Helping agribusiness to grow again

By Nibal Zgheib

Supporting agribusiness to grow again

The EBRD at 25: how linking a long tradition with today’s challenges provides for a successful future

Agriculture suffered badly under Soviet rule – as much for economic as for ideological reasons. Collectivisation destroyed the livelihood of millions and left deep scars on vulnerable economies and societies.

The end of communism brought an end to this doctrine and private agriculture was again permitted. Yet the problems were not over. Decades of neglect and under-investment had left a trail of economic decay. With the shift to market economies, other sectors such as industry received more attention than agriculture.

However, the region has a long tradition of successful agricultural production and some of the most fertile soil in the world. Ukraine used to be called the “bread basket of Europe”. The country is only now starting to regain that title – a step that is vital for its economic future.

The EBRD has been at the forefront of reawakening the agricultural sector. The challenges were manifold: the return of communal land into private hands, the introduction of modern mortgage laws, attracting investment and regaining competitiveness. As a return to the pre-communist structure was neither desirable nor feasible, a system had to be developed that would allow agribusiness in the EBRD region to draw on its strengths and once again flourish.

From supporting the expansion of the wholesale food market in Budapest in 1994 to promoting sustainable dairy farming in Egypt in 2015, the EBRD has long worked with private companies to revive the fortunes of the agricultural sector. With the aim of boosting productivity and creating the conditions that will bring investment back into the farming and food industries, the EBRD strives to help the private sector to produce better quality food more efficiently, while at the same time respecting the environment.

The EBRD and FAO have teamed up to help food producers in Serbia achieve Geographical Indication status, starting with sour cherries.

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One priority for the Bank has been to ensure that its activities span the whole agribusiness value chain – creating a continuous link from primary farming and food processing to distribution, packaging and retail. The Bank continues to foster entrepreneurial initiative and to help suppliers and food producers and processors connect with large food chains. In recent years, this support has expanded to include advice for as well as the transfer of skills to – small and medium-sized enterprises as well as the promotion of innovation and advanced technology and research.

After a major international food crisis in 2007 and 2008, the EBRD responded with an increased focus on investment in the sector. In 2011, it launched its Private Sector for Food Security Initiative to scale up investments and strengthen partnerships with governments and other IFIs and the Food and Agriculture Organization of the United Nations to facilitate the private sector’s contribution to global food security. Enhancing food security is one of the Sustainable Development Goals that were adopted by world leaders in 2015, and also one of the main global and regional challenges the EBRD is addressing with its current strategic priorities.

To date, the Bank has invested €10 billion in agribusiness. By addressing the specific needs of companies with tailored financing, the EBRD aims to maximise the region’s agricultural potential. Boosting competitiveness can help agribusiness companies succeed beyond their home markets and tap into high-end export markets such as the European Union.

Proactive engagement with the local authorities in policy dialogue is an important contribution to the reform process in the light of ever-increasing competition. To attract domestic and foreign investment a stable and predictable policy framework is indispensable.

The EBRD will maintain its support for effective public-private policy dialogue and work together with partners to promote investments in agribusiness that deliver economic growth, social inclusion and environmental protection.