Increasing Agricultural Productivity:
Encouraging Foreign Direct Investments in the COMCEC Region
57
Figure 25: Breakdown of cost (left) and quality (right) motivations for food & beverage FDI
Source: MIGA 2007
Despite the diversity in terms of business activities between horticulture and food & beverage
(i.e. agro-processing), there appears to be consensus regarding the most important quality-
related site selection factors as illustrated in Figure 25. For both industries it seems that access
to markets and supplies (31 percent and 43percent, respectively) and the general business
environment (both 18 percent) are perceived by agricultural investors as most critical site
selection factors. The third most important site selection criteria, availability of real estate and
arable land for horticulture (14 percent) and local potential to recruit staff for food & beverage
(13 percent) do relate to differences in business activities. Horticulture investments are
dependent on vast quantities of (arable) land to grow crops whereas food & beverage
investments require labour to process products.
A similar picture is present with regards the cost-related site selection criteria. Wage levels (26
percent for horticulture, 23 percent for food & beverage) and the cost of real estate (20 percent
and 16 percent, respectively) have been identified as the most crucial site selection factors for
agricultural FDI projects. Again, the third most significant site selection factor differs between
horticulture and food & beverage investors: cost of transport and cost of construction,
respectively. As mentioned earlier, the horticulture industry is relies heavily on trustworthy
transportation to secure its just-in-time principles whilst food & beverage investments require
significant investments in commercial real estate.
The conclusion that can be drawn from the horticulture and food & beverage case studies, firstly
relates to the site selection criteria that have been perceived as significant by investors.
Secondly, this allows evaluating the competitiveness of agricultural FDI for various potential