I wrote this blog post for Feed the Future Week 2017 for Feed the Future Partnering for Innovation. It was published on Agrilinks.
Smallholder farmers around the world need access to products, services and markets to become more productive and more profitable. With access to these, smallholder farmers can build sustainable businesses and feed a growing global population.
In countries where the majority of the population consists of smallholder farmers, small- and medium-sized businesses have a unique role to play in increasing agricultural productivity. Businesses not only have the ability to identify and commercialize innovations that farmers need, they also have an incentive to build a long-term, sustainable presence in these countries if they can achieve profitability. Smallholder farmers represent a huge and mostly untapped market for agricultural businesses. If these companies could find ways to get the right products to smallholders at the right time and place, they can grow their business while also improving food security.
Feed the Future Partnering for Innovation, a USAID-funded program, directly funds companies to enter or scale products and/or services in smallholder markets. These companies can benefit from nontraditional financing, such as a Partnering for Innovation grant, to overcome the initial hurdle of establishing themselves in difficult to reach and often poorly understood smallholder markets. With this support, the program’s partners are building profitable, sustainable businesses while also increasing smallholder access to improved inputs, mechanization, financing, postharvest storage, and processing, training and markets.
So far, Partnering for Innovation has reached more than one million smallholder farmers in 17 countries with 74 new innovations through its private sector partnerships. Here are four reasons why it makes sense to partner directly with the private sector to end hunger:
Partnering for Innovation uses USAID dollars to spark private sector investment in smallholder markets. By requiring a one-to-one or more investment match from its partners, the program is using donor dollars to spur even greater investment in smallholder markets. And by helping companies build their ability to work with smallholder farmers for years to come, the impact of the program’s investment will multiply over time long after its funding has ended.
Once established in smallholder markets, businesses have an incentive to continue working to gain and retain customers so they can increase profits. As farmers become more productive, they have more money to spend on these companies’ goods and services, and companies can use their revenues from sales to reach more smallholder customers without the need for continuing donor support. The initial investment from Partnering for Innovation sparks a sustainable cycle of growth both for farmers and for companies.
More than one million smallholder farmers are now accessing improved technology, products, services, markets and training through Partnering for Innovation’s partners. These partnerships are about more than just sales — they’re about finding effective distribution channels and innovative ways for farmers to obtain financing to purchase products as well as building long-term relationships between farmers and offtakers. Building a robust private sector ensures long-term smallholder access to needed products, services and markets.
One of the keys to Partnering for Innovation’s success is ensuring that partnerships are based on both food security and business development goals. Even in these very difficult markets, it is possible to both be profitable and do good. Companies will be more profitable, farmers will be more productive and earn more, and consumers — both rural and urban in local and international markets — will have better access to more and better quality food at lower prices.
Check out how individual farmers and business entrepreneurs around the world are benefiting by directly funding companies to enter or scale products and/or services in smallholder markets.