Matthew Krause, Partnership Development Lead, Feed the Future Partnering for Innovation
A few years ago, President Obama and then-Secretary of State, Hillary Clinton, pledged to “promote sustainable development through high-impact partnerships and local solutions”. They stressed investing in new models for public-private partnerships (PPPs), which has been a key agricultural development theme for many years. While a traditional PPP is a government service or private
|Mike Duke, Walmart CEO and Dan Bartlett Walmart Vice |
President, with USAID Administrator Rajiv Shah.
Photo by: U.S. Global Leadership Coalition
business venture that a partnership of government and one or more private sector companies co-funds and operates, USAID has more recently developed the Global Development Alliance (GDA) model. GDAs leverage market-based solutions to advance broader development objectives. When successful, the resulting alliances are both sustainable and have greater impact. GDAs are co-designed, co-funded, and co-managed by all partners involved, so that the risks, responsibilities, and rewards of partnership are shared. They work best and have the greatest development impact when private sector business interests intersect with USAID’s strategic development objectives.
The Feed the Future initiative describes these partnerships as a joint development venture in an area pertinent to food security. Feed the Future and the business creates a public good—such as improved irrigation, seed research, advanced communications, or post-harvest market access—that helps transform the agriculture sector in a developing country or region. The partnership simultaneously helps move the business forward. The most common types of agricultural PPPs either support improved linkages between smallholder farmers and input companies or food processors/traders. For example, Syngenta might work with USAID to develop and distribute improved seed varieties to smallholder farmers through the establishment of agro-input dealers. Alternatively, PepsiCo and Walmart might work with USAID to help farmers with post-harvest handling and storage technologies and practices to improve product quality giving them access to a higher value market. Through collaboration, they can have a greater impact on the business’ bottom line and USAID’s development goals than if they worked alone.
In principle, this makes a lot of sense, especially in an environment of limited financial resources with global poverty and economic hardship. However, there are many challenges in designing, structuring, and operationalizing these partnerships. Maximizing earnings and economic profitability with a focus on increasing productivity, competitiveness, and cost reduction motivate the private sector. Businesses invest where there are opportunities to improve the quality of primary agricultural materials, the cost structure of product and processes, and export potential to high value markets. This can be at odds with the public sector’s motivation towards development goals of economic growth, social equity, and environmental sustainability.
The private sector realizes that public funds can lower the costs and risks of entry into new markets; however, they may find the process of securing funds to be bureaucratic and usage of funds inflexible. In addition, the private sector may value a partnership with a public donor that raises their profile with local national governments. This can help minimize corruption and reduce barriers to entry and can also be painfully slow. Moreover, businesses can be reluctant to share their intellectual/technology rights, trade secrets, and effective practices.
These are just a few of my observations about agricultural public private partnerships. What have others experienced or seen as challenges and difficulties in designing, structuring and operationalizing these partnerships?