India agriculture commercialization and enterprise project (ACE) : end-of-contract report -- contract no. 386-0521-C-00-2166-00

The project significantly increased private investments in the agribusiness sector. According to the Industrial Credit and Investment Corporation of India (ICICI), direct loans to agribusinesses grew from under $15 million to more than $250 million over the life of the project. Current loans by ICICI under ACE stands at $14.4 million. Based upon successes in exporting, it is clear that relations between producers and marketers have improved, particularly in the floriculture, table grape, and mushroom subsectors, where ACE provided the bulk of its TA. In addition, the Agriculture Information Center (AIC) now allows producers, processors, and marketers to obtain "real-time" market and technology information, thereby putting them more closely in touch with international brokers. The rapid growth in subscribers attests to the utility of, and the increase in linkages between, these levels of the production-to-market chain. At the beginning of the project, few floriculture projects were underway and there was little exporting of fresh fruits and vegetables. Thanks to ACE, the estimated export value of the floriculture subsector in 1997 was $20 million. Although measuring the residual effects (essentially, the multiplier impact) of these exports was not part of the contract, the Mission ought to investigate the effect of ACE on these support industries, including job growth. The project had perhaps its least impact on strengthening industry associations representing agribusiness. An exception to this was the establishment of AIC in the Federation of India Chamber of Commerce and Industry (FICCI) and the sensitization of the FICCI Managing Director and staff to agribusiness issues. In addition, the project began assisting agribusiness associations such as the seed, food processing, and floriculture associations -- a priority area for future efforts. At the goal level, while progress was made toward developing a dynamic private agribusiness sector in India, the ACE project barely scratched the surface of potential for growth and employment of this subsector. The "second green revolution" in India will require major investment in production-enhancing technology, training in its use, and policies to create incentives and eliminate bottlenecks to subsector efficiency. Lessons learned are as follows: (1) The original project design gave ICICI full authority to implement the TA and agribusiness association support components, thereby excluding Chemonics from independent activities in these areas. The mid-term evaluators found this to be a design flaw, since ICICI is a lending, not an agribusiness development, institution, and so lacks the expertise required for these components. A March 1995 study of agribusiness ties between U.S. and Indian agribusinesses also criticized this arrangement. As a result, the TA review process was streamlined and more independence was given to the Chemonics team to make detailed programming decisions. This contributed to more opportunities for technology flows from the United States, including equipment sales, joint ventures, and trade and market tours. (2) The original placing of the expatriate Technical Coordinator in the United States increased coordination problems among USAID, ICICI, and Chemonics. This issue was resolved during the final 21 months of the project by stationing an expatriate Technical Coordinator full-time in New Delhi. (3) In a country the size of India, it is practical to focus resources on states -- in the case of the present project, Maharashtra -- that have the most progressive policies to support the expansion of higher technology horticulture; good infrastructure or plans for such; and a climate that supports the production of horticultural products that are in demand in the region and internationally.