Dear All,
My name is Katarina Eriksson and I am responsible for Partnership Development at Tetra Laval Food for Development. I am also a member of the Swedish Government’s FAO Committee (www.svenskafaokommitten.se).
Tetra Laval Group companies Tetra Pak and DeLaval together address the whole value chain for milk with its goods, services and expertise, from cow to consumer. Tetra Laval Food for Development is actively driving development of the entire dairy and food value chain in partnerships with dairy processing customers, governments, UN and other development agencies and civil society organisations (CSOs).
Dairy development partnerships are for the most part in the form of Dairy Hub projects. The main objective is to increase the collection of locally produced milk from smallholder farmers for industrial processing and packaging, while at the same time improving skills, efficiency and incomes for large groups of farmers. The contribution from Tetra Laval is mainly technical assistance provided by Food for Development specialists in smallholder milk production and school milk implementation.
The Swedish FAO Committee each year publishes a report. In 2018 the theme was “The private sector as a partner for sustainable development”. This publication highlights three perspectives on private sector engagement in development cooperation – the perspectives of the private sector, public sector and civil society. These perspectives are presented by the Tetra Laval Group, The Swedish International Development Cooperation Agency (Sida) and World Wide Fund for Nature (WWF). Below and much more is covered in this report that can be downloaded here: https://www.svenskafaokommitten.se/2018/10/?post_type=artiklar
There are several roles for the private sector in development cooperation, including supplying goods and services, sharing its expertise and knowledge, not the least by good CSR practices, and contributing funds or staff to external charity projects. The private sector also increasingly engages in development cooperation as a partner with governments and with UN and other development cooperation agencies. There are many good reasons why partnerships between governments, UN and other development cooperation agencies and the private sector should be encouraged:
• Common goals – the development of value chains contributes to the creation of jobs and incomes, as well as creating markets for private sector goods and services.
• Market linkages – increased outputs of products are not enough; there also has to be a demand for the products. The private sector can assess market potential and enable access to the market.
• Synergies – partnerships have the potential to make more efficient use of resources. In a public private development partnership, all public and private partners contribute funding and/or resources in their respective fields of competence and expertise.
• Sharing the burden of high initial costs – new models and concepts take time to establish and commercial viability may be many years ahead owing to the introduction of new technology, high initial running costs per unit produced, and time-consuming transfer of knowledge. Joint funding can help commercial entities to reach the production volumes and quality required for a sustainable and viable venture.
As with the formation of all kinds of partnerships, there are some challenges with public private development partnerships:
• The partnership must be in the “sweet spot” where commercial and development goals overlap.
• The respective partners’ roles and responsibilities have to be understood and clearly defined, preferably in a memorandum of understanding (MoU) or partnership agreement. Each partner should also follow its own due diligence process to assess its future partner, and decide whether it wants to enter into a partnership with the party concerned.
• Something that is often overlooked is the need for all partners to allocate time and resources in the development phase of a project. These resources are needed if the project is going to be implemented in a reasonable time frame. Also, the better prepared a project is, the higher the chances of all project goals being reached, and the lower the risk of problems and conflicts in the implementation phase.
• Profit making and non-profit making partners have to handle the potential conflict of interest in providing a solid business case on the one hand and the role of profit making when dealing with public goods on the other. This contradiction can be managed, for example by not transferring any public funds to the private sector unless they cover project-specific costs. Another solution is to engage a third-party implementor in order to avoid the transfer of funds to the private sector.
A number of recommendations are also made in the report:
• Allocate resources for the development of partnerships and partnership projects as a core activity and not on a case-by-case basis.
• Look for partnerships where partners’ core businesses and competencies are involved. Make use of the private sector’s ability to create necessary market linkages for long-term viability.
• Respect partners’ different objectives with the partnership and identify the “sweet spot” where goals overlap.
• Clarify partners’ different roles and responsibilities to avoid difficulties during implementation.
• Avoid overly lengthy and complicated due diligence and approval processes, without compromising on quality, especially for smaller-scale interventions.
• Be open to partnerships irrespective of size or budget. It is the results and outreach that matter, not the size of the budget spent. Even very small projects can have a big impact.
Ms. Katarina Eriksson