of different stakeholders. The Principles address all types of investment in agriculture and food systems and in the production and processing spheres. They provide a framework that all stakeholders can use when developing national policies, programmes, regulatory frameworks, corporate social responsibility programmes, individual agreements and contracts.

6 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 • The difficulty in obtaining capital investment for post-production processes is a main

constraint for smaller agribusinesses in developing contexts. Without proper investment in value- adding technologies, agribusinesses can only produce unprocessed raw commodities which are exposed to price fluctuations and high volatility. Investments in value addition are also important to increase inclusiveness levels, as they unlock current bottlenecks among smaller agribusinesses which prevent purchases from smallholder families.

• Technical assistance and capacity development programs are among the most useful

services that FAO can offer to investee companies in developing countries, to attract further investment and enhance their developmental impact. The use of Technical Assistance Facilities (TAFs) for agricultural investment funds represents a notable example in this regard.

• The complexity in governments’

structures can greatly constrain private investors’ initiatives, due to the difficulty in understanding and interacting with relevant public entities that shape the enabling environment for investments. As a public-private intermediator, FAO can play a strong role in fostering coordination within governmental entities for a more effective dialogue with private sector.

• Impact investments in agriculture do not necessarily imply a trade-off between economic and

social returns. These can co-exist with excellent results on both sides of the spectrum. It is important to have a blended and long-term perspective on impact investing returns, which acknowledges the longer timeframe necessary to measure the effects of such investments.

• The CFS-RAI were introduced as a useful tool to promote inclusive and responsible

investments in the agricultural sector. Further awareness-raising programs would be required to showcase the benefits of their adoption to an increasing number of private companies. This implies engaging with multiple stakeholders through a pragmatic approach, providing concrete good practices and examples of the results achievable through the implementation of the Principles.

• Private agricultural investment in African contexts is constrained by the limited harmonization

in border regulations, which makes it difficult to develop investment strategies spanning across multiple countries. FAO could greatly foster investment in developing contexts by advising governments to facilitate free trade of goods and coordination in regional infrastructure development, also within the context of a South-South collaboration perspective.

Parallel Session II – Innovations in agricultural finance: bridging financial institutions with value chain actors

Session II proved to be a thoughtful debate on inclusive finance mechanisms and ways to bridge formal financial actors with value chain players in the field. It benefitted especially from the wide variety of panelists and participants in the audience, consisting of representatives from international and local banks, foundations, asset management companies, producers’ associations, agribusiness companies, and more.

• Private financial institutions with a strong track record in serving agriculture in developing

countries have demonstrated that this can be a very profitable venture. However, a long-term vision and strong relationships with value chain actors are needed in order to gain exposure to the sector in a sustainable manner. By aiming at tentative short-term economic returns,

Parallel Session I – Panelists

Iride Ceccacci – EBRD Makoto Goda – Nippon BioDiesel Fuel

Daniel Gad – Omega Farms Coy Buckley – Equity For Tanzania

Pascal Liu – FAO Andrew Hilton - FAO

Patrick McNellis (Facilitator)

7 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015

without committing to properly understand the dynamics among actors in the agricultural sector, it is difficult for these institutions to develop the expertise and know-how necessary to become successful at serving rural households and firms engaged in agriculture.

• It has been acknowledged that formal financial institutions, despite the strong performance

of agricultural markets in developing countries, have played a limited role in serving the agricultural sector. Non-financial actors, such as agribusinesses and producer groups, have been the main providers of financial solutions that fostered the rise in agricultural investment.

• In order to increase exposure to the agricultural sector, it is necessary for formal financial

institutions to develop agribusiness intelligence units that understand the unique dynamics of agricultural value chains, and the needs of rural clients. A trend is being set by pioneer

financial institutions which partner with local non-financial actors within agricultural value chains, in order to learn from their experience and better assess agricultural financial markets. The aim of this process is to develop more inclusive, efficient and sustainable financial solutions.

• Due to the significant information gap that formal financial institutions face in agriculture,

there is a diffused perception of few investable deals in the sector. This discourages large equity investors from further involving themselves in these areas. Promoting investment vehicles based on partnerships with key agribusiness actors, which possess critical informational advantages, can result in outgrower and smallholder schemes, among other mechanisms, which aggregate smallholders and rural SMEs to reach increased scale within investment projects. This approach has begun attracting more foreign private investment in developing agricultural contexts.

• Financial institutions wishing to enter rural agricultural markets should adopt a bottom-up

approach if they want to fill the information gap and gain essential know-how on clients and their agribusiness relations. This implies collaborating with local agribusiness organizations that have extensive knowledge on the different stakeholders engaged in specific agricultural sectors. This approach should be implemented gradually, by establishing progressively more intense business ties as the relationship with local partners progresses.

• Developing financial solutions for rural agricultural contexts requires a multidisciplinary

approach that involves various kinds of expertise, different partners (public and private), and innovative risk management solutions. Creativity, expertise and field knowledge are necessary elements to serve the sector, and they derive from establishing commercial relations between actors within very different public and private professional networks, such as those related to finance, agriculture, and communications among others.

• From a multidisciplinary perspective, the example of value chain financing in agriculture is

quite notable, as it represents a systematic approach aiming at identifying and creating linkages between actors across different segments and sectors, to cover financial gaps and stimulate growth.

• FAO and other development institutions must be more aware of the effect that reputational

risk can play in discouraging the formal financial sector's involvement in agriculture. Fear of reputational backlashes at field-level, due to misleading information, can discourage lending

Parallel Session II – Panelists

John Y. Simpson – Duxton Asset Management Ben Njikamp – ICCO Investments

Gaetano Carboni – Mastercard Worldwide Pierre van Hedel – Rabobank Foundation

Jamal Eddine El Jamali – Crédit Agricole du Maroc Michael Marx (Facilitator) - FAO

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to projects which could be economically and socially profitable.

Plenary Ending Session – Where do we go from here? Joint action for future public-private collaboration

This final session brought together the various participants from the technical discussions, in order to develop a synergic conclusion from the elements collected, given the close linkages between the topics discussed. A suggested list of points of action was compiled:

• Strengthen FAO’s capacity to cover the data gaps and policy recommendations in agricultural investment and finance

• Develop multi-stakeholder communication and brokering platforms to foster partnerships

and collaboration

• Encourage financial institutions to adopt a multidisciplinary approach when entering the agricultural sector

• Facilitate the dialogue between private investors and local governments

• Improve and diversify technical assistance provision to different private agricultural value

chain actors, mainly rural SMEs and smallholder families, through a more direct approach

• Promote scaling-up and aggregation of value chain actors to increase the number of investable deals for private investors

• Strengthen the ties between FAO Country Offices and local agricultural and financial

actors

• Assist agricultural players in compiling detailed business plans responding to international market trends and standards

Conclusion

The different sessions proved to be extremely productive, and participants expressed their pleasure at the results obtained. There was a general consensus that FAO has a major role to play in fostering public/private dialogue for responsible agricultural investment in developing contexts. Nevertheless, it was widely noted that the organization needs a more active and concrete engagement with private sector players at field level, in order to achieve tangible results. As noted from the panel discussions, FAO is in a unique position to advise local governments on how to improve enabling environments for private investment in agriculture to achieve greater developmental impact. Furthermore, through specific technical assistance programs FAO can become a catalyst in fostering stronger collaboration and partnerships between local public and private stakeholders, leading to increased investment. This

‘’Time, knowledge and resources: all these things are stored in different pockets, and

FAO must help us break down these barriers if we want to obtain tangible

results’’

Coy Buckley – Equity For Tanzania

9 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 engagement should be systematic within FAO’s programs and projects, to further enhance its role in fostering agricultural finance and investments that result in greater socio-economic development.

Morning Meeting with the Director General

10 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 Welcome and Opening Remarks

Ms. Marcela Villarreal (Director, Office for Partnerships, Advocacy and Capacity Development, FAO) began by welcoming all participants to the 4th Private Sector Partnerships Dialogue, highlighting the theme of the year’s dialogue: “Inclusive finance and investment models in agriculture”. She reminded participants that very recently the UN General Assembly had adopted the 2030 Sustainable Development Agenda, along with a set of bold new 17 Sustainable Development Goals (SDGs). Of these goals, 14 are directly related to the FAO Mandate. In particular, for the purpose of the event in question, Goal 17 is extremely relevant: “Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development.” In this regard, all forms of partnerships, whether with all types of actors, including non-state actors, will play a huge part in the achievement of the SDGs. Ms. Villareal mentioned the United Nations Framework Convention on Climate Change (UNFCCC), which would take place in Paris at the end of November. The negotiations on the Framework are approaching an important milestone, with the Post-2020 global climate agreement scheduled to be negotiated at the meeting. FAO aims at ensuring that appropriate linkages between climate change, agriculture and food security are made during the Convention, since agricultural sectors are key in addressing climate change. She also highlighted that since last year's dialogue FAO signed 14 new agreements with private sector entities. These include Kuehne Foundation, Auralight, Union of Wholesale Markets, Autogrill, Ikea, APF Network, Mastercard, CEMA, La Stampa, Boulder Institute, and Mars. All of these private sector entities have made the commitment to join FAO in the fight against hunger, through various initiatives. The private sector can contribute to the fight against hunger in various ways, including through financial and non-financial resources, by supporting the achievement of the 5 FAO Special Objectives, as well as through policy dialogue, capacity development, programmatic work, norms and standard settings. Ms. Villareal mentioned that previously that week a MoU was signed together with Mars, highlighting the commitment of Mars to enable farmers to obtain sustainable livelihoods and substantially increase their productivity, as well as its goal of promoting food safety through innovative and scalable management approaches. A number of major collaborations between FAO and the private sector were presented, with a focus on their support to inclusive finance and investment models in agriculture. These included FAO's collaborations with Mastercard Worldwide, Rabobank, Auralight, Grameen Foundation, Ikea, Autogrill, Kuehne Foundation, and the International Feed Industry Federation (IFIF). Ms. Villareal ended her speech by praising the role of the Office for Partnerships, Advocacy, and Capacity Development within FAO, as well as the role of the Private Sector Partnerships Team. She expressed her wish for a productive and interesting dialogue, with the active participation of all attendees. She then invited Strategic Programme Leader Eugenia Serova to give a brief technical introduction on the theme of the Dialogue. Ms. Eugenia Serova (Strategic Programme Leader, SO4, FAO) welcomed all attendees and expressed her wishes for a successful initiative and a very productive dialogue between all participants. She explained that the choice for this Dialogue’s theme was strictly linked to the realization of FAO Member States’ Goals in the new Strategic Framework. Ms. Serova cited the ’’Achieving Zero Hunger’’ 2015 report, which stated that eradicating world hunger sustainably by 2030 will require an estimated additional $267 billion per year on average for investments in rural and urban areas and in social protection. The choice of inclusive finance and investment as this year’s Dialogue theme was part of FAO’s efforts towards achieving these results.

11 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 Ms. Serova explained that the aim of the event was to facilitate a general debate between a wide range of private and public actors involved in investment and financial provision towards developing world agriculture. FAO's objective was to jointly recognize and assess the main issues and constraints which affect investing and lending to the agricultural sector, in order to develop innovative partnered solutions to these problems. In FAO’s perspective, the private sector is the origin of the drive in expanding rural agricultural investment, with the public sector facilitating and guiding the process.

As pointed out by Ms. Serova, the aim of the first parallel session on investment was to discuss the collaboration potential between public and private organizations to overcome under-investment in agriculture, substantiated by an analysis of investment challenges, an analysis of recent trends, and examples of innovative public-private investment partnerships. The focus questions that would drive the debate in this session were: i) is there a chance for greater coordination among diverse investors at country level? ii) is it possible to collaborate between foreign and domestic private investors? iii) what can be done to avoid its controversial impact of FDI on local communities? The objective of the second parallel session, focused on agricultural finance, was to debate how formal financial institutions can overcome current inadequacies in financial flows to agriculture, especially for smallholders and small and medium agro-enterprises. It aimed at exploring what are the causes of the rural financial gap, which are the characteristics of informal financial markets that are filling this gap, and how can the formal financial sector tap into these unexploited markets. The focus questions for this session were: i) are formal financial institutions capable of capturing part of the services in rural areas currently serviced by non-financial actors? ii) what should the private sector do to encourage public policies for collaboration between foreign and domestic investors? iii) how to boost knowledge exchange between financial institutions and value chain actors? Mr. Serova again welcomed private companies to FAO and encouraged a productive dialogue among all participants.

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Official FAO statement

Mr. José Graziano da Silva (Director General, FAO) commenced his speech by welcoming all participants to the 4th annual Private sector partnerships dialogue. He underlined the fact that this year’s Dialogue was animated by the recent adoption by the United Nations Assembly of the 2030 Sustainable Development Agenda, which together with the Sustainable Development Goals (SDGs) mark a turning point in the global community’s approach to development. The Goals bring a renewed energy to the collective efforts towards ending poverty, protecting the planet, and ensuring prosperity for all. The 2030 agenda endorses FAO’s vision of a world free of hunger and malnutrition. Food security, nutrition, and sustainable agriculture, through the 2nd Sustainability Development Goal, have been placed at the heart of international commitments. The Director General pointed out that most of the 17 SDGs are also related to FAO's Mandate. Reaching them will pave the way for ending hunger and extreme poverty. Mr. da Silva felt it was particularly important to underline Goal 17: “Revitalize the Global Partnership for Sustainable Development.” The SDG will allow leading companies to demonstrate how their business activities can help advance sustainable development, by minimizing negative impacts and maximizing positive impacts on people and the planet. The Director General stated that he has always believed in the role that the private sector can play in fostering development. That is the reason why FAO hosts the Private sector partnerships dialogue every year, and that is why he has called the private sector to aid FAO in achieving its five Strategic Objectives.

According to the Director General, the private sector has to rise to the challenge of aiding in guaranteeing essential needs to advance sustainable development at a global level: the need to

13 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 promote inclusive growth and responsible investments that address the needs of the world's poor; the need to build more sustainable agriculture and food systems that are better able to cope with climate change; the need for well-designed social protection systems.

José Graziano da Silva – FAO Director General FAO estimates that investments for approximately US$ 265 billion per year on average are necessary, over the next 15 years, in order to end hunger. The public sector alone cannot guarantee such figures; they have to come from the private sector. That is why the theme for this year's dialogue is inclusive finance and investment models in agriculture. Over the past years FAO has been facilitating cooperation between public and private investment, aiming to reduce risks along the entire agricultural value chain, and to create an enabling environment for all stakeholders. Mr. Da Silva pointed out that since last year's Dialogue FAO had been involved in many important initiatives. The organization had signed 14 new agreements with private sector entities, including Mastercard Worldwide, Kuehne Foundation, and Auralight. Furthermore, FAO and WHO had co-hosted in November 2014 the Second International Conference on Nutrition whose outcome was the Rome Declaration on Nutrition and the ICN2 Framework for Action. In October 2014 the Committee on World Food Security had endorsed the Principles for Responsible Agricultural Investment in Agriculture and Food Systems (CFS-RAI). The principles aim at showing how to maximize positive and avoid negative impacts of investments on food security and nutrition. Mr. Da Silva also mentioned the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security (VGGTs). The VGGTs promote secure tenure rights and equitable access to land, fisheries and forests as a means of eradicating hunger and poverty. They support sustainable development and enhancing the

14 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 environment. Companies such as Cargill, Nestlé, Pepsi-co, and Coca Cola have committed to supporting the implementation of the VGGTs. FAO considers compliance with the RAI Principles and the VGGTs as the foundation on which to build partnerships. The Director General called on all current and potential FAO's partners to promote, support and utilize these instruments in their everyday business practices. Mr. Da Silva also reminded participants that 2016 will be the International Year of Pulses. He expressed FAO's hope that the private sector will join in promoting awareness of the nutritious qualities of pulses and understanding the challenges faced by pulse farmers. The Director General ended his speech by welcoming again all participants, and expressing his wishes for the success of the dialogue.

15 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015

Session I - Public-private collaboration for agricultural investment mechanisms in the context of the RAI Four panelists from the private sector and two FAO officers constituted the panel for this session, focused on public-private collaboration for responsible and inclusive agricultural investment. In addition to them, a large number of participants from the audience were actively involved in the discussion. The list of participants is included in Annex III. Opening remarks Mr. Patrick McNellis (Independent Finance Consultant), in his role of facilitator for the session, began by welcoming the panelists and the audience. He outlined the way in which he expected the discussion to develop, and invited Mr. Toshiaki Ono from AGS to present the background paper that his team had prepared for the dialogue. Presentation of the background paper Mr. Ono (Agribusiness Officer, Rural Infrastructure and Agro-Industries Division, FAO) began his presentation by highlighting the steady increase in global demand for agricultural commodities in the past two decades, and how the supply sector has risen to respond to such growth. He explained that there are a number of important changes behind this growth, which include, among others: increased demand for perishable and processed food products on the part of urban and rural populations, as part of dietary changes; the rapid rise of supermarkets; increased attention towards food safety and quality standards. Consequently, agricultural value chains in developing contexts are also becoming increasingly more complex. As a response to these trends, private investors are becoming increasingly more active in the agricultural sector of the developing world. More specifically, the largest component of agricultural investment in developing countries derives from the activity of private domestic investors. These players possess a privileged point of view from within local value chains, allowing them to perceive and exploit investment opportunities which are typically outside of the reach of external investors. Notwithstanding the fact that these actors are typically small in size and quite fragmented, they play an essential role in agricultural investment. At the same time, the public sector is increasingly recognizing local private domestic investment in agriculture as an important poverty reduction factor. Public support is essential for creating enabling environments that are conducive to agricultural investment, especially for what concerns those value chain segments usually eschewed by private investors. Mr. Ono highlighted how the majority of private investments are channeled into value chain segments related to the post-production phase (e.g. processing, retailing), due to higher expected returns and lower associated systemic risk. Public investment still plays an important role in value chain segments where expected return is lower, yet critical for success of private

Mr. Toshiaki Ono

16 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 investment in other parts of the chain. Coordination between public and private actors becomes critical in order to unlock new investment opportunities in these value chain segments. Mr. Ono ended his presentation by underlining that FAO is strongly focused towards promoting responsible investment in developing world agriculture, which has to possess the qualities of being both inclusive and sustainable. FAO has, in recent years, developed and implemented several important guidelines and frameworks aiming at fostering responsible investment at a global level, such as the CFS-RAI and the VGGT. . Panel presentation Mr. McNellis invited all panelists to briefly introduce themselves and their line of work, together with the most relevant topics pertaining to their presence at the discussion. Ms. Iride Ceccacci (Food Economist, European Bank for Reconstruction and Development) explained that the EBRD's mandate is to support countries in transitioning towards open and democratic market economies, by enabling them to develop in a sustainable and inclusive way. As part of her role in leading EBRD's Private Sector for Food Security Initiative, Ms. Ceccacci works closely with the Investment Center of FAO and country governments to foster public-private dialogue in developing market economies, aimed at creating enabling environments for private investment. Today the Initiative operates in 22 countries, with €860 million of annual investment in the agri-food sector. Mr. Makoto Goda (CEO, Nippon BioDiesel Fuel) highlighted that his company started its operations in the Asian market in 2000, subsequently expanding to Africa (in Mozambique) in 2012. In Africa, Nippon BioDiesel Fuel has partnered with the Japan International Cooperation Agency (JICA) and the African Enterprise Challenge Fund. The company operates in three main sectors: energy, food and finance. Its main areas of operations include, among others: production and marketing of biodiesel, import and marketing of crude vegetable oils, cultivation of energy crops. Mr. Coy Buckley (CEO, Equity for Tanzania) explained that Equity for Tanzania is a financial institution whose main objective is to provide equipment finance (leases) to small agricultural businesses. The company's goal is to create sustainable employment as well as investment opportunities for social investors. The organization also runs a capacity building training for small businesses in bookkeeping, marketing, supply chain management, which are funded by FMO (the Dutch Development Bank). Mr. Daniel Gad (CEO, Omega Farms) explained that his company is a high-value vegetable production farm in Ethiopia which exports pre-packed vegetables to UK and EU supermarkets. Omega Farms plays a leading role in a nascent effort to replicate Ethiopia’s floriculture success in horticulture, with the potential for an even larger impact. Mr. Gad explained that his objective is to change the production model at the core of Omega Farms, so that the smallholder farmers collaborating with his company can become equity partners in the business. Mr. Gad highlighted how the main challenge for agricultural businesses in Ethiopia lies in obtaining adequate financing and the technical assistance necessary to properly exploit the rising market opportunities in the sector. He pointed out that important constraints for local agribusinesses stem from the lack of direct access to impact investment, coupled with the inability to obtain long-term capital from local banks. Furthermore the lack of adequate collateral on the part of local farmers severely constrains their ability to obtain the loans required to develop their businesses. This leads local banks to favor lending to the infrastructure and real estate sector, eschewing agriculture.

17 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 Mr. Andrew Hilton (Senior Land Tenure Officer, Climate, Energy and Tenure Division, FAO) outlined the concept behind the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security (VGGT). The guidelines provide a set of principles and practices that can assist countries in establishing laws and policies that better govern land, fisheries and forests tenure rights, ultimately supporting food security and sustainable development. Mr. Hilton then briefly expanded on the work of his unit within FAO. The Division engages in awareness-raising programs at country level with a wide variety of stakeholders (e.g. governments, smallholders, private investors), for example through multi-stakeholder national platforms. The aim is to convene together different players which normally wouldn't dialogue with each other, in order to develop shared solutions to individual problems. Another task of the Division is to provide local governments with the expertise and resources necessary to interact with private investors in a mutually beneficial manner. Mr. Pascal Liu (Senior Economist, Trade and Markets Division, FAO) showcased the work of his Division, underlining how two main related workstreams can be defined in relation to agricultural investment. The first stream concerns the analysis of the trends and impact of Foreign Direct Investment (FDI) in developing world agriculture. Although less relevant from a quantitative point of view, the impact of FDI in agriculture is extremely relevant from a qualitative perspective, in terms of technology transfer, modernization, adoption of standards, managerial skills transfer, and so forth. A relevant example of this line of work is the 2012 publication: ''Trends and Impacts of Foreign Investment in Developing Country Agriculture'', which analyses examples of agricultural investments in nine developing countries in Africa, Asia and Latin America. The second workstream is related to guidance and support relative to standards for responsible agricultural investment. In addition to the Principles for Responsible Investment in Agriculture and Food System (CFS-RAI), there are a number of other principles and standards on investment developed by both public and private stakeholders. For this reason the Trade and Markets Division, together with the OECD, is developing the FAO-OECD Guidance for Responsible Agricultural Supply Chain, aimed at helping enterprises to observe existing standards of responsible business conduct along agricultural supply chains. The guidance will neither create any new standards, nor does it seek to substitute existing ones. Rather, it should help clarifying existing standards in the agricultural sector. Panel Discussion The following points resume the main findings from the participated discussion: The importance of capital investment in post-production processes: in many developing African economies, the basic borrowing rates for short- and medium-term loans are above 20%, hence prohibitive for most agricultural SMEs. This is compounded by the lack of available collateral on the part of farmers. Without proper investment in capital equipment, it is impossible to obtain the technology necessary to process and add value to raw agricultural materials in the post-production phase. Hence, farmers are obliged to produce and sell raw commodities which are exposed to high price fluctuations and volatility. This, coupled with other systemic risks associated to primary agriculture (e.g. weather risk), further leads financial institutions to eschew the agricultural sector in favor of real estate and infrastructural development.

18 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 Technology constraints faced by developing world agribusinesses: as pointed out by a number of panelists from the agribusiness sector, obtaining reliable technology in developing contexts to improve production cycles can often be prohibitive in terms of costs, timings, inadequate technical support, and other factors. According to Omega Farms, Asian countries have recognized Africa as a profitable market to which to offer technological solutions for agricultural production. Chinese companies can offer low cost, readily available machinery, coupled with customer support and pre-training. In contrast, European agritech companies are lagging behind in acknowledging African agribusinesses as potential customers. Challenges and opportunities of impact investing: as pointed out by Equity for Tanzania, the time element is a challenge when it comes to agricultural impact investing. It is necessary to have a blended perspective on investments' results, which does not take in consideration only short-term financial returns, but also a larger number of socioeconomic variables whose changes are realized on a longer timeframe. Nippon BioDiesel Fuel underlined how evaluation of social impact is still a major issue in many agriculture-related endeavors. The variety of approaches which could be adopted in evaluating social developments makes it hard to establish common benchmarks necessary to compare the impact of different investments. As pointed out by several panelists and participants from the audience, not only profitability and developmental impact of agricultural investments are not mutually exclusive goals, but can in fact often go hand in hand. According to a participant from the audience, Ms. Laura Mecagni of the International Finance Corporation (IFC), there is no reason why inclusive and sustainable investments cannot also provide very good returns. Ms. Mecagni gave the example of Malawi Mangoes as a company that is an epitome of this dual approach, by being both financially successful and a promoter of socioeconomic development. The role of the “missing middle”: The average development level of agribusinesses in African contexts is too low for them to represent an attractive investment opportunities for large-scale investors. Supporting the “missing middle” category of SMEs and farmers in their scaling-up and specialization process could play a vital role in relaunching investment in the agricultural sector, by developing more advanced business cycles and local markets. As pointed out by the EBRD encouraging aggregation, for example into cooperatives or producers’ organizations, is also a valid approach to attract foreign investment, as well as to facilitate dialogue between smallholder representatives and local governments. Related to the low development level of many agribusinesses, Omega Farms pointed out in African contexts is the inadequacy of bankable proposals: many agricultural actors in these contexts (e.g. smallholders, cooperatives, SMEs) lack the required training to write proper business cases, hence losing perfectly feasible opportunities to attract investment.

‘’The East has got it figured it out…They see our companies as valuable clients to which to offer personalized solutions for

our technological needs. I wish I could say the same for European tech providers’’

Daniel Gad – Omega Farms

19 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015

The issue of complexity of local governments’ structures: a notable constraint when it comes to promoting agricultural investment with local governments is the complexity of their internal structures and bureaucracies: the variety of institutions and authorities that private investing actors have to understand and dialogue with in order to champion their investments. As pointed out by Mr. Ono (AGS, FAO), in addition to FAO acting as intermediary between governments and the private sector, there is also an important role to be played in fostering coordination within local governments to better interface with private investors. An example would be the creation of specific public platforms and entities solely devoted to facilitating private investment in the country. The role of FAO in providing technical assistance to investing actors: there are many opportunities for FAO to provide technical assistance and capacity building services to private sector investors, with a view to achieving higher developmental impact through their investments. A notable example cited by the AGS division is the use of technical assistance facilities (TAFs) for agricultural investment funds. Through grant-funded TAFs, funds can identify and provide technical assistance to investee companies in order to develop their capacities, making them ready to accept further external investment. Some TAFs also aim at developing the value chain surrounding investee companies, making investments more inclusive and sustainable, thus increasing their developmental impact. As noted by the EBRD, in the case of TAFs great care must also be given to the post-grant phase, by ensuring that the continuity and sustainability of the operation is guaranteed after a grant has been exhausted. In the same line, Equity for Tanzania highlighted the great importance that seed-phase grants can have for new agribusinesses. These grants can provide agribusinesses with an incubation period which they can exploit to develop and refine their production process, their brand, team and know-how. The issue of coordination between technical assistance providers was also mentioned, with the EBRD expressing its hope for increasing collaboration between agencies, especially for what concerns: the improvement of common standards and measurements systems; better quality of delivery; increased knowledge transfer and sharing of best practices. Opportunities for FAO to foster investment under a South-South collaboration perspective: Omega Farms highlighted the importance, in the case of Africa, of harmonizing border custom regulations with a view to fostering private agricultural investment. Inadequate, unnecessary or

The ‘’Missing Middle’’ category in agriculture: SMEs and farmers whose capital needs are covered neither by large private equity nor by microfinance institutions. Source: Milder, B. (2008). “Closing the gap: reaching the missing middle and rural poor through value chain finance”

20 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 autarchic policies severely constrain direct and easy transport of agricultural goods between African countries. FAO can play an important role in convincing local governments that, in order to reduce their foreign exchange expenses, they need to enact legislation that facilitates the exchange of goods across the borders, whether through custom harmonization, subsidies, facilitated procedures, and so forth.

As pointed out by Ms. Antonella Harrison (ICIS), the experience of the fertilizer industry in Sub-Saharan Africa is a good lesson in collaboration under a South-South perspective. The fertilizer industry brokers investments in African contexts to provide agribusinesses with the infrastructure, technology and equipment needed to provide fertilizers to smallholder farmers. An example would be the South-South partnership project between Morocco and Gabon brokered by leading fertilizer company OCP, based on the integration of both countries’ national resources (phosphate and gas), which aims at covering at least 30% of the entire African demand for phosphate fertilizers.

Key challenges and opportunities for the CFS-RAI: the panelists agreed that FAO's key challenge for what concerns the CFS-RAI lies in effectively convincing private businesses of the benefits behind their voluntary adoption. This implies actively reaching out to the private sector and raising awareness on the RAI, moving the debate around the Principles at a local country level. As pointed out by Mr. Pascal Liu, the Inter-Agency Working Group (IAWG), composed by FAO, World Bank, IFAD and UNCTAD, has recently launched an awareness-raising program on different tools for responsible investment. The programme includes piloting principles for responsible investment in agriculture in a number of African countries. The core approach when discussing these principles with field-level stakeholders has to be extremely practical, highlighting concrete cases and consequences of both positive and negative investments, thus demonstrating the objective benefits of integrating responsible investment principles such as the RAI. The importance of improved coordination between private investing actors and FAO Country Offices: panelists from the agribusiness sector agreed on the necessity for improved collaboration with FAO Country Offices. FAO Country Offices could play a major role in acting as public-private intermediaries, as well as overseers of multi-stakeholder platforms devoted to fostering partnerships and unlocking investment opportunities. Through this approach, it would be possible to move the dialogue on investing more at country and field level, engaging local stakeholders.

Session II - Innovations in agricultural finance: bridging financial institutions with value chain actors

21 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 Five panelists from the private sector and four FAO staff were involved in the second parallel session focused on agricultural finance, together with a large number of participants in the audience who were actively involved the discussion. The list of staff and panelists is included in Annex III. Opening remarks

Mr. Michael Marx (Senior Credit and Rural Finance Specialist, Investment Centre, FAO), in his role of facilitator for the session, welcomed all participants. He briefly outlined how he envisioned the session to develop, and invited all participants in the audience to actively contribute to the discussion. He then invited Emilio Hernandez to briefly outline the core of the background paper which was prepared specifically for the event. Presentation of the background paper

Mr. Emilio Hernandez (Agricultural Finance Officer, Rural Infrastructure and Agro-Industries Division, FAO) began by clarifying that his presentation would focus on the second section of the background paper, i.e. agricultural finance. The aim of the document was to aid in better framing the panelists’ discussion, by providing thought-provoking data on agricultural finance which may aid in focusing the participants’ ideas. Over the past twenty years, the supply sector in agriculture has been very effective in meeting the increase in demand at a global level, even managing to establish reserves and stocks which could be used in case of disruptions in the supply chains. This has been the consequence of a global upward trend in production associated to different agricultural commodities, with some commodities (e.g. fruits and vegetables) growing at a faster rate than others. This increase in agricultural production has been achieved through increased output growth, mainly deriving from an increase in total factor productivity (more efficient use of capital and labor). From an economic standpoint this implies improvements both in technology and business models. This process has been sustained by an upward trend in agricultural investment, mainly deriving from the rising activity of private domestic investors. Mr. Hernandez showcased data which outlined how, in most developing countries, the financial sector does not lend to the agricultural sector in a way that is proportional to the agricultural sector's contribution to the overall country's GDP. Consequently, it has to be underlined how at local level non-formal sources provide the majority of credit and savings services to the agricultural sector of the developing world. Formal financial actors still play a very limited role in providing financial services to rural agriculture, eschewing potential investment opportunities due to limited information at field level, high risk perception, lack of an enabling environment and public support, and other factors. Hence, partnerships become critical to complement the lack of knowledge and expertise across value chain segments, although nowadays they still represent the exception, rather than the norm, in agricultural investment. Panel presentation Mr. Marx then invited the panelists to introduce themselves, as well as to provide some information on their companies' work and their main interests related to the afternoon dialogue. Mr. John Y. Simpson (Vice President, Duxton Asset Management) started by congratulating AGS for its work on the background paper, stating that such a document had been requested for a long time by private investing firms involved in developing world agriculture. He proceeded

Mr. Emilio Hernandez

22 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 to explain that Duxton is a leading alternative asset management firm based in Singapore, mainly focused on agricultural investment, which manages a net value of assets of approximately US$690 million. The firm manages and advises investments in a wide range of agribusinesses across the supply chain of developing countries. Its clients include global pension funds, insurance companies, high net-worth investors and private banks, among others. Mr. Ben Nijkamp (CEO, ICCO Investments) explained that ICCO is a faith-based organization based in the Netherlands with a 50-year track record in promoting social, economic and political rights throughout Asia, Africa and Latin America. Its activities focus on promoting responsible business, economic empowerment, food security and sustainable consumption. ICCO Investments is the impact fund manager of the ICCO Cooperative. The ICCO Guarantee Fund is one of the three funds currently managed by ICCO Investments. It has a 15-year track record, during which it has issued around 300 guarantees. So far, the Fund has raised EUR 120 million in funds related to agricultural value chain development. Around 75% of its portfolio is covering social investors, while 25% covers banks active both in developed and developing contexts. Mr. Pierre van Hedel (Director, Rabobank Foundation) explained that the focus of the Foundation is to enhance savings and thrift activities amongst the rural poor in developing countries, targeting smaller producer organizations that are still in a development stage. It provides financial instruments to credits and savings associations, farmers' cooperatives, and producers’ organizations. In addition to providing grants, the Foundation ensures that the grantee organizations are able to achieve sustainability and operate in a grant-free environment over a period of time. The Foundation has 25 countries as part of its global area focus. In addition to the Foundation, the Rabo Rural Fund was created with the aim of providing financing for more mature cooperatives and agribusinesses in developing countries. In some cases Rabobank Foundation and the Rural Fund work together, each extending finance to a particular cooperative. Mr. Gaetano Carboni (Group Executive, Strategic Alliances, Public Private Partnerships, Mastercard Worldwide) exampled that in developing contexts Mastercard considers itself as a service enabler, capable of offering two key services: 1) drastically reduce the cost of cash transfers in financial provision to developing world actors, enabling for example agricultural smallholders to receive funds in an easy, economical and secure way; 2) track how cash transfers that are part of development programs are spent, thus offering invaluable data that institutions can use to assess impact and results. Mr. Carboni also briefly outlined the core elements of Mastercard Foundation, which was created in 2006 by Mastercard Worldwide through a 10% donation of shares. The mission of the Foundation is to advance youth learning and promote financial inclusion to catalyze prosperity in developing countries. The Foundation partners with non-profit and non-governmental organizations that focus on two key program areas – financial inclusion and youth learning. Mr. Jamal Eddine El Jamali (Director, Crédit Agricole du Maroc) explained that Crédit Agricole du Maroc (CAM) is a public sector bank, established in 1961 as an agricultural financial institution. Since the 90s the CAM has stopped focusing on agriculture alone, expanding its businesses to a wide range of other sectors. The bank manages USD 7 billion in loan capital, of which 60% goes into the rural and agricultural sector. The CAM has a public service mission related to agriculture, based on the following principles: facilitating access to modern financial products for agricultural actors; mobilizing national savings in favor of rural development; offering

23 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 tailored financial services to agricultural and rural actors; supporting the creation of agribusinesses and their access to finance. Panel discussion The following points resume the main findings from the participated discussion:

The need for formal financial institutions to adopt a long-term commitment and vision in order to be successful in developing world agriculture: as pointed out by various panelists, most private banks approach financing investment in developing world agriculture through short-term and tentative endeavors, from which they usually bail out at the first signs of losses. They have scarce knowledge of the sector, and they are unwilling to step out of their comfort zone and involve themselves in endeavors which in their perspective hold high risk, high uncertainty and low return potential. Due to this lack of a long-term commitment towards properly understanding agricultural business, it is impossible for these institutions to develop the necessary know-how and experience required to be successful in this sector of agricultural finance. In this sense, the example of Rabobank as a private bank possessing a long-term commitment and vision towards developing world agriculture is almost unique, deriving in part from its original identity as a farmers' cooperative bank. Most private banks nowadays lack the necessary know-how and willingness to envision a long-term strategy towards lending to agriculture. The panelists agreed that only when formal financial actors begin to recognize the potential of developing world agriculture as a genuinely profitable asset class, they will then start to systematically confront the specific issues and constraints associated with lending to rural and agricultural actors. Partnering with non-specialized financial actors within the value chain, and learning from their experience, is a vital step towards developing more systematized solutions. As pointed out by Duxton Asset Management, creativity, patience, and a multidisciplinary perspective are key elements towards developing innovative models that can foster investment and attract funds in specific agricultural contexts. The need for an multidisciplinary approach in financial provision to agriculture: lending to developing world agriculture is a complex process, which requires tailored solutions for a wide range of very specific cases. The complexity of value chains, the technical requirements associated to its specific segments, the variety of different actors involved, are only a few of the

elements which combine together to increase the specificity of lending requirements. Therefore, financial institutions must realize the necessity of a multidisciplinary perceptive towards agricultural lending, which unites together various kinds of expertise, different public and private partners, synergic risk-management strategies, and numerous other elements. In this regard, the example of value chain financing in agriculture is quite notable, as it represents a systematic approach to identify and create linkages between actors across different segments and sectors, to cover financial gaps and stimulate growth.

24 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 The scarcity of accurate data as a main barrier to involvement: data related to agricultural lending in developing contexts is often extremely scarce and unreliable. Few public institutions (whether governmental or international) provide updated and systematic data which might be used to assess these contexts, with FAO being one of the most effective among them. The lack of sectoral knowledge is the main reason why financial institutions can’t manage to properly understand developing agricultural markets and their risks, their specificities, and the linkages between the various actors involved at country level. Panelists agreed that FAO could greatly foster effectiveness by adopting a more diversified and specialized role in its data providing efforts at country level, providing some relevant suggestions in this sense. Gaining expertise and know-how through the analysis of best practices: as suggested by Mastercard, the role of FAO as a data provider could be expanded by developing a compendium of best practices of collaboration between financial and agricultural actors in developing world agriculture. This would incentivize relevant players among private banks and foundations to come out of their comfort zone, by exploiting past examples and success stories from which to draw lessons and know-how related to financial provision to the sector. FAO possesses a top-down perspective on the different actors and companies involved in developing world agriculture, and is thus in the best position to guarantee such a service. FAO as an online brokering platform: As pointed out by Ms. Katarina Eriksson of Tetralaval, the previous concept could be refined even further with the development by FAO of an online platform that convenes together different local and external stakeholders, possessing either the knowledge or the funds necessary to unlock specific investment opportunities through their partnerships. This would aid in fostering the vertical collaboration needed by foreign banks and financial institutions to acquire the knowledge necessary to properly understand developing agricultural sectors. The platform would be freely available to all, with FAO acting as overseer and all-around information provider, to avoid favoring any specific entity or breaching FAO's mandate of neutrality and impartiality. The importance of a bottom-up approach: Rabobank Foundation stated that a solution to the information gap should come through a bottom-up approach, involving smallholders’ savings and credit cooperatives, as well as producers’ organization, which possess the information and sectoral experience that formal financial institutions lack. By partnering with these actors, it would be possible for financial institutions to enter the market with the know-how required to enact informed and long-term strategies. In Rabobank’s experience, the best approach for financial institutions entering the rural agricultural sector lies in a slow but gradual gathering of information on local partners, by building progressively more intense business linkages with cooperatives and producers’ organizations. FAO's approach in fostering rural agricultural finance: Mr. Emilio Hernandez outlined FAO's approach towards fostering financial provision in developing contexts. In terms of field operations, FAO's intervention focuses on the demand and the supply side of rural financial markets. The component related to the demand side focuses on supporting agricultural value chain actors, for example through capacity building and technical assistance programs, as well as lobbying governments into fostering enabling environments for investment. Another important task is related to assessing which value chain segments, in local contexts, are more susceptible to amplify developmental impact when receiving focused investments. On the supply side, FAO is working increasingly more directly with financial institutions, providing knowledge, training, and capacity-building services. FAO tries to subsidize the research and development component for these companies, in order to reduce the high opportunity costs these players face when approaching the rural agricultural sector. When these actors decide to invest in the market, FAO subsidizes their knowledge-gathering process, for example by brokering relationships, providing direct assistance to the staff, building agro-intelligent units within the banks, and so forth.

25 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 As pointed out by Mr. Hernandez, one of the major constraints to obtaining relevant information faced by FAO at country level is the high degree of heterogeneity and fragmentation of private stakeholders. Obtaining accurate information on the composition of agricultural value chain actors and dynamics at country level is an extremely challenging process, which requires regular updating in order to be relevant for financial players. The scarcity of investable deals for large foreign equity: as underlined by different panelists, the scarcity of investable deals at agribusiness level plays a strong role in discouraging foreign equity investors. Although large-scale external players may actually possess the funds and the willingness to deploy them in developing contexts, there is a scarcity of adequately sized deals to pick their interest in developing agriculture. FAO could play a strong role in developing investment vehicles, as well as promoting out-grower and smallholder schemes, which could aggregate small farming and agribusiness units up to a scale that is attractive for large equity investors.

A collection of metaplan cards which were prepared during the session

The instability of public policies as a main constraint: the majority of panelists agreed that one of the main constraints which curtail external investors' involvement in developing contexts is the instability and volatility of public policies. This applies not only to issues related to rule of law (e.g. land and property rights, investment and financial law), but also to infrastructural development and inadequate commitment on the part of local governments to long-term plans. By raising awareness within local governments of the benefits deriving from stable and progressive policymaking, aimed at fostering and guaranteeing private investment, it would be possible to encourage an enabling environment that is conducive to formal financial actors' involvement. It is essential that development institutions maintain the pressure on local policymakers even if private actors are initially unwilling to involve themselves. Developing enabling environments only as a response to private sector’s commitment is ultimately a passive and suboptimal approach. The impact of reputational risk: as pointed out by Duxton Asset Management, DFIs often underestimate the role that reputational risk plays in affecting large equity players' involvement in agriculture. This kind of risk can play a strong role in discouraging private equity investors from involving themselves with developing agricultural markets. Projects which are financially profitable could be called off or eschewed altogether for fear of reputational backlashes at field level, which could damage the brand and identity of financial institutions. This is particularly true for developing world agriculture, which is a sector where information is scarce and can easily lead to mishaps and setbacks in investments. If FAO wants to encourage equity investment in agriculture, it should consider more carefully the role that reputational risk might play in the

26 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 strategic planning of formal financial actors, and try to counteract it with more accurate data provision. Plenary Ending Session Where do we go from here? Joint action for future public-private collaboration

27 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 The panelists and the audience from the two parallel sessions reunited for the plenary ending session. The aim of the plenary session was to collect and recap the main findings derived from the discussions, to come up with objective and tangible points for action. Mr. John McNellis, in his role of facilitator, moderated the session. Points for future joint action Strengthen FAO’s capacity to cover the data gap in agricultural investment and finance. There is a large data gap in the agricultural financial sector: available data is scarce, and key actors involved in the sector either cannot or do not know how to access it. There is a necessity for FAO as well as other development institutions to improve data on the performance of agricultural markets and investment, so that it is made available to critical stakeholders (especially from the private sector). FAO is in a unique position to gather and compile specific data related to agricultural lending and investment, which might be exploited by different formal and non-formal actors to find entrance points for partnerships and unlock new investment opportunities. Develop multi-stakeholder communication and brokering platforms to facilitate partnerships and collaborations Specific multi-stakeholder platforms can offer a range of concrete services aiming at unlocking investment opportunities through partnerships. FAO’s comprehensive perspective on agricultural and financial markets would make it the ideal candidate to establish such as a service. These platforms’ services could range from providing specific information on investment opportunities, to systematically convening different public and private actors, to more direct brokering services that do not violate FAO’s neutrality stance.

As pointed out by Malawi Mangoes, more than brokers there is a need for public agencies to be champions for private agricultural investors, able to effectively relay to local governmental authorities the opportunities and constraints faced by specific private players. In a broad perspective there is no greater challenge to collaboration than the present isolation between different public and private players, which has to be overcome by adopting a very open information-sharing stance on the part of all parties involved, whether public or private. Encourage financial institutions to adopt a multidisciplinary approach when entering the developing agricultural sector. Financial players, in order to be successful in the developing agricultural sector, need to adopt a creative and multidisciplinary stance that allows them to come up with tailored solutions to very specific cases, by using different kinds of expertise and roles. The few private financial institutions who have gained long-term results in this arena have this approach in common in their line of work. Improve and diversify technical assistance provision to private agricultural value chain actors, through a more direct approach There is a need for FAO to expand and diversify its technical assistance provision models, as most panelists agreed that TA services are a major game changer for small and growing

28 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 businesses in developing contexts. This implies providing different TA services to a variety of actors: to farmers, to build more resilient and sustainable farms; to agribusinesses, to increase their capacity and expertise; and to financial institutions, to allow them to on-lend to farmers. Technical assistance facilities, for example, can improve linkages between enterprises and smallholder outgrowers, thus creating new opportunities for smallholder farmers, farmer business groups and rural communities. Improve the interaction between the private investing sector and local governments. Private investors, both local and foreign, often have a hard time interfacing with local government in developing countries, due to the absence of multi-stakeholder investment platforms and structures devoted to facilitate such interactions. In addition to its role of public-private intermediator, FAO can play a critical role in lobbying and counseling governments into creating multi-stakeholder structures. Promote scaling-up and aggregation to increase the number of investable deals for private investors. Private investors (especially large foreign equity players) are usually more interested in large-sized investment projects within the developing agricultural sector, due to a certain amount of associated costs that are not proportional to the size of the investment. To make a generic example, it would be unfeasible for a financial institution to consider investments of less than USD 4 million when the due diligence process by itself would require a tenth of that amount. The aim for FAO should be to find investment structures and strategies aimed at expanding and aggregating small agricultural players in a responsible and inclusive manner, across the supply chain, in order to create attractive investable opportunities on a larger scale. Strengthen the ties between FAO Country Offices and local agricultural and financial actors. Local private investors usually do not know where to look for, and how to access, information that might assist them in their work. Being able to easily access information at country level on possible grants, technical assistance programs, best practices, and so forth, would represent a critical enabling service for investment promotion. The presence of FAO Country Offices is not very well publicized among local agricultural communities, and the specific details of their activities (such as collaborations with local governments) are not known. By strengthening the ties between FAO Country Offices and local agricultural players, it would be possible to foster new investment opportunities. Assist agricultural players in compiling detailed business plans responding to international standards. Farmer groups in developing contexts, such as cooperatives and associations, do not possess the education required to write proper business proposals that respond to international standards, necessary to attract investments and grants. FAO and other public entities can create windows and platforms that can aid these players in compiling such proposals, for example through consultancy and advisory services, as well as financial literacy education. Closing Remarks Ms. Marcela Villarreal (Director, Office for Partnerships, Advocacy and Capacity Development, FAO) thanked all participants for their invaluable contribution, stating that FAO remains fully committed towards encouraging debate within the private sector. She expressed her belief that

29 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 the Dialogue had represented an important step forward towards developing innovative forms of collaboration in agricultural investment and finance. She also assured all participants that FAO stands committed to act as a facilitator in this collaborative process, by putting its expertise and its vision at the service of a more inclusive and sustainable agricultural financing. She stated that the private sector can energize the SDGs through a ‘revitalized global partnership for sustainable development’. The SDGs bring new tasks and responsibilities to FAO, and it is in those areas that FAO would want to count on the private sector’s assistance and partnership. Ms. Villareal again underlined how the Principles for Responsible Investment in Agriculture and Food Systems constitute an important step towards establishing a regulatory framework for responsible investment in the agricultural sector. They represent a notable attempt at establishing a commonly shared framework for investment which adopts a holistic and consensus-driven approach, which encourages global application. She ended her speech by expressing her gratitude towards the colleagues of OPC and AGS whose efforts had allowed the Dialogue to happen.

Annexes Annex I: Meeting agenda

Private Sector meeting with the Director General, King Faisal Room (D263)

30 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 8:30 am to 9:00 am 9:00 am to 9:20 am

Morning Coffee Welcome and Introduction Marcela Villarreal, Director, Office for Partnerships, Advocacy and Capacity Development, FAO

9:20 am to 9:35 am

FAO partners: Pierre van Hedel, Executive Director, Rabobank Foundation; Gaetano Carboni, MasterCard Group Executive Strategic Alliances in the Public Private Partnerships; Alexandra de Athayde, Executive Director IFIF.

9:35 am to 10:00 am 10:00 am to 10:10 am

Open discussion Statement and Open Dialogue José Graziano da Silva, Director-General, FAO

10:10 am to 10:30 am

Private sector representatives’ perspectives on inclusive finance and investment models

10:30 am to 11:00 am Open discussion 11:00 am to 11:15 am

Overview of FAO’s initiatives: constraints to inclusive finance and investment models in agriculture

Eugenia Serova, Strategic Programme Leader, SO4, FAO

11:15 am to 12:00 am Open discussion

Parallel Session I: Public-private collaboration for agricultural investment mechanisms in the context of the RAI, Mexico Room (D211) 1:00 pm to 1:15 pm Presentation of the background paper: ‘’Unlocking private

investments in agriculture: a case for public-private dialogue’’

1:15 pm to 4:15 pm Facilitated discussion and drafting of the Session Conclusions Facilitator: Patrick McNellis (Consultant) Panellists: Iride Ceccacci (EBRD), Daniel Gad (Omega Farms), Coy Buckley (Equity for Tanzania), Makoto Goda (Nippon BioDiesel Fuel), Pascal Liu (FAO), Andrew Hilton (FAO).

4:15 pm to 4:30 pm Coffee break

Parallel Session II: Innovations in agricultural finance: bridging financial institutions with value chain actors, King Faisal Room (D263) 1:00 pm to 1:15 pm Presentation of the background paper: ‘’Challenges to and

opportunities for achieving more inclusive rural and agricultural financial systems''

1:15 pm to 4:15 pm Facilitated discussion and drafting of the Session Conclusions Facilitator: Michael Marx (FAO) Panelists: Ben Nijkamp (ICCO Investments), Jamal Eddine El Jamali (Crédit Agricole du Maroc), Pierre van Hedel (RabobankFoundation), Gaetano Carboni (Mastercard), John Young Simpson (Duxton Asset Management).

4:15 pm to 4:30 pm Coffee break

31 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015

Plenary ending session, King Faisal Room (D263) 4:30 pm to 5:15 pm Where do we go from here? Joint action for future public-private

collaboration Panel of assigned representatives from the parallel sessions

5:15 pm to 5:30 pm Closing remarks Marcela Villarreal, Director, Office for Partnerships, Advocacy and Capacity Development, FAO

Annex II: List of participants to the plenary session

Name Entity Title

1 Princess Abze Djigma AbzeSolar S.A. CEO

32 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015

2 Andrea Villafañe AGR Food Marketing Chief Business Development Officer

3 Kristian Shach Møller Agricultural Commodity Exchange for Africa (ACE) CEO

4 Daniel Bercovici AJINOMOTO EUROLYSINE S.A.S. President

5 Monica Fanti Alltech Global Regulatory Affairs Manager

6 Joel G. Newman

American Feed Industry Association (AFIA) President & CEO

7 De Wet Boshoff Animal Feed Manufacturers Association (AFMA) Executive Director

8 Nielsen Kasper Thormod Arla Foods Director Global Trade

Policy

9 Francois Tomei Assocarni Managing Director

10 David Bray Australian Stock Feed Manufactures Council Development Manager

11 Luigi Troiani Autogrill Vice President of Institutional Affairs

12 Anne-Marie Neeteson Aviagen, for International Poultry Council Vice President

13 Ruth Hayler BASF SE Regulatory Manager

14 Michael Schneider Bayer CropScience Public and Government Affairs

15 Rick White Canadian Canola Growers Association CEO

16 Penny Studholm Cargill

Vice President of Corporate Affairs of

Europe Middle East and Africa

17 Harold Poelma Cargill Managing Director, Refined Oils Europe

18 Keith Polo CFNA Capital CEO

19 Cindy Brown Chippewa Valley Bean Chief Executive Officer

20 P. G. Phalke CLFMA OF INDIA / Innovet Consultant Hon. Secretary

21 Sylvain Roy CNFA President & CEO

22 Jennifer Ann Ragland Coca-Cola Director, Public Affairs

and Government Relations

23 Salvador Marin COFIDES President

24 Marco Foschini Coldiretti GdL PAC Coordinator

25 Jamal Eddine El Jamali Crédit Agricole du Maroc (CAM) Secrétaire Général

26 Siang Hee Tan CropLife Asia Executive Director

27 Klaus Kraemer DSM / Sight and Life Director

28 Philippe Becquet DSM Nutritional Products Europe Ltd

Senior Global Regulatory Affairs

Manager

29 John Young Simpson Duxton Asset Management Vice President

30 Cesarie Kantarama Eastern Africa Farmers Federation (EAFF) First Vice President

33 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015

31 Olivier Espeisse Elanco Animal Health EU and Africa

Government Affairs Director

32 Robert Wright Epure CEO

33 Coy Buckley Equity for Tanzania CEO

34 Iride Ceccacci European Bank for Reconstruction and Development Senior Economist

35 Michael Binder Evonik Nutrition & Care GmbH Director Sustainability

36 Pandya Poorva Export Trading Group HEAD, Agri Business Development

37 Jean-Christophe Debare Farm Foundation Director

38 Frank Van Ooijen FrieslandCampina Director, Corporate Communication and Sustainability Affairs

39 Jaine Chisholm Caunt GAFTA Director General

40 Marc Van Ameringen GAIN Executive Director

41 Femi Oye GEBiofuels CEO

42 Nichola Dyer Global Agriculture and Food Security Program Program Manager

43 Maurizio Vecchione Global Good Fund at Intellectual Ventures Senior Vice President

44 Samantha Akins Grameen Foundation Director of Institutional Relations

45 Melissa San Miguel Grocery Manufacturers Association Director Global Strategies and

Multilateral Affairs

46 Rajeev Chauhan Himalayan Farmers’Organisation President

47 Ben Nijkamp ICCO Investments Guarantee Fund Manager

48 Karine Tanan IFIF (Cargill - CAN, Global regulatory lead) Board member

49 Giovanni Battista Rossi Impact Finance Management Middle Office Manager

50 Javier Pardo de Santayana INCATEMA GROUP CEO

51 Jose Manuel Pardo de Santayana INCATEMA GROUP President

52 Patrick McNellis Independent Consultant Independent Professional

53 Erin Fitzgerald Innovation Center for U.S. Dairy Senior VP Global Sustainability

54 Iciar La Casta Muñoa Instituto de Crédito Oficial (ICO) Responsible for the

Department of International Finance

55 Robynne Anderson International Agri-Food Network (IAFN)

Main Representative to the UN

56 Seok-Ju Kang International Co-operative Alliance (ICA) Agricultural Advisor

57 Nico van Belzen International Dairy Federation (IDF) Director General

58 Carel Du Marchie Sarvaas

International Federation for Animal Health (IFAH) Executive Director

59 Alexandra de Athayde International Feed Industry Federation (IFIF) Executive Director

60 Abdulrahman Jawahery International Fertilizer Industry Association (IFA) President

34 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015

61 Charlotte Hebebrand International Fertilizer Industry Association (IFA) Director General

62 Laura Mecagni International Finance Corporation (IFC)

Head of Global Agriculture and Food

Security Program

63 Hsin Huang International Meat Secretariat (IMS) Secretary General

64 Tip O'neill International Raw Materials LTD President

65 Francisco Presencio Istituto de Crédito Oficia Corporate Finance & Restructuring Manager

66 Svetlana Minkova LB Bulgaricum Department Director

67 Jonathan Jacobs Malawi Mangoes Limited Joint Managing Director & Founder

68 David Crean Mars Inc. Vice President, Corporate R&D

69 Gaetano Carboni MasterCard Worldwide VP Public Private Partnerships

70 Audrae Erickson Mead Johnson Nutrition Vice President, External & Public Affairs

71 Brian Lowry Monsanto Deputy General Counsel

72 Hazem Al-Jarallah Musahamat Farms/Instishar Holding Owner and Chairman

73 Rabih Fatal Musahamat Farms/Instishar Holding Board member

74 Makoto Goda Nippon BioDiesel Fuel Chief Executive Officer

75 Wayne Dredge Nuffield International Ambassador Nuffield International

76 Adeline Lescanne- Gautier NUTRISET Executive Director

77 Daniel Gad Omega Farms Managing Director

78 Zoltan Reng Pannonia Ethanol - ePURE CEO

79 Meghan Sapp Partners for Euro- African Green Energy (PANGEA) General Secretary

80 Michael Berger Programme for the Endorsement of Forest Certification (PEFC)

Deputy Secretary General

81 Gordon Bacon Pulse Canada CEO

82 Pierre L. van Hedel Rabobank Foundation Managing Director

83 Diaka Diallo Sall Root Capital Director of Lending, West Africa

84 Mohamed El Mardi El Tegani Saturn Investment Co Executive Chairman

85 Michael Adams Seafood Finance Initiative CEO

86 Roberto Betancourt Sindirações Brasil President

87 Yohannes Assefa Stalwart management consultancy services Director

88 Roland Dominicé Symbiotics Group CEO

89 Juan Gonzalez Valero Syngenta Head Public Policy and Sustainability

90 Katarina Eriksson Tetra Laval AB Senior Project and

Partnership Development Manager

91 Nuno Ramos Lopes Pereira De Carvalho TRAGSA Group Deputy Director of

International

35 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015

92 Francisco Martin Aguirre TRAGSA Group Technical Adviser

93 Karl Schebesta UNIDO Chief Food Systems Unit

Agro Business Development Branch

94 Puvan J Selvanathan United Nations Global Compact Special Advisor, Agriculture

95 Nina Khangaldyan URALCHEM

Head of the Market Research and Trade Policy Department,

Foreign Affairs adviser

96 Victoria Gutierrez WeForest Director of reforestation

projects and science strategy

97 Lorin Fries World Economic Forum Associate Director

98 Faouzi Kechrid World Veterinary Association (WVA) President

99 Bente Slatten Yara International Senior VP and Chief Communications and

Branding Officer

36 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 Annex III: List of participants to the parallel sessions2

Session I Public-private collaboration for agricultural investment mechanisms in the context of the RAI

Name Entity Title 1 Iride Ceccacci European Bank for

Reconstruction and Development Food Security Economist

2 Daniel Gad Omega Farms CEO

3 Coy Buckley Equity for Tanzania CEO 4 Makoto Goda Nippon BioDiesel Fuel CEO 5 Patrick McNellis Independent (Facilitator) Finance Professional

6 Toshiaki Ono FAO / AGS Agribusiness Officer

7 Andrew Hilton FAO/NRC Senior Land Tenure Officer 8 Pascal Liu FAO/EST Senior Economist 9 Milica Petruljeskov FAO/AGS Consultant

Session II Innovations in agricultural finance: bridging financial institutions with value chain actors

Name Entity Title

1 Pierre van Hedel Rabobank Foundation Director

2 Gaetano Carboni

Mastercard Worldwide

Group Executive, Strategic

Alliances, Public Private Partnerships

3 John Young Simpson Duxton Asset Management Vice-President

4

Jamal Eddine El Jamali

Credit Agricole du Maroc

Director

5

Ben Nijkamp ICCO Investments Guarantee Fund Manager

6 Michael Marx FAO/TCI Senior Credit and Rural Finance Specialist

7 Emilio Hernandez FAO/AGS Agricultural Finance Officer

8 Niclas Benni FAO/AGS Consultant

9 A’kos Szebeni FAO/AGS Consultant

2 The lists include session panelists and FAO officers, but not participants in the audience

37 Fourth FAO private sector partnerships dialogue – Rome, 14 October 2015 Annex IV: Discussion Guides for the Parallel Sessions

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