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11/12/2014
1
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