Connecting Farmers to Markets
As the world’s largest humanitarian agency, WFP is a major staple food buyer. In 2012, WFP bought US$1.1 billion worth of food – more than 75 percent of this in developing countries WFP buys locally in developing countries when its criteria of price, quality and quantity can be met. P4P is a logical continuation of this local procurement with the intent to achieve a higher developmental gain with WFP’s procurement footprint by buying increasingly in a smallholder-friendly way.
Through P4P, WFP’s demand provides smallholder farmers in 20 pilot countries with a greater incentive to invest in their production, as they have the possibility to sell to a reliable buyer and receive a fair price for their crops. It is envisioned that in the wake of WFP purchasing in a more smallholder-friendly way, other buyers of staple commodities including Governments and the private sector will also increasingly be able to buy from smallholders.
P4P at the same time invests in capacity building at country level in areas such as post-harvest handling or storage, which will yield sustainable results in boosting national food security over the long term. The five year pilot P4P (2009 - 2013) rests on three pillars:
i. Demand: Through P4P, WFP tests innovative ways to buy staple food and promote marketing opportunities for smallholder farmers.
ii. Supply: P4P links WFP’s demand with the expertise and resources of partners who support farmers to achieve better yields, reduce their losses after the harvest and improve the quality of their staple crops.
iii. Learning and Sharing: P4P will gather and share lessons on effective approaches to connect smallholder farmers to markets in a sustainable way and share them widely with stakeholders.
20 Pilot Countries
• Africa: Burkina Faso, Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Liberia, Malawi, Mali, Mozambique, Rwanda, Sierra Leone, South Sudan, Tanzania, Uganda, Zambia
• Asia: Afghanistan
• Latin America: El Salvador, Guatemala, Honduras, Nicaragua
Beneficiaries: 500,000 smallholder farmers
Duration: 5 years (Sept 2008 - Sept 2013)
Procurement during P4P pilot period (September 2008 – December 2013):
• Over 450,000 metric tons contracted (value $177 million).
• Almost $150 million paid to suppliers, and of this some $90 million directly to farmers' organizations.
• 367,000 metric tons (81%) successfully delivered across the 20 pilot countries.
• Defaults over the 5 years totalled 19% of the contracted amount.
Total funding: US$168 million for technical capacity, including sub-grants, for 5 years (food not included)
Key donors – Bill & Melinda Gates Foundation, Howard G. Buffett Foundation, European Commission, Governments of Belgium, Brazil, Canada, France, Ireland, Luxembourg, the United States of America and the Kingdom of Saudi Arabia.
WFP's Demand-Buying food in new ways
WFP usually buys food through large competitive tenders. Through P4P, WFP is testing new procurement approaches more suited to smallholder farmers and:
i. Buys directly from farmers’ organisations through direct and forward contracts or modified, smallholder-friendly tenders. Most of the food so far contracted under P4P has been purchased through direct contracts with farmers’ organisations Forward contracts commit WFP to buy from farmers’ organisations in the future at an agreed price, and enables the farmers to increase their production.
ii. Supports emerging structured trading systems such as warehouse receipt systems in Uganda and Tanzania and commodity exchanges in Ethiopia, Malawi and Zambia.
iii. Buys from small and medium traders, agrodealers or NGOs who work with smallholder farmers.
iv. Develops local food processing capacities that source the staple commodities required as raw materials from smallholder farmers.
As part of P4P, WFP has developed and continues to seek partnerships at different levels (national, regional and global) to support smallholder farmers throughout the entire value chain. Having different partners collaborating together is vital for enhancing production, accessing seeds and fertilizers, improving storage facilities, promoting high quality standards, accessing credit, increasing female participation and knowledge sharing.
A wide range of partners support the smallholder farmers throughout the entire value chain to:
• Improve their skills to increase the quantity and quality of their crops
• Reduce post harvest losses
• Enhance farmers' knowledge of markets (learning about quality, pricing, packaging)
• Strengthen their farmers' organizations (through training in management and negotiation of contracts, strengthening account and fiscal systems)
• Improve business skills
Learning and sharing
Implementing P4P in 20 diverse countries and policy environments will generate lessons learned and best practices to inform future WFP work and to share with all stakeholders. Through an extensive Monitoring and Evaluation framework, WFP will capture these lessons systematically. Two independent evaluations (mid-term in 2011 and final in 2014) will examine the pilot and give impartial recommendations.
Best practices identified will be mainstreamed into WFP’s long-term policies and programme practices. The lessons will also be shared with national governments, public and private actors in the agricultural sector to enable other actors to learn from the experience gathered during the five year pilot and use this knowledge to transform the lives of more smallholder farmers around the world.