London, United Kingdom and Rome,
Italy
March 10, 2008
In the context of soaring world
food prices, senior government officials from Eastern Europe and
the former Soviet Union are meeting with executives from the
private agribusiness sector to seek concrete proposals to boost
agricultural investments and unlock unused output potential.
At a conference in London today organised by the
European Bank for Reconstruction
and Development (EBRD) and the UN
Food and Agriculture Organization
(FAO), participants are exploring options to foster better
cooperation between the private and public sectors to facilitate
this investment.
One of the key messages at the conference: it is crucial to
increase investments not only in the primary agricultural sector
but also in the whole infrastructure of agriculture, as well as
in the processing industry.
Untapped agriculture potential
According to FAO, world food prices rose by almost 40 percent in
2007. Both EBRD and FAO believe that there is significant
untapped agricultural production potential in the Eastern Europe
and Commonwealth of Independent States (CIS) region, especially
in countries such as Kazakhstan, Russia and Ukraine.
In these countries around 23 million hectares of arable land
were withdrawn from production in recent years. At least 13
million hectares could be returned to production, with no major
environmental cost.
In a speech delivered by Charles Riemenschneider, Director of
FAO’s Investment Centre, FAO Director-General Jacques Diouf
called for courageous steps to be taken now to help unlock the
untapped agricultural production potential, noting that current
predictions for CIS grain production point to a rise of seven
percent to 159 million tonnes between 2007 and 2016.
“But let us be bolder and imagine the removal of the
institutional and financial constraints that limit production in
the region. The region’s cereal output and its contribution to
world exports would then be well above those projections,” Diouf
said.
Urgent need to work together
EBRD President Jean Lemierre said: “There is now an urgent need
for both the private and public sectors to work together to
create the conditions for sustainable investment that will
restore the primacy of this region as a crucial centre of
agricultural production.”
Mr Lemierre also welcomed the strong participation of private
businesses in the conference. This showed their strong
commitment to solving the problem of high food prices and that
it was clearly understood that new and increased investments
were now urgently needed.
An EBRD paper submitted to the conference noted governments have
responded to rising food prices by introducing a series of
measures including price controls, increased subsidies, reduced
import barriers and restrictions on exports designed to benefit
consumers. But it noted that many of these measures, while
well-intentioned, could prove to be counterproductive on a
long-term basis.
Investment, not government intervention, needed
The EBRD paper encouraged governments to limit interventions
that would distort domestic markets or disadvantage producers
and traders, arguing that the most effective way to generate a
supply response to the rise in global demand is to facilitate
investment along the entire agricultural value chain.
Protection of the poorest consumers, it suggested, could be
achieved through targeted income support to the most vulnerable
segments of the population
The Bank said it would target its own investments to the
development of local supply chains to increase production and to
the development of new rural financing instruments.
Working to improve communication
In cooperation with FAO, EBRD will also pursue greater policy
dialogue to help overcome the lack of communication and
effective contact between private sector companies and related
authorities in the agricultural sectors across the transition
region
In the agribusiness sector alone, EBRD has already committed
€4.9 billion in 357 projects across central and Eastern Europe
and the CIS.
In its submission to the conference, FAO said ambitious
government policies are vital, implying improved use of state
budgets to deliver essential public goods and services to the
agricultural sector.
“A supportive institutional and regulatory environment is
mandatory to attract private investment at all levels of the
food chain. To achieve that, improving policy dialogue between
private stakeholders and policy-makers will be instrumental,” an
FAO paper said.
Areas that need immediate attention
It added that areas of immediate attention for policy-makers
included knowledge and human capital development, strengthening
of credit systems and financial instruments, regional networking
and land markets. In these areas, FAO has been providing
technical assistance to governments of the region and is ready
to step up its efforts, on its own or in conjunction with
international financing institutions.
“Massive investment will be needed in handling, storage and
transportation infrastructures. Financial resources will have to
be mobilized from both the public and private sectors,” a
summary document concluded.
The EBRD, owned by 61 countries and two intergovernmental
institutions, aims to foster the transition from centrally
planned to market economies from central Europe to central Asia.
FAO, with 191 Member States, one Member Organization and one
Associate Member, aims to raise levels of nutrition, improve
agricultural productivity, better the lives of rural populations
and contribute to the growth of the world economy. Achieving
food security for all is at the heart of FAO's efforts - to make
sure people have regular access to enough high-quality food to
lead active, healthy lives. |
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