Development practitioners and policymakers are increasingly experimenting with public-private partnerships (PPPs) in agricultural value chains. These PPPs aim to bring private sector expertise and market opportunities to marginalised farmers through high quality value chains. But do they work for farmers?
Research I’ve carried out on four PPPs in Ghana (maize), Indonesia (cocoa), Rwanda (tea) and Uganda (oil palm), all supported by the International Fund for Agricultural Development (IFAD), found clear benefits. Outcomes of the PPPs included new investment in impoverished regions, an increased availability of inputs and finance for farmers, and productivity gains. Despite these results, however, farmers were often dissatisfied with the arrangements. At one level this is perhaps unsurprising, as there is often distrust between farmers and their buyers. However, what was puzzling for me was that where the results in terms of productivity and short-term household gains were the strongest (Uganda), the farmers were the least satisfied.
The conclusion I reached is that farmer satisfaction with value chains is not only determined by tangible results, but also judged on the fairness with which they are being treated, in terms of the decision-making processes within the chain and the related behaviour of chain partners. Relevant factors that affect this include:
- Transparency – the sharing of relevant information – on procedures, plans and objectives, alongside price and market information – with farmers who are supported to make sense of it all. A positive example here comes from the PPP in Ghana, where farmers not only had information on prices, crop budgets, loan applications and the selection of input providers, but also support from a local NGO to better understand this information.
- Two-way communication and conflict resolution measures – open communication between farmers and buyers that enables farmers to understand (and contest) decisions, as well as help buyers to better understand the farmers’ context. Communication mechanisms should also allow farmers to voice complaints and suggestions, and ensure that concerns are acted on. In Ghana, again, district value chain committees meet regularly, providing a forum for exchange and a mechanism for dispute arbitration.
- Informal but reliable agreements – to purchase crops or provide ongoing support. Such agreements provide stability and security based on mutual understanding, but do not impose limiting conditions on farmers, unlike formal contracts (which are often used to enforce conditions on farmers, rather than protect their interests). In both Rwanda and Uganda, substantial company investment in local processing factories represented a very tangible long-term commitment. However, in Uganda, the enforcement of loan repayments based on poorly understood contracts was a point of grievance.
- Farmer empowerment – through strengthening collective action (rather than imposing farmer organisation from the top down) and fostering interdependence between farmers and buyers. In Rwanda, although farmers are dependent on the factory, they also control half of the land producing tea, creating an interdependence between the factory and the farmers.
Building these factors into PPP arrangements enables farmers to participate in decision-making and wield some power in value chains. They are not simple solutions. However, the purpose of governments engaging with and supporting companies through PPPs is not to support private investments that would have happened anyway. PPPs should improve the quality of value chain relationships and create public benefits, which would not be attained through market forces alone.