The future of agri-food systems. The impacts of shocks and what lies ahead

Paul Kalu, from CASA, shares his reflection on the shocks that agri-food systems have been enduring. He explores how the recent Investor Meeting, held in early December 2022 in Kathmandu, is helping form a consensus about how to create a thriving agri-food sector in Nepal. And to do this by linking small-scale farmers to new markets at home and abroad.

The first section of this blog is drawn from the closing speech Paul made at the Nepal Investment Meeting:

No sooner had the world emerged from the throes of the covid crisis than we were thrust into the cost-of-living crisis. This severely affected the agriculture sector. Farmers who were forced to throw away milk and perishable vegetables during lockdown are now struggling to find or afford key inputs like fertiliser and feed to boost production. They are also dealing with the more long-term impact of climate change on well-established farming patterns.

Paul Kalu

What these crises have demonstrated is how inter-linked the global economy has become. However, most developing countries remain reliant on a few key countries for strategic commodities and supplies, from crude oil to microchips, cooking oil to wheat. This reveals an inherent weakness in the current model of globalisation.

I am not proposing a redesign of the globalisation model of capitalism, but rather to recognise the opportunities these crises have presented for countries, such as Nepal.

Whilst the pandemic was devastating to many individuals, families, and economies, it also created opportunities for entrepreneurs willing and able to adapt to survive.

Across the world home-delivery services took off. This included produce never really considered for home delivery such as fresh vegetables. CASA Nepal was able to support several companies on this journey.  CASA Malawi was able to make similar interventions to safeguard access to markets for small-scale fish producers.

Businesses have had to become more creative in their business models, both with regards to supply chains and accessing markets. They have learnt to be more efficient in their use of resources – human, financial, and technological. They are increasingly more collaborative in their engagement with competitors and third parties such as e-commerce and payment fulfilment platforms. Many are becoming more environmentally and ethically conscious in all aspects of their operations – from sourcing raw materials and energy to their choice of packaging.  This forms part of the brand image and the way their products are perceived by a younger and increasingly more informed consumers

This should bode well for investors willing to take advantage of these businesses’ capital requirements. However, investors often do not find the investable businesses.

This is one of the ways that CASA steps in. CASA tries to bridge the gap between agribusinesses and investors. It does this by identifying promising businesses that can be given support that raises their game in business planning, financial reporting, production and business management and governance. CASA then showcases investment-ready enterprises to would-be investors.

CASA sows the seeds of investment, ploughs the soil of specific value chains, tends to businesses in need of a little cultivation and ensures the yield of financial institutions willing to invest and harvest these opportunities.

In addressing market system failures, however, CASA has to explore the enabling environment. This involves all manner of rules and regulations which govern how market actors operate. For example, in the case of home delivery services and electronic payments it’s the rules needed to protect and reassure consumers that they will get what they paid for, that it’s safe to eat and that they are not ripped off financially Without the right regulations and effective implementation, it is hard to build confidence in business innovations.

Since 2019, CASA has been at the forefront of supporting businesses that source produce from smallholder farmers. In this way the businesses’ growth and success has a positive knock-on effect on those smallholders in their supply chain, often in remote parts of Nepal. This is not to begrudge industrial agriculture but to make sure smallholder agriculture is not suppressed or eradicated.

CASA does not equate local with anti-global. On the contrary, a handful of CASA-supported businesses here in Nepal have their sights firmly set on export markets even for the most traditional of Nepali products, such as indigenous vegetables.

In this complex and interconnected world there is a need for the facilitation of stakeholders involved in agribusiness. This includes providers of business development services, financial services and policy maker working in concert with each other and probably many other stakeholders too. CASA, with the support of FCDO, are here to support this effort.”

So, what did the Investor Meeting achieve?

The Nepal Investment Meeting, promoted by CASA and FNCCI.  The attendees explored the opportunities and associated challenges, I set out at the start of this blog. The stakeholders worked hard to identify a set of clear priorities for Nepal that will be further explored.

The most critical action points to drive more investment into agribusinesses in Nepal include

  • Helping stakeholders fully understand government policies
  • Develop local markets for business development services to support a transition to the services being demand-driven and which until now have been provided by programmes such as CASA.
  • Introducing suitable incentives, rather than penalties, to supposedly encourage investment.

The emerging priorities will be part of a plan for how best to cut back the weeds that stifle growth, let the sunshine and rain reach the areas of the agricultural economy that need it most, and fertilise the businesses ideas that show the most promise.  This can support Nepalis, from the smallest landholdings to the largest food processing businesses and the wider economy, to benefit from the emerging opportunities.

More information on the Nepal Agriculture Investment Meeting:

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