Measuring Agro-Industry and Agribusiness in East Asia · 2015-11-20 · Measuring Agro-Industry and...

Measuring Agro-Industry and Agribusiness in East Asia

Patrick Labaste, FAO/AGS FAO-UNIDO Expert Group Meeting on Agro-industry Measurement (AIM) 23-24 November 2015, Rome, Italy

Overview

• What we were trying to do and key hypothesis to be tested

• Sources of information, methodology and issues

• Main findings

• Unresolved questions and next steps

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1. What were we trying to do? • Regional study on farmgate to market in East Asia (2013)

▫ Qualify and quantify the changes taking place in the AFS

▫ Historical and comparative analysis

▫ Context of agriculture transformation in East Asian countries

▫ Drivers of change: economic growth, urbanization, dietary changes

▫ What do we need to know or know better?

• Research questions: ▫ Place and role of agribusiness over time and between countries

▫ What patterns can we observe? What are the paths and trajectories?

▫ Role of private sector investment in agro-industry and agribusiness

▫ What are the policy implications of the changes taking place?

Measuring agribusiness in East Asia

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1. Key assumptions

• Contextualization: how does the agriculture transformation process apply to EA countries? ▫ Analytical framework of the WDR 2008 ▫ Typology of the Agriculture Transformation Matrix (ATM) ▫ Specific patterns in EA countries?

• The share of agribusiness increases as GDP/capita increases • Agriculture + agribusiness goes up even though agriculture declines and

until GDP/cap reaches a certain treshold • Private sector investment in “value adding agro-enterprises” can be

measured and will also inform on agribusiness activity • Value addition is higher in ag export oriented economies for similar

GDP/cap level


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1. The WDR 2008 framework: the three worlds of agriculture


5

0%

10%

20%

30%

40%

50%

60%

70%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Agri-Based

Pre-Transition

Urbanising Transition

Developed

1. The Agricultural Transformation Matrix (ATM) Country segmentation based on agriculture’s role in the national economy

(provides insights into the transformation of the agro-industry)

Ag

ric

ult

ur

e V

A a

s %

of

GD

P

Economically Active in Ag as % of Total Economically Active Population

25.0%

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Share and Size of Agribusiness in National GDP, Selected Countries (2000)

Country Agriculture’s Share of GDP Agribusiness’ Share of GDP* Combined Agriculture and

Agribusiness Share of GDP

Agribusiness GDP

($ Billion)**

South Africa 4 16 20 15

Nigeria 42 16 58 6

Uganda 41 23 64 3

Kenya 26 23 49 2

Zimbabwe 18 21 39 2

Ghana 44 19 63 1

All SSA 32 21 53 67.0

For Comparison

United States 1 13 14 1007

Brazil 8 30 38 236

Argentina 11 29 40 94

Mexico 9 27 36 91

Indonesia 20 33 53 71

Thailand 11 43 54 68

Chile 9 34 43 25

* Combines the value added for agro-related industries and that of agricultural trade and distribution services. Based on WB, FAO, and UNIDO databases.

** Agribusiness only. Does not include the GDP of primary agriculture.

Sources: Jaffee (1999a); Pryor and Holt (1998)


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1. Growth in agro-industry according to ATM typology


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Source: WB/BBA Project (2014)

2. Main data sources and indicators Source Indicators

World Bank (WDI) Population, GDP, agriculture value added, food and merchandise exports, Gini coefficients

FAO Stat Agriculture production, value added, trade

GTAP Value added of (i) agriculture, (ii) processed agriculture and (iii) other

UNIDO FBT manufacturing and overall manufacturing output, value added, gross fixed capital formation (GFCF), enterprises, employees GFCF, reported in UNIDO Indstat, best proxy found for investment

Comtrade Exports (world)

ITC FDI inflows, foreign affiliates

USDA FBT and Food & Fiber, ERS time series

2. Sources of information and methodology

• ATM data source: GTAP (Global Trade Analysis Project), Purdue University

▫ Input-Output tables (I/O matrices) for 130 countries, version 9.0

▫ Based on Pryor and Holt (1999) methodology

▫ 57 sectoral categories at the disaggregated level, grouped into (i) agriculture, (ii) processed agriculture and (iii) other sectors

▫ Data extracted for 2004, 2007, 2011

• UNIDO: Indstat

▫ Relevant parts of manufacturing identified by ISIC code (FBT)

▫ Estimation of agribusiness value added using UNIDO/Indstat data for manufacturing, and prorating wholesale, retail and trade value added data from national accounts


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INPUT-OUTPUT TABLE TO CALCULATE THE SIZE AND COMPONENTS OF AGRIBUSINESS: Ghana 2011, in Millions of Dollars

Agriculture Processed Agriculture Other (Non-Ag) Intermediate Demand Investment Consumption Government Exports Final Demand Domestic Demand

AGRICULTURE

Domestic Demand at Market Prices 1190.5 1904.1 172.9 3267.5 3040.8 8941.0 0.002 2818.9 14800.7

Import Demand at Market Prices 24.4 75.2 4.2 103.8 229.4 0.005 229.4

All Intermediate Agriculture 1214.9 1979.3 177.2 3371.3 3040.8 9170.4 0.0 2818.9 15030.1 12211.2

PROCESSED AGRICULTURE



All Intermediate Processed Ag 35.4 1093.5 479.2 1608.0 1451.1 9253.2 0.1 1260.2 11964.6 10704.5

OTHER SECTORS (Non-Ag)



All Intermediate Other Sectors 3158.7 1252.6 16868.0 21279.4 7579.2 9533.9 7845.5 4017.5 28976.1

ALL SECTORS



Intermediate Use 4409.0 4325.4 17524.4 26258.8 12071.2 27957.5 7845.6 8096.5 55970.9

16406.6 Imports

Land 1140.1 15.3 0.0 1155.4 39564.0 GDP

Unskilled Labor 188.5 222.6 2794.0 3205.0 Exports Structure at Market Prices

Skill Labor 7246.3 2054.3 12544.3 21845.0 Ag 2721.549 34.8%

Capital 1648.9 622.4 7089.7 9361.0 Ag Proc 1216.635 15.6%

Natural Resources 285.0 0.0 35.5 320.5 Non Ag 3878.712 49.6%

Value Added (L+K+N) 10223.8 2914.6 22428.0 35886.9 7816.896

Taxes 3677.1

GDP 39564.0

Total Costs Domestic Demand 13730.4 6552.4 34222.8 54505.6 Share of total cost as % total cost (Domestic) 25.2% 12.0% 62.8%

Source: Agribusiness as an engine of growth in developing countries, Pryor and Holt (1999)

2. Issues encountered • Definitions

▫ Agro-industry, agribusiness vs. agriculture/primary production

• Categorization • ISIC • GTAP: I/O approach, agriculture vs. processed agriculture, select categories,

extraction to get time series

• Quality and reliability of data

▫ Consistency over time and across countries ▫ Formal/informal sectors


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3. Main findings

• Findings: ▫ Agriculture transformation

Has been taking place in most countries, at an accelerated pace in middle-income countries (China, Vietnam, Indonesia)

▫ Agribusiness (or “agro value addition”) has grown as part of the transformation process

▫ Different country trajectories can be observed

• Policy Implications: ▫ Upstream/farm level

Facilitate transformation process: (i) land consolidation, (ii) mechanization, and (iii) diversification of farming systems

▫ Downstream/farm-to-market Improve: (i) VC logistics efficiency/VC modernization, (ii) farmer inclusion, (iii) food

safety, and (iv) flexible and undistortive trade policies


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3. Agriculture Transformation Matrix (ATM), 1980


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3. Agriculture Transformation Matrix (ATM), 2012


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3. Visualization of agricultural transformation in selected East Asian countries (1980 – 2012)


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3. Ratio of the value of processed agriculture to agriculture

selected countries (2004, 2007 and 2011)

-

0,50

1,00

1,50

2,00

2,50

3,00

3,50

4,00

4,50

4 chn 6 jpn 7 kor 11 khm 12 idn 13 lao 14 mys 15 phl 17 tha 18 vnm

2004

2007

2011


18

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0% 90,0% 100,0%

25.0%

Urban Demand Growth – Need for basic infrastructure, roads, market linkages,

mkt IQ, productivity e.g. access to seed, fertilizer, finance , etc.

Continued Urban Demand Growth – early stages of agribusiness development,

product differentiation, quality and post-harvest

Expanding Export Markets – food safety, international

standards, processed foods

Agribusiness growth – contract farming, PPP,

larger more professional farms, mechanization

Urbanising Transition

Developed

Ag-Based

Pre-Transition

3. Policy Implications from the ATM and related analysis

3. Summary of results of quantitative measurements of agribusiness activity across EA countries

Hypothesis Quantitative evidence Comment

1 Agriculture transformation Partly Ag employment data to be refined

2 A Agribusiness share increases as GDP/cap increases

Partly

Time series incomplete

2 B Different trajectories can be

identified between countries To some extent

Benchmarking of agribusiness size and

performance still difficult

3 Agric + agribusiness increases No Not well documented

4

Private sector investment in

agribusiness related to

agribusiness activity

No No aggregate and cross-country data

available

5 Ag. export-led economies

transform more rapidly Yes

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4. Unresolved questions and next steps

Right now, still difficult to measure and monitor agro-industry over time and across countries, therefore to properly inform policies

Need more robust, easy to measure and universally applied definitions of agribusiness, agro-industry, agro-enterprise

Esp. at country level and across countries

Continue to work on - and improve – definitions, classifications, harmonization, data collection and quality control

• Could the AIM Project help and how?


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Thank you !


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Measuring Agro-Industry and Agribusiness in East Asia · 2015-11-20 · Measuring Agro-Industry and...

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Transcript of Measuring Agro-Industry and Agribusiness in East Asia · 2015-11-20 · Measuring Agro-Industry and...