Afghan private sector: engine of development?
FAO-EU project launches farmer-run seed businesses, promotes state regulation of industry
6 August 2007, Gulbafa, Afghanistan – If there is any hope for bettering the lot of the average person in this shattered country, it is in the hands of people like Abdul Qader, village farmer turned entrepreneur and director of a small enterprise that aims to transform low crop yields into bumper harvests.
Mr Qader, who is also arbab or elected chief of the village, works democratically with 18 other villagers who are all founding shareholders in a small business called Hambastagi Private Seed Company. Their product, improved-quality wheat and vegetable seed, is in demand and they have made a profit in each of their two years of operation, selling over 500 tonnes of seed to local farmers in 2006.
No wonder Mr Qader is smiling and no wonder his cell phone keeps ringing as he speaks to visitors about business concepts like product diversification, credit and debt, margins, marketing and customer satisfaction.
"Afghans are entrepreneurial; they will take risks," says FAO technical advisor Sam Kugbei, the seed expert and economist who set up Hambastagi and seven other similar pilot companies in six Afghan provinces. If they are successful over time, the firms will serve as models for enough seed enterprises to serve the whole country.
Years of war and anarchy had bled the Afghan civil service of its best staff. Looters had stripped government laboratories and offices of equipment and records. The public sector ceased to perform its function of introducing improved crop varieties, especially the staple wheat, but also rice, maize and vegetables. Therefore, the government has taken a policy decision to privatize seed production and marketing while it ensures seed quality control and regulates the industry.
European Union backing
The European Union has financed two ambitious FAO projects to help this come about – phase one to bolster seed production capacity (2003-2006) and phase two to build a national industry with a seed policy, seed law and regulatory bodies (2007-2011). In total, EU taxpayers have invested €16 million in the projects, which pays for genetic material, staff, training, refurbishment of looted seed testing facilities, equipment and building materials. The Afghan government provides what staff and premises it can, and private seed company founders like Mr Qader and his associates invest their savings and contribute their own labour to build business premises.
As of mid-2007, the draft seed law was about to go before cabinet, a building for the National Seed Secretariat was being built in Kabul and the eight pilot seed companies were doing well. The fledgling enterprises, which after two years of life receive advice but no subsidies from the project, produced 4 000 tonnes of seed in 2006 – mostly high-yielding, disease-tolerant wheat seed. Considering that prior to 2004, the private seed sector was virtually nonexistent in Afghanistan, this is quite an achievement.
Let's talk to a satisfied customer to find out how they did it.
"I bought 100 kg of Mazar 99 wheat seed on credit from Hambastagi. The results were good and I'll buy from here again," declares farmer Ghulam Sadiq. "I used to buy from the government farm but now I come here because it is closer, the price is good and I don't have to wait for government people to sign this and that form before I can take the seed home." He adds that he is interested in a new product line Hambastagi will bring out soon – seed for the local eggplant, famous for its delicious flavour and cooking qualities.
"There are a lot of expectations riding on these projects," says Matin Behzad, an advisor at the Delegation of the European Commission to Afghanistan in the capital Kabul. "The private sector has a role to play and this will be the first time in this country farmers will have seed varieties created locally. And new crop varieties are going to lead to a massive jump in food production."
Mr Behzad explains that the EU wanted FAO to implement the projects because of the Organization's long association with the Afghan seed industry [since 1978]. "FAO takes the lead in everything including getting the seed law through parliament," he says. "We are very much interested and fully involved. As a humanitarian concern, rural development is one of our focal areas."
Seed's unique nature
It may be hard to imagine small companies dotted around Afghanistan supplying the thousands of tonnes of quality seed that this mainly agricultural country needs every year. Won't big Iranian, Pakistani, Indian or Western seed companies simply flood the Afghan market with mass-produced seed and undercut the fledgling companies?
Seed that grows well in one agro-climatic zone does not necessarily do well in another. Seed must be tested in local soil, weather and growing conditions to judge its potential in that area. This specificity opens opportunities for local seed producers who are savvy and efficient enough to produce and market a quality product suited to their own area. An added benefit is that local seed companies also give growing advice to farmers, augmenting or even replacing the government extension service.
This is not to say foreign seed companies don't promote their wares on the local market. But buyer beware. Kabul area farmer Mohammed Tahir tells the story: "One time I bought seed in a packet from India which was supposed to be onion. Do you know what I got? Garlic!"