Inclusive Model for Agribusiness Development. October 2011

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1 Inclusive Model for Agribusiness Development October 2011

2 Prevailing Agribusiness Environment Weak economic governance Absence of a coherent agricultural development strategy Lack of investment in agriculture and related infrastructure. Weak innovation systems technology, agribusiness education, extension services Unintended consequences of liberalization high food import bill Absence of deliberate policies/strategies to upgrade domestic production Limited access to affordable inputs land, tractors, fertilizers, agro-chemicals, improved seeds 2

3 Undeveloped Agribusiness Potential Population of 3.7 million Over 50% living below $2 per day 30% engaged in agribusiness and related activities Land area of about 14, 875 sq km 80% suitable for agriculture (figure includes built up areas) Presence of rivers and water bodies for irrigation Proximity to a large food market opportunity $23m per day Lagos food market Good road and rail connections to Lagos Strategy is to capture 10% of the Lagos food market 3

4 Strategic Objectives Osun Rural Enterprise & Agriculture Programme (O-REAP) Food security in Osun State Job creation and youth empowerment Economic transformation of Osun State with agriculture as a key driver Wealth creation, leading to increased household income and IGR Focus on Mass Food Production 4

5 Programme Components Farm Estate Development Infrastructure upgrade Inputs supply Provision of storage facilities Market linkages Training Farmer Cooperatives Association strengthening Agribusiness support services Access to credit As for farm estates O-REAP Agricultural Land Bank Initiative 1,000 ha per local government Agric Land Planning & Development Authority As for farm estates Agric Investments and Partnerships Public private partnerships Large scale agric investors One stop government agency 5

6 Preparing for Agribusiness Development (1) Organise the factors for agribusiness development A land bank dedicated to food production Equipment leasing companies to promote affordable access to tractors and other farm machineries High yielding seed varieties private sector driven market for seeds Private sector driven markets for fertilizer and agro chemicals Innovative training and extension services Rural infrastructure roads, water, energy Portfolio of affordable financial services for farmers 6

7 Preparing for Agribusiness Development (2) Producer Business Support building capacity for innovation and upgrading Producer association strengthening Entrepreneurial training for farmers Trade and information systems, market linkages Aggregate Production and Processing Development of production clusters Facilitate formation of commodity association and networks Agro-industrial estates for cassava, maize and rice. 7

8 Preparing for Agribusiness Development (3) Link producer groups to the Lagos food market Produce buying companies to distribute from the farm gate to market A logistics hub to move produce to Lagos by rail - free of freight charges Osun Food Mart in Lagos markets dedicated to agricultural produce from the State of Osun Broker linkages between value chain participants Producers, industry, governments, investors, trade associations, NGOs. Private sector linked out growers schemes 8

9 Market Development Stages Stage 1 Value Chain Integration for Low Income Farmers Fully developed production and agro-processing clusters 10% of the Lagos food market Strong trade relationships with industrial buyers Raw materials input supply- out growers schemes Improved economic governance MDA capacity enhancement Inter-ministerial collaboration to create value 9

10 Market Development Stages Stage 2 Agribusiness Development and FDI Flows Strong domestic agribusinesses Investments in out growers schemes FDI from large global players and buyers of agricultural commodities Establishment of food processing subsidiaries Equity investments in domestic agribusinesses Significant private sector investment in the agribusiness sector 10

11 Partnering for Agribusiness Development Office of Economic Development & Partnerships (OEDP) to drive development cooperation, investments and partnerships for agriculture. Investment and partnership opportunities for: Maize, rice, cassava, tomato, chili, vegetables, fisheries and livestock commodity sectors. Equipment leasing company limited govt. equity Produce buying companies to distribute from farm gate to market Lagos, industrial and export markets. Agro-input dealers seeds, fertilizer, agro chemicals, machinery. Food processing and marketing companies. 11

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