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4 April 2024
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The Economic Research Institute for ASEAN and East Asia (ERIA), in collaboration with the OECD and Human Resource Development Project of the ASEAN Secretariat, held a joint regional conference on Value Chains in Agriculture and Food on 26-27 June 2018 at the ERIA office in Jakarta.
This conference aims to help participants learn from each other and take steps to develop stronger policy advice for ASEAN governments. The development of more robust policies would enable agricultural producers to benefit more from participation in agro-food value chains.
This conference seeks to create a forum of dialogue where different countries come together and make policies. Expertise from a range of domestic and international experts with the same purpose are present to develop evidence-based policies and help develop processes for everyone, from our farmers to our consumers. With this collaborative work through the discussion of ideas and sharing of experiences and contexts, actionable policy recommendations for the agro-food value chains of ASEAN are then developed.
Dr Kentaro Kawasaki, from the OECD, discussed some of the methodologies and problems with analysing global value chains (GVCs). By focusing on GVCs, Kawasaki said the emphasis should be on value-added rather than gross trade. He explained that gross trade overestimates the total value contribution of each sector, so value-added should be measured to reflect the true contribution of each sector. In order to measure this complex interaction, the Inter-Country Input-Output table can be used.
Also from the OECD, Dr Jared Greenville’s presentation asked where ASEAN fits in the agro-food GVC landscape and why are GVCs important? He explored current challenges for ASEAN’s participation in agro-food GVCs, and opportunities to enhance benefits for ASEAN from agro-food GVC participation. According to Dr. Greenville, the biggest barriers between ASEAN members and the rest of the world are both tariff and non-tariff measures. If such measures are removed from agro-food sectors, there will then be growth in domestic value-added, which also translates to growth in the domestic sector itself. Hence, multilateral reforms should be carried out for the region. Furthermore, ASEAN should not only focus on the agriculture sector, but also the services sector and infrastructure, as well as the cost of establishing markets for traded products.
ERIA Economist Dr Eiichi Kusano expanded on the food value chains (FVCs) concept. Although FVC has been used in various contexts, analysis of value chains is historically affected by methodologies on GVCs and value chain development (VCD). Typical recommendations from GVC studies are the encouragement of global firms, the expansion of infrastructure, and the strengthening of training for upgrading purposes. Whereas from VCD studies, policy recommendations are often the relaxation of regulations on private sectors, the promotion of trade and investment, matching buyers to suppliers and vice-versa, and the improvement of access to credit. In his country reviews, Dr Kusano talked about relationships between production efficiency and resource allocation, and technology and productivity. He said that demand-stimulating technological progress would increase the production of more value-added products.
Malaysia
Dr Kelly Wong, from Universiti Putra Malaysia, talked about the growth in Malaysia’s food industry sector including international trade, the emergence of online markets, Halal certification, as well as a loan programme implemented by the government to transform small retail shops into modern business establishments. Ms Suhana Safari, from the Malaysian Agriculture Research and Development Institute, presented on Malaysia’s food retail market, and suggested that economic, social, and environmental aspects of policy impacts on the country should also be considered. She supported her argument with details of the national agro-food policy from 2012-2020. As a way forward, she recommended exploring the potential of high-value agriculture commodity products, increasing productivity through intensive use of technology, and expanding the agro-based industry.
Myanmar
Dr San San Yi, from the Ministry of Agriculture, Livestock and Irrigation of Myanmar, highlighted the opportunities and challenges in Myanmar’s FVCs. Myanmar has a growing economy with high potential for expanding its export sector. This opportunity is backed by food standard laboratories equipped with necessary facilities to issue appropriate food safety certificates. Myanmar offers a first-mover advantage with supermarkets and innovative markets quickly setting up in the big cities. Improvements to the FVCs include expanding contract farming (but there is still a need for standard operating procedures for the private side and farmer groups) and improving logistics that will facilitate the export of products. Critically, she believes agribusiness needs to develop and improve packaging, branding, labelling, logistics services, and niche market development.
Indonesia
Dr Suadi, from Gadjah Mada University, explained that fishery and aquaculture still play important roles in Indonesia. They provide the main sources of animal protein and primary nutrition for most Indonesians, especially those in the rural areas. As exports, they serve as foreign exchange for the country and as a resource, they are reasons for Indonesia asserting maritime sovereignty. Several issues need to be addressed to accelerate fisheries development, including the lack of infrastructure (like fish ports, cold storage, access to power, and communication), the lack of large fishing vessels and suitable fishing gear, costly logistics (especially transportation), highly perishable fish products, and labour shortages. Presidential Instruction No. 7 of 2016 Accelerating the Development of the National Fisheries Industry was implemented by the government and is expected to resolve the fundamental problems of fishery and aquaculture.
Thailand
In his presentation on the development of FVCs, Dr Nipon Poapongsakorn, from the Thailand Development Research Institute, delved into contract farming in Thailand. He introduced three new channels linking smallholders to high-value markets in Thailand, which are the re-emergence of farmer groups and new community enterprises, certification in sustainability, and public-private-producer (PPP) participation. Policy implications drawn from his study range over various areas, such as the importance of building long-term trust between smallholders with weak bargaining power and large-scale agribusiness, and the introduction of a prudential regulatory law to overcome weak governance limiting the effectiveness of the collective action of farmer organisations etc. His colleague, Mr Phunjasit Chokesomritpol, evidenced the broiler value chain and the impact of bird flu shocks in 2004. He suggested since FVC development is not just about “developing” but also about “sustaining”, then it is equally important to improve capacities for resilience. In addition, the role of the government, in this case, the Department of Livestock Development, is very vital to the industry’s success, especially when facing unexpected shocks.
Brunei Darussalam
Dr Abby Tan, from Universiti Brunei Darussalam, introduced the study for isolation of the bioactive compound and phytochemical analysis on Gaharu, namely Tongkat Ali and Agrawood, which have the potential of medicinal values such as anti-aging, treatment of osteoporosis and increased strength. His study is expected to provide information on the major constituents responsible for their medicinal values and provide preliminary scientific data to warrant further investigation into the study of their toxicity levels. He also explained the nutritional evaluations of seaweeds and microalgae, and a study on honey from stingless bees believed to have high anti-oxidant properties, as well as potentially demonstrate some healing properties against diabetes and cholesterol. He believes these studies will encourage food companies to manufacture value-added products.
Viet Nam
Dr Cuong Tran Huu, from Vietnam National University of Agriculture, explored the overall situation of FVCs in Viet Nam, the challenges, and policy implications. The key agro-food issues faced in Viet Nam are small business sizes and fragmentation in both production and marketing, most agricultural products are either produced generally undifferentiated or exported as raw materials, the length of marketing channels have little collective action or coordination throughout the chain, the lack of a Vietnamese agro-food brand globally, strong competitiveness for exports and price fluctuations, and the lack of long-term strategies or a master plan for the agricultural product sector. The policy implications drawn from the study include the reduction of production and marketing costs, improvement of agro-food quality as well as food hygiene and safety, technology for production and marketing, and improvement of the quality of services and infrastructures.
Practical Values of Policy Implications
Participants discussed and summarised policy implications provided in previous sessions through group work to make affinity diagrams. The group work identified key topics including market/market access, trade and investment, logistics, consumer demand, technological policy, capacity building, sourcing relationship, PPP approaches, linkages, national/regional issues, farmers, and infrastructures. ERIA rearranged these topics into five categories:
Several opinions were shared on how to utilise recommendations for the improvement of FVCs in ASEAN.
The government should be the key actors in the development. The government should not only be providing infrastructure but also a mechanism. As a key actor, it should provide market information, especially to farmers.
The recommendation is to educate the younger generation through campaigns about agriculture. They should be educated about the benefits of being a professional farmer and how it is a form of entrepreneurship. This recommendation is not only addressed to the private sector, but also to the public sector, educators, and academia to have a capable human resource in the future.
It was suggested that ERIA hold a conference and invite policymakers, ministers, and politicians. Moreover, local district offices want to get involved in extension projects and report this to the higher-ups as a form of acknowledgement. That way, policymakers can see how the policy recommendations are actionable and lead to positive reforms.
Inputs are wasted due to poor and inefficient utilisation. As recommended, there are two things that should be looked into — the micro and macro levels. At the micro level (involving farmers), the problem of low productivity should be addressed. This could be due to low-seed quality or technical issues like the organisation the farmer is affiliated with. At the macro level, the problem of logistics, for instance, requires government intervention.
The main goal of the conference is to solve poverty as well as to provide food domestically, for the ASEAN region, and to the rest of the world. Constraints in each process must be identified and analysed so that appropriate solutions and policies can be crafted to improve the entire FVC. This way, not only farmers and other actors earn more, but food can also be provided to all markets at fair prices.
The participants from the Visayas State University (Philippines), Dr Ernesto Fuentes Bulayog and Ms Therese Catingan Ratilla, are acknowledged for their help in recording the proceedings of the conference.
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