The agribusiness incubation approach

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DR. WILLIAM DAR 

DR. WILLIAM DAR

Consider this column the second part on the subject of Agripreneurship, and this time I will discuss an excellent strategy of realizing that through Agribusiness Incubation (ABI).

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ABI is a derivative of Technology Business Incubation (TBI) that is widely applied in various industries where technologies abound. But TBI’s application in the agriculture sector seems like an alien concept, including in the Philippines. Is it because farming is seen more like a carabao-and-plow thing, or where the use of ancient tools will suffice? Or are farmers perceived as not being receptive to technology adoption?

Looking at the case of India, however, ABI’s application in creating agripreneurs can be called a success. Through the joint efforts of ICRISAT, which was then under my leadership, and India’s Department of Science and Technology (DST) starting in 2002, the success rate for participants for the groundbreaking ABI program was 80 percent, which was achieved in about six to seven years. Previous ABI programs in India without ICRISAT’s support was a measly 10 percent. Also, India today can boast of having the biggest number of agribusiness incubators in the world.

ABI doesn’t mean simply forming a business enterprise and helping it adopt a proven technology; it should be more than that. That simple approach is a recipe for disaster!

Based on the success of the ABI program jointly undertaken by ICRISAT and DST, the following components should be put into place: Technology consulting; capacity building and training; access to funding; business facilitation; and infrastructure and facilities.

Technology consulting allows the participating institutions to identify or even develop the technologies farmers and stakeholders need in value adding or increasing farm production; capacity building and training is making sure farmers and stakeholders gain the required knowledge on technologies and how to run successfully a business enterprise; access to funding not only covers credit sourcing but also possible capital infusion by the participants or venture capitalists; business facilitation primarily involves linking the enterprise to markets; and infrastructure and facilities refer to the establishment of research and development (R&D) centers for farm technologies, physical facilities like classrooms to train farmers and stakeholders, and offices for the lead agencies involved in the ABI project. In the case of India, the ABI center was embedded in an R&D center.

Before embarking jointly with DST for India’s TBI program, ICRISAT identified two bottlenecks to its mission: Public sector R&D was not connected to broader market developments and demands; and R&D, technology development, technology transfer and technology use sectors have not built enduring ties with each other.

So ABI should not be merely about commercializing technologies; it should also have a framework to develop technologies that farmers and agripreneurs need, and what type of products the market really needs. This approach is the opposite of the many “livelihood” programs in the past that promoted the home-based manufacturing of products like longganisa, tocino and other processed meats, only for the participants to discover that there was a big supply of such products with better quality and even lower price that were manufactured by big established firms.

With $500,000 funding from the government, DST and ICRISAT in 2002 launched the ABI program that was developed at ICRISAT with three initial staff or a manager, secretary and assistant. The $500,000 was spent mainly to acquire laboratory equipment, and interventions focused initially on biotechnologies. The ABI program soon evolved to offer fee-based feasibility studies and consulting services.

Since 2002, India’s ABI program has successfully incubated 29 enterprises of which nine have “graduated” or exited the program because they have attained sustainable operations from the acquisition and application of the right technologies and business enterprise management skills. The successful enterprises saw their profits increasing by $13 million since 2002. With the dollar-peso exchange rate at about $1:P50, that amounts to P650 million.

Under India’s ABI, farmers were provided funding assistance (in the form of loans or venture capital), mentoring support, office space, business development services, networks and product promotion.

ICRISAT definitely played a big role in India’s ABI success and this was achieved with the agency making a commitment to bridging the gap between research and farmers, and establishing close partnerships with key institutions of India’s government. Also ICRISAT provided a pool of scientists and technologies for the program, and there was a clear orientation toward innovative ideas with sound market prospects.

The lessons that can be learned from India’s ABI program are plenty, but I can identify at least four: partnerships or linkages with national development programs are essential; there is a need to bridge the gap between research/researchers and farmers; there is a need to also incubate incubators; and participating firms should eventually become models for capital gain (and not just revenue generation).

In the Philippines, I see no reason why ABI cannot be successful like India’s because the country has very capable government agencies and state colleges and universities (SCUs).

The Department of Science and Technology (DOST) already has a TBI program in place for various industries, but it has made little headway in the country’s agriculture sector.

So I challenge the Bureau of Agricultural Research (BAR) under the Department of Agriculture, the PCAARRD or the Philippine Council for Agriculture and Aquatic Resources Research and Development under the DOST, and the Commission on Higher Education to fund ABI projects jointly or separately. For sure, BAR, PCAARRD and SCUs have enough technologies and experts that can jumpstart and sustain ABI programs or projects.

Notably, only 0.5 percent of the country’s micro, small and medium enterprises are involved in agribusiness, and this can increase if the number of agripreneurs is increased through an ABI program. And with more agripreneurs involved in value-adding, more farmers can be assured of markets for their products.

Besides creating successful agribusiness firms, India’s ABI program has positively impacted the lives of hundreds of thousands of farmers with better incomes and assured markets for their products.

An ABI program can also attract more young people into farming, especially those who appreciate or are even obsessed with technologies. More on that in my column next week.

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