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| Panel on the secrets of successful partnerships. ©IFAD/Amedeo Paglione |
That point was especially evident at yesterday’s panel on secrets of successful partnerships. Participants in the panel recounted their direct experiences with smallholder producers who have organized themselves into cooperatives, thereby expanding their operations and increasing market access.
Lucian Peppelenbos, Director of Learning and Innovation at the Sustainable Trade Initiative in the Netherlands, noted that smallholders are among the world’s estimated 1.5 billion commodity producers, who are in a position of growing influence. The global pool of 7 billion consumers is edging ever higher, he said, and opportunities beckon along with growing demand.
Peppelenbos and other panellists pointed out, however, that private-sector suppliers need food products that meet standards of quality and consistency in order to sell them internationally – notably in the European Union and other markets with strict food-safety requirements. As a result, smallholder producers must become more technologically proficient. “This is a shared interest of all our partners,” Peppelenbos said.
Economies of scale
In order to achieve quality and consistency, the panellists agreed, it is in the interest of smallholders to organize themselves into producers’ cooperatives. Tulio Garcia, Executive Director of 4 Pinos, a 3,500-member agricultural cooperative in Guatemala, observed that such associations enable farmers to sell at better prices and take advantage of economies of scale. But they are most viable when they offer farmers training and access to finance, he said, adding: “Cooperatives have to be the best option for their members.”
Tadesse Meskela, General Manager of the Oromia Coffee Farmers Cooperative Union of Ethiopia, suggested that cooperatives can also provide social benefits, including support for education. He said many coffee cooperatives in Ethiopia are doing just that as a long-term investment in the communities where their members live and work.
Salah Hegazy, Chairman of Agrofood, a private company in Egypt that exports fresh produce to supermarkets in Europe, suggested yet another prerequisite for successful partnerships between the private sector and smallholder farmers: They must begin at an early stage to ensure that farm products meet suppliers’ specifications. “Quality starts in the field,” Hegazy asserted. But when quality is assured, he said, partnerships between smallholder cooperatives and companies like Agrofood are “a win-win situation.”
Role of governments
Lest anyone think that the market cures all ills, the panellists were clear about the critical role of governments in establishing a level playing field for smallholders and their private-sector partners.
“There’s only so much that the marketplace can do,” Peppelenbos cautioned. He pointed out that government investments in rural infrastructure such as roads and irrigation systems – as well as policies on farm subsidies, taxes and education – can create an enabling environment for agricultural development. And since it often takes time for private-sector investors to see a significant return from partnerships with smallholders, he said, public-sector funding can provide an important bridge to profitability.
Mylène Kherallah, IFAD’s Senior Technical Advisor on Private Sector Development, concluded the discussion with a brief take on how the Fund itself can support successful partnerships. Among other actions, she said, IFAD can be “an honest broker between small farmers and private businesses,” and an advocate for investments in infrastructure and basic services in rural areas. “Private companies need scale, quality and consistency,” Kherallah added. “It’s a business relationship, not charity.”
Video: Watch the trailer for Black Gold, a documentary about Tadesse Meskela – one of the speakers at the IFAD Governing Council panel on secrets of successful partnerships – and his organization's struggle to protect 74,000 Ethiopian coffee farmers from exploitation.