Enabling Environments for Successful Contract Farming Carlos Arthur B. da Silva, Ph.D. Rural Infrastructure and Agro-Industries Division FAO - Rome

FAO – Rural Infrastructure and Agro-Industries Division Contents Enabling environments: the concept Assessing enabling environments What constitutes an EE for contract farming ? Questions for discussion

FAO – Rural Infrastructure and Agro-Industries Division Let’s talk about “conditions”

FAO – Rural Infrastructure and Agro-Industries Division Conditions can be favorable or not

FAO – Rural Infrastructure and Agro-Industries Division Conditions can change!

FAO – Rural Infrastructure and Agro-Industries Division “Enabling environments” can be seen as the general conditions The set of policies, institutions and support services that create the conditions for enterprises to be started and grow  the environment, or “climate” for business  value chains cannot be developed without a favorable business climate  contract farming cannot work well if the conditions are not right

FAO – Rural Infrastructure and Agro-Industries Division Can we assess EEs ? Focus of increased attention in the recent past  perception of high potential impact from interventions on EE reforms Evaluation of overall business climates performed by several international organizations and private institutions  guidance to investors; guidance to policy reform; rankings of competitiveness, ease of doing business, FDI confidence indexes, etc.  Since late 70’s

FAO – Rural Infrastructure and Agro-Industries Division The World Bank’s Doing Business Survey “ The Doing Business database provides objective measures of business regulations and their enforcement. The Doing Business indicators are comparable across 175 economies. They indicate the regulatory costs of business and can be used to analyze specific regulations that enhance or constrain investment, productivity, and growth” Benchmarks (annual survey)  Cross country comparison  Monitoring of progresses in reforms  Considers 10 items that form “the regulatory costs of business”

FAO – Rural Infrastructure and Agro-Industries Division What does the WB really assess? Starting a Business Dealing with Licenses Employing Workers Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business

FAO – Rural Infrastructure and Agro-Industries Division Who is faring well an who is not? Africa Mauritius2429 South Africa3235 Botswana3852 Namibia5148 Kenya8278 Ghana8782 Zambia Seychelles10493 Swaziland Uganda Ethiopia Nigeria Lesotho Tanzania The Gambia The World Singapore11 New Zealand22 United States33 Hong Kong, China45 Denmark57 United Kingdom66 Canada74 Ireland810 Australia98 Iceland1012

FAO – Rural Infrastructure and Agro-Industries Division Who reformed the most in Africa ?

FAO – Rural Infrastructure and Agro-Industries Division In sum Starting a Business Dealing with Licenses Employing Workers Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business Not free of criticism, but highly effective in triggering reform Not specific to any economic sector Can we use a similar framework to promote contract farming ?

FAO – Rural Infrastructure and Agro-Industries Division What could be the key elements of an EE for contract farming? General contract laws Land tenure laws Contract enforcement mechanisms Competition regulations Regulations on associations Grades and standards Finance and risk mitigation mechanisms Others?

FAO – Rural Infrastructure and Agro-Industries Division Questions for discussion What are the macro- level conditions for successful contract farming ? How can we ensure they are in place? What support institutions are required to facilitate contract farming? Sugar beet contract farmers in Egypt

Thank you!