Incentives for private sector engagement in pro-poor programming in agriculture
Agriculture and Food Security
Cash-strapped public sector organizations are looking for innovative ways to fund research or development projects in agriculture to improve incomes and reduce poverty and food insecurity. Central to these explorations are discussions on new mechanisms and partnerships to engage non-traditional funders, primarily the private sector.
While public-private partnerships to solve health problems in the developing world are now common, they are just beginning to explode in the agricultural sector. IDRC co-hosted a conference on public-private partnerships in agriculture in partnership with the Syngenta Foundation for Sustainable Agriculture in March 2012. One of the main messages from that meeting
was the need for new partnerships between public and private sector stakeholders for a catalyzing nudge
to kick-start dialogue, improve communication, speed up negotiations, and increase the quality and quantity of public-private partnerships to help improve food security for the world’s poorest. Engaging the private sector in pro-poor campaigns
IDRC engaged Global Access to Technology for Development (GATD) to do a scoping study on the various financial mechanisms that can be used to engage the private sector for pro-poor campaigns. These mechanisms can be categorized into three main categories:
- Funding from new sources, usually the private sector and/or the general public. This includes programs such as the (PRODUCT)RED campaign that helps fund the Global Fund for Health.
- Funding from traditional public sector donors, but payments are results-based for specific programs, such as Canada’s contribution to the AgResults program. This program engages traditional public sector funds to encourage private industry to solve technical problems with a high potential for impact on food security.
- So-called “pull mechanisms,” where new sources of funding are used in innovative ways to fund market-generated solutions to solve problems of hunger and malnutrition. The World Economic Forum’s New Vision for Agriculture is an example of this approach.
Results-based payments are popular with governments looking for increased accountability and results-per-dollar of public money spent. While there are significant administrative challenges in creating and implementing such mechanisms, they are generally well understood.
Pull mechanisms bring in new money from new sources. This includes the private sector or private citizens, to encourage the generation of innovative ideas. Some examples of pull mechanisms include advance market commitments, where buyers commit up front to purchase goods at a set price; prize challenges, where an award is offered to individuals or groups who achieve a specified goal or solve a specific problem; or patent pools, for example, where different organizations contribute to the development of a new variety of grain, and shared patent rights are determined by the contribution to the research in explicitly defined ways.
However, public and private institutions have many questions about the mechanisms of public-private partnerships in agriculture. Specific issues include: How well do the incentives of the private sector align with those of the public sector? Is there a correct blend of public and private money?
Read more about IDRC’s activities encouraging better understanding of public-private partnerships:
IDRC acknowledges the contributions of Sara Boettiger and Kayje Booker of Global Access to Technology for Development to this article.
Photo (top): Greg Teckles
Photo (right): University of Zimbabwe / P. Mapfumo