Private sector, government, international and other funders were urged to work together to transform agriculture in the Indo-Pacific region, and more effort was needed to explore potential synergies between these sectors, according to a discussion on strategic investment by business and academic leaders at the In the Zone 2016: Feeding the Zone forum in Jakarta today.
Dr Dino Patti Djalal, Founder of the Foreign Policy Community of Indonesia and Former Deputy Minister for Foreign Affairs moderated the panel.
Hans Dellien, Agrifinance Specialist with International Finance Corporation said bankers had a number of misconceptions about the agricultural sector in Asia, believing that only small farms operated in the region. While small farming operations were prevalent, what often went unacknowledged was the entrepreneurship and innovation occurring in the medium sized farms.
“Other farmers are very innovative and entrepreneurial but they still lack access to finance. We are helping the banks to understand these farmers and to show them that they are a good investment,” Mr Dellien said.
He said large companies also needed to understand that Asian agricultural innovation involved adapting large systems to smaller scale operations and often small loans would go a long way in financing technology which would allow farmers to better use resources and be more sustainable in their practices.
“Bankers and investors need to understand the farming sector and its diversity and adjust their products accordingly,” he said.
Mr Dellien also highlighted the misconception that men were the farmers in rural Asia.
“In fact, 60 per cent of farm work is done by women. Women do most of the work in rural areas.
Refocusing a training project from a male base to a focus on training women, resulted in a 30 per cent increase in coffee crops through the application of knowledge gleaned through the course.
“Women are often the invisible, silent force and we need to target them more. Finally this is starting to happen.”
All panelists saw investing in human capital as a worthwhile endeavour. UWA Business School Dean, Professor Phil Dolan said scholarships and education were critical to improving capacity and capability to address the emerging issues of our time.
“My sense is that most people are under-developed, most stop too soon rather than go too far. Scholarships are an investment in your own self,” he said while urging governments to invest in universities.
Professor Dolan recognised the increasing mechanisation of agricultural work and encouraged the investment in value-adding technology, believing this then “freed people up to use their brains” rather than work manually on the land.
He said capacity was needed at management and governance levels in cooperative structures, which were useful agricultural frameworks but required different skills to be successful.
Mr Dellien agreed, stating that about 70 per cent of cooperatives in emerging markets and development nations failed due to insufficient management and governance support and capability.
“We need professional managers in co-ops. We have seen more failures than successes. After the initial funds dry up, the co-operative doesn’t manage itself well. They key is to support them and bring the right people in to manage them.”
Dr Djalal said Indonesia had learned this lesson well and had created a Ministry for Cooperatives that found cooperatives with professional managers were more profitable and successful.
“We need to modernise the cooperative to make it a better economic unit,” Dr Djalal said.
Avi Finz, Group Strategy and Acquisitions Director, Interflour Holdings Ltd said Western Australia’s cooperative model, long term planning and its ability to spend on big projects were stories of success in the region.
He said investors wanted to minimise risk and reduce uncertainty and he believed government had a role to play in establishing safe and secure agricultural supply chains.
“For investors, the biggest enemy is uncertainty. As much as we can reduce uncertainty, then that is helpful. We are not in and out investors, we are here for the long term and to make this sort of infrastructure investment we want to reduce uncertainty,” he said.
Mr Dellien said sustainable investment in agriculture was yet to be achieved and current models needed to be continually challenged so that innovation could occur.
“Agriculture is a big waster of resources and we need to ask how can we produce the same yields without destroying our planet and without destroying ourselves? We need a strong and vibrant SME sector, family companies generating wealth,” he said.
“We need to think of an inclusive model with equitable growth and where prosperity is shared. How can we grow sustainably and use our resources wisely?”
Mr Dellien said Vietnam was an innovation and investment success story as it was now the number one aquaculture producer, second largest coffee bean grower, and largest producer of pepper.
Sonia Nolan, Media Manager, In the Zone 2016