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  1. Transboundary Agribusiness Development and Management in the Greater Mekong Sub-regionDr. Pornsri LaurujisawatMarch 24, 2010 Economic advisory office CP GroupEmail: Pornsril@yahoo.com

  2. CONTENTS • The Important roles of agriculture • The Challenge of Agricultural Business Development and Management • Criteria Analysis and Solutions • The Case Studies to explain the solutions • Summary& Recommendation

  3. PART- ONE

  4. THE IMPORTANCE ROLE OF AGRICULTURE First, The Agriculture sector provides sufficient food to feed everyone.

  5. THE IMPORTANCE ROLE OF AGRICULTURE Second, Employment about 42.2% of the world workers are employed in the agricultural sector.

  6. THE IMPORTANCE ROLE OF AGRICULTURE Third, Agriculture is “national security”. It is the very basis of the political and social stability of a nation, because the task of food distribution in each country is the government’s first priority. (http://ezinearticles.com, 2010)

  7. THE IMPORTANCE ROLE OF AGRICULTURE Forth, Agriculture is core of the economy of most low income developing countries.

  8. THE IMPORTANCE ROLE OF AGRICULTURE Fifth, Agriculture is an Added Value Product, Develop Local Content Material & Growth of Nation

  9. THE IMPORTANCE ROLE OF AGRICULTURE

  10. THE IMPORTANCE ROLE OF AGRICULTURE Fifth, Agriculture is an Added Value Product, Develop Local Content Material & Growth of Nation especially in developing countries which earns the most income dependent on the revenue from agriculture. The agriculture productions which add value is process productions for which most of the resources are almost 100% local content. This means the income will come back to the village in each country.

  11. THE IMPORTANCE ROLE OF AGRICULTURE Sixth, Agriculture give higher multiplier effect In a study of four African countries, Delgado and others (1998) estimated the income multipliers to be around 2.5, meaning that each additional dollar of income from agriculture generates about $2.50 of economic growth in the economy as a whole. (Per Pinstrup-Andersen and Satoru Shimokawa, Japan, May 29-30, 2006)

  12. THE IMPORTANCE ROLE OF AGRICULTURE Agriculture give higher multiplier effect “The multiplier effects tend to be high when agricultural growth is driven by broad-based productivity increases in a rural economy dominated by small farms, as in much of Asia” (Mellor 1976)

  13. THE IMPORTANCE ROLE OF AGRICULTURE Agriculture give higher multiplier effect A number of empirical studies (e.g., Hazell and Röell 1983; Haggblade, Hammer and Hazell 1991; Delgado and others 1998; Fan, Hazell and Thorat 2000; and Fan, Zhang and Zhang 2002) conclude that the multiplier effects of agricultural growth is usually greater than two.

  14. THE IMPORTANCE ROLE OF AGRICULTURE In agriculture, when productivity gains the multiplier effect will be faster. In addition, Gollin, Parente, and Rogerson (2002), using data for 62 developing countries during 1960-1990, find that agricultural growth, nonagricultural growth, and sectoral labor shifts explain 54 %, 17 %, and 29 % of the growth of GDP per worker, respectively.

  15. THE IMPORTANCE ROLE OF AGRICULTURE In Asia rice is more tradable than other kind of food, local price more easily reflected border prices. (Per Pinstrup-Andersen and Satoru Shimokawa, Japan, May 29-30, 2006)

  16. THE IMPORTANCE ROLE OF AGRICULTURE Agriculture development provides a crucial foundation for economic growth in both agricultural and non agricultural sectors. • Cheaper& Better food • Economic Growth • Income distribution

  17. THE IMPORTANCE ROLE OF AGRICULTURE It is empirically shown that poor people tend to benefit more from economic growth originating in agricultural sectors than from that originating in industrial or service sectors. (Ravallion and Datt 1996; Ravallion and Chen 2004; and Timmer 2002, 2005)

  18. THE IMPORTANCE ROLE OF AGRICULTURE In addition, Ravallion and Datt (1996), using data for India over 1951-1990, show that rural growth through agricultural development reduces poverty not only in rural areas but also in urban areas and hence has a significant and positive effect on national poverty reduction. (Per Pinstrup-Andersen and Satoru Shimokawa, Japan, May 29-30, 2006)

  19. THE IMPORTANCE ROLE OF AGRICULTURE Seventh, agriculture is an alternative source of energy such as bio fuel from crop and bio-mass. Chicken products

  20. THE IMPORTANCE ROLE OF AGRICULTURE Finally, Agricultural development is poverty reduction and nation growth: Agricultural development is essential for economic growth, rural development, and poverty alleviation in low-income developing countries. (Per Pinstrup-Andersen and Satoru Shimokawa, Japan, May 29-30, 2006)

  21. THE IMPORTANCE ROLE OF AGRICULTURE “Chickens feed the family; families build the village; villages & cities from the country. Agricultural products are a nation’s wealth; they are like the oil in the ground, and are the energy source to sustain mankind. Industry develops because agriculture develops.” DhaninChearavanont, Chairman, Charoen Pokphand Group (CP)

  22. Do you ever heard aboutCharoen Pokphand Group (CP) group?

  23. CP GROUP

  24. GAME ONE

  25. Game 1: After the presentation of the important role of Agriculture • Divide the participants into five groups: • 1.       Is there any important role for agriculture that was not referred to in my presentation? • Please explain your thoughts on this in detail and refer to a case study which you have experienced. • What  benefits  will be gotten for those who participate in "improving the role of agriculture? • Who will get these benefits?

  26. PART TWO

  27. The Challenge of Agricultural Business Development and Management In order to meet the objectives of the seminar, this will focus on analyzing the four challenges as follows: Production in Agricultural Section is not efficiency Inefficient Production in the Agricultural Section causes poverty The next 5,10 years challenges for the agri-food sector worldwide Questions for sustainable agriculture in the Mekong region Weak of Marketing expansion.

  28. The Challenge of Agricultural Business Development and Management 1. Production in Agricultural Section is not efficiency.

  29. SEE PAGE PERFORMANCE RATIO (GDP COMPARISON)

  30. The Challenge of Agricultural Business Development and Management

  31. The Challenge of Agricultural Business Development and Management The agricultural sector in the Mekong region has the lowest percent of GDP value, compared to other sectors, such as industry and service. On the other hand, the agricultural sector absorbs the highest labor employment. This reflects the low efficiency of the agriculture sector. The input (Labor force) is more than output (GDP Value or low income).

  32. The Challenge of Agricultural Business Development and Management The reason why trend of labor force is decrease Low Income Hard working New Technology substitute to labor forces

  33. The Challenge of Agricultural Business Development and Management The labor force in this region is about 50 % of the total population and that means some of them are in child or elder age.

  34. The Challenge of Agricultural Business Development and Management Example: In Thailand the structure of Thai people has changed to expand and include the elder group. This has increased compared to previous periods. To development and manage business well, concerns should focus on the demographic change factor too.

  35. The Challenge of Agricultural Business Development and Management 2. Inefficiency Production in Agricultural Section causes poverty

  36. The Challenge of Agricultural Business Development and Management In regard to the World Food and Agricultural Statistics (2009), there are a lot of people in this region who are still poor, as compared to people in developed countries.

  37. The Challenge of Agricultural Business Development and Management

  38. The Challenge of Agricultural Business Development and Management 3. What happen in the next 5-10 years challenges for the agri-food sector worldwide?

  39. The Challenge of Agricultural Business Development and Management Regarding to Dunne, A. J. (2001): • Only demand driven businesses will survive, therefore business is required to find out the real demand of consumers and adapt to the constant market changes.

  40. The Challenge of Agricultural Business Development and Management Regarding to Dunne, A. J. (2001): • Integrating the growing environmental and social issues of a changing agribusiness sector with prevailing economic imperatives.

  41. The Challenge of Agricultural Business Development and Management Regarding to Dunne, A. J. (2001): • Creating innovative solutions to address the growing challenges.

  42. The Challenge of Agricultural Business Development and Management 4. How to sustain the agriculture in the Mekong region?

  43. The Challenge of Agricultural Business Development and Management The challenge is to find out “How to develop and manage the agriculture”, which has many questions to study, such as;

  44. The Challenge of Agricultural Business Development and Management • GMS member countries will still have to deal with a wider range of challenges to sustain and increase the productivity of traditional commodities.

  45. The Challenge of Agricultural Business Development and Management • Transforming family farms into competitive agribusinesses through technological and institutional innovations, participating in production and export of high-value products, non-traditional crops, and value-added commodities.

  46. The Challenge of Agricultural Business Development and Management • The landless poor, smallholder farmers and Small and Medium Enterprises (SMEs) should be strongly integrated to participate in the sub-regional value-chains on selected priority crops for food and bio fuel. Therefore it is indispensable to provide intervention in the form of training to policy makers and practitioners.

  47. The Challenge of Agricultural Business Development and Management • Promote agribusiness development and management as a mean to eradicate poverty in rural areas, as well as forging greater interdependence of cross-border trade ties between GMS countries.

  48. The Challenge of Agricultural Business Development and Management The analysis to develop and Manage the agricultural business.

  49. GAME TWO

  50. Group the new group ( by nation) for five persons per group • Game 2: The challenge of improving agricultural efficiency.