The experience of developed countries in the development of agro-industry. Abstract

The experience of developed countries in the development of agro-industry.
ABSTRACT
The time is ripe for an evidence-based discussion of what is ‘private sector development’ in Africa and how it occurs. This discussion requires analyses on how actual existing industries are created, expanded and remain competitive, and the role of industrial policy. This paper contributes to the discussion by examining the emergence and trajectory of a new agro-industry in Ghana: the pineapple export industry. It explores how this new agro-industry emerged as well as how it responded to changes in international competition. It explains the limited expansion of the industry and its declining international competitiveness by looking at how Ghanaian exporters developed technological capabilities initially and the incentives and disincentives to building those capabilities. The industry has its origins in Ghanaian professionals, civil servants and import businessmen who sought new economic opportunities in the 1980s and 1990s. The paper argues that at the heart of the industry’s crisis was an inabil- ity to further develop technological capabilities. Both firm level and national level factors determine technological capability development. Thus, the crisishad systemic features that have broader implications for understanding the obstacles to developing new agro-industries in Ghana as well as other African countries. It also argues that small farmers can have a place in high-value agricultural export industries, but they must be linked into supply chains in ways that increase their capabilities.
INTRODUCTION
Some 60% of the people in the developing countries still depend on agriculture for their main livelihood. However, as incomes rise, labour and other resources are progressively transferred to the industrial and services sectors to satisfy burgeoning consumer needs and preferences. Productivity tends to be higher in industry than in agriculture, due to greater investment and more advanced technologies. Thus the relative contribution of agriculture to total Gross Domestic Product (GDP) generally declines as economies expand and diversify.
Experience world wide shows that the transition to a diversified, high-income economy is made smoother if strong linkages are forged between agriculture, industry and related services. Agro-industry performs a key role as a catalyst and promoter of these linkages.
An increasing number of developing countries especially those undergoing the transition from an agriculture-based economy to a mixed agricultural/industrial economy - are becoming aware of the strategic importance of agro-industry in promoting rapid economic expansion with beneficial feedback effects on agricultural and rural development. However, the essentially commercial nature of agro-industry means that governments are likely to play an indirect rather than a direct role in promoting this kind of development. This entails creating a policy environment and supportive facilities and incentives which will encourage private sector's investment in agro-industry. At the same time, most governments want the benefits of this type of development to be spread as wide as possible, and, in particular, have some positive spin-off on the mass of people living in the rural areas.
Achieving the above goals is a difficult task which entails institutional capacity in formulating agro-industrial strategies and policies as an integral part of agricultural policy analysis and planning. FAO, as the leading agency for food and agriculture, is increasingly requested to provide technical and training assistance in this field. It is against such a background that FAO decided to undertake the preparation of these Guidelines.
The main purpose of these Guidelines is to clarify and make explicit the logical process and the analytical techniques used in analysing and assessing the impact of government macro economic and sectoral policies and programmes on the development and performance of the agro-industrial sector. This entails identifying and making a distinction between policies encouraging an efficient use of resources and furthering social objectives, and policies that may be retarding the development process. It is expected that agro-industrial policy reviews can enhance the sector's contribution to development goals by identifying existing constraints and distortions and suggesting ways in which policy instruments might be reformed or refined to make them more effective.