Key note at EAAE Seminar September 2016 in Kiev on East West relations in agricultural economics

1. Economic and Scientific Collaboration
between East and West
Krijn J. Poppe, Wageningen Economic Research
September 2016 EAAE Seminar, Kiev

2. Krijn J. Poppe
 Economist
 Research Manager at
Wageningen Economic Research
 Member of the Council for the
Environment and Infrastructure
(foto: Fred Ernst)
 Member Advisory Committee Province of South-Holland on the
quality of the Living Environment
 Board member of SKAL – Dutch organic certification body
 Former Secretary General of the EAAE, now involved in managing
its publications (ERAE, EuroChoices)
 Former Chief Science Officer Ministry of Agriculture

3. Wageningen Economic Research
Plant
Sciences
Group
Animal
Sciences
Group
Agro-
technology
and Food
Sciences
Group
Environ-
mental
Sciences
Group
Social
Sciences
Group
Wageningen University Social Sciences
Department
Wageningen Research Wageningen
Economic
Research (LEI)

4. Wageningen Campus 2015
Aeres University of Applied Sciences
FrieslandCampina
NIOO Netherlands Institute of Ecology
Yili Dairy
StartHub
CSK Food Enrichment

5. 5
Background
 There is a history of collaboration between East and
West
 First ideas for the EAAE and the European Review of
Agricultural Economics were discussed at the IAAE
Congress in 1970 in Minsk
 This seminar is a nice opportunity to take stock and see
how we can make progress
 Focus of this presentation
● The role of knowledge exchange in agricultural
development for the East of Europe
● As complement to investments in land,
infrastructure and other institutions

6. 6
Content of the presentation
 The economic relationship between East and West
● to see if the relation in science can be linked to
that
 Trends in science and innovation
 Collaboration between East and West in science and
innovation
 Take home messages

7. 1. The E-W economic relationship
 Exports / Imports of agricultural products (bln. Euro)
 Of course there also: services, direct foreign investment

8. Exports from East to West: commodities
East is including
-stan countries
2013-2015

9. Exports from West to East: high value

10. Potential future developments in trade ??
 Pigs and poultry industry: could Ukraine and Russia
become the “mid west” of Europe (see next slide)
 Fruit and vegetables: based on the rich biodiversity of
the Caucasus and the lower labour costs?
 Basic material for the bio-economy (grains, wood,
energy) ?

11. Relocating pig and poultry production?
LabourFeed Meat
?
Future
location

12. 2. Trends in Science and Innovation
 AKIS: Agricultural Knowledge and Innovation Systems
 Science, R&D, Innovation
 Trends in the organisation of R&D and Innovation
● Multi-actor / interdisciplinary
● Public-private partnerships
● Big data

13. THE FOOD CHAIN AND AKIS

14. Different objectives,
methods, and public roles

15. Role of EU policy

16. SPECIAL ATTENTION IS NEEDED TO INCENTIVIZE RESEARCH TO BE
RESPONSIVE TO THE NEEDS OF INNOVATION PROCESSES

17. Strong ICT trends: prescriptive farming?
17

18. ROLE OF ICT: A SOURCE OF INNOVATION
 Input suppliers (tractors, pesticides) are moving from
products to services with the Internet of Things. Towards
Big Data.
 Changes / replaces some of the activities of farmers:
remote control / advise
 Advisors (and researchers?) want access to farmers’ data
 Some of the advise will be delivered in the form of apps.
 Research could create open systems for data exchange
 ICT helps to create access to advise and research from
other regions, could foster collaboration
 E-science, open access

19. INTERNATIONAL COOPERATION: INTERACTIVE MODEL ?
Policy Brief of swg ARCH and swg AKIS
Best strategies for intercontinental research and innovation
partnerships - towards greater impact on global challenges
 Opportunities to align research themes in AR and ARD
 Multistakeholder collaboration for complex issues
 Cooperation on cross border issues (like pests)
 Research methods
 Research Infrastructures
 Institutional and governance aspects of research (e.g. PPS)
 Align research and innovation, bottom-up

20. INTERNATIONAL COOPERATION: INTERACTIVE MODEL ?
Suggestions to SCAR; EIARD; the Expert Group supporting the
High Level Africa Initiative, the European Commission (DG
DEVCO, DG AGRI and DG RTD) and the Member States’
governments:
 Europe from the outside is complex: coordinate!
 Bottom-up innovation and private sector involvement
 Make added value of European practices explicit
 Flexibility to experiment with new funding mechanisms (prizes
etc)
 Excellence, Relevance, Impact should be balanced in research
evaluation
 New intercontinental innovation partnerships could become part
of the global policy framework

21. 3. Chances for East-West collaboration in
science and innovation
 Topics:
● ICT and precision farming
● Supply chain integration on food safety and food
quality management
● Future studies and data gathering to improve
models
● Policy research / support for institution building
 Organisational form:
● H2020: research infrastructures, multi-actor
projects (EU could give explicit attention in calls)
● Public private programmes: e.g. EBRD

22. Two scenarios, with significant impacts ?
1. Scenario CAPTIVE PRODUCT CHAINS:
● Farmer becomes part of one integrated supply chain as a
franchiser/contractor with limited freedom
● one platform for breeder, machinery company, feed company,
farmers and milk processor.
● Weak integration with service providers, government ?
2. Scenario OPEN NETWORK COLLABORATION:
• Market for services, apps and data
• Common, open platform(s) are needed
• Higher upfront, common investment ??
• Business model of such a platform more difficult?
• More empowerment of farmers and cooperatives?
F
F

23. Chain organisation changes (©Gereffi et al., 2005)
inputsEndproduct
PRICE
Shops
Complete
Integration
Lead
company
Lead
company
Turnkey
supplier
Relational
supplier
Market Modular Relational Captive Hierarchy
Low Degree of explicit coordination and power asymmetry High
Lead
company
Farmers

24. Chain contracts replace open markets?
 Genetics and conditioning of the production environment
makes planning possible (see vegetables)
 Contracts with exchange of data (and compliance audits)
for labels, sustainability brands, regional food (see egg
production)
 Genetics makes specialties and prescriptive farming
possible (see IPR on hybrids in genetics in chicken)
 ICT moves some decisions from the farm to the input
industry or the food processing.
 ICT makes long distance coordination and information
exchange possible

25. Development of farm systems
Net value
/ ha
Time
Agricul-
tural
Family
Firms
(sme)Family
farming
Lati-
fundia
socialist
state
farms
Subsis-
tence
farming
Ag. policy
AKIS.gov
Food supply networks
3rd gen. uni
Urban
farming
Residen
-tial
farming
Metropolitanagriculture

26. 3. Changes for East-West collaboration in
science and innovation
 Topics:
● ICT and precision farming
● Supply chain integration on food safety and food
quality management
● Future studies and data gathering to improve
models
● Policy research / support for institution building
 How to organise:
● H2020: research infrastructures, multi-actor
projects (EU could give explicit attention in calls)
● Public private programmes: e.g. EBRD

27. Agribusiness in UkraineToday
27
32%
of employment
30%
of export
16%
of GDP
11%
of budget
revenues
Agribusiness in Ukraine:
#1 Producer of sunflower
seeds and oil, and
exporter of sunflower oil
#3 Exporter of grains and
exporter of rapeseeds
#5 Producer of honey
#8 Exporter of poultry and
producer of soybeans
Ukraine’s global role:
#23 agri-food exporter
with high potential

28. EBRD Investments in Ukraine’s
Agribusiness Sector
28
• EBRD is the largest private sector
investor in Ukraine, with over €1.7bn
invested in the agribusiness sector in the
last 10 years
• €150-200m invested annually or 15-20%
of the Bank’s total investments
• 2014 was a record year with 13 new
transaction for total of €251m
Crop
farming
5%
Animal
farming
28%
Commodit
y trading
25%
Meat
processing
31%
Edible
Oil
7% Fruit
processing
4%
Annual Business Investments
(Dec 2015)
EBRD agribusiness investments 2012-15
Country € million # projects
Ukraine 772 37

29. The Pilot Programme
Four components
 Promoting innovation for agribusiness on a case-by-case
basis – Ukraine
 Overcoming market access barriers through working
groups – Ukraine
 Assessing backward and forward linkages with SMEs –
Western Balkans
 Supporting FINTECC in greening agribusiness value chains
– Ukraine and other countries

30. 1. Promoting innovation for agribusiness
on a case-by-case basis – Ukraine
 Component leader: Jos Verstegen
 Work on a case-by-case basis to
promote innovation
 Investigate what is needed to
improve competitiveness
 Showcase opportunities:
technological and business model
 ‘Anchor’ the process by involving
local institutions and building a
platform between local businesses
and institutions
30

31. 2. Overcoming market access barriers
through working groups – Ukraine
 Component leader: Siemen van Berkum
 Analyse trade and food markets
 Identify market access barriers
 Conduct a stakeholder survey
 Provide recommendations to public-
private working groups on how to tap
into new markets for Ukrainian goods
 Indicate priorities for Ukrainian reform
31

32. 3. Assessing backward and forward
linkages with SMEs – Western Balkans
 Component leader: Karin
Zimmermann
 Work with SMEs and retail to identify
ways to improve competitiveness,
operational efficiency and
sustainability
 Focus on uptake of innovative
technologies at the retail stage and
positive spill-over effects along the
value chain
 Develop indicators, benchmarks,
action plan to link value chain parties
32

33. 4. Supporting FINTECC in greening
agribusiness value chains – Ukraine a.o.
 Component leader: Marijke Brune
 Conduct in-depth analysis of climate
technologies in Ukraine
 Design a voucher scheme with focus
on resource-efficiency and
environmental sustainability
 Build a network of experts and
consultants
 Provide recommendations on how to
implement the voucher scheme (local
embedding, database, etc.)
33

34. Take home messages
 We have to strengthen the East-West interaction in
science, R&D and innovation
 It could be linked to the economic relationship in trade
and investments
 ICT and supply chain management as topics and input
for (data gathering for) future studies and policy
research
 Multi-actor and public private partnerships could be
useful organisational arrangements

35. Thanks for your
attention
krijn.poppe@wur.nl
www.wur.nl
Thanks to:
• Siemen van Berkum (International
trade and policy evaluation)
• Jos Verstegen (EBRD-project)