Partnering with the Private Sector to Reach Smallholder Farmers

Smallholder farmers are critical to global food security and economic growth, however they have largely been overlooked by the private sector, constraining their productivity and income potential. To successfully engage the private sector and improve the livelihoods of smallholder farmers, it is critical to gain a refined understanding of which solutions work – and which do not. There is a need to ascertain the extent to which donor support to private companies can catalyze entry, expansion, and commercial sustainability within the smallholder market segment. It is also important to examine how design and implementation of these programs can promote (or inhibit) their impact on partner companies and smallholder farmers.

Feed the Future Partnering for Innovation (P4I), a USAID-supported program, provides a rare opportunity to delve deeper into these questions. Over the last six years, the program has supported 50 private sector companies with over USD 92 million to scale and market innovative agricultural technologies and services to more than a million smallholder farmers. Partnering for Innovation provides companies with investments tied to milestone-based outcomes, and tailored support services designed to build managerial and operational capacity. The ultimate goal is to sustainably improve smallholder farmers’ income and food production.

Smallholder farmers are critical to global food security and economic growth, but despite their importance, the private sector has largely overlooked this market given perceived risks and skepticism about their commercial viability as a market segment.

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Editorial Design
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To make headway in addressing this challenge, USAID’s Investment Support Program (implemented by Dalberg Advisors) assessed the effectiveness of the USAID Feed the Future Partnering for Innovation (P4I) program (implemented by Fintrac), which provides companies targeting the smallholder market with investment tied to milestone-based outcomes, along with tailored support services designed to build managerial and operational capacity.

This assessment was a rare and important opportunity to assess the effectiveness of market-based solutions that bring agricultural innovations and services to smallholder farmers. Among other insights, Dalberg’s analysis found that the milestone-based grant funding was largely successful in catalyzing companies' entry into and growth within the smallholder market, providing promising evidence for future programs of its kind in smallholder agriculture, and perhaps other hard-to-reach sectors.



Report overview
The report is based on a review of the P4I program, where USAID partners with companies that have potential to market/sell much-needed products and services to smallholder farmers, but have historically been reluctant to given perceived risks. The team found that P4I's approach using milestone-based grant funding (which companies matched) was very successful in catalyzing companies' entry into and growth within the smallholder market.