Synthesis documents

Enabling environments for agribusiness and agro-industries development. Regional and country perspectives, FAO, 2013

    Description
    This report studies the enabling constraints that are specific to the agribusiness and agro-industry sectors. It is argued that the components of enabling environments considered by traditional assessment frameworks are relevant and necessary, but not sufficient to cover the specificities of these sectors.

    Factors driving the development of the agribusiness and agro-industries sectors include: efficient land markets and tenure systems; access to appropriate rural and agricultural finance and risk management products; specific regulatory provisions, consistent trade policies and access to global markets; availability of skilled human resources, improved technologies and adequate infrastructural facilities and utilities (particularly rural roads and storage facilities); and capacity for complying with food quality and safety standards. The importance of these factors differs from region to region – reflecting each region’s level of development and the critical bottlenecks facing its strategic commodities. To some extent, priorities also differ among countries in each region, emphasizing the relevance of the country context in creating an enabling environment.

    The study also considers the roles of the public sector and international organizations in promoting business climate reforms, and discusses the possibility of developing specific country-level indicators for agribusiness and agro-industries enabling environments. It concludes by calling attention to the fact that although business climates that are conducive to investments in agribusiness and agroindustries are important, they cannot by themselves guarantee that such investments will be forthcoming. In addition to efforts to improve business climates, the paper argues for the need to ensure that returns on investments are sufficient to compensate for any perceived constraints on enabling environments that increase risks and add to the costs of doing business. In other words, policies and strategies that aim to increase agro-based investments must go beyond a pure emphasis on business climates, considering as well elements that affect profitability and, in consequence, investors’ perceptions of risk/return ratios.