INCLUSIVE AGRIBUSINESS: THE STATE OF PLAY

BACKGROUND WORKING PAPER

Prepared for the Global Donor Platform for Rural Development

Jim Woodhill September 2016

Note: This is background working document, the content and views expressed are those of the author, based on literature and discussions with a diverse range of stakeholders in the sector, and do not necessarily reflect theviews, positions or policies of the Global Donor Platform for Rural Developmentor its members.

Acknowledgements: The author appreciates the time and support given byPlatform Members and the Secretariat and others in preparing this report.Background research and editing support was provided by Zalynn Peishi.

Graphic design and productionGudrun Barenbrock

PhotosNasa Earth Obervatory

Published byGlobal Donor Platform for Rural Development www.donorplatform.org

December 2016

Contact:Secretariat of the Global Donor Platform for Rural DevelopmentFriedrich-Ebert-Allee 3653113 Bonn, GermanyPhone: +49 228 4460 3448Twitter: @donorplatformEmail: secretariat@donorplatform.org

CONTENT

Executive Summary 21 Introduction 52 The Global Context 63 What is Inclusive Agribusiness? 8

3.1 The Wider Inclusive Business Agenda 83.1.1 Inclusive Business in the AgriFood Sector 10

3.2 Inclusive Agribusiness, Value Chains and Markets Systems 133.3 The Business Case for Inclusive Agribusiness 143.4 Requirements for AgriFood Sector Development 173.5 Summary – Articulating Underlying Assumptions 17

and a Theory of Change for Inclusive Agribusiness4 Developments and Results to Date 19

4.1 The Inclusive Agribusiness “Ecosystem” – an Overview 194.2 Inclusive Agribusiness Development Programs and 19

Financing Mechanisms4.3 Private Sector Initiatives 214.4 Financing Inclusive Agribusiness 234.5 Results to Date 25

5 Emerging Issues and Opportunities In Going to Scale 275.1 Developing the Evidence Base 275.2 Integrating Public and Private Goods 285.3 Aligning Policy 285.4 Incentives for Business 285.5 Mobilising Responsible Investment and the Catalytic Role 29

of Donor Funding5.6 Food Systems Transformation 305.7 Effective Multi-stakeholder Partnerships 30

6 Enhancing the Knowledge and Learning for Inclusive Agribusiness 306.1 Who Needs to Know What? 316.2 Learning Questions 32

6.2.1 Strategic Questions 326.2.2 Operational Questions 33

6.3 A Learning Systems Approach 346.4 Creating an Effective Inclusive Agribusiness Knowledge 35

and Learning Network7 Implications for The GDPRD and Recommendations 37

Annex 1. Indicative Directory of Donor Strategies and Initiatives 39Annex 2. Initiatives related to Inclusive Agribusiness 53Annex 3. Key Resources 54Annex 4. Illustrative Mapping of Initiatives 58

content | 1

2 | executive summary

EXECUTIVE SUMMARY

This working paper has been prepared as background for the inclusive agribusinesswork stream of the Global Donor Platform for Rural Development’s (GDPRD). The paper outlines the concept of inclusive business and its application to theagrifood sector, it maps the current state of play and explores implications fordonors and the GDPRD.

Inclusive agribusiness is one perspective or “lens” from which to view transfor-mations in the the agriculture and food sectors. This perspective recognises thecritical role the private sector, from small local businesses through to largeinternational corporations, can play in contributing to poverty reduction. It alsorecognises that the resources of donors and development agencies must be usedin catalytic ways to help drive solutions to poverty that can achieve scale throughsmart use of market solutions. However, public investments and enabling policiesare also critically important - the private sector cannot succeed on its own. Soinclusive approaches require the matching of public and private investments toachieve both commercial and public good outcomes.

There is a long history of donor support for agricultural value chain and marketsystems development projects. More recently, for example, the work of the WorldEconomic Forum’s New Vision for Agriculture, there is increasing private sectorengagement in the issues of inclusive and sustainable agriculture. At times thesetwo “worlds” are intersecting and reinforcing each other, and at others they areoperating in parallel and not necessarily sharing the lessons they could.

Inclusive agribusiness provides a perspective that can contribute to a deeperunderstanding of how to align public and private interests and investments inpursuit of the Sustainable Development Goals.

There is a vast body of experience and knowledge about how agricultural marketscan help to tackle poverty and encourage sustainable practices. However, thishas not been fully tapped, synthesised and communicated in ways that can helpto tackle the ongoing structural barriers of taking inclusive agribusiness initiativesto scale. Consequently, inclusive agribusiness is a field where the GDPRD canpotentially make significant contribution through its knowledge sharing, advocacyand networking functions.

An inclusive business benefits poor producers and/or consumers by providingaccess to markets, services and products in ways that improve their livelihoods,while at the same time being a profitable commercial venture.

Progress on Inclusive Agribusiness

1) Widespread renewed recognition that commercial development in the agriculture sector still has a key role to play in helping tackle poverty and driving inclusive growth

2) Substantial engagement from leading agrifood sector companies with clear commitments to embedding inclusive and sustainable practices into their core operations.

3) Engagement from ministers and heads of state with public acknowledge-ment of the importance of the sector and the needs for policies that enable inclusive growth.

4) The implementation of a vast number of inclusive agribusiness related projects/business initiatives that have generated a broad base of practitioners with a growing understanding of how to put inclusive agribusiness models into practice.

5) Numerous business, government, donor and NGO partnerships again with a rich base of experience for future learning.

6) A substantial investment by donors into inclusive agribusiness, running in the order of 3–4 billion, funded both directly through agriculture initiatives and indirectly through general market development, and private sector development mechanisms.

7) A growing and increasingly interconnected network of senior practitioners from business development organisations and researchers knowledge-able on the subject and motivated to deepen the available evidence and understanding.

Emerging issues and Opportunities

1) Developing a sound evidence base to justify investment.2) Better integration public and private goods and costs and with policy

aligned to create a supportive environment for inclusive agribusiness.3) Understanding improving the incentive structure for inclusive agri-

business especially for small and medium scale enterprises.4) Mobilising responsible investment and optimising the catalytic role of

development finance.5) Driving wider scale food systems transformation through inclusive agri -

business to ensure long term sustainability, secure supply and nutrition and women’s empowerment.

6) Improving the effectiveness of multi-stakeholder partnerships.

Implications for the GDPRD

There are five areas where the GDPRD could add value in line with its role and focus on knowledge-sharing, networking and advocacy:

1) Fostering multi-donor support for integrated evidence gathering and research initiatives that work across donor and international agency programs in a coordinated way underpinned by a framework of indicators and metrics for assessing impact.

2) Encouraging and mobilising support for a global inclusive agribusiness learning alliance that better connects and coordinates knowledge sharing and capacity development activities.

3) Providing a networking and learning opportunities for the staff of GDPRD members who have operational roles and need to be kept informed of latest developments.

4) Keeping abreast of the implications of emerging evidence and research for development policy and programing and fostering high level engage-ment on these issues.

5) Promoting and supporting enhanced coordination and support by donors for national level policy dialogue on creating an enabling environment for inclusive agribusiness.

Recommendations

1) The GDPRD proceed with a work stream on inclusive agribusiness and establish a strong network of practitioners within its member organisations that cuts across, agriculture, trade, private sector engagement and market development themes.

2) Donors, supported by the GDPRD establish a coordinated mechanism for funding cross program impact assessment, meta-evaluation and research, driven by a knowledge and learning agenda jointly developed by key stakeholders.

3) Knowledge institutions and practitioner networks engaged with inclusive agribusiness form a global learning alliance to better coordinate activities reduce duplication and strengthen research activities, capacity develop-ment and knowledge sharing

4) The GDPRD host a workshop in early 2017 to develop a knowledge and learning agenda for inclusive agribusiness.

introduction | 5

1INTRODUCTION

This working paper has been prepared as back-ground for the inclusive agribusiness work streamof the Global Donor Platform for Rural Develop -ment’s (GDPRD). The paper outlines the conceptof inclusive business and its application to the agri-food sector, maps the current state of play andexplores implications for donors and the GDPRD.

It follows from the Annual General Assembly (AGA)pre-event on Investing in Inclusive Agribusiness,Geneva, 19 January 2016. The work has been under -taken in the context of the Platform’s new strategicplan that will focuses on rural transformation.

There is a long history of donor support for agri -cultural value chain and market systems programs.More recently the concept of inclusive business hasgained traction and the inclusive term is increasinglybeing used in relation to the agrifood sector andwork with small-scale farmers. There is also in -creasing private sector engagement in the issues ofinclusive and sustainable agriculture for example,the World Economic Forum’s New Vision forAgriculture with its Grow Africa and Grow Asiainitiatives.

Donors are increasingly looking at how they canmost effectively catalyse inclusive growth to helpovercome poverty through partnerships with theprivate sector.

There is a vast number of initiatives currentlyunderway that could be considered as “inclusiveagribusiness”. The paper provides an initial map-ping of this work and identifies emerging issuesand opportunities.

In particular, the paper highlights a weak and frag-mented evidence base regarding impact, whichrisks undermining the case for the much neededinvestment to take promising example to scale.Critics note that few inclusive business modelshave gone beyond pilot stage and reached scale.

The paper has been prepared through desk literaturereviews, discussions with representatives fromdonors and development organisations, outcomesfrom the AGA pre-event on Investing in InclusiveBusiness and attendance by the author at the GrowAfrica Investment forum and the BEAM ExchangeConference. It was beyond the scope of this initialwork to fully consider all programs and activitiesbeing supported by donors, instead the focus hasbeen on understanding the emerging broad con-tours of the field.

Inclusive agribusiness provides a perspective thatcan contribute to a deeper understanding of how toalign public and private interests and investmentsin pursuit of the Sustainable Development Goals.

6 | the global context

2THE GLOBALCONTEXT

Agriculture is back on the global agenda as a keydriver for sustainable development. For severaldecades up until the 2008 food price crisis, therewas a substantial de-investment in agriculture bythe international development community. This wasfuelled by views that the economic growth need toovercome poverty would largely come from othersectors.

The 2008 crisis brought a rethinking of the role ofagriculture in development and a renewed commit-ment to the sector. This was reinforced by the anal -ysis such as the World Bank’s Development Reporton “Agriculture for Development”1, the FAO HighLevel Expert Forum2 and the UK Government’s Fore -sight report3 on the “Future of Food and Farming”.

For many emerging economies, the agriculture sec-tor continues to make a significant contribution toGDP, be an important source of export income, andemploys a large proportion of the population4 (REF).Some 2-3 billion people at the bottom on the eco-nomic pyramid remain highly dependent on agri-culture for their livelihoods and ensuring globalfood security and nutrition is fundamental to globalstability and prosperity.

There has been a realisation that while jobs must becreated outside agriculture, agriculture will remaina critical instrument of development for decades tocome and that it underpins other economic anddevelopment processes.

For example, in Sub-Saharan Africa growth gener-ated by agriculture is estimated to be 11 times moreeffective than reducing poverty than GDP growthin other sectors5. Evidence of the increasing impor-tance of agriculture sector can be seen in the AfricanUnion’s 2014 Malabo Declaration on AcceleratedAgricultural Growth and Transformation for SharedProsperity and Improved Livelihoods6. The MalaboDeclaration was built on the AU’s ComprehensiveAfrica Agriculture Development Programme(CAADP) principles of agriculture-led growth,regional cooperation, evidence-based planning andpolicy, partnership, and expanded African financialcommitments.

However, transformation of the agriculture sectorcannot be achieved by governments alone. It requiresa coordinated effort by all stakeholders, includingfarmers, government, civil society and the privatesector. The role that agribusinesses need to play isvital: Agriculture and food production systems arelargely driven by private sector enterprises be theysmall-scale farmers, global agrifood companies orsmall and medium-sized enterprises.

Reflecting a wider trend in development thinking,over the last decade, donors too have shifted theiragricultural programming to engage more signifi-cantly with the private sector. Programs now typi-cally seek to leverage private sector investment,knowledge and market access to help achieve devel -opment outcomes. In part, this reflects a desire for

1 World Bank. 2007. World Development Report 2008: Agriculture for Development. Washington, DC. World Bank2 FAO High Level Expert Forum, 2009. Global Agriculture to 2050. 3 UK Government Office for Science, 2011. Foresight. The Future of Food and Farming.4 World Bank. 2007. World Development Report 2008: Agriculture for Development. Washington, DC. World Bank; DFID. 2014.

Agriculture and Growth – Agriculture and growth evidence paper series. DFID. London; Adam Smith International. 2015. Final Report: Agriculture and Economic Growth Study for the Department of Foreign Affairs and Trade. DFAT. Canberra

5 World Economic Forum, 2016. Grow Africa: Partnering to Achieve African Agriculture Transformation. p. 2.6 http://pages.au.int/sites/default/files/Malabo%20Declaration%202014_11%2026-.pdf

donor funding to play a more ‘catalytic’ role in theagriculture sector – that is, to catalyse the changesneeded in agriculture value chains for pro-poor out-comes. In part, this reflects a shift with many donorgovernments to the centre-right, with accompanyingemphasis in private sector (rather than governmentor civil society) driven solutions to address devel-opment challenges. From a technical perspective,many donors are now adopting market systems(also referred to as Making Markets Work for thePoor or M4P) approaches in their agriculture pro-gramming. Using the market systems approach,agribusinesses are key market actors and are part-nered with to drive systemic change in the agricul-ture sector. The recognition that trade can play atransformative role in many agriculture value chainshas also led to many donors funding aid for trade(A4T) initiatives with the aim of supporting devel-oping countries to export their agricultural products.

At the international level, initiatives such as theWorld Economic Forum’s New Vision for Agricul -ture7 seek to strengthen collaboration through multi-stakeholder platforms such as Grow Africa andGrow Asia.

Simultaneous to these changes in donors, many private sector players –in particular larger agrifoodcompanies– have recognised the importance ofdevel oping inclusive and sustainable business mod-els to secure their long term supply base, managereputational risks and create market growth.

7 https://www.weforum.org/global-challenges/projects/new-vision-for-agriculture/

8 | what is inclusive agribusiness?

3WHAT IS INCLUSIVEAGRIBUSINESS?

3.1 THE WIDER INCLUSIVE BUSINESS AGENDA

An inclusive business benefits poor producersand/or consumers by providing access to markets,services and products in ways that improve theirlivelihoods, while at the same time being a prof-itable commercial venture. The term was givenprominence by the World Business Council forSustainable Development as far back as 2005 andhas become a widely understood concept thatbridges the interests of business and developmentorganisations. Inclusive business was a significantfocus of the G20 Development Working Groupduring Turkey’s 2015 presidency.

Given the requirement for scale and systemic change,inclusive business goes well beyond philanthropyand corporate social responsibility (CSR)9. It aimsto integrate inclusive approaches into the core com-mercial operations of a business. It recognises thatbetter functioning markets for the 4 billion or morepeople at the bottom of the economic pyramid is akey to tackling poverty and inequality while alsocreating opportunities for business growth.

As the ADB highlights, there is a need for clarityon the terminology around inclusive business10.The G20 framework11 distinguishes between:

8 http://www.inclusivebusinesshub.org/page/ib-asia-definitions9 ibid10 Bauer, Armin, 2015. The under-exploited potential of Inclusive Business in Asia.

Blog post on The Practitioner Hub on Inclusive Business.11 G20 Development Working Group, 2015. G20 Inclusive Business Framework, p. 5

BOX 1 INCLUSIVE BUSINESS DEFINITIONS8

G20 Inclusive Business Framework

Inclusive businesses provide goods, ser vices, and livelihoods on a commer cially viable basis, either at scale or scalable, to people living at the base of the economic pyramid (BOP) making them part of the value chain ofcompanies’ core business as suppliers, distributors, retailers, or customers. Inaddition to these commercially inclusiveactivities, businesses may also pursuebroader socially inclusive goals. Inclusivebusiness should promote sustainable development in all its dimensions – economic, social and environmental.

The Asian Development Bank (ADB)

Commercially viable core business models that provide – at scale –innovative and systemic solutions to the relevant problems of the poor and low income people.

what is inclusive agribusiness? | 9

• IB models as commercially-viable and scaled-up core business models often promoted by medium-sized family-owned national companies or as a dedicated business line of larger companies

• IB activities as smaller non-core actions of companies to promote social and/or environmental purposes, and often sponsored through CSR; and

• IB initiatives as for-profit or not-for-profitwork with the poor and low income people,often locally focused without scale and bankability, often promoted by social enterprises.

There is a need to define what is, and what is not,an inclusive business as many businesses do involvethe poor (as customers, suppliers, workers or dis-tributors) without providing innovative or system-atic solutions to tackle the challenges faced by poorand low income people12. For example, do business-es have to reach a certain number of poor people tobe considered inclusive and is this in absolute termsor a proportion of those reached13? Using the G20definition, IB models need to be commercially-viable and scalable solutions, while IB activitiesand initiatives may be smaller in impact and oftencommercially not viable or not core business work.

For the poor and for businesses there are many barriers – many of which are structural – to creat inginclusive business models. The G20 Develop mentWorking Group (2013) notes four broad policyconstraints in doing business with low-incomecommunities: limited information about the targetmarket; missing or burdensome regulations, whilemarket informality can make it difficult to establishformal business relationships; incomplete publicstructures and capacity such as transportation

12 Also see Wach, Elise, 2012. Measuring the Inclusivity of Inclusive Business. IDS Practice Paper 913 Wach, 2012.14 G20 Development Working Group, 2015. G20 Inclusive Business Framework, p. 5

TABLE 1 DIFFERENCES BETWEEN INCLUSIVE BUSINESS MODELS, ACTIVITIES AND INITIATIVES14

INCLUSIVE BUSINESS INCLUSIVE BUSINESS SOCIAL ENTERPRISEMODELS ACTIVITIES INITIATIVES

BOP’s Relationship Core Value Chain Ancillary Ancillary or to Business Core Value Chain

Financial Returns Market Returns Market returns or Not Profit Expectations Below Market Returns Maximizing

Primary Funding Commercial Commercial MixedType

10 | what is inclusive agribusiness?

systems, energy grids or healthcare services; andlimited financial resources and access to furtherfinance, both to fund company growth and allowlow-income groups to actively participate in markets(see diagrammatic representation in Figure 1).16

The G20 work also identified policy related con-straints to inclusive business as outlined in table 217

(see page 11).

Many donor agencies and development organisa-tions, including DFID, SIDA, SDC, CanadianGlobal Affairs, and Australian DFAT, now havestrategies of using market systems approaches tohelp achieve development outcomes. This reflectson one hand a philosophy of economic empower-ment, rather than only charity, and on the otherrealisation that reducing poverty at a significantscale can only be achieved through addressing systemic constraints in markets and changing howmarkets work for the poor.

15 Ibid. 16 G20 Development Working Group, 2013. Policy Note on Inclusive Business Policies: Recommendations for Governments and Donors.

p. 2-3, as summarised in the DCED Synthesis Note on inclusive business models.17 From http://www.g20challenge.com/wp-content/uploads/2013/09/G20_Policy_Note_on_Inclusive_Business_Policies_G20_Summit_

September_2013.pdf

FIGURE 1 G20’S INCLUSIVE BUSINESS ECOSYSTEM15

3.1.1 Inclusive Business in the AgriFood Sector

Inclusive agribusiness is simply the inclusive busi-ness idea applied to the agriculture and food sectors.This document, take a broad definition of ‘inclusiveagribusiness’. Using the G20 distinctions, inclusiveagribusiness is “an inclusive business model, activ-ity or initiative within agrifood market systems, atlocal, national, regional or international scales, thatseek to achieve pro-poor outcomes while beingcommercially profitable for the business entitiesinvolved”.

From this perspective it is important to clarify thatinclusive agribusiness is not just what businessesdo but includes how business, government, devel-opment organisations partner and invest to createthe incentives for viable inclusive business models.It would perhaps be more accurate to talk of creatinginclusive agrifood markets, however to align withthe broader work on inclusive business in makes

what is inclusive agribusiness? | 11

sense to keep with the business term. It also rein-forces that in the end it is businesses who imple-ment inclusive strategies and that the whole ideaonly works if it is commercially viable for them.

In 2012, the Seas of Change international learningworkshop brought together 100 leaders from busi-ness, development organisations, government,farmers’ organisations and research for an exchangeof experiences, innovations and questions aroundinclusive agrifood markets (business). This work ledto the criteria below for inclusiveness in the sector.Since this workshop, there has been a growing bodyof work on inclusive agribusiness. For example,

the UN Food and Agriculture Organisation (FAO)devel oped and piloted their inclusive business model(IBM) approach across 16 countries (see their defi-nition of an IBM in Box 3, page 12). Similarly,GIZ developed a guide to inclusive business that isaimed at helping companies interested in develop-ing business relationships with smallholders18.

The agrifood sector has very significant opportuni-ties from an inclusive business perspective, but alsosignificant challenges. There are some 500 millionsmall scale farmers on whom the over 2.5 billionpeople directly depend and seventy percent of thepoor still living in rural areas and depend largely

TABLE 2 CONSTRAINTS TO INCLUSIVE BUSINESS

Type of constraint

Type ofapproach

INFORMATION RULES FINANCIAL RESOURCES

STRUCTURE AND CAPACITY

Enablecompanies to enterlow-income markets

Encouragecompanies to investin inclusive business

Empowerlow-income peopleto participate in markets

• Data• Research• Peer

learning

• Awards

• Awareness raising

• Overarching policy frameworks

• Legal forms • Industry

regulation • Standards

• Obligatory inclusion

• Formalizing informal markets

• Market-rate credit

• Subsidies and tax relief

• Impact investing funds

• Guarantees• Public

procurement

• User subsidies

• Insurance schemes

• Infrastructure

• Development partnerships

• Capacity building

18 GIZ. 2012. Growing Business with Smallholders, A Guide to Inclusive Agribusiness. GIZ. Bonn

19 Woodhill et al, 2012. From islands of success to seas of change: a report on scaling inclusive agri-food markets. Seas of Change Initiative p. 4

20 FAO, 2015. Inclusive business models – Guidelines for improving linkages between producer groups and buyers of agricultural produce, by Kelly, S., Vergara, N. & Bammann, H. Rome, Italy. p.4.

BOX 3WHAT IS AN INCLUSIVE BUSINESS MODEL? – FAO 201520

An inclusive business model:

1. provides a living wage for vulnerable groups, such as smallholder groups, small enterprises, women- and youth-run enterprises, while also enabling buyers to profit;

2. uses flexible trading arrangements that make it easier for smallholders or MSEs to supply a buyer,such as cash on delivery, accepting small consignments, providing reliable and regular orders;

3. supports farmers and small enterprises to establish a stronger negotiation position through skills development, collective bargaining and access to market information and financial services;

4. builds on the skills and expertise of existing market players, including traders and processors, and promotes value chain collaboration, transparency in pricing mechanisms, and risk sharing;

5. is scalable in the medium-term so that the numbers of small actors involved can be increased and/or the type of business model can be replicated in other value chains or parts of the sector;

6. allows for diversified income streams in the long term to enable the dissemination of upgraded skills to the rest of the sector, avoiding overdependence on any single buyer or market outlet.

12 | what is inclusive agribusiness?

BOX 2WHAT IS AN INCLUSIVE AGRI-FOOD MARKET OR BUSINESS? – SEAS OF CHANGE, 201219

Agribusinesses are inclusive when they:

1. Create opportunities that enable small-scale farmers and their cooperatives to become economically viable business partners in supply chains.

2. Support small- and medium-scale enterprises to flourish as processors and service providers along the supply chain.

3. Provide employment opportunities under fair labour conditions.4. Establish agri-clusters/centres that help to drive overall rural economic

prosperity.5. Deliver healthy, affordable, accessible food products and services

for low-income consumers in rural and urban areas.6. Give all stakeholders and in particular marginalised groups

(small-scale farmers, women, youth, unorganised labour) a voice in governance and investment.

what is inclusive agribusiness? | 13

on agriculture for their livelihoods. Consequently,linking small-scale farmers into new market oppor-tunities can have a significant impact on poverty.And there are also many opportunities for pro-pooreconomic development along the entire supply chain.

The agrifood sector has particular features andchallenges that require unique approaches andinnovations when developing inclusive business.

These include:21

• high levels of uncertainty and risk due to dependence on weather conditions and global market forces;

• a dispersed supply base involving large numbers of producers. Aggregation and bulking can often be cost ineffective;

• limited human capacity

21 Adapted from Woodhill, J. et al, 2012. From islands of success to seas of change: a report on scaling inclusive agri-food markets. Centre for Development Innovation, Wageningen UR

• a dispersed client base for goods and services such as agricultural inputs, credit, training, market information and so on;

• product perishability, requiring process, storage and logical systems;

• high levels of agricultural and food waste; • requirements of global agricultural trade

systems, including sanitary and phyto-sanitary standards, that must be met.

3.2 INCLUSIVE AGRIBUSINESS, VALUE CHAINS AND MARKETS SYSTEMS

Inclusive agrifood business overlaps with a rangeof other concepts including making markets workfor the poor (M4P) now often referred to as the mar -ket systems approach, the Bottom of the Pyramid(BOP), and sustainable value chain development,see Figure 2. While some businesses use the term‘inclusive’ others embed the idea in the broaderconcept of sustainable supply chains.

FIGURE 2 KEY CONCEPTS

14 | what is inclusive agribusiness?

3.3 THE BUSINESS CASE FOR INCLUSIVE AGRIBUSINESS

The World Banks estimates that by 2030 agricul-ture and agribusiness in Africa will grow to a US$1trillion industry, up 3 fold from 201022. This is avast economic opportunity for local African busi-nesses, farmers, and national economies as well asfor trade and foreign investment. In Asia, while theagribusiness sector is less significant in terms of

overall GDP the Asian Development Bank23 notesthat it remains critical to the long term economicstructural change in the region due to continuinghigh levels of employment in the sector.

Broadly the business case for inclusive agribusinessis that with growing demand for agricultural andfood products and constrained resources the world’ssmall-scale producers (along with small-scale entre -preneurs along the food chain) will be key to meet-

22 World Bank. 2016. Enabling the Business of Agriculture 2016: Comparing regulatory good practices. World Bank. Washington DC23 ADB, 2013, Agriculture and Structural Transformation in Developing Asia: Review and Outlook

TABLE 3EXPLANATION OF CONCEPTS

CONCEPT

Inclusive Agribusiness

Sustainable Agricultural Value Chains

Agricultural market systems

TYPICAL IMPLEMENTATION MECHANISMS

Explicit business sustainability/inclusiveness strategies; businessplatforms (Grow Africa/Grow Asia;commodity round tables); public pri-vate partnership funding mechanisms(enterprise challenge funds, grantingmechanisms; Sustainable TradeInitiative); Impact investment andsocial entrepreneurship; innovativedevelopment financing (equity, under-writing risk, soft loans); business development services; enabling policy.

Stakeholder platforms for value chaincoordination; facilitation of marketlinkages; organisation of small scaleproducers; financial services for producers; improved agriculturalextension;

Donor funded market developmentprograms that target specific marketopportunities and facilitate marketlinkages and broker deals with privatesector actors to achieve pro-poorimpact

FOCUS

Businesses (of all scales) changingthe way they operate and invest to beinclusive of the needs and economicopportunities for poor people. Thefocus is on the incentives for businessto operate in this way and how thiscan be influenced by policy, advocacyand the funding mechanisms of devel-opment agencies.

Improving the coordination communi-cation and incentives between actorsalong value chains to improve effi-ciency, sustainability and access forfor poor producers.

Intervening in market systems to create systemic changes so that themarket works in a beneficial way forpoor consumers and producers andbe commercially viable.

what is inclusive agribusiness? | 15

ing future demand. In reference to sustainable foodvalue chains, David Niven from FAO has illustratedthe overall economic and food security benefits fromgreater commercialisation of small-scale agricultureas illustrated in Figure 3 below.

The inclusive business case for agrifood sectorfirms is driven by three main dimensions:

1) Securing a supply base: With rapidly growing demand for agri-food products, businesses will need to stabilise their supply base by using the potential of small-scale producers and processors

2) Market growth: Generating a positive spiral of wealth with large numbers of people at the base of the economic pyramid, which creates new markets for business

3) Reputation management: Businesses are able to enhance and protect their reputations for social responsibility and ensure a ‘licence to operate’ in the face of growing public scrutiny of business practices and rapid communication technologies.

The business case for inclusive agribusiness needsto be considered from the perspective of differentmarket actors with the following 6 groups beingparticularly critical (see Table 4, following page):

1) small-scale producers and micro-enterprises (and their organisations)

2) national and regional agribusines3) multinational agribusinesses4) financial service companies5) national governments6) donors and development organisations

Further, inclusive agribusiness depends on invest-ment from, and relations and partnerships betweenthese different groups and will only be successfulwhen there is a clear business case for all actors,given public and private interests, in a particularmarket context.

FIGURE 3 THE SUSTAINABLE FOOD VALUE CHAIN DEVELOPMENT PARADIGM

16 | what is inclusive agribusiness?

TABLE 4OPPORTUNITIES AND RISKS FOR MARKET ACTORS

MARKET ACTOR

Small-scale Producers and Micro-Enterprises

National and Regional Agribusiness

Multinational Agribusinesses

Financial Service Companies

National Governments

Donors and DevelopmentOrganisations

OPPORTUNITIES AND BENEFITS

new market opportunities; increasedincome; access to technical advice,inputs and finance; guaranteed contracts

Reliable access to better quality supply, new market opportunities,increased profitability, brand identity

Reliable access to better quality supply, new market opportunities,increased profitability, brand identity,social licence to operate, access to dialogue with government, managingglobal reputational risks

New market opportunities, increased profits

Reduction of rural poverty, increasedtaxes, greater foreign investment,increased export income

Greater impact on poverty throughmobilising private sector resources andmarket forces, creation of more sustain-able solutions to poverty

RISKS AND CONSTRAINTS

marginal income increase; unfair/exploitive contractual arrangements;dependency on single buyer; benefitsmainly flow to already better endowedproducers; lack or organisational capacity; limited public infrastructureand services

Side selling by producers, limited return on inclusive practices, lack ofknowledge and resources to engage,poor business enabling environment

Side selling by producers, limited return on inclusive practices, embed-ding across entire business operation,negative campaigning by NGOs, poorbusiness enabling environment

High transaction costs, high agri-cultural risks, poor understanding ofagricultural sector

Lack of large scale impact on poverty,free riding by private sector, wealth/resource capture by elites, NGO criticism, lack of resources to provideinfrastructure and services, weakcapacity to develop enabling policy

Unable to reach the poorest, limitedscale of impact, association withexploitive/unsustainable practices bybusiness, NGO criticism of working with private sector, inability to alignfunding mechanisms with market/private sector needs; lack of capacity to work with the private sector

what is inclusive agribusiness? | 17

3.4 REQUIREMENTS FOR AGRIFOOD SECTOR DEVELOPMENT

It is important to recognise that inclusive agribusi-ness is no panacea to the wider requirements andchallenges of agricultural development. Broadly, anintegrated set of public and private investments areneeded to:

• Raise awareness, understanding and commitment for agricultural development

• Develop agricultural technology and management practices

• Provide advisory services, extension and develop capacity

• Create access to financial services• Create access to agricultural inputs• Provide transport, market and processing

infrastructure• Create enabling policies and regulations

3.5 SUMMARY – ARTICULATING UNDERLYING ASSUMPTIONS AND A THEORY OF CHANGE FOR INCLUSIVE AGRIBUSINESS

• Agriculture continues to play an important role in the economies of low and middleincome countries and remains a critical sector for tackling poverty, reducing inequality and enabling women’s econom-ic empowerment.

• A socially inclusive and environmentally sustainable commercial transformationof small-scale agriculture is required torealise the potential of agricultural forinclusive development

• This transformation requires:

– Structural change recognising that the route out of poverty for many will be toleave agriculture, while for others theywill need to scale up to be more marketoriented and commercially viable.

– Maximising the benefits the poorest of the poor can realise from agriculturein the short term to provide pathwaysout of poverty for next generations.

– Optimising the role of agriculture as a driver of vibrant rural economies withvalue adding and service sectors, integrated with the off farm-economy,to maximise employment opportunitiesin rural areas.

– Creating conditions for responsible investment in the sector by small, medium and large scale businesses.

– Creating business models and livelihood strategies that help to economically empower women andcreate agriculture and rural sectorjobs for youth.

BOX 4PERENNIAL CHALLENGES FOR AGRICULTURAL DEVELOPMENT

• Poor rural infrastructure• Limited access to financial services

for small-scale producers, micro-entrepreneurs and SMEs

• Poor rural services• Lack of secure and land tenure• Gender inequality• Corruption• Poor social protection

– Ensuring resilient local and global food systems, that can ensure food demands can be met at affordableprices for rural and urban populationsin the face of climate change, naturaldisasters disease outbreaks andextreme market volatility.

– Creating food systems that enable good nutrition

• To drive this transformation there is a need to shift focus from agricultural production to agricultural value chainsmarkets that connect business andinvestment from production through toconsumption in an inclusive and sustain-able way.

• The scale of the change needed is such that it will only occur through using thecatalytic force of markets and private sector investment.

• Strong enabling policies are needed to enable both private sector investmentand to ensure agricultural developmentis social and environmentally desirable.

• Business and policy dialogue are essential for driving inclusive and sustainable busi-ness approaches and creating supportivepolicies and there is a need for public private partnerships to better integratepublic good and private good outcomesfrom the sector.

• There are a series of key constraints to realising the potential of more inclusiveand sustainable agricultural value chainsthat need to be overcome, these include:

– limited capturing and sharing of lessons from and between projects,

– development organisations and knowledge institutions lacking thecapabilities to analyse develop-ment market opportunities and toengage effectively with private sec-tor players,

– weak enabling policy environment,

– limited knowledge by business playersabout how to make their operationmore inclusive and sustainable andlack of an evidence base to justifyinvestment or changed practices.

• These constraints require strategic level engagement and often regional collabo-ration and dialogue that bring business,government, civil society and researchplayers together.

• To engage effectively such players need to develop their own capacity and haveaccess to good information.

developments and results to date | 19

4DEVELOPMENTS ANDRESULTS TO DATE

4.1 THE INCLUSIVE AGRIBUSINESS “ECOSYSTEM”

The inclusive agribusiness field has evolved rapidlyover recent years, particularly since the 2008 foodprice crisis. As illustrated in Figure 4, there is nowa wide range of interconnected initiatives beingsupported by individual businesses, governments,business platforms, donors, NGOs, multilateralorganisations, foundations and research institutions.

This has resulted in thousands of specific projectsworking to link small-scale producers with marketsto help tackle poverty. These have been initiatedthrough a combination business, NGO, and donorprogram efforts. To date most efforts of business towork explicitly in an inclusive way (as opposed tosimply buying from or seeling to small-scale pro-duces have been linked to some form of donor orphilanthropic financing.

As detailed below many large agrifood businessfirms have specific strategies and programs address -ing inclusive practices in their supply chains, whichare also supported by a range of business platforms.There is a wide array of programs from donors andinternational agencies that either directly or indirectlysupport inclusive agribusiness.

Most NGOs involved in agriculture and rural devel -opment have established value chain and marketdevelopment programs and increasingly work in

partnership with agri-food sector businesses. Thereis a broad spectrum of the roles and philosophiesNGOs bring to their work in this space from thosewho are working collaboratively with largely cor-porations to those who play a more critical advocacyrole. The rich diversity of NGO work provides avitally important context for the development ofinclusive agribusiness business especially aroundcreating transparency and standards, bringing acritical voice, helping to build capacity and sup-porting multi-stakeholder partnerships.

There are at least seven significant practitionerknowledge hubs/networks, some of which are agri-culture focus and other that are inclusive business/market systems focus but still with a significantagriculture sector engagement.

Many universities and research institutes haveresearch programs focused on various aspects ofinclusive agribusiness. These range from academicstudies to very applied work that is of more rele-vance to business players. There is an emergingalliance between a number of institutes. However,overall the field still lacks investment in a coordi-nated applied research effort.

4.2 INCLUSIVE AGRIBUSINESS DEVELOPMENT PROGRAMS AND FINANCING MECHANISMS

Through a diversity of mechanisms bilateral donors,multi-lateral agencies, development banks andfoundations are all heavily involved in supportingand financing inclusive agribusiness initiatives(although they may use the terminology of valuechains or market systems). Currently there is nooverview of this support and it comes variouslyfrom thematic work that includes agriculture andfood security, rural development, market develop-

20 | developments and results to date

ment, financial inclusion, improving the enablingbusiness environment and private sector engagement.Broadly this work is split between initiatives thatare agriculture specific and those that are privatesector and market oriented but which neverthelesshave a significant agriculture and food focus becauseof the sectors importance for poverty reduction.

Assessing the scale of funding for inclusive agri -business is difficult. There is no specific OECDDevelopment Assistance Committee (DAC) codefor inclusive agribusiness. Further complicated bydonor funding for inclusive agribusiness comingfrom across agriculture, private sector developmentand trade budget lines. Judging on the size of some

key programs and the overall size of donor expen-diture on the agriculture sector funding relatedinclusive agribusiness could well be in excess ofUS 3 billion per year. This would be for inclusiveagribusiness programs where there is some form ofpartnership or engagement with private sector actorsto drive more inclusive practices in business opera-tions. Expenditures that help to create an overallenabling environment for inclusive agribusinesswould be much higher and arguable include theentire development spend on the agriculture sector.

Annex 1 provides an overview of different programsand initiatives by key donors and multi-lateralagencies in the inclusive agribusiness space.

FIGURE 4 MIND MAP OF ILLUSTRATIVE INCLUSIVE AGRIBUSINESS INITIATIVES

Figure 4:Note: this is illustrative of the dimensions of inclusive agribusiness and not intended to list all initiatives. The details of this mind map can be viewed in Annex 4 and is available online at http://www.xmind.net/m/sCmZ

developments and results to date | 21

Broadly this support falls into 4 categories:

1) Value chain and market development programs: these are initiatives focused on a specific value chain or markets mostlyin one country and generally funded byindividual donors, working throughimplementing consultancy firms or civilsociety organisations. The large bulk ofthe funding for inclusive agribusiness istied up in these programs.

2) Support for business platforms: Donors are also supporting a range of businessdriven platforms that encourage inclusiveagribusiness. These include the work ofthe World Economic Forum’s New Visionfor Agriculture Grow Afric and Grow Asiainitiatives and commodity round tables.While strategic, the level of funding forthese initiatives is quite small relative tosupport for value chain and market devel-opment programs.

3) Specific initiatives: There are a number of specialised initiatives that have beenset up to support inclusive agribusinessmost notably, the New Alliance and theSustain able Trade Initiative.

4) Multi Donor Trust Funds: These include initiatives such as the Global Agricultureand Food Security Program (GAFSP), inparticular it private sector window, theMulti-donor Trust fund for CAADP and theAfrican Enterprise Challenge Fund(AECF)

This donor support seeks to address a wide arrayof challenges or barriers to inclusive business (seeTable 5)24. Actions target a range of actors, fromsmallholders to SME value chain actors to bigagribusiness. Their ultimate aim may be to supportsmallholders as producers, or as consumers of inputssuch as irrigation, fertiliser, financial products, orICT products.

An ongoing challenge for donors and the publicsector is to find ways of working with the privatesector that ensures “additionally” in terms ofimpact on poverty. It is clear that the private sectoris critical for achieving inclusive and sustainabledevelopment in the agriculture and food sectors.

However, finding mechanisms for effective part-nering and co-investment that are transparent andavoid any reputational risks for the use of publicresources is an ongoing challenge.

4.3 PRIVATE SECTOR INITIATIVES

Most large global agri-food sector companies, forexample, such as Unilever, Nestle, Olam, Rabobank,Swiss-Re and Syngenta, have company plans forhow they will work in an inclusive and sustainableway in the sector. These plans are driving changewithin how companies operate internally and lead-ing to collaboration with other companies andstakeholders.

Alongside individual company efforts are businessplatforms. These include, The World EconomicForum’s New Vision for Agriculture, the SustainableAgriculture Initiative Platform (SAI), the Sustain -able Food Lab and a range of sector specific round-

24 See also IFC, 2010. Inclusive Business Solutions: Expanding opportunity and access at the base of the pyramid, p. 3-4 for inclusive business solutions that are not specific to the agriculture sector.

22 | developments and results to date

TABLE 5EXAMPLES OF DONOR INCLUSIVE BUSINESS INITIATIVES

CHALLENGES THAT THE IB INITIATIVESSEEK TO ADDRESS

1. Smallholders’ poor linkages to value chains (as producers and consumers)

2. Poor linkages to global value chains

3. Lack of capital (for agribusinesses)

4. Lack of information, financial resources or services for smallholders

5. Lack of infrastructure

6. Lack of access to technology

EXAMPLES OF ACTIONS

Support to farmers’ cooperatives or other forms of aggregation, qualityimprovement, joint marketing, designing appropriate products (e.g., smaller fertiliser sachets, low cost irrigation)

Working capital, certification programs, improving traceability, trade facilitation, multi-stakeholderplatforms, matchmaking servicesbetween businesses or with funders

Development capital, enterprise challenge funds, fund matchmakingservices

Mobile phone price information systems, financial services for smallholder farmers

Improved transport, ICT, storage facilities

Technology transfer, agricultureresearch for development (AR4D) programs

EXAMPLES OF DONOR INITIATIVES

Value chain and M4P programs of many donors, e.g., GIZ’s Africa Cashew Initiative, DFID’s Katalyst program, DFAT’s PRISMA program,Europeaid’s Small Farmers’Organisations in Africa Program(SFOAP)

DFID’s Food Retail Industry ChallengeFund (FRICF), The Sustainable TradeInitiative (IDH), ASEAN’s Standards inSoutheast Asian Food Trade, IFC’s loans and technical assistance, BMZ’s‘Cotton made in Africa’ initiative, DFID’s Connect to Grow, Business Callto Action (BCtA), WEF’s Grow Africa and Grow Asia

Africa Enterprise Challenge Funds,African Agriculture Fund, BMZ’sdeveloPPP.de, IFC, GAFSP’s PrivateSector Window

DFID support for Safaricom’s M-Pesa,BCtA pledge by Thomson Reuters todevelop an agricultural information tool for farmers

Loan programs of AfDB, ADB, and World Bank

USAID’s Ag TechXChange, DFID’sAgriculture Technologies Catalyst Fund

developments and results to date | 23

table platforms (e.g. palm oil, fisheries, cocoa, soy).There are also a range of business initiatives pro-moting inclusive business generally and not specif-ically focused on the agriculture and food sectors,these include, for example, the World BusinessCouncil for Sustainable Development (WBCSD),Business Fights Poverty.

Over the last 5 years, the work of the World Eco -nomic Forum’s New Vision for Agriculture hasgained momentum with the establishment of theGrow Africa and Grow Asia and the Transforma tionLeaders Network. This work is being supported byUSAID, DFID, DGIS and Canadian DFATD andAustralian DFAT. In September 2015 an ASEANRegional Roundtable on Inclusive Agribusiness washeld linked with the establishment of Grow Asia. TheGDPRD was an active partner in this roundtable.

To date larger international agrifood companieshave been at the forefront of inclusive agribusinessinitiatives and gained most of the attention. In partthis has been driven by consumer demands ofNorth ern markets. There is now an increasing num-ber of local businesses becoming engaged, how -ever the scale of this engagement is currently hardto assess.

4.4 FINANCING INCLUSIVE AGRIBUSINESS

Limited finance for agriculture is widely recognisedas one of the key constraints for development ofthe sector in general and in particular for inclusiveagribusiness and the linking small-scale farmers tomarkets. There are now a wide range of initiativesacross donors, development banks, NGOs and the

Partnering with business is always going to be a contentious issue for donorsand NGOs. On the other side, for business demonstrating the results from theirstated commitments to responsible, inclusive and sustainable practices is import fortheir brands and for a social licence to operate.

Inclusive agribusiness does have its risks or what Oxfam has called moral hazards. Thesepotentially include creating a veil for exploitive practices; debate and policy influence being dom-inated by powerful interests; problems in the global food system being reduced to technical focuswhile ignoring deeper political economic issues; the critical voice of development organisations beingco-opted due to partnerships with business; or development efforts being side-tracked away fromwhere they can have the most benefit for the most in need.

BOX 5MANAGING RISKS IN DONOR–FUNDED INCLUSIVE AGRIBUSINESS INITIATIVES

Recognising and avoiding these hazards is essential to gain broad stakeholder support for innovativepartnerships between the public and private sectors. Especially in an era where the boundaries betweenpublic and private goods increasingly overlapping. Ways of doing this include having clearer vision of therole and transformation of small-scale agriculture; clarifying the public and private good aspects;investing in transparency and accountability mechanisms; encouraging a strong civil society voice; andensuring open and effective processes of multi-stakeholder engagement.

24 | developments and results to date

BOX 6REFLECTIONS ON FINANCING INCLUSIVE BUSINESS (IB) FORUM THE 2ND ASIA INCLUSIVE BUSINESS FORUM

Investments in IB are expected to increase rapidly in the next years. However IB will remain – by volume – a niche asset class, where good money can be made and lots of social impact created. Whilethe number of IB investments will increase and new investors come in, IB cannot become the main busi-ness line of large banks or development banks, given the relatively small size ($3–$50 million) of deals.

Development banks are strong actors in promoting the IB agenda: Development finance institutions likeADB, IFC, IADB and bilateral development banks are increasingly interested in IB as an investment case fortheir private sector and for their sovereign operations. Governments and development partners, how ever, askdevelopment banks to provide more than just financing and also engage more actively in the enabling environ-ment for IB. Development banks can do this only if they are equipped with additional grant funding.

Commercial banks can do more but need to know better: Apart from impact investors, commercial banks are alsogetting increasingly interested in the IB space. Their important roles in scaling businesses of different sizes, andadapting their processes to IB was highlighted. However, the sum of their investments is still small, given thesmall number of bankable deals, risk perceptions in the sector, and investment procedures that somehow dis-favour smaller deals in the range of $3-$50 mn which are typical for IB models. The meeting included a trainingworkshop for bankers and impact investors in the region on risk perception and structuring finance of IB invest-ments. It was agreed that ADB and Credit Suisse will offer a second training in 2016.

More information about appropriate risk assessment and innovative structuring of financing was highlighted asa key necessity. These were hotly discussed in 3 Forum sessions (perspectives of impact investors, investmentrisks, IB finance through commercial banks) and the bankers training. It was suggested to establish a systemof closer exchange of information between those actors and the development banks, especially given thesmall number of investable deals, the different financial needs of IB companies, and the different marketsizes impact investors, banks, and development banks are targeting.

Philanthropist are increasingly interested to use their grants, patient venture capital, and corporatesocial responsibility (CSR) funding more strategically to develop IB models. Philanthropist are alsoincreasingly seeing the role of governments and industry association to create a better enablingenvironment for companies that provide value for society, and would like to support this, if con-crete programs to support IB and SE are being developed. The Forum featured an interestingsession on the strategic role of CSR.*

* http://www.inclusivebusinesshub.org/profiles/blogs/the-under-exploited-potential-of-inclusive-business-in-asia

private sector targeted to improving financial flowsand services to the sector. Mostly these are notframed as specifically relating to inclusive agri -busi ness but never-the-less are heavily oriented tothe agriculture sector and to providing the financialservices required by small scale-producers. Reflect ing a wider trend in the development sector,there is growing interest in innovative financingmechanisms for agriculture. These mechanismsinclude blended financing models that integratepublic and private sources of finance, impact invest -ing, micro-insurance schemes and mobile banking.

Financing inclusive agribusiness is complex andthe different financing needs, sources, constraintsand risks need to be well understood. Broadly thereare the needs of large scale agribusinesses, SME’salong value chains and the small-scale producersand micro-entrepreneurs. However, there are manyinterconnections between these three main groupsas there is much internal financing in agriculturalvalue chains, through for examples buyers or inputsuppliers providing credit to producers.

4.5 RESULTS TO DATE

The core idea of business and development organi-sations working together to tackle poverty throughcommercial market opportunities in the agricultureand food sectors has unquestionably gained a verystrong foothold. There are now literally thousandsof projects and initiatives that could be consideredas inclusive agribusiness. The underlying approach

of improving the way markets work for small-scaleproducers and entrepreneurs in the sector has beenwidely accepted and adopted by many businesses,donors and development NGOs.

However, as noted by the CARANA Study, com-missioned by the Australian Department of ForeignAffairs and Trade, on “Trends in public-privatepartnerships (PPPs) and inclusive business models(IBMs) for improving food security and rural devel -opment through agriculture”, there is remarkablylittle evidence to date on the scale of impact or thedepth of the inclusive benefits for the poor. Therehave been very few cross case study analyses done,and very little synthesis of what evidence does exist.

For practitioners involved in the inclusive agribusi-ness space (this author included) there appears to beplenty of anecdotal evidence of successful exampleswhich keeps driving faith in the inclusive agribusi-ness effort. There are a limited number of collationsof case studies25 that reinforce this view. However,from all quarters of the inclusive agribusiness fieldthere are calls for a much greater focus on scalingup inclusive agribusiness efforts. This widespreaddemand from involved businesses and practitionersin itself suggests that at this stage the impacts aremore limited than might be hoped for.

To date the most successful examples of inclusiveagribusiness come from the sectors such as coffee,cocoa, tea and palm oil, where small-holders arecritical in supplying to a global value chains andwhere there are large international firms involvedwho are driven by concerns over long-term supplyand reducing reputational risks.

Beyond direct evidence of impact at scale frominclusive agribusiness on poverty, the case can bemade that a considerable amount has been achieved,including:

25 Two key documents that illustrate the value of cross case study comparison are: Graf, Jessica et al. (2015). Smallholder farmers and business: 15 pioneering collaborations for improved productivity and sustainability. Report prepared by Hystra; Monika Sopov, Yeray Saavedra, Wytse Vellema, Yared Sertse, Henric Verjans. 2014. Is Inclusive Business for you? Managing and upscaling an inclusive company: Lessons from the field. Wageningen UR (University & Research Centre). Wageningen.

developments and results to date | 25developments and results to date | 25

26 | developments and results to date

26 Oxfam. 2014. MORAL HAZARD? ‘Mega’ public–private partnerships in African agriculture.

The inclusive agribusiness agenda also has its critics,with arguments that it is too big business focused,doesn’t sufficiently benefit the poor and is not ade-quately tackling fundamental sustainability andinequality issues. Oxfam in one report referred tothe efforts of Grow Africa as a Moral Hazard26 andrecently the European Parliament passed a resolu-tion calling for the EU to withdraw from the NewAlliance.

To date there is insufficient evidence to adequatelyunderpin well informed wider debates about theoverall successes or failings of inclusive agribusi-ness. Arguments for and against tend to be basedon isolated anecdotal examples, assumptions aboutthe underlying logic of the approach or ideologicalpositions. By cherry picking individual cases it ismore that possible to find examples that back updifferent positive or negative positions on inclusiveagribusiness.

1) Widespread renewed recognition that commercial development in the agriculturesector still has a key role to play in helpingtackle poverty and driving inclusive growth.

2) Substantial engagement from leading agrifood sector companies with clear com-mit ments to embedding inclusive and sus -tainable practices into their core operations.

3) Engagement from ministers and heads of state with public acknowledgement of theimportance of the sector and the needsfor policies that enable inclusive growth.

4) The implementation of a vast number of inclusive agribusiness related projects/business initiatives that have generated abroad base of practitioners with a grow-ing understanding of how to put inclusiveagribusiness models into practice.

5) Numerous business, government, donor and NGO partnerships again with a richbase of experience for future learning.

6) A substantial investment by donors into inclusive agribusiness, running in theorder of 1–2 billion, funded both directionthrough agriculture initiatives and indi-rectly through general market develop-ment, and private sector developmentmechanisms.

7) A growing and increasingly interconnectednetwork of senior practitioners from business development organisations andresearchers knowledgeable on the sub-ject and motivated to deepen the avail-able evidence and understanding.

emerging issues and opportunities in going to scale | 27

5 EMERGING ISSUESAND OPPORTUNITIESIN GOING TO SCALE

The overarching challenges for advocates of inclu-sive agribusiness, on both the business and devel-opment agency side, is to find ways of takingpromising examples of inclusive agribusiness toscale. This core issue links to all the other issuesraised below.

During the 2016 Grow Africa Investment forum,for example, this issue was highlighted by keybusiness and government representatives, with clearmessages about the need for an enabling policyenvironment.

While there are undeniable challenges in achievinglarger scale change, there are also clearly substantialfoundations on which to build. Numerous exampleshave started to show what is possible and havehelped to build a substantial, albeit fragmented,understanding of the practicalities of linking small-scale producers with markets. As evidenced fromstatements made by agriculture ministers and headsof state at recent Grow Africa and Grow Asiaforums, national government across Asia and Africaare talking about how to work more closely with theagribusiness sector to realise the inclusive growthpotential of the agriculture sector. Numerous privatesector companies, both large and small, have com-mitted themselves to working in an inclusive wayas a core part of the supply chain operations. And,new innovative financing mechanisms are startingto emerge.

5.1 DEVELOPING THE EVIDENCE BASE

A critical constraint to driving change at scale however is the lack of a clear evidence base andsynthesis of lessons and experiences to-date.Despite the huge range and diversity of projectsand initiatives supported by business, donors andNGOs, little comprehensive case study work hasbeen done and essentially no meta-analysis to showbroad trends and identify overarching lessons andpolicy implications27. This then impacts back onthe ability to drive the investments and policy sup-port needed to have impact at scale.

From the development perspective evidence of im -pact is important to show that partnering with theprivate sector is an effective way to tackle poverty,sustainability and inequality. From the businessperspective it is necessary to show that inclusivebusiness models have a sufficiently big impact onbusiness profitability and branding that it is worth-while to embed such approaches in to core businessoperations and invest in the necessary partnerships.

To fully embed inclusive approaches to agribusi-ness into the global food system will require muchgreater public and private sector innovation. In turnthis requires effective learning processes and net-works within and across businesses, public sectororganisations and NGOs supported by researchinstitutions. Key elements of such an agribusiness

27 See footnote 25 for two good examples of where this has been done.

28 | emerging issues and opportunities in going to scale

learning network are emerging, however furtherinvestment and coordination is needed to meet thescale of innovation that will be necessary to tacklethe barriers to impact at scale.

5.2 INTEGRATING PUBLIC AND PRIVATE GOODS

The agriculture sector presents a complex mix ofpublic and private goods that are not always easy todisentangle. Historically the agricultural sector hasbeen recognised as underpinning wider economicgrowth and so in all countries has attracted sub-stantial public expenditure on extension, researchand productive infrastructure (including in devel-oped countries). An orderly economic transition ofsmall-scale agriculture over the coming decadesthat helps to tackle rural poverty, while reducingoutmigration and pressure on urban centres is alsoclearly a public good. As is ensuring local and globalfood and nutrition security. Inclusive agribusinessinvolves models where public goods can also bedelivered through partnerships with the private sector. This however requires a new sophisticationin unpacking the public and private good dimensionsof agricultural transformation and the consequentimplications for who bears what costs and risks.This has significant implications for the agricultureand rural development policies and investmentstrat egies of national governments. In particular,it requires new thinking about the pre-commercialand pre-competitive costs associated in partneringwith business to achieve public good outcomes.

5.3 ALIGNING POLICY

Policy settings in relation, for example, to taxation,tariffs and trade, public sector investment in agri-cultural research and extension, price support, socialprotection and foreign investment are all key to

creating a viable, sustainable and inclusive agri-food sector. Food security and the economic wel-fare of poor rural populations are sensitive politicaleconomic issues for most countries that requirewell managed transition processes which need tobalance economic efficiency, trade interests andeffective mechanisms for social protection. Thiscreates the need for enhanced dialogue and trustbetween government and private sector players tofind balanced policy directions that can supportinclusive agri-food sector development.

5.4 INCENTIVES FOR BUSINESS

For all businesses market incentives underlie theircommitment for inclusive practices. To date, muchof the business sector engagement in inclusiveagribusiness has come from larger global agrifoodcompanies. This has been driven by the need forsustainable supply and the greater consumer pres-sure for corporate responsibility in Northern mar-kets. However, for inclusive agribusiness to haveimpact at scale a much greater engagement of smalland medium scale firms operating in domestic andregional markets. But for these firms there are dif-ferent incentive structures and more constrainedhuman and financial resources.

There are clearly strong interconnections betweenbusinesses of all scales across the agrifood sector.However, the political economy and dynamics ofthese linkages are only partly understood with littlework having been done on the implications for inclu -sive practices. Smaller sized firms are often engagedin intermediary functions within value chains, be it inthe offtake, input supply or financial services mar-kets. Global firms are also increasingly involved inlocal and regional markets and not just in globalvalue chains serving northern markets. Further,standards and operating principles set by globalfirms can also have influence throughout the sector.

emerging issues and opportunities in going to scale | 29

5.5 MOBILISING RESPONSIBLE INVESTMENT AND THE CATALYTIC ROLE OF DONOR FUNDING

It is well understood that the agriculture sector ingeneral will require substantial investments, thatwill largely have to come from the private sector,in order to meet future food demands. Integratinginclusive practices bring an additional challenge tofinancing the sector. Growing market demands,finite natural resources, low margins, and pricevariability all bring risks for agricultural develop-ment to become less rather than more inclusive ofpoor and marginalised groups who depend on thesector. Evidence of land grabbing and exploitivepractices has led to the World Committee for FoodSecurities Principles for Responsible AgriculturalInvestment and the Global Compacts AgribusinessPrinciples.

There many tensions, dilemmas and differing posi-tions on how to drive a modernisation and commer -cialisation of the agriculture sector in ways that canenable the sector to be productive and competitivewhile also delivering broad based inclusive eco-nomic development.

Part of the challenge for the sector in being moreinclusive is to develop financial services for the“missing middle” to serve small and medium scaleenterprises who need investements of betweenUSD 100,000 and several million to run their busi-ness. There also still remains a very significant gapin the financing needed by small-scale farmers andmicro-enterprises.

These public and private good issues are also linkedto how donor funding can be used in the most cat-alytic way given its increasingly small volumes relative to the scale of the challenges faced and theflows of other financial resources. It is this realitythat has led donors to work more closely with the

private sector and to seek market oriented solutionsto poverty. With recognition that large private sec-tor financial flows must be drawn into the agricul-ture sector the key questions are how to create theconditions for this to happen and what is requiredfor such investment to be responsible and inclusive.Donors are increasingly looking beyond traditionalgrant funding to work with innovative financingmechanisms that include great emphasis on softfinancing, equity, risk and first loss mechanisms and blended financing.

BOX 7GENDER, WOMEN’S ECONOMIC EMPOWERMENT AND THE FOOD SYSTEM

The linkages women’s empowermentand agri culture, food security and agri-food markets are deep and fundamen-tal. In many areas mi gration is seeing asubstantial feminisation of agriculturewith profound implications, both posi-tive and negative. Commercialisation ofagriculture does not automatically leadto benefits for women and girls andthere are huge challenges in develop-ing markets and value chains in waysthat are economically empowering forwomen (see footnote28).

28 For details gender and women’s economic empowerment related to the agriculture sector see for example: Oxfam knowledge hub; Baden, Sally. 2014. Policy brief - Women’s economic empowerment and collective action in agriculture: new evidence and measurement challenges. Future Agricultures, IDS. Brighton; DFAT. 2015. Gender equality and women’s economic empowerment in agriculture - Operational Guidance Note. DFAT. Canberra; KIT, Agri-Profocus, IIRR. 2012. Challenging Chains to Change: Gender Equity in Agricultural Value Chains. KIT Publishers. Amsterdam

30 | enhancing knowledge and learning for inclusive agribusiness

5.6 FOOD SYSTEMS TRANSFORMATION

Inclusive agribusiness needs to be set in a widercontext of the transformations of the global foodsystem needed to ensure food security and goodnutrition in the face constrained natural resources,climate change and mass urbanisation and chang-ing. As private and public sector advocates for foodsecurity have widely acknowledged, this will requiregoing well beyond business as usual. The challengesfor inclusive agribusiness then are not simply toconnect poor producers and micro-entrepreneursinto markets but to do so in ways that are part ofwider innovation and transformation processes thatwill be needed to ensure resilience of the global foodsystem. From an inclusive perspective it is those atthe bottom of the economic pyramid that will bemost severely affected by food insecurity, poornutrition options and extreme food price volatility.

5.7 EFFECTIVE MULTI-STAKEHOLDER PARTNERSHIPS

All players working towards inclusive agribusinesshave recognised the need for effective partnerships.This includes coordination along supply chainsfrom producers through to retailers, collaborationbetween NGOs and businesses to help small-scaleproducers meet the demands of modern markets,pre-competitive platforms such Grow Asia or GrowAfrica where all sectors can work together to fosterinnovation and partnerships for joint public andprivate investment in the sector. While many suchmulti-stakeholder partnership processes and plat-forms have been initiated there remains much workto strengthen leadership and trust, build capacityfor effective collaboration and demonstrate theimpact of such partnerships processes.

6ENHANCINGKNOWLEDGE ANDLEARNING FORINCLUSIVEAGRIBUSINESS

While there is a growing body of experience andknowledge about how agricultural markets canhelp to tackle poverty and encourage sustainablepractices, this is not being optimally tapped, syn-thesised, communicated or utilised. This limits thecapacity to tackle the ongoing structural barriers totaking inclusive agribusiness initiatives to scale.Further there has been little effort to systematicallyundertake case study and impact assessment workthat could provide a more robust evidence base andadvice for investment decisions by business, gov-ernments and international organisations.

These challenges of a weak evidence base, frag-mented knowledge and limited sharing is com-pounded by the difficulty that support for inclusiveagribusiness is often dispersed across different the-matic work areas of development agencies. Forexample, across agriculture and food security, rural

enhancing knowledge and learning for inclusive agribusiness | 31

development, market development, financial inclu-sion, business environment, trade and private sectorengagement.

There is now a diversity of business, developmentand research platforms/networks engaged withinclusive agribusiness. Some of these are agricul-ture focused while others are market developmentoriented yet with a significant engagement in thefood and agriculture sectors. However, there is lim-ited structural collaboration between these initiativeson core research and learning agendas and all ofthem lack resources for research, impact assessmentand practitioner learning functions.

Many donors have established generic programs offor support inclusive business, market systems andprivate sector engagement that do not have sectorspecific focus. However, in practice these programsoften have a significant portfolio of activity in theagriculture and food sector but lack the capacity toaddress specific issues and challenges facing thesector. For example, working with large numbersof small scale farmers/entrepreneurs, managing theunique market and finance risks of the agriculturesector, driving investment in infrastructure, economicempowerment of women or creating resilience toclimate change. For these general market and privatesector programs as well as specific agriculture/foodsector ones there is a need for greater investment infocused research, case study and impact assessmentwork, especially around achieving impact at scale.This needs to be targeted to the specific learningneeds of business and development agency practi-tioners.

6.1 WHO NEEDS TO KNOW WHAT?

Broadly there 9 actor groups in inclusive agribusi-ness who have different but intersecting knowledgeand learning needs:

Business – needs to know how inclusiveagribusiness can improve their bottom line,create new market opportunities and enhancetheir brand. They also need to know whatinclusive business models work and how toembed these into business operations. Theyalso often need new capabilities to work inpartnership with government, donors anddevelopment organisations. The specificneeds will vary greatly between differenttypes of businesses at different scales. Forexample, smaller local businesses, will havedifferent needs than international compa-nies, as will finance companies vs tradingcompanies.

National governments – need to know howinclusive agribusiness can improve the eco-nomic performance of their agrifood sectorwhile also delivering on public good respon-sibilities of poverty reduction and sustainableresource use. They need insight into how tocreate a better enabling environment forinclusive growth in the sector and how bestto align public good investments in infra-structure or extension with inclusive busi-ness opportunities.

Donors and funders – are faced with signifi-cant issues around how they can be mostcatalytic with limited funds, the most effec-tive delivery mechanisms, how to ensureimpact for poorest and how to work with theprivate sector in responsible ways withoutreputational risk. They also face significantchallenges to align market orientedapproaches with internal procurement andaccountability mechanisms.

Producer organisations – face major chal-lenges helping their members to becomeorganised in ways that enable them to meetthe volumes and quality required by markets.They also need to develop effective mecha-nisms for supporting members with accessto input supplies and finance. They also needknowledge to play an effective advocacyfunction with government and business.

32 | enhancing knowledge and learning for inclusive agribusiness

NGOs – play an increasing diverse set ofroles in inclusive agribusiness, includingterm ediaries with farmers, to servicesproviders, advisors and supports of businessprograms as well as advocating for inclusiveapproaches and sustainability. There areenormous questions about how to play theseroles effectively, with implications for theunderlying mission and purpose of the sector.

Advisors and brokers – the growing numberof inclusive agribusiness programs has led tonumerous consultancy companies and inde-pendent consults providing support. They allface challenges of being up-to-date keytrends and workable business modes as wellas many practical issues around programdesign, working at the interface of donorsand business and putting in place effectiveresults measurement metrics.

Investors and financial service providers –in the agri-food sector be they commercialor social impact oriented, often have a poorunderstanding of the agriculture sector andits risks. They need to know how to engagewith large numbers of smaller-scale producerand micro-entrepreneurs and how to partnerwith other business actors.

inclusive agribusiness Platforms – such asGrow Africa, Grow Asia, the Sustainable FoodLab, the Sustainable Agriculture Initiative(SAI) Platform of the various commodityround tables are all on a learning curve ofhow to best play they intermediately, broker-ing and advocacy roles. They have a massiveneed good evidence and practical good practice examples to help inform theirconstituents and to advocate for enablingpolicies.

Knowledge Institutions – need a deeperunderstanding of the key issues and ques-tions faced by the above actors in order totailor research, advisory support and capacitydevelopment to their needs. In particular

they need to know how to help broker in -formed learning and innovation processes ina complex multi-stakeholder setting drivenby the dynamics of markets and entrepre-neurial activity.

6.2 LEARNING QUESTIONS

Across these different stakeholder groups a commonset of questions and need for evidence is emerging.Below these have been grouped into strategic ques-tions, answers to which are needed to help guidethe overall inclusive agribusiness effort, and opera-tional questions which are needed for effectivelyimplement specific inclusive agribusiness initiatives.

6.2.1 Strategic Questions

Understanding inclusiveness – What are thedimensions of inclusiveness and what is the conceptcoming to mean in practice?

Impact on poverty – What scale of impact hasinclusive agribusiness had, or is it likely to have onpoverty and sustainability, and what are the impli-cations for future investment strategies by business,governments and donors?

Benefits for business – How strong is the evidencebase that inclusive agribusiness is good for busi-ness and what are the implications for further com-mitments and investments by business?

Catalysing inclusive agribusiness – What are theways for donors to be most catalytic with limitedresources to maximise the development impact

enhancing knowledge and learning for inclusive agribusiness | 33

through inclusive agribusiness? In particular, whatthe the implications for innovative forms of devel-opment finance including the underwriting of risk?

Pushing down the economic pyramid: How caninclusive agribusiness push down the “economicpyramid” to benefit groups in more marginal con-ditions or with fewer economic assets and implica-tions for public good and private good outcomes?There are fundamental questions about how infor-mal, local, national, regional and international mar-kets interact and the roles and interactions of globalcompanies vs smaller scale domestic or regionalbusinesses.

Enabling policies: What are the key policychanges that can improve the enabling environmentfor inclusive agribusiness and what processes andmechanisms for dialogue between government,business and civil society are needed to supportsuch reform? Land tenure, trade policy, investmentin rural/agricultural services and infrastructure andbusiness processes and all critical areas that affectinclusive agribusiness.

Attracting investment: How can the much neededincreased investment in the agriculture sector bemobilised, in a responsible way, given the risk profile and needs of large numbers of small-scaleproducers and enterprises.

Public private partnerships: What sorts of publicprivate partnership arrangements can underpininclusive agribusiness in particular to link infra-structure with market development opportunities?How can such partnership be developed in a trans-parent way that adhere to principles of responsibleinvestment?

Effectiveness of inclusive agribusiness platforms:What are the key factors, principles and modalitiesfor effective global, sector, regional or national

level inclusive agribusiness platforms andalliances, that foster multi-stakeholder engagementand dialogue between business and policy makers.

Transparency and the role of standards, certifi-cation and labelling: How can transparency andaccountability best be achieved for inclusiveagribusiness and what are the advantages and dis-advantages of various standards, certification andlabelling systems?

6.2.2 Operational Questions

Developing an inclusive business strategy: Whatdo businesses of different types and sizes need toconsider when engaging in inclusive agribusinessactivities and how can they embed inclusiveagribusiness practices into their operations in acommercially viable way that strengthens theirbrand and market position?

Inclusive business models: What are the types ofbusiness model options for working in an inclusiveway with different sectors in different contexts andhow can the best model be chose and optimised fora specific market situation?

Working with large numbers of famers andsmall-scale entrepreneurs: What are the optionsfor working efficiently, effectively and fairly withsmall-scale entrepreneurs and micro-enterprises, interms of product aggregation, provision of input andfinancial services and adoption of commerciallyviable and sustainable farming practices? Forexample, how can the use ICT innovation be bestutilised in the sector?

Brokering market coordination and inclusiveagribusiness deals: What capabilities, organisa-tional arrangements, engagement processes andresources are needed to most effectively catalyse

34 | enhancing knowledge and learning for inclusive agribusiness

new value chain and inclusive market developmentswhere coordination is needed along a value chainand/or with other government and non-governmentactors in the sector. What do business need to knowto efficiently engage in a multi-stakeholder contextthat may involve public and private sector financing?

Women’s economic empowerment: In what wayscan inclusive agribusiness empower women andenhance their economic opportunities?

Integration of responsible investment principles:What are the practical steps, processes and consid-erations that businesses need to follow in order toadhere to the principles of responsible investment?

Results monitoring and impact assessment:How can businesses, and donor supported inclusiveagribusiness initiatives adopt effective results mon-itoring and impact assessment metrics, that enablecost effective and transparent reporting againstinclusive agribusiness goals and commitments?

Working in partnership: How can business, gov-ernment and civil society organisations all developthe understanding and internal capabilities to workwith non-traditional partners in inclusive agribusi-ness initiatives?

Working in marginal contexts and with margin-alised groups: How can businesses and/or devel-opment organisations extend the benefits of inclu-sive agribusiness to people who live in marginalareas with poor production conditions, thin marketsand limited services and/or who marginalisedbecause of poverty, gender, ethnicity or disability?

Innovative use of development finance: How canbusinesses effectively and legitimately make use ofdevelopment finance to enhance the inclusivenessof their business operations and how can donorsstructure financing and grant mechanisms to max-

imise the potential of inclusive agribusiness fortackling poverty while ensuring accountable use ofpublic funds?

6.3 A LEARNING SYSTEMS APPROACH

Knowledge and learning is used in this context torefer to the practical knowhow that business, gov-ernment, donors and development organisationsneed to be effective in their approaches to inclusiveagribusiness.

Inclusive agribusiness unfolds in a complex envi-ronment of overlapping market, economic, political,social and ecological systems. There are few blue-print or recipe solutions and new ideas and lessonsfrom other contexts need to be creatively adaptedto a particular situation. Never-the-less, good evi-dence, an evolving knowledge based and effectiveprocesses of learning can positively influence andspeed up innovation and help to drive the effective-ness of inclusive agribusiness.

As illustrated in the diagram a learning system forinclusive agribusiness is conceived of as havingtwo main elements, the brokering of learning andinnovation, which both leads to and draws from anevidence and knowledge base. The brokering oflearning and innovation can support inclusiveagribusiness in three ways:

1) It helps businesses and development agencies to solve practical problemsthey face in imple menting inclusiveagribusiness. This involves providingaccess to others experience, new ideas,evidence, case studies or good practiceexamples that can help in solving problemand overcoming emerging challenges.

2) It helps businesses and development agencies improve their practice by build-ing up the knowledge and experiencebase of staff and managers throughprocesses that engage them with withother practitioners underpinned by asound evidence and knowledge base.

enhancing knowledge and learning for inclusive agribusiness | 35

3) Policy makers and investors (including donors) can be engaged in informed dia-logue over the implications of experiencefor policy change and what is needed togain the best public and private returnsfrom investment.

The quality of these learning and innovation proc -esses in turn relies to a significant extent on anunderlying evidence and knowledge base that isgenerated from research, case studies, monitoringand evaluation, meta-analysis, trend analysis andthe capturing of insights from practitioners. Thisneeds to be supported by applied research andlinked with effective communication and knowl-edge networking to link with the brokering oflearning and innovation.

6.4 CREATING AN EFFECTIVE INCLUSIVE AGRIBUSINESS KNOWLEDGE AND LEARNING NETWORK

Currently learning and networking in the inclusiveagribusiness field is rich but fragmented. There arethousands of inclusive agribusiness related projects,numerous initiatives by many businesses, muchsupport being provided by NGOs and a diverserange of donor and philanthropic funding programs.There are numerous business platforms, and knowl-edge/networking platforms and many conferencesand events on or related to the topic.

However, the field is inadequately supported by theapplied research, knowledge synthesis, meta-analysisand structured communication needed to providedeeper evidence and insight for the questions raisedabove. Limited coordination between those whoare working in this field means scarce resources arenot necessarily being used in an optimal way.

FIGURE 5 LEARNING SYSTEM FOR INCLUSIVE AGRIBUSINESS

36 | enhancing knowledge and learning for inclusive agribusiness

This situation creates two key limitations:

1) Lack of overall evidence on impact and key trends: Investments in the billions of dollarsare being made into inclusive agribusiness bybusiness and donors. Many initiatives have nowbeen working for 5 years or more so substantialresult should be starting to show. While manyinitiatives do monitor and evaluate their results,there is little coherence in the metrics of assess-ing inclusiveness and virtually no meta-analysis(evaluation) across these different initiatives.Lack of credible evidence about the scale ofimpact from inclusive investments was a keyissue raised at the recent Grow Africa andBEAM conferences.

2) Limited sharing of experiences and lessons between inclusive agribusiness initiatives todrive innovation and improve performance:Much of the knowledge about inclusive agri -business rests with the practitioners who aredirectly involved in the businesses or develop-ment organisations implementing inclusiveagribusiness. Such practitioners have limitedtime for reflecting on, documenting or sharingtheir experience and knowledge. There is alsolimited analysis of the commonalities in the les-sons from different inclusive agribusiness whichhampers a broader understanding of successfactors that could inform both practitioners andthose designing and funding support programs.

To improve the current situation, the following isneeded:

1) Creation of knowledge and learning agenda shared between key stakeholders thatbuilds on the key questions raised above.

2) A clearer set of inclusive agribusiness metrics and results monitoring guidelinesto improve data collection and analysis.

3) A program of in-depth case study analysis combined with meta-level (cross casestudy) analysis to help identify key trendsand scales of impact.

4) Focused research/action research activities that can capture key lessons onspecific topics (strategic and operationalquestions raised above) from across different inclusive agribusinessinitiatives.

5) Meta evaluation of the individual evaluations of donor funded programsthat cut across different donors andimplementing institutions.

6) A brokering hub and web-based platform that can help to ensure informationis shared with relevant implementing bodies and practitioner networks.

7) Focused support for learning activities and practitioner support that ensuresknowledge and evidence is put into use:

a. Deepening the dialogue in conferences, forums and workshopsthrough a better evidence base.

b. User friendly evidence based guidance notes, policy briefs and web basedresources that support practitionersand policy makers.

c. Guidance for project/program design.

d. Enhanced capacity development and training activities for practitioners.

e. More informed web-based blogging and discussed forums.

8) Development of a cadre of inclusive agribusiness specialists who have broadbased knowl edge of the sector as well aspractical experience and who are able tosupport, business, development organi-zations and donors in the inclusiveagribusiness work.

implications for the GDPRD and recommendations | 37

7IMPLICATIONS FORTHE GDPRD ANDRECOMMENDATIONS

Achieving the food security and the sustainableagriculture goal of the SDGs will only be feasiblethrough widespread engagement of the private sec-tor. Substantial innovation will be needed to fostermore inclusive practices across the entire agrifoodsector.

Members of the GDPRD currently support a widearray of initiatives that in various ways link withinclusive agribusiness. However, this work remainsfragmented with engagement from donor agenciesoften coming from different thematic areas includ-ing agriculture, private sector engagement, marketdevelopment, rural development and food security.

At the same time private sector driven and donordriven efforts are not always connecting or rein-forcing each other. There are a number of valuablemarket and private sector development knowledgeand networking platforms, including BEAMexchange, DCED, SEEP Network, the PPPLab.However, these initiatives are focused on marketsand enterprise development in general and notspecifically on the opportunities and challenges inthe agrifood sector.

As this discussion paper has illustrated there is avast amount happening in the inclusive agribusi-ness and related value chains and market systemsfields. It is critical for the GDPRD not to duplicatethis work. There are five areas where the GDPRDcould add value in line with its role and focus onknowledge-sharing, networking and advocacy:

1. Fostering multi-donor support for integrated evidence gathering andresearch initiatives that work acrossdonor and international agency programsin a coordinated way underpinned by aframework of indicators and metrics forassessing impact.

2. Encouraging and mobilising support for a global inclusive agribusiness learningalliance that better connects and coordi-nates knowledge sharing and capacitydevelopment activities.

3. Providing a networking and learning opportunities for the staff of GDPRDmembers who have operational roles andneed to be kept informed of latest devel-opments.

4. Keeping abreast of the implications of emerging evidence and research fordevelopment policy and programing andfostering high level engagement on theseissues.

5. Promoting and supporting enhanced coordination and support by donors fornational level policy dialogue on creatingan enabling environment for inclusiveagribusiness.

38 | implications for the GDPRD and recommendations

Overall, realising the promise of inclusive agri -business will to a large extent hinge on effectivelyaligning public and private investments and soundpolicy development. The GDPRD can play a valu-able role collating and sharing strategic knowledgeon the development of inclusive agribusiness tohelp inform donor policies and program strategies.It can also play a role in making the case for specificagriculture and food sector issues in the more gen-eral discussion on inclusive business.

RECOMMENDATIONS

1. The GDPRD proceed with a work stream on inclusive agribusiness and establish a strongnetwork of practitioners within its memberorganisations that cuts across, agriculture,trade, private sector engagement and marketdevelopment themes. Initial priority themesfor the work stream be:

a. Developing metrics and evidence base on inclusive agribusiness

b. Innovative financing mechanisms for inclusive agribusiness

c. Supporting business and government policy dialogue at the national level toimprove enabling conditions for inclusiveagribusiness.

2. Donors, supported by the GDPRD establish a coordinated mechanism for funding crossprogram impact assessment, meta-evaluationand research, driven by a knowledge andlearning agenda jointly developed by keystakeholders.

3. Knowledge institutions and practitioner net-works engaged with inclusive agribusinessform a global learning alliance to bettercoordinate activities, reduce duplicationand strengthen research activities, capacitydevelopment and knowledge sharing.

4. The GDPRD host a workshop to develop a knowledge and learning agenda for inclusiveagribusiness and discuss institutional andfunding modalities for implementation.

annex 1. indicative directory of donor/agency strategies and initiatives | 39

ANNEX 1 INDICATIVE DIRECTORY OFDONOR/AGENCY STRATEGIES AND INITIATIVES

Note: This table provides an indicative overview of inclusive agribusiness relatedstrategies and initiatives from key donors and agencies. The information has beendrawn largely from what is available on their websites and is not necessarily afull or comprehensive representation of their work in this field.

UN Food and AgricultureOrganisation(FAO)

Strategy. Over the last decade FAO has been working on how to promotesustainable food value chain development. Using sustainable food valuechains (SFVC) to reduce poverty present both great opportunities andchallenges. The work on sustainable value chain development revealedthat for the most cases the producer-first buyer point of sale continuesto be the most inefficient market linkage impacting the overall chancesof a sustainable value chain. The inclusive business model (IBM) conceptis a narrower concept than the value chain that focuses on this specificlink (producer-first buyer) to facilitate market access for smallholders.

FAO’s inclusive business model (IBM) approach29 was developed andpilot tested by FAO under the EUR45 million All ACP AgriculturalCommodity Programme (AAACP) funded by the European Commissionfrom 2007 to 201230. The interventions targeted business models basedon identified priority commodities from a basket of cash and food cropsthat through innovation, value addition and strategic market linkages,could be commercialized to improve income for smallholders.

FAO held workshops in 2013 and 2014 (funded by Government of Ireland)to better define IBM and to provide training for FAO program participants.

29 Also see the four-page policy brief here: http://www.fao.org/3/a-i5101e.pdf30 Also see AAACP technical note here: http://www.aglinks.net/sites/default/files/Business%20Model_technical%20note%20FAO.pdf

DONOR/AGENCY STRATEGY AND INITIATIVES

40 | annex 1. indicative directory of donor/agency strategies and initiatives

An outcome of the Rome expert’s workshop was the document,Inclusive business models – Guidelines for improving linkages betweenproducer groups and buyers of agricultural produce, released in 2015.

FAO also has a strategy for partnering with the private sector (2013)and guiding principles on developing sustainable food value chains(2014). In 2013, FAO prepared a report on Smallholder integration inchanging food markets. This report examines ways of facilitating theparticipation of smallholders in markets.

Initiatives. The Kenya cotton case study has been featured for FAO’sIBM work.31

Strategy. While IFAD does not use the term ‘inclusive agribusiness’,IFAD has had a private sector partnership strategy since 2007, whichwas updated in 2012.

IFAD’s Governing Council session of 2013 focused on partnerships,especially partnerships with the private sector. In February 2016, theIFAD’s Governing Council met on ‘Inclusive Investment: Rural people,state and business in the post-2015 agenda’.32

IFAD’s Post-2015 implementation brief is entitled ‘Promoting partner-ships for inclusive and sustainable rural transformation’. It refers toinclusive agricultural supply chains as partnerships, as well as refersto Public-Private-Producers Partnerships (4Ps), adding ‘producers’into their long-standing PPP model.

IFAD has begun to more strategically work with new private sectorpartners, both at the country and global levels, through PPPs. As summarised by DCED, IFAD is supporting three types of PPP models33:

1. Formal contractual arrangements, where private sector companies work with small producers according to a variety of contractualarrangements – such as out-grower schemes or contract farming –and pursue a long-term commercial relationship with them – anexample of this is in Liberia where the newly approved Smallholder Tree Crop Revitalization Support Project will establish a partner-ship between LAADCO, a private sector exporter of cocoa and coffee, the government and small producers of coffee and cocoa.LAADCO has committed USD 5 million in co-financing to rehabili-tate the coffee and cocoa smallholder sector.

UN Food and AgricultureOrganisation(FAO)

IFAD

31 Also see the video here: https://www.youtube.com/watch?v=EZH29vQnL3En32 For program, see https://www.ifad.org/documents/10180/0c99883b-206d-41ae-b63a-637a8ee96b8633 See http://www.enterprise-development.org/page/ifad

annex 1. indicative directory of donor/agency strategies and initiatives | 41

2. Joint ventures between private companies and producers’ groups. In Rwanda for example, in the Project for Rural Income throughExports (PRICE), we are replicating the previously established partnership between two tea-producing cooperatives and privateinvest ors. The tea factories established by the private sector part-ners buy directly from the cooperatives, which participate as equityshareholders in the companies. Cooperatives will acquire equityshares of 30 to 40 per cent in factories to be built on four greenfieldsites.

3. Establishing specific funds within projects to finance PPP business plans: In a new project in China’s Hubei Province which will be sub-mitted for approval by IFAD’s executive board in April 2014, a largepart of the project’s funds was set aside to finance business plansthat will be submitted jointly by private companies and cooperativesthat wish to enter into a long-term partnership with each otheralong specific value chains. Project funds will finance those partsof the business plans that are semi-public goods such as storageand transport facilities, technical assistance, technology upgrading,and rehabilitation of small farm plantations.

For a further description of IFAD’s private sector development work,please refer to DCED’s IFAD summary.

Initiatives. An example of IFAD’s work in inclusive business is the HighValue Agriculture – Inclusive Business Pilot Project, which was initiatedby IFAD and SNV in Nepal to test and learn how inclusive businessapproach could make a difference in linking remote farmers to marketsin Nepal.34 SNV is similarly implementing IFAD-funded program tointroduce inclusive business models to smallholder cassava productionin Cambodia.35

On a more regional scale, IFAD has engaged with the African Agricul -ture Fund (AAF) as a member of its advisory board. AAF is an innova-tive US$250 million private equity fund that is tackling food securitychallenges throughout Africa by supporting private companies workingto improve food production and distribution across the continent. IFADprovided €10 million to establish the Technical Assistance Facility,which will provide technical support to outgrower schemes run bylarge companies and business development services to SMEs receivinginvestments from the AAF. Further information on AAF is availablehere: http://www.phatisa.com/funds/aaf/. IFAD also funds the AfricaEnterprise Challenge Fund.

IFAD

34 From a blog post in 2012. 35 See SNV website here:

http://www.snv.org/project/inclusive-business-models-promote-sustainable-smallholder-cassava-production-ibc-cambodia

42 | annex 1. indicative directory of donor/agency strategies and initiatives

Strategy. The WBG’s strategic focus for the agriculture sector is tosupport clients to improve sustainable agricultural growth, incomes,food and nutrition security, and their resilience to climate change.36

This includes providing innovation, infrastructure and resources toboost agribusiness by building inclusive and efficient value chains.37

The WBG’s 2013–15 agriculture action plan signalled a departure fromthe crisis response following the 2008 food price crisis to a greateremphasis on private sector response to strengthen value chains, andincrease small holder supplier networks serving agribusiness proces-sors, traders, agri-commodity supply chain integrators, and foodretailers, including by women smallholders. This is largely to beachieved through agribusiness investment provided by the IFC. Thisincreased from $2.7 billion in FY2010–1238 to $3.2 billion in the FY end-ing June 2015. This was invested in agribusinesses across the supplychain – from farm to retail – to help boost production, increase liquidity,improve logistics and distribution, and expand access to credit forsmall farmers.39

A significant strand of WBG’s work is in the agriculture sector’s busi-ness enabling environment. The WBC product, Enabling the Businessof Agriculture (EBA), supports the WBG’s overall strategy by examiningand monitoring regulations that impact how markets function in theagriculture and agribusiness sectors. The ultimate aim is to promotesmart regulations that ensure safety and quality control as well as efficient regulatory processes that support thriving agribusinesses.The new 2016 report, Enabling the Business of Agriculture 2016:Comparing regulatory good practices examines 40 countries for theiragriculture practices. The EBA is funded by DFID, the Government ofDenmark, the Government of the Netherlands, Bill and Melinda GatesFoundation, and USAID.

Initiatives. The IFC provides investment and advisory services to agri -business companies. Since 2011, IFC has developed programs such asthe Global Warehouse Finance Program, which supports private banklending backed by agricultural production, and the Critical CommodityFinance Program, created to stimulate the trade of critical agriculturalcommodities and inputs.40

IFC manages the private sector window of the Global Agriculture andFood Security Program (GAFSP). See the IFC’s agribusiness brochureand publication, Agribusiness: Stories of Impact, for further informationon IFC’s investments in agribusiness. The World Bank is also a donorpartner to initiatives such as AgResults.

World BankGroup (WBG),including theInternationalFinanceCorporation(IFC)

36 Implementing agriculture for development : World Bank Group agriculture action plan (2013-2015), p. xvii37 http://www.worldbank.org/en/topic/agriculture/overview#238 Implementing agriculture for development: World Bank Group agriculture action plan (2013-2015), p. xx39 http://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/agribusiness/overview40 Implementing agriculture for development : World Bank Group agriculture action plan (2013-2015)

annex 1. indicative directory of donor/agency strategies and initiatives | 43

Strategy. The ADB’s work in inclusive agribusiness has its place intwo areas of the Bank’s work: In its food security plan, and in its socialdevelopment theme.

ADB’s new Operational Plan for Food Security 2015–2020 focuses on arange of critical areas to address the region’s food security challenges,including:

• Improving value chains infrastructure to better meet consumer needs with more investment in processing, storage and distribu-tion. An upgraded food transportation network will help integratefragmented markets, reduce transaction costs, and enable widedissemination of sophisticated farm inputs, financial services andmodern technology.

• Partnering with the private sector on inclusive business opportu-nities that connect farmers, small producers and processors toinvestors and markets, and help achieve scale for instance viarisk sharing agreements.

• Supporting public policies that create an enabling environment for agribusiness and set higher standards for green business, foodsafety, and quality.

• Promoting innovative financing tools to give agricultural small and medium-sized enterprises access to credit so they can participatein global value chains, including cluster lending and financial literacytraining.

Food security initiatives. Under the Building Sustainable Food andNutrition Security in Asia and the Pacific – Phase 1 Technical Assistance(2016–2018), the ADB is seeking to test and introduce approaches todevelop inclusive and sustainable agribusiness value chains. The tech-nical assistance (TA) is intended to analyse and pilot a range of businessmodels for agribusiness value chains that can generate transforma-tional impacts in ensuring environmental sustainability and the bene -ficial engagement of a large number of smallholder farmers. A fewpromising business collaboration models for inclusive and sustainableagribusiness value chain development will be selected for pilot testing.

The ADB is hosting a forum in Manila in June 2016 on Safe, Nutritiousand Affordable Food for All. While the focus is not in inclusive agribusi -ness, the event seeks to sing the value chain framework approach totackle transformations, trends, and future direction from food produc-tion to consumption.

AsianDevelopmentBank (ADB)

44 | annex 1. indicative directory of donor/agency strategies and initiatives

Inclusive business initiative. ADB has embarked on an inclusive busi-ness initiative that supports inclusive business in Asia and the Pacific through technical assistance projects. The Inclusive Business Supportproject, co-financed by Government of Sweden and Credit Suisse AG,was designed to facilitate the financing of inclusive business projectssupported by ADB, and promote policy work with selected govern-ments as well as knowledge exchange on inclusive business. CreditSuisse AG is considering the establishment of an inclusive businessand social enterprise fund for Asia.

Collaborators of the ADB include Agence Française de Développement(the French Development Agency); the Canadian Department of ForeignAffairs, Trade and Development; the Inter-American Develop mentBank; and Oxfam GB Asia. ADB will also partner with leading domesticand international business associations, including the World BusinessCouncil for Sustainable Development and Philippines Business forSocial Progress. While the initiative is not specific to the agriculturesector, the agriculture sector features heavily.

As part of this initiative, ADB hosted the 2nd Inclusive Business (IB)Forum for Asia in Manila in February 2016. The event agenda anddetails be found on the Inclusive Business Hub's website. In preparationfor the report, ADB commissioned a study into Smallholder Farmersand Business. The study compares the performance of 15 pioneer com-panies and organisations that have sustainably increased the incomeand livelihoods of millions of smallholder farmers around the world bysourcing produce from them or selling products to them.

Along with Inclusive Business Action Network and the Practitioner Hubfor Inclusive Business, ADB hosts the Asia Inclusive Business Hub (AsiaIB Hub) website. This is an active website with blog posts, resourcesand a database of inclusive businesses (including those working inagriculture).

Strategy. AfDB’s existing agricultural sector strategy (2010–2014) isfocused on two pillars: 1. Agricultural infrastructure; and 2. Renew ablenatural resources. The AfDB’s website also promotes interventions in‘Agro Industry Development’ administered in collaboration with theprivate sector. Similarly, the AfDB 2014 publication, Inclusive Growth:An imperative for African Agriculture, highlights the important role thatagriculture plays in inclusive growth. In 2012, AfDB prepared a briefingnote on private sector development strategy.

AsianDevelopmentBank (ADB)

AfricanDevelopmentBank (AfDB)

annex 1. indicative directory of donor/agency strategies and initiatives | 45

Strategy. USAID is scaling up a comprehensive approach to fightinghunger and strengthening food security through expanding andenhancing agricultural markets and trade. USAID seeks to work withpublic and private sector market participants, governments, universi-ties, agribusi ness value chains, and civil society and farmer groups to:

• Support the development of sound policy environments that enable open markets, private sector investment, and gender-equitableaccess to factors of production, products, and income.

• Promote effective institutions and services, such as rural extension and finance, to enable both women and men producers to acquire,protect, and use the assets they need to take advantage of emerg-ing market and trade opportunities.

• Strengthen producer and other rural organizations to help them participate effectively in national, regional and global markets,reduce transaction costs, acquire productivity-enhancing technolo-gies, and make use of information on domestic, regional, and inter-national markets.

• Develop product standards and quality control to meet market demands for food safety, purity, and quality, and to reach higher-value markets.

• Develop the public sector’s roles as provider of market-facilitating goods and services, regulator and referee, and monitor and analyst.

Initiatives. The US Government’s flagship program is Feed the Future.Working in 19 focus countries, Feed the Future aims to sustainablyreduce global poverty and hunger through two objectives: 1. Inclusiveagriculture sector growth; and 2. Improve nutrition status. Feed theFuture seeks to engage the private sector in a meaningful, comprehen-sive way to develop models that are integral to core business strategiesand meet the global food security challenge. From the program’sinception in 2011 through to 2014, more than 200 global and Africancompanies have committed to invest $10.2 billion to benefit 8.7 millionsmallholders through sourcing or services, with $1.8 billion investedthrough 2014.In 2014 alone, the program formed 2,209 public-privatepartnerships and leveraged US$151.7 million in new private sectorinvestment.41 The program reports impact on key indicators includingchildhood stunting and income.

There are a range of mechanisms in which FTF engages with agribusi-ness. One of them is the FTF’s Private Sector Engagement Hub. TheAgTechXChange is designed to link private sector who want to supportsmallholder farmers increase incomes and productivity through market

US Government,including USAID

41 2015 Achieving Impact: Leadership and Partnership to Feed the Future. https://feedthefuture.gov/progress2015/assets/2015_FTF_Progress_Report.pdf

46 | annex 1. indicative directory of donor/agency strategies and initiatives

opportunities, business support services, and improved access to agricultural inputs. One example is of DelCampo Soluciones Agricolas,a company that sells drip irrigation to smallholder farmers. In 2009,the company sought funding from the Millennium Challenge Account –Honduras to offer credit to farmers to finance their purchases, whichallowed many to access irrigation equipment for the first time.

USAID is a donor partner to the New Alliance for Food Security andNutrition, which helps African countries undertake key policy reformsto spur agricultural and private-sector growth and to deepen responsi-ble private-sector engagement around a shared set of goals to reducehunger, poverty and malnutrition. Since its launch, the New Alliancehas catalysed investments from more than 200 companies around theworld – two-thirds of them African – to accelerate agricultural growth,with private sector commitments totalling more than $10 billion. Ofthis, more than $1.8 billion has been implemented to date, reachingover 8.6 million smallholder farmers and creating 58,000 jobs.

USAID has supported the Leveraging Economic Opportunities (LEO) tosupport programming that fosters inclusive growth through markets.

Building on the value chain approach. It focuses on a systems approachto markets and inclusion with learning topics that include: MultiplierEffects, Innovative Business Models, Female Empowerment, Push/Pull,Market Resilience, Facilitation, Market-Driven Technology Scaling, andSystems Approach to Policy.

Strategy. DFID has had a long-standing interest in inclusive business,and several of its policies support these. They include 2010–2015Government Policy: Economic Growth in Developing Countries and 2010to 2015 government policy: hunger and malnutrition in developing coun-tries. In July 2015, DFID released a policy on Development Capital –Catalysing Investments to Benefit Poor People, which includes as exam-ples investments to agribusiness to provide early stage, growth stageand working capital to SMEs in manufacturing and agriculture becom-ing part of global value chains. In 2015 DFID also released a newConceptual Framework on Agriculture.

DFID, along with SIDA, was a pioneer in market systems approachesor ‘marking markets work for the poor’ (M4P) approach. While theseare not specific to the agriculture sector, many of the market systemsinvest ments do have an agrifood sector focus.

US Government,including USAID

UK Departmentfor InternationalDevelopment(DFID)

annex 1. indicative directory of donor/agency strategies and initiatives | 47

Initiatives. DFID funds a substantial portfolio of in-country marketdevelopment programs many of which have a substantial agriculturalelement for example, Propcom Mai-karfi in Nigeria. An early examplewas the Agri-business for Trade Competitiveness Project in Bangla -desh – Katalyst, co-funded by DFID, SDC and Danida.

DFID’s Food Retail Industry Challenge Fund (FRICF) makes fundingavail able for grants for partnerships that bring UK retailers andAfrican farmers together to encourage the corporate sector to findnew ways of buying produce from developing countries.

The Business Innovation Facility (BIF) is currently working in multiplemarkets across three countries – Malawi, Myanmar and Nigeria – aswell as embarking on a new 'company led' expansion globally. WhileBIF is not agriculture specific, it does work in agriculture value chainsusing market systems approach.

Connect to Grow is an enterprise matchmaking initiative, designed tohelp ambitious enterprises grow by creating partnerships betweenIndian enterprises and enterprises across South Asia and Africa, toimprove people’s health and agricultural prospects.

Building on this track record, DFID has committed £10 million to sup-port an Agriculture Technologies Catalyst Fund which will support thedevelopment and deployment of new agriculture technology in devel-oping countries using UK agricultural technology sector expertise.The fund aims to stimulate the development and adoption of new tech-nologies to help increase agricultural productivity in the UK, emergingmarkets and developing countries and thereby contribute to globalfood security.

DFID is a donor partner to several global and regional initiativesincluding New Alliance for Food Security and Nutrition, GAFSP, theAfrica Enterprise Challenge Fund and AgResults.

Strategy. The EU’s agriculture sector work includes a focus on agricul-tural value chains, markets and trade. The EU supports the developmentof inclusive value chains as an effective way of linking smallholderswith markets, and promotes regional integration of markets. Its workincludes improving competitiveness of commodity chains, supportingfarmers’ organisations, and facilitating and enhancing trade.

UK Departmentfor InternationalDevelopment(DFID)

European Union(Europeaid)

48 | annex 1. indicative directory of donor/agency strategies and initiatives

EU’s work in the agriculture is underpinned by their policy paper onA Stronger Role of the Private Sector in Achieving Inclusive and Sustain -able Growth in Developing Countries (2014). This paper, which is notspecific to the agriculture sector, sets out the role of private sector atthe forefront of international development in its partner countries.42 Itoutlines the principles for strengthening the role of the private sectorin EU development cooperation. It suggests that European companiescan contribute to enterprise development in partner countries by inte-grating local micro, small and medium-sized enterprises (MSMEs) intotheir supply chains, especially in the agriculture and agro-food sectors.

Looking to the future, the EU is seeking to enhance mechanisms forcatalysing responsible private sector engagement for inclusive valuechains based on family farming. Over the years, EU donors give increas-ing attention for partnering with the private sector to help drive changeat scale. There is a recognition that there is a need for greater learningand sharing about the effectiveness of these ‘inclusive business’approaches to ensure that family farmers benefit from global andglobal value chains. In particular, the role and relationship, in achiev-ing food security and nutrition outcomes, between larger global com-panies, small and medium scale national or regional companies andthe informal economy need to be clarified. To make sustainable invest-ments feasible for local stakeholders, innovative inclusive financial serv-ices, are needed. Much work also remains to be done on creatingeffective public private partnerships that also ensure governancemechanisms where producer organisations and CSOs have a voice andon applying the CFS' Principles on Responsible Agricultural Invest -ments (RAI) with special emphasis on the Voluntary Guidelines on theResponsible of Tenure of Land, Fisheries and Forests (VGGT).

Initiatives. The EU has a range of programs that promote inclusiveagribusiness. The following are some examples: The AgricultureFinancing Initiative (AgriFI), launched in 2015, responds to the lack offinancing mechanisms adapted to farmers and agri-entrepreneurs.The EU has put out a call for proposals for Sustainable Inclusive ValueChains and Food Fortification (EUR57 million, launched on 12 February2016). The objective of this is to develop inclusive and sustainable agri-culture-based value chains and fortified foods that improve the foodsecurity for the poor and vulnerable. For the value chain work, thefocus is on smallholder farmers and MSMEs. For fortified foods, thefocus is on working with government and intergovernmental regulatorybodies, the food processing private sector operators and civil society,reinforcing PPPs.

European Union(Europeaid)

42 For further information, please see the press release.

annex 1. indicative directory of donor/agency strategies and initiatives | 49

• The EU’s engagement with the African agri-food sector includes the Agenda for Change and European Development Fund (EDF),support for regional and global programs and support throughthe Small Farmers’ Organisations in Africa Programme (SFOAP).In 2013, Europeaid hosted a seminar on Agribusiness and Develop -ment: How investment in the African agri-food sector can help support development.

• The EU is a donor partner to global and regional initiatives includ-ing the New Alliance for Food Security and Nutrition.

(Note: BMZ develops the guidelines and the fundamental conceptson which German development policy is based. GIZ is responsible fortechnical cooperation with partner countries. As much of the work isundertaken in collaboration between BMZ and GIZ, we discuss themhere jointly).

Strategy. BMZ and GIZ are leaders in the field of inclusive businessmodels. Their publication, Promoting inclusive business models for sustainable development, provides an outline to their work inclusivebusiness (or bottom of the pyramid BoP projects) across sectors.BMZ’s contribution is broadly categorised as developing markets, providing capital, and creating enabling environments.

GIZ has published a guide to inclusive agribusiness entitled GrowingBusiness with Smallholders. Using over 40 case studies, it aims to helppractitioners to have a step-by-step approach to improving inclusivityof business models.

BMZ’s inclusive agribusiness work is further supported by BMZ’s ruraldevelopment and food security portfolio, to which it invests over EUR1billion per year. In 2014, BMZ launched a ‘One World – No Hunger’Special Initiative. This initiative draws on Germany’s experience so farin dealing with food and nutrition security, and has objectives in theagriculture and food sector. GIZ’s inclusive agribusiness is also sup-ported by its work in value chains43, private sector development, agri-culture trade, and standards and food safety.

Initiatives. Examples of BMZ/GIZ initiatives include:

• Responsible and Inclusive Business Hub in South East Asia (RIBH SEA)(2013 to 2016). RIBH SEA currently focuses on agriculture, informa-tion and communication technology, and tourism.

European Union(Europeaid)

GermanGovernmentthrough GermanFederal Ministryfor EconomicCooperation andDevelopment(BMZ) andDeutscheGesellschaft fürInternationale Zusammenarbeit (GIZ)

43 Also see their Valuelinks manual: http://www2.giz.de/wbf/4tDx9kw63gma/ValueLinks_Manual.pdf

50 | annex 1. indicative directory of donor/agency strategies and initiatives

• develoPPP.de program, which was established by BMZ to ‘foster the involvement of the private sector at the point where businessopportunities and development policy initiatives intersect. It providescompanies investing in developing and emerging countries withfinancial and, if required, also professional support.’ BMZ providesup to a maximum of EUR200,000, and requires companies to coverhalf of the overall costs. Agribusiness examples include coffee andhigh value food crops.

• The Africa Cashew Initiative which works on cashew value chain (largely producers and SMEs) focusing on areas including qualityimprovement, aggregation, joint marketing and traceability.

• The ‘Cotton made in Africa’ initiative, which is an alliance of the Aid by Trade Foundation (Otto Group), other textile producers, Welt -hungerhilfe, WWF and African producers, and is supported by theBMZ among others.

Other related initiatives include:

• Standards in the Southeast Asian Food Trade: Aim is to support theASEAN Expert Working Group on ASEAN GAP, as the competentbody in the sector, in harmonising national standards with theexisting regional ASEAN GAP standard. Small and medium-sizedenterprises will obtain certification in the context of developmentpartnerships.

Strategy. The Dutch Development strategy is outlined in its 2014 policydocument ‘A World To Gain; A New Agenda for Aid, Trade and Investment’.Food security is one of the four themes of this policy with a significantfocus on private sector development and sustainable trade as mecha-nisms for poverty reduction.

Initiatives.• At a country level, through its embassies, the Netherlands is heavily

involved in programs that support inclusive agribusiness initiatives. • The Sustainable Trade Initiative (IDH) accelerates the scaling up of

sustainable trade by building impact oriented coalitions of frontrunning companies, civil society organisations, governments andother stakeholders. The organisation was established by theNether lands and now also has support from Switzerland, Denmarkand Norway. IDH is active in more than 60 countries and supports250 businesses within a framework of 11 commodity-based pro-grams, including cash crops, timber and fish. It is implemented

GermanGovernmentthrough GermanFederal Ministryfor EconomicCooperation andDevelopment(BMZ) andDeutscheGesellschaft fürInternationale Zusammenarbeit (GIZ)

Government ofthe Netherlands

annex 1. indicative directory of donor/agency strategies and initiatives | 51

through a wide range of private sector and NGO partners, and participating companies must commit to provide a minimum of 50%co-funding. By the end of 2013 IDH had leveraged EUR 56 millionof private sector funding.

• The Dutch Good Growth Fund (DGGF) supports Dutch SMEs and entrepreneurs in emerging markets and developing counties,by offering a source of financing for development-relevant localinvestments and exports. A significant proportion of these invest-ments are in the agribusiness sector.

• A Food and Business Knowledge Platform has been established that connects business, science, civil society and policy.

• The Netherlands supports the World Economic Forum’s Transformation Leaders Network.

Strategy. The Canadian aid program has food security as one of its sectoral priorities, with sustainable agricultural development as ahighlight. Similarly, partnering with the private sector44 and stimulat-ing sustainable economic growth45 are priorities. While inclusiveagribusiness is not mentioned as a strategic focus.

Initiatives. • Canada is funding a range of global and regional initiatives including

GAFSP, the New Alliance for Food Security and Nutrition, Grow Asiaand AgResults.

Strategy. The Strategy for Australia’s aid investments in agriculture,fisheries and water (February 2015) has three priority areas of engage-ment, including: strengthening markets to help increase small-scalefarmers’ participation in markets and address constraints to agri-foodbusiness, including by leveraging private sector investment and inno-vation; and assisting partner countries achieve more effective policysettings to promote sustainable and inclusive growth and open trade,and improve the enabling environment for business, investment andinnovation.

Overall, the Australian Government sees the private sector as anessential partner to achieving sustainable development outcomes inits region. For further detail, see the Ministerial Statement on engagingthe private sector in aid and development, as well as the Strategy forAustralia’s aid investments in private sector development (Oct 2015).

Government ofthe Netherlands

Governmentof Canada, including GlobalAffairs Canada,formerly DFATDand CIDA

AustraliaGovernment,including theDepartment ofForeign Affairsand Trade(DFAT)

44 http://www.international.gc.ca/development-developpement/partners-partenaires/ps-sp.aspx?lang=eng45 http://www.international.gc.ca/development-developpement/priorities-priorites/sseg-fced.aspx?lang=eng

52 | annex 1. indicative directory of donor/agency strategies and initiatives

DFAT, through the Food Systems Innovation Initiative, commissionedstudies to analyse the global trends and lessons learned from donorexperiences implementing aid for trade programs and partnering withprivate sector actors to advance agricultural development and foodsecurity. The studies were conducted by the CARANA Corporation andcan be found here.

In September 2015, DFAT, along with others, funded the Inclusive Agri -business Southeast Asia Roundtable, which was delivered by Grow Asia,the Food Systems Innovation Initiative, and Seas of Change. For furtherinformation, see the event report.

Initiatives. DFAT has funded a range of initiatives that include inclusiveagribusiness components:

• Australia is funding a number of programs that use market systems approaches to engage with business. These include the AustraliaIndonesia Partnership for Rural Development (AIP-Rural), CambodiaAgricultural Value Chain Program (CAVAC), and the multi-countryMarket Development Facility (MDF – focused on agriculture and othersectors).

• Australia funds several global and regional initiatives including GAFSP, AgResults, Grow Asia, and the Africa Enterprise ChallengeFund. See Annex 2 for further information on these initiatives.

• The Business Partnership Platform is a new mechanism used by DFAT to partner with business. While not exclusively focused onagriculture, agribusinesses are expected to be included in the businesses that receive funding.

AustraliaGovernment,including theDepartment ofForeign Affairsand Trade(DFAT)

annex 2. initiatives related to inclusive agribusiness | 53

ANNEX 2INITIATIVES RELATED TO INCLUSIVE AGRIBUSINESS

Multi-donor initiatives

u Africa Enterprise Challenge Fundu AgResultsu Business Call to Action (BCtA)u Global Agriculture and Food Security Programu New Alliance for Food Security and Nutritionu Sustainable Trade Initiative (IDH)

Private Sector Driven Initiatives

u Grow Africau Grow Asia u Sustainable Agriculture Initiative Platformu Sustainable Food Labu World Business Council for Sustainable Developmentu World Economic Forum - New Vision for Agriculture

Knowledge Networks

u SEEP Networku SeasofChange.netu Development Committee for Enterprise Developmentu Building Effective and Accessible Markets (BEAM) Exchangeu PPPLabu The Practitioner Hub for Inclusive Businessu Business Fight Povertyu Bottom of the Pyramid Global Networku USAID Leveraging Economic Opportunities (LEO)u DFID Research for Development Outputs

54 | annex 3. key resources

Inclusive Business (not specific to agriculture)

BMZ, 2011. Promoting inclusive business models for sustainable development: Experiences of Germandevelopment cooperation. BMZ, Berlin

BMZ, 2014. Multiplying impact: Supporting the replication of inclusive business models. BMZ, Berlin

DCED, 2014. Current debates on Inclusive Business Models. Synthesis Note

G20 Development Working Group. 2015. G20 Inclusive Business Framework

GIZ, 2015. Inclusive Business Toolbox, Promoting Inclusive Business Models in Development CooperationProgrammes

GIZ, 2013. Inclusive Business. Options for support through PSD programmes

IFC, 2010. Inclusive Business Solutions: Expanding opportunity and access at the base of the pyramid.Written by Beth Jenkins, Eriko Ishikawa, Alexis Geaneotes, and John Paul

The Practitioner Hub for Inclusive Business: Database of publications and Gateway to inclusive businesses

Wach, Elise, 2012. Measuring the Inclusivity of Inclusive Business. IDS Practice Paper 9

World Business Council for Sustainable Development. 2013. Scaling up inclusive business – Solutions toovercome internal barriers

Inclusive Agribusiness

Business Call to Action (BCtA): Inclusive Business and Agriculture. BCtA Company Initiatives, fundingsources, key actors, partnerships, guidelines and toolkits

DFID. 2014. Agriculture and Growth – Agriculture and growth evidence paper series. DFID. London

DFID. 2014. Agriculture and private sector – Agriculture and growth evidence paper series. DFID. London

FAO, 2015. Inclusive business models – Guidelines for improving linkages between producer groups andbuyers of agricultural produce. By Kelly, S., Vergara, N. & Bammann, H. Rome, Italy

GIZ. 2012. Growing Business with Smallholders – A Guide to Inclusive Agribusiness. GIZ. Bonn

Graf, Jessica et al. (2015). Smallholder farmers and business: 15 pioneering collaborations for improved productivity and sustainability. Report prepared by Hystra

ANNEX 3 KEY RESOURCES

annex 3. key resources | 55

Ion, A., Beyard, K. and Sedaca, S. 2014. Synthesis of trends in public-private partnerships (PPPs) andInclusive Business Models for Improving Food Security and Rural Development through Agriculture.Report prepared by Carana Corporation for the Food Systems Innovation initiative

Molenaar, J.W., Gorter, J., Heilbron, L., Simons, L., Vorley, B., Blackmore, E., Dallinger, J. 2015.Sustainable Sector Transformation: How to drive sustainability performance in smallholder dominated agricultural sectors?White Paper 1. Commissioned by IFC

Monika Sopov, Yeray Saavedra, Wytse Vellema, Yared Sertse, Henric Verjans. 2014. Is Inclusive Business foryou? Managing and upscaling an inclusive company: Lessons from the field. Wageningen UR (University &Research Centre). Wageningen

Wiggins, Steve and Sharada Keats, 2013. Leaping and Learning: Linking smallholders to markets in Africa.London: Agriculture for Impact, Imperial College and Overseas Development Institute

Woodhill, J., Guijt, J, Wegner, L., & Sopov, M. 2012. From islands of success to seas of change: A report onscaling inclusive agri-food markets. Centre for Development Innovation, Wageningen UR (University &Research Centre). Wageningen

Value Chain Development

Donovan, Jason , Steven Franzel , Marcelo Cunha , Amos Gyau , Dagmar Mithöfer. 2015. Guides for valuechain development: A comparative review. Journal of Agribusiness in Developing and Emerging Economies,Vol. 5 Iss: 1, pp.2 – 23. (link)

Dixie, Grahame; Jaeger, Peter Martin Lind; Jonasova, Marketa; Ronchi, Loraine; Sergeant, Andrew ThomasH.; Yap, Justin. 2014. An analytical toolkit for support to contract farming. Agriculture and environmentalservices. Washington, DC: World Bank Group

FAO. 2014. Developing sustainable food value chains – Guiding principles. By David Neven, Rome, Italy

GTZ. 2007. Value Links Manual

KIT and IIRR. 2008. Trading up: Building cooperation between farmers and traders in Africa.Royal Tropical Institute, Amsterdam; and International Institute for of Rural Reconstruction, Nairobi

Lundy, Mark. 2012. CIAT Link Methodology. CIAT Columbia

McGregor, Andrew & Kyle Stice. 2014. Agricultural Value Chains for the Pacific – Making value chainanalysis a useful tool in the hands of farmers, traders and policy makers. CTA, Wageningen

McVay, M. and Snelgrove, A., 2007. Program design for value chain initiatives – Information to action: atoolkit series for market development practitioners. MEDA

Vermeulen, S, Woodhill, J. Proctor, F. Delnoye, R. 2008. Chain Wide Learning for Inclusive Agrifood MarketDevelopment: A multi-stakeholder guide for understanding institutions and policies to link small-scale producers with modern markets. IIED / Wageningen International

56 | annex 3. key resources

Making Markets Work for the Poor (M4P) / Market Systems

Bekkers et al,. 2014. Guidelines for good market development program design: A mangers’ perspective.

DFAT AIP- Rural. 2015. Deal Making Guidelines for private sector partners

Humphrey, John. 2014. Market Systems Approaches – A literature review. BEAM Exchange

SDC, DFID. 2008. A Synthesis of the Making Markets Work for the Poor (M4P) Approach

The Springfield Centre. 2014. The Operational Guide for the Making Markets Work for the Poor (M4P)Approach. 2nd edition funded by SDC & DFID

Gender

Baden, Sally. 2014. Policy brief – Women’s economic empowerment and collective action in agriculture: newevidence and measurement challenges. Future Agricultures, IDS. Brighton

DFAT. 2015. Gender equality and women’s economic empowerment in agriculture – Operational GuidanceNote. DFAT. Canberra

KIT, Agri-Profocus, IIRR. 2012. Challenging Chains to Change: Gender Equity in Agricultural ValueChains. KIT Publishers. Amsterdam

Monitoring and Evaluation

Sustainable Food Lab. 2015. Towards a Shared Approach for Small-holder Performance Measurement:Common Indicators and Metrics

DCED. 2015. The 2015 Reader on Results Measurement

FinancingAfrican Development Bank (AFDB). 2013. Agricultural Value Chain Financing. AFDB. Tunis

International Finance Corporation (IFC), G-20 Global Partnership for Financial Inclusion’s (GPFI). 2011. Scaling Up Access to Finance for Agricultural SMEs Policy Review and Recommendations. IFC. Washington DC

International Finance Corporation (IFC), G-20 Global Partnership for Financial Inclusion’s (GPFI). 2012.Innovative Agricultural SME Finance models. IFC. Washington DC

International Fund for Agricultural Development (IFAD). 2012. Agricultural value chain finance strategyand design technical note. IFAD. Rome

Miller, C. and Jones, L. 2010. Agricultural value chain finance: Tools and lessons. FAO. Rome

Initiative for Small Holder Finance. 2016. Inflection Point: Unlocking growth in the era of farmer finance

annex 3. key resources | 57

Aid for trade

CARANA Corporation. 2014. International Trends in Aid for Trade for Agriculture – Consultancy report.CSIRO. Brisbane. (link)

Investment Principles

UN Global Compact. 2013. Sustainable Agriculture Business Principles: White Paper

World Committee on Food Security (CFS). 2014. Principles for Responsible Investment in Agriculture andFood Systems. CFS. Rome

OECD, FAO. 2015. Guidance for Responsible Agricultural Supply Chains. OECD-FAO. Paris

Policy

International Finance Corporation. 2013. Building a Road Map to Sustainability in Agro CommodityProduction. IFC. Washington DC

GIZ. 2015. Agricultural Development Policy a Contemporary Agenda. GIZ. Bonn

World Bank. 2016. Enabling the Business of Agriculture 2016: Comparing regulatory good practices.World Bank. Washington DC

Facilitating Partnerships Leadership and Innovation

Brouwers, H. and Woodhill J. 2015. The MSP Guide – How to Design and Facilitate MultistakeholderPartnerships. Wageningen UR Centre for Development Innovation. Wageningen

Nelson Jane and Beth Jenkins. 2016. Tackling Global Challenges: Lessons in System Leadership from theWorld Economic Forum’s New Vision for Agriculture Initiative. CSR Initiative at the Harvard KennedySchool. Harvard

Pynburn, R. and Woodhill, J. eds. 2014. The Dynamics of Rural Innovation. Amsterdam. Kit Publishers.

Donor and International Agency Documents

Adam Smith International. 2015. Final Report: Agriculture and Economic Growth Study for the Departmentof Foreign Affairs and Trade. DFAT. Canberra

DFAT. 2015. Strategy for Australia’s aid investments in agriculture fisheries and water. DFAT. Canberra

DFID. 2015. DFID’s Conceptual Framework on Agriculture. DFID. London

GIZ and ODI. 2015. Agricultural Development Policy: A contemporary agenda. GIZ

Thorpe, Jodie and Mar Maestre. 2015. Brokering Development: Enabling Factors for Public-Private-Producer Partnerships in Agricultural Value Chains. IFAD. Rome

58 | annex 4. illustrative mapping of initiatives

1. Responsible Investment Principles1.1. World Committee for Food Security

1.1.1. Principles for Responsible Investment in Agriculture and Food Systems1.2. Global Compact

1.2.1. Food and Agriculture Business Principles1.3. International Finance Corporation

1.3.1. Environmental and Social Sustainability Standards1.4. OECD-FAO Guidance for Responsible Agricultural Supply Chains

2. Business Platforms2.1. World Economic Forum

2.1.1. New Vision for AgricultureGrow AfricaGrow Asia

2.2. Sustainable Agriculture Initiative SAI Platform2.3. RoundTables2.4. World Business Council for Sustainable Development

ANNEX 4 ILLUSTRATIVE MAPPING OF INITIATIVES

annex 4. illustrative mapping of initiatives | 59

3. Examples of NGO initiatives3.1. Oxfam3.2. SNV3.3. Solidaridat 3.4. WWF3.5. Technoserve3.6. Hystra3.7. Swiss Contact3.8. World Vision3.9. Mercy Core

4. Illustrative Donor Programs4.1. DFID 4.1.1. Katalyst

4.1.2. Food Retail Industry Challenge Fund4.1.3. Business Innovation Facility4.1.4. Connect to Grow

4.2. BMZ/GIZ 4.2.1. Rural development and food security portfolio4.2.2. Responsible and Inclusive Business Hub4.2.3. DeveloPPP

4.3. DGIS 4.3.1. Good Growth Fund4.4. USAID 4.4.1. USAID-EAT project

4.4.2. Expanding Agricultural Markets and Trade4.5. DFAT4.6. EU 4.6.1. Agrifi

5. Illustrative Multi-Lateral Agency Initiatives5.1. FAO 5.1.1. Investment Centre Review of Small Holder Linkages

5.1.2. Inclusive Value Chains 5.2. IFC 5.2.1. Promoting Inclusive Development5.3. World Bank 5.3.1. Enabling the Business of Agriculture

5.3.2. Help Farmers Reach Markets5.4. IFAD 5.4.1. Business Models Case Studies

5.4.2. Access to Markets5.4.3. Private Sector Develpment and Partnership Strategy

5.5. WFP 5.5.1. Purchase for Progress5.6. OECD 5.6.1. Alternative Futures

5.6.2. Responsible Value Chains

6. Multi-Donor Initiatives6.1. Global Agriculture and Food Security Program (GAFSP)6.2. African Enterprise Challenge Fund (AECF)6.3. Alliance for Green Revolution in Agriculture (AGRA)6.4. New Alliance6.5. AgResults

7. Examples of Engaged Research Institutions7.1. WUR7.2. IFPRI7.3. CIAT7.4. IDS7.5. ODI7.6. IIED7.7. ACIAR7.8. CSIRO

60 | annex 4. illustrative mapping of initiatives

8. Key Policy Initiatives8.1. Africa 8.1.1. CAADP8.2. APEC

9. Examples of Implementing Consultancy Firms9.1. Palladium9.2. Adam Smith9.3. Cardno9.4. Coffey

10.Financing10.1. IFC10.2. AgDevCo10.3. Root Capital10.4. EU Agrifi10.5. Agrifin10.6. Initiative for Smallholder Finance

11.Examples of Engaged Foundations11.1. Rockefeller 11.2. Gates11.3. Syngenta11.4. Rabobank

12. Practitioner Networks12.1. Inclusive Agribusiness

12.1.1. Seas of Change12.1.2. Sustainable Food Lab12.1.3. Transformation Leaders Network

12.2. Inclusive Business / Market Systems12.2.1. BEAM Exchange12.2.2. SEEP12.2.3. Development Committee for Enterprise Development (DCED)12.2.4. Inclusive Business Practitioner Hub

13.Examples of Company Programs13.1. Unilever13.2. Rabobank13.3. Nestle13.4. Olam13.5. Gargill13.6. Ecom