Last week I saw that IFPRI had published a new policy brief entitled:
“LOCAL MARKETS, LOCAL VARIETIES. Rising Food Prices and Small Farmers’ Access to Seed.” The full text can be viewed by clicking on the lead link above. The following post consists of comments from Peter Bloch; Peter is a CAS-IP consultant who specialises in technology transfer and IP management. He has been working with the West African Seed Alliance (WASA) on branding. WASA, which is led by ICRISAT, is a highly focused initiative designed to stimulate the development of market driven distribution chains for seed and agricultural products. Peter said:
“The summary references “carefully targeted subsidies” and later talks about “investments”. Donors often use the word “investment” when discussing grant aid mechanisms, but we should be aware of the difference between subsidies, grants and investments. Grants to seed companies are not sustainable; and they distort the market. One grant facility requires seed companies to establish a “charitable” objective, and to sell seed for less than any competitor in the area. WASA chooses to provide business training and technical support, and to facilitate connections between seed companies, merchants, farmers and breeders. Using funding from USAID, companies can qualify for bank loans which are supported by guarantees of up to 50% of the loan amount.
A direction to watch is donor supported investment vehicles such as African Agricultural Capital and the (soon to be launched) African Seed Investment Fund that provide finance (as opposed to grants) to seed and agribusiness companies. These entities will invest (as in equity or debt finance) in agribusinesses that are too small, too risky or not profitable enough for private sector investors. This is social investing (where investors seek a social return in addition to a modest economic return) or, as Bill Gates calls it, “creative capitalism”.
Right now there are initiatives which target market driven increases in agricultural output, and there are initiatives that are giving money (or seed) away. Whichever pathway we believe is the “right” one, a decline in funding from international donors requires that available support be applied to achieve maximum sustainable impact. Surely, then, the various donors should try and align their basic thinking on how best to increase agricultural output in Africa.”