1. SESSION 3 (Part two) AGRO-BASED CLUSTERS
AGRIBUSINESS PPPs AND TERRITORIALLY-BOUND INVESTMENT INSTRUMENTS FOR AGRO-INDUSTRIAL DEVELOPMENT
SESSION 3 (Part two)
AGRO-BASED CLUSTERS

2. LEARNING OBJECTIVES Better understand what is an agro-based cluster.
You will:
Better understand what is an agro-based cluster.
Know about policies and governance mechanisms that can foster success.
Understand challenges and success factors.
Know about other territorial tools.

3. WARMING UP EXERCISE From your experience…
Are you familiar with any type of cluster?
Does your country have or promote this tool specifically in agriculture?
Do you think your country has potential subsectors that would benefit from cluster development initiatives?

4. CONTENT Rationale and characteristics of an agro-based cluster.
Implementing successful agro-cluster initiatives: A roadmap.
Challenges and other important things to consider.
Other territorial tools.

5. 1. RATIONALE AND CHARACTERISTICS OF AN AGRO-BASED CLUSTER

6. From Session 2….
AN AGRO-BASED CLUSTER is the geographic concentration of farmers, agro-industries, agribusiness and institutions engaged in the same agricultural subsector or value chain that work
together to address common challenges and seize common opportunities.

7. CLUSTER INITIATIVES Agroclusters emerge on their own.
BUT their growth and development can be actively promoted by governments, private companies and the global community through:
CLUSTER INITIATIVES
identify the binding constraints to competitiveness and implement effective solutions

8. WHY TO PROMOTE CLUSTER INITIATIVES?
Comprehensive approach to sustainable and resilient agribusiness value chains;
Boost industrialization;
Facilitate the spread of innovations;
Attract foreign investors;
Provide a pathway of coordination among a variety of agricultural actors;
Foster inclusive growth and reduction of poverty;
Help building social capital and productive public-private dialogue.

9. CHARACTERISTICS OF AGRO-BASED CLUSTERS
They concentrate geographically multiple agents and create inclusive value networks (horizontal, vertical, support ...)
Size: Variable ( ha), usually associated with a province or region
They are usually called after the name of the production area and product around which they develop: the Lemon Tecumán cluster (Colima, Mexico), the Mossoró melon cluster (Rio Grande do Norte, Brazil)...

10. THE ACTORS Agro-processing firms; Retailers;
Farmers and their associations;
Input suppliers;
Governments;
NGOs;
Research institutes and universities;
Other facilitating organizations.

11. THE PROMOTERS
Cluster initiatives can be lead by various kinds of players:
Private sector value chain actors and input supplier (especially for high-value products). This model seems more dynamic and market-focused than others;
Governments, prevalent in commodities that are key to the economy and in domestic food staples;
Local governments and local economic development agencies;
Economic development agencies and financial institutions (usually crucial for small-scale producers since they increase productivity and enable entry into a higher value-added global market).

12. Example - Thailand’s Western GAP cluster
In 2000s difficulties in complying with GlobalGAP;
Concern for the Thai horticultural cluster, spreading over ha of vegetable production;
The cluster introduced new GAP standards;
It organized training for its members and fostered their active participation in public-private dialogue;
Thai Government has encouraged agrocluster development.

13. Ex. The flower cluster of Pichincha, Ecuador
Formation in 1980, following the example of the Colombian flower cluster.
2/3 country production
2000 firms
EXP: 450 million
Direct employment: 70000 ha
EXP: TM
1982: 1st initiative of modern flower cultivation
1984: The Asociación de Productores y Exportadores de Flores de Ecuador, Expoflores, was set up.
: Formation of critical mass (20 firms) following the removal of logistical bottlenecks.
: Massive growth (150 firms)  price war + pressure on production factors (land and labour force).
1998: Reestructuring  exit of firms + collaboration among surviving firms (collective action) and with the public sector
 Gálvez-Nogales, 2010.

14. Flower cluster of Pichincha, Ecuador
Please comment the following statements:
When competition outweighs the spirit of cooperation, the cluster might end up suffering: e.g. price war affecting companies + farmers + cluster workers. 
Cooperation through interprofessional, territorial or value chain associations is critical to overcoming the problems that threaten the survival of the cluster.
Joining forces against external threats is also vital: e.g. collective action to address changes in air logistics that threaten the access to the main market (the US)

15. 2. IMPLEMENTING SUCCESSFUL AGRO-CLUSTER INITIATIVES: A ROADMAP

16. STEPS FOR CLUSTER DEVELOPMENT
Initial phase:
Observe and map the existing cluster network;
Convene the cluster and establish the right psychological contract;
Conduct relevant studies.
Implementation phase:
Identify strategic initiatives;
Finance the agrocluster initiatives and mobilize investment;
Monitor and evaluate results;
Ensure sustainability.

17. 3. CHALLENGES AND OTHER IMPORTANT THINGS TO CONSIDER

18. CHALLENGES AND SOLUTIONS
Weak structure and linkages of firms and clusters in developing countries.
Solution: Continuous training and strengthening at all levels of the cluster.
Advantage of foreign competitors.
Solution: Supportive public policies, investments and incentives.
Weak and corrrupted public institutions.
Institutions (particularly governmental institutions) should not dominate clusters; a decentralized approach is to be preferred.

19. Last things to consider…
It is difficult to “create” clusters.
Effective public-private dialogue happens when an industry speaks as one voice.
Agrocluster development initiatives in basic staples seem more challenging.

20. 4. OTHER TERRITORIAL TOOLS

21. AGRIBUSINESS INCUBATORS
It is a physical or virtual co-working space where business support and other services are provided to new entrepreneurs with the aim to engender agro-industrial development and stimulate innovation.

22. CHARACTERISTICS OF AGBIZ INCUBATORS
An agbiz incubator encourages and supports the development of new agribusiness and agro-industrial entrepreneurs with growth potential and competitiveness.
It promotes business development and innovation.
It offers shared space & services to tenant companies: mentoring and support to develop business ideas, market access, technology, financial services + support for business networking.
It often has links to universities & research centres
Surface: between 500 and sqm (2 000 sqm enough for 20 entrepreneurs).
A type of third-generation incubator called business accelerator has rapidly proliferated in recent years.