AFGHANISTAN SEED AND CROP IMPROVEMENT SITUATION

X. A MARKET ECONOMY-THE BASIC NEED

X.6. ESTABLISHING A MARKET ECONOMY

To establish a "market agricultural economy" which enables farm families to produce for the market, will require considerable time and effort by government to create and maintain conditions which attract production and marketing firms to Afghanistan.

It will also require setting up and maintaining the systems and facilities which train/guide farmers in producing crops suitable for market, and to maintain the marketing network which can reach many rural villages.

This is a major economic development effort in itself, and cannot be detailed within the scope and time of this effort.

X.7.MARKET POTENTIAL AND OPPORTUNITIES

Afghanistan urgently needs to find/create export markets for its commodities, to earn foreign exchange. And, agriculture is the mainstay of the Afghan economy, is the most likely area to re-establish export earnings, and involves the majority of the Afghan population (which needs increased income). But, the question is: what is there a market for, what can be sold, and what is required to produce commodities to satisfy such markets?

Before the era of conflict, Afghanistan exported agricultural commodities such as almonds. As the Afghan supply was affected during the conflict, these markets were taken over by other areas so that it would be exceedingly difficult to re-establish these markets for Afghan products.

The result is that Afghanistan should not try to go back to its position before the conflict. In this-and in other things-it must try to leap ahead and rejoin the world market at its present status.

In addition, the per-capita cultivable land has declined as the population has grown, and the minimum needed income per family from the sale of commodities has grown. There is not now enough available cropland to produce export commodities that have relatively large land requirements or low market value.

Afghanistan has climatic conditions, irrigation, and isolated small farming areas that are ideal for producing high-value, low-volume commodities such as spices (saffron, for example) and hybrid specialty flower and vegetable seed (petunia and tomato, for example).

These would require bringing in foreign companies which process and market these commodities. Afghanistan and its farmers will be the producer; an outside market must be developed, and this will require investment by the "market" agencies in Afghanistan, so they can ensure that the materials produced meet their specifications. Attracting foreign investment in Afghanistan is the only way that Afghanistan will be able to develop high-value, low-volume production for export markets.

Bringing in external investors is of significant benefit to the country: while the foreign investor must profit, the country also profits through increased employment, increased domestic family income, transfer of technology, national development, etc.

Environmental conditions alone are not enough to make Afghanistan an attractive place for foreign investment. As one investor put it, "I only have so much money to invest, and there are many places where I can invest. I will invest only in those places where there is minimum risk and maximum economic opportunity".

In addition to the environmental conditions, Afghanistan must create the social, economic, manpower, delivery, and technical conditions required to attract the investment required to establish an operating export-oriented production industry. This will include:

Good transport: It must be easy to reach the villages where production takes place, and to bring in inputs and bring out the production. Although rural roads are in generally poor condition, there are enough villages which can be reached, so this is available.
Good communication: The investor must have ready communication with the producers, to maintain current information on crop conditions and expected yields, so as to develop and prepare to supply his markets, advise on shipment instructions, etc.
Reliable transport from Afghanistan to overseas destinations: most commodities which enable high agricultural earnings from small land areas are shipped by air. Regular, rapid and safe air freight connections with major overseas hubs through which shipment can be made without delay or constraints are essential.
Plant quarantine and international phytosanitary certificates: Essential to enable free movement and marketing of seed and agricultural products. Creating this is one of the improvements included in the FHC planning.
Rapid, supportive customs clearance: most commodities such as are envisioned here are shipped quickly to meet the needs of very time-sensitive markets. The customs clearance procedures and personnel must be honest and supportive to avoid delay or constraints to immediate clearance and shipment.
Technically-trained local manpower: crop production must be supervised by persons with a high degree of technical knowledge. Local specialists must be available; if expatriate resident specialists are required, the costs become so high that the production is uneconomic. This requires domestic educational programs to train specialists who can be given short-term intensive training abroad to make them ready and able to supervise the specialized production.
Trainable, intelligent, reliable farmers and farm workers: The farmers and farm workers who do the actual technical field work do not have to be literate, but must be intelligent and trainable, and dependable to do the proper work in the proper manner. Afghanistan has such farmers and farm family laborers; they only need training and guidance.
Supportive government agricultural programs, agencies and officials: Government agricultural agencies and their officers must support and assist the operations of production for the foreign market/investor, and must not constrain, interfere or increase costs of their operations.
Social stability: Local societies must be stable and relatively free of unrest, uprisings, or labor stoppages.
Safe and reliable financial systems: The country must have adequate, rapid and safe banking and financial systems through which funds can be transferred in and out at reasonable cost and within short times.
Tax freedom: Taxing production, import of stock seed, export of produced seed, etc., increase costs to the point where investment is not economic. There should be legal guarantees of freedom from tax.
Safety of genetic materials: The parent lines of valuable hybrid seed crops are quite valuable, and are a major proprietary asset of the investing company. There must be minimum risk that the growers, government agencies, etc., will allow such genetic materials to "escape" to other entities.
Electric power: Uninterrupted electric power to operate equipment is highly desirable. However, Afghanistan's climate is such that minimal drying (most such commodities must be dried to moisture contents suitable for sealed packaging, which is 6% moisture or less) is required. If electricity outages are not excessive, small standby generators can be used.
Investment incentives: Because of competition for investment, it is most effective to offer special incentives to attract investors. Some countries have special "Investment Promotion" Laws which provide significant incentives to investors.
Domestic external seed quality control: While supporting services such as seed testing, seed health testing, certification, seed law implementation, etc., are not absolutely essential, they do minimize the "non-production" investment required, and increase the attractiveness of the country for investment.
Security: Freedom from risk or danger to personnel, equipment, facilities, crops, produced commodities and local cooperators is an absolute necessity.

Afghanistan definitely has some of these requirements; information on some others, or how soon they could be implemented, is not now available. Detailed information on these situations, for specific locations in Afghanistan, is not known. This would require a trip to Afghanistan by an appropriate specialist, combined with interviews set up by ICARDA-Kabul, to discuss with appropriate authorities what the current situation is in selected areas, and what can be done.

Some international companies, however, may need facilities such as Afghanistan has, and may be willing to make investigatory investments here as soon as stability can be achieved. To explore this, an appropriate specialist known in the US (almost all international seed companies have facilities and staff in the US) should contact potential companies, describe the situation, (including details of what Afghanistan has to offer) to them, discuss their requirements, and identify possible investigatory investors for further dealings.

Under no conditions should international/foreign companies be offered a "bonus" to make an investment in Afghanistan before Afghan conditions are ripe for such an investment. This has been tried in other countries; in most cases, the investment was made and then failed, resulting in losses for the sponsor, the investor, and the country where the investment was made. And, one failure "scares off" later investors.