The Business of Agriculture: Best Practices for Sustainable Growth

On May 12, the USAID Agrilinks program held a webinar on a new report released by the World Bank, entitled Enabling the Business of Agriculture 2016: Comparing Regulatory Good Practices . The event examined the report’s key findings and discussed the objectives and future path of the Enabling the Business of Agriculture (EBA) project .

The 2016 report ranks 40 countries on six indicators: seeds (strength of seed systems), fertilizers (supply and quality), machinery (extent of mechanization, as well as safety and quality), financing (access to financial services), transportation (cost and reliability), and markets (access and efficiency). Across these areas, the report looks at operations, quality control, and trade. These rankings can promote cross-country learning regarding practices that protect both consumers and producers and help stimulate successful agribusiness.

Among developing countries, Colombia scored above average in all of the topics measured, meaning the country shows a substantial number of good regulatory practices. However, the report points out that there is still room for improvement. For example, Colombia has strong fertilizer registration regulations and laws that effectively support financial inclusion and market regulation, but lacks adequate safety standards for agricultural machinery.

At the other end of the spectrum, several countries scored below average on all topics. These include Burkina Faso, Burundi, Ghana, Myanmar, and Niger. In general, low-income countries were found to have less effective agribusiness regulations than high-income countries.

Results from most countries, however, were more mixed, with a combination of good regulatory practices and areas for improvement. For example, Mozambique has weak regulations for credit unions and e-banking, but strong regulations for the registration, certification, and development of new seed varieties. Similarly, Vietnam has strong regulations for fertilizer quality control and plant operations, but lacks proper machinery safety standards.

This latest report also includes the themes of environmental sustainability and gender, and the presentation given at the Agrilinks event highlighted how EBA indicators can be used to help make agriculture more inclusive and sustainable.

For example, encouraging countries to ease restrictions on land tenure and ownership can make farmers, including small farmers and female farmers, more secure on their land and improve agricultural productivity and market involvement. Similarly, reducing the cost of the documentation required to export agricultural goods can help resource-strapped farmers, especially women, take a more active role in the export market; similarly, lowering the fees to join professional organizations can also increase women’s access to social capital and marketing opportunities.

On the environmental side, enabling local water user associations to make decisions can increase the use of irrigation and ensure more sustainable, less wasteful water use.
The event moderator, Kelley Cormier of USAID, pointed out that while the EBA indicators and reports highlight some of the key factors in a successful business enabling environment, they do not necessarily explain why many countries fail to establish such an environment. Thus, the EBA is a good starting place for policy dialogue, but a deeper analysis of countries’ political economy, institutional development, and social dynamics is required to truly overcome regulatory shortfalls.

By: Sara Gustafson, IFPRI