by Christa Ketting
The Public-Private-Producer Partnership (4P) approach, is one of IFAD’s strategies to connect smallholders to the private sector as a way to secure access to inputs and outputs markets. But how do we broker the 4P model? An IFAD grant-funded initiative implemented by SNV Netherlands Development Organisation looks into this question. Through the grant, SNV brokered twenty three 4P cases in Senegal, El Salvador, Mozambique Uganda and Vietnam. With the grant hitting midterm, some initial lessons from the grant were presented at IFAD headquarters in Rome on 7 December 2016.
Conventional Public-Private-Partnerships often assume that farmers are common private sector operators. However, it is obvious that smallholders have specific needs and face different constraints than well-established agribusinesses. Many agribusinesses, and especially international companies are therefore still hesitant to source directly from smallholders. A 4P therefore explicitly includes smallholders as equal partners in a business relationship and blends public and private resources in order to make the 4P mutually beneficial (win-win) for both producers and agribusinesses.
In Vietnam for example, a 4P is brokered between Betrimix, a private company active in the processing of coconuts, and local producers. Betrimix used to process traditional products like desiccated coconut with little value added. Ms. Chau Kim Yen, general director of Betrimix explained now as part of a 4P, it provides smallholders with inputs, training services and quality verification enabling them to significantly improve quality and practices. The IFAD-funded Project for Adaptation to Climate Change in the Mekong Delta in Ben Tre and Tra Vinh Provinces, representing the P that stands for public in the acronym, provides training to these groups on business plan development and farming techniques.
Ms. Chau Kim Yen stressed the importance of a broker when it comes to enforcement and arbitration of the 4P. For Betrimix’s business model to succeed it is key that smallholders uphold organic standards as indicated in contractual agreements. In a 4P, this is where the broker steps in. In the case of Betrimix for example, the independent broker hired by SNV through the grant stepped in to resolve conflicts when necessary.
Mr. Abbey Anyanzo is hired by SNV to assume the role as an independent broker in Uganda. He explained that a key feature of his role is to balance the interests of different participants and take a neutral stand in potential discussions between the partners. In order to do so it is important to understand what the main motivations and interest of the different partners are by talking to them separately. Afterwards a broker should bring different partners together and slowly start with the development of the partnership. Unfortunately it is often the producer who is the most vulnerable partner in the partnerships. Producers could for example be illiterate and have urgent financial needs luring them to side-selling which jeopardizes the entire 4P. In some cases Mr. Abbey Anyanzo encountered that producers are not accustomed with working for an agribusiness and, therefore, require more attention.
4P brokers hired by SNV through the IFAD-grant, are independent brokers and not connected to governments. Independency is a key requirement for the success of the 4P model. But how to roll out the 4P strategy in IFAD projects? The grant aims at showcasing different models through which a 4P brokerage can be developed in order to replicate it in IFAD projects globally.
Brokerage services are not limited to partnership brokering. Financial brokerage is another key-enabler for a 4P. For example, 4P cases established through IFAD’s Agricultural Value Chains Support Project in Senegal are constrained by limited access to finance. In order to resolve this problem, a financial brokerage model is developed by the IFAD grant with the assistance of a specialized partner, i.e. The Rock Group. Mr. Ruud Nijs, a partner at the Rock Group, just returned from Senegal where he mapped the financial situation and needs of the Alif Group in order to attract potential investors. By developing individual financial models for cases, they can liaise with both local financial institutions as well as international investment funds.
It often occurs that producer organizations and private companies are active in a certain area, but not able to form a synergetic partnership. 4P brokerage can overcome this problem, but it is key that learning on brokerage skills are disseminated more widely in order to do so. This is exactly what the IFAD-grant will focus on during the final year of implementation. In order to support IFAD projects with value chain development, 4P brokerage guidelines and knowledge products will be produced building on the experience of grant-supported cases in the five pilot countries.
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| Stanley uses his mobile phone to communicate current market prices from a variety of traders and markets to producers in his group. The First Mile Project in Tanzania began in 2005 concentrating on developing the connection between suppliers in rural areas and markets. ©IFAD/Mwanzo Millinga |
The Public-Private-Producer Partnership (4P) approach, is one of IFAD’s strategies to connect smallholders to the private sector as a way to secure access to inputs and outputs markets. But how do we broker the 4P model? An IFAD grant-funded initiative implemented by SNV Netherlands Development Organisation looks into this question. Through the grant, SNV brokered twenty three 4P cases in Senegal, El Salvador, Mozambique Uganda and Vietnam. With the grant hitting midterm, some initial lessons from the grant were presented at IFAD headquarters in Rome on 7 December 2016.
Conventional Public-Private-Partnerships often assume that farmers are common private sector operators. However, it is obvious that smallholders have specific needs and face different constraints than well-established agribusinesses. Many agribusinesses, and especially international companies are therefore still hesitant to source directly from smallholders. A 4P therefore explicitly includes smallholders as equal partners in a business relationship and blends public and private resources in order to make the 4P mutually beneficial (win-win) for both producers and agribusinesses.
In Vietnam for example, a 4P is brokered between Betrimix, a private company active in the processing of coconuts, and local producers. Betrimix used to process traditional products like desiccated coconut with little value added. Ms. Chau Kim Yen, general director of Betrimix explained now as part of a 4P, it provides smallholders with inputs, training services and quality verification enabling them to significantly improve quality and practices. The IFAD-funded Project for Adaptation to Climate Change in the Mekong Delta in Ben Tre and Tra Vinh Provinces, representing the P that stands for public in the acronym, provides training to these groups on business plan development and farming techniques.
Ms. Chau Kim Yen stressed the importance of a broker when it comes to enforcement and arbitration of the 4P. For Betrimix’s business model to succeed it is key that smallholders uphold organic standards as indicated in contractual agreements. In a 4P, this is where the broker steps in. In the case of Betrimix for example, the independent broker hired by SNV through the grant stepped in to resolve conflicts when necessary.
Mr. Abbey Anyanzo is hired by SNV to assume the role as an independent broker in Uganda. He explained that a key feature of his role is to balance the interests of different participants and take a neutral stand in potential discussions between the partners. In order to do so it is important to understand what the main motivations and interest of the different partners are by talking to them separately. Afterwards a broker should bring different partners together and slowly start with the development of the partnership. Unfortunately it is often the producer who is the most vulnerable partner in the partnerships. Producers could for example be illiterate and have urgent financial needs luring them to side-selling which jeopardizes the entire 4P. In some cases Mr. Abbey Anyanzo encountered that producers are not accustomed with working for an agribusiness and, therefore, require more attention.
4P brokers hired by SNV through the IFAD-grant, are independent brokers and not connected to governments. Independency is a key requirement for the success of the 4P model. But how to roll out the 4P strategy in IFAD projects? The grant aims at showcasing different models through which a 4P brokerage can be developed in order to replicate it in IFAD projects globally.
Brokerage services are not limited to partnership brokering. Financial brokerage is another key-enabler for a 4P. For example, 4P cases established through IFAD’s Agricultural Value Chains Support Project in Senegal are constrained by limited access to finance. In order to resolve this problem, a financial brokerage model is developed by the IFAD grant with the assistance of a specialized partner, i.e. The Rock Group. Mr. Ruud Nijs, a partner at the Rock Group, just returned from Senegal where he mapped the financial situation and needs of the Alif Group in order to attract potential investors. By developing individual financial models for cases, they can liaise with both local financial institutions as well as international investment funds.
It often occurs that producer organizations and private companies are active in a certain area, but not able to form a synergetic partnership. 4P brokerage can overcome this problem, but it is key that learning on brokerage skills are disseminated more widely in order to do so. This is exactly what the IFAD-grant will focus on during the final year of implementation. In order to support IFAD projects with value chain development, 4P brokerage guidelines and knowledge products will be produced building on the experience of grant-supported cases in the five pilot countries.