Adaptive Management in Partnerships With the Private Sector
Commercial agribusinesses operate in risky environments. Natural disasters, lack of enabling environment reforms, and currency fluctuations are all part of the looming threats that businesses frequently contend with. These, coupled with the unpredictability of agriculture in general, requires innovative and adaptive thinking to survive from one agricultural season to the next.
How can donors play a role in helping companies adapt to these unpredictable environments? Partnering for Innovation’s pay for performance approach integrates adaptive management into the design of its partnerships agreements. How do we do this?
- Co-design the partnership scope of work and deliverables
- Structure payments to tie to outcomes, leaving companies with flexibility in their approach towards achieving commercial and social impact
- Negotiate agreement modifications when external circumstances severely affect a business’s ability to commercialize a product or service in rural markets
- Provide hands-on partnership management where the Partnering for Innovation team works with the company to mitigate the challenges of pivoting commercialization strategies to smallholder markets
One example of this is Partnering for Innovation's investment in Rab Processors, a company in Malawi that procures a variety of agricultural commodities from farmers and traders and then adds value by processing the commodities into products for retail sale domestically, as well as for export markets. Partnering for Innovation’s investment in Rab Processors was designed to increase farmer’s access to markets by supporting the construction of three rural storage facilities that include warehouse receipts financing. Malawian smallholder farmers, who rarely have access to on-farm storage, use the facilities to store and then sell their products at higher rates. Rab Processors also purchases commodities from smallholder farmer warehouse clients to process and sell.
Adaptive Management in Action
Pivotal to the commercial and development success was the construction of the aforementioned storage facilities. Of the three, Rab Processors was able to construct two of the facilities on-time. However, with the third, it faced challenges. This is because it was not able to secure government approvals for the land purchases, and there were also floods that impacted the availability of construction labor. Meeting smallholder impact and business objectives in the face of these challenges required adaptive management between Rab Processors and Partnering for Innovation.
Through a monitoring visit, and a closer analysis of the situation including sales and farmer outreach in the other two locations, Partnering for Innovation worked with Rab Processors to use an existing nearby facility to purchase commodities and provide warehouse receipts financing until the permanent warehouse was complete. Rab Processors located this temporary warehouse facility through their local networks within a few weeks. This was critical to the commercial and development impact that Rab Processors achieved, as they needed to procure commodity during the agriculture season in order to reach more farmers and achieve their milestones targets. The result? Rab processors reached over 11,000 farmers through the purchase of commodities and warehouse receipts financing. Importantly, the company is now scaling the model in other areas of Malawi.
This is just one example of how harnessing the power of the private sector and co-creating shared value partnerships can result in adaptive and responsive interventions. For more detail on our adaptive approach with Rab Processors, please tune into our podcast #4 here.