Countries where agriculture is a major economic activity have greater room for improving key regulations that govern the agribusiness sector, a new World Bank report finds.
In contrast, countries where agriculture accounts for less than 25 percent of GDP have better regulatory systems that foster agribusiness and ensure quality control and safety of food production, says the first edition of Enabling the Business of Agriculture 2016: Comparing regulatory good practices. The report, released today, examines regulations that affect private enterprise in agribusiness in 40 countries around the world.
Global population is estimated to grow to 9 billion by 2050, from the current 7.3 billion people, and food demand is projected to rise by 20 percent over the next 15 years. The largest increases are expected in Sub-Saharan Africa, South Asia and East Asia. As countries accelerate their efforts to achieve the new Sustainable Development Goals (SDGs), ending poverty and hunger will require well-performing agriculture and food sectors that can cater to the rising demand, which in turn depends on smart regulations that enable agribusinesses to thrive.
“Well-designed agribusiness laws and regulations are the bedrock of national and global efforts to address these daunting challenges. By focusing on key elements of the food production and distribution value chain, Enabling the Business of Agriculture hopes to promote regulatory systems that enable sustainable and inclusive agribusinesses to take root and thrive,” said Preeti Ahuja, Manager in the World Bank’s Agriculture Global Practice, which produced the report jointly with the Global Indicators Group in the Development Economics Vice Presidency.
The current edition presents country-level results on six topics: Seed; Fertilizer; Machinery; Finance; Transport; and Markets. Four additional topics — Information and Communication Technology (ICT); Land; Water; and Livestock — are under development and will be included in next year’s report. Two overarching themes — environmental sustainability and women’s participation — are embedded in the indicators developed under each topic.
The report finds that urbanized countries have on average smarter regulations in the topic areas measured by the report than countries where agriculture accounts for a larger role. Of the 40 countries surveyed, the urbanized economies of Colombia, Denmark, Greece, Poland and Spain perform above average on the measured areas.
But in most countries, performance is mixed and challenges remain. Bosnia and Herzegovina, an urbanized economy, has good regulations for plant protection and fertilizer but faces challenges in regulating credit unions and e-money. Morocco (urbanized) and Mozambique (where agriculture accounts for over 50 percent of GDP) have smart regulations in place for registration, certification and development of new seed varieties but need to strengthen regulations in agricultural finance. Vietnam, where agriculture accounts for around 20 percent of GDP, has strong regulations for fertilizer quality control and plant protection, but can improve safety standards for farm machinery.
The indicators presented in this report look at whether national regulatory systems enable agribusiness start-ups and operations; have provisions for plant protection, safety standards for agricultural machinery and quality control for seeds and fertilizers; and facilitate trade of agricultural inputs and products.
“Improved knowledge and understanding of the environment in which agribusinesses operate can lead to better national strategies and policies that not only optimize sustainable food production and distribution but also achieve maximum development impact to end poverty and boost shared prosperity,” said Federica Saliola, Program Manager at the World Bank’s Global Indicators Group.
In terms of regions, the regulatory quality and efficiency of OECD high-income countries stand out in areas measured by EBA, followed by Latin America and the Caribbean, and Europe and Central Asia.
South Asia and Sub-Saharan Africa show levels of regulatory strength that are generally lower than the global average across the areas measured.