Economic and Scientific Collaboration between East and West

Krijn J. Poppe, Wageningen Economic Research September 2016 EAAE Seminar, Kiev

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

Wageningen Economic Research

Plant Sciences

Group

Animal Sciences

GroupAgro-

technology and Food Sciences

Group

Environ-mental

Sciences Group

Social Sciences

Group

Wageningen University Social Sciences Department

Wageningen Research Wageningen Economic

Research (LEI)

Wageningen Campus 2015

Aeres University of Applied Sciences

FrieslandCampina

NIOO Netherlands Institute of Ecology

Yili DairyStartHub

CSK Food Enrichment

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

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

1. The E-W economic relationship

Exports / Imports of agricultural products (bln. Euro) Of course there also: services, direct foreign investment

Exports from East to West: commodities

East is including -stan countries

2013-2015

Exports from West to East: high value

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) ?

Relocating pig and poultry production?

LabourFeed Meat

?Future location

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

THE FOOD CHAIN AND AKIS

Different objectives, methods, and public roles

Role of EU policy

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

Strong ICT trends: prescriptive farming?

17

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

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

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

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

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

Chain organisation changes (©Gereffi et al., 2005)

inpu

ts

E

nd p

rodu

ct

PRICE

Shops

Complete Integration

Lead company

Leadcompany

Turnkey supplier

Relationalsupplier

Market Modular Relational Captive Hierarchy

Low Degree of explicit coordination and power asymmetry High

Leadcompany

Farmers

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

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

Market integration

Supply chain integration

Urban farming

Residen-tial

farming

Metropolitan agriculture

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

Agribusiness in Ukraine Today

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

• 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 farming5%

Animal farming

28%

Commodity trad-ing

25%

Meat process-

ing31%

Edible Oil 7% Fruit

processing4%

Annual Business Investments (Dec 2015)

EBRD agribusiness investments 2012-15Country € million # projects

Ukraine 772 37

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

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

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

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

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

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

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)