The FINANCIAL — Improving agriculture regulations in low and middle income countries could go a long way toward feeding the world’s growing population and improving farmers’ livelihoods around the world, says the latest edition of the World Bank Group’s Enabling the Business of Agriculture (EBA) 2017 report, released on February 7.
The report argues that, while many countries are already home to strong, commercially-oriented agriculture, more needs to be done, for example, by lowering transaction costs for farmers and firms engaged in domestic trade and exports, by improving water permit systems for irrigation, or by providing better conditions for microfinance institutions. Smart regulations that ensure safety and quality control while avoiding burdensome and inefficient requirements are highlighted in the report as good practices that governments may wish to consider as part of their reform efforts.
“Sustainable, inclusive investments in the agriculture and food sectors help create jobs – on farms, in markets, cities, towns and villages and throughout the farm-to-table food production and supply chains – which, alongside improved access to affordable and balanced, diverse diets, are key to fighting extreme poverty and for boosting shared prosperity,” said Preeti Ahuja, Practice Manager, World Bank Food and Agriculture Global Practice. “Governments have a key role to play in supporting economically, socially and environmentally responsible policies and practices that help smallholders while removing burdensome processes that add to food costs and discourage agribusinesses from entering the market.”
The latest EBA report, the third in an annual series, presents data on legal barriers for farmers, entrepreneurs and businesses operating in agriculture in 62 countries and across the topics of land, seed, fertilizer, machinery, water, livestock, finance, markets, transport, and information and communication technology (ICT). The 2017 edition also expands its survey of laws and regulations that impact environmental sustainability and gender.
Globally comparable data helps countries know where they stand, compare their performance with that of their neighbors, and identify areas for improvement that are critical to building a thriving agribusiness sector.
For example, obtaining export documents for agricultural produce takes on average 6 days in Sub-Saharan African countries, compared with only 2.3 days in the Middle East and North Africa region. Such delays not only increase business costs, but also increase food waste and make it more likely that shipments will be rejected upon arrival due to spoilage or low quality. Securing permission to sell and use new tractors can also be very time-consuming: it takes 270 days and costs about 604 percent of income per capita to complete this process in South Asia, versus 21 days and 7 percent of income per capita in East Asia and the Pacific. Drawn-out processes reduce the incentives for agricultural machinery manufacturers and suppliers to develop or import new and updated tractors that could otherwise help to modernize agricultural processes and improve productivity.
“Government regulations affect agricultural development through several dimension, including agricultural inputs such as seed, fertilizer, land and water, as well as small-scale and remote farmers’ access to financial services,” said Federica Saliola, Program Manager, World Bank Vice Presidency for Development Economics. “Boosting agribusinesses requires public policies and regulations that foster growth in the agriculture and food sectors, improve the functioning of markets, and enable agribusinesses and food entrepreneurs to better meet the growing demand for food.”
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