Feature story

Food inflation: finding the answers

Agribusiness conference in Kiev

As food prices continue to rise and food stocks continue to fall in the region and across the globe, the EBRD continues to work with other international financial institutions (IFIs), governments and businesses to respond to the challenge of feeding the world. The EBRD’s Agribusiness Director, Gilles Mettetal, explains what progress is being made.

The EBRD was one of the first IFIs to focus on rising food prices and insufficient supply. “The London conference, attended by a small group of decision makers, was our attempt to raise awareness of the problem and also to demonstrate that our region can be one of the solutions,” says Mr Mettetal. Potential for increasing production is higher in the EBRD’s region than in other parts of the world, thanks to the quality of the land and the climates.

“The result was almost surprisingly successful,” reports Mr Mettetal. “By the time the issue had reached significant proportions in the media, the EBRD had already started to do something about it.” He also points out that, for a change, there was a positive message to be conveyed in the current food situation: this was about finding the answers, rather than raising more questions.

The second conference, which took place in Kiev on 20 May, the day after the EBRD’s Annual Meeting, was about moving into a more practical phase: “how to release the potential that we know is there,” says Mr Mettetal. “Showing exactly how and where the EBRD can help.” Attendance at this second event was larger, with over 200 delegates.

The first steps that need to be taken are clear, according to Mr Mettetal. “Good policy is needed. Good policy on land ownership, trade, taxation.” The Soviet legacy on land ownership is particularly difficult, he admits. “Land ownership rights need a land registry and an entire system. It’s too big a problem for us to handle on our own. Our cooperation with the World Bank is of vital importance here, as they have experience in this area.” The conclusion from both conferences is the need for policy dialogue. “Until the land is privately owned, the Bank cannot help, so the pressure is on policymakers to focus attention and efforts on these issues.”

What else can the EBRD do? “The strength of the Bank is to work together to help solve some of these problems. For example, we can offer very specific help with infrastructure. It was great to have Thomas Maier, EBRD’s Business Group Director for Infrastructure, addressing an agribusiness conference. In order to export any increase in yields, better roads, railways and ports are needed.”

The conference also proved valuable as knowledge-sharing event. “We saw some very impressive local companies, who showed that the technology is already there. One has managed to double its yield, while reducing its environmental impact by using liquid fertiliser; thus cutting its fertiliser usage by 60 per cent. Another is using a different method of ploughing, which hugely reduces the amount of water needed; this is key,” enthuses Mr Mettetal.

For the EBRD, one important matter is how to maximise the transition impact while using funds most effectively. “By working with the food processing and distribution industries, we can reach the host of farms that supply factories and supermarkets; working with agricultural machinery companies or input suppliers, we can also reach all those who are buying implements; similarly with agricultural storage and transportation enterprises, supplying grain silos and elevators; these will allow farmers to increase yields by providing them with storage products. We will gain a much greater and deeper reach into the whole chain of food production, processing and distribution.”

It’s clear that the teams have their work cut out for them: Mr Mettetal mentions Kazakhstan, Russia, Ukraine, Romania and Bulgaria as having huge potential for exporting grain to the world markets. Of course the issue is no less important for the Early Transition Countries and the Western Balkans. “Agribusiness traditionally plays a very important role in these countries and we can help them reduce their dependence on expensive imports by increasing their own production.”

By Nikki Braterman, Internal Communications Manager
Contact: Agribusiness Team

30 May 2008