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www.fao.org/ag/ags

Public-Private Partnerships for

Sustainable Agricultural

Development

October 14th, 2014

OECD, Paris

Marlo Rankin, PhDAgribusiness EconomistAGS Division

Public Private Partnerships

Why the hype?? PPP buzz word??

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FAO Agribusiness PPP Appraisal2011-2013

• 70 cases in 15 countries, 3 regions, specific criteria

Africa Latin America Asia

Ghana (5) Chile (4) Thailand (5)

Kenya (4) Colombia (4) Indonesia (5)

Nigeria (5) Ecuador (4) China (5)

Tanzania (4) Guatemala (4) Pakistan (5)

Uganda (4) Peru (5) Philippines (5)

2014-•Synthesis of international experiences forthcoming•Ag PPP Policy support (Vietnam, Philippines)•Typology based guidelines for public partners (?)

http://www.fao.org/ag/ags/ags-division/publications/country-case-studies/en/

Selection Criteria for Cases

1. Agribusiness enterprise

2. Formal collaborative relationship

> 2 years of operation

> US$ 100,000 invested

• Increase investment, profitability or reduce risk

• Positive societal impacts

• Role in governance and implementation for all partners

• PPPs involving only transfers, concessions or guarantees excluded

• Preference for non-donor PPPs

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FAO Study Agri-PPP Definition

“Formalized partnerships between public institutions and private partners designed to address sustainable agricultural development objectives…

• where the public benefits anticipated from the partnership are clearly defined,

• investment contributions and risk are shared,

• active roles exist for all partners at various stages throughout the PPP project lifecycle”

PPP Typology for Agriculture

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Agri-PPP themes

FAO Study – 70 cases

1. Value chain development 57% (meso & micro)

2. Innovation & technology transfer 23%

3. Business development/advisory services 11%

4. Market infrastructure & logistics 9%

Typology of PPP cases per region

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Africa Asia LAC

BDS

Marketinfrastructure& logistics

Innovation andtechnologytransfer

Value chaindevelopment

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PPP Financing Structure

0%

20%

40%

60%

80%

100%

Africa Asia LAC

National PPPProgramme

Co-equity investment

Grant/concession forthe private sector

Development projects

Who are the Partners?

Public• Central and decentralized government

• State banks and rural finance corporations

• State-owned enterprises

• Research institutions, universities, marketing boards

• Donors

Private• Global and domestic food companies

• Input supply and agro-processing companies

• Financial institutions

• SMEs and producer associations*

• Civil society (NGOs)

• 3rd party contractors

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Who are the Partners? Public

0

10

20

30

40

50

60

% of partnerships

Ministry of Agriculture

Other ministries(Economy/Industry/Commerce)Municipality/Localauthority

Donors/InternationalDeveloment Organizations

Universities/Researchcentres

State banks

Who are the Partners? Private

0

10

20

30

40

50

60

70

% of partnerships

AgribusinessEnterprises

Farmers/FOs

FinancialInstitutions

NGOs/Foundations

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What do they do?

Public• Define ‘public good’

• Design program objectives

• Conduct/commission feasibility studies

• Screen potential partners

• Monitor and evaluate implementation

• Create enabling environment

• Provide finance and technical assistance

What do they do?

Private• Comply with programme design

• Lead implementation• Secure markets and financing

• Introduce technology innovations

• Provide technical assistance

• Deliver results

NGO/Intermediary • Ensure inclusion

• Organize producers and provide technical support

Producers• Dual role as beneficiaries and/or private partners

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Management tools in Agri-PPP agreements

Formal PPP agreements• Contracts & MoUs

• Fixed design, well-defined procedures & criteria (LA)

• Demanding bidding and vetting process (LA, SEA)

• Feasibility analysis (economic, enviro., VCA)

• Business plans

• M&E systems (weak)

• Contract farming*

PPPs for Innovation & Technology

Transfer (ITT)

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What is the public objective?

PPPs to address

• Food security concerns

• Pest & disease problems

• Climate change effects

• Environmental degradation

• Rural poverty & unemployment

Common examples

1. Seed production & commercialization

2. Small scale technologies

Two Models• Public Research Institute (RI)

• Private seed company • Contract growers

• RI develops prototype

• Manufacturing company• SMEs/farmers as adopters

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Benefits from Partnering

Public • Leverage investment

• Access to new technology & research methods

• Improve management skills

• Generate income from licensing/royalties

Private• Reduces risk of entering new market

• Access local genetic materials

• Protect IP

• Access extension networks

• Trial new technology (SME)

Both:• Collaboration fosters innovation

Session 4 Questions

• Do ITT PPPs facilitate the diffusion of technology efficiently?

• Do they provide other benefits such as better formulation of demand for innovation?

• Do they address the needs of smallholders in developing countries?

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Example ITT Cases

Case descriptions - DiversityCountry &

Commodity

PPP Purpose/Driver

Thailand

Vegetable seed

Regain export market access

Develop & commercialize disease resistant seed

Uganda

Maize seed

Address government seed market monopoly –

stimulate liberalization of seed industry

Indonesia

Rice seed

Ensure improved relevance of SOEs and RIs

Diffusion of new varieties through direct engagement

of smallholders in seed production & distribution

Pakistan

Wheat

Climate change adaptation and food security

Target drought-prone area, employment generation

through input supply distribution in remote area

Chile

Pisco

Value addition and new product development to

address low competitiveness

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Thai ITT Cases

Strong institutional framework

National governance bodies for Agri-PPP

• National Science & Technology Development Agency (MoST)• US$30 million co-investment 2010

• National Centre for Genetic Engineering and Biotechnology• PPP Programmes

Formal contracts & MoUs

• Room for unsolicited proposals from private sector

• Detailed vetting process

• Feasibility & market analysis

• Rapid negotiations & agreement – 3-months

• Investments US$72k-200K

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Case descriptions

Commodity/

Subsector

PPP Purpose

Vegetable Develop & commercialize disease resistant seed

Regain export market access

Poultry Develop new technology (fans)

Increase production efficiency

Reduce disease risk (bird flu)

Sugar cane Commercialize plant disease test kits

Reduce production risk

Poultry Develop biogas technology

Reduce greenhouse emissions

Improve community health

Partners

PublicNational and local research institutions

• Reduce risk through co-financing

• Provide technical & management expertise

• Identification of 3rd party contractors

• Monitoring

PrivateExporters, SMEs, agro-processors, seed companies, 3rd

party contractors

• Commercialization & dissemination

• Uptake of technology

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Roles of Public Partners

Lead design phase• Conduct/commission feasibility studies

• Negotiate IP ownership

• Set price ceilings

• Ensure inclusion of smallholder farmers/SMEs

• Contribute funding

Ensure regulatory compliance • Licenses for private partners

• Certification of varieties

Facilitation• Access to rural infrastructure

• Link to extension networks and farmer groups

• Technical assistance for new & pre-existing technology

Monitoring• Of contract farming agreements

• Partner progress

Partner Contributions

PPP Public Private Total Investment

US$

Okra seed 15% 85% 114k

Air-controlFans

50% 50% 72k

Disease kits 100% dev. phase

100% commercial.

100k

Biogas 30% 70% 200k

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Impacts

PPP Impact

Disease resistant Okra seeds

Increased yield 56% per haNet profit US$2545/ha

Air control fans poultry 23% less energyUS$667/year savings

White-leaf disease test-kits 90% accurateCost-effective US$1.70/test

Biogas technology LPG savings US$1.5 millionEmission reductions 41.6 million kg

Challenges ITT PPPs

• Partner selection – open bidding or not?

• Complex bureaucracy - slows partnerships

• Lack of coordination in multi-stakeholder PPCs

• Delays in funding release

• Unsupportive regulatory environment

• Technology failures and long lead time

• Land access and exclusion of smallholders

• Dealing with force majeure (weather impacts)

• Adoption failures

• Protecting intellectual property

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Success factors ITT PPPs

• Partner roles based on unique expertise & prior experience

• Seek support for partnership design (PPP unit)

• Feasibility studies a must (market, enviro, economic)

• Short negotiation timeframe (3-6 months)

• Price ceiling & time horizon; distribution requirements

• Well defined contracts

▫ Financial contributions

▫ Management responsibilities

▫ Expected outputs & outcomes

▫ Explicit ownership of IP

• Purpose influences design

▫ Solve pressing market problem vs.

▫ Subsidize technology for social benefits until proof of concept

▫ POs and SMEs (end-users) involved in commercialization