How to broker Public-Private-Producer Partnerships in agriculture?

17 January 2017. 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.

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.

A key feature of my 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. Producers are not accustomed with working for an agribusiness and, therefore, require more attention.
Mr. Abbey Anyanzo, Team Leader at PALM Business Consult, independent broker in Uganda hired by SNV 

Related:
IFAD and PPPs: Selected project experiences
IFAD 2013, 48 pages

Case studies of IFAD-supported PPPs IFAD’s experience in partnering with the private-sector centres on its role as a facilitator and ‘honest broker’. Through the projects and programmes that it supports, IFAD has forged partnerships between private companies and groups of small-scale producers along specific value chains. In these projects,

IFAD has supported three basic types of PPP models:

1. Formal contractual arrangements. In this model, private-sector companies work with small-scale producers according to a variety of contractual arrangements – such as outgrower schemes or contract farming – and form a long-term commercial relationship with them. 
2. Delegation of a particular function of the value chain to producers’ organizations. In this model, private-sector companies delegate the management of producer-owned primary processing centres to small producers’ organizations. 
3. Joint ventures between private companies and producers’ groups. In this model, a new enterprise is set up in which small-scale producers and the private-sector company co-own the business along part of (e.g. at the processing stage) or the whole value chain. 

The case studies described below illustrate these PPP models (or slight variations and combinations of these models) and indicate the results and impacts documented thus far.

Brokering Development: Enabling Factors for Public-Private-Producer Partnerships in Agricultural Value Chains

IFAD 2015, 56 pages

• This research seeks to understand how public-private-producer partnerships (PPPPs) in agricultural value chains can be designed and implemented to achieve more sustained increases in income for smallholder farmers and broader rural development.
• The research also considers the role of PPPP brokers as independent facilitators who support the process of exploring, designing and implementing PPPPs. The research is based on four case studies of agricultural value chain PPPPs developed through projects financed by the International Fund for Agricultural Development (IFAD) in Ghana, Indonesia, Rwanda and Uganda

How to doPublic-Private-ProducerPartnerships (4Ps) in AgriculturalValue Chains
IFAD 2016. 36 pages
A 4P arrangement ensures that smallholder producers are respected partners and not relegated to the receiving end of public-private partnerships (PPPs). There are important asymmetries in the balance of power that need to be acknowledged in 4Ps, since smallholders are typically not well equipped to negotiate with public and private actors. It is important to ensure the transparency, fairness and accountability of these arrangements, especially when it comes to recognizing local communities’ tenure rights (to land, water and forests), the role of women and environmental issues. The devil is often in the details of PPP deals when it comes to price-setting mechanisms, enforcement of contracts, regulatory issues, payment modalities, ownership and coordination. Introducing the 4Ps concept helps to identify and address these issues from the outset. It can also be employed to justify the use of public funds as an incentive for both the private sector and producers to make better deals in which everyone is genuinely committed to a long-term partnership.

The PPP Canvas
Businesses are increasingly involved in partnerships with CSOs and governments to jointly work on

sustainable development challenges. For these Public Private Partnerships, a solid business case is very important. To formulate a sound business case, it is necessary to understand the entire business model, and describe the way an organization creates economic and social value.

To understand how PPPs can deliver added value, by creating business opportunities and a smarter business approach, PPPLab has developed the PPPCanvas, based on the Business Model Canvas of Alexander Osterwalder.