Purchase for Progress (P4P)

Connecting Farmers to Markets

Hunger…

1 billion people go to bed hungry every night

Every six seconds, one child dies from hunger

Major impact on economy: losses of 6-10 % in foregone GDP

WFP, feeding the poorest of the poor…

When an emergency strikes…

Refugees…

School children…

For a better future…

... But there is more…

Logistical power and transport capacity• Logistical and storage networks worldwide including UN Humanitarian Response

Depots • Leads global logistics and ICT clusters for the humanitarian system • Early warning systems• Vulnerability assessment methodologies

• Mitigating the impact of climate change in the developing world

• WFP helped women in Timbuktu reclaim land from advancing desert to grow vegetables and rice

WFP:

Builds roads

De-mines areas

Renovates tracks

Builds bridges

WFP’s food

basket meets the

nutritional needs

of beneficiaries

WFP helps to get more girls to school

Improves the lives of people affected by HIV/AIDS

United Nations’ frontline agency in addressing hunger

World’s largest humanitarian organization

In 2009, will provide food assistance to 108 million people in 74 countries

What is WFP?

Why is WFP unique?

Entirely voluntary funded

93% of donations to feed the hungry

Has both emergency and development mandate

Uses food, cash and vouchers to help communities achieve sustainable food security

In 2008, bought US$ 1.1 billion of food commodities in 73 developing countries

New Challenges

Global Context Today

Growing demand for food

Conflicts over land resources

Declining natural resources

Climate changeTightening food stocks

High commodity costs

Natural disasters

Increased migration

“PERFECT STORM”

What can we do?

Purchase for Progress

Quick facts about P4PGeographic Coverage – 21 countries

Africa – Burkina Faso, Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Liberia, Malawi, Mali, Mozambique, Rwanda, Sierra Leone, Sudan, Tanzania, Uganda, Zambia

Asia – Afghanistan, Laos

Latin America – El Salvador, Guatemala, Honduras, Nicaragua

Global Facts

Beneficiaries: 500,000 farmers

Duration: 5 years (Sept 2008 - Sept 2013)

Total funding: US$115 million for technical capacity for 5 years (food not included)

Key donors – Bill & Melinda Gates Foundation, Howard G. Buffett Foundation, Governments of Belgium, Canada and the United States of America

P4P’s Two Key Questions      Assessment Criteria

OBJECTIVES 1 & 2

What procurement modalities/platforms* best support capacity building and create an enabling environment for procurement from smallholder farmers?

   

Group marketing capacity

 

Production / productivity response

 

Livelihood improvement

*Modalities include direct and forward contracts, soft tendering, warehouse receipt systems, commodity exchanges

OBJECTIVES 3 & 4

What is the best way for WFP to balance the risks and costs associated with pro-smallholder procurement in order to optimise and transform it’s local procurement practices?

   

Scale of procurement,

timeliness, cost, efficiency and

quality/safety of procured food

 Market

development impact

 

Impact on livelihoods of smallholder

farmers

Three Fundamental Components Connecting Smallholder Farmers to Markets through Market and Agricultural Development

WFP Local Procurement – the Foundation of P4P Principles of acceptable, timely and cost efficient food procurement remain the same for P4P purchases

Local procurement principles underpin P4P purchases

Best practices will be mainstreamed into WFP local procurement procedures by the end of the pilot

Learning and Sharing Monitoring & EvaluationLessons Learned/Best PracticesInforming policy

Supply-side PartnersProviding technical expertise in agriculture & market development Building capacity Empowering Women

Innovative Procurement ModalitiesPro-smallholder competitive tenderingDirect contractingForward contracting

Procurement Modalities

Competitive Processes

Local & Regional Procurement, “soft” tendering, Warehouse Receipts Systems, Commodity exchanges

Direct Contracting Forward Contracting

Targeted P4P Market Entry Points

Consumers

Retailers

Large-scale Food Processors/Large-scale Millers/Large-scale Wholesalers

Blended Food or Small-scale Processors

Smallholder Farmers

Farmer OrganizationsThrid Tier

Second TierFirst Tier

*Levels and characteristics of FOs are different in each P4P country

WFP Point of Entry RP/LP

WFP Point of Entry RP/LP

Agricultural. inputs & services

Warehouse Receipts System

Commodity Exchange

Medium-scaleTraders

Small-scale Traders(Collectors)

WFP P4P Point of

Entry

WFP P4P Point of

Entry

Farmer Organizations

CREDITGovernments, IFAD,

IFC, Banks and Microfinance Institutions

PRODUCTION INPUTSGovernments, NGOs, FAO, AGRA, Bilateral Partners and Private

Sector

POLICY & ADVOCACYGovernments, Regional Economic Communities,

NGOs, Media, Universities and Private Sector

MARKET ACCESSGovernments, FAO, IFAD, AGRA, Regional Economic

Communities, Research Institutions, Universities and

Private Sector

QUALITY Governments, FAO,

NGOs, Research Institutions and Private Sector

CAPACITY DEVELOPMENT(Skills, Market Analysis, Post-harvest

Handling, etc.)

Governments, IFAD,AGRA, FAO, Regional Economic Communities, NGOs and

Universities, Private Sector

INFRASTRUCTUREGovernments, AU, IFAD, World Bank and Bilateral

Programmes, Private Sector

Strategic Partnerships

Illustrative Indicators for P4P Learning Framework

  Assessment Criteria

Group marketing Production Household welfare

Best practices models will be compared on the basis of their:

Impact on farmer groups: Organizational capacityFinancial capacityCapacity to aggregateInfrastructureAccess to markets

Effects on:Agricultural productionYieldsCropping patternsInvestments in agriculture

Impact on:Number of smallholder farmers engagedAnnual household incomesFood consumption scoreLivelihood/wealth indexOther indicators of household welfare (e.g. health and education access, housing quality)Net buyer/seller status

Transforming WFP’s local procurement will require a clear understanding of the benefits in terms of:

Number of smallholders engagedSmallholder household income and other welfare measuresProcurement cost (food cost and administrative cost)Pipeline risksMarket impacts (positive and negative)Market development impactsAgricultural development impacts

Indicators for Learning Framework

Challenges

Limited presence of supply side partners at field level

Insufficient availability of rural credit for smallholder farmers

Price discovery and price expectations

Natural disasters affecting agricultural production

What can you do?

www.wfp.org