Enabling Environment Analytical Tools Spotlight: the AgBEE Snapshot
This is the second installment of the Feed the Future Enabling Environment for Food Security project’s analytical tools series. Read the introductory post here and stay tuned for new installments all week!
Say budgets are tight. Say you are trying to quickly gauge key legal challenges undermining private sector investment in agriculture where you work. You might be wondering what rapid, low-cost tools are out there for better understanding or identifying the key constraints within the agribusiness enabling environment behind these challenges. In this post, we take a closer look at what the USAID Agriculture Business Enabling Environment (AgBEE) Snapshot tool has to offer, what it captures, and how it fits as one of many analytical tools available to USAID and other partners.
The AgBEE Snapshot can identify critical gaps in the existing research to focus subsequent deep-dive analysis. It can offer quick, low-cost data collection and analysis at the country level. AgBEE Snapshots can validate older analyses or offer a structure for understanding issues guided or identified by private sector or programmatic challenges. It also can highlight areas for further research, priority issues, areas to unpack and recommendations for future action.
The AgBEE Snapshot covers five crucial steps in the lifecycle of successful agribusiness operation, from obtaining inputs to competing in markets at home and abroad to identify common constraints faced by private sector actors. These include accessing inputs, accessing finance, operating a business, linking to markets and competing fairly. Using a combination of literature review, remote surveys and/or interviews, and in-country interviews with key stakeholders, the Snapshot provides a broad look across the lifecycle of agribusinesses to identify gaps and/or areas that could be strengthened to incentivize action and engagement by agribusinesses. Let’s take a closer look at the five life cycle steps.
To sustain or increase agricultural productivity, producers need access to inputs, such as improved seed, fertilizers and equipment as well as the education and training required to put those inputs to productive use. Producers also need stable rights and access to land and natural resources to justify investment in higher risk, higher reward production techniques.
Agricultural sector actors need access to financing to invest in inputs and equipment, hire workers and cover cash flow gaps between harvest or production and sale of goods. Banks and other financial institutions can be reluctant to offer products to the agricultural sector due to the perceived costs and risks, a lack of information about borrowers, a poor “culture of contracts” or the inability to enforce their rights judicially in the event of default. Increasing access to credit for the agricultural sector requires risk mitigation tools for lenders as well as innovative financing arrangements with non-financial institutions and value chain partners.
Operating a Business
The regulation and taxation of a robust formal economy is crucial to the ability of a state to protect the health and safety of its citizens and fund long-term growth initiatives, such as health and education programs, infrastructure projects and social security. While formality has many benefits to the company (access to credit, limited liability, eligibility for government and donor assistance), businesses are often discouraged from participation in the formal economy by the excessive costs (both time and money) of formal registration, regulation and taxation.
Linking to Markets
A primary component of agricultural competitiveness is marketing infrastructure, that is, the physical and information systems for marketing agricultural products beyond the farm gate. Well-designed, strategically located and properly maintained marketing infrastructure enables efficient movement of agricultural goods within a country and across borders, thus reducing the cost of trade, opening markets and enabling economic participation from the greatest number of citizens. Delineating the conditions for stewardship of public goods is vital, as is establishing rules governing the use of these goods.
An open culture of competition is essential to agricultural-led growth. Habitual acceptance of barriers to entry and trade or productivity-usurping government interventions undermines a free and efficient economy. A stable legal, regulatory and institutional framework that more proactively defends the benefits of competition is vital to promote economic efficiency, private investment and consumer welfare.
To see examples of these analyses, check out Jordan Agribusiness Enabling Environment (AgBEE) Snapshot and Palestinian Economy Agribusiness Enabling Environment (AgBEE) Snapshot. To learn more about this tool, please contact the Feed the Future Enabling Environment for Food Security project.