Landscape:Inclusive Agribusiness in Southeast AsiaA Scoping Study Roundtable on Inclusive Agribusiness in Southeast AsiaHo Chi Minh, Vietnam, 23-25 September 2015

Dr. Nerlita M. ManaliliSEARCA Consultant

& Managing Director NEXUS Agribusiness Solutions

A study commissioned by Commonwealth Scientific and Industrial Research

Organization (CSIRO) to

Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA)

for theRoundtable on Inclusive Agribusiness in Southeast Asia

The Presentation • A number of business models have emerged, mostly

private-led ones that engage the participation of smallholder producers (inclusive ones) in the ASEAN economies that provide a rich learning ground.

• This study looks into these emerging practices and

explored trends in the shape, function and success of inclusive agribusinesses in the region. It is based on a review of 111 agribusinesses across four countries (Vietnam, Indonesia, Myanmar, the Philippines), it provides an overview of the current landscape and offers recommendations to support future action..

UNDERSTANDING THE LANDSCAPE:

What does agribusiness look like in ASEAN?

Why Inclusive Agribusiness?

"Small-scale agriculture• Main source of food in the

developing world,• Produces up to 80

percent of the food consumed in many developing countries”

FAO 2013

Inclusive Agribusiness (IA)• Create business growth

opportunities for smallholders and companies alike

• There are 500 million smallholder farms around the world: represent both home and livelihood for two billion people

GIZ, 2013

Why Inclusive Agribusiness in South East Asia?

• The ASEAN region (plus China and India) is referred to as the Emerging Asia and is one of the fast growing regions in the world.

• Investment in inclusive agribusiness will improve not only the global food supply but reduce as well the rural poor in the region– As Asia (basically most of ASEAN) supply 50

percent of the world’s food requirement and home to almost a third of the world’s poor

Why focus initially on Indonesia, Myanmar, Philippines and Vietnam?

• All four countries are major agricultural producers of staple crops, primarily rice

• Each country is world’s biggest supplier of at least one major commodity:– Indonesia: palm oil and coconut– Myanmar: pulses and oil seeds– Philippines: sea weeds, banana and coconut

(2nd biggest)– Vietnam: rice and coffee

Agricultural Development PathIndonesia and Philippines

• Followed the self-sufficiency to import substitution thrusts with sources of agricultural development growth mainly due to area expansion.

• Later, comes the focus on agro-industrialization, directing investments in increasing food crop production specifically horticultural crops

• Trade liberalization for much needed investment to come in

Vietnam and Myanmar

• Both emerging from closedto isolated economies,

respectively and passed through a series of reforms– since the “Doi Moi” in 1986 for Vietnam and– 1988 economic reform for

Myanmarwith both adopting amarket-oriented reform.

SNAPSHOT OF INCLUSIVE AGRIBUSINESS

49 Initiatives

Reviewed Inclusive Agribusiness Initiatives by Sector

Inclusive Agribusiness Initiatives by Sector and by type of intermediaries:

Non Private Sector Private Sector

Farmer Organizations

14%

Farmer Organizations

7%

Reviewed Inclusive Agribusiness Initiatives by Sector and by Areas of Interventions

Non Private Sector Private Sector

Total: 72 Multiple responses

Total: 50 Multiple responses

Marketing 12%

Environment 7% Production

29%

Manufacturing 3%

Food Processing 3%

Marketing 12%

Environment 4%

Production 34%

Manufacturing 8%Food

Processing 8%

KEY FEATURES ACROSS CASE STUDIES

Key Features Across Case Studies

External support is critical for smallholders to be partners in inclusive agribusiness

Meeting market requirements is key to sustained market access

Successful case studies often have a training component to increase product quality.

Key Features Across Case Studies

Adoption of inclusive agribusiness translates to improved smallholder welfare, and to raw material sourcing benefits to agribusiness firms.

Access to assets results in increased yield and value benefits for smallholders.

Enabling environments is present but fragmented

SUPPORTING SUCCESS

Supporting success of inclusive initiatives

While New marketing approaches are an increasing trend for inclusive agribusiness (e.g. creating niche market based on product origin) market related initiatives still are lagging behind production initiatives,- more of the former are needed.

Supporting Success: Country Level

Supporting Success: Country Level All four countries • fared low in terms of growth due to product and

geographic specialization. – will be additional sources of growth if invested on

• relied heavily on servicing traditional products to traditional markets, though starting to diversify (with Philippines on the lead) by targeting traditional markets with new product– product and market diversification are strategies that will

broaden sources of growth and competitiveness of countries under study.

Supporting success of inclusive initiatives Success with ICT has been patchy. Questions of scale, adoption and relative benefit need to be addressed to enhance benefit to smallholders

Private sector, donors and NGOs are initiators and also intermediaries. More study is needed on relative success of intermediary-initiator relationships.

To be truly inclusive, also support other stakeholders in the supply chain. They can help achieve results and distribute gains.

Supporting success of inclusive initiatives

Resource needs vary according to smallholder type, location and commodity. Tailoring interventions to specific needs will support success.

Multiple country investments bring expanded opportunities and partnerships. Border issues, land and water use issues and mismatched production present risks to success.

Supporting success of inclusive initiatives

Multiple stakeholder partnerships are an emerging model for inclusive agribusiness.- Clear objectives, roles and responsibilities

will support success.

Review and identify which national policies help and which hinder development of inclusive agribusiness.

Supporting success of inclusive initiatives

Public sector activity lags behind activity from private sector, development organisations and civil society.

Careful consideration is needed on where public sector investment (eg infrastructure) can be best targeted.- Example: developing roads and bridges provide

greater impact than providing irrigation facilities in some economies in the region

Supporting success of inclusive initiatives Investment in human and social capital is

beneficial. Greatest benefits result from shared approaches to capacity building.

Inclusive agribusiness requires multi-factor consideration and multi-sector involvement, on a foundation of multi-stakeholder decision making.

Thank You!