This allows more participation of firms in agrosupply

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Unformatted text preview: ucts. Rapid urbanization plays a vital role in increasing demand for processed food, and fruits and vegetables by reducing time available for cooking or maintaining a healthy diet. The Asia‐Pacific region is host to all these factors given the presence of developed economies such as Japan and Australia; fast‐growing emerging economies such as China and India with big urban populations, and highly 17 populated least developed countries such as Bangladesh, Cambodia and Nepal. All these factors provide an opportunity to accelerate intra‐regional trade. E. Why Facilitating Agricultural Trade is Crucial? Trade Facilitation is defined as the set of measures that reduce barriers to the movement of goods between buyers and sellers throughout the international supply chains (ESCAP 2010). A broader definition includes consideration of the environment in which trade transactions take place, including the transparency of regulatory environments, harmonization of standards, and conformance to international or regional regulations. Facilitating agricultural trade could result in multiple long term and short term gains for an economy. Figure XV ‐ Long Term Impact of Agricultural Trade Facilitation For Poverty Reduction Trade Facilitation Measures Applied in Agricultural Supply Chains/Sectors Improved Reduced Trade Transaction Policies, Cost, Efficient Improved Trade Trading Processes Environment Improved Trade Competiti veness Greater integration Greater of MSMEs Income including for Poor Producers Source: Author’s own illustration The immediate purpose of Trade Facilitation is to reduce inefficiencies during the movement of goods from factory gate to the port. Efficient processes should result in reduced transaction costs for the trader. Improved processes and reduced transaction cost should lead to enhanced trade competitiveness. This allows more participation of firms in agro‐supply chains creating more employment for the poor and ultimately contributing to poverty reduction in the country. 1. Impact on Poverty Reduction Facilitating agricultural trade contributes significantly to poverty reduction in an agricultural supply chain since millions of farmers, petty traders and other small and medium enterprises are partof the chain. The Agricultural Supply Chain can be broadly defined as the activities related to the movement of agricultural products by road, sea and air, starting at production and ending at consumer level. 18 Producers of agricultural goods are at the bottom of the supply chains. They supply the export products or main ingredients for export products. Almost 70% of rural poor depend on agriculture for their livelihood. They numbers in the millions in the region, are mostly poor and vulnerable to economic shocks. A large number of intermediaries such as wholesalers who handle large volumes of products are next in the chain. Most of them could be considered as Small and Medium Enterprises (SMEs). Many are producers also. SMEs are growing in number in this region. Exporters are the key players in the chain as they perform international trading. They employ a large number of people and relay market demands to the wholesalers and finally to the producers. Many exporters have integrated supply chain operations including storage facilities close to factories and own transportation. In some cases, they maintain suppliers’ contract with wholesalers or contract farming with the producers. The potential impact for poverty reduction through promotion of agricultural exports and thus, production and related supply chain activities is significant. 2. Developing Agro‐export Competitiveness Trade facilitation for agricultural products can tremendously develop export competitiveness of Asia‐Pacific countries, which are looking to expand their exports. The gains are realized both at the micro and macro levels for an economy. At the micro level, enterprises gain by saving on transaction costs. Among agricultural p...
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