Rural Partnerships between Small Farmers and Private Sector The case of Colombia

1. Rural Partnerships between Small Farmers and Private Sector The case of Colombia

2. Context • Search for competitiveness (upcoming Free Trade Agreement with USA). • Agriculture policy supporting production chains. • Poor performance of sector policy and investments in reducing poverty. • Public funds captured by larger farmers. • Colombia’s conflict and the need for social cohesion. • Weak institutional capacity and Government lacks credibility (need to promote alliances with diverse stakeholders).

3. Project Objectives The establishment of productive partnerships between organized small farmers and the private sector, with the support of different facilitators (public entities, NGOs, other members of the production chain). Partnerships to develop business activities in which all partners invest, assume risk and gain. This scheme seeks to generate income, create employment, and promote social cohesion of poor rural communities in an economic and environmentally sustainable manner.

4. Principal products involved in partnerships

5. What do Partnership Agreements contain? • Production targets: volume, quality, frequency of supply, mechanisms to establish prices. • Business plan and sources of finance including the contribution of each partner. • A management committee for decision making. • Rules and procedures for conflict resolution. • Rules for the partnership operation.

6. Process Characteristics • Communications strategy to involve a large number of local stakeholders (public and private). • Demand driven: partnerships selected through regional contests. • Transparency: partnership selection criteria and contest results disseminated. • Delegation of technical responsibilities to private agents (NGOs, consulting companies, other). • Flexibility: adaptable to the requirements of each partnership. • Sustainability: graduation process.

7. Communications Strategy

8. Phases of partnership building Profile Pre-investment (Feasibility studies and partnership agreements) Investment (Facilitators support training, management and technology)

9. Government Incentives • Finance expenses at the farm level working capital, productive infrastructure, access to land, marketing equipment, technical assistance and management support. • Up to 40% of the total investment and maximum US$2,500 per farmer. • Disbursed through a trust company. • Farmers to repay government incentive to a partnership revolving fund.

10. Size of program • Active in 50 % of the country (16 departments). • 7 regional private technical assistance providers. • 99 partnerships at different levels of development. • 12.500 small farmers involved. • 31.000 hectares. • US$ $50 millions invested. • US$14 million from government incentive.

11. Working Partnerships

12. We have learned: • The characteristics of the production chain determine the complexity of agreements. • The management arrangements and conflict resolution mechanisms must be clearly defined and permanently used. • The quality of the profiles, the pre- investment studies and the monitoring is important for success. • Commercial Partners participate actively when: • The Partnership is relevant to their current activities. • They perceive a win-win situation. • They can fulfill their social responsibility. • They can access new productive areas, without which the partnership would not be accessible.

13. Constraints • Poor institutional capacity at regional and local level: • Regional governments • Regional private technical assistance providers • Local facilitators • Weak associative culture of small farmers. • Difficult to obtain co-operation of private sector: conservative - risk averse. • Civil conflict in the regions.

14. Main achievements until now: • Program with regional and national credibility. • Regional interest to create quality demand. • Image of transparency and technical capability. • Adoption of the model by some regional governments. • Change of attitude of small farmers towards government: a new business language.

15. Challenges • Sustainability without the support of NGO or other service providers. • In the long-term: - how to ensure that agreements are respected and enforced (without the presence of the project) - how to ensure adequate benefit sharing over time • Effective contribution of the model to social cohesion and peace.