Most of the world has seen significant foreign and local investment in agribusiness and the food industry, including the rise of supermarkets (Reardon and Berdegué 2006). Increasingly, the aggregation of output for small-scale farmers is being done by large private purchasers such as food companies (trader-processors) and supermarkets. These firms want assurance that the goods meet stringent quality and safety standards, and these requirements make it difficult for smallholders acting individually to take advantage of these new marketing opportunities. Bank projects also recognize the importance of collective action and assist farmers in forming producer organizations and building links with exporters, as was done in the Senegal Agricultural Export Promotion Project (fiscal 1998). World Bank Group activities seek to improve farmers’ access to output and input markets.24 Many Bank projects assist farmers with public infrastructure (as discussed above), and most of the Bank’s agro-industry projects (nearly 10 percent of its agricultural lending) address weaknesses along supply chains, including marketing information, and compliance with food safety protocols.25 IFC core F&A operations have traditionally supported trader-processors in accessing local and international markets and in providing their outgrowers with extension, financial, environmental, and social services and inputs for their production (the processor model).
BOX 3.11
Bank Group activities seek to improve farmers’ access to output and input markets. Many Bank-supported agricultural projects have supported development of the seed industry. In agricultural research components, the Bank has supported plant breeding and crop improvement. Agricultural administration and agricultural extension components have supported multiplication, certification, and dissemination of seeds of improved cultivars. Agribusiness and marketing components have supported enhanced emergence and growth of input dealers and their networks. These activities span the public and private sectors and have important links to international entities, including the CGIAR on the public side and international agribusinesses (especially those with major crop biotechnology products) on the private side. Operations that support seed industry development are found in a range of country typologies: agriculture-based, such as the Rwanda Agricultural and Rural Market Development Project (fiscal 2000); transforming, such as the India Diversified Agricultural Support Project (fiscal 1998); and urbanized, such as the Philippines Diversified Farm Income and Market Development Project (fiscal 2004). IFC has committed $1.7 billion in F&A investments (30 percent of total commitments) and spent an additional
IFCA COMBINATION OF ADVISORY SERVICE AND INVESTMENT HELPED DEVELOP VEGETABLE SUPPLY CHAINS IN SOUTHERN UKRAINE
The transition to a market economy had left the vegetable sector in southern Ukraine in disarray. To rebuild the sector it was necessary to initiate policy dialogue with the government, to promote regulatory reform, and to build the entrepreneurial capacity of the farmers. IFC advisory work contributed to regulation improvements and supported farmers to: • Raise productivity and quality • Improve managerial and business skills • Deal with legal issues related to land and property rights. IFC investment helped the client vegetable processor to become a reliable off-taker partner to the farmers helped by the Southern Ukraine Vegetable Supply-Chain Development Advisory Service Project. Conversely, the advisory service project improved the vegetable supply chain of Sandora, a major juice processor in Ukraine. The client’s supply-chain chokepoints were caused by the lack of reliable supply and the poor quality of tomatoes and carrots produced by local farmers. Thus, through its support to the processor and farmers, IFC has helped the development of the fruit and vegetable sector in southern Ukraine, the promotion of the production of value-added agribusiness products, local entrepreneurship, technology transfers, and the training of local people. IFC invested in the client twice, in 2004 ($20 million) and in 2006 ($20 million). Through these investments, IFC directly helped the client carry out its expansion plans by providing the appropriate maturity match between assets and liabilities. In July 2007, the client was sold to an international beverage company, and it fully repaid its IFC loans in March 2008. Sources: Portfolio review, IEG-IFC 2008b.
World Bank Group Activities and Results
|
57