Your Questions Answered About Enabling the Business of Agriculture!
On May 12, 2016, Agrilinks hosted Federica Saliola and Farbod Youssefi from the World Bank Group to discuss a recently released report, Enabling the Business of Agriculture 2016: Comparing Regulatory Good Practices. During the webinar, Federica and Farbod answered many questions from participants, but there was not enough time to address them all. Below you can find answers to additional questions asked during the webinar from the presenters. To learn more about the event and to listen or read about other questions addressed, please visit the event page.
How have you handled gender from the project's beginning?
The EBA team recognizes that men and women face different constraints in operating in agribusiness markets. For the EBA 2016 report, the team conducted a gender analysis of current EBA indicators. The analysis showcased how improving on EBA indicators could improve some of the constraints faced by women in the agriculture sector. For example, easing the regulatory burden on importers and dealers of agricultural inputs can make them more readily available and affordable in remote regions and thus more accessible to women farmers. Improving the quality control of fertilizer, seeds and machinery is also key to ensuring that increased input use boosts women’s productivity. For the upcoming 2017 report, in addition to conducting the same analysis, the team has added specific questions to collect data that address some of the constraints faced by women in the topic areas measured.
Specifically, the following areas of focus have been chosen:
- Availability of sex-disaggregated data
- Restrictions on women’s employment and activity
- Women’s participation and leadership in collective groups (cooperatives, farmer’s organizations, water user organizations, etc.)
- Government and private sector initiatives aimed at women’s inclusion related to EBA topic areas
The development of questions for these areas were informed by the recent World Bank Group Gender Strategy and the newly adopted Sustainable Development Goal 5, which aims to achieve gender equality and empower all women and girls.
How often do you update the data featured in the report?
In the current stage of the project's development, as topic and country coverage has been scaled up, data collection and reporting has taken place on a yearly basis. All data is available and can be accessed at eba.worldbank.org.
Are you concentrating on national and international companies or local dealers? Did you include the government/public sector in your research?
In targeting enabling conditions for the private sector, firms of different size and scale—both foreign and domestic—are factored in. EBA indicators analyze laws and regulations which facilitate the participation of private firms in the agribusiness sector. Data is primarily obtained from private firms. The public sector, however, and any associated companies, have been surveyed to better understand the laws in place around specific indicator areas.
Have you considered adding agricultural insurance to your finance benchmarks? Have you considered plant protection chemicals?
EBA has considered the topics of agricultural insurance and plant protection chemicals in the early stages of the project. During the first two years, the team had to sift through numerous data points and narrow the scope to those that were actionable, robust and comparable. The finance topic chose to focus on financial inclusion and not include agricultural insurance. Plant protection chemicals were considered along with fertilizers, but given considerable overlap between them, the scope was narrowed to only include at this stage the registration, import and quality control of fertilizer.
How is plant protection defined?
Plant protection encompasses regulations, policies and institutional frameworks that affect plant health in a country, including domestic pest management measures as well as phytosanitary controls at the border.
In the "markets" category, have you measured those countries that fix or guarantee prices for some commodities?
EBA markets indicators measure obstacles faced by agribusinesses in the production and marketing of agricultural products and when accessing foreign markets. Phytosanitary regulations that favor agricultural trade through the promotion of plant and crop health are also assessed. The current methodology does not assess fixed prices.
Have you considered looking at the unique risk weighting for commercial loans in the agricultural sector?
Unique risk weighting for commercial loans in the agricultural sector is an important issue for agriculture finance. It affects the lending incentives and behaviors of financial institutions. However, please kindly note that the EBA Finance indicators do not measure the full range of factors, policies and institutions that affect the quality of an economy’s environment on providing financial services to those in need. Only areas where regulatory good practices are clear are measured under the EBA Finance indicators. According to team’s research, no global consensus has been reached in regards to regulatory requirements on whether there is a need or how to assign different risk weight for commercial loans in the agricultural sector. Therefore, this issue is not taken into the measurement scope of EBA Finance indicators.
How many of these non-discriminatory good practices relate to (a) foreign companies or (b) small companies?
Of the 18 non-discriminatory good practices measured by EBA, five have to do with discrimination against foreign companies and three with obstacles for small firms.
Who is the chief intended audience or beneficiary for implementing the good practices reflected in the indicators?
The data and indicators produced by EBA can be used by many different audiences but is primarily aimed at Governments and policymakers. They can use the indicators to assess the status of the regulatory environment for agribusiness in their countries and introduce regulatory good practices to drive improvements in this aspect.
Can you share an example of a country where EBA reports findings and recommendations have lead to government changes in agriculture policy?
As expected, it will take some time for evidence such as that provided by EBA to generate reforms and have an impact on a country's regulatory framework. For instance, it took three to five years for Doing Business indicators to garner attention to its measurements and begin leveraging regulatory changes. EBA released its 2016 report, presenting initial indicators in a few areas, earlier this year. Considerable more time will be needed for indicators to be further developed, disseminated, understood, incorporated into policy planning and used for reforms. However, even at such an early stage of their development, EBA indicators are starting to be used for policy reforms. Both in Vietnam and Rwanda, for instance, EBA data has informed the development of a new seed ordinance and been used to shape its norms. In other countries—Cambodia, the Russian Federation and Sudan, for instance—EBA indicators are being incorporated into policy discussions and planning.
Focusing on changing the score could pose some interesting dilemnas in terms of prioritization of reforms. Changing your score with one reform may or may not result in certain other goals for reform. In your disucssions with governments, what other questions are coming up when prioritizing reforms using EBA?
The evidence EBA provides is best used in the context of Governments' broader policy plans. It highlights regulatory elements that can be targeted and improved, but does not replace a broader discussion and planning on the priorization of reforms. For this reason, EBA indicators are best used when integrated into the policy strategy and operations of a country. For this reason EBA coordinates with World Bank operational staff discussions held with Governments on these issues.
With criteria like seed and fertilizer have you considered the supply as a percent of need?
No, the team has not considered this criteria in its assessment. In early stages of the project the team tried to collect some statistics related to supply of inputs and number of input firms. However, these were shown to be difficult to collect and compare across countries. The current methodology focuses on assessing the regulations and implementation of these regulations.
Is it possible to qualify how WRF promotes financial inclusion and in particular affects the small farmers?
Loans secured by collateral typically have more favorable terms than an unsecured loan that is not easy for the banks to verify. Many small businesses and smallholder farmers do not have access or ownership of traditional forms of collateral such as immovable assets and are unable to pledge it to secure loans. Allowing them to use movable collateral, such as inventory of agriculture products (e.g., crops), livestock, warehouse receipts, agriculture machinery, receivables etc., to obtain a loan, increases access to finance. Warehouse receipts system legislation provides transparency and clarity of the rules governing the system by defining the rights and responsibilities of all parties involved. Legislation protects the rights of depositors and lenders and facilitates easy enforceability of the security and, thereby, makes WHR good collateral.
What about non-tariff bariers in regional market access like police and customs' intervention in your analysis on market access?
A full analysis of market access—or any other topic area for that matter—requires evidence on a number of different elements and aspects of the agribusines enabling environment. The regulatory framework which EBA measures, along with certain administrative procedures, represents a part of the puzzle which should be examined along with data that can be found elsewhere on other variables. The enforcement and/or implementation of regulations is for sure an important factor in the analysis but one that EBA does not currently measure. Has/will analysis been done on the WTO TFA and effects on NTMs?
The EBA team has consulted with TFA experts both internal and external to the World Bank and has concluded that indicators relating to the TFA and its implementation will not be included. Similar datasets and diagnostic tools to assess TFA compliance are already made available by other international organizations or World Bank teams. Regarding NTMs, the EBA project collects data on the mandatory membership, licensing and documentation requirements to produce, trade, and export agricultural products.
Does your data include a breakdown of entity sizes and respective percentages in markets?
EBA does not collect data on firms or other private sector entities and so is not in a position to provide information on their sizes or market shares.
I would like to understand how this information can be linked at the smallholder level.
Many of the data collected by EBA provide evidence on regulations in place—or those that are absent—that facilitate smallholders' access to finance, land or cooperative and/or contracting schemes for selling their production. To the degree that weaknesses in these areas are brought to the attention of policymakers, they will be able to act on them and provide more enabling conditions for these smaller-scale producers.
How are you planning to integrate climate-smart agriculture into the broader EBA framework, and how we are taking initiatives to develop tailor-made region-wise CSA solutions in this framework?
The aim of EBA indicators is to provide evidence on enabling conditions for more vigorous, inclusive and efficient agribusiness value chains. Whereas climate-smart agriculture is not the focus of the data collected, environmental sustainability is a key issue factored in the indicator set and, as such, one of the topic areas being developed. Several aspects covered by EBA data have a bearing on CSA.
Based on your experience with government action, what is the likelihood for effective policy change to occur and be implemented within two to five years?
Given the early interest of several Governments to study EBA indicators and to incorporate them into their policy plans, impact on their regulatory framework can be expected within the next few years.
Will/are local/small farmers' presepctives included? If not, when or why not?
Small farmers' experience and feedback has been incorporated into the development of EBA's methodology since its early implementation. On the one hand, most topic experts who have participated in shaping the focus and metholodology of the indicator areas have a rich understanding and experience with farmer experience. Furthermore, the EBA team has tapped into farmers' experience by surveying different farmer groups in target countries during the project's pilot phase and by holding ongoing consultations with farmer organizations throughout different regions. By showcasing good practices and exposing inefficient processes, EBA helps governments pay attention to improving regulations, policies and institutions that support inclusive participation in agricultural value chains and foster an environment that is conducive to local and regional business of agriculture.
Do you worry that in focusing too much on the red dots, policymakers will miss other priority areas not reflected in the scores (e.g., informal activities or extralegal behavior) and/or cut the private sector out of the dialogue process?
The EBA team is working closely with World Bank operational staff and government representatives to make sure that the data provided is well understood and that the range of issues it highlights are identified. Those spearheading policy dialogue and operations are in the best position to incorporate this evidence into a broader analysis and utilize it to prioritize policy reforms.