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Partnering with big business: 4 key lessons

Posted by Juni Sul Previously the Private Sector Adviser

24th Feb 2015

Photo: Unilever farmer Javid checks the onions in the yelllow onion field, Barda. Credit: Kieran Doherty/Oxfam

In 2010, Oxfam and Unilever started Project Sunrise, a partnership to learn how to do business with women and men smallholders in a way that improves their livelihoods. Five years on Private sector adviser, Juni Sul, looks at some key lessons which can be applied to future corporate-NGO partnerships

Through Project Sunrise we set out to reduce poverty and improve productivity among smallholders in supply chains, and to inform both Unilever's business model and Oxfam's development model.

We collaborated in a pilot project on onions in Azerbaijan, we studied Unilever's supply chains on tea in Kenya, tomatoes in India and soybean in Indonesia, and we researched how other companies and organisations are engaging with smallholders.

Our findings are set out more fully in the final report. But, here, we focus on four lessons.

1. Clarify mutual expectations in the corporate-NGO partnership

Both organisations should have the same clear expectations from the partnership. It's important to surface assumptions at the outset. The expectations should be obvious, but it's worth double-checking. Is it an implementation partnership, where each organisation is delivering on a specific outcome? Or is it a learning partnership, where wider principles are being shaped? 

In the first two years of Project Sunrise, what started as a learning partnership quickly turned into an implementation partnership for one project in Azerbaijan. We critically reassessed the partnership in 2012 and decided on a new research agenda that became Sunrise 2.0.

As well as expectations, each organisation should be clear on its, and the partner's, skills and capabilities. Depending on the situation, the NGO's role may be to give strategic advice on development projects, to convene multiple stakeholders, to broker different service providers, or to act as a service provider itself. And depending on how the situation develops, and at different stages of the project, different roles may need to be played by each partner. It is worth trying to anticipate these in advance to identify any red lines or gaps in skills or capability.

2. Go beyond the buy

This became one of the project's mottos. It describes succinctly how a lead firm, such as Unilever, is ultimately a buyer of smallholders' produce, and it can remain at that basic trading relationship, or it can go beyond buying to also invest in smallholders. 

There are, of course, benefits to engaging with smallholders to improve their productivity, which are well known. We also found good examples of how ...a lead firm can share and alleviate the risks and costs faced by smallholders in bad times, as well as share the benefits in good timesa lead firm can share and alleviate the risks and costs faced by smallholders in bad times, as well as share the benefits in good times. 

For example, Unilever set up farmer field schools for tea in Kenya, at a time when the environment was degrading and posing a risk to tea production. Arguably, it may have been easier to just move production to another geography. Instead, the farmer field schools were set up, with crucial support from the Kenya Tea Development Agency, DFID and IDH.  

This helped spread sustainable and productive farming practices, improving both the environment and productivity. However, the recent drop in prices has reduced farmers' earnings, and shows how challenging it is to manage the various risks that farmers face.

In Indonesia, we found that Unilever shares some of the risks of price fluctuations and input cost rises faced by smallholders growing soybean. They do this by having an open and transparent pricing system, based on a standard cost price calculation, which takes into account the input and other costs faced by smallholders each year. The price is agreed and set before planting, giving greater security to the farmers.

3. Look for, and target initiatives towards, the women

Women are still largely invisible in many supply chains. Although when it comes to smallholder farming, it is safe to assume that women are playing an important role, even if all market transactions are done by men. Agricultural production depends heavily on women's labour, and women are responsible for the majority of food production in many developing countries, despite having restricted access to markets, land, and credit....women are responsible for the majority of food production in many developing countries

Social norms may prevent women from engaging directly with traders and buyers. So, from the lead firm's perspective, the only way to get the full picture is to actively look for the women. By identifying the women hidden in the supply chain, it will become clearer what interventions should be targeted directly to them. 

For example, both women and men smallholders grow soybean for Unilever in Indonesia. In addition to growing, women sort the harvested soybean to separate out the defective beans before packing the bags for sale. This sorting work by women improves and guarantees the quality of the product, but usually would not be visible as value-addition to the buyer. Unilever specifically remunerates the women for the sorting work, and also supports women's groups to attend training and set up additional activities, such as a snacks business which is proving to be profitable. 

4. Think twice before going greenfield

In the first phase of Project Sunrise, we set out to connect smallholders to Unilever to build new and mutually beneficial supply chains. Making such new connections (going 'greenfield') seemed to hold great potential. We conducted several feasibility studies and started two pilot projects before focusing on the pilot on onions in Azerbaijan. Even with such rigorous pre-analysis, creating a new supply chain was a challenge. And we were not able to complete that challenge within the two years that we had. 

Greenfield projects can be successful, but must be supported by a long-term business case that can sustain the investment over time. The lead firm and the smallholders must be prepared for the risk of poor yields and quality, and for the risk that the supply chain will ultimately not be viable. Especially for the smallholders, who cannot afford to risk their livelihoods, there must be adequate safety nets

What emerged during the course of Project Sunrise is that lead firms such as Unilever have hundreds of thousands, if not millions, of smallholders already within their supply chains. Often, there will be several layers of traders and processors between the lead firm and the smallholders. This makes engagement more difficult, but by no means impossible. There is great potential for lead firms to improve smallholders' livelihoods by sharing good practices and providing targeted incentives through the traders and processors in the supply chain. Deepening social impact in existing supply chains may hold more promise than including smallholders into new supply chains. 

These are just some of the lessons from a long and ongoing partnership, and there is more in the full report. How easy is it to implement all these lessons? Not very, but it's worth trying. We hope that our learning is helpful for all companies (not only Unilever) that are setting goals on positive social impact, going beyond financial profits.  

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Photo: Unilever farmer Javid checks the onions in the yelllow onion field, Barda. Credit: Kieran Doherty/Oxfam

Blog post written by Juni Sul

Previously the Private Sector Adviser

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