TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

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BRAZIL Trends and impacts of foreign investment in developing country agriculture instrumental to the transformation of the region. His analysis classified them in two groups: those that affected the supply of agricultural products, and those that affected their demand. He described the real and potential impact of the growing demand for these products on price formation and inflation pressures. His study concludes that in addition to a growing demand for exports, pulled by the opening of the economy to world markets and flexible exchange rates, agriculture prices in Brazil were being pressured upwards by a growing domestic demand resulting from population and income growth, especially in urban areas. Income growth in urban areas contributed to the increase in demand as poorer members of society became more able to buy more and higher quality food items. Sustained demand pressures generated incentives for farmers to invest in agricultural production growth, while the government understood that the control of inflationary pressures from agriculture products could be addressed by greater growth in the supply of those products. Such an increase in production generated jobs, income, foreign exchange, reduced poverty, in addition to substantial positive externalities. The heart of the strategy was to improve profits of agricultural investments, so that the growth in supply of agricultural products could be sustained. Government interventions were mainly designed to reduce costs and risks, so that producers and investors need not rely on high prices to make their businesses profitable. Although not explicitly discussed by Tollini, it is clear that the authorities understood the critical role of the private sector. Tollini highlights the following interventions 3 : Investments to improve infrastructure in the areas of transportation, energy, and communications; 3 The supply box in Chart 2 - Factors that contributed to the agriculture-based development of the Brazilian Savannah includes variables and factors normally associated with the rural or agriculture branches of government responsibility at the time. Several other extra sectorial policy instruments were also used by the government in a mostly coordinated effort. 40 Measures to improve land markets; The mobilization of public and private banks in the financing of agriculture production; Increased and sustained investments in research and development to overcome the limitations of the Cerrados soils and increase productivity; Creation of business opportunities for service providers to help in the several operations directly or indirectly associated with agriculture production; Mobilization of southern agriculture producers (gauchos 4 ) to bring to the Cerrado their skills, knowledge, entrepreneurship, and capital; and Measures to support the training and education of rural labour and professionals. Tollini recalls that “a point to note is that Brazil received support of bilateral and multilateral agencies in its effort to promote institutional development. For instance, EMBRAPA has benefited from projects financed in part by the World Bank and by the Inter-American Development Bank. The Inter-American Institute for Cooperation on Agriculture, IICA, also assisted EMBRAPA during its first years with the allocation of some professionals to help with the installation and initial research planning and programming. EMBRAPA was recognized as a good administrator of resources received through these projects, and has been able to benefit from several sequential projects, each adding new objectives as the research programme develops.” It should be noted that numerous business climate measures were introduced at stages and in sequencings that were contingent on context. While the results of these interventions were not always immediate or successful, the policy consistency applied for more than four decades eventually bore fruit. The process was initially slow but gained momentum, and today the Brazilian Savannah is one of the most influential food producing regions of the world. 4 Gauchos are the decedents of early Europeans who migrated to Southern Brazil at the end of 1800s and early 1900s. They have been key for the development of the Brazilian Cerrados.
CHART 2 Factors that contributed to the agriculure-based development of the Brazilian Savannah Energy Commnications Infrastructure Price and Marketing Regulating Policies Stock of Foreign Exchange + - Price of Imported Inputs Export Favorable Exchange Rate Roads Inflation - + + + + Open Trade Policy Arable Land Storage Ag Products Export + Ag Prod Export Opportunities + + Consumers’ Welfare + + - Income Growth + Ag Products Supply Ag Prod Prices Ag Prod Demands + + + - + Arable Land Supply - (Legal & Logistical Acessibility) + + + + Ag Production Demand Side Private Banks Acreage Under Production + Urbanization - + - + - Part 3: Policies for attracting FDI and impacts on national economic development Supply Side + - Public Banks Land Market Improvement Land Price Agr Bus Profitability Rural Population Population Size - - Labor Financing Cost + + Agr Production Cost - - - - - - + Labor Productivity - + Input Providers Entrepreneurship Capacity Service Providers + Land Productivity + + Adapted Technology + Technology Stock Research Capacity + + + + + Extension Training + Source: J.R. Nascimento, 2009 41 BRAZIL
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TRENDS AND IMPACTS OF FOREIGN INVES
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Trends and impacts of foreign inves
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Acronyms ABRAF Brazilian Associatio
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EAC East African Community EC Execu
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JV Joint Venture Kascol Kaleya Smal
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PTF Privatization Trust Fund PTS Pe
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Foreword Large-scale international
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xvi Page 4. The business climate fo
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xviii Page 4. Investments by transn
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xx Page 7. Conclusions and recommen
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xxii Page SENEGAL: ASSESSING THE NA
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xxiv Page PART 5: SYNTHESIS OF FIND
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Page 30 and 31: ZAMBIA: INVESTMENT IN AGRICULTURAL
Page 32 and 33: xxx Page Table 4 Foreign investment
Page 34 and 35: xxxii Page Table 5 Additional tax b
Page 36 and 37: PART 4: BUSINESS MODELS FOR AGRICUL
Page 39: P A R T O N E INTRODUCTION
Page 42 and 43: Trends and impacts of foreign inves
Page 53 and 54: 1. Introduction 1 Foreign Direct
Page 55 and 56: FIGURE 2 Trends in FDI-African case
Page 57 and 58: FIGURE 6 Average annual growth in c
Page 59 and 60: FIGURE 9 Share of agriculture in to
Page 61 and 62: FIGURE 12 FDI flows to agriculture
Page 63: FIGURE 18 Agricultural Investment i
Page 67 and 68: Improving the business climate for
Page 69 and 70: BOX 1 A brief history of FDI in Bra
Page 71 and 72: BOX 2 TNCs and the Brazilian agrifo
Page 73 and 74: BOX 3 Monsanto Company Part 3: Poli
Page 75 and 76: BOX 5 International Paper Company P
Page 77: the same time, conserving natural r
Page 81 and 82: TABLE 3 Performance of Brazil for s
Page 83 and 84: BOX 6 Checklist for Foreign Direct
Page 85 and 86: factors that affect, lead to succes
Page 87 and 88: CHART 4 PROMECIF phases cycle Phase
Page 89 and 90: the priority indicators within thes
Page 91 and 92: 73 rd in a total of 182 countries e
Page 93 and 94: Sutainable Development: Lessons fro
Page 95: World Bank. 2009. Awakening Africa
Page 98 and 99: TANZANIA Trends and impacts of fore
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: Foreign investment and agricultur
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the two data sources are compiled o
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survey (accounting to approximately
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Students are entitled to tuition fe
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Free Trade Agreement (TAFTA), was s
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Germany, Switzerland, United Kingdo
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FIGURE 1 Investment promotion polic
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percent of GDP in 2001considerably
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Philippines indicate their signific
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TABLE 4 Foreign investment approved
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TABLE 6 Export-oriented FDI in the
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followed by fisheries, livestock an
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FDI and employment The impact of FD
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TABLE 12 Employment generated by fo
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BOI investment promotion policy are
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National Food Institute of Thailand
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: Analysis of private investment in
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FIGURE 3 Value of planned foreign i
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TABLE 1 Investment incentives, Ugan
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TABLE 3 Summary of enterprises in c
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Over 95 percent of the total annual
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CHART 1 Uganda coffee value chain C
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CHART 2 Value chain of chrysanthemu
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CHART 3 Value chain for fish proces
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companies and fully owned subsidiar
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(a) the decreasing fish stocks and
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TABLE 5 Sources of investment finan
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Part 3: Policies for attracting FDI
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TABLE 6 Market destinations for sel
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BOX 9 Community services provided b
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BOX 10 Examples of environmental im
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contributed to opening internationa
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Websites 1. faostat.fao.org 2. htt
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Local impacts of selected foreign a
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linkages; unsecured land ownership;
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hectare and 1.5 tonnes per hectare,
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3.2 FDI in agriculture by nationali
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form of pure Korean ownership or pa
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of the discrepancies between CDC da
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TABLE 7 Distribution of ELCs by nat
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the country’s economy. It is ther
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on forest use 13 . Across the count
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The National Strategic Development
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team in December 2010 in the Kompon
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order to transport materials and wo
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other agricultural purposes, but la
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stream (one that is 20-30 m wide) a
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MAFF, prohibited the import of live
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7.5 NGOs/Civil society Local NGOs
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: business models in Ghanaian agri
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TABLE 3 FDI agricultural projects a
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Part 4: Business models for agricul
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level of foreign ownership for each
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land disputes, slowing and complica
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TABLE 6 Ease of doing business in G
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TABLE 8 Selected indicators of the
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estate and out-grower scheme for th
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vice-chairman, secretary, assistant
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are exported, 40 percent are sold t
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strong advocate of bush fire preven
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chiefs, irrespective of whose land
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The Assemblyman of Jimle, a locally
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TABLE 12 Key features of the Solar
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given the lengthy time frame involv
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ESD (Environmentally Sustainable De
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Large-scale agricultural investment
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Touré, 2009). So, agricultural mod
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the lineage holdings to one family
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BOX 2 Content of agricultural inves
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of largescale land acquisitions. 6
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percent); and students, undoubtedly
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BOX 4 The conclusions of the feasib
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Malians. Significant players includ
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out in the absence of strategic pla
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ESIAs. The mass influx of foreign i
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objectives, but the contract makes
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in the sugar sector. The aim was to
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stresses the government’s respons
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covering 857 hectares of land, plus
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Final remarks about project design
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As a result, activities to implemen
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and rural electrification (Agence M
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shareholders began to ask questions
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so far. The revenues received from
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were allocated to investment projec
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family farmers to have access to le
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SENEGAL Trends and impacts of forei
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ZAMBIA Trends and impacts of foreig
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The findings of the studies present
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3. The significance of business mod
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were introduced to enhance producti
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The presence of enabling factors is
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5.8 Type of production system and c
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The available data confirm that the
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the project. This situation increas
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debates on resource-seeking foreign
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programmes for government officials
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EDITED BY: Pascal Liu Suffyan Korom
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TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

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