Access to financial services, following a market-oriented approach and the relevance of supporting the organizational structure and governance of farmers’ organizations – these are some of the critical issues identified by a group of eleven experts brought together by WFP for a two-day gathering to discuss the Purchase for Progress (P4P) initiative. These experts, including academics, development practitioners, market specialists and the private sector actors, constitute the Technical Review Panel (nine permanent members and two observers), established to provide high level independent advice to WFP on P4P.
During the meeting in Rome - the first of the Technical Review Panel - the group discussed implementation challenges and effective mechanisms to learn and share from the work being done in the 21 P4P pilot countries.
“This was a unique opportunity for us to learn, make adjustments and ensure that our pilot project reaches its goals,” said Ken Davies, WFP’s Purchase for Progress Coordinator. “It was a privilege to discuss with some of the acknowledged experts in the many areas that this project touches – agricultural economics, markets, organizational and institutional strengthening, monitoring and evaluation.”
Among the implementation challenges, special attention was paid to defining commodity prices paid to smallholders in case of forward contracting. With these contracts, WFP commits to procure a certain amount of commodities at planting time. The challenge is to define a pricing mechanism to ensure a fair deal without distorting or disrupting markets. Risk mitigation mechanisms to prevent contract defaults and ensure that quality standards are met, as well as ways to ensure that female farmers also benefit from the project were some of the other implementation challenges discussed.
Regarding learning and sharing, the focus of the group was on measuring the impact of the project on smallholder farmers, involvement of traders and the replication of P4P learning to ongoing local and regional procurement undertaken by WFP.
Participants share their views:
David Tschirley, Professor, Michigan State University
Building stronger markets is the lifeline out of poverty for many poor farmers in developing countries. By purchasing hundreds of millions of dollars of food every year in these countries, WFP has already made a major contribution to improving this lifeline. P4P aims to build on this success by shortening the marketing chain, giving these farmers more direct access to this market, and further raising their incomes. It is exciting to be involved in this effort to help WFP learn how to use its enormous buying power to assist some of the world's most needy people.
Chris Kaijuka, grain trader in Uganda
“P4P has great benefits for the private sector. For us traders the most important is to find volumes and quality standards. So this project is taking WFP’s work beyond the needs of the agency. Supporting smallholder farmers to increase grain production, reduce post-harvest losses and improve quality addresses the needs of the market. By helping strengthen farmers’ organizations WFP is also creating the opportunity for us traders to buy directly from these organizations. As a result, smallholder farmers will be able to engage in formal trade, reduce their losses and have higher incomes.
Aleksandr-Alain Kalanda, banker in Malawi
This project can give bankers the assurances they need to make financial services available to smallholder farmers. Bankers are interested in working with the farmers, but it is a high risk population. P4P can create the conditions that help bankers feel more confident about working with smallholder farmers.
Henk-Jan Brinkman, Senior Adviser for Economic Policy, who facilitated the meeting, shares his views on the event.
What are the main benefits of a Technical Review Panel of this kind?
P4P needs to be able to access expertise in various areas and make sure it is doing the right thing and doing things right. There are two fundamental reasons for this. First, P4P is a relatively new activity for WFP, despite its long experience with local procurement. WFP has had no or limited experience with some P4P activities, such as forward contracting. Second, the success of P4P is critically dependent on partners, whether working on productivity increases, access to credit or training of farmers’ organizations. We need to tap into the knowledge of these partners and know how their activities link to P4P.
Q2 What were the main lessons learned at the meeting?
Perhaps the most important learning in my view was the importance of bringing on people from the private sector. The experience and expertise that Christopher Kaijuka , a grain trader from Uganda and Aleksandr-Alain Kalanda, a banker from Malawi brought to the table were very illuminating. Another lesson is that WFP needs to keep, and in some cases intensify, its dialogue with partners, experts and various stakeholders.
Q3 What were the key recommendations/guidance provided by the panel to support P4P?
The Panel thought that a full impact assessment in all 21 countries is not feasible. It basically recommended that it is better to have robust estimates of the impact in a few countries than lousy ones in all. WFP also should increase its efforts to work with small- and medium-sized traders. Their capacity should be strengthened to ensure a long-lasting impact of P4P. The Panel also recommended additional research through case studies and modelling to determine the impact of the regular WFP local procurement on smallholder farmers, using historical data. It also provided guidance on direct and forward contracts.