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Round Table 4 - “Local Purchases in the African Continent, challenges and perspectives for international cooperation initiatives”, July 03 2012, Brasília.
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P4P PURCHASE FOR PROGRESS By Laura Melo
2012
BENEFICIARIES: at least 500,000 smallholder farmers - 1 million members of farmers’ organisations engaged in P4P (500,000 in Ethiopia).
DURATION: 5 years (Sept 2008 – Dec 2013)
FUNDING: US$151.8 million for technical capacity for 5 years (food not included)
KEY DONORS: Bill & Melinda Gates Foundation, Howard G. Buffett Foundation, European Union, Governments of Belgium, Canada, France, Ireland, Luxembourg, Netherlands, United States of America and the Kingdom of Saudi Arabia.
21 PILOT COUNTRIES
AFRICA: Burkina Faso, Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Liberia, Malawi, Mali, Mozambique, Rwanda, Sierra Leone, South Sudan, Tanzania, Uganda, Zambia
ASIA: Afghanistan and Laos
LATIN AMERICA: El Salvador, Guatemala, Honduras, Nicaragua
P4P Overview
WFP’s local and regional procurement
WFP Local Procurement – P4P’s foundationPrinciples of acceptable, timely and cost efficient food procurement
VISION OF SUCESS
By 2015, agricultural markets will have developed in such a way that many more small-holder or low income farmers, the majority of whom are women- will produce food surpluses, sell them at a fair price and increase their incomes.
P4P Main objectives
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Leverage WFP’s procurement footprint as a catalyst for growth and connect farmers to markets,
Build the organisation’s capacities and expertise in the area of procurement and market development,
Build a body of best practices in agriculture and market development
Share this knowledge as part of the efforts to strengthen the capacities of countries to reduce hunger.
P4P Development Hypothesis
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Three main pillars
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Demand
Test innovative procurement modalities to foster ability of WFP to work with small holder farmers • E.g. pro-smallholder
competitive tendering, direct and forward contracting,...)
Supply - Partnerships
Through partnerships, ensure quality and reliability of local supply by• Providing technical expertise
in agriculture and market development
• Building capacity• Empowering women
Learning & Sharing
Pilot phase will be monitored closely to learn from experience and identify best practices for later
scale up
Partnerships across the value chain
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P4P Models
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Approach 1:Farmers’ Organisations
and Supply-side Partnerships
Buying from farmers’ organisations
• Receiving support on production and marketing
• various procurement modalities • FO’s at different capacity levels –
high, medium and low • Main challenges – governance,
access to finance, limited availability of infrastructure and equipment to facilitate group marketing, meeting contract requirements
+
Common approach in all countries
Approach 2Support to emerging structured
trading systems
Supporting the roll-out of warehouse receipts systems in two ways • direct support for the establishment of the system• Purchasing through the system
Purchasing through commodity exchanges to create a “pull-in/follow-in effect” Working with farmers’ organisations to build their capacities to participate in structured trade
Approach 3Small and
medium traders
Rationale to enhance competitiveness in the market Provide an alternative market for farmers’ surpluses Procurement modality – modified tendering Training provided on WFP procurement and contract requirements Investment in marketing equipment – stitching machines, weighing scales
Approach 4Developing local food processing capacities
Connecting farmers’ organisations to established food processors Developing local processing capacity – biscuits, supplementary feeding products
CountriesCountries
Ethiopia, Malawi,
Tanzania, Uganda and
Zambia
Mozambique and Kenya
Afghanistan, Ethiopia,
Guatemal, Mozambique,
Zambia
Approaches are combined to fit countries needs
Achievements - Procurement
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220,000 metric tons contracted (50,660 mt defaulted) $56 million USD directed to the pockets of smallholders Global default rate - less than 23% (20,000 mt) P4P purchases as a percentage of total local purchases
by WFP in the pilot countries increased from 9% in 2009 to 13% in 2010.
WFP has realized savings of approximately US$ 30 million (savings with respect to import parity price, considering the total quantity contracted
Quantities contracted and Delivered
P4P purchases vs local procurement
Achievements – Training
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855 FOs, with a total membership of over 1 million (352 FOs have signed contracts with WFP)
Over 133,400 smallholder farmers, lead farmers, agricultural technicians, small and medium traders and warehouse operators have participated in training activities organised by WFP and partners
Number of Trainings per Quarter
3 key lessons
Match buying modality to capacity of Farmer organisations
Focus on food safety / quality / processing Link financial service providers to
FOs / strengthen financial literacy
Consistent supply and aggregation Quality assurance Price discovery Cost efficiency Contract performance Elite capture Weak organisational capacity Appropriate Processes and systems
Risks