Public-Private Development Partnerships in commodity sectors: a case study from Indonesia
Public-private development partnerships (PPDPs) promise a mechanism for addressing the complex and pervasive challenges framed by the Sustainable Development Goals. As multi-stakeholder platforms, they facilitate development and business actors to formulate collective goals that contribute to both commercial and development outcomes, and translate these into coordinated strategies and actions, combining resources and harnessing complementary competencies.
Turning this promise into effective action is not straightforward. Many PPDPs tend to focus on collective processes rather than achieving tangible changes and measurable results in terms of overcoming specific sectoral constraints or unlocking new opportunities.
This case study examines the experience of a PPDP in Indonesia’s cocoa sector over nearly two decades, how the partnership evolved as the sector changed, and its contribution to transforming Indonesia’s cocoa industry as it faced global and domestic challenges. Seven development organisations and eleven private cocoa buyers contributed approximately USD 55m to the PPDP – the Partnership – making it one of the largest partnerships between donors and businesses in a commodity sector. The Partnership focused on improving production and building sustainable supply chains. Key features of the partnership were its clarity of purpose, ownership by key stakeholders and the involvement of a ‘lynchpin’ funder, SECO, and implementing organisation, Swisscontact, throughout, which provided continuity and stability.
The Partnership provided a platform for stakeholders to establish and strengthen four key market functions: farmer training, traceability, planting material, and finance. It trained 160,000 farmers, enabled the integration of 79,000 cocoa farmers into sustainable, certified supply chains, generating USD 927,000 of certification premiums, and increased smallholder yields by 52% and raised their incomes by 75%. These tangible results demonstrated that the model of training plus certification plus traceability promoted by the Partnership could upgrade conventional cocoa supply chains to traceable, certified supply chains. In turn, this triggered sector-wide changes that indicate growing sector maturity:
- Investment in farmer training as a core business function, not a Corporate Social Responsibility (CSR). Cocoa firms have integrated farmer support into the core commercial functions of their procurement or sourcing departments, as opposed to running them separately under sustainability or CSR departments.
- Cocoa sector stakeholders are developing their own training programmes based on the content developed under the Partnership, including cocoa firms and the Ministry of Agriculture.
- Traceability services developed under the Partnership are now being offered commercially to various clients the in cocoa, palm oil, coffee, coconut, and rubber sectors in more than 15 countries. Other firms have developed their own, in-house traceability platform and established or expanded their field teams.
The Partnership has helped Indonesia establish itself as a sustainable cocoa-producing origin. The sector is markedly different from a decade ago and is becoming more resilient, in the face of strong headwinds. Innovations have taken hold, businesses continue to invest, and the sector platform has stepped up its advocacy to garner support from the Government of Indonesia.
The Partnership’s experience highlights several lessons that are more widely applicable to agricultural development initiatives. These relate to:
Analysis and approach to promoting more inclusive, sustainable and competitive supply chains
- Understand how incentives, feasibility and sensitivity affect behaviour change
- Direct delivery can be a valid tactic, but it must be guided by a vision for sustainability
Convening business and development actors
- Anticipate and manage conflicting developmental and business interests
- Foster consensus and manage tensions between competing firms
Operation and administration of public-private development partnerships
- Provide operational stability as a basis for expansion and experimentation
- Build adaptability to changing conditions into contracts and partnership agreements
- Ensure administration system can cope with donor requirements and business pragmatism
Cooperation and collaboration continues in the sector, focusing on better understanding the livelihood patterns and farming landscape of smallholders, the continued uptake of traceability and of innovations such as FarmNetX and Transformative Coaching, and joint policy positioning and representation to government.