The Inter The Inter- -American American Development Bank and Development Bank and p Agriculture in LAC Agriculture in LAC – – Financing Opportunities for Financing Opportunities for g g pp pp Coffee Sector Development Coffee Sector Development 4 th Consultative Forum of the International Coffee Organization - ICO Coffee Organization ICO London, UK, September 23, 2014
What is the Inter What is the Inter ‐ American Development Bank? American Development Bank? p The year in which the IDB was The year in which the IDB was 1959 1959 established to serve the Region of Latin America and the Caribbean (LAC). Now, e ca a d t e Ca bbea ( C) o , there are 48 member countries. 26 26 26 26 Th The number of borrowing member b f b i b countries of the Bank from LAC. Bank offices in the capital of these countries. offices in the capital of these countries. The total amount of loan approved per The total amount of loan approved per US$12 billion US$12 billion US$12 billion US$12 billion year in the last three years, 90% of which are sovereign guarantee loans to governments. 2
The Bank has been committed to LAC’s The Bank has been committed to LAC’s agriculture sector since its creation agriculture sector since its creation Loans approved for agriculture in the Loans approved for agriculture in the US$15 billion US$15 billion Region since 1961 (9% of total app o a s) approvals) Loans approved for agriculture in the US$3 billion US$3 billion US$3 billion US$3 billion R Region between 2008 and 2014. Six i b t 2008 d 2014 Si operations have been approved annually on average for same period. on average for same period. Amount of technical cooperations Amount of technical cooperations US$1 million US$1 million US$1 million US$1 million approved for the sector in 2011. 3
Why Why Agriculture and Rural Development in y Agriculture and Rural Development in LAC? g g p p LAC? LAC has abundant possibilities for expanding farm production p p g p 28% of the world’s arable land 33% of its renewable water resources LAC accounts for 14% of global agricultural exports It exports: 52% of soybean 45% of coffee 44% of beef & poultry 70% of bananas 45% of sugar 12% of citrus 33% of maize 30% of the labor force works in in the sector 75% of rural poor depend on agriculture as its income source 4
In 1980’s, LAC started policy reforms to In 1980’s, LAC started policy reforms to overcome agriculture stagnation… overcome agriculture stagnation… The region went from Macroeconomic policy stability extracting the sector g US$10 billion in Neutrality of monetary policy on exchange rate on exchange rate annual revenue to support farmers with Trade regime with reduced Trade regime with reduced anti ‐ export biases more than US$5 billi billion annually after ll ft Favorable investment framework for private sector reforms
… that resulted on an average annual sector … that resulted on an average annual sector growth rate in 1990 growth rate in 1990 ‐ 2011 greater than most 2011 greater than most OECD countries in same period (%) OECD countries in same period (%) OECD countries in same period (%) …. OECD countries in same period (%) …. 6
… and contributed to reduce … and contributed to reduce … and contributed to reduce … and contributed to reduce poverty in the Region poverty in the Region • Between 1990 and 2011, poverty in rural areas fell from 65% to 50% & rural indigence went from 40% to 29% • LAC aggregate growth based on agriculture was gg g g g 2.7 time more effective in reducing poverty than growth of non ‐ agricultural GDP g g 7
What challenges do we see for What challenges do we see for g agriculture in LAC? agriculture in LAC? 1. Slow growth in agriculture productivity Annual rate of growth of total productivity in LAC has been lower than that in OECD countries: 1.9% vs. 2.4%, between 1961 and 2008. , In Central America and the Caribbean that rate of growth has been even lower: 1.1%. Public resources to agricultural research in LAC only 1 1% of its agricultural Public resources to agricultural research in LAC only 1,1% of its agricultural GDP vs 2.4 % in developed countries. 2. Unequal distribution of growth benefits to rural population In spite of a 37% increase in LAC’s agricultural production during 1999 and 2009, poverty remained in the la � er year for almost ⅔ of its rural population. 3. Vulnerability to climate change Higher temperatures may eventually reduce yields of crops, encourage weeds and pest proliferation and change in precipitation patterns. d d t lif ti d h i i it ti tt In LAC, rice and maize production may be among crops most severely impacted. 8
The The Bank established a strategic approach Bank established a strategic approach to support agriculture in the to support agriculture in the Region in Region in 2008 2008 2008 2008 Economic efficiency Efficient resources allocation: Comparative No distortions Advantages Max coverage of farmers, with Social inclusion emphasis on emphasis on smallholders High economic returns on Wealth increase of investment rural families
OUR STRATEGIC APPROACH OUR STRATEGIC APPROACH IN LAC IN LAC AGRICULTURE SECTOR HAS AGRICULTURE SECTOR HAS FOUR AGRICULTURE SECTOR HAS AGRICULTURE SECTOR HAS FOUR FOUR FOUR AREAS OF AREAS OF INTERVENTION INTERVENTION AGRICULTURAL AND NATURAL RESOURCES SECTOR FRAMEWORK: AGRICULTURAL AND NATURAL RESOURCES SECTOR FRAMEWORK: 10
1. Elimination of obstacles in price 1. Elimination of obstacles in price ‐ p transmission mechanisms transmission mechanisms • Ensure that domestic producers benefit fully from favorable price shocks from favorable price shocks • The Bank supports policy reforms on agriculture and trade policies: – Reduction/Elimination of tariff & non ‐ tariff Reduction/Elimination of tariff & non tariff barriers – Elimination of State market interventions 11
2. Improvement of effectiveness, 2. Improvement of effectiveness, p p , , coverage and quality of rural public coverage and quality of rural public expenditure to foster investment expenditure to foster investment expenditure to foster investment expenditure to foster investment 100% 100% In 2010 2011 In 2010 In 2010 ‐ 2011, In 2010 2011, 2011 90% LAC countries LAC countries 80% allocate more allocate more 70% 60% fiscal resources fiscal resources 50% to support to support 40% private goods private goods 30% than public goods than public goods 20% 10% in agriculture in agriculture in agriculture in agriculture 0% sector sector CO RD ME PR HO JA EC HA PE CH ES BO AR GU BR UR NI CR %Apoyos fiscales directos (1) %Apoyos fiscales directos (1) %Bienes públicos (2) %Bienes públicos (2) 12
3. Support . Support the provision of effective and pp pp the provision of effective and p modern agricultural services and rural modern agricultural services and rural infrastructure infrastructure infrastructure infrastructure • Ensure long ‐ term sector competitiveness g p • Typical Bank ‐ financed investment programs: – Rural roads and electrification R l d d l t ifi ti – Irrigation – Agricultural innovation system – Agricultural health & food safety – Agricultural information systems – Land management: tenure regularization g g • Emphasis on impact project evaluation 13
4. When necessary, promote temporary 4. When necessary, promote temporary y, p y, p p p y y direct support programs focused on direct support programs focused on technology adoption technology adoption technology adoption technology adoption • Help to overcome liquidity constraints in the H l li idi i i h sector due to thin rural financial markets • Ensure that public expenditure on private goods promote cost ‐ effective mechanisms goods promote cost ‐ effective mechanisms thru decoupled income transfers • Emphasis on small farmers 14
Some recent IDB investment loans to support coffee development in LAC IDB Executing Country Name (USD millions) Agency Colombia C l bi Innovative Intervention Models for the Coffee Sector (2006 ‐ 2010) I ti I t ti M d l f th C ff S t (2006 2010) US$ 6 0 US$ 6,0 National Coffee N ti l C ff (CO ‐ L1009) Growers Federation Costa Rica Development Programme for Agrobusiness (PRONEGOCIOS) US$ 14,4 Ministry of (CR0142) (2008 ‐ 2015) Agriculture and Livestock Livestock Honduras Development Programme for Agrobusiness (PRONEGOCIOS) (2008 ‐ US$ 27,1 National Sustainable (HO ‐ L1010) 2015) Rural Development Department Haiti i i Mitigation of Natural Disasters Programme (2009 ‐ 2015) i i i f l i (2009 201 ) US$ 30,0 S$ 30 0 Ministry of i i f (HA ‐ L1041) Agriculture and Natural Resources Haiti Programme for Technology Transfer to Smallholders (2011 ‐ 2016). Co ‐ US$ 15,0 Ministry of (HA ‐ L1059) (HA L1059) financing from Global Agricultural and Food Security Program financing from Global Agricultural and Food Security Program Agriculture and Agriculture and (Additional US$ 25) Natural Resources Regional ECOM – Facilities for the Renewal of Coffee farms affected by Rust. US$ 40,0 ECOM Agroindustrial (RG ‐ X1220) Mexico, Nicaragua, Costa Rica, Honduras and Peru). Co ‐ financing Corporation from IFC GAFSP Canadian Climate Fund and ECOM Total US$ 100 from IFC, GAFSP, Canadian Climate Fund, and ECOM. Total US$ 100 million Nicaragua ECOM – Renewal of coffee farms, Sub ‐ Project 1 (2014–2016). Total US$12,0 ECOM Agroindustrial (NI ‐ L1088) US$ 30 million Corporation
Recommend
More recommend
