Maximizing investments in agriculture in Central and Eastern Europe
Meeting explores ways to ensure integrated approach to agricultural development
28 February 2005, Rome - An integrated approach to agricultural investment emphasizing greater public-private partnership is key to agricultural development in Central and Eastern Europe and the Commonwealth of Independent States, according to the UN Food and Agriculture Organization (FAO).
Participants at a two-day forum opening today at the agency's Rome headquarters, sponsored by FAO, the European Bank for Reconstruction and Development (EBRD), the World Bank and the Central European Initiative, will discuss ways to enhance the synergy between the various investment projects of public and private institutions working in the region.
Representatives from international financing institutions, development agencies, donor governments and the private sector, as well as from the ministries of agriculture in a number of the countries concerned, are expected to attend.
"A range of institutions are providing support to the agricultural sector in the region, from grassroots assistance to farmers and financing of small and medium-sized enterprises in rural areas to policy advice to governments," said FAO economist Emmanuel Hidier.
How to maximize collaboration by the public and private sectors so that the agricultural investments of various financing institutions complement each other and help improve the performance of the agrifood chain will be high on the meeting's agenda.
One of the main topics of discussion, and the subject of a side event seminar hosted by the World Bank, will be vertical integration in the food chain, or how the various links in the chain from agricultural producers to consumers contribute to ensuring that agricultural products match demand and find appropriate markets.
"Many farmers and small and medium-sized food companies in Central and Eastern Europe have problems selling their products on international markets and getting access to inputs, finance and technology," says Laura Tuck, Director at the World Bank's Environmentally and Socially Sustainable Development Department for the Europe and Central Asia region. "Increasing product quality and safety demands by importing countries and large retailing companies further complicate market access."
At the same time, she notes, investments by large retailing and agribusiness companies have had major positive impacts on farms and local food companies in the region.
Hans Christian Jacobsen, the EBRD's Director for Agribusiness, agrees. "The EBRD is the largest single investor in private agribusiness in Central and Eastern Europe, with 220 projects worth a total of 3.5 billion euros. While our investments have mainly been in the processing and retail end of agribusiness, there are strong linkages back to the farmer in the field. For example certain brewery projects in which we've been involved have boosted demand for local barley production enormously. Our role is to marry local agribusiness potential with investment -- foreign and domestic -- that will add value to farm commodities and help build rural and national economies."
"One very important aspect of these increased investments is the growth of contracting and vertical coordination within the food chains," Tuck adds. "The implications are important but often not well understood."
To bridge that gap, the World Bank reviewed recent trends in and implications of increased investments in vertical coordination within the food chain in the region. The findings of that study, "When the Market Comes to you - Or Not: The Dynamics of Vertical Coordination in Agri-food Chains in Transition," will be presented and discussed at the seminar.
Serbia: range of interventions sweeten the pot
One round-table discussion will be devoted to the case of Serbia, where the agricultural sector represents over 20 percent of gross domestic product and the Government has shown its commitment to agricultural development by tripling the agriculture budget in 2004.
"In Serbia we can really see the complex interplay of interventions by a number of actors in helping to strengthen vertical integration in the sugar sector, for example," said FAO Financial Analyst Vlaho Kojakovic. "FAO is providing policy advice to the Government, and, along with the World Bank, grassroots assistance to farmers. The EBRD is investing in local agribusiness companies and providing financing to Procredit Bank, which is in turn lending to small and medium-sized enterprises in rural areas."
During the roundtable, H.E. Ivana Dulic-Markovic, Minister of Agriculture, Forestry and Water Management of Serbia, will give an overview of the new government strategy for the agriculture sector and the role of the international financing institutions and donors in supporting it.
"Special attention should be given to integrated grassroots-level development, as well as policy assistance and capacity building at local and national level," she says. "Serbia's long-term objective is integration into the European Union. This requires further assistance in policy harmonization and advice, and we ask FAO and its partners to support our efforts towards this goal in a concerted way."
The meeting is being organized by EastAgri, a network of funding institutions, including private banks, committed to improving their agricultural and agribusiness investment portfolio through information sharing. EastAgri is sponsored by FAO, the EBRD, the World Bank and the Central European Initiative (CEI), a forum for political, economic and cultural cooperation comprising 17 countries in Central and Eastern Europe.
"EastAgri represents a unique neutral umbrella under which the various funding institutions can come together for constructive dialogue, to share lessons learned and to chart future action," said Tesfai Tecle, Director of FAO's Investment Centre. "By helping foster partnership building and better collaboration at all levels, meetings such as this go a long way towards improving agricultural investment in the region."
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