Governments Can Do More to Unlock Innovation and Support Market Growth in the Agriculture Sector
Imagine a vibrant market in a village in Sub-Saharan Africa, filled with vendors selling lush tomatoes, hearty ears of corn, ripe mangos, and a myriad of other fruits, vegetables, and grains. Where did all that food come from? Where did the farmers get the financing to buy the seeds and fertilizer they needed? What research institutions developed the seed varieties that thrived in local agro-ecological conditions? How did farmers learn the agriculture techniques to produce high-quality crops? And how did farmers get those high-quality crops from their farms to the market?
Agriculture is a tremendously complicated industry. Doing it right requires researchers, successful distributors of farm inputs, banks, providers of agricultural and business skills training, processors, and traders. Some of these players are in the private sector, while others are generally in the public sector. Some, like banks or providers of agriculture skills training, can have a foot in both of those worlds.
A successful agriculture industry in any country requires the many players in the value chain to work together in collaborations that are both formal and informal. Partnerships occur daily between private-sector players, public-sector players, and public and private players. Though perhaps the most challenging formal partnerships to craft, public-private partnerships are essential to the long-term growth of a country’s agriculture sector, as well as long-term environmental stewardship.
We know firsthand the importance of successful public-private partnerships in the agriculture sector. We represent two very different organizations—The Coca-Cola Company, the world’s largest beverage company, and One Acre Fund, a nonprofit agriculture organization that serves 280,000 farmers in East Africa. The Coca-Cola Company sources various agricultural ingredients from all around the world to produce its beverages, and One Acre Fund supports smallholder farmers who grow staple food crops for local and regional markets. We work with different types of crops and in different parts of the value chain, but we have discovered that what we both need from the public sector to be successful is quite similar.
People often talk as if the private sector, nonprofits, and farmer organizations in Africa are at odds, with extremely different motivations, ways of working, and goals. In reality, we are more similar than different. We are all seeking innovative ways to build a strong agriculture sector in which smallholder farmers are profitable businesspeople and responsible environmental stewards. And we all recognize that the public sector has the responsibility to set certain conditions that foster an environment where innovation and growth can occur.
In our experience, there are five things the public sector can do to foster agriculture innovation and growth across the value chain:
Create a level playing field. It’s important for all market players to compete under the same rules, particularly to attract private sector (domestic and foreign) investment. The government can change laws and regulations to make sure that the private sector is not forced to compete with state-subsidized enterprises, and it can use open procurement processes when it purchases seed and fertilizer.
Develop transparent rules and regulations. When innovators are unsure if their product or service can be legally sold, they will choose not to operate in that country. When governments create clear, transparent rules and regulations that govern things like seed licensing, fertilizer blend approval, and the approval process for selling a new agriculture technology, innovators will flourish. When multiple, inconsistent, or conflicting standards exists, private companies have a tough time navigating the market. Organizations like One Acre Fund can’t offer farmers promising new seed varieties if the regulatory process for the variety is opaque. Farmers, suppliers, and companies like Coca-Cola are all affected when markets have conflicting ingredient bans, labeling standards, and categorization of products.
Fund “public goods” that catalyze innovation and sustainable growth. Governments can invest in specific things that catalyze agriculture innovation. Most importantly, governments can invest in national research systems that develop new seed varieties, methods for adapting to changing climate, and agriculture techniques to preserve or improve soil health. They can also create incentives and opportunities for the private sector to generate new agriculture research, either on its own or in collaboration with public research institutions. The private sector relies on this research to bring new products and services to market.
Clearly articulate national priorities for agricultural development to help guide domestic and foreign investment. A national investment framework and a mechanism for the private sector to engage with the national government are important tools to guide investments to the highest impact areas of the agriculture sector, aligning resources and opportunities.
Develop institutional structures that allow non-government actors to engage in the policy process. When there are clear, formal structures in place for setting a policy agenda, consulting a wide variety of stakeholders, developing a draft policy, seeking feedback, and then approving the policy, all interested organizations can give input on agriculture policies. To be clear, we define non-government actors as anyone who is not the government: the private sector, nonprofits, farmer organizations, and individual farmers.
To make these ideas more concrete, we’d like to share some specific examples from each of our organizations. At The Coca-Cola Company and One Acre Fund, we have learned a lot over the years about how to work with the public sector. Successful collaboration requires a clear alignment of objectives, shared risks, and a long-term perspective that allows for dynamic change and growth. Consistent and genuine communication is paramount. Without trust among the parties, a partnership can be tenuous.
One Acre Fund has worked in Rwanda since 2007 and now provides over 106,000 Rwandan smallholder farmers with agriculture inputs on credit. One Acre Fund has a long-standing collaboration with the government and has been fortunate to participate in some of the agriculture policy changes that have occurred over the last seven years. This participation has been possible because Rwanda has created a level playing field for the agriculture sector, and has a well-run institutional structure for non-government actors to engage in the policy process called the Agriculture Sector Working Group.
The Agriculture Sector Working Group is effective because the Ministry of Agriculture in Rwanda runs the group well. It is not just a theoretical entity. It actually meets once a month, and a wide range of stakeholders are active participants in those meetings. Once a year, the group agrees on a set of policy action items that will be tackled on a specific timetable. Smaller internal working groups are formed for specific policy actions, and those sub-groups develop a set of policy recommendations which are presented to the full working group for feedback and eventual approval. One Acre Fund has participated in the sub-groups on extension and soil fertility. We sit at a table with government representatives, private-sector entities, researchers, and nonprofit organizations, and everyone has the opportunity to contribute their views.
Work that Coca-Cola has done in East Africa, known as Project Nurture, shows the value of public-private partnerships and underscores the importance of government investment in “public goods” that catalyze innovation and support market growth. This partnership with the Bill & Melinda Gates Foundation and TechnoServe reached more than 53,000 farmers over four years, 30% of whom were women. Project Nurture achieved some promising results.
Government support was critical to the structure and success of Project Nurture. Government representatives participated in the strategic direction and oversight of the project itself, and they helped align the project with national agricultural priorities on high-value horticultural crops and partnering strategies. They supported agricultural research institutions to produce and commercialize new varieties of passion fruit, capitalizing on years of public investment by the government and international donors. The project has also worked with the public sector to provide farmers with additional technical skills and business training to help support management of their own supply chains.
The many lessons learned from Project Nurture are now being applied to Coca-Cola’s Africa-wide agricultural initiative, Source Africa, which is enabling even closer alignment and coordination on policy and investment priorities with government. Coca-Cola sees great opportunity to help advance sustainable and commercially viable supply chains of key agricultural ingredients for Coca-Cola products in Africa. This supply potential is currently underdeveloped and underutilized, but by adopting the recommendations above, the public sector can help catalyze new investment and growth.
At the regional level, changes underway in Eastern and Southern Africa illustrate the importance of transparent rules and regulations for encouraging private-sector investment in agriculture. Several organizations, including the Alliance for a Green Revolution in Africa (AGRA), and the Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA), are facilitating positive changes in the regulatory regimes of individual countries and regions. This work enables global initiatives seeking sustained and inclusive agricultural growth through better alignment between government and private sector interests like the New Alliance for Food Security and Nutrition and Grow Africa to be successful. Further, ACTESA has been working to develop seed sector policy that is harmonized across the region. Once implemented, this policy will create a larger market for new seed products, giving seed companies an incentive to roll out new products. For example, a Zambian seed company will be able to sell seed in Zambia, but also in Malawi and Mozambique.
These examples are heartening. Governments have made a lot of progress in creating a better environment for agriculture innovation and investment. 2014 marked the African Year of Agriculture and Food Security, in which African governments recommitted to allocating a significant percentage of their budgets to agriculture. Like never before, the momentum and energy exists to bring about substantial positive impacts to farmers and communities throughout the continent.
However, a lot of work remains to be done. The good news is that many of our recommendations can be implemented relatively quickly and with relatively modest amounts of money. We suggest that governments focus first on creating a level playing field for all actors and developing transparent rules and regulations to govern the sector. Those two actions would go a long way toward creating an agriculture sector in which private-sector companies like Coca-Cola, nonprofits like One Acre Fund, farmers’ organizations, and individual smallholder farmers can all innovate and thrive.
 Net farmer revenue increased by over 100% resulting in participating farmers’ annual fruit incomes more than doubling. Participating women farmers saw their average incomes increase by 140%.  More than 36,000 metric tons of fresh fruit have been harvested and sold.
Jen Ragland is Director of International Government Relations and Public Affairs at the Coca-Cola Company and Stephanie Hanson is SVP of Policy and Partnerships at One Acre Fund. Both are members of the Aspen Food Security Strategy Group.