Promoting trade, business and financing in agriculture

Project description

Title: Sector Project on Agricultural Trade, Agribusiness, Agricultural Finance
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Germany
Lead executing agency: German Federal Ministry for Economic Cooperation and Development (BMZ)
Overall term: 2018 to 2021

Context

Global demand for foodstuffs and agricultural raw materials has risen to an unprecedented level over the past ten years. Accordingly, global trade with agricultural products has also increased. Higher incomes in developing countries and emerging economies also play a role here. Nevertheless, hunger and poverty are still prevalent in the rural areas of German development cooperation partner countries. Around half of the world population lives in rural regions and is directly or indirectly dependent on agricultural production. 

Many partner countries have increased their agricultural exports in recent decades. However, the diversity of export products is comparably low. In sub-Saharan Africa, regional trade in agricultural products fails to achieve its potential. Most partner countries rely on food imports to meet their nutrition requirements.

In promoting agricultural value chains, German development cooperation has established an approach that integrates small farms into markets and increases value creation at all levels. In order for businesses to remain competitive in the long term, it is necessary to promote private sector structures in agriculture, mobilise private funds by means of cooperation between development cooperation actors and the private sector, and ensure access to financing opportunities. However, the basic conditions and intervention by public and private sector actors are often not sufficiently coordinated. The approaches, experience and results of promoting trade and business in the agricultural sector as well as corresponding financing arrangements undergo constant analysis. Based on this analysis, economic approaches are to be taken into account in the strategies, positions and projects of German and international development cooperation actors. 

Objective

German development cooperation positions and strategies for promoting a socially acceptable, environmentally friendly and competitive agriculture and food sector have been incorporated into national and international processes.

Approach

The sector project has a cross-border structure. Its advisory services are tailored directly to the demands of the partner divisions in the Federal Ministry for Economic Cooperation and Development (BMZ). It provides support in the following areas: 1) advisory services 2) strategy development and 3) learning, networking and knowledge management.

The project contributes statements, commentaries and technical analyses and appraisals of current political processes. It also provides gender-sensitive analyses, processes results and impacts, and comments on project outlines to support ongoing or planned projects.

• In the thematic area of agricultural trade, the project draws on national and international agricultural economic expertise for scientifically sound policy analyses. The project investigates possible scope for political action and supports development cooperation actors in planning and implementation.
• Small farmers can become more competitive by joining together to form farming organisations. With regard to promoting agriculture, for example, the project thus analyses promotional instruments for farming organisations and possibilities for investment in resources such as farm machinery. Priorities here include establishing impacts and communicating results.
• To further develop the positions and the development cooperation portfolio in the area of agricultural financing, the project evaluates approaches for investment promotion and operational risk management. 

In addition, the project organises exchange events and specialist events on behalf of BMZ. Offering training courses and the exchange of experience, it strengthens and utilises sector networks with relevant development cooperation actors and companies. 
 

Results

• The project has advised BMZ on its position regarding national and international processes. 
• For example, it drew up various strategy papers prior to the reform of the European Union’s Common Agricultural Policy. In this way, aspects relevant to development policy have had a positive impact on coordination with BMZ.
• Various products have been created that provide the framework for successful cooperation between development cooperation and the German private sector. Examples include a strategy paper and a compilation of best practices demonstrating cooperation between the German private sector and agriculture in our partner countries.
• Studies, training courses and strategies developed by the project support the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and BMZ. As a result, the work of German development cooperation is always based on the latest findings from theory and practice.