GEORGIAN AGRICULTURE STRUGGLES TO SURVIVE

We are in Georgia looking at agricultural development (see Note below). In the post-Soviet era agriculture in Georgia declined severely with people falling back on their own resources to survive in a much harsher market-oriented environment. With the dissolution of the large collective state-run farms, more than 2.3 million land titles were distributed. Most families have plots about one hectare in size, enough for self-sufficiency, but well below an economic scale for commercial agriculture. The situation has also been complicated by political problems such as the August 2008 war with Russia.

The wine growing industry is a case in point: Georgia produced most of the wine drunk in the Soviet Union. The quality was not all it might have been, but there was a large and regular market. The dispute over the South Ossetian territory changed that. Georgia now struggles to find a market for its wine, and the vineyards have limited financial resources for upkeep and re-planting.

The fact is that Georgia has a wonderful natural endowment for agriculture; the climate is good, rainfall and water supply plentiful in most parts, the soil is black and fertile. Georgians are hard-working, conservative people. But the rural population is ageing (36% of smallholding owners are over 65 years old) and it is hard to keep young people working on an essentially stagnant sector; self-sufficiency is the overall model, with only 18% of agriculture in the cash economy.

The collapse of the Soviet Union (admittedly now 20 years ago) meant that existing large-scale infrastructure was left to rot and a range of 'public goods' such as roads and main irrigation channels were not maintained. In general, but especially in the mountain areas (that comprise most of Georgia), access to services and markets is very limited.

But the real absence is one of finance. Interest rates are very high (over 25%) and agricultural land is not accepted as collateral. The point about a transition from a centralized, communist economy to a free-market, capitalist economy is that there should in fact be available capital! What is capitalism without capital? The answer is as any Georgian small holder will tell you, a desperate struggle to survive with what you have to hand.

This is not to say that we suggest a major transformation of agriculture in Georgia. There may be parts (e.g., along the central corridor, in the lowlands of the coast and in the east) where a commodity approach can be taken. But for the majority living in the fertile, Caucasian uplands, smallholding is a sustainable model. However it desperately needs support and the question we are trying to answer is how should that support might be delivered.

Note: Geoff Quartermaine Bastin is contracted by International Relief & Development (IRD) for this assignment. IRD is a major not-for-profit company and charitable institution based in Washington DC and has operated in Georgia for the last 10 years supporting various aspects of humanitarian relief and economic development activities. Check out http://www.ird.org/

Photo: vineyards in Central/East Georgia

RURAL DEVELOPMENT IN YEMEN

Yemen! In the news unfortunately for all the wrong reasons, political strife and terrorism - the themes for our age. Geoff QB is in Sana’a looking at the rural development situation and suggesting what can be done for a country where 90% of the people live in abject poverty in rural areas, where the most remunerative crop is a mild narcotic shrub (“qat” or “khat” - Catha edulis), only a fraction of the land is cultivable (most is desert and mountain) and where a population of 22million will double in 20 years. Yemen imports its essential food stuffs and exports oil and gas, but the supply of those commodities is running out. Worse still, water for agriculture and social use is limited. Aquifers get recharged from sudden rainstorms in short periods so run-off is massive. Water catchment, conservation and distribution is the priority sector in rural development – but qat uses 30% of water available for agriculture with no nutritive value whatsoever. The other issue is terracing (see photo). Yemen has a terrace system thousands of years old. But it is being abandoned except where it can grow qat; farmers don’t find it worthwhile to grow food in such a labor intensive way. Yemen is probably one of the most challenging countries we’ve ever worked in (and that includes Iraq, Pakistan and Afghanistan!). Not to mention the risk of being shot or kidnapped if you even try and get to see the farmers!

Photo shows qat terraces in the Haraz Mountains

LAND GRABBING OR THE WAY OF THE FUTURE?

Is the new wave of major private sector investments in (mainly) African land just a new form of colonialism or perhaps the only way to successfully leverage major underutilized natural resources? This is a question that Andrew Rice tries to answer in an important and well-researched 6-page article in 'The New York Times' (see:

http://www.nytimes.com/2009/11/22/magazine/22land-t.html?pagewanted=1&_r=1&sudsredirect=true

Outlining the way often Arab investors have moved into countries like Tanzania, Congo and Sudan, Rice uses the example of Ethiopia to illustrate both the pitfalls and advantages of the private sector doing what the public sector (including the donor agencies) has largely failed to do. On the one hand as my ex-tutor at Oxford, Dr. Paul Collier, has pointed out, ignoring commercial agriculture in favour of peasant farming (which he delightfully calls "middle class romanticism"!) has not provided food security, but on the other hand, much of the land best suited for commercial ventures is already spoken for by local people - don't they have a voice too? And what if it is ignored?

I tend to agree with Collier; significant agricultural (and agribusiness) progress - and hence increased food security - occurs when the huge resources of multi-national agribusiness are leveraged responsibly, which was my experience as a manager with Cargill. Thailand, for example, is a major food exporter for quality standard products not least because Cargill made significant investments in the industry that were rapidly taken up by local groups. Few governments and less donor agencies or NGOs can match the technical R&D and market clout of these big corporations. But the emphasis has to be on responsible development, paying particular attention to the local socio-economics and local cultures. The fact is unless the project takes these factors and all the stakeholders into account it will inevitably fail.

This is one aspect of the new wave of investments that concerns us at FoodWorks: as both technical and economic consultants (having worked in both private and public sectors) we understand the full complexity of agricultural development through the value chain "from farm to fork". I wonder if many of the new investors (perhaps speculating on future rises in food commodity prices but without in-house expertise) realize that agriculture goes beyond simple agronomy? Unless a full package of development services is applied to their investments that deals with local concerns as well as, for just one example, international marketing standards, many of Mr. Rice's dire predictions will indeed come to pass - Geoff Quartermaine Bastin, Bangkok

Photo: Simon Norfolk, NYT

EASTERN EUROPE - AGRIBUSINESS POTENTIAL

Belgrade - a pretty dramatic and interesting change from Islamabad! However elements of this work have been similar to the competitiveness activities in Pakistan. Geoff Quartermaine Bastin has just spent a month assessing USAID's Economic Growth Program (EGP) that includes an Agribusiness Project that has focused on small enterprise development throughout Serbia. The Agbiz Project is primed by Development Alternatives Inc. The Project has 195 'clients' and aims at increasing enterprise sales and creating jobs. A successful example of the work is a family-owned company called Bio-Trend Donato, a producer of prepackaged salads, dressings and vegetable-based sauces in Novi-Sad where the Project helped develop a new marketing plan, improved product packaging and increased sales by $1 million as the result of a sponsored visit to a major trade fair in Germany. For more information on this particular activity with Bio-Trend see http://www.america.gov/st/business-english/2009/September/20090930160446amskoorb0.7583887.html

Serbia is a fascinating country with a huge scope for agricultural development and FoodWorks hopes to return sometime in the not too distant future.

CHANGE OF PERSPECTIVE AND NEW HORIZONS

For the last three years FoodWorks has been focused on South Asia, principally Pakistan, although Eddie Vernon has been working in Afghanistan and Bob Lindley has been in the Pacific. However, now the time has come to change perspective somewhat and look at opportunities throughout the region. This does not mean we have finished with Pakistan - the problems in agriculture remain enormous - but that the donor community has put agriculture on hold for a while. The Asian Development Bank has re-focused on infrastructure while USAID is pondering about whether to move ahead with the the $400 million planned investment (that we helped design) in staple crops and livestock/dairy. Hopefully by Christmas some decisions will have been taken and things might move ahead. We'll be happy to participate if the do. Meanwhile, we are looking at Nepal (crop diversification), Bosnia (capacity building) and Cambodia (private sector investment in rice).

AGRIBUSINESS DEVELOPMENT FUND IN SINDH

SINDH DEVELOPMENT FUND: Working with the Competitiveness Support Fund (CSF - see link), we have created, designed and now mobilized a $30 million agribusiness investment fund exclusively for the Provincial Government of Sindh (Planning and Development Department). As designed by the CSF team, the SDF will eventually make grants to small farm enterprises and provide credit guarantees for larger investors; it will provide technical assistance (Eddie Vernon and Bob Lindley have designed the crops and fisheries aspects respectively, Younus Sandeela has supported the project) and access to infrastructure development funds. The CSF-SDF Team was put in place by Geoff Q-B and has now been handed over to a local CSF manager. Based in Karachi, the CSF managed team will operate throughout rural Sindh. Projects so far identified include date processing in Khairpur District, banana processing, continued development of the Karachi Fish Harbour, and installation of an effective cool chain system at Karachi Airport. The SDF is initially funded by the provincial government for 3 years but is expected to be augmented by other donors.

NEW WORK IN 2009

EMPOWER PAKISTAN: AGRICULTURE. This program is a new USAID initiative undertaken via CSF (see link) aimed at counter-terrorism, poverty alleviation and rural development along the supply chain. Geoff Quartermaine Bastin is currently working as Design Economist with the Program Design Team led by Don R. Mickelwait of Experience International, Inc. The EPAG will be a $400 million group of projects in livestock (mainly dairy) horticulture and food security (including wheat, maize, oilseeds, pulses and sugar). The activities and interventions will be right along the supply (value) chain "from farm to fork" and will be implemented throughout Pakistan with trade connections to the Middle East, Afghanistan and Central Asia. The US Government under the new administration emphasizes three elements in foreign policy: Defense, Diplomacy and Development. The EPAG program is aimed square on at improving incomes and creating jobs in those areas of Pakistan most likely to produce radical insurgents. Success in this Program which will last 3 to 5 years and will bring 1 million women into the cash economy is seen as critical to winning the argument over radicalism and winning the War on Terror. Pakistan's agriculture accounts for more than 40% of employment and food security is vital. Failure in either the design or implementation of the EPAG is not an option.

COMPETITIVENESS AND PRODUCTIVITY

Competitiveness is of major importance in a global economy. Productivity includes innovation and technology transfer as well as cost-cutting and improved workforce skills. Geoff Quartermaine Bastin has led a team at the Competitiveness Support Fund (CSF -see link) in Islamabad working with J.E.Austin Associates (JAA) to write an in-depth study of competitiveness in Pakistan, the "State of Pakistan's Competitiveness Report 2008*. The study includes a case study of agriculture and another on women's access to finance. The study, based on World Economic Forum base rankings explains why Pakistan currently ranks 92nd out of 131 countries measured by the WEF. The Report also suggests what can be done to change things for the better. A copy can be found at the following link:

http://www.competitiveness.org.pk/publications_policy_studies.php

WHEAT-FLOUR INDUSTRY IN PAKISTAN

2008 has seen an enormous crisis in the wheat grain grain and flour industry in Pakistan. Geoff QB along with colleagues Sadia Sarwar and Zain Asadullah Kazmi prepared a comprehensive analysis of wheat policy, prices, supply and demand in order to cast light on what caused the crisis (government mismanagement) and what could be done to avoid the situation in future (among other things restructure the GOP official procurement system). The Discussion Paper, issued by the Competitiveness Support Fund in Islamabad is available at the following link in ,pdf format:

http://www.competitiveness.org.pk/articles.php?p=1

"STONE DIMENSION"

We've been doing some work outside our normal food industry activities - in the "dimensional stone " industry - stone used for tiles and other construction areas. This has involved looking at the activities of a quasi-government organization established to help upgrade quarries and stone cutting and polishing facilities. A lot to the value chain focused  techniques of analysis we use in the food industry are similar, and because the food industry is so complex, other industrial activities seem simple to understand by comparison. The main problems are at the quarrying end, where stone gets blasted out of the mountain instead of cur correctly. Wastage of the primary product is very high -but where have we heard that before!

TECHNOLOGY AND DESIGN

You need to have the machine working! And working right! You would like it to be designed for your needs and be efficient. Innovative and well-designed machinery and related technology is essential for productivity in this highly competitive industry and in a global economy. 

I got sick of dysfunctional technology and ranted about this pet gripe on LinkedIn (www.linkedin.com). I got A LOT of answers! These knowledgeable people helped me understand what was going wrong in technology design.  I;ve written an essay about the subject based on their ideas and comments which appears on the website of the Competitiveness Support Fund at: 

http://www.competitiveness.org.pk/articles.php?p=1

CHILD LABOR IN KARACHI

Children are peeling the expensive prawns that you might eat in restaurants around the world! They work in disgusting conditions for a pittance, but you probably pay a premium price.

These pictures show the extent of the problem at the Karachi Fish Harbour (see other posts). The major haul from the Arabian Sea is prawns and these have been the bulk of the now-banned exports (of course they still go to less particular countries).

The children are probably from Bengali families who have migrated illegally to Pakistan, The Karachi Fish Harbour itself is run by the provincial government of Sindh with these peeling sheds kept by the private sector.

Photos: courtesy of Robert Lindley, Karachi, Pakistan August 2008

CONTINUING WORK AT KARACHI FISH HARBOUR

Karachi Fish Harbour is still filthy! Despite all our efforts to work with the local authorities, the main exit point for Pakistan’s seafood is still in a disgusting condition. Slack management, vested interests and lack of urgency to find funds mean that technical solutions proposed by ourselves and teams from other agencies including UNIDO are not being adopted. Meanwhile the photograph taken in August this year shows the current state of the Harbour. The rubbish is floating on water over which fresh fish passes to the factory in the background. So much for HACCP!

FoodWorks has been working at Karachi Fish Harbour in collaboration with Robert Lindley, an international expert on fisheries, as part of an on-going contract with the Competitiveness Support Fund. The aim of the project is to upgrade and restructure the Harbour with a special focus on re-establishing seafood exports to the EU banned last year on the grounds of lack of hygiene. It's an uphill struggle to say the least!

A full set of reports on Karachi Fish Harbour prepared by Robert Lindley with support from Geoff Q-Bastin are to be found at:

http://www.competitiveness.org.pk/publications_policy_studies.php

Photo: courtesy of Robert Lindley, August 2008

EXECUTIVE SEARCH

Geoff Quartermaine Bastin has accepted the position of Director, Asia & Pacific for Kincannon and Reed, since 1981 the premier executive search company working exclusively in the areas of agriculture, agribusiness and life sciences. Geoff will undertake this work concurrently with on-going consulting work for FoodWorks and related clients.

Greg Duerksen, President of K&R says "Kincannon & Reed recruits leaders with judgment who get results. Two things make us different: (1) our unique focus on food, agribusiness and life sciences; and (2) the experience base of our principals, each of whom has held top management positions within the industries we serve. The benefit to our clients is that we understand at a personal level, not just an intellectual level, the dynamic environment in which they operate. We also know from our own experience the huge value to stakeholders of hiring the right person.”

NEW YEAR AT CSF

Geoff Quartermaine Bastin and Usman Ahmed Khan in the CSF office celebrating the New Year; indeed not such a happy time in Pakistan. Usman is the Manager for Matching Grants of which CSF has 10 approved and more in the pipeline.

YES MINISTER

We sit again around an enormous table with the Minister (Interim) for Finance Dr. Salman Shah (first on the left). This was a meeting relating to the financing of horticulture as part of the on-going Task Force for which CSF (via Geoff JQB) is providing the secretariat. On the right is Amir Jahangir our senior media consultant and GJQB writing the minutes. The meeting successfully promulgated Guidelines for investing in the industry prepared by the State Bank of Pakistan and approved by the Minister at this meeting.

"NEUTRACEUTICAL" MANUFACTURING

This $400,000 project in the Ghizer district of the Northern Area of Pakistan in the foothills of the Himalayas gathers medicinal berries and extracts “neutraceuticals” from the seeds to tackle prostate and breast cancer, it also makes skin ointments from the fruit pulp. The project innovates by extracting oil by using state-of-the-art super critical carbon dioxide fluid extraction. The technology is also used to extract oil from other fruits such as apricots and grapes.

The work is financed via private sector investors and the Competitiveness Support Fund (see post below - FoodWorks provides technical and economic advisory services to CSF). The project addresses poverty by putting value to otherwise non-commercial wild plants of the Sea Buckthorn (for more details of the health aspects of this important medicinal plant check our partner blog www.boomgenerationfitness.blogspot.com). The project targets around 1,200 households by reinvesting profits back into the community for better growing and harvesting practices. Over 70% of the beneficiaries are women.

The main partner, Rural Development Initiative (RDI), is a Pakistani NGO which aims at generating employment opportunities by utilizing local natural resources. RDI has established a fruit processing and pulping unit in Ghakuch, Ghizer NA (see photo). The Sea Buckthorn pulp and seeds are transported to Lahore for final extraction. Products such as neutraceutical organic juices and medicine capsules will be marketed not only in Pakistan but exported to Japan, Europe and North America.

QUARTERMAINES WORLD

This is the launch of Quartermaines's World! I have developed three blogs, Q's World is my personal blog open to close friends and relatives only, FoodWorks is,of course, my company blog describing my work in agribusiness and food, Boom Generation Fitness (http://www.boomgenerationfitness.blogspot.com/) is about health and fitness (mind and body) for the Baby Boom Generation - those over 50. All of this is driven thru the quartermainesworld.com domain via Google Apps and my principal email addresses are now: geoff@quartermainesworld.com (personal), foodworks@quartermainesworld.com (business) and fitness@quartermainesworld.com (pleasure). Please enjoy the blogs and comments are always welcome.

HORTICULTURE DEVELOPMENT IN PAKISTAN

The Pakistan Horticulture and Export Development Board is the leading organisation in this country for promoting an industry that contributes 12% to agricultural GDP and for which there is enormous potential. Pakistan grows the full range of horticultural crops from tropical bananas in coastal Sindh, through mango and citrus in Punjab, apples and grapes in Balochistan to apricots, peaches and unique medicinal plants such as Sea Buckthorn in the Himalayan foothills. Floriculture is another sub-sector that offers huge opportunities for investment. FoodWorks (via the Competitive Support Fund) is working with PHDEB and an inter-ministerial Task Force to formulate initiatives covering all aspects of the industry. However the focus is on improving quality especially via infrastructure. A multi-million dollar project financed by the World Bank entitled the "Northern Trade Corridor" includes provision for building packhouses, cool storage facilities and a pool of reefer containers. For more information check out the PHDEB website at http://www.phdeb.org.pk/ or contact the CEO Mr. Shamoon Sadiq on ssadiq@phdeb.org.pk

TASK FORCE FOR HORTICULTURE INDUSTRY

FoodWorks has worked with the Competitiveness Support Fund in Pakistan to establish a Task Force on Horticulture Finance and Competitiveness. Meetings have been held covering finance, infrastructure (especially transport, logistics and aspects such as cool chains), production/processing/marketing and quality control and standards. The first phase of this work will be completed in September 2007 with related work being carried forwards by various line ministries and private sector partners. The goal of the Task Force is to significantly increase the volume and quality of exports of major crops such as mango, kinnow, peaches, apples. For more information on what CSF and FoodWorks are doing in horticulture please check the CSF website on http://www.competitiveness.org.pk/