Agricultural Development Economics Division ESA AGRIBUSINESS PPPs AND

Agricultural Development Economics Division (ESA) AGRIBUSINESS PPPs AND TERRITORIALLY-BOUND INVESTMENT INSTRUMENTS FOR AGROINDUSTRIAL DEVELOPMENT SESSION 3 (Part one) TERRITORIAL INVESTMENT TOOLS – AGRO-INDUSTRIAL PARKS AND SPECIAL ECONOMIC ZONES http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) LEARNING OBJECTIVES You will: • Better understand what is an agro-industrial park. • Have an idea of when a park is an appropriate tool to promote agribusiness development. • Know about policies and governance mechanisms that can foster success. • Understand challenges and success factors. http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) WARMING UP EXERCISE From your experience… • Are you familiar with any type of industrial park? • Does your country have or promote this tool specifically for agriculture/agribusiness development? • Which elements would you consider before planning to establish an agropark? http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) CONTENT 1. Rationale and characteristics of an agroindustrial park. 2. Different types and when to use them. 3. Good policies, good governance. 4. Challenges and success factors. http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) 1. RATIONALE AND CHARACTERISTICS OF AN AGRO-INDUSTRIAL PARK http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) WHAT AND WHY An AGRO-INDUSTRIAL PARK is a welldefined industrial platform where agro-industries and other companies engaged in agroprocessing and related activities are concentrated. • Agroparks: ▫ Facilitate localized competitiveness and growth; ▫ Help their tenant firms to gain competitiveness; ▫ Facilitate the creation of backward and forward commercial linkages. http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) CHARACTERISTICS OF AGROPARKS • Core feature of agro-industrial parks: promotion of value addition through processing, manufacturing & storage of food, feed and biofuel products. http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) CHARACTERISTICS OF AGROPARKS (cont. ) • Co-location of agribusiness and agro-industries in an industrial area • Provision of infrastructure, logistics and specialized facilities and high quality services to tenants • Size: 10 -160 ha (urban / semi-urban land ) • Links to academic & research institutions • Specialization: agroprocessing + ▫ S&T= agrotechnology or scientific agropark ▫ Agro-ecology = agro-ecological park http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) FACILITIES OFFERED • Affordable industrial land available buildings for sale or leasing. • Areas for agricultural farming, fish farming and animal husbandry, e. g. greenhouses, and poultry and aquaculture hatcheries. • A range of common specialized and general facilities (e. g. service, education and research). http: //www. fao. org/economic/esa

Stakeholder type Government /public sector Private sector Agricultural Development Economics Division (ESA) Ministries of agriculture, industry, trade and commerce, transport, land planning, education, innovation, etc. Local and regional governments Specialized (central) government agencies involved in economic promotion (e. g. investment, export promotion and SME support agencies), land planning and environment protection Public universities, colleges, vocational training centres and research institutes Ad hoc government agencies Chambers of Trade and Commerce (often under public law) Airport and seaport authority (when the park is developed in the proximity of an airport or seaport) Private investor, developer (land/business developer, etc. ) Agro-industries and agribusinesses (small, medium and large; domestic and multinational) Financial service providers Logistics and other ancillary service providers Private universities, colleges and vocational training and research centres Cooperatives and interprofessional and value chain associations, i. e. value chain stakeholders International community Bilateral and multilateral donors International organizations Private foundations Multilateral and regional banks Civil society NGOs Workers’ organizations http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) STAKEHOLDERS ROLES • • • Concept plan for the development of the park. Select location and identify potential demand. Procure land. Take care of masterplanning. Take care of financing, financial structuring and resource mobilization. Conduct marketing among potential investors. Procure infrastructure building and equipment. Take care of tenant settlement. Operate and maintain the park. M&E. http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) Examples of agro-industrial parks • India: Yes Bank & the IFFCO KISAN agropark have teamed up to foster CF operations between park firms & farmers that bring their raw materials to a network of Rural Transformation Centres, which act as collection points & services provision hub (e. g. agriculture extension services, warehousing and banking). CF agropark CF RTCs RTC CF CF CF http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) Examples of agro-industrial parks • Jamaica: Three-pronged strategy of the Ministry of Agriculture to foster agribusiness investments in selected territories & agrifood chains: ▫ Establishing 6 agrifood parks targeting selected agrifood chains such as Irish potato, ginger and turmeric; ▫ Developing irrigation systems to expand crop yields; ▫ Promoting contract farming agreements between irrigated farmers & park tenants. http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) 2. DIFFERENT TYPES AND WHEN TO USE THEM http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) Types of agro-industrial parks Classification Types of agropark Characterization Industry targeting Focus on agro-industry Several industries, including agrifood Premises and services Specialized agropark Mixed or hybrid industries park Intensive agro-industrial parks Mixed-use parks Integrated social agroparks Basic agro-industrial park Agro techno- or science park Agro eco-industrial park Agropark with SEZ status Public agroparks Private agroparks Public-private agroparks Brownfield initiative Greenfield initiative Agro-industrial and logistics Agro-industrial, commercial and residential uses Community involvement and other social features Agro-industrial competitiveness Innovation and technology transfer Green agroprocessing Special regulatory and fiscal regime Mostly public sector driven Mostly private sector driven Public-private driven Based on existing development http: //www. fao. org/economic/esa Developed from scratch Development objectives Ownership Starting-point

Agricultural Development Economics Division (ESA) Agro-parks with SEZ status • What is a Special Economic Zone? It is a demarcated geographic areas contained within a country’s national boundaries where the rules of business are different from those that prevail in the national territory. • Parks can have a special regime that is more favourable in terms of tax-related exemptions, investment environment and streamlined administration and is more conducive to agribusiness and agro-industrial development than in the rest of the country. http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) WHEN TO USE THE PARK MODEL • Policy-makers can rely on this model when: seek to add value in agriculture through processing; plan to support a multiplicity of agrifood chains; and want to develop cities and their agricultural hinterland. • Prerequisites for the development of a park: There is demand for the type of infrastructure and services offered; Land is available and prices reasonable; There is potentially longstanding political will; Benefits exceed costs. http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) 3. GOOD POLICIES, GOOD GOVERNANCE http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) Supportive public sector actions • Conduct sound preparatory work (e. g. feasibility analysis) to select location, industry and supply chains. • Implement transparent process of land acquisition. • Market and promote the park initiative. • Enhance legal framework and policies that support the development and operation of agroparks. • Assure investments in infrastructure and services and provide or attract financing, including private investment. • Provide public services and support value chain linkages. • Devise sustainability strategies. http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) Good governance • Adopt a multistakeholder principle. • Set and adhere to transparent criteria and processes to select park operators and tenants. • Favour governance models that ensure the participation of public and private park actors. • Establish effective ownership structures to facilitate financing and effective operation. • Provide sound park management. • Set up agile governance arrangements such as one-stop -shops for streamlined delivery of public services. • Monitor and evaluate results. http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) 4. CHALLENGES AND SUCCESS FACTORS http: //www. fao. org/economic/esa

Element Objectives Enabling environment and Rule of Law Transparency, equity and inclusiveness Challenges Solutions Agricultural Development Economics Division (ESA) Lack of clear objectives Objectives not consistent with the agropark model Significant differences between partners in terms of objectives, managerial style and other crucial topics Legal framework that does not support the development of agropark (inconsistent, incomplete, inadequate, not enforced) Wrong policies Political instability Lack of transparent criteria and processes to select park operators and tenants Bias against park companies on the basis of their origin (domestic versus foreign) or scale (small versus large) Conduct multistakeholder meetings to align objectives Elaborate a park plan or statement clearly stating the mission, vision and objectives of the agropark Assess whether the park model is the right policy tool to achieve the stated objectives Revise relevant legal framework to fill gaps, correct inconsistencies and improve enforcement (by developing special/dedicated enforcement arrangements for the park, in line with its “experimental” nature) Revise policies impacting agroparks Introduce mechanisms to prevent or cope with political instability, or to isolate agroparks from it Elaborate, publish and use transparent criteria for selecting park tenant companies and operators Generate data disaggregated by origin and scale to be used as decision-making inputs Introduce a system of checks and balances to avoid discriminating against companies on the basis of their scale/origin Introduce a system of checks and balances to fight against corruption http: //www. fao. org/economic/esa

Element Participation and consensus building Challenges Solutions Agricultural Development Economics Division (ESA) Key agropark stakeholders not involved or involved at a later stage Lack of coordination mechanisms among park stakeholders Responsiveness Bureacratic burden, delays and/or lack of response Scaling-up strategy Too ambitious a project in relation to the funds available and/or the capacities of stakeholders Launch multistakeholder consultations at the design/inception phase to align views and objectives and ensure participation and consensus Favour governance models that ensure the participation of public and private park actors and foster coordination among them, e. g. PPPs Set up park tenant associations Ensure representation of farmers and other key stakeholders in the management structure of the agropark Establish high-level and/or technical coordination arrangements among relevant public sector institutions dealing with agroparks (interministerial committees, focal points liaising with central and decentralized agencies, etc. ) Set up agile governance arrangements such as onestop-shops for streamlined delivery of public services Privilege private sector involvement in operation and maintenance of agroparks Develop concept proposal Demonstrate proof of concept Design and implement scaling-up strategy http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) SUCCESS FACTORS • Ensuring alignment and leadership among public institutions and between the public and private sectors; • Fostering an unbiased, evidence-based decisionmaking process; • Chosing the right size and location; • Ensuring proper access to good off-site infrastructure; • Drafting a well-researched marketing plan; • Promoting the park project among potential park users; • Ensuring open dialogue with the civil society; • Raising funds for full coverage of investment costs. • Facilitating park linkages (backward and forward). http: //www. fao. org/economic/esa

Agricultural Development Economics Division (ESA) http: //www. fao. org/economic/esa