Market-Oriented Agricultural Infrastructure: Appraisal of public-private partnerships

A major, if not the major, component of competitiveness in agriculture value chains is access to affordable physical infrastructure. This includes infrastructure that supports on-farm production (irrigation, energy, transportation, pre- and post-harvest storage), ensures efficient trading and exchange (telecommunications, covered markets), adds value to the domestic economy (agroprocessing and packaging facilities), and enables produce to move rapidly and efficiently from farmgate to processing facilities, and on to wholesalers (transportation and bulk storage). In a recent study on agricultural investment in Africa by the United Kingdom Department for International Development (DFID), poor access to infrastructure services was cited as "the greatest impediment to growth of agribusinesses". Low population densities, remote locations and weather-dependent production systems make participation by the private sector in agricultural infrastructure highly risky. An analysis of the World Bank's (WB) comprehensive database on Private Participation in Infrastructure (PPI) in developing countries attributes just one percent of total infrastructure investment value directly to the development of agriculture between 2003 and 2005. The persistent challenge seems to be to know when and where public-private partnerships (PPPs) are a value-adding proposition for infrastructure in market-oriented agricultural development, and how best to formulate the financial and institutional arrangements for such collaboration. The lesson to date is that collaborative approaches will not work in all cases, and that "a PPP can never turn a poor investment in rural infrastructure, and an emerging bull market for global trade in cereals, horticulture, meat and milk products - as well as experimentation with new forms of infrastructure financing and contracting - there are real opportunities to broaden the role of the private sector in infrastructure for agriculture development through PPP models.