Transcript The Southern Agricultural Growth Corridor of Tanzania

Agricultural Growth Corridors
Presentation by Sean de Cleene, Vice President Business
Development, Yara International and Vice Chair Kilimo
Kwanza Growth Corridors Executive Committee, Tanzania
BAGC Investment Blueprint was launched in January 2010
SAGCOT Investment Blueprint will be launched in January 2011
Strong public – private partnership focus
Partners involved separately in the two initiatives include:
Southern Agricultural Growth Corridor of Tanzania
(SAGCOT)
Mozambique Beira Agricultural Growth Corridor
(BACG)
Corridor investment blueprints demonstrate the potential to
develop “clusters” of profitable agribusinesses
Agricultural clusters that support professionalisation of both small and
medium sized farms require simultaneous and properly coordinated
investment by the public and private sectors
Clusters provide basis for integrated approach to agricultural
growth
Service providers
Transportation
Business support
Agricultural Growth Cluster
NGOs
Technical
assistance/ training
Extension services
Support to farmers
organisations
Private
investors
Private equity
and debt
capital for
agribusinesses
Village
Smallholder
commercializatio
n scheme
Commercial
Catalytic Fund
Seed capital for
medium-sized
start up
agribusinesses
Reefer
container
refrigeration
Commercial
unit
Farm
New
feeder
road
Farm
Smallholder
service delivery
scheme
Development Finance
Institutions
Expansion capital for
established
agribusinesses
Development partners
Direct funding of
public goods (e.g.
backbone
infrastructure)
Indirect funding of
public goods through
Government
Government
Public infrastructure
Policy environment
Land titling
Major benefits to farmers and local communities
Wider benefits to surrounding
communities with a 25km radius of
the farm hubs and clusters include:
• access to inputs and markets
for smallholder farmers
• provision of extension and
financial services
• linkages into specific
agricultural value chains
• job opportunities in the
agricultural value chain
Example: 190,000 hectares of irrigated commercial agriculture in the Beira corridor region of Mozambique
delivers: 350,000 jobs; $1 billion farming revenues pa; 150 villages get electricity and water supply; 13,000
smallholder farmers gain affordable access to irrigation services; improved access to inputs, finance and
markets for up to 200,000 smallholder households
Critical component is the need for innovative gov’t/donor financing
to “kick-start”, at scale, investment in early-stage agriculture
H.E. Prime Minister Pinda of Tanzania at the African Green
Revolution Forum: called for donors “to make the catalytic
fund operational as soon as possible”
Traditional
donor
financing –
supports
government in
developing
policy and
public goods
to facilitate
sustainable
growth
•
Innovative gov’t/donor financing (promoting
small holder integration into value chain)
Catalytic Fund – takes the
early-stage risks in developing
new agriculture businesses
Project
concept
“Bankable”
project
Patient capital – funds agricultural
infrastructure including feeder roads,
electrification and irrigation targeted
specifically at private sector
Innovative finance is provided by governments and donor agencies at a low cost of capital. Each $1 of
innovative finance can leverage potentially more than $10 of private investment into socially-responsible
agriculture businesses
Agricultural potential along Beira Corridor by 2030 as
presented in investment blueprint
2010
• <20,000 ha irrigated commercial
agriculture
• Smallholders almost exclusively
subsistence production
• High production and marketing costs
2030
• >210,000 ha irrigated commercial
agriculture
• Smallholders have access to irrigation
infrastructure and markets
• Economies of scale
increased
competitiveness
Investment blueprint findings
• Limited investment into either small or larger
scale commercial agriculture
• Operating costs are much higher than
international benchmarks [competitors]
• Investment in new commercial agribusinesses
is especially weak given high start-up costs
• Challenging business environment
• Major constraints are lack of “last mile”
infrastructure to the farm gate and a lack of
access to affordable kick start finance that acts
as a bridge to traditional financing
• But investment blueprints clearly show there
are ways to overcome these constraints . . .
The way forward
• Identify areas of high potential for agriculture “clusters” with access
to infrastructure backbone
• Establish a partnership organisation to help coordinate targeted public
and private investments within the corridor
• Provide new types of finance – including “catalytic financing” &
“patient capital” – to overcome high start-up costs and bridge with
traditional financing
• Insist on strong and direct benefits for smallholder farmers and local
communities and environmental sustainability
• Support development of a range of investments along the value chain,
including nucleus farms, processing facilities and outgrower schemes
• Recommend incentives needed to attract agricultural investment