2013 GAP Report® – [3] Building Local Capacity and Mobilizing the Private Sector in Developing Countries

The right policies and regulatory practices can attract investment and encourage increased productivity while protecting resources and improving people’s lives. Building the capacity of developing-country governments to enact and administer appropriate policies and mobilizing the private sector and local communities to work with government agencies in those efforts resulted in lasting economic, social and environmental improvements in the following case studies.

SECURE LAND RIGHTS PAVE THE WAY FOR AGRICULTURAL GROWTH

Secure land rights is a foundational condition for agriculture and rural development. If rights to land, natural resources and real property assets are secure and enforceable, people and companies are more likely to make long-term investments in their property and manage resources wisely. If there is no legal means for transferring these assets or onerous administrative procedures make it difficult to do so, then it is not possible to sell or lease land to others who could put it to its most productive uses. When property is used as collateral to secure loans, legal proof of registration, while not itself sufficient to ensure that financing will become available, is critical. Therefore, good land governance and clear and secure land rights are fundamental to agriculture and rural development.

The U.S. Millennium Challenge Corporation (MCC) enters into compacts with developing countries to address their most significant barriers to economic growth and poverty reduction. Interventions to build agriculture and rural economies have been included in 21 of MCC’s 29 signed compacts, for a total obligation of $4.6 billion. In twelve of those countries, poor land governance, including in most cases the lack of clear and secure rights to farm land, was identified as a major impediment to improving agricultural productivity and attracting rural investment. MCC is helping those countries improve access to secure land rights.

In Burkina Faso, for example, the 2009 through 2014 MCC compact focuses on increasing the volume and value of agricultural production. It includes mutually reinforcing projects of securing land rights, road construction, water management, irrigation and diversified agriculture. The Rural Land Governance component supports Burkina Faso’s efforts to implement important new legislation by building the regulatory system and administrative capacity and by assisting communities to document farmers’ rights and access to land.

With support from MCC in 2009, the new Rural Land Tenure Law was established in Burkina Faso. Rural land administration agents were trained and are now operating in 47 of the country’s 302 rural communes (municipalities), resolving disputes, recording land rights and delivering land-holding certificates to households. Those certificates serve as the legal basis for adjudication, mediation, administration, and subsequent transactions through a system administered by the communal government.

The success of the Burkina Faso project, as well as the G-8’s pledge to support implementation of the 2012 Voluntary Guidelines on the Responsible Governance of Tenure of Land,56 has attracted potential support from the World Bank, European Union and others to expand the capacity for good land governance to other communes. In the final year of the compact, MCC will support the establishment of a national land observatory to monitor progress of the land rights process, identify outstanding issues that need to be addressed and improve transparency. A key goal is to promote gender equity and sensitize citizens and land administration personnel to include both men and women in land tenure reform.

TRAINING & TECHNICAL COOPERATION IN THE AMERICAS FOR BETTER AGRIBUSINESS, MARKETS & TRADE

The Latin America and Caribbean (LAC) region holds vast potential to provide food and agriculture products to meet the demands of a growing world. To harness this potential and improve productivity, the Inter-American Institute for Cooperation in Agriculture (IICA) provides training and technical cooperation among its 34 member states across the LAC region, resulting in better policies, institutional frameworks, and capabilities to improve agribusiness and facilitate market and trade development.57

IICA serves as the specialized agency of the Inter-American System for the promotion of agriculture and rural well-being, and its efforts are fully focused on making agriculture competitive and sustainable in the Americas. IICA works closely with ministries of agriculture, research institutes and universities as well as farmers and farmer organizations to promote successful market access in the region.

IICA organizes programs that directly help farmers, such as the Family Farm Plan established with the El Salvador Ministry of Agriculture (MAG). This program benefitted 16,000 producers with immediate productivity increases, cost reductions, and improved market quality standards. MAG targeted eight priority chains: coffee, dairy, honey, fruit, vegetables, cacao, aquaculture, and staple grains (beans and maize). The Plan uses farmer field schools, a methodology created decades ago by the United Nations Food and Agriculture Organization (FAO), to which IICA has added additional training in marketing  and entrepreneurship.

In addition to working on in-country productivity and market access, IICA helps improve export capabilities. Using a Canadian methodology called “Export Platforms,” IICA strengthened the capacities of some 400 small and medium enterprises from Central America to export agricultural products in high demand in North America.

In collaboration with USDA, IICA consolidated the Market Information Organization of the Americas (MIOA) that facilitates the timely and consistent exchange of market information on agricultural commodities and products among its 32 member countries. Senior officials are trained to collect, analyze and disseminate market information, and improve their services. In Costa Rica, for example, officials are using the knowledge acquired through MIOA to assist producers by collecting price information at the farm-gate and consumer levels, developing and disseminating national and international price surveys, processing production estimates and forecasts, and providing information and domestic and international market news for products of interest to Costa Rican producers. Price information is now available via mobile phones so that more than 900 farmers can access information using short text messages.58

FACILITATING REGIONAL TRADE IN AFRICA

In Sub-Saharan Africa, the lack of transparent, science-based and consistently applied grain quality standards and trade rules are barriers to developing agricultural and livestock value chains, assuring food quality and safety, and taking advantage of trade opportunities. In 2006, the Eastern Africa Grains Council (EAGC)59 was established as a membership organization comprised of key stakeholders in the grain value chain — producers, input suppliers, processors and traders — with the purpose of improving the policy and trade environment for grain at the national and regional levels and strengthening market linkages.

Initially, EAGC operated in the East African Community (EAC) countries of Burundi, Kenya, Rwanda, Tanzania and Uganda. It quickly became a vital private-sector policy voice as well as a hub for building professionalism in the grain sector. This attracted the interest of private companies outside the EAC region and by 2013, the EAGC had expanded to 5 other countries. In addition to members’ dues and fees paid by workshop participants, it receives support for specific projects from the British, Swedish, and United States aid agencies, as well as the Alliance for a Green Revolution in Africa (AGRA).

Quality Standards. For several years, the EAC has been striving to fix and harmonize the standards of various commodities across its five member countries. The EAGC supported this effort, since without uniform standards opportunities for commercial cross-border trade are limited. However, the EAGC also wanted to ensure that the standards are science-based, realistic and developed with input from all involved sectors, otherwise staple foods could be pushed into informal and unregulated markets, bypassing food safety regulations and harming agricultural growth.

Since moisture is particularly difficult to control in tropical climates, a controversial issue has been setting the moisture content standard for grain. With higher moisture content, there is increased chance of grain deterioration due to insects, mites, mold and fungi, hence losses to farmers, millers and traders. If the moisture content is too low, it is difficult for farmers to meet the requirement without significant investments in production and post-harvest systems.

In 2012, when the EAC proposed an upper limit of 13 percent moisture for maize, many farmers were concerned that they would not be able to comply. The EAGC conducted a scientific review of the effects of varying levels of moisture content at different temperatures and storage conditions, and brought together farmers, millers and traders to develop a consensus position.60 They agreed to 13.5 percent moisture content, which EAGC presented to the EAC in May 2012 in a well-documented position paper on moisture content of grains and staple foods. In August 2013, the EAC announced the adoption of 13.5 percent as the East African moisture content standard for maize, reflecting the EAGC recommendation, and also adopted standards for a variety of other grains and pulses.

Market Information Systems. A major problem facing small-scale maize producers and traders throughout the region is the lack of market information on prices, volumes, and crop projections. The EAGC collects and disseminates price information covering a variety of border points and markets through its Regional Agricultural Trade Intelligence Network (RATIN). EAGC also introduced RATIN SMS, a low-cost, user-friendly cell-phone based platform that provides daily/weekly/monthly prices for maize, beans, rice, wheat, sorghum and millet in four countries.61 Training is provided for using the technology to determine the break-even point for production, trading, and processing and to evaluate market trends and opportunities before selling or buying a crop.

Warehouse Receipt System. The rationale behind warehouse receipt systems is to provide options for risk management and credit access to both sellers (producers) and buyers (processors and traders). The systems allow a producer to use a receipt for commodities held in storage as collateral, thereby reducing pressure to sell during the harvest period when prices are low. Millers and processors do not need to take as much physical stock into inventory since they can access known quantities when needed from certified warehouses. With support from USAID, EAGC developed and is operating a warehouse receipt system in Kenya that will be used as a model for expanding to other countries.

The EAGC system was successfully used as part of ACDI/VOCA’s Kenya Maize Development Program and it demonstrated two distinct advantages for smallholder farmers. First, the well-run warehouses provided a place to keep the grain safe from spoilage or infestation.

In Africa, post-harvest losses from poor storage are common and can cripple income potential and endanger food security. Second, the farmers used their receipts as collateral to obtain bridge financing so they could store grain and obtain higher prices several months after harvest. Kenya’s Equity Bank provided a special financial product to serve the needs of smallholders and there was active participation by transporters, traders, storage managers, millers, local banks, and input supply companies.62

Eastern Africa Grain Institute (EAGI). In 2012, the EAGC established the EAGI to offer training in post-harvest handling, storage, and marketing to all participants in the grain value chain. Under a memorandum of understanding with the Eastern Africa Farmers’ Federation, EAGI will conduct a capacity-building program for farmer organizations and cooperatives, first assessing their capacities to engage in business, then designing training materials and coaching on market information systems, pre- and post-harvest management and storage, warehouse receipt systems, commodity exchanges, trade contracts, and grain quality assurance and standard’s requirements.

CONSERVING BIODIVERSITY AND IMPROVING PEOPLE’S LIVES

Around the world, reef systems are critical for protecting islanders and coastal villagers from storms and for providing high-protein food from fishing. In West Papua, Indonesia, sedimentation and extensive fishing by non-locals were placing the reef system in jeopardy. In 2004, Conservation International (CI) collaborated with The Nature Conservancy and the World Wildlife Fund-Indonesia in West Papua to save the most diverse marine ecosystem in the world, the Bird’s Head Seascape, from deterioration and to improve the well-being of the local population.63

Since the program was launched in 2004, the Seascape’s marine protected areas (MPAs) have grown from 1.5 million hectares to 3.6 million hectares. Much of the area is secured for traditional use, where only locals may fish, enabling villagers to catch more close to home. Prior to 2004, 95 percent of the total catch was attributable to non-locals; now, it is less than 50 percent.

Between 20 and 30 percent of the MPA network is comprised of “no take” zones that allow healthy reef systems to replenish and grow. Local government revenue from tourism has grown fourfold, and the community benefits from marine protection and tourism jobs. Preservation of the reef system is apparent in the abundance of marine life, which has transformed the Bird’s Head Seascape into a world-class destination for divers.

The success of the program is largely due to engaging local communities and leaders early, as full partners with government agencies, in managing the MPAs. The MPAs are embedded in local and national legislation and protected through carefully designed and enforced management practices with widespread support. Before the partnership was in place, less than $1 million was spent on management of MPAs. Today, government funding for the MPAs exceeds $3.7 million.

Traditional Papuan resource management has also been reinvigorated by Conservation International’s collaboration. In Wayag, villagers organize a three-year cycle of traditional closures (known as sasi), after which the area is opened for two to three weeks of controlled harvest. The results have been quite impressive: during 2012, the second round of sasi harvest since CI assisted the villagers to otherwise close the MPA, there was a six-fold increase in sea cucumber and doubling of topshell catch. Lobster was similarly much more abundant.

Trofinus Dailom, church leader in the Mayalibit Bay, observed:

“Since the old times, I have eaten sea cucumber, grouper and jack. In the 1990s, a lot of people were coming from the outside with a big net and caught lots of fish. After Conservation International came, we stopped the nets and feel there is some improvement. If we cannot find big sea cucumbers, we must close the fishery so it can recover. We also know where the fish lay their eggs, and we do not go in that area.”

The results in Bird’s Head can be replicated elsewhere. The Indonesian Ministry of Marine Affairs and Fisheries led the implementation of an ambitious national capacity development program to ensure that its more than 2,500 MPA staff has the training and skills necessary to effectively manage Indonesia’s vast network of protected areas.


TABLE OF CONTENTS

Executive Summary

The Global Agricultural Imperative

Producing More With Less

The GAP IndexTM

Spotlight on Sub-Saharan Africa: The Productivity Gap

Sources of Growth in Agricultural Output: Variation by Income

The Brazil-China Agricultural Connection

A Policy Voice

The Agricultural Value Chain

Policies in Action: Productivity Along the Value Chain

[1] Comprehensive Value Chain Programs

[2] Investments in Research, Science and Technology

[3] Building Local Capacity and Mobilizing the Private Sector in Developing Countries

Endnotes