igdIMPACT

AGRIBUSINESS // MAY 2013 igdIMPACT SECTOR FRAMEWORK

PRACTICAL, BUSINESS-DRIVEN IMPACT MEASUREMENT

igdIMPACTigdIMPACT is the Initiative for Global Development’s (IGD) practical, business-oriented approach to impact measurement. Designed with direct input from businesses, sector-specific measurement frameworks help companies map potential (or realized) impacts to key business drivers and performance metrics. Sector-specific frameworks are currently available for the agribusiness, financial services, FMCG, ICT, and power sectors, with more under development.

Businesses use the framework to guide impact assessment at any level – from the micro impact of a single product or service to the macro impact of regional operations or public-private partnerships.

IGD provides advisory support by partnering with individual companies to develop a tailored impact measurement strategy which reflects the needs, priorities, and operating contexts of our clients. We deliver value to companies by articulating impacts that result from core business operations, while also building in-house capacity for measurement and reporting and creating a platform for knowledge-sharing. We are currently working with Visa Inc. and ContourGlobal, among other leading companies.

We look forward to partnering with your company on impact measurement. Please contact us at impact@igdleaders.org to get started.

www.igdleaders.org/tools-initiatives/igd-impact/

ABOUT IGDThe Initiative for Global Development (IGD) is a non-profit organization that drives poverty reduction by catalyzing business growth and investment in the developing world. We bring together an influential network of senior executives from sector-leading companies with the interest and capacity to make strategic investments in high-need, high-potential areas of Africa. Members of our Frontier Leaders network shape global connections and frontier market insights, and promote business-driven development to create economic growth and opportunity.

www.igdleaders.org

Agribusiness sector framework // 1

AGRIBUSINESS SECTOR

Impact Framework // May 2013 version

www.igdleaders.org

BUSINESS DRIVERS POTENTIAL IMPACT SUGGESTED METRICS/MEASURES

Achieving Growth

Expand products and services

Develop high-quality inputs for smallholders, adapted to local conditions

Improve/upgrade/finance agricultural infrastructure (equipment, storage, processing, transportation)

Enhance agro-processing capacity and techniques to deliver new products

Develop nutritional products for local markets

Increases availability and effectiveness of products in local markets. Connects input and output markets, reduces risks of investment, and provides greater security for producers. Improves quality and safety of products, and health and nutrition of consumers.

$ invested in R&D (or % of R&D budget) to develop affordable products for the low-income/ local market

# new/adapted, low-cost products targeted to low income (e.g., low unit packs); % of total product portfolio

% increase infrastructure capacity (transportation, storage); % utilization

% increase in processing capacity; % utilized

% increase in productivity; % increase in producer surplus

Serve more customers

Implement input distribution strategy to reach rural, low-income and last-mile farmers

Offer affordable products combined with value-added or extension services (e.g., agronomy, financial/ business training; finance, loans, insurance; ICT; mobile payments; soil mapping)

Provide appropriate and affordable equipment and infrastructure solutions, integrating mobile technology

Upgrade/build capacity, enabling higher volumes that meet standards for international markets/export

Deliver high-quality processed goods at price points appropriate to target markets

Improves access and affordability to low-income, rural and SME customers. Improves productivity through product knowledge. Reduces post-harvest loss for staple/cash crops. Addresses critical gaps in smallholder financing. Enhances resilience to shocks. Promotes entrepreneurship among small-scale retailers, retail outlets, distribution centers.

% increase in new consumers; % low-income; % women

% market penetration; % increase in market share

$ invested in distribution outlets; #/% increase in outlets

# value-add services provided; $ invested in

# low-income receiving seasonal loans/finance, crop insurance, extension services/business training; resultant % increase in productivity

$ spent on educational marketing campaigns (e.g., around product usage and benefits

$ cost per unit (input, transportation, storage, warehousing)

$/# transactions conducted using mobile payments

% increase in processing capacity; % utilization

Agribusiness sector framework // 2

BUSINESS DRIVERS POTENTIAL IMPACT SUGGESTED METRICS/MEASURES

Achieving operational efficiency and increased productivity through the value chain

Local workforce development

Hire local talent and build capability among employees to develop localized management and leadership

Support professional training, technical and specialized agriculture training

Supports job creation. Transfers knowledge and addresses skills gaps. Builds capacity in primary production to achieve improved productivity, quality and yields, and processing.

#/% skilled/unskilled jobs created; # filled by local employees; % women; $ wages/benefits paid

# receiving training; $ and hours spent on training: qualitative increase in knowledge and capacity

#/% seasonal/contracted workers

$ spent on health management programs (e.g., HIV/AIDS)

Cost-effective, responsible local sourcing

Source high-quality inputs and agricultural raw materials sustainably from local suppliers, cooperatives, associations

Integrate smallholders into value chains to reduce risk by providing credit/ financing and through forward contracts

Comply with standards for food safety, traceability, and sustainability (e.g., fair trade, ethical trade)

Integrates local suppliers into value chain. Encourages entrepreneurship along supply chain by creating jobs and enhancing skills. Improves farmer livelihoods while guaranteeing future supplies. Connects farmers/producers to off-takers and global markets. Improves local value retention through processing. Drives development of (export-oriented) agriculture industry. Promotes food and animal safety.

# jobs created or supported (skilled/unskilled)

#/$ value of (forward) local producer/processor contracts

% materials/inputs/ingredients sourced locally

% total procurement sourced locally (vs. % imported)

#/$ contracts with local suppliers (% women-owned)

$ invested in building capacity of suppliers

# hours spent on supplier training/skills transfer

Applied Suppliers Code of Conduct for responsible procurement

#/% producers/processors meeting international food and feed safety standards; $ value of exports

Optimized local production

Deploy climate change adaptation techniques/sustainable agriculture to improve productivity, yields, quality and consistency of outputs

Increase capacity and enhance local processing/production through effective technology improvements

Promote sustainable production and resource efficiency; cut energy, water, waste

Builds local production capacity. Creates jobs and develops human capital. Supports efficiency-gains within the supply chain. Reduces environmental footprint and waste, which creates efficiencies and reduces costs. Mitigates risks of climate change, which reduces farmer vulnerability.

% of production carried out in country

% increase in productivity and output; resulting $ profits

% reduction in energy/water usage/waste generated per unit produced; % reduction in carbon footprint

% reduction in per unit cost

$ invested in sustainable technology, financing, technical assistance

Applied Producers Guidance/Code of Conduct

% sites achieving zero non-hazardous waste to landfill

Agribusiness sector framework // 3

BUSINESS DRIVERS POTENTIAL IMPACT SUGGESTED METRICS/MEASURES

Responsible business

High standards of governance

Adhere to international standards for good governance, sustainable agriculture, and worker and environmental protection

Respect human and indigenous rights regarding land ownership, water usage and bioengineering

Comply with national/international food safety standards, quality and labeling regulation

Create a culture in which performance is aligned with value

Retains license to operate. Improves company transparency, accountability and reputation. Safeguards land rights and community health. Reinforces responsible business practices. Creates shared value for local community and company. Promotes good corporate citizenship. Motivates people to do good, while doing well.

Compliance with international standards/principles, internally and across value chain e.g., UN Global Compact; ILO’s Declaration on Fundamental Principles and Rights at Work; UN Declaration of Human Rights; sustainable/fair trade agriculture

Participatory engagement with local communities around land/resource rights

Policy on GMO reflecting host government policy

Development and implementation of a fair, effective company-specific code of conduct/ethics

Remuneration of senior executives linked to positive impact

Macroeconomic impact

Make transparent payments to employees, suppliers, and governments

Ensure that producers/farmers receive a fair price for their crops and products

Stimulates local economic growth by increasing the capital flows needed to purchase local goods and services. Ensures company’s inclusive economic growth benefits reach all segments of society.

$ employee compensation; % earned locally

$ paid in corporate and other government taxes

$ operating expenses; % earned by local contractors

$ paid to shareholders; %/$ shares held locally

% increase in producer surplus

Effective corporate philanthropy

Launch targeted initiatives aligned to core business which leverage company technology and expertise (e.g. agricultural mechanization, specialized farming techniques)

Implement relevant corporate sponsorships

Creates shared value for local community. Addresses specific development needs, particularly when programs align to core business.

Effectiveness of initiatives (in meeting defined goals/metrics)

# local beneficiaries; # stating improvements to livelihood

Perceived success of initiative (via stakeholder surveys)

Effective CSR governance

% of pre-tax profit invested in philanthropy/sponsorships

# $ corporate sponsorships; # beneficiaries of sponsorships

$ spent; gifts in-kind

Agribusiness sector framework // 4

BUSINESS DRIVERS POTENTIAL IMPACT SUGGESTED METRICS/MEASURES

Enhancing the operating environment

Improve the policy and regulatory environment

Engage local governments, ministries, and agricultural/farmer associations to promote sector development and prioritize investments in agriculture infrastructure, access to finance

Advocate for reforms related to land rights, trade balance, and market distortions in the sector

Promote effective agriculture and food safety standards

Creates more equitable marketplace to support socio-economic development. Contributes to local industry free from market distortions due to subsidies and pricing, which protects smallholders. Connects farmers to markets. Reduces post-harvest losses. Increases value retention, farmer protection, access to finance, and incomes. Reduces agricultural imports.

Advocate against market distortion, subsidies

Land reforms achieved to balance protection of land rights with agriculture development

Improved agriculture infrastructure

Reforms to facilitate access to financial products; commodities exchanges linking farmers to markets

Participation in agriculture councils and associations

Increased local sourcing of inputs as a result of tax breaks/incentives granted

Strengthen institutional capacity

Collaborate with relevant ministries to foster knowledge-sharing; implement best practices; achieve effective standards-setting and compliance

Develop farmer associations and extension services to improve reliability and quality of agricultural outputs

Build capacity of higher education institutes to provide specialized technical and business training

Increases productivity. Improves business skills. Builds capacity to address specialized skills gaps. Raises standards in agribusiness sector. Enhances domestic export potential. Reduces barriers to investment. Fast-tracks technology transfer into rural farming. Reduces industry’s vulnerability to external shocks.

Integration of literacy/education, business skills and modern agronomy techniques into government-provided extensions services; $ spent on training

$ spent; # trained in specialist skills (e.g., seed technology and agro-processing)

$ spent; # officials trained

# local education institutes offering technical skills and business education/entrepreneurial programs

#/% increase in local grower associations; # trained

Partner to achieve common objectives

Establish strategic partnerships to achieve efficient sharing of knowledge (e.g., seed technology, technical skills, access to market)

Partner to apply ICTs for soil mapping, agricultural information, and mobile payments

Collaborate to address complex issues (e.g., child labor, financial literacy, access to finance)

Catalyzes investment. Builds capacity in underdeveloped markets by leveraging resources and sharing knowledge. Reduces costs and expands reach of interventions. Builds local capabilities to sustain activities in the long-term. Improves productivity through access to improved information.

# MOUs/partnerships developed; $ invested in each partnership (e.g., joint research/development projects)

# utilizing ICT-enabled agriculture information/mobile payments (% country soil mapped, input purchase, warehouse ticketing, sales)

Partnership performance indicators defined and met; # beneficiaries of partnership; results of stakeholder surveys and/or independent evaluation