1. Fostering Transition in the Agribusiness Sector Sam Fankhauser Director for Policy Studies and Sector Strategy Office of the Chief Economist - EBRD Berlin, 4 May 2006

2. Overview 1.The EBRD Agribusiness Portfolio - Commitments, regions, segments 2.EBRD’s Approach: Transition Impact - Methodology and selected investments 3.The Way Ahead - Achievements and remaining challenges ● Overview о Portfolio о EBRD approach о The way ahead о Conclusions

3. 1. EBRD’s Agribusiness Portfolio EBRD annual commitments in Agribusiness 1994 - 2005 (million EUR) о Overview ● Portfolio о EBRD approach о The way ahead о Conclusions Source: EBRD 2005

4. 2. Transition Impact in Agribusiness projects Structure and Extent of Markets –Competitive pressure –Market expansion Markets Institutions and Policies –Private sector participation –Institutions, laws and policies Market-based Conduct, Skills and Innovation –Transfer and dispersion of skills –Demonstration effects –Corporate governance and business conduct о Overview о Portfolio ● EBRD approach о The way ahead о Conclusions

5. Selected investments: Structure and extent of market о Overview о Portfolio ● EBRD approach о The way ahead о Conclusions Bunge (Ukraine) EUR 43.8 million working capital loan to finance seasonal purchases of sunflower seed Bunge is the world’s largest oilseed processor, with sales of US$ 25 billion. DOEP edible oil plant producing branded bottled refined sunflower oil with a leading market position in Ukraine and Russia. TRANSITION IMPACT: Increase in competition in the edible oil crushing sector, market expansion through upward linkages to farmers by providing physical inputs and training

6. Selected investments: Market institutions and policies Frikom (Serbia Montenegro) EUR 10.1m long-term debt facility One of the good examples of regional expansion of key local players Supports local farmers - increased demand of quality inputs including vegetables and milk о Overview о Portfolio ● EBRD approach о The way ahead о Conclusions TRANSITION IMPACT: supporting the recent privatisation of the largest frozen food manufacturer in Serbia Montenegro

7. Selected investments: Market-based conduct о Overview о Portfolio ● EBRD approach о The way ahead о Conclusions Marbo (Regional) EUR 10m long-term debt plus EUR 3m follow-on One of Serbian success stories in the agribusiness sector Constant capacity increase which leads to increased demand of quality potatoes TRANSITION IMPACT: improvements in corporate governance

8. None Minimal Moderate Significant Very significant о Overview о Portfolio о EBRD approach ● The way ahead о Conclusions EBRD’s impact on Agribusiness 3- How have we done so far? Source: TIR

9. Determinants of performance Country’s reform progress Resource allocation (EBRD staff hours) Synergies with IFIs /donors (e.g., SEE, EU, FAO) Additionality constraints (especially CEB) Article 1 constraints (BL, TU, UZ) о Overview о Portfolio о EBRD approach ● The way ahead о Conclusions

10. What’s left to do in the sector? = negligible = small = medium = large о Overview о Portfolio о EBRD approach ● The way ahead о Conclusions Average size of the remaining challenges Source: ATC

11. Concluding remarks: remaining challenges о Overview о Portfolio о EBRD approach о The way ahead ● Conclusions CEB Development of active land markets Promote farm restructuring and rural development Development of market-based food distribution/packaging ind. Restructuring of some of the remaining state-owned enterprises Promotion of new agricultural finance schemes SEE Land privatisation and farm restructuring Privatisation and restructuring of agro-processing companies and development of related services (retail, distribution, packaging) Appropriate financial schemes for agriculture, including improved collateral services CIS Land privatisation and farm restructuring; Development of agibusiness and related services (such as retail and packaging) Provision of credit to the agricultural sector Source: ATC

12. Fostering Transition in the Agribusiness Sector Sam Fankhauser Director for Policy Studies and Sector Strategy Office of the Chief Economist - EBRD Berlin, 4 May 2006