PROCEEDINGS

Regional Expert Consultation

Agro-Industries Development
Countries of the Middle East and North Africa
Cairo, Egypt 6-7 December, 2009

Inside cover photograph

People at the Expert Consultation: day one. Credit Peter Steele

Cover photograph
Packaging grapes for export to Messrs TESCO Supermarkets, United Kingdom. Photograph courtesy of field visit to Messrs Hegazy Orchards & Packhouse, Cairo-Alexandria Desert Road, km50. Credit Peter Steele.

PROCEEDINGS

Regional Expert Consultation

Agro-Industries Development
Countries of the Middle East and North Africa
Cairo, Egypt 6-7 December, 2009

Editor Peter Steele Agricultural Engineer FAO/RNE Consultant, Agro-Industries June 2010

Food and Agriculture Organization of the United Nations Regional Office for the Near East Cairo Egypt

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ISBN 978-92-5-106634-8

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Executive Summary 1. Regional socio-economic challenges

The challenges of the Middle East and North Africa (MENA) region are routinely highlighted by those responsible for national leadership and their advisors in the development industries expanding populations, rising living standards for people in all countries, resilient poverty for minority populations in many countries (mainly rural communities), and unsustainable pressure on natural resources of land, soils and water. A business as usual approach to the socio-economic development of regional people and their aspirations will not suffice into the next period - the inherent risks are simply too great. The extent of the demographic changes underway and the demands of people for higher living standards, with divergence between expanding middle-income sectors and minorities that remain poor raise challenges for national leadership with the decisionmaking required for the economic choices that will help shift development priorities. The region would benefit from unity of vision and an approach to development that is able to transcend national interests. Models of sustainability show increasing vulnerability, expanding poverty, dietary deficiencies and wide-spread malnutrition amongst populations that cannot always keep pace with escalating living costs. Divergence of income is widening. Safety nets continue to be developed to accommodate the rapidly urbanizing populations of the region, for example, more than 80 percent of the population of Egypt enjoys selected public subsidies for foods and fuels.

2. Investing in agriculture
Agriculture continues to provide the basis for stability of rural communities, notwithstanding issues of poverty and the traditional approach to agro-production typical of all regional countries largely fragmented and small-scale, limited infrastructure, outdated technologies, low-educational standards and crops/livestock products that do not meet basic standards of quality and health. Agriculture provides for up to 15 percent of national earnings in regional countries, but continues to decline when compared to the contribution of services, energy and tourism to gross domestic product (GDP). This reflects in the lack of investment in small-scale agriculture by both the public and the private sectors; and rural communities that have become the repository of the old, the very young or those unable to migrate. The dichotomy of development between urban and rural communities increases apace, and rural investment becomes increasingly one of meeting social needs. Declining resources of water are manifest in the inefficiency of water use and traditional choice of crops for agro-production throughout the region. This is exemplified with continuing efforts to boost exports of fresh fruits and vegetables and/or cereals effectively selling expensive water cheaply. Food dependency remains high and will continue to grow in line with populations, which have doubled during the past 25 years and are projected to do much the same again before stability is reached, mid-century.

3. Agro-industrial value chains

More can be done to boost the contribution of agro-production and derivative agroindustrial value chains within national socio-economic development. Country reports from the Expert Consultation Agro-Industries highlighted the polarity between agroproducers and agro-processors in the region and the lack of coordination, shared interest and understanding of the one sector to the other. Notwithstanding this apparent lack of complementarity, the agro-industrial sector is being described as a motor for growth across the region, but for this to become a reality resources, vision and action are required on regional scale. The region is home to some of the richest states in the world social development and investment funds are available. The largest food importer on the planet is minutes away from North Africa and is a willing investor and purchaser of regional goods and produce. The European Union has a vested interest and remains a willing partner in the stability, growth and economic wellbeing of the region. Agro-industries has potential as a cross-cutting investment sector bringing technologies, improved working conditions and wealth without being tainted with the historical images of agro-production as the repository of the poor, the under-achiever and the failed. Success with socio-economic development in the region will be easier if the region recognizes the value of unity, and of working together beyond the politicoeconomic issues of national interest. A regional population of estimated 380M people is small on global scale and, like the small-scale farmer the region needs to collectivize, promote and represent itself as a reliable business partner all countries, all sectors, all of the time.

4. Expert Consultation agro-industries

The highly successful and well-focused Expert Consultation organized and hosted by FAO 06-07 December 2009 has helped to determine priorities for agro-industries development for regional countries and their partner agencies into the next period. Success was based largely on the shared team work of national experts from six regional countries,1 and FAO technical people from Rome and Cairo. National experts prepared country studies to a standard format that provided the basis of the debate. Equally important, the studies provide a window on the agro-industrial opportunities and constraints for investment in the focus countries. The results of the presentations and debate led to recommendations for FAO to focus attention on three key sectors: 1. Reinforcing relations between primary production and agro-industries. 2. Enhancing competitiveness and investment in agro-industries. 3. Boosting the effectiveness of public sector coordination and partnering.

Regional agro-producer countries. National agro-industries reports were prepared for Algeria, Egypt, Jordan, Lebanon, Morocco and Syria. Efforts to produce similar reports from Sudan, Tunisia and Yemen were unsuccessful given the time available, but these and others will be further considered and contracted into the next period in order to provide a repository of regional information that will help identify the main political, economic, social and technical (PERT) issues that prevail; and the opportunities that this represents. The national expert from Algeria was unable to attend the expert consultation as planned.

5. Regional agro-industries forum

Delegates at the Expert Consultation endorsed proposals to hold a MENA Countries Regional Agro-Industrial Forum (RAIF-RNE), which will focus thinking within the sector, help encourage investment in planning, support and development of agroindustries, and provide regional direction into the next period. Strategic choices from the Expert Consultation will be further explored on the basis of technical papers that will be prepared prior to the RAIF-RNE. These will focus upon Regional Experiences in Technology and Product Innovation/R&D, Raw Materials Supplies/Agro-Industries Development and Improved Resource Efficiency for Agro-Producers. There are always issues with choices of this kind targeting the intellectually astute decision-makers within the region, whilst rural communities continue to live in sometimes abject poverty. Effort to focus upon small-scale agro-production, small- & medium-scale enterprises (SME), pro-poor livelihoods and similar frameworks will be essential that the many hundreds of thousands of micro-scale producers across the region are mobilized to share in the market economies open to them. FAO has the ability to guide and direct strategic investments and many regional partners are available. Here it is that FAO/RNE has a role working on behalf of the estimated 30 percent regional people living in rural communities before they too move to the towns and cities and become lost to agriculture.

Foreword to the proceedings

Agro-industrialization is already well underway throughout the region with a host of donor-led government partnerships most of which are linked to private sector investment. This follows recognition by regional governments of the vulnerability of dependence on food imports typically more than 50 percent for most countries but, more pragmatically, the severe social unrest of 2008 that followed hikes in costs of imported staples. The latter has led to donors and development banks promoting investment in the agro-food sector across the MENA countries. Agricultural production in regional countries has featured a steady decline in economic importance - contributing less than 15 percent to GDP but, at the same time, providing employment and livelihoods for more than 30 percent of regional people. Much of this, however, has been in the form of safety nets and, notwithstanding the estimated 140 million people involved, this has not been matched by national investment priorities until now. The Organization is well-placed to take advantage of the many strategic opportunities taking place, and the proposed RAIF-RNE that will follow the Expert Consultation will provide the basis for sector planning and investment required long-term. Focus on regional agro-industries development is timely for FAO given the emphasis on strategic planning required of the work programme of the Organization, and following a shift into results-based planning (RBP) that is being implemented from 2010-on. Agro-industries will take centre-stage for regional growth during the next period. Regional ownership will be essential that the people tasked with delivery of the FAO agro-industries programmes and activities achieve what is intended. Marketing and promotional effort will be required for which the proceedings of the Expert Consultation Agro-Industries represents a small, but valuable, indicator. Proceedings are an important part of all workshops, meetings and consultations, and provide a record of the presentations and debate undertaken at the time. They record the contribution of the many people who made the effort and took the time to participate. The proceedings comprise one small part of the repository of the intellectual wealth of the community, industry, country or region and one, moreover that cannot always be recaptured at a later date. The proceedings thus provide a measure of continuity within sector investment, and this enables others to take note and advantage of the information provided at that time. This helps with choices that may follow, with the promotion of investment opportunities and this, further, helps provide the creation of wealth financial, technical and intellectual in the host communities.

In this case the proceedings of the Expert Consultation have helped to highlight the constraints and opportunities that prevail for socio-economic development across the region. Findings and recommendations will provide opportunities and choices to those responsible for decision-making in support of national and regional agro-industries. Strategic proposals have been made that warrant further consideration by partnership groups representing public and private sector people, institutions and companies; and these will provide the basis for further debate and promotion at the forthcoming RAIFRNE.2

RAIF-RNE. During the six months that has passed since the Expert Consultation was held, timing for the proposed RAIF-RNE has shifted to March 2011. The venue remains the same Cairo, Egypt following the invitation extended by the Egyptian Minister of Agriculture & Land Reclamation at the Regional AgroIndustries Forum (RAIF) Africa held in Abuja Nigeria in March 2010. Attending the RAIF Africa on behalf of the Office of the President of Egypt, the Minister invited all eligible North African countries to meet in Cairo. Further information to describe the RAIF Africa is available at: http://www.hlcd-31.org.

Table of contents

Section

Title Executive summary Foreword Contents Abbreviations and Acronyms Opening statement: Abdessalam OuldAhmed Introduction to the expert consultation: Peter Steele Summaries country reports: Algeria: Mohamed Amokrane Nouad Egypt: Mounir Labib & Samir Tantawi Jordan: Majdi Ali Al-Mahasneh Lebanon: Mariam Eid Morocco: Bouchta Saidi Syria: Samir Jrad Conclusions and recommendations: Agro-industries development strategies & priorities: Doyle Baker

Page 5 8 10 11 12 15

22 28 31 38 43 49 52

Annexes A1 A2 A3 A4 A5

List of participants expert consultation Programme expert consultation Terms of reference outline of country report Promoting agro-industries in the MENA countries Concept note planning MENA countries RAIF-RNE

56 59 62 74 76

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Abbreviations and Acronyms

A&A AfDB B COMESA EC EU FAO FDI GAIF GAP GDP ICT IFAD M MALR MENA NGO PNDAGRO PNDAR PEST R&D RAIF-RNE RBP RNE SME UAE UNCTAD UNIDO WTO

Full text African Development Bank Billion Common Market for East and Central Africa Expert consultation European Union Food and Agriculture Organization of the United Nations Foreign direct investment Global agro-industries forum Good agricultural practices Gross domestic product Information and communication technologies International Fund for Agriculture Development Million Ministry of Agriculture & Land Reclamation (Egypt) Middle East & North Africa (countries/region) Non government organization National Agro-Industrial Development Plan (Algeria) National Plan for Agricultural and Rural Development (Algeria) Political, economic, social and technical (analysis) Research and development Regional agro-industries forum (MENA countries) Results based planning (FAO regional program implementation) Regional Office for the Near East (FAO) Small and medium-scale enterprise United Arab Emirates United Nations Conference on Trade and Development United Nations Industrial Development Organization World Trade Organization

Currencies
Country Algeria Egypt Jordan Lebanon Morocco Syria Currency Dinar (DZD) Pound (EGP) Dinar (JOD) Pound (LBP) Dirham (MAD) Pound (SYP) Equivalent US$1 73.52 5.66 0.708 1,501 9.13 46.95

Currencies as at 10June2010

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Opening Statement Mr. Abdessalam OuldAhmed Deputy Regional Representative & FAO Representative in Egypt _____________________________________________________________ Ladies and gentlemen Colleagues You are welcome to the FAO Regional Office of the Near East.
It is a pleasure for me to be with you this morning on the occasion of the opening of the Expert Consultation Agro-Industries Development in the MENA Countries. On behalf of the Director General of the Food and Agriculture Organization of the United Nations, I would like to thank all national and international experts attending for accepting our invitation - with a special thanks to those of you who have been tasked with preparing country reports. May I welcome everyone to the FAO Regional Office of the Near East. For those of you from Jordan, Lebanon, Morocco and Syria this may be your first time here; we hope that it will not be your last. For our Egyptian national colleagues we are pleased to see you here. For our FAO colleagues from FAO Headquarters Rome the message is one of welcome back. The Organization may be re-designing the way in which we share our respective development roles, but we remain increasingly dependent on the expertise and capabilities of those technical specialists who link into the needs of the region wherever they are located. At RNE we comprise a small team of 15 specialists and 70 support staff and we service a region that is home to more than 380 million people across a land area of 8.7 million square kilometers of which more than half is designated as nonagricultural. ________________________________________________________________________

Ladies and Gentlemen Colleagues The MENA Region is at the cross-roads - and choices need to be made.
We have just two days in which to debate some of the most challenging issues facing the region given our vulnerability to a rapidly degrading natural resource base, and our dependency on imports for all kinds of goods. Food security and the need to maintain social harmony is dependent upon the stability that comes from regular employment and income. With populations continuing to expand in all countries in the region the real challenge for the next 20 years will be reconstruction of national economies, linking them one-to-the-other in some form of regional framework that will help strengthen trading opportunities and, importantly, boost agricultural productivity.

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Progress and development of this kind raises issues of resource use. Herein is the continuing role of the state in national development, the need for new ways in which governments will engage with national economies and, importantly, the effort that will need to be made to encourage investment; to ensure that investments are made that benefit the entire community irrespective of scale or location. The region is being adversely affected by global climate change with no clear indication of the ramifications of what those changes will bring in the future. We already have the lowest renewable water resources on the planet (at 750 cubic meters per capita and declining) and we depend upon imports for more than half the food we eat. Food and water are basic requirements of people, and our resources of both are insecure. ________________________________________________________________________

Ladies and Gentlemen Colleagues Agro-industries development will provide new opportunities in the region.
The natural resources base for agriculture in the countries of the region is fragile, but agriculture remains the main source of income for more than 40 percent of regional people. Whilst much of agriculture remains traditional, there are real opportunities for reinventing current practices and approaches, for example, for boosting productivity of land and water, recognizing new opportunities from rising food prices in local markets, producing non-traditional crops/livestock products, using institutional and technical innovation and, crucially, adding value by processing, storing, packaging and similar. Here it is that agro-industries can become the motor for development of rural and periurban communities. The private sector has risen to prominence and dominates food industries from producer to consumer across the world. Regional countries are no exception. There are different ways of doing business - different people and services involved, pro-active governments are establishing public-private partnerships and small-scale credit is being provided. With higher incomes people are exploring new foods, and there is has been a recognizable shift from cereals and other staples to fruits, vegetables, dairy foods and meat. These provide opportunities for agro-industrial investment and, back on the farm, increased demand for labor more jobs are created many of which make use of new technologies. Across the region investments are shifting into the infrastructure, skills, capacity building and innovation required of new agro-industries. As you present your country studies for debate to the Expert Consultation, look into the wider vision of regional opportunity. To the north of the region we have the worlds most demanding importer of specialist high value foods. To the east of the region (part of the region really) we have the wealth of the oil producing states of the Arabian Gulf. Both purchase on the basis of quality; and both are willing to work in partnership with regional agro-producers and agro-processors to encourage higher productivity and investment.

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You are tasked with making this happen.

________________________________________________________________________

Ladies and Gentlemen Colleagues

I would like to take the opportunity to convey my thanks to those of you responsible for planning and organizing this Expert Consultation; and to those of you who have travelled long distances to attend. I encourage you all to discuss and debate with confidence, and to produce recommendations for FAO and partners that will enable us to drive the national economies of the region for the benefit of everyone who lives here.

I am pleased to welcome you all to the meeting.

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Introduction to the Expert Consultation Peter Steele

Summarizing the background and objectives of the Expert Consultation AgroIndustries in the MENA countries, and emphasizing the continuity of priority investment required in the region for the next immediate period. The meeting was described as a stepping stone into the regional agro-industries forum (RAIF-RNE) that is proposed during the next 12 months; with the recommendations made forming the basis of the technical focus of the RAIF-RNE. Inviting everyone to participate to ensure that agro-industries become the motor for development. Originally prepared as a spoken introduction, the paper has been redrafted and summarized as a record for the proceedings. ________________________________________________________________________

Welcome
Welcome to the Expert Consultation - you are welcome to FAO Cairo and we look forward to our shared debate during the next two days. In a small experts meeting of this kind everyone has a role to play. By so doing you are participating in a pioneering event this is a first FAO/RNE programme focused upon agro-industries shared across the region. Our meeting is timely. This introduction is in four parts: 1. Background priorities 2. Objective of the Expert Consultation 3. People introducing themselves 4. Programme Expert Consultation 5. Additional reporting post-Expert Consultation

1. Background priorities
The countries of the Middle East and North Africa (MENA) region face many challenges into the next period, and not least those linked to the changing demography of regional populations, their livelihoods and, increasingly, their rising expectations. Populations have doubled during the past 25 years and continue to increase with estimated 380 million (M) people in more than 20 countries across the region. Stable populations proposed for 2050 show 60 percent more people - estimated total 600M. It is people that place demands upon the natural resources and the socio-economic resources of the region, with the extent and development of the latter largely dependent upon the exploitation of the former. In a region in which estimated 40 percent of lands are habitable, the challenges become those of maintaining (and improving) access to sufficient soil organic materials and water to sustain life. Dynamic changes projected for regional climates raise more daunting trans-national challenges for everyone in the region with demand for short to medium-term planning that will provide for the contingencies that climate change may bring. Speed of change and impact over time remain unknown,

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but it is clear that access to sufficient water will become a crucial regional issue in what is already the driest region on the planet.3 If crops can be grown and required standards of product quality, hygiene and health can be met, then the region is well-placed to exploit the rich food markets of the European Union (EU). The EU is a willing partner and investor in selected agro-producer sectors and agro-industries that will continue to provide for economic growth and social stability in the MENA countries. Many of the standards that are being established for quality, hygiene and health of locally-grown foods will enable these foods to be exported into the countries of the EU; the MENA countries are making similar efforts at unification that eventually exemplified the success of the single European market of 27 countries. Progress across the MENA countries remains fragmented, however, given lack of infrastructure, limited facilities, inadequate laws, policies and legislative frameworks and, importantly, the lack of expertise, tools and knowledge required of regional producers/processors. The importance of energy industries in the MENA countries has given rise to skewed national development; with the wealth of the oil-producing countries of the Arabian Gulf, for example, providing dramatic contrast to that of the agro-producer countries. The countries of the Gulf hold estimated 75 percent of world oil resources. Institutions, banks and agencies in the Gulf countries provide considerable social and investment funds for regional countries but investments are made worldwide, and the MENA countries receive disproportional less foreign direct investment (FDI) than that of the industrial countries. Notwithstanding efforts to shift away from carbon-based fuels, the oil resources of the Gulf countries are likely to remain economically important through to the end of the century; and perhaps always.4 In a region covering nearly nine million square kilometers and which spans some of the most inhospitable lands on the planet, less than 25 percent of the land is occupied permanently, and estimated 40 percent is used by people (i.e. with commercial value for agro-production, services and/or tourism). Proposals to construct large-scale solarelectrical generation plants with reticulation of power to Europe continue to be promoted, but the magnitude of investment and insecurity of supply exemplify the extent of the risks involved for private companies; and only pilot-scale investment has thus far been made. The region is unlikely ever to become a significant agro-producer not simply because of lack of organic materials and water, but as a result of climate change projections. Rainfall is likely to become less predictable and river catchments that have existed for millennium are already under pressure from increased extraction/use much of which is inefficient
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Climate change. The State of the Environment Report for 2007 for Egypt emphasises the impact of climate change on increased average temperatures, rises in sea levels and coastal inundation, and efforts required to mitigate the production of greenhouse gases (GHGs). Available at: www.eeaa.gov.eg. 4 Oil-based industries. Compare the value of petrochemical products and fuels derived from a single barrel of oil. In 2005, the pre-tax value of petrochemical products in the USA was US$375B; and the pre-tax value of fuels was US$385B. The former comprised just 3.4 percent of the barrel and transport fuels 70.6 percent (with the remaining proportion used for non-petrochemical products such as asphalt, waxes, lubricants, etc.). The reality is one where the oil producing countries are under-valuing their mineral wealth on a long-term basis in exchange for the expediency of short-term economic gain. Source: Marshall, J. (2007) Who needs oil? Article. New Scientist. Reed Business Information, London. 7 July.

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and wasteful but also from those occupying the highlands in which these rivers and their tributaries rise. Without adequate water resources crops and livestock cannot be produced with confidence and, it follows, agro-processing is unlikely to become viable. Yet 30-40 percent of regional people remain directly or indirectly dependent upon agriculture. In a region that is rapidly urbanizing, it is the people left behind in rural areas who represent the poor in regional society; and who are likely to suffer from the widening income gap as rural communities remain with entrenched (i.e. traditional) agro-practices, attract less investment, provide fewer jobs and services and, over time, become less viable; thereby further encouraging the young and mobile to shift to the towns. What options exist for boosting agro-processing in poor rural communities apart from investments of social-funds provided by a distant government? Attracting the private sector may prove difficult. Commercial agro-producers/industries, however, can be found in all regional countries, but these farms, pack-houses and processors represent the minority larger-scale agroindustrial producers with direct links into the supermarkets of mainly Europe; and grow and sell with use of modern technologies, new facilities and skilled managers/workers. The sector represents a considerable opportunity, however, for herein is the basis of an agro-industrial national/regional core into which backward and forward linkages can be made that will provide essential partnerships for small-scale/traditional producers. For the present, linkages of this kind are rare. The paradox for regional governments and national planners will be one of maintaining the modern large-scale commercial sector and, at the same time, encouraging the many millions of traditional and largely impoverished small-scale producers into models of production that will enable them to benefit from the development of parallel industries. Incentives will have to be provided for both sectors for, ultimately, rural poverty based on safety net investments for small-scale producers is neither sustainable nor viable; the older rural generations will disappear and the youngsters will head for the towns, and land will be abandoned. Agro-industries may provide some of the answers required for employment, wealth creation and more productive agriculture.

2. Objectives of the Expert Consultation

The Expert Consultation has objectives that seek to provide direction based on three key agro-industrial themes: 1. Strategies; 2. Issues; and 3. FAO guidance. However, in recognition of the small number of people involved and the dynamic nature of the dialogue that is likely to evolve, priorities can be changed as the debate develops. FAO/RNE has placed agro-industries development as a platform for the agrodevelopment work programme of the Organization in the region. Commitment to the sector is exemplified with the recruitment of a full-time Technical Officer due on post for mid-2010. For the first time in three years, the regional agroindustries programme will have in-region professional management. The agro-industries 17

programme will comprise a key component of the FAO/governments field programme, that can be changed to meet the aspirations of FAO Partner Countries. The modest budget available can be augmented with funding from bilateral, international agency, NGO and other development partners as-needs-and-opportunities-arise. FAO is ready to provide strategic direction for investment in agro-industries across the region. The Expert Consultation will consider key issues on the basis of the three inter-related themes: strategies, issues and FAO guidance, with a number of key pointers that will help direct the debate. 2.1 Establish national and regional agro-industries strategies and priorities Access to international food markets. The draw-down on international stores of food staples during the mid-2000s has shown the vulnerability of countries that depend upon food imports. Notwithstanding cash-in-hand if foods are not available in international markets, then none can be purchased, a situation that was exacerbated in 2008 when many traditional food exporters placed restriction on exports of staple food (and thereby gave priority to domestic populations/markets). Food security. In the MENA region more than 50 percent of all foods are imported; this brings risk for access to supplies (and access at costs that are sustainable). Food riots in selected countries showed the vulnerability of large parts of local society; and governments intervened with government-supplied staples and more subsidies. National experience. Although most countries in the region can be described as middle-income, there is wide divergence in national wealth between the oil producers and the agro-producers; and this reflects in the level of national facilities, services, expertise and experience that can be shared one-with-the-other. This is particularly important for agro-industries. The more technically advanced agro-producers have intellectual resources that can be used by other countries (e.g. Egypt has shared experience of traceability practices with Lebanon). Market approach. Regional agro-producer countries would benefit from the adoption of standards, procedures, systems, legislation, etc. in support of a regional approach to the exploitation of markets in the EU and the Gulf states (and for raising standards in domestic food markets). 2.2. Development of key themes for agro-industries Equitable sharing of resources. Devising and implementing procedures that resulted in shared investment and/or use of resources between cities and rural areas within the country; that rural people were not disadvantaged (i.e. did not perceive themselves as disadvantaged). This will help mitigate migration into the cities; and promote stability in rural communities. Value chain. Introduce and promote the concept of the value chain between agro-producers and food consumers; that the majority people in the cities were sensitized to rural investment and the socio-economic value of agro-industries (i.e. for employment, income, wealth, etc.). Added value production. Identify, introduce and encourage novel agro-food crops that can be processed into added value products for local consumption and/or

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exports. This may provide an alternative to current staples and/or adaptation to current staples crops that they can also be processed5. Rural services. The higher the added value possible, the greater the return to the grower; and this is manifested in greater wealth in rural communities and the establishment of rural services, artisans, entertainment and similar all of which help create employment opportunities and more viable communities. Location of agro-industries/services. Choices need to be made for the best location of facilities, factories, services, stores, etc. that comprise agroindustries which add value and/or transform raw agro-materials into saleable products. Many existing scenarios are case- or location-specific, with processing facilities linking agro-producers to urban consumers or export ports. New agrofood industries, however, can be designed such that facilities, transport, storage, etc. can take advantage of efficiencies and/or economies of scale with best-choice opportunities that benefit the maximum number of enterprises and/or communities. Compromise is usually essential, but location close to source materials/agro-producers is typical. Socio-economic development. Ownership of agro-industrial facilities, materials, source, etc. will be vested in the entrepreneurs involved, but government has responsibilities to ensure the investments made are shared into communities that will benefit from the additional financial, economic and intellectual wealth created; and this requires sound legislation, laws and similar infrastructure that provides incentives which will help direct investment.

2.3 Guidance for FAO interventions FAO as a partner in agribusiness. FAO is the leading UN agency responsible for agro-food industries providing services, information and technical assistance to governments worldwide; and thence to national and international commercial agro-food industries. The reality of agribusiness investment has not always been appreciated - with earlier emphasis on the science and technology required of agro-food production. This approach has changed in recent times. Public, private partnerships. Change has come as a result of recognition of the role of the private sector in agro-food industries; with governments worldwide shifting into partnerships with private investors. Large-scale agro-industries have expanded into the developing countries in part as a result of FDI from the industrial countries with use of modern industrial technologies. The challenge remains one of maintaining and modernizing the small-scale agro-food producer that he/she is able to take advantage of markets available; in this way rural communities remain viable and secure. FAO/RNE Regional Conference November 2010. The biennial regional conference provides opportunities for FAO and partner countries in the MENA
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Productivity/use of natural resources. Staple foods such as rice are popular traditional crops in the region, but much can be done to boost productivity of natural resource use with adoption of the appropriate technologies. For example, plant breeders in Egypt have introduced varieties of rice that have boosted yields of the order 60 percent during the past 30 years; and have done this with reduction in water demand of 25-30 percent mainly by reducing the period required for the plant to reach maturity by up to 40 days. Commercial yields are currently 9.5 t/ha; with R&D yields of hybrid varieties of 13 t/ha available. See Badawi, T. (2004). Rice based production systems for food security and poverty alleviation in the Near East and North Africa. Paper. Conf. Rice. FAO, Rome, Italy.

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region to share views and debate on regional agro-food issues and opportunities. Agro-industries development will feature on the agenda at the forthcoming conference, and the challenge will be one of boosting ownership of the FAO/governments programme across the region. This will be essential for all agro-food sub-sectors, and no less agro-industries given current interest and investments underway.

3. People introducing themselves

The participants at the Expert Consultation are listed in Annex A1. Everyone was invited to introduce themselves with the starter: Dont be shy.

4. Programme Expert Consultation

The tentative programme developed for the Expert Consultation and followed during two days of presentation and debate is shown in Annex A2. The programme comprised six sessions: (i.) Agro-industries in the region: motor for growth. (ii.) Case studies: agro-industries development across the region. (iii.) Developing agro-industrial development strategies and priorities. (iv.) Key themes: future agro-industrial exploration. (v.) Guidance to FAO and partners for regional effort and investment. (vi.) Conclusions and recommendations. Day #1 provide the basis for positioning and scoping within the objectives required of the Expert Consultation and were based largely on reporting from the national experts for the six case studies available (i.e. sessions one & two). Case studies were based on the six countries for which standard reports had been prepared. Day #2 covered sessions three six. Session #1. Agro-industries in the region motor for growth Three speakers, respectively, provided the basis for FAO servicing the MENA region with emphasis on socio-technical opportunities and innovation; agro-industries in context and the challenges of making things work, and; agro-industries investment and the importance of partnerships for making progress. In a period of little more than one hour the three speakers with experience, respectively, of FAO in the region and regional geo-planning requirements, agro-industries and agribusiness, and public private partnerships as a driver for industrial investment set the basis for the two-day debate. There was emphasis on the need to arrive at conclusions and recommendations that would be of value to both regional partners and FAO. There was need to understand the constraints, issues and opportunities involved within the country studies and to use these as a means of extrapolating into a regional context. Case studies national reporting To provide for a measure of compatibility between the six country case studies (i.e. to enable them to be compared) the national experts had been provided with the outline of the report required. This is shown in Annex A3. Each report comprised six chapters linking the country, resources and opportunities into the macro-economy, the national

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agricultural sector and the national agro-industries sub-sector. This was followed by an assessment of the sub-sector: based on an analysis of the political, economic, social and technological (i.e. PERT) forces that applied. Log-frame charts were prepared that summarized findings. This led into an assessment of the national support required of agro-industries within the country; and this was summarized in additional log-frame charts that focused upon three key sectors: #1. Public goods and facilitative policies; #2. Innovative institutions; and #3. Financial capital and risk mitigation. Each key sector was further supported by separate analysis of the investment and effort required per activities/sector; from which the likely outcome could be derived focus on 23 different activities/sectors was requested per country. Given the wealth of information and analytical information derived (each case study, effectively, comprised a 60 page report with additional annexes), national experts were requested to summarize findings into 10-12 slide presentation and to prepare an Executive Summary to the case study containing key findings. The latter and supporting documents form the basis of the proceedings to the Expert Consultation. The separate national case studies will eventually be published on the FAO/RNE website, which is available at: http://ww.fao.org/rne/....

5. Additional reporting post Expert Consultation

Given the continuity of current agro-industries investment within the work programme of the Organization in the MENA countries, two additional annexes have been appended to the proceedings. Annex A4 contains a promotional note that was distributed following a period of regional training in support of the FAO/governments field programme in the region; it provided a lead-in to the Expert Consultation and has value for the proposed RAIF-RNE. Annex A5 contains some preliminary planning required of the proposed RAIF-RNE.

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Country Report Algeria

Agro-Industries in Algeria
Mohamed Amokrane Nouad 1. Introduction
Agricultural production and agro-industries in Algeria face many constraints into the next period as populations continue to expand, dietary changes bring demand for new and novel foods and as the country continues to open up to international trading. Competition from foreign supplies, foods and beverages will continue to impact upon local producers and manufacturers. Production of food staples has not kept pace with increased demand, there is divergence between agro-production and the requirements of processors for selected materials and, equally alarming, the country is importing more foods and becoming increasingly dependent on them. This is neither logical nor tenable long-term given domestic resources of land, soil, water and people available. Algeria has always been a resilient agricultural producer but, in recent times, food industries have become uncompetitive as a reflection on lack of investment, lack of focus and unimaginative public policies. The re-stimulation of agro-production and integration into the wider agro-industrial sector is a major challenge for national planners into the next period. A resurgence of agricultural industries is essential for national well-being.

2. Agriculture and food industries

Algerian agriculture has strong physical and economic advantages when compared to neighboring countries in North Africa; favored trading into the markets of the EU, natural resources of climate, land, soils and water that are reliable and provide the basis for the commercial production of a range of crops and livestock, and a capable and relatively well-educated work force. Technical and scientific resources within institutes, R&D centres, training and extension facilities, schools and universities are scattered across the north of the country, but provide services nationwide. Agro-producers are generally individualistic, and partly organized within regional and local chambers of commerce that provide links one-to-theother. A host of professional services are provided by both the public and private sectors.

3. Overview of agro-industries
Agriculture is a key part of the national economy and typically provides 20-25 percent of GDP annually, with estimated 30 percent of the population of 34.5M engaged full-time or part-time in agricultural activities. Production is focused upon domestic consumption with exports of agricultural goods woefully insignificant at estimated one fifth of one percent of total export earning. This contrasts with imports of agricultural goods, which represent 30 percent of total imports. The food import bill each year is of the order US$10.5B. During the five year period up to 2005, the publicly-supported Agricultural Development Fund provided interventions into the sector of >US$3.4B.

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4. Characteristics of agro-industries
Agro-industries generally have little or no contact with agro-producers; they are neither market-orientated nor familiar with the demands of domestic markets. They have no contact with external markets. Domestic processors have limited competitiveness; they lack ability to produce to the demands of markets and are unable to match production to meet demand or to reduce production as demand falls. They generally remain illinformed of manufacturing and/or market regulations. Much of the failure rests with the absence and/or weakness of the professional organizations responsible for sector development. The public sector has generally not been supportive of commercial companies and a culture of bureaucratic resistance continues to prevail. Change has been slow in coming to the agro-industrial sector, but change is underway as a result of national planning centered on the objectives and impact of the National Plan for Agricultural and Rural Development (PNDAR). Government has recognized the importance of a buoyant agricultural sector and has begun to mobilize the resources required of change. A first indication of change has been encouragement from the Ministry of Agriculture for increased planting of fruit tree orchards countrywide, which will reflect in greater quantities of fresh fruit available for processing. Herein is an element of parallel development with crop surpluses coming on stream and providing the basis for investment in agro-industries. Large-scale commercial farms are being encouraged. Such has been the success of fruit and vegetables production that export of quality goods are, for the first time, being planned. This will not come without system and facilities which will enable Algerian producers/processors to match the requirements of standards of quality, safety and hygiene required by importing markets. In this respect, the country remains poorly served when compared to other North African agro-producers, where information, services, traceability procedures and modern storage facilities, pack-houses, packing systems and more are already in place. It is not sufficient to plan agro-industries piecemeal and without reference to national planning required, for example, for the wider issues of socio-economic development, rural development, and availability of technologies, skilled people, finance and more. What are the key factors? Where should focus apply? Who are the main players? Where are the main markets? And so on. By way of assistance with exploring some of these highly complex issues, proposals have been made to establish an Agro-Industrial Development Plan (i.e. PNDAGRO) to follow on from the success of the PNDAR. This would place emphasis on agribusiness investments and promote the complementarities between agro-producers and agro-industries. The PNDAR has included elements of this approach, but not sufficient to make a difference to change much of current practice. The challenge has become one of remaining competitive, to boost local industries to standards that will enable them to replace imports, to provide employment and protect livelihoods.

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5. Expectations of agro-industries
The expectations of agro-industries remain high, but this is unlikely to come quickly and will rest ultimately on improved agricultural productivity (i.e. on the results of the PNDAR and similar initiatives). It will also depend on the emergence of a resilient commercial sector based on the establishment of large numbers of SMEs; and SMEs, moreover working one-with-the-other in industrial groups that will have both the political and economic strength to promote investment, obtain public-sector assistance and successfully exploit domestic markets. The emergent agro-industrial sector will be required to respond to the demands of consumers for foods and materials that match those currently imported. It will not be sufficient to host unwanted products of lower quality and unknown standards on to an unwilling clientele simply because they are locally-made. This will not succeed long-term and it will be unrealistic for government to target reduced imports and more local consumption if Algerian-made foods are uncompetitive. With the provision of public support for modern methods of food production that match food standards elsewhere, success is more certain but this will take time. Agro-industries has the potential to become a locomotive for development for agriculture and to help with increased productivity, rural development, employment creation and more, but not without strong and reliable public sector support over many years. Algeria can best be described as an industrializing country, and typically lacks the resources of the industrial countries in terms of materials, services, funds, information and more that can be marshaled in support of industrial development. The country remains resilient economically into the foreseeable future, however, with buoyant demand for energy products (which provide >95 percent of foreign earnings, 60 percent of budget revenues and 30 percent of GDP). Establishing public funds with which to encourage agro-industries and agro-production will be essential. Funding alone will not suffice, and transformation from traditional production to quazi-industrial production systems will require long-term planning and commitment. The challenge of food imports will continue to affect the competitive ability of domestic agro-processors, who will be establishing and trying to compete in mature markets with competent importers providing high quality goods. Agricultural productivity has not kept pace with population growth and the country has used the luxury of earnings from energy industries to purchase foods and beverages that should by rights have been developed by domestic processors. This is exemplified by the success of neighboring states that have more productive agro-producer/processing industries, and have never enjoyed the surpluses that have come from sales of oils/petrochemicals. Algeria faces the choice of trying to catch up but, fortunately, has the resources with which to do so. The country recognizes the opportunities available for making change to shift the stagnation of agricultural productivity, to meet growing demand for more food, and has the resources with which to invest in modernization. The challenge will be one of integrating into global markets and, at the same time, becoming less dependent on the industrial countries. With food industries rapidly globalizing everywhere, Algeria has yet 24

to determine the extent of the partnerships that need to be established to provide for a resurgent domestic agro-industrial sector.

6. National support required for agro-industries

National food chains lack integration with little or no forward or backward linkages connecting the main partners involved. The organization of groups of producers, traders and/or processors is fragile or non-existent. Coordination between the different nodes is rare and/or insecure, with little in the way of confidence or responsibility shown notwithstanding mutual self-interest that comes from the inter-dependence that comes from shared material resources. Agro-production may be unimaginative and traditional because agro-producers remain ill-informed of what processors and markets require. Processors turn to imports when local supplies are scarce, and customers buy imported foods because these are supplied by the main supermarkets. Dysfunctional networks of this kind work against the national good. Re-integration of agro-production into the national economy, resurgence of investment and the establishment of modern agroindustries require five key interventions: 1. Environment. Promotion of an enabling environment for agroproduction/processing/business development. 2. Finance. Provision of financial and associated sector support for agribusiness development and, in particular, for focus upon SMEs. 3. Partnerships. Creation of strong public/private sector partnerships with welldefined responsibilities and set goals for agriculture/industries; as part of national planning into the next period (and, in particular, in preparation for a postpetroleum future). 4. Infrastructure. Investment in the infrastructure required for agro-production and agro-industries across the country transport facilities, handling and storage facilities, processing centres, service centres, etc. in addition to traditional public sector infrastructure such as power, water and telecommunications. 5. Food quality. Introduction of good agricultural practices and good manufacturing practices within a culture of safe and high quality food production; to include the food service laboratories, centres, technologies and systems that have become part of all food industries worldwide. Failure to address issues of this kind, and domestically produced foods will continue to decline within the country as people lose confidence and shift to imported foods with guaranteed standards of quality and safety. It is essential to encourage and develop partnerships between the public and private sectors that will help to improve the productivity of both agro-producers and agroindustries. Approach may vary, but should take note of the following key issues: R&D. Provide more resources for education and R&D in support of food production and agro-industries; provide emphasis for agribusiness development, the establishment of SMEs and the resources required to attract investors into the sector. Policies. Harmonize national policies and regulations in support of agro-industries investment, establishment and growth; to encourage the provision of information,

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technologies, funds and skilled people. Eradicate and/or change existing policies that continue to be detrimental for agro-industrial investment. Resources. Mobilize the resources required for providing more investment in the infrastructure required of agro-industrial investment; to include infrastructure traditionally provided by the public sector and infrastructure which can be privately owned; to encompass R&D facilities, promotion of SMEs and the development of value chains that link producer areas with agro-industries. Tools. Create the frameworks, networks, tools and other socio-techno-economic requirements that will further boost the competitiveness of agro-industries. Novelty. Diversify and widen the range of products available within agroindustries by supporting developments in novel practices, new processes and new opportunities that can be manufactured from the current range of agro-products available; encourage the introduction of new crops for which new products and new markets can be developed; encourage the introduction of new technologies, and new ways of doing business. Transparency. Focus upon fair trading within the value chain that there is knowledge and transparency, for example, on prices and contracts from one part of the chain to the next; and that the rewards of the market are better understood and better shared between agro-producers, traders and agro-processors. GAP. Establish good agricultural practices (GAP) as a basis for production, trading and processing within the value chain that the risks of malpractice can be reduced; that adulterated products, for example, can quickly be recognized and isolated. Competitiveness. Improve competitiveness at all stages of production-tradingprocessing by the transfer of technologies, by promoting a culture of high quality production, fair trading, diversification of products (that will better suit different clients and different markets) and mobilized the resources required for the R&D, innovation and pilot-scale investments required.

The development and consolidation of relations between farmers and processors will take time and require much perseverance and investment, but they represent a promising prospect and inevitability. In this context, the contribution of PNDAR is expected to provide initiatives to farmers (and their associations) to encourage them to increase the cultivation of products for industry, to reduce imports and thus to contribute to improved food security. There are considerable challenges facing the development of agriculture and agroindustries in Algeria. Both sectors need to become more competitive and this requires the state to take a number of bold initiatives that should best be considered within some form of comprehensive strategy in support of both sectors. This strategy should encompass: Integration. Critical assessment of both sectors with better integration of agroproducers and agro-industries, with the many thousands of small-scale producers linked into groups that cluster farm production and produce the raw materials that can better service agro-industries; creating vertical links between key components of the value chain.

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Dialogue. Improved and strengthened dialogue, cooperation, understanding and responsibilities one-to-the-other between the main partners involved with the value chain. Responsibilities. Better definition of the roles and responsibilities of the main partners in the value chain; with mutual agreements, contracts and methods in place that provide for fair trading and transparency within the value chain. Coordination. Systems developed and put into place that will better coordinate the different mechanisms required of public and private partnerships in the value chain; established within guidelines and practices established by the public authorities.

Conditions of this kind are essential to enable agriculture and agro-industries to work in harmony and to contribute to accelerated economic growth in the country.

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Country Report Egypt

Agro-Industries in Egypt
Mounir Labib & Samir Tantawi 1. Introduction
Egypt lies in the north eastern corner of the African continent as a land bridge between Africa and Asia. It has a land area of one million square kilometers, which is geographically divided into four main regions - Nile Valley and Delta, Western Desert, Eastern Desert and Sinai Peninsula. The climate of the country is influenced by factors of location, topography and, importantly, from the influence of the longest river in the world the Nile and the adjacent waters of the Mediterranean and Red Seas. After more than 50 years of central economic planning since independence, the country has embraced market economic development and introduced economic reform that will encourage a dominant role for the private sector. Privatization is underway with many publicly-owned companies being broken up and/or sold to private ownership. During the next period shared public and private sector partnerships will begin to take a leading role in national development. Reforms have been undertaken by government that have modified the structure of the income tax law, simplifying the rate structure and cut personal and income tax rates. Reforms have helped the country to integrate into the global economy, and employment fell of the order one percent during the period 2005-2007 to 10.9 percent of the workforce. The domestic agribusiness sector is responsible for estimated 21 percent of total industrial production, and has a value estimated US$4.7B.

2. National agricultural sector

Egypt is a large desert country and the estimated 80 million population occupy 10 percent of habitable lands estimated 100,000 km2 - along the valley and in the delta of the Nile, and elsewhere in a small numbers of isolated oases and coastal areas. The Nile Valley represents the basis of the fertile heartland of the country, and provides of the order 50 percent of domestic food supplies. Productive lands are strictly limited, with estimated three percent of the country (30,000 km2) is cultivated of which 10% is considered first grade land and 10% low grade land, with the remainder of mixed grades. In 1997, Egypt began a 20-year plan to reclaim estimated 140,000 km2 new lands for agricultural production. The private sector has also become involved with land reclamation, and of the order 350,000 ha of new lands have been established at Toshka for the production of organic foods for sale into the markets of the EU. Productive land is the ultimate resource in a desert country and, whilst efforts continue to reclaim land for cropping and food production, issues of population growth and illegal settlements on agricultural lands continue to place pressure on domestic food supplies. The country remains an importer of foods and will continue to do so into the foreseeable future. Agricultural production is severely constrained by an inability to expand into more lands. The larger quantities of foods and other raw materials required for investment in agro-industries cannot be produced; the economies of scale that match 28

investment in modern plant cannot always be met. Egyptian production in some cases, however, matches the best yields in the world. Rice, for example, has reached average yields of 10 t/ha and sugar cane 123 t/ha; valued materials, respectively, for food staples and biofuels development. Rice yields of 13 t/ha with new variety seeds are typical of R&D trials.

3. National agro-industrial sector

It is estimated that more than 87 percent of food processing industries in the formal sector are either small-scale or medium-scale. Egyptian food processing enterprises, with few exceptions among a handful of multi-national companies are SMEs, traditional in outlook, with few R&D resources and limited opportunity for novelty or innovation in the products made. Productivity can be mixed. Some success have been made with creative products and packaging for sales into high quality markets, but most domestic products sell to consumers who do not have sufficient income with which to seek higher quality. The R&D sector is poorly supported and lacks funding. Innovation and new product development in food processing is strictly limited. Most domestic R&D programs are not coordinated across industry, public R&D institutions and the universities. Financial assistance in particular for SMEs requires priority decisions to be taken and funds to be provided; most of which will come from the public sector. Indications from key ministries, however, have identified agro-industries for priority investment and there is optimism for improved long-term support. The imbalance in food imports and food exports is pronounced and of the order 4:1, respectively. In 2007, Egypt imported agriculture products to the value of US$6.6B, while exporting similar goods with value US$1.7B. The export of processed vegetables has shown average increase of 5.3 percent annually during the five year period from 1998 with earnings rising by 150 percent from US$92M to US$145M. The country ranks 26th in global export markets which, considering the resource base is a remarkable achievement. This has implications for further industrial investment based on imported raw materials. Fish industries remain small and fragmented, but important for sales into fine quality niche markets. Annual exports of fresh and processed fish are 2,900 tones. A key feature of the Egyptian food industry is the existence of a dual-market structure. The sector is characterized by a small number of large commercial companies producing multiple products for domestic and foreign markets such as fruit juices, frozen vegetables and pasteurized milk. Livestock production in Egypt is typically small-scale and fragmented with most cattle, sheep, goats and camels kept on the basis scavenging and agro-residues supplemented with specially grown clover which provides a valuable break crop. A small industrial dairy sector has been established in recent years, and supplies of the order 15 percent of the liquid milk market in the main cities. Rising wealth among the general population has resulted in increased demand for dairy products which cannot be met from domestic production, and large quantities are imported.

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4. Forces affecting the agro-industrial sector

With a large population that is >60 percent urban and the establishment of a substantial middle-income sector the domestic market has, not unexpectedly, attracted the attention of the multi-national investors seeking to exploit local demand and to consider Egypt as a local hub from which to sell into regional countries. The banking sector is made up of Egyptian and foreign-owned banks and plays a crucial role with development in the country. In 2005, government announced the establishment of a US$70M fund mainly to support and upgrade agro-food processing operations in Egypt and to increase exports of processed foods. Egypt, like many countries worldwide, has been severely affected by bird flu during the past five year, and this has decimated much of the meat and egg industries. Industrial bird populations are being rebuilt. The development of a modern retail sector has played a key role in determining the pattern of development of the food-processing sector. In terms of the number of supermarket and hypermarkets available, however, the retail sector in Egypt lags behind many of those in competitor countries and this is detrimental for the development of agro-industries long-term. Economic and political ties between Egypt and the United States remain strong and there are benefits for FDI, technologies transfer and technical assistance. Similar advantages come from membership of COMESA, wherein foreign manufacturers located in Egypt are able to take advantage of reduced tariff access for goods sold into countries in east and southern Africa. The same applies for Egyptian grown foods or Egyptian manufactured goods into the markets of the EU, where the country has preferential access.

5. National support required for agro-industries

Strategic planning for agriculture into the next period is to produce more foods and other materials from the same resource base; making agricultural production more efficient of land, soil chemicals and water use. This will involve reductions in existing subsidies for key commodities such as fertilizers, petroleum fuels and basic foods. Rural development will centre on the impoverished areas of Upper Egypt and the promotion of selected industrial and food crops in new lands. Biofuels production, sugar cane, horticulture and dairy industries have been earmarked for priority investment. Agro-industries will play an increasingly important role with adding value, providing employment and creating wealth in rural and peri-urban communities.

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Country Report Jordan

Agro-Industries in Jordan
Majdi Ali Al-Mahasneh 1. Overview and macro-economy of the country
Jordan is a small country with limited agricultural, water and domestic energy resources. In 2009, the country had a population estimated at six million. Natural resources include minerals such as phosphates, potash and shale oil. The total revenue of the country comprises domestic revenues 85-90 percent and foreign grants 10-15 percent. Of the order 68 percent of domestic revenue comes from taxes with 32 percent from other sources. The service sector contributes of the order two thirds of the gross domestic product (GDP) of the country and employs >75 percent of the workforce. Manufacturing is responsible for one fifth of GDP and employs >10 percent of the workforce. Agriculture and related activities are a relatively small part of national GDP at three percent, and employ about three percent of the workforce. The most profitable agricultural sub-sector is fresh fruits and vegetables production. The main imports are crude oil, textile fabrics, machinery, transport equipment and manufactured goods. The main exports are clothing, pharmaceuticals, potash, phosphates, fertilizers and vegetables. The Jordanian Government continues to highlight the advantages of investing in the country, citing a relatively well-educated and skilled labor force, and social and economic stability. Much of this is comparative to neighboring states in the region. Since the succession to the throne of King Abdullah in 1999, government has attempted to undertake broad economic reform with strong emphasis on economic liberalization and privatization. This has led to a resurgence of the private sector, emphasis on commercial markets and a corresponding decline of the state as the driver of the national economy. The resilience of the Jordanian economy in recent times has enabled it to accommodate the impact of the worldwide economic recession of the past two years that has resulted in soaring prices for energy, food and other primary commodities. The year 2008 has been particularly challenging with the global financial crisis that emerged during the third quarter. Jordan has sought partnerships with a number of regional and international trading groups including membership of the group of recently-acceded members and the Arab group of the World Trade Organization. Jordan is a member of the pan-Arab free trade zone, and shares a free trade zone with Egypt and Morocco. In 2006, the country ranked 8th out of 141 economies in the foreign direct investment (FDI) performance index established by UNCTAD. In 2005 it held 19th position. Real GDP grew 5.6 percent in 2008 compared to 6.6 percent in 2007. In 2008, the fiscal deficit fell to 4.9 percent of GDP compared to 5.2 percent in 2007, and the outstanding balance of external public debt was down by 30.7 percent to a value of US$5.08B (Jordanian dinar 3.6B). The same year, the agriculture and fishery sector contributed about three percent and manufacturing 17 percent to GDP. Unemployment remains at a stubborn 13 percent, but this is sometimes difficult to qualify given the 25 percent of Jordanians who

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work in the informal sector and who regularly contribute estimated 20 percent of national GDP.

2. National agricultural sector

The cultivated area of the country is small and estimated at 3-4 percent total land area, most of which is in the Jordan Valley. Fully 75 percent of cultivated lands are in the north of the country producing wheat, barley, lentils, chickpeas, fruits and vegetables, and dependent on rain fed cropping. The remainder is irrigated lands in the Jordan Valley, which produce most of the countrys fruits and vegetables. In 2008, the contribution of agriculture to national GDP was 3.6 percent. The same year agriculture employed 5.7 percent of the labor force. Agricultural production is dominated by vegetables and fruits (mainly citrus), which make up estimated 80 percent of all crops grown and 70 percent of agricultural exports. Agricultural exports each year typically comprise 10 percent of total exports. Livestock are raised across the country, and much of the production is based on natural grasslands. Sheep, goats and cattle are raised extensively, with industrial production of broilers, milk, chickens and eggs located close to urban areas. Jordan has a small but viable marine fishing industry located at the countrys only sea port Aqaba on the Red Sea. Semi-intensive salt water aquaculture production of Tilapia spp fish is undertaken by Jordan Valley Fisheries. There is strong support for agricultural research and extension in the country from a number of government ministries and associated centres, institutions, universities and schools. Shared public and private sector services are provided by agencies such as the Ministry of Agriculture, the National Centre for Agricultural Research and Extension, and a number of rural NGOs and dedicated agricultural organizations.

3. National agro-industries sector

The Jordanian food industry is the second most important sector in the country on the basis of FDI and national investment according to the Jordanian Investment Board. The agro-food industrial sub-sector represents of the order 15.4 percent of the national industrial sector. In 2008, US$747M (JD529M) was invested in agro-food industries, and the sub-sector enjoyed exports of US$497M (JD352M or 13 percent of total industrial exports). This represented a direct contribution of four percent to national GDP. The total number of registered agro-industrial enterprises was 3,366 (i.e. nine percent of total industrial enterprises) and employed >27,000 workers (i.e. 10 percent total industrial workers). Agro-food exports represent the third most important manufactured goods after textiles and pharmaceuticals. The most important agro-industrial sub-sectors are bakery products, vegetable oils, animal fats and milling products. Fully 79 percent of agroindustries in Jordan can best be defined as small and medium enterprises (SMEs), and have been established close to Amman as a source of workers and of markets. Estimated 97 percent are privately owned. Access to information, training, extension services and R&D for agro-industries is provided by a number of private, quazi-public or public sector agencies, some of which

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are in the form of agribusiness incubators providing services linked to funding, technical assistance and supervision. Jordan has good infrastructure including an extended network of permanent roads, a sea port at Aqaba, three international airports capable of handling modern freight planes and a number of grain storage silos. A modern information and communications technologies (ICT) sector has been established in recent years and estimated 96 percent of all households have telephone, 40 percent with home computers and Internet connection and >98 percent are connected to the national electricity grid. This is an excellent basis upon which to build a viable agro-industries sector and one, moreover, that has regional implications. No other regional country has such advanced ICT facilities. Jordan has a reliable and stable banking industry with a variety of services available but, notwithstanding assets of this kind, neither agriculture nor agro-industries has featured as focus for investment. The same holds true for SME investment. Some effort will be required to redirect investment and to take advantage of on-going efforts to simplify financial business practices, complex laws and cumbersome regulations. The private sector has become recognized as a leading service provider in the financial sector and elsewhere within industry, and is expected to take an increasing role with the shift to an open market economy. The country is well-served with a stable and technically skilled labor force that is generally cheaper than that of neighboring countries. The main agro-industry competitors in regional markets are likely to be Saudi Arabia, Syria, Lebanon and Egypt. Global competition will come from Turkey, Italy, Spain and the US. There are, however, major opportunities for agro-food processing industries to supply domestic, regional and international markets and not necessarily dependent upon limited quantities of Jordanian produce. Growth areas already identified for investment include packaging, freezing and de-hydration, and the production of fruit and vegetable juices and pastes. A recent initiative of the Jordanian Ministry of Trade and Industry aims to promote and develop national agro-food industries during the period 2009-2011 as a platform for regional expansion. Agro-industrialization is not without challenges, however, and the country faces climate change (with decreased rainfall and risk of further desertification), shortages of fresh water, instability of energy supplies/prices and, given the reality of geo-position, the instability of neighboring territories and the impact this may have on the national economy. This is not; however, sufficient reason not to plan and invest with confidence for the country has the intellectual capacity to provide the services, facilities, technical resources, skilled manpower, R&D centres and more that could enable it to become a regional focal centre for agro-industrial development.

4 .Forces shaping agro-industries sector

Jordan is located at the heart of a difficult regional grouping of countries. The country has faced internal challenges as a result of the changing patterns of regional allegiances, conflicts within neighboring states and across international borders, the large-scale movement of displaced people within states and the refugees that have crossed into the country and taken temporary residence. Conflict and displaced people in large numbers bring additional risk to the many complex socio-economic and political issues that have 33

affected the region since the demise of Turkish hegemony in the region in the early part of the 20th century and the establishment of the state. Jordan continues to take these challenges in its stride. The political and economic stability of the country and a sound track record of social development and inward investment in recent times is recognition of good governance. Jordan has made effort to liberalize the economy, to seek open borders and to become a respected partner in international trade. The country has enforced copyright and intellectual property laws. Trade-related legislation has been passed, pro-privatization programs implemented and inward investment has been encouraged, which have resulted in a number of multilateral trade agreements with key multi-national companies. The current global economic recession and follow-on effects are expected to have mixed impact on the Jordanian economy. Economic growth will slow, and there are likely to be reduced remittances from Jordanians working in the countries of the Arabian Gulf as salaries are cut and jobs are lost. Reductions in foreign aid and in DFI are also likely. Economic forecasts suggest that 2010 and 2011 will see a return to greater normality in international finance markets, but Jordan will continue to confront difficulties and not least with factors that remain largely outside the control of the state. The country remains vulnerable to fluctuations in international oil markets, high unemployment is socially destabilizing and projections for climate change show further pressure on natural resources and particularly water supplies. Government can, however, do much to continue to foster a socio-economic environment that increases the role of the private sector and improves the competitiveness of the domestic economy. This remain, perhaps, the greatest opportunity for making change into the next period. Migration remains a complex issue within the country. This is the out-migration of welleducated Jordanians seeking to gain experience and higher earnings mainly in countries of the Arabian Gulf, and the inward-migration of people who are willing to undertake the low-skilled jobs that are no longer attractive to Jordanians. Sometimes migration is temporary and people return home, although increasingly people are remaining for longer periods and establishing the networks and social stability that comes with a permanent move. This is particularly so with minority populations within the country that provides services, occupy unskilled posts and accept low-paid employment. Jordanians are moving professionally and socially into levels of employment demanding skills, academic education and advanced technologies such as ICT and, in so doing, are following regional and international markets of supply and demand for people with training and mobility. The challenge for Jordan and for national development long-term will be to provide the resources, funds, facilities and infrastructure which will encourage these qualified people to remain linked to their home country. Given the technical base required of modern agro-processing industry human resources - technicians, managers, entrepreneurs and services people are likely to become the crucial industrial resource into the next period. Public supported agricultural and agro-industrial R&D is invested largely in the national agricultural R&D centres and the universities, but sharing across programs and sectors is poor with lack of coordination, competition and inefficiencies arising. This results in 34

duplication of work and wasted effort and funding. The country recognizes existing deficiencies and efforts are in hand to make the changes required, but this is hindered by the limited financial and human resources available with which to improve the institutional and technical performance of existing systems. It is essential, however, that more emphasis be placed on unifying national R&D investment that some form of strategic direction be defined that will provide the support services, information, technologies and human resources required of agro-industries development. This will be essential for prioritizing the use of limited R&D funds available. More commercially-led R&D investment is required.

5. National support required for agro-industries

Considered on the basis of three inter-related sectors public goods, innovative institutions and finance. 1. Public goods and facilitative policies Policies are required that will increase public investment in agro-food R&D and market information systems. This can be accomplished with the establishment of a national fund that will direct R&D into a number of key agro-technologies and agro-industrial technologies. These should include: Agro-technologies. Alternative energies, biotechnologies, clean production practices, water efficiency in agriculture, modern agro-food practices, high quality/value products, market-led processing and good agricultural practices. Agro-industries. Establishing a national agro-food database, food-testing and quality-monitoring/analysis laboratories, maintenance of quality standards, adoption of traceability practices, contracting systems for producer associations/groups to supply processors, industrial services for providing marketing, technical, finance, etc. information, linking agro-industries services into existing R&D centres and universities and generally constructing an agroindustrial public sector to augment existing services in support of agroproduction. Infrastructure. Augmenting and improving existing supplies of energy, water and transportation at reasonable cost; development of industrial manufacturing centres that will foster SME development; priority investment in pro-environmental issues energy, water, climate mitigation, early warning systems for food supply/demand and similar. Agribusiness as a sector needs to be recognized and promoted, and this can be done by establishing a national food and agricultural marketing company with responsibilities to promote, guide and lead by example in support of Jordanian Agro-Industries. Industrial sector support will come from access to incentives and soft loans for establishing more agro-food projects (and in particular those that target small-scale, income-generating, rural and similar). Jordanian exporters should be encouraged to exploit more foreign markets, which will help stabilize prices, improve food safety and raise the quality of products manufactured in the country. Agreements are required across the region to encourage integration and harmonization between countries that will help improve regional food security and price stability. Regional producers should be seeking to exploit distant markets as shared ventures (and particularly markets in the EU).

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2. Innovative institutions There is much that can be done to encourage innovation within supply chains. Agribusiness support. To develop improved business services that target agroproducers and agro-industries by promoting business support organizations, giving funds and supporting the establishment of SMEs in regional towns (and away from Amman), promoting enterprises owned or operated by women, and focusing on agro-food projects that will be sustainable. Markets. Facilitating access to the EU, Arabian Gulf and US markets by providing training on food quality, safety and certification. Establishing new agroindustry business incubators. Introducing warehouse receipt systems within commodity exchanges for grains, fruits and vegetables that will help moderate fluctuations in seasonal market prices that will reduce the need for government intervention in agricultural markets. There is more certainty with markets that are controlled by principles of supply and demand. Future directions. Focus on markets and agribusiness is expected to attract more investment into the agro-food and horticulture sector and increase national exports by exposing more SME/producers to external markets. Higher quality and safer foods will be produced. Modern infrastructure will be provided for handling, control, monitoring and storage between producers and exporters. Producers and manufacturers will have more stable markets. The national food sector will become more reliant and capable of handling future agricultural crises. 3. Financial capital and risk management Finance and funding needs to become the platform for development of the agro-food sector. This can be done. Domestic resources. Creating investment funds and loan guarantees to improve access to commercial lending for agro-industries, making more public and private funds available for agro-food R&D programs, providing incentives such as tax exemptions for banks and credit unions who lend to agro-food SMEs and extending loans to new customers who may have limited history or collateral. External resources. Promoting FDI in support of modern technologies, job creation, value-added production and export activities, supporting micro-finance institutions and structured finance instruments that target agro-industries by reducing existing barriers to investments in agro-food industries, improving the legislative environment to make doing business easier and promoting national competitiveness (with the introduction of indicators). Pro-business development. Encouraging returning migrants to invest in the agrofood sector, implementing design and support mechanisms for assessing investments including agribusiness risk management, strengthening professional associations and cooperatives, boosting access to information and strengthening linkages between agro-producers and agro-industries. This is expected to increase investment and the size and number of SMEs established, jobs created and exports. It will help create a national SME culture that is more familiar with the financial sector and provide a more resilient pro-business environment. Risk. Monitoring and mitigating risks facing agro-producers and agro-industries by establishing early warning systems that will provide assurance and compensation with access to emergency funds in times of natural disaster.

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Planning for the impact that climate change is likely to have on agro-production during the next period.

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Country Report Lebanon

Agro-Industrial Development in Lebanon

Mariam Eid 1. Lebanon as a trading nation
Lebanon has a long history of entrepreneurship and regional and global trade, but still does not have an internationally recognized status as a trading nation. For example, the country is not a member of the World Trade Organization. Membership of the WTO would enable it to better integrate into the world economy and take advantage of multilateral trade. Many domestic trade and investment related laws are antiquated, too general in context and unrealistic for modern day trading. Other laws frequently hamper modernization and detract from key issues. These include the rule of law, good governance and the effective enforcement and predictability of current commercial practices. Overhaul of the socio-eco-financial environment is essential to attract FDI, to help maximize the value of competition and to re-position Lebanon as a viable regional trading partner. This is seeking to regain a position that the country enjoyed in earlier times. The economy of the country is based upon competition and private ownership. Services and the banking sector predominate and provide 70 percent of national GDP. Agricultural and industrial sectors are small and provide, respectively, of the order 10 percent and 20 percent GDP. Notwithstanding size, however, the agricultural sector remains an important part of the national economy given the estimated 40 percent of the population dependent directly or indirectly on agro-production, the contribution made to domestic food consumption and the small but valuable contribution to exports. The economic importance of agriculture has, however, decreased in recent times; and continues to decline. The sector is woefully under appreciated and this reflects in limited inward investment, the shift of people from the land to the cities, the detrimental impact that internal and cross-border wars have had on damaged infrastructure and loss of productive resources, and low priority given the sector by the public administration. There are indications, however, that this period of indecisiveness and lack of investment is about to change. The recent post-conflict period has seen inward flow of capital to rebuild damaged infrastructure towns, roads, ports and more. The national economy is being reconstructed to comply with the demands of regional and global investment requirements and, in particular, the redistribution of regional wealth from the countries of the Arabian Gulf. Lebanon has been a willing recipient of FDI. Domestic agriculture has been slow to take advantage of the opportunities available, however, but now faces change as a result of EU requirements for uniformity of standards of quality, safety and hygiene for products sold into EU markets. Similar pressures are required for commitments to the Greater Arab Free Trade Area and to the WTO, to which Lebanon aspires to join. These changes have resulted in re-consideration of the agricultural sector and resurgence of interest as exemplified by the rise in contribution of GDP and the corresponding rise in 38

the contribution from the industrial sector, much of it due to agro-industrial growth. Government has highlighted the potential for industry to provide the employment and economic growth required to keep pace with a growing population.

2. National agro-industries sector

Agro-industries are the most important sub-sector of domestic industry. According to surveys undertaken by the Ministry of Industry, food industries are the largest industrial sub-sector at 23 percent of total and account for estimated 26 percent of industrial output. Agro-industries employ estimated 23 percent of all industrial workers. Agro-food processors are the largest industrial contributor to national GDP. Lebanese food industries provide a diversity of national foods and beverages including traditional products such as alcoholic beverages (mainly wine and arak), confectionery, fresh and canned fruits and vegetables, bakery products and olive oil. Many new factories have been established in recent years to accommodate changing dietary requirements for convenience foods, meat and dairy products and recreational/tourist interests. This has included potato chips and similar snacks, milk, yoghurts and ice creams, frozen foods, processed vegetables, ready-to-eat meals, specialized breads, pastas and white meats. Commercial factory farms and services have been established to cater for these new markets. Agro-producers and agro-industries provide 10 percent of domestic exports, and the countrys main export markets are regional - Saudi Arabia, the United Arab Emirates and Kuwait. Fresh fruits, vegetables and derivative products dominate exports and these mainly go to Saudi Arabia, the United States and the United Kingdom.

3. Key factors shaping agro-industrial growth

Notwithstanding a small but viable export sector, the country supplies only 20 percent of domestic requirements and remains a net importer of foods. Whereas the production of fruits, vegetables and poultry exceed the requirements of local markets (and thus contribute substantially to exports), the country continues to remain deficient in staples such as cereals. Large quantities of dairy products are also imported. More can be done to re-address this balance; and this has been proposed. More open trading, however, will further expose the country to cheaper and better quality products from outside, a situation that has already been recognized within the regional and global trading patterns that are arising. The traditional patterns of domestic agricultural production cannot meet these challenges; and both producers and processing industries need to modernize. The country is relatively well-provided for with a small but viable natural resource base soils, land, water and agro-climates that provide opportunities for diversifying agroproduction across a range of crops, livestock and materials with potential for added value processing. The country is located on the Mediterranean Sea and within reach of the largest food importing trading bloc in the world the EU and one, moreover, that remains a willing investor in technical and commercial agribusiness in the country. The challenge thus far has been to recognize the opportunities thus provided, to marshal the resources required and to invest and develop in sub-sectors that show promise. This has not been done, notwithstanding rhetoric to do so.

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Failure to move (and to move quickly) will have serious long-term consequences on agro-production and associated agro-industrial sectors. This will manifest in the social imbalance of rural-urban communities, poverty in rural communities, social inequality, economic growth and the loss of well-educated young people to distant lands. Lebanon has the resources and the ability to become a strong but small/mid-scale participant in key regional markets, but stands to lose out to more dynamic neighbors unless more effort is invested in strategic industrial planning. Historically, public expenditure in domestic agriculture and industry had always been small. The dominance of services has always taken priority and this notwithstanding the large numbers of people dependent on the rural sector. Agro-production and agroindustries may provide 30 percent or thereabouts of GDP, but provide livelihoods and social safety nets for almost half the nation. The challenge is one of boosting the value of these sectors that more can be earned by people and by the national economy. This has been recognized as improving sector competitiveness. The impact of the current downturn in the international economic climate following from internal and cross-border conflict in Lebanon during the period before 2008 creates severe challenges for government. Lebanese agro-producers, companies and traders need public sector support for boosting inward investment in skills, technologies, business support services and legislation that will provide short- and medium-term incentives to mitigate risk. The political instability of recent times has not assisted. Improving the competitiveness of Lebanese companies is an important challenge, and even more so with the deterioration of the economic climate following recent conflicts. Next to lack of political stability, low level of investment in technologies, lack of cash payments and business support services, and the high costs of inputs collectively pose a major challenge to the competitiveness of Lebanese companies. The level of investment is simply too low to upgrade existing production or to introduce new production/marketing techniques. Moreover, high costs on inputs such as energy and telecommunications lead to high production costs. In addition, enterprises still face cumbersome registration procedures if they want to start or close a business, a tardy judicial system and poor contract enforcement. Government, however, continues to seek ways of improving and attracting new investments into the agro-food sector.

4. National support required for agro-industries

A number of advantages can be highlighted, but also constraints that continue to apply. (a.) Advantages for agro-industries investment Lebanon continues to enjoy a number of comparative and competitive advantages for boosting growth in agro-production and agro-industrial sectors. This includes: Geo-location on the seaboard of the Eastern Mediterranean providing a gateway to the countries of the Middle East, with excellent links into the markets of the EU. The country has the potential to become a key hub in agroprocessing/transport corridors between the two groups of countries.

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Highly favorable temperate/Mediterranean climate, fertile soils and sufficient water resources to enable the country to grow a mix of different crops and livestock and to produce a variety of goods that cannot be grown/produced in neighboring countries; agro-industries have a key role within investments of this kind. Portfolio of advanced economic, financial, marketing and business skills, knowledge and experience based on Beirut and an extensive network of Lebanese people, companies and services worldwide (mainly concerned with international financial markets; re-positioning to service domestic agro-production and agroindustries is required). Access to a pool of willing, largely unskilled but capable low-cost labor from neighboring countries such as Syria and/or Egypt. Relatively large numbers of SMEs already working in support of agro-production (but less so for agro-industries) with potential for investment to exploit change, technologies, development and so on (but this will need direction, guidance and long-term vision). Existing tariffs on imported raw materials are relatively low (and can provide the basis for import/export and/or import/domestic market investments).

(b.) Constraints for agro-industries development Constrains are complex, inter-related and daunting, but this should not retract from the investment in funds, effort and choices required to overcome them. High cost of domestic production as a result of the high costs of utilities fuel/energy and water. Continuing dependency on key factors of production - raw materials, labor and equipments. Continuing low productivity of domestic capacity, and the high fixed costs of key production factors- land, construction and equipment. Out-dated legal and regulatory structures that do not meet prevailing requirements of foods entering international trade including monitoring procedures, testing for quality, safety and health, traceability procedures and more. Inability to enforce existing laws because of limited or non-existent resources within the public sector, for example, for compulsory standards and specifications, intellectual property rights and more. Insufficient resources in national institutions, universities and other public centres where testing facilities, personnel and laboratories exist; inability to keep pace with domestic demand for services; facilities remain out-of-date and unable to perform advanced and sophisticated tests required of goods sold into foreign markets. Woefully inadequate infrastructure and services available to agro-producers; Lebanon has an early 20th century industry that needs modernizing. Similar issues apply with post-harvest, pre-factory and processing infrastructure without which modern industries cannot be established. Local raw materials available in strictly limited quantity and in mixed qualities; and generally insufficient to sustain the investment required of plant, facilities, factories, etc. required for economies of scale required of modern industry; and growing dependency on imports that will be required to keep industry working. 41

Lack of export marketing support organizations; manifested in inadequate information on market conditions, prices, opportunities, constraints, changes and more that are essential for decision-making. Lack of institutional support for standardization of materials, goods, products and methods across domestic and regional industry. This results in inefficient marketing and loss of markets. National services in support of R&D remain woefully inadequate low R&D investment, absence of R&D facilities, uncoordinated approach to R&D, and no linkages between R&D and markets, socio-economic requirements, skills/technologies need and more. Insufficient support provided to agro-producer and agro-industrial SMEs finance, information, technologies, agribusiness services and more.

(c.) Summary Notwithstanding the many constraints that face agro-producers and agro-industries in Lebanon, the advantages of investment are overwhelmingly in favour of sector development. Given the potential for mobilizing almost half the population of the country working within a sector that has remained of minor national interest in recent times, there is much to be gained by focus, strategic decision-making and investment in selected crops, livestock and industries for import substitution, for sales into regional markets and for the greater equality that this will bring to socio-economic development in the country. For the longer-term this will re-position Lebanon as a trading/added value hub in the Eastern Mediterranean; a position for which there are no real competitors. This represents a win-win situation for domestic agro-industries and one in which there are no negatives involved.

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Country Report Morocco

Agro-Industries in Morocco
Bouchta Saidi 1. Morocco: socio-economic situation
The Kingdom of Morocco is in the north-west corner of the African continent and bordered by the Mediterranean Sea and the Atlantic Ocean. It has a land area of 710,850 km2. Location and topography provide for a varied climate that is continental once away from coastal regions. In the north the country is mountainous. To the south and east the country is largely desert/dry lands. The country has a well-developed transport infrastructure. This consists of a permanent road network of 57,226 km, railway network of 1,907 km, 35 sea ports and 28 airports. In 2008 the country had a population estimated at 31M with annual growth rate of the order 1.2 percent. In recent years there has been progressive urbanization with current populations skewed 56:44 percentages, respectively, in urban and rural communities. The country is in transition industrially, and this is reflected in levels of poverty which are estimated nine percent nationwide and continuing to fall. Illiteracy remains high at 43 percent across the country, but this is further skewed by gender and between urban and rural communities (with rural women the most disadvantaged). Unemployment is 9.5 percent (but 14.6 and 3.8, respectively, for urban and rural communities). Geographic position adjacent to EU and across the Atlantic from North America, and an urbanizing population, stable administration and industrializing economy have attracted strong foreign investment and the country has gained entry into a number of international trading blocks. The country has signed free trade agreements with the EU, with Egypt, Jordan and Tunisia, with the UAE, with Turkey and with the United States. The major trading partner and the source of considerable remittance funds from expatriate workers remains the EU. GDP growth rate has risen steadily in recent years, but in volatile manner (e.g. eight, 2.5 and 5.8 percent, respectively, in 2006, 2007 & 2008) and generally attributable to the impact of agricultural production on the economy. GDP per capita is US$3,800 (at dollar purchasing parity in 2000), but remains one of the lowest in the MENA region. During 2004-2007, average contribution of GDP by sector was 14 percent primary, 25 percent secondary and 51 percent tertiary reflecting on the respective values of agriculture, agro-industries and other manufactures, and services.

2. Morocco: agricultural situation

Agriculture remains an important part of the Moroccan economy. The agriculture area of the country covers 8.9 Mha (13 percent) and includes 1.4 Mha under irrigation (i.e. 14 percent). Rangelands and forests cover another 30 Mha (43 percent). The role of the agricultural sector in the Moroccan economy can be seen from the correlation between national GDP and agricultural GDP, with cereal yields dependent upon patterns of

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rainfall. Agriculture has an important social role, however, providing more than four million jobs and representing 42 percent of total employment. Morocco is a major exporter of vegetables, citrus and fish but is unable to produce sufficient key foods and industrial crops to satisfy domestic markets. Self-sufficiency has averaged 30-75 percent for cereals, 40 percent for sugar and 20 percent for oilseed. Livestock production is dominated by sheep (17.2M) with fewer goats (5.3M), cattle (2.7M) and camels (180,000). The agro-industrial sector remains under-developed and under-exploited and, at estimated four percent of GDP, is well below levels of development typical of the industrial countries (of the order 15 percent). Opportunities have been recognized for more added value processing in-country with improved integration between agro-producers and agro-processors.

3. Status and constraints of agro-industry

In 2007, the agro-industry sector generated added value estimated at US$2.7B or 34 percent of industrial GDP. The country has 2,954 agro-industrial units representing 37 percent of national industrial units, and employees estimated as 135,000 people or 26 percent of the industrial workforce. The production value of these industries is estimated US$9.45B or 32 percent of total industrial GDP. Investments in the sector remain weak, however, at US$370M in 2007 and represented only 19 percent of total industrial investment. Given the value of agrofood exports at US$1.58B or 19 percent of total industrial exports during the same year, i.e. four times investment levels, this is surprising. The sector is dominated by grain and flour processing with 1,282 industrial units or 44 percent of the total, and mostly made up of bakeries and cake-makers. There are 193 fish industry processing units employing an estimated 35,900 workers. Fish exports make an important contribution to the national economy and in 2007 earned US$790M or 61 percent of total sector income. Fresh fruit and vegetable exports were only one third this value at US$250M or 20 percent of total. Additional earnings from agro-producers and agro-industries total US$110M or eight percent of total, with the remaining sectors collectively contributing US$130M, i.e. 11 percent of total exports. In summary, exports of agro- and agro-industrial goods are 60 percent, dominated by SME manufacturers, with fewer large-scale manufacturers concentrating on the domestic market. Exports are limited to few products and few markets which ultimately brings risk. Agro-industries are generally concentrated in few hands. For the manufacture of basic products such as flour, milk, oil and sugar, for example, only the mills can be considered outside existing monopolies. Sugar production, for example, remains a highly entrenched monopoly. Other industrial sectors are also integrated including biscuits, confectionery, soft drinks, beer, wines and coffee. Paper and cardboard production is dominated by a dozen companies who control 65 percent of domestic production. The production of pulp and tobacco products is monopolistic. Throughput at existing plant and factories is generally low and varies of the order 30-60 percent of capacity as a result of earlier

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planning, older design equipment and an inability to scale-down to meet market requirements. More recently, inadequate supplies of raw materials have been a constraint. The establishment of a quality system for food safety within domestic industry is in its infancy and needs to be upgraded with improved facilities and structures and, importantly, with training that people become familiar with the technologies involved. Traceability of products requires integration within all food chains, but this is only found within selected food industries such as processed milk and canned vegetables. The use of computers for industrial management is strictly limited with estimated 12 percent of employees using them on a regular basis and estimated 18 percent of enterprises with a company website. Less than five percent of companies provide Internet-based markets for their products. Staff training is minimal with estimated 0.7 percent of employees offered training and only 0.2 percent of company costs attributable to training. Only seven percent of Moroccan companies spend on R&D, and publiclyfinanced R&D is in its infancy. Notwithstanding a reasonable network of transport infrastructure, the logistics of handling goods within the country remains challenging. Fishing ports and rural communities remain poorly serviced and this limits the movements of agricultural goods and raw materials which are typically produced over scattered areas; these materials provide the basis for agro-industrial processing. Outside the settled northern areas of the country, the costs of logistics are generally higher than those of the EU countries. The transport infrastructure is generally insufficient to meet the countrys needs. Other constraints faced by agro-industrial companies include access to finance, access to land and numerous administrative barriers (many of which are in the process of being changed). Long land and sea borders provide opportunities for clandestine trade and smuggling.

4. PEST analysis for agro-industry

A review of the political, economic, social and technological constraints that face agroindustries in Morocco provides some indication of the challenges facing domestic industry, but also the context against which this kind of global review should be made. Numerous weaknesses remain, but when set against efforts to establish good governance, to create reasonably living conditions for everyone and to provide a climate which will attract agribusiness, much has been achieved notwithstanding much needs to be done. (a.) Political analysis. Progress with political developments has helped to establish more democratic institutions, with the fight against corruption and with the establishment of rule of law countrywide. In the modern state there is more gender equality, more wealth and more opportunity for participation in local and national decision-making. A climate of confidence has been established which has attracted the investors from within the country and internationally. This will further encourage the development of the agroindustrial sector as a component of national economic growth.

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The corollary to political reform brings risk that could put back the development process. Regression of rights, growing inequality, loss of national confidence and more would result in reduced investment, deterioration of economic growth and less opportunity for commercial development in agro-industries and other sectors. (b.) Economic analysis. Economically, the country needs to continue to improve national infrastructure and facilities (including roads, ports, airports, telecommunications, access to water, electricity and other services, etc.). Economic and financial reform needs to continue (e.g. the abolition of monopolies and boosting competition; simplifying procedures and processes required of business transactions when dealing with labor, finance, creation/closure of businesses and more; improving the flexibility of employed labour; providing greater protection for investors, ownership of assets and capacity contracts; reducing fees, costs of energy, transport, water and other services, and so on). There is urgent need to make it easier to do business in Morocco that ideas can be taken through to the reality of investment and establishment in all sectors and not least in agroindustries. Failure to implement existing economic reforms or to slip back into the monopolistic approach of earlier times will bring great risk, the most obvious of which will be a shift of investors to other markets in other countries as the climate of investment deteriorates. The less obvious results will manifest in outward migration, the loss of quality people and the growth of clandestine industries based on informal production and smuggling. (c.) Social analysis. Government continues to invest in the social welfare of people (e.g. in health, education, and in the fight against illiteracy, poverty, malnutrition and more). Significant effort is directed into the more disadvantaged sectors of the community and into rural areas where there are minorities living in poverty. Notwithstanding results achieved, developments of this kind require commitment across national society, that the responsibility for improving the lives of all citizens is accepted by all. There are likely to be severe threats to the fabric of society should investments of this kind be reduced and should they fail to achieve raised living standards more social inequality, tension, illegal immigration, extremism and more. Failure with social developments is not an option. (d.). Technological analysis. Perhaps the easiest sector to review given the ease with which technologies can be considered, introduced and/or used, but progress of this kind typically depends on progress made with the previous sectors political, economic and social developments. Technological progress is the result of politico-socio-economic progress; it rarely leads. The country has a weak technical base and this constrains development. More investment is required in R&D for all sectors, agro-industries included. Improved telecommunications, transport, infrastructure, services and other modern facilities are needed to attract investors. The risks from failure to invest in technologies development will be reduced competitiveness, less investment in agroindustries and stagnation in the agro-producer sector.

5. National support required for agro-industry

The agro-industrial sector is subject to many key constraints including inadequate supplies of agro-materials, lack of diversification in products and markets, lack of 46

innovation, weak logistics, high transport costs and other factors of production, and the weak financial structures of enterprises. To help mitigate these and to encourage development requires the intervention of the state; there is simply insufficient resources within the private sector to make a difference. Investments of this kind are already underway, with agro-industries linked into three key national strategies - Plan Emergence, Plan Maroc Vert and Halieutis. National support is focused upon providing incentives, facilitating policies, institutions and innovation that will better address access to financial capital and reduced risks. The way forward: Three essential steps must be taken; and taken in unison. (a.) Industrial integration. Agro-producers have to be better linked into agro-industries that the two key sectors become interdependent one-to-the-other; and existing attitudes towards separation are abandoned. This will take time given the challenges of linking many thousands of smallscale producers in rural areas with few key processors located mainly in the towns. Linking the two sectors is the infrastructure required of transport, storage, markets, postfarm handling and pre-processing, etc. much of which is dependent upon networks of traders who also need to make a living. The same issues hold true for agro-producers and fishing communities both are disadvantaged with existing arrangements. Other measures are needed that will help improve sector productivity, raise the standards of quality of materials and foods produced, reduce the vulnerability of crop and livestock to drought, and help boost the sustainable management of natural resources (e.g. water, soil, land and fish-stock). It is essential to help agro-producers to further develop local products, to add value within rural communities and to shift towards specialization and brand recognition. Public sector investment in R&D is required with, eventually, the establishment of centres of excellence with whom agro-producers will work. Providing a platform for development is access to market information for domestic and international market exploitation. (b.) Value chains. Chains need to be identified, recognized and promoted that have vertical, horizontal and regional integration. Herein will be the incubators, technology parks, enterprise clusters and more required, and the incentives and rewards that come from recognition of excellence, effort, achievement for high quality food and agroproducts from public recognition, the establishment of certification agencies and access to service providers. (c.) Financial resources. Nothing can be achieved without access to investment funds and, moreover, funds provided at reasonable cost. Funds need to be specific to agro-industries development with the proviso of guarantees, services, support, etc. that will offer credit to SMEs working in the sector. Support for, and from, micro-credit institutions can help contribute to the creation and development of SMEs. Opportunities exist for encouraging Moroccan communities residing abroad to invest in domestic agro-industries. Issues of risk management and insurance will arise given the vagaries of climate and annual production of key agro-materials that cannot always be forecast with confidence.

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As agro-industries grow and gain in confidence, there will be opportunities for attracting FDI to help with diversification, with sales of goods into alternative markets, and with new enterprises. FDI is particularly important long-term given the managerial supervision that result, improved performance demanded and higher quality goods produced. A portfolio of funds and financial incentives specifically available to agro-industries is a prerequisite for sector development in Morocco.

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Country Report Syria

Agribusiness & Agro-Industries in Syria

Samir Jrad 1. Importance of natural resource utilization
In an era of rapid globalization it is essential to consider an in-depth investigation of the agro-industrial sector in Syria. This provides an opportunity to encourage more coherence in the supply chain, to improve competitiveness and to consider forward and backward linkages that bottlenecks can be identified. Syria is a country with limited natural resources, but it provides the basis for a commercial agricultural sector that remains important for economic growth, and estimated 17 percent of the population makes a living from agricultural production. A small agro-industrial sector has developed that provides employment and income from adding value to agricultural materials and selling into mainly urban markets. Natural resources have come under increased pressure in recent times as populations have expanded and people have demanded higher living standards. Land resources are scarce as a result of government policies that encourage the utilization of all cultivatable lands. This leads to the inappropriate use of lands, for example, in mountain areas where tree cover or permanent grasslands are essential to better protect water catchments. Water resources have become depleted because of over-exploitation, which has been further exacerbated in recent times by periods of prolonged drought. National oil reserves are fast diminishing because of high extraction rates. The challenge for the state into the next period will be one of attracting investment into key natural resource sectors that a measure of sustainability can be achieved.

2. Socio-economic demands
The population of the country has expanded at 1.9 percent in recent years to reach estimated 22M by 2009, but this is skewed giving that 60 percent of the population is under the age of 24 years. Social development into the next period will need to address issues of employment creation and skills upgrading that young people leaving schools and universities will be absorbed into the national economy. With trends in migration and increased urbanization at the expense of rural populations, it follows that the bulk of these new jobs will need to be linked to investment in cities and towns. National planning has recognized the burden of providing the services, funding and infrastructure that will create the industries required. Increasingly, the government is providing the structures, policies and laws that will encourage public/private sector partnerships. The national economy relies heavily on earnings from agricultural production and agrorelated industries, oil revenues and services. Climatic differences across the country are the basis for a range of different agricultural production systems, and the country has been successful with diversification into added value processing based on crop and livestock production. In recent times, for example, the country has become a net exporter of a diverse range of agricultural products meeting the demanding standards required by markets in neighboring countries and in the European Union. 49

3. Agricultural production in the economy

Priorities for investment have shifted in recent times with more emphasis upon improved food security, use of modern agricultural production technologies, agro-processing and rural services in an effort to encourage stability in rural communities and to discourage migration. Industrial investment remains a priority, but increasingly this is linked into agricultural production. Notwithstanding the pace at which national policies can change in an effort to re-direct investment, agricultural production in the country remains traditional, small-scale, pastoral and slow to adapt. The infrastructure, modern technologies and improved skills required to enable Syrian goods to be sold in international markets remains woefully inadequate.

4. Modernizing state services

The Government of Syria has identified value addition, the role of the private sector and public-private-partnerships as a means of stimulating investment, and has set in train the policies, laws and other incentives to encourage change. There has been a relaxation of regulations that previously blocked or discouraged the entrepreneur, and substantial progress has been made. The dichotomy of monopolies and dominance that once characterized state planning and state ownership has shifted with the stated aim of government to relinquish control of a range of public sector industries. Innovative legislation has been introduced to attract the private investor. The need for change has been recognized across the political spectrum, direction has been established and development is underway, but the challenges remain daunting and not least for agro-industries. Modern agro-industries barely exist and for change to happen, the sector will have to overcome existing trading partnerships that are entrenched and constraining, the inadequacy of existing infrastructure, the lack of skills in the workforce, low investment in research and development (R&D) and insufficient investment funding. The country continues to depend heavily on inward investment. Opportunities for developing the sector by modernization and improved performance need to take into account the many constraining factors that characterize much of the Syrian economy by removing them or reducing their impact; establishing the frameworks in which the private sector will be encouraged to become involved and boosting investment in public sector infrastructure roads, power utilities, technical training facilities, financial services/incentives and so on.

5. Value of agro-industrial investment

Agro-industrial development is a logical outcome from socio-economic investments of this kind that result in better educated people, more R&D investment, adoption of modern technologies, improved quality production and better access to markets that were previously out-of-reach. Society at-large benefits from more employment and higher incomes, but also from more equality between the genders, between rural and urban communities, greater participation in local communities and local decision-making, protection of intellectual property rights, reduced migration and so on. Improved social infrastructure of this kind allied to political and economic reforms is a fundamental requirement of membership of the World Trade Organization.

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6. Globalization and international membership

The country recognizes the dangers inherent in isolation domestically and internationally and is placing emphasis on improving regional and international relationships with neighbors and trading partners in distant markets. The global nature of international trade for improving access to resources, skills, finance, technologies and more makes it essential that Syria follows international norms, joins the appropriate organizations and adopts the appropriate standards and reforms that will enable the country to participate in the wider international communities of nations. According to an analysis of the policies, socio-economic factors and technologies required with which to establish a competitive and dynamic agro-industrial sector, government needs to continue to redirect the economy to enable it to compete in regional and international markets. This means boosting the performance of the public sector, improving the quality of the legislative tools available, providing more technically innovative institutions for education and services and, equally important, providing a climate in which banks and other financial institutions will extend credit within the normal constraints of capital risk.

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Conclusions and Recommendations Agro-Industries Development Strategies and Priorities Doyle Baker - Rapporteur
Summarizing the outcome of the debate during day #2 and the findings, conclusions and recommendations to arise from the Expert Consultation. These will assist with preparatory work and planning required of the proposed MENA countries regional agro-industries forum (RAIF-RNE).

1. Overarching strategy
Reduce dependency on food imports while increasing the contribution of agro-industries to national economic development.

2. Critical issues
More than 50 percent of food in the region is imported. This is neither needed nor desirable. How to manage food imports that shocks in supply and demand can be mitigated. Reduce the value of food imports; most imports into the region are food. The region is importing more agricultural products than it is exporting. Imports represent 80 percent of the food consumed. The issue then becomes one of substitution of food imports.

3. Strategic approach to promoting agro-industries in the region

Three inter-related strategies are required:

Strategy #1 Reinforce relations between primary production and agro-industries

1. Reinforce relations between primary production and agro-industries Valorize primary production. Farms are small and isolated; post-harvest systems are rudimentary and lack infrastructure. More attention is required to match agro-industries to agro-production within communities. Processing of local products. Aim for high value and market-matched processing. Herein is a potential strategy to accelerate agro-industries development using, where required, imported raw materials. 2. Centralized facilities Incubators, technology parks, agribusiness/business incubators, territorial approaches. 3. Improving productivity Improving productivity per unit of water. Improve productivity of land, water, and labour resources. 52

Water resources are strictly limited throughout the region. Managing and boosting the efficiency of water use is essential. Shift towards a water economy. Water rights; sharing water between sectors within the country; and between neighboring countries.

4. Markets Weak market infrastructures throughout the region. Internal agricultural markets are weak. Weak whole sale markets.

Strategy #2 Enhance the performance and increase investment particularly for smalland medium-scale agro-industries
1. Enhance performance Raise the performance of agro-industries. Most agro-industries are small-scale. Encourage small-scale agro-producers into agro-industries. Improve the business environment and provide support for SMEs. Encourage high-value economic activities. Most food processing enterprises in the formal sector are small- and/or medium-scale. The reality is one of dual market structures; in Syria, for example, most formal agroindustries are state owned and large-scale. 2. Promote quality Quality control systems are generally inadequate across the region. Issues of health and safety, and inspection and certification continue to apply. 3. Investment required Promote competitive agro-production/agro-industries by enhancing investments. Investment in agriculture is required. Investment planning is essential. Governments typically provided low investment for agro-production; and do not do enough to encourage the private sector to invest. Industry-wide, investment is insufficient. Financial capital is required, and the management of risk that will be essential. Access to industrial finance needs to be improved for the private sector.

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Strategy 3 Enhance the effectiveness of public sector coordination and partnering

1. Innovation and novelty Innovative institutions are required. Region-wide, there is low investment in research and development (R&D). The universities are neither well-linked to the R&D institutions nor to the wider R&D programmes required of the commercial agro-processing sector. 2. Information systems Information systems need to be established, promoted and used. National agro-food databases need to be established. Regional information networks can be established; based on existing models (e.g. RADCON). 3. Private public partnerships Trends in privatization need to be followed, captured and exploited across the region. More coordination is required between the public and private sectors within countries. There is scope for innovative partnerships between national public and private sectors; leading towards public-private-partnerships. 4. Public services delivery Responsibilities within the agro-producer/agro-industrial value chain need to be recognized and exploited. Greater coordination is essential between government ministries involved (e.g. Agriculture and Industries). Public services need to be modernized, improved and developed such that public service delivery matches requirements for the current day.

4. Recommendations Opportunities for FAO for boosting agro-industrial investment in the MENA region
Six inter-connected sectors in which FAO can make a contribution for boosting agro-industries in the region. FAO is recommended to: 1. Strategic regional planning Re-visit the three strategies described above provide analysis, improved precision and focus and redevelop the approach and action required to boost agro-industries development in the region. 2. Regional priorities Develop strategic clarification of the approach required for development that provides linkages between: (a.) National and regional dependency on food imports. (b.) Agro-producers and agro-industries within regional countries.

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(c.) Opportunities for boosting public-private-partnerships as the modus operandi for SME development. 3. Investment relationships Brokerage relationships between government and the private sector, and between large-scale private and small-scale private investors; with emphasis on: (a.) Coordination between existing ministries that focus upon the sector. (b.) An understanding of the role of partnerships between the public and private sectors. (c.) Support for SMEs when compared to large-scale enterprises (which will generally need less support). 4. Directing finance Provide guidance on responsible ways of directing finance in support of innovative opportunities, business planning/plans and commercially viable investments that can be shown on the basis of feasibility appraisals to have developmental benefits; these to focus upon: (a.) Adding value to primary production, for example, with processing local products. (b.) Raw material imports that can augment local materials and/or form the basis of agroprocessing. (c.) Business incubation/encouragement. (d.) Provision of financial capital and risk management. (e.) Provision of finance for private sector investment. 5. Capacity building Focus upon capacity building across the agro-producer-industries value chain that will encourage, stimulate and/or provide: (a.) For improved linkages within the value chain, for example, with better marketing skills. (b.) Improved understanding by government of the concept/reality of value chains, publicprivate-partnerships, role of government, etc. (c.) Improved understanding of the productivity required per unit of natural resources, for example, per unit of water (and the differences that are apparent from focus upon economic criteria). (d.) For the introduction of quality control systems; with corresponding shift into production for quality. (e.) Greater awareness of the importance of innovation and innovative systems, and of need to invest in the R&D programmes, institutions and universities involved with R&D. 6. Information systems Encourage the introduction, development, and use of agro-industrial databases, information systems and networks that will boost the exchange of eco-techno-financial information.

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Annex A1. Participants Expert Consultation

Agro-Industries Development Countries of the Middle East and North Africa Cairo, Egypt 6-7 December 2009
EGYPT Mr. Mounir Whaba LABIB Climate Change Consultant Climate Change Central Department Egyptian Environmental Affairs Agency (EEAA) 30, Misr Helwan Agricultural Road, Maadi Cairo, Egypt. Tel: 00-202-252-461-62 Mob: 2-012-764-6780 Fax: 00-202-252-461-62 E.mail: m_labib2000@yahoo.com JORDAN Mr. Majid AL-MAHASNEH Associate professor of Food Engineering Jordan University of Science and Technology Chemical Engineering Department Jordan University of Science and Technology P.O. Box 3030, Irbid, 22110, Jordan. Tel: 00-962-027-253-629 Tel: 00-962-079-543-5983 E.mail: mmajdi@just.edu.jo LEBANON Ms. Mariam EID Expert in Food Industries Ministry of Agriculture Agro-Industries Service, Ministry of Agriculture Embassies Street, Bir Hassan Beirut, Lebanon Tel: 00-961-182-4100 Fax: 00-961-182-4100 E.mail: meid@agriculture.gov.lb 56

MOROCCO Mr. Bouchta SAIDI Professeur & Directeur de Formation IAV Hassan II Madinat Al Irfane BP 6202, 10100, Rabat-Instututs Rabat, Morocco Tel: 00-212-376-749-29 Fax: 00-212-376-749-29 E.mail: bsaidi@iav.ac.ma E.mail: Saidi51@menara.ma SYRIA Mr. Samir JRAD Chief of Agro-Food Systems Division National Agricultural Policy Centre (NAPC) Ministry of Agriculture and Agrarian Reform (MAAR) National Agricultural policy Center (NAPC) Airport High Way Fifth Bridge, Happy Land Damascus, Syria Tel: 00-963- 11 4-725-880 Fax: 00-963- 115-455-369 E.mail: jradsamir@yahoo.com FAO Mr. Doyle BAKER Chief, AGS FAO Headquarters Viale delle Terme di Caracalla 00100 Rome, Italy Tel: 00-390-570-54409 Fax: 00-390-570-53860 E.mail: Doyle.baker@fao.org Mr. Divine NJIE Technical Officer Agro-Industry, AGS FAO HQ Viale delle Terme di Caracalla 00100 Rome, Italy. Tel: 00-390-570-54613 Fax: 00-390-570-53860 E.mail: Divine.nije@fao.org

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Mr. Peter STEELE Agro-Industries Consultant FAO/RNE 11 El Eslah El Zerai Street Dokki, Giza, Egypt Tel: 00-202-333-160-00 Fax: 00-202-374-959-81 E.mail: peter.steele@fao.org E.mail: peter.steele137@gmai.com Mr. Nasredin ELAMIN Senior Technical Officer Regional Policy FAO/RNE Dokki, Giza, Egypt Tel: 00-202-333-160-00 Fax: 00-202-374-959-81 E.mail: nasredin.elamin@fao.org Ms. Heba TOKALI FAO/RNE 11 El Eslah El Zerai Street Dokki, Giza, Egypt Tel: 00-202-333-160-00 Fax: 00-202-374-959-81 E.mail: heba.tokali@fao.org UNIDO* Mr Tarek ELBAZ Agro-Industries Consultant 2, Latin America Street Garden City PO Box 37 Bab El Louk 1153 Cairo, Egypt. Tel: 00-202-27943477 Mob: 2-0103400299 Fax: 00-202-27921199 E.mail: telbaz@gmail.com

*A long-time national consultant for UNIDO, Mr Tarek El Baz attended as a private individual but with permission from the UNIDO Representative to share UNIDO sector experience in the region.

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Annex A2. Programme Expert Consultation

Agro-Industries Development Countries of the Middle East and North Africa Cairo, Egypt 6-7 December 2009
PROGRAMME

Sunday 06 December 900 2

Opening Session 09:00 09:30 Registration 09:30 10:00 Inauguration of the Expert Consultation - Opening statement Abdessalam OuldAhmed, Assistant Director General Representative, RNE 10.00 10.30 Coffee Break

O.I.C,

Regional

10:30 10:45 Objectives of the Expert Consultation. 1. Developing agro-industrial development strategies and priorities. 2. Key themes - future agro-industrial exploration. 3. Guidance to FAO and partners for regional effort & investment. Peter Steele, Consultant Agro-Industries, FAO/RNE, Cairo 10:45 11:00 Self-introduction - people attending Peter Steele, Consultant Agro-Industries, FAO/RNE, Cairo Session 1 Agro-Industries in the Region: Motor for growth Chair: Peter Steele, Consultant Agro-Industries, FAO/RNE, Cairo 11:00 11:20 FAO servicing the MENA Region socio-technical opportunities & innovation. Nasredin ElAmin, Senior Policy Officer, FAO, Cairo. 11:20 11:40 Agro-Industries - challenges of making things work. Doyle Baker, Chief, Agricultural Management, Marketing & Finance Service, FAO, Rome. 11.40 12.00 Agro-Industries investment partnerships for progress. Tarik Hussein El Baz, Agro-Industries Consultant, Cairo 12.00 12.30 Discussion Identify key sectors for carry-over to day #2.

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12.30 13.00

Lunch break

Session 2: Case Studies: Agro-industries development across the region Chair, Divine Njie, Senior Technical Officer Agro-Industries, Rural Infrastructure & AgroIndustries Division, FAO Rome. 13:00 13:30 Study of Morocco Bouchta SAIDI, Professeur & Directeur de Formation, IAV Hassan II, Rabat. 13:30 14.00 Study of Algeria Mohamed Amokrane Nouad, Consultant Expert, Fondation Filaha Inove, Algiers 14.00 14:30 Study of Jordan Majdi Ali Al-Mahasneh, Jordan University of Science and Technology, Amman. 14.30 15.00 15:00 15.30 Coffee Break

Study of Syria Samir Jrad, Chief of Agro-Food Systems Division, National Agricultural Policy Centre, Ministry of Agriculture and Agrarian Reform 15.30 - 16.00 Study of Egypt Munir Labib Wahba, Climate Change Consultant, Egyptian Environmental Affairs Agency, Cairo. 16.00 16.30 Study of Lebanon Miriam Eid, Agro-Industry Expert, Ministry of Agriculture, Beirut. 16.30 17.00 Discussion 1. Comparison of national development agro-industries. 2. First impressions experience that can be shared. 3. Regional advantages. Identify key sectors for carry-over to day #2. Close of session.

17.00 17.15

07:45 Dinner Nile Pharaohs Cruise ______________________________________________________________________________

Monday 07 December 2009

The programme for day #2 will be based on the objectives of the Expert Consultation, the outcome of day #1 and key topics identified for further exploration. This will be done in plenary and in separate discussions. Given 10-12 people attending for the main part of the Expert Consultation, two groups will be formed and tasked with preparing key messages that will be shared in plenary sessions that will follow group discussion. Groups will change. Four sessions will be held representing the three objectives with a final round up session for the end of the day. The objectives for day #2 will be for delegates to make recommendations for FAO, including a Regional Agro-Industries Forum (RAIF-RNE) proposed for 2010. 09.00 09.15 Re-emphasis objectives Expert Consultation & summary of previous days discussion. Peter Steele, Consultant Agro-Industries, FAO/RNE, Cairo. 09.15 09.30 Programme for the day.

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Session 3. Developing agro-industrial development strategies and priorities. Chair: Majdi Ali Al-Mahasneh, Jordan University of Science and Technology, Amman 09.30 -10.30. Separate sessions followed by plenary/discussion. 10.30 11.00 Coffee Break

Session 4. Key themes - future agro-industrial exploration. Chair: Miriam Eid, Agro-Industry Expert, Ministry of Agriculture, Beirut. 11.00-12.00. Separate sessions followed by plenary/discussion. 12.00 13.00 Lunch break Session 5. Guidance to FAO and partners for regional effort & investment Chair: Samir Jrad, Chief of Agro-Food Systems Division, National Agricultural Policy Centre, Ministry of Agriculture and Agrarian Reform 13.00-14.00. Separate sessions followed by plenary/discussion. Session 6. Conclusions and Recommendations Chair: Doyle Baker, Chief, Agricultural Management, Marketing & Finance Service, FAO, Rome. 14.00 15.00 Group discussions and preparation of key messages for FAO. 15.00 15:15 Closing Expert Consultation - Final Remarks Divine Njie, Senior Technical Officer Agro-Industries, Rural Infrastructure & Agro-Industries Division, FAO Rome. Close of session.

15.15.

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Annex A3. Terms of Reference Outline of Country Report FAO/RNE Regional Agro-Industries Development Initiative

Country Study Report Agro-Industries

Outline of the Report and the Approach Required for the Country Study on Agri-Business & Agro-Industries This note contains an outline of framework, sections and supporting text for the material that should be collected, described and analyzed for the value of findings for the development of a national strategy in support of Agri-Business and Agro-Industries that will comprise the basis of the country report. The country report will be the main output from the work required of the National Consultant. Outline Contents Required of the Report Summary
Report will be in three parts: 1. Front section 2. Main section 3. End section The separate sections should contain reference to the information listed below. Chapters and contents are provided as a guide and other materials, information, text, figures, etc. can be included. Length of report can expect to vary, but will probably be of the order 60 pages of typed script including inserted tables. Annex will be additional. Proposed six chapters and 60 pages provides average 10 pages for each chapter, but emphasis of reporting should focus upon chapters #4, #5 & #6. All published material used should be listed in a Reference List at the end of the report. Should you have any issues when preparing the report, please contact one or other of the people below:

1. Peter Steele 2. Heba Tokali RNE Agro-Industries FAO Cairo peter.steele@fao.org heba.tokali@fao.org

3. Divine Njie Technical Officer AGST FAO Rome divine.njie@fao.org

4. Carlos DaSilva Technical Officer AGSF FAO Rome carlos.dasilva@fao.org

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A. Front section Front Page

Cover page and page #1; to contain the title of the report, the name, title and address of the author, and the date that the report was completed.

Executive Summary
To contain a summary of the findings of the report; highlighting key development opportunities and constraints that will encourage investment in the national agroindustrial sector in the country. Maximum two-page summary required.

Contents List
Tabulate the contents of the report in a separate table as shown below:
Chapter Section Title Executive summary Abbreviations and acronyms Measurement units Currency conversions Introduction country and opportunities Title to be decided Title to be decided Title to be decided Etc. Macro-economy of the country Title to be decided Title to be decided Etc. Page

1. 1.1 1.2 1.3 2. 2.1 2.2

Abbreviations and Acronyms

Tabulate all abbreviations and acronyms used in the report in alphabetical order, as follows:
A&A FAO MDG NGO TA Full name/title Food and Agriculture Organization of the United Nations Millennium Development Goals Non government organization Technical assistance Etc.

Currency Conversions
Tabulate all domestic and international currencies* used in the report; as follows:
Currency #1 Currency #2 US$1.00 LE5.60 LE1.00 US$0.18 Euro1.00 LE8.50 LE1.00 8.50 * Example: Egyptian pounds, US dollars and euro shown for Egypt.

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Measurement Units
Tabulate all measurement units used in the report, as follows:
Abbrev. g h ha kCal MJ Unit gram hour hectare (10,000m2) kilocalorie (Calx103) megajoule (Jx106) Etc.

________________________________________________________________________

B. Main Section Chapter #1. Introduction: Country and Opportunities

Chapter will contain findings, analysis & trends to describe the following information. Provide a general introduction only for the following sectors. Country people, economic development, progress, etc. Geography, location, natural resources, demography, key socio-economic issues and/or constraints. Demographic changes underway; urbanization, re-settlement, migration, etc. Governance and investment opportunities. National economy and main revenue streams. Role of agriculture within national development. Priorities for agricultural development linking people to resources, employment, etc. Agricultural production linked to agro-industrial development value chains. Current initiatives in support of agro-industrial development. Main trading partners, membership of main trading blocs and/or marketing blocs. Summary: Country and opportunities into the next period.

Chapter #2. Macro-Economy of the Country

Chapter will contain findings, analysis & trends to describe the following information. GDP by sector and growth rate, with clear indication of contribution of agriculture and of agro-industries to the national economy. Public sector; historically, today and into the next period; industries, investments, etc. Formal and informal sectors of the economy. Employment by sector; trends in employment; informal and formal sectors. Private-public partnership reality, constraints and opportunities. Climate for private sector investment and business development. National, bilateral and international investment opportunities; incentives and taxation. Investment in agricultural production, agro-industries and value chains. Other conditions, issues, opportunities, etc. that may apply. Summary: Macro-economy of the country as of mid-2009.

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Chapter #3. National Agricultural Sector

Chapter will contain findings, analysis & trends to describe the following information. Introduction to the national agricultural sector general description. Production of crops; to include all main sub-sectors cereals, oilseeds, fruits and vegetables, roots, plantation crops, biofuel crops, etc. Production of livestock; to include main species/products dairy, meat, fibres, hides&skins, non-edibles, etc. Fisheries and aquaculture; to include all main sub-sectors. Forestry; to include all main sub-sectors - wood and non-wood forest products. Services available in support of production; to include public support for R&D, statistics, extension, etc; and private sector support to include commercial services, marketing, trading, etc. Market development, composition, value and trends of sub-sector development. Value chain opportunities linking input supplies and producers with processors and with markets. Summary: National agricultural sector as of mid-2009.

Chapter #4. National Agro-Industries Sector

Chapter will contain findings, analysis & trends to describe the following information. Introduction #1 - Overview Introduction to the national agro-industrial sector overview general description. Agro-industries in context of industrial and/or agricultural development resources, etc. Trends with manufacturing and agro-industries development. Existing portfolio of manufacturing resources and facilities scale, informal/formal, urban/rural, etc. Assessment of status, capacity, sub-sector priorities, trends, investment, etc. Distribution within the country; location, regional bias, changes into the next period, etc. National ownership of manufacturing facilities; state, private sector and/or multinational. Introduction #2 - Portfolio Introduction to the national agro-industrial sector portfolio general description. Include cereals/products, horticultural crops/production, edible oils/by-products, sugar/confectionary, spices/extracts, edible livestock products/dairy, meat, etc. Include non-edible livestock/hides & skins, fibres, etc., non-edible crop/fibres, industrial goods, etc. Include fisheries products, forestry products, animal feeds, crafts and similar. Agro-industrial manufacturing and/or goods in support of sub-sector development. Including support for tourist services, energy industries, construction industries, etc. Technologies Introduction to domestic agro-industries technologies. Production methods and approach; scale, technologies, skills, etc. typically used. Technologies available; historic, current and modernizing. Capacity installed and working; extent of utilization; trends into the next period.

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Challenge of modernizing; opportunities to transfer, adapt/or develop technologies. Extent of national resources in research and development and extension services in support of agro-industries technologies innovation, transfer, investment and similar. Main national partners providing access to information, education, training and similar centres, universities, institutions, agencies, etc. Approach to technologies transfer, services, facilities and information available. Service industries Introduction to domestic agro-industries service industries. Industrial sectors providing services in support of raw materials, technologies, finance, information, equipment/machinery and human resources (i.e. skilled/trade, unskilled, managers, technical expertise and advisory). Logistical, handling and storage services including transport, storage, packaging and similar for land, air and sea freight/goods. Shared service providers between public and private sectors; trends underway. Market information services; providers from public and/or private sectors, reporting, television/radio, journals and similar. Infrastructure Introduction to domestic infrastructure support base (i.e. power, water, telecommunications, roads, markets, etc.). Logistical infrastructure including markets, storage, warehouses, distribution, specialized handling and storage (e.g. refrigeration); and to road, rail, air and sea freight. Electrical power including national generation, distribution, accessibility for rural industries/households, etc. Access to commercial fuels for power generation, transport, heat, etc; and some indication of comparative costs of power from alternative sources (that may apply to agro-industries). Domestic telecommunication infrastructure; national cover/extent of services; typical services/hardware used by agro-industries including mobile phone, land-line phone and internet providers. Extent of domestic water resources and water quantities and quality typically used for agro-industries. Extent of rural communities and access to people and social services (including health, schools, recreation, etc.). Trading and markets Introduction to domestic markets and trading used by/required of domestic agroindustries. Viability of domestic agro-industries and trading environment. Domestic agro-industries development in context of domestic, regional and global markets; and marketing opportunities. Regional and global competitors in domestic markets for selected materials and products. Multi-lateral and regional trade agreements; and relevance for investment and markets. Regional and/or continental common market agreements; and relevance for markets. Agreements and technical barriers to trade that may impact on trading.

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Banking and finance Introduction to domestic banking, funds and finance available to agro-industries. Main banking and/or financial resources available to agro-industries. Investment funds and pro-business developments/resources available public sector. Make reference to micro-finance, venture capital, private equity and similar. Extent of foreign direct investment incoming and/or available; and ex-banks for SMEs. Extent of agency and/or international donor funds available in support of SMEs. Institutional support Introduction to institutional support (i.e. mainly public sector support) for agro-industries general overview. National policies and regulations in support of domestic agro-industries; including role of agro-producer groups, SMEs and similar. National facilities/resources in support of regulations/laws, food services standards, weights and measures, domestic and international trade, fair trading, policing, etc. Consumer support organizations and/or NGOs and/or industrial manufacturing groups available to agro-industry extent, value, trends, etc. Demographic impact on institutional support linked to shifts in consumption, demand for alternative foods, health promotion, lifestyle changes, urbanization and similar. Miscellaneous issues Sub-sector to cover all additional issues not previously covered including: climate change, national emergencies arising from natural and/or civil disasters, sustainable development, national political, social, economic and or technical issues that impact on agro-industries etc. Summary: National agro-industries sector as of mid-2009

Chapter #5. Forces shaping Agro-Industries

Chapter will contain findings, analysis & trends to describe the following information. Identify the major forces shaping current agri-business and agro-industries investment. These can be considered within four sections shown below (5.1-5.4). Provide insight into national development findings, analysis and trends; and summarize the chapter on the basis of a PEST analysis approach as shown in section 5.5.

5.1 Political and legal forces

Political stability and good governance is a key prerequisite for encouraging investment in agri-business and agro-industries. Government normally provides the public facilities and legislation that fosters economic growth. Consider: Political stability; but also providing other key essential requirements (infrastructure, etc.). Regional integration; resources and markets that extend across national borders. Institutional capacity; providing public services which encourage the private sector. Business climate; removing regulatory obstacles and encouraging the entrepreneur.

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Factors to consider Stability in the home country and in neighboring/regional countries. Political conflict that may impact upon the home country. Fairness and/or corruption of government, public and/or institutional services. Regional harmonization of policies (in support of agro-business development). Preferential trade agreements and trade policies with main trading partners and/or trading blocs. Limited enforcement of laws in support of agri-business enforcement such as property rights. Weak and/or inadequate business climate.

5.2 Economic forces

These normally dependent upon domestic market demand, market structures and other basic conditions. Typically there is dominance by a few key industries and/or markets. Consider: Rural infrastructure; directly affects international competitiveness. Financial sector; needs to be available across the entire investment spectrum. Foreign direct investment; official aid and development assistance compared to foreign direct investment. Impact of current global crisis (2008-2010) minimal direct impact, but longterm issues may apply. Factors to consider Has economic liberalization started? Is it well underway? What has been performance thus far? Extent of economic growth in recent years poor, middle or good? What trends? Extend of foreign direct investment (FDI) poor, middle or good? What trends? Central role of agriculture in the economy? Current global recession and the way in which the local economy is affected. Follow-on effects for the local economy from the current global financial crisis. Comparative impact of global recession, etc. on inward flow of investment funds, including remittances from migrant workers. Lack of competitiveness from reliance on export sales of limited commodities. Extent of partnerships between international banks and domestic banks. Quality of local infrastructure transport, power, water, sanitation, etc. and its impact on economic performance. Extent of legal barriers to trade. Access to credit and the rates of interest that may apply to borrowers. Extent of inflation within the national economy and its impact upon earnings, employment, etc. Policies in place to help provide for macro-economic stability.

5.3 Social, cultural and human demography forces

This is people as the basis for all socio-economic development in the community taking charge politically and economically; either deliberately or by default. People moving between the country and the towns, people moving away from a home-base (in-country

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or out-of-country), people seeking new opportunities, dysfunctional communities remaining behind as the young, educated and mobile leave as the men leave and women and children remain behind. This is populations expanding beyond their resources. This is the impact of cultural change on traditional society. Consider: Urbanization; political strength of larger cities absorbing the national wealth. Informal sector; frequently rivals that of the formal sector and firmly linked. Population; normally expanding beyond resource base and urbanizing. Factors to consider Expanding populations; and both positive and negative connotations, respectively, for market opportunities and employment and resource sharing. Urbanization movements of people, managed trends, rural-urban linkages that remain in place; issues of infrastructure, of ability of towns/cities to accommodate flow of people, etc. Access to social services provided by the public sector education, health, power, water, housing, employment, etc; and by the private sector entertainment, employment, health, etc. Gender issues; dichotomy between the genders within contemporary society, shared responsibilities for agricultural production, womens rights issues, impact of private sector, impact of international trends. Prevalence of migration and remittances in providing for socio-economic security for local communities migration internally or out-of-country. Social indicators prevalence of HIV/AIDS, malnutrition, food insecurity, unemployment, women headed households, and similar in local communities. Inability of local communities to adopt new technologies; inhibiting factors. Cultural preferences for specific staple foods, for ways of doing things, for social management and similar. Formal and informal sectors are essentially linked and have to be considered together. Informal sector has limited support and cannot easily access services.

5.4 Technological forces

Small-scale, traditional nature and isolation of most agro-producers and agro-processors restricts opportunities for keeping pace with technical change, and for take-up of promising technologies. Consider: Technical acquisition capacity; transferring agro-technologies is not easy without R&D, experimentation and extension support. Information communications technology; easy to transfer, but some governments hesitate and are slow to adapt and to liberalize the flow of information. Factors to consider Access to improved information technologies (e.g. mobile phones, internet, etc.). Advances in bio-technologies and other advanced technologies that may have a role within national agro-development. Opportunities for technological leap-frogging; with national and/or foreign partners. Reasons why some countries have been slow to adopt new communication technologies. Investment in public research by national institutes and/or within partnerships with external partners (e.g. CGIAR).

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Effectiveness and capabilities of public sector investment; evaluation of resources, trends, etc. Diversity of agro-ecological conditions that may limit the natural diffusion of agrotechnologies. Weaknesses in, and/or poorly supported, national research and development resources. Matching the transfer of agro-technologies with national need; and then supporting it with R&D investment for local use. Extent of the technical agro-services available from public and private sectors. Extent and effectiveness of agro-technical education provided including dedicated agro-universities for capacity building. Investments available from private sector for agro-R&D programmes. Limited enforcement of intellectual property rights.

5.5 Policy, Economic, Social and Technology Analysis

A policy, economic, social and technology chart (i.e. PEST chart) provides the basis for summarizing the opportunities and threats that will help determine and shape agri-business and agro-industries development. Prepare a chart to the format shown in Table 1. The chart can be any length depending on the information included. Use bullet points and summarize text within the table. Make the PEST chart as large as it needs to be to include all key information. Attach the table as an annex to the report. Summarize the main points to arise from the PEST chart below. Table. PEST Chart - Main forces influencing agro-industries development
Forces Political & legal Economic Social, cultural & human demographic Technological Opportunities Threats

Chapter #6. National Support Required for Agro-Industries

What national programmes, business climate and services are in place to provide a supporting environment in which agro-industries can be introduced, encouraged and flourish? What is missing from the national portfolio of supporting services? This will be described in this chapter. Give priority to the competitiveness of the sector; and the role of the private sector and the need for commercial investment and profit-making. Provide information for boosting agro-industries within the three focus sectors as shown in Table 2.

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Table 2. National support required to boost agro-industries investment

Support programmes required 1. Public goods and facilitative policies Objectives To provide public goods and formulate and implement policies that will facilitate efficient trade along the agroindustrial value chain. Create new and improved existing innovative institutions that will strengthen SME linkages and access by smallholders to national, regional and global agro-industry supply chains. Provide investment capital and risk management instruments to agro-enterprises to enhance their competitiveness.

2. Innovative institutions

3. Financial capital and risk mitigation.

Provide the information required of Table 2 by completing Tables 3, 4 and 5. Use bullet points and summarize what should be done, and what can expect to be the outcome of taking this course of action. Attach Tables 3, 4 and 5 to the report as annexes. Summarize the main points to arise from each of the tables under separate headings below. Table 3. Public goods and facilitative policies
Activities/sector 1. Public investment in agricultural and food research and development. 2. Public investment in infrastructure that serves agroindustries. 3. Public investment in market information systems for key agricultural commodities. 4. Develop and enforce grades and standards for agricultural products. 5. Enhance business climate to improve ease of doing business for agro-industries. 6. Develop and enforce legal framework for property rights. 7. Develop and implement trade policy that minimizes distortions and harmonizes regional trade Investment & effort required Outcome expected

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Table 4. Innovative institutions

Activities/sector 1. Develop business development services that are targeted at farmers and agro-industries 2. Promote business incubators for agro-industries. 3. Establish agro-industry research and technology parks. 4. Promote agro-industries business clusters and networks. 5. Build warehouse receipt systems for agricultural commodities. 6. Promote collective action, contract farming and out-grower schemes that will integrate farmers into the agricultural value chain. 7. Develop commodity exchanges for agricultural commodities. 8. Create and support certification agencies for agricultural products. Investment & effort required Outcome expected

Table 5. Financial capital and risk management

Activities/sector 1. Create investment funds that exclusively target agro-industries. 2. Create guarantees for agroindustries that will improve access to commercial lending. 3. Promote foreign direct investment by international agrocompanies. 4. Support micro-finance institutions for investment in agro-industries. 5. Leverage foreign remittances for investment in agro-industries 6. Design and support mechanisms for assessing, mitigating and monitoring risks facing agro-industries. 7. Promote structured finance instruments that target agroindustries. Investment & effort required Outcome expected

________________________________________________________________________

C. End Section
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Bibliography and Sources of Information

Listing all sources, text, web pages and similar from which information has been used within the main report. No information to be used that cannot be substantiated. References to be listed alphabetical and in the format shown below: Abouziena, H.F. (2009). Organic Plant Waste Proves Effective Weed Control for Citrus Trees. News item/Report. Botany Department, National Research Center, Giza, Egypt. Available at: www.freshplaza.com/news_detail.asp?id=35877

Annexes
1. Provide additional materials, text, data and similar in support of the separate chapters. 2. Provide information identifying the main participants/players within national industries. 3. Provide contact information for key ministries, R&D institutes, companies, agencies, people and others relevant to reporting; to include web addresses and email addresses. 4. Table - Policy, economic, social and technology analysis (PEST Chart). 5. Table - Public goods and facilitative policies. 6. Table - Innovative institutions. 7. Table - Financial capital and risk management

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Annex A4. Promoting Agro-Industries in the MENA Countries

Agro-Industries Development FAO/RNE

Describing opportunities for boosting the Agro-Industries sector into the next period; and the work proposed of the RNE/AGS International Agro-Industries Consultant working in support of RNE Cairo. Promotional note distributed to FAO Representatives in the region following training mid-March 2009.

Background
Communities develop on the basis of their ability to create wealth and to lead harmonious and peaceful lives. This comes from socio-economic development that remains sustainable and produces goods, products and/or services for which there are reliable markets. The reality of the MENA region, however, is that people need employment; and this comes from investment that will provide the infrastructure, technologies, education, skills and, importantly, the markets that will provide for security of employment into the longer-term. For middle-income countries it is not sufficient to restrict investment to agricultural production, for the larger part of the national population are not agricultural workers. Middle income people are mainly urban or quasi-urban dwellers and, as the country creates wealth, more people shift from the country to the towns. This boosts opportunities for mechanization, advanced technologies, improved husbandry practices on-farm and industrial livestock production. Services expand. The GDP of the agricultural sector rises.

Agro-industrialization
What do you do with surplus ex-rural people? This will be a significant challenge for national planners in middle-income countries into the next period. Egypt, for example, has to find of the order 600,000 new jobs annually to match population growth. Processing agricultural products, adding value to raw materials or simply cleaning, storing and packaging goods to exploit market opportunities becomes essential. Agro-industrialization is underway throughout the region with a host of donor-led government partnerships most of which are linked to private sector investment (and if not immediately, then downstream once pilot-scale ventures have been completed). FAO has the potential to remain strategically involved. This is not a certainty, however, and continued effort will be required to ensure that the resources are marshaled, promotional activities undertaken and investment in time, intellect and funds made that will help convince national clients and donor partners of FAO capabilities.

Partnership arrangements
FAO/RNE has embarked upon an initiative to help boost agro-industrialization in the region. FAO is seeking to highlight opportunities, and to become a reliable partner in the technical, financial and socio-economic planning required that FAO member countries are able to invest with confidence. FAO works closely with UNIDO, IFAD, AfDB, World Bank, EU and others for the value that comes from synergy, collaboration and shared effort to help better exploit selected national and regional advantages that will enable member countries to establish industrial ventures. These will provide the basis for economic growth into the longer-term.

Regional agro-industries forum

India hosted a joint FAO/UNIDO/IFAD global agro-industries forum (GAIF) in April 2008 to promote opportunities for agricultural supply chains. Notwithstanding the jargon with names of this kind, GAIF means providing people with jobs that come from the establishment of agroenterprises that process crop and livestock products. The agricultural sector thus reaches from the

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farm to the consumer (wherever he/she may be) and includes all the intermediary steps for collection, storage, processing, packaging, transporting and trading. This is the real business of FAO; working in support of people who earn a living from agriculture. The global forum was highly successful and FAO would like to do the same again at regional level. The modus operandi of the model will travel; and we should be able to plan for an RNE agro-industries forum (RAIF-RNE) sometime during the next 12 months. Timetables remain to be determined. FAO/AGS remains host to a GAIF Secretariat. Check out more at www.fao.org/ag/ags/index.html. Each of the RNE/FAO Representatives attending the RNE Regional Planning Workshop during the week-ending 19March09 has been provided with a package of GAIF materials. If you would like more please ask. During the next few months RNE will explore national and regional opportunities, recruit national consultants, identify national partners and focus upon the issues of national, sub-regional and/or regional industrialization that will result in a collection of planning documents that will comprise the basis for decision-making. A network will be established. An Expert Consultation (EC) will be held to determine what to do next. Shared partnership investment will be essential but, with skilful promotion, this will be found. The EC will provide the basis for the RAIF proposed.

Your role
Early days on this one but one thing is clear without the participation and ownership of the FAO Country Offices and national counterparts, nothing will be achieved. This then remains a first priority. A shared role within the planning and exploratory effort will be essential, which means more work with limited resources - and yet another programme with a mixture of ideas, hopes, imagination and effort required. The one key certainty herein, however, is that agroindustrialization in the region is already underway. Its time to take a more positive role and to lead from the front. Feedback, ideas, comment and more, please, to:

Abdessalam OuldAhmed Deputy Regional Representative & FAO Representative in Egypt abdessalam.ouldahmed@fao.org Doyle Baker Rural Infrastructure & Agro-Industries Division, Rome. doyle.baker@fao.org Peter Steele RNE Agro-Industries Consultant, Cairo. peter.steele@fao.org

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Annex A5 Concept Note Planning MENA Countries RAIF-RNE

Draft Concept Note: Version #2 Middle East & North Africa Regional Agro-Industries Forum (RAIF-RNE)
Summary
Introducing some of the many planning issues that concern proposals to hold a RAIF for agro-producer countries in the region covered by FAO/RNE; including background, the value of investments of this kind, the reasons for undertaking this activity and the outputs that can be expected. Key issues will be those of establishing working partnerships with the host government, preparing a reasonable timetable for the event and pre-event activities and, importantly, encouraging regional countries to take part. There are no significant barriers, and much to be gained by holding the RAIF-RNE. Others have already been successfully held elsewhere. Concept note version #2 replaces the earlier version and follows meetings with potential partners in Cairo/Egypt during the week-ending 05June10. ________________________________________________________________________

1. Background and rationale for activity

The inaugural Global Agro-Industries Forum (GAIF) was held in April 2008.6 This has been followed by regional agro-industries fora (RAIF) in Latin America, Asia and Africa.7 A similar forum is planned for the countries of the Middle East and North Africa (MENA) and can expect to be equally successful as a means of boosting sector interest and investment. The MENA RAIF has been given the descriptor RAIF-RNE. The Food and Agriculture Organization of the United Nations (FAO), the United Nations Industrial Development Organization (UNIDO) and the International Fund for Agricultural Development (IFAD), in collaboration with the Government of India, brought together ministers and government officials in charge of agriculture, trade and industry, food industry leaders, agro-industries specialists and civil society representatives for the Global Agro-Industries Forum (GAIF), which was held in New Delhi from 8-11 April 2008. More than 500 senior country delegates and professionals from 111 countries discussed the contribution of agro-industries to economic development and the challenges of promoting these investments.8 The GAIF encouraged dialogue between the private and public sectors, and helped to foster partnerships for developing commercially viable agro-industries. Formal and ad hoc meetings of regional people held during the GAIF concluded that the diversity of development situations in the different regions of the world required context
6 7

GAIF information. Further information is available at: http://www.gaif08.org/. RAIF Africa. Further information is available at: http://www.hlcd-31.org/ 8 Focus agro-industries. Agro-industry in this context refers to the establishment of linkages between enterprises and supply chains for developing, transforming and distributing specific inputs and products in the agricultural sector.

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and geo-specific intervention; a global approach was not sufficient, and there are advantages in regional focus for: 1. Promoting investments in physical and social infrastructure. 2. Creating an enabling environment for agro-industries investment. 3. Encouraging greater participation by small-scale producers in commercial agroindustries. A number of priority recommendations were made in support of sector development: 1. To shift public investment away from subsidies and towards better targeted research and development, extension and infrastructure that would stimulate marketing networks. 2. To harmonize safety standards and strengthen institutional and legal frameworks governing certification and dispute resolution. 3. To developing alternative business models that will encourage the informal sector to participate in the formal economy. 4. To focus on small-scale producers and other stakeholders in the value chain by sharing information and success stories, developing national and in-country supply chains, using pilot cases of entrepreneurship to identify barriers to business, and encouraging customized competitiveness (as opposed to pricecompetitiveness) among the main stakeholders. A key recommendation of the GAIF was to hold follow-up regional meetings with similar objectives to promote and encourage agro-industrial development, but with a regional focus. These should be held as soon as practically possible. Meetings should be held in collaboration with regional and sub-regional partners governments, international and regional agencies, development banks and representatives of the private sector. An FAO/AGS/RNE mission was fielded to Cairo during the week-ending 05June10 with objectives of making preliminary contact with key partners required of hosting and organizing the proposed RAIF-RNE.9

2. Objectives
The purpose of the Middle East and North Africa RAIF-RNE is to assist governments of FAO Member Countries in the region with developing competitive agro-industries that will encourage the participation of small-scale producers and other stakeholders in agrofood supply chains.

3. Outputs expected
The RAIF-RNE will raise awareness of the key role of agro-industries in regional development; provide imaginative debate, encourage thinking and foster investment in support of the farm-trader-processor-market value chain. This will result in the following outputs: 1. Technical papers. Two lead technical papers addressing the challenges identified for the Middle East and North Africa RAIF-RNE.10

FAO/AGS/RNE mission. The mission met with representatives of the Ministry of Agriculture & Land Resources (MALR), Ministry of Trade & Industry (MTI), UNIDO, IFAD and FAO.

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2. Forum. Up to 100 participants from government, the private sector, NGOs and farmer organizations attending; with debate and advice targeting the challenges for developing competitive agro-industries, and the role of small-scale producers and other stakeholders in supply chains.11 3. Round tables. Minimum four competitiveness round tables organized in which to share information and discuss success stories on the technical topics identified as priority challenges by the RAIF-RNE. This may include, for example: Relocating public investment away from subsidies and towards funded research and development, extension and infrastructure in support of marketing networks. Harmonizing safety standards and strengthening institutional and legal frameworks governing certification and dispute resolution. Developing alternative business models that will encourage the informal sector to participate in the formal economy. Identify barriers that can be overcome for the greater participation of small-scale producers and stakeholders in agro-industries; to help improve competitiveness. 4. Peer-assisted workshops/investment strategies. Minimum six strategies proposed for boosting practical agro-industrial investment/development; based on casestudy analysis of the reality of existing practices and the value of supporting partnerships. 5. Media event. Full media coverage of the event; regular press releases prior, during and after the event with focus upon achievements made.12 6. Regional focus publication. One publication reporting exclusively on the Middle East and North Africa RAIF-RNE.

4. RAIF-RNE rational activities

These are likely to include: The RAIF-RNE plenary addresses will introduce the main focus of developing competitive agro-industries in the Middle East and North Africa region, and highlight those issues that will encourage the sustainable role of small-scale producers in value chain development. The round table meetings will provide an opportunity for invited experts and agro-industrial stakeholders to debate the proposition and the response suggested by the organizers on each of the four key issues. The debate will be followed by wider discussions with RAIF-RNE participants.
10

Technical papers. Key elements in the search for quality within the modus operandi of the RAIF-RNE, recommendations to the FAO/AGS/RNE mission of 29-31May10 were to focus one paper on attainability; covering a socio-eco-techno-sector that would come within reach of regional industries without the need for sweeping government intervention (which are subject to delay and the risk of becoming lost). 11 RAIF-RNE participants. Feedback to the FAO/AGS/RNE mission of 28-31May10 suggested that participant numbers will increase from the earlier target of 60 given the number of MENA countries involved; that the venue should consider 100 as a reasonable target audience. 12 Media interaction. Suggestions made to the FAO/AGS/RNE mission of 29-31May10 included awarding regional media agencies with exclusive rights to reporting; to provide for pre-RAIF-RNE planning, RAIFRNE venue and post-RAIF-RNE follow-up that key decision-makers in MENA governments could be tracked for post-RAIF action that had been promised, delivered, etc.

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The peer-assist workshops will enable minimum six participants each facing a well-recognized challenge and with proposals for taking corrective action to place these issues before delegates; to seek insight and advice. Case study topics will be selected by the RAIF-RNE organizers to provide focus on the priority issues of the RAIF-RNE linked to agro-industrial development in the region. This guided exercise will enable solutions, processes and partnerships to be proposed that will enable them to tackle some of the real problems faced by stakeholders in the development of competitive agro-industries.13 If many interesting case studies are suggested/found, the peer-assist workshops will endeavor to compare up to three industrial cases at the same time.

5. RAIF-RNE implementation and approach

The RAIF-RNE will be held in Cairo Egypt as a result of preliminary discussions held FAO/Government of Egypt in 2008 and, importantly, as a result of the invitation extended by the Minister of Agriculture Egypt when attending the RAIF Africa in Abuja Nigeria March 2010.14 The RAIF-RNE will be held over a period of 2-5 days at a date to be fixed during March 2011. Originally proposed for October 2010, the RAIF-RNE has been put back to March 2011 given national elections scheduled for October 2010. The additional time available will assist with the production of high quality lead technical papers. RAIF-RNE attendees are expected to include: 40 participants to be invited and selected by FAO, IFAD & UNIDO. 20 participants to be selected by FAO from interested people, who will cover their own cost of travel and accommodation. 20 participants to be invited and selected by the host country institution. 20 participants to be invited and selected by externally funded sources.

6. Draft programme of events

The draft below remains open to change, but may include: Day #1 Morning Afternoon Evening Day #2 Morning

Arrival of participants Optional half-day technical field visits to agro-industries Welcome dinner

Official opening Press conference Tea/coffee break Plenary address Discussion

30 minutes 30-60 minutes 30 minutes 1 hour 1 hour

13 14

Peer-assist methodology. More information at: http://www.youtube.com/watch?v=ObmQyW3EiiE Invitation RAIF-RNE. The Egyptian Minister of Agriculture attended the Africa RAIF as a representative of the Office of the President, and not as Head of Ministry.

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Lunch Afternoon 2 parallel competitiveness round tables Tea/coffee break 2 parallel competitiveness round tables Networking open space or free time Dinner

1 hour 1.5 hours 30 minutes 1.5 hours

Evening Day #3 Morning

Afternoon

Evening Day #4

Plenary address Discussion Tea/coffee break 3 parallel peer-assist workshops Lunch 3 parallel peer-assist workshops Tea/coffee break Organizers conclusions Networking open space Free time/departure of participants Farewell Dinner

1 hour 1 hour 30 minutes 1.5 hours 1.5 hours 30 minutes 30 minutes

Departure of participants

7. Responsibilities of FAO
FAO will: Provide technical supervision within the organization committee. Provide travel, accommodation and per diem to 20 regional participants selected from government, private sector, NGOs and producer organizations involved with agro-industries; focus will be people with managerial and/or technical ability. 15 Identify and invite two lead speakers; and cover costs for honorarium, travel, accommodation and per diem. Identify and invite eight round table experts; and cover costs of travel, accommodation and per diem. Select, coach and advise minimum six case studies for peer-assisted review. Provide four Technical Officers from FAO HQ Rome and FAO Regional Office for the Near East to facilitate the RAIF-RNE round table and workshop sessions. Invite the FAO Regional Representative for the Near East to open the RAIF-RNE. Provide supervision and technical editing for the report of the RAIF-RNE. Undertake to print and distribute the RAIF-RNE report.

8. Responsibilities Government of Egypt: representing the host

The Government of Egypt will:

15

Additional supported delegates. An additional 10 delegates will be supported, respectively, by UNIDO and IFAD, bringing total supported delegates FAO/UNIDO/IFAD to 40.

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Identify the host ministry responsible for the organization of the RAIF-RNE, and supporting ministry (ies); identify key focal points in each ministry who will comprise the basis of an organization committee responsible for holding the RAIF.16 Provide a venue for the RAIF-RNE: one large meeting room capable of holding up to 100 participants and suitable for holding formal meetings (e.g. with sound facilities - microphones, sound reticulation, LCD projector, screens, etc.). Provide four break-out rooms suitable for workshops (e.g. with white boards, markers, etc.). Provide simultaneous translation facilities for the plenary and break-out rooms, if considered necessary. Provide interpreters for the duration of the event for the plenary and break-out rooms, if considered necessary. Provide all meals/drinks for RAIF-RNE participants during the period of the event each working day. Negotiate discounted prices for hotel accommodation required of participants at the RAIF-RNE; and make these available minimum one month before the venue. Organize two parallel half-day technical field visits to local agro-industries that will provide an insight into the key challenges addressed during the RAIF-RNE; to include consecutive interpretation, if considered necessary. Provide all local transport required of the RAIF-RNE. Provide airport pickup of participants staying at the official hotels nominated for the RAIF-RNE. Provide secretarial and registration staff throughout the period of the RAIF-RNE. Provide the services of national counterparts to undertake liaison duties with FAO. Provide a senior staff member of standing within government who will officially host the RAIF-RNE; including the presentation of a welcome address.

9. Budget
Different budgets will apply, as follows: FAO. Estimated budget non-FAO people: US$50,000. FAO. Estimated budget FAO people: US$35,000. FAO will cover the additional costs attributable to preparatory planning effort required of FAO Technical Officer and supporting people prior to the RAIF-RNE; and provide the travel costs, accommodation and per diem, as appropriate, of FAO staff attending the RAIF-RNE. Government. Estimated budget Government of Egypt: to be determined, but provided mainly in kind services, venues, people, transport, hosting facilities and more. Additional. Additional budget sources will be requested/sought from agencies, private sector companies, financial institutions and others that will be used to support the attendance of delegates.
16

Organization committee. Feedback to the FAO/AGS/RNE mission of 29-31May10 by government representatives suggested that the MALR will function as national host, with strong support from the MTI. Representatives from FAO and UNIDO would make up the four-person organization committee.

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10. End Note

The ideas and outline shared within the concept note remain open to change and redirection. They have been based on the modus operandi of earlier RAIFs held in Asia and Latin America shared, respectively, with FAO/AGS, FAO regional offices in Bangkok, Santiago and Accra and host governments. FAO/RNE was not represented at these venues and has no first-hand experience of the planning required, modus operandi and outcome. Partnership arrangements will be essential that the RAIF-RNE is as successful as those held previously. Middle East and North African countries have much to gain with focus and re-directed investment of this kind. The second FAO/AGS/RNE mission is scheduled into Cairo for July 20101 with objectives of firming the arrangements outlined in this re-developed concept note.
Peter Steele RNE Agro-Industries Consultant Cairo, Egypt 03 June 2010

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