Agroindustrial project analysi

22 AGROINDUSTRIAL PROJECT ANALYSISshould remain with the project throughout implementation to providecontinuity from design through evaluation. The analyst'sfamiliarity with the project should improve the monitoring andredesign of the project.Considerations at the macro levelAlthough this book concentrates on the analysis of individualagroindustrial projects, single projects cannot be divorced from thelarger context of development policy. Macro-level policies likelyto affect agroindustries are briefly discussed in the remainder ofthis section.INTERNATIONAL TRADE. In the case of exports, fiscal incentivessuch as tax rebates, or monetary incentives such as preferentialforeign exchange rates, have been used to provide an added stimulusto attract capital and managerial resources to agroindustrialprojects. Care must be exercised, however, that fiscal incentives donot favor substitution of labor by capital, unless the former is inscarce supply. In any event, tax incentives do not appear to becritical factors in the investment decisions of most entrepreneurs. 2 7In the case of imports, policy incentives have included tariff andquota exemptions for essential inputs, such as packaging or rawmaterials, that are not locally available. Although providing accessto vital inputs may help establish an agroindustry, this and likemeasures should generally coincide with efforts to develop local inputproduction. Only then will the full developmental benefits ofthe linkage characteristics of agroindustry be realized.REGIONAL DEVELOPMENT. Agroindustries can play a critical role inregional development because of their relationship to agriculturalproduction and urban marketing. Fiscal incentives and investmentsin public sector infrastructure can attract industry to new regions.For example, penetration roads can allow a processing plant toprocure raw materials and thereby develop the region's agriculturalresources more fully. Policies may have different effects on enter-27. The policymaker should weigh whether the proposed measures willcreate greater price distortions that would disfavor agriculture; a move towardmarket-oriented scarcity pricing might create a more effective incentive.