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Transition Challenges in Agribusiness

Transition Challenges in Agribusiness. Heike Harmgart Office of the Chief Economist EBRD. EastAgri Annual Meeting 2008. Initial conditions in agriculture. The command economy system was characterised by: collective or state ownership of land and farms

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Transition Challenges in Agribusiness

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  1. Transition Challenges in Agribusiness Heike Harmgart Office of the Chief Economist EBRD EastAgri Annual Meeting 2008

  2. Initial conditions in agriculture • The command economy system was characterised by: • collective or state ownership of land and farms • vertically integrated state-owned agro-companies • tight state controls over prices and trade • dilapidated infrastructure and controlled distribution channels • usually with state Agrobank as the sole financing channel • Progress in general economic reform has been strongly correlated with progress in agricultural reform

  3. Status of agricultural reforms Source World Bank 2001. Scale 1-10, with 10 indicating standards of market economy.

  4. Transition indicators • Large-scale privatisation • Small-scale privatisation • Governance and enterprise restructuring • Price liberalisation • Trade and foreign exchange system • Competition policy • Banking reform and interest rate liberalisation • Securities markets and non-bank financial institutions • Infrastructure reform (Electric power, Railways, Roads, Telecoms, Water and waste water)

  5. CIS+M SEE CEB Transition progress by phases of reform Source: EBRD. 4.3 indicating the standards of an advanced market economy.

  6. Transition Challenges • Incomplete land reform • Inadequate transport, storage and warehouse facilities • Lack of professional and technical skills • Inefficient scale with inefficient vertical coordination • Low compliance with hygiene and quality standards • Lack of access to credit for the primary sector • Lack of adequate financing mechanisms, i.e. agricultural mortgages, leasing and risk-sharing schemes • Lack of modern retail solutions

  7. Tradability of land • Private land ownership continues to be a contentious issue, even in advanced countries • Full: Bulgaria, Croatia, Estonia, Georgia, Romania, Slovakia, Slovenia • Full except foreigners: Armenia, Czech Republic, Hungary, Kazakhstan, Kyrgyz R, Latvia, Lithuania, Moldova, Poland • Limited de facto: Albania, Mongolia, Russia, Ukraine • Limited de jure: Azerbaijan, Belarus, Bosnia, Macedonia, Montenegro, Serbia, Tajikistan, Turkmenistan, Uzbekistan

  8. Consumer Distribution Foodservice Packaging Production Food Processors Primary Processing Production Agricultural Inputs Investment along the value–chain Important to maximise supply potential and identify bottlenecks Food retailers Distributors Caterers Wholesale Markets Glass Bottles/Jars PET Bottles Cans Carton Containers Meats/Poultry Baked Goods Confectionery/Snacks Beverages/Beer/Water Dairy/UHT/Cheeses Frozen Foods Fish Pet Food Edible oil Millers Malters Grain Handling Grains Oilseeds Livestock Dairy Fish Seeds Farm Machinery Bio-tech Agricultural Chemicals Distributors/Services

  9. Primary Processing Production Agricultural Inputs Transition gaps: primary production

  10. Packaging Production Food Processors Transition gaps: processing

  11. Retail Wholesale Distribution Foodservice Transition gaps: distribution

  12. Distribution Processing Primary production Transition gaps by region

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