Involving the Agro Industry in Development

1
Involving the Agro Industry in Development

• Innovations around Corporate Social
  Responsibility in the Native Potato Market Chain

2
Outline

• What is CSR?
• Papa Andina and the private sector
• Approaches developed to involve private sector
• CSR Business case - Pepsico Foods
• Joint demand-driven innovations
• Lessons learned and perspectives

3
What is corporate social responsibility (CSR)?
There are no successful companies in a failed
society, nor successful societies with failed
companies. Stephan Schmidheiny
4
CSR

• CSR is
• a philosophy and an ethical form of business
  management
• Taking into account stakeholders interests
• to achieve mutual sustainable development
  (win-win situation)

Shareholders
Employees
Market Chain
Providers
Clients
Environment
Government
Society
5
Methodologies approaches of Papa Andina to
involve private sectorin linking small-scale
farmers to market

• Participatory market chain approach (PMCA)gt
  trigger innovation
• b. Stakeholders platform gt institutionalize
  innovation drive
• c. CSR applied to potato market chains
• gt scale-up results and achieve sustainability

6
The challenge beyond PMCAscaling-up and
sustainability
Wider context

• Increase market, but not at any cost!
• Strengthen farmers position in value chain
  despite high transaction costs
• Guarantee access to fair share of benefits
• despite low negotiation capacity

CSR
Responsible consumption
?
Impact poverty reduction
Papa Andina partners achievements
Stakeholders platforms
New products
7
Lessons learned Tikapapa

• There is a potential market for  socially
  responsible  products
• Need for social marketing tools available to
  communicate CSR investment of committed companies
  / increase responsible consumption
• Need to work with large, formal private sector
  (local SMEs have limitations)
• Getting to know big private sectors workstyle
• No time to join participatory processes at early
  stage
• Start with identifying key persons within company

8
CSR applied to potato market chain
Independant certification
RD actors expertise and facilitation
Orientation and control
Credibility
Responsibleconsumption
Qualityproduction
Providers
Clients
Quality product Social marketing
Fair price Capacity building
Responsible company
Small-scale farmers high production
transaction costs reduced through training
absorbed by company transferred to consumers
9
Business case Pepsico Foods

• Profile
• Part of Pepsico International (US-based)
• World leader on the snacks market
• Leader (gt80 ) on Peruvian crisps market
• 19 000 MT potatoes / year in Peru
• Concern
• Change  outsider  image and make visible its
  contribution to Peruvian economy

10
Pepsico Foods looking for alliances
Identifed pilot naturally-coloured potato crips
(1st PMCA 2004) as interesting product
2006 Collaboration with Papa Andinas local
partners (NGOs) to get access to providers
(Andean small-scale farmers)
2008 contact with CIP/Papa Andina and partners
to develop CSR from philantropy and marketing
to strategy
11
Lays Andinas succesful business for
development

• Launched on Peru National Potato Day
• High quality product with explicit
• CSR elements and social marketing(social,
  cultural and health aspects)
• Package
• Event
• Promotion
• Transparent and empowering
• relationship with producers
• Price setting and contract (through NGOs)
• Technical support
• Personal relationship trust building

12
Lays Andinas Development outputs

• 1st year
• Farmers organizations sold 100 MT of native
  potatoes.
• Price covered production cost and left fair
  profit margin
• Operation benefited approx. 2000 people (incl.
  daily workers)
• Capacity strenghtened (post-harvest management,
  organization and management)

13
Lays Andinas Development outcomes

• At entreprise level
• Internal reward and prospects of replication
• Trust towards Andean small-scale farmers
• At farmers level
• Trust and loyalty from farmers/respect of
  contract
• Organizations strengthened and empowered
• At partnerships level
• Stronger cooperation with RD actors to generate
  technological and institutional innovations

14
Papa Andina and partners facilitating
technological innovations

• New action-research fields
• Quality seed production system for native
  potatoes
• Research on quality-oriented production practices
  (reducing sugars)
• Workgroup including industry, public sector,
  stakeholders platform and CIP

15
Papa Andina and partners facilitating
institutional innovations
Promoting native potato trade with social
responsibility

• Managed by stakeholders platform
• Open to any actor who shares its vision
• Starting with leaders (private sector, NGOs,
  chefs)

16
Andean Potatoes Initiative - information and
advocacy

• Campaign
• Rediscovering Andean native potatoes

17
Andean Potatoes Initiative - certification scheme

• Inspired from fairtrade and biotrade, but
  specific for native potatoes and national market
• Contributes to positionning products from
  socially responsible companies and secure
  benefits for small-scale farmers
• Independent and credible certification process

18
Lessons learned large enterprises and RD
actors have interest to partner for development

• Private sector is key for sustainable commercial
  success and scaling-up of development impact
• Marketing competencies / access to consumers
• Financial and human resources
• RD actors add value to private sector
  investment
• Strategic partner for companies CSR
  (credibility)
• Thematic expertise and research capacities for
  impact-oriented CSR strategy
• Natural facilitator (neutrality) for
  multistakeholdersinnovation processes
• Success factors for collaboration
• Dont ask for financial support, but offer
  solutions to private sectors concerns
• From pragmatism and flexibliity to well-defined
  roles

19
Perspectives for native potato market chain with
CSR in Peru

• Growing demand for gourmet product at high price
  / new large companies follow
• CSR from filantropy towards strategic investment
  
• Mutual interest and trust between private sector
  leaders and development actors to develop
  pro-poor market chain
• Government committment to invest in potato market
  chain (strategic vision 2018)
• Success of certification scheme among private
  enterprises and consumers (impose CSR as
  business standard)
• Increase small-scale farmers competitivity

Joint challenges towards sustainability
20
Thank you!
Alice ThomannAndré DevauxMiguel OrdinolaThomas
BernetCIP/Papa Andina, Lima
CIP Annual Review27 October 2008
21
Replicability

• Peru highly favorable context
• Political stability governments commitment
• Thrivering private sector strong CSR trend
  (mining sector)
• High diversity for native potatoes
• In the Andes and elsewhere
• Papa Andinas methodologies and approaches have
  proven useful also with other products in less
  favorable contexts
• CSR is a global trend

22
CSR

• Strategic for business activity (vs philantropy)
• Implies companys creativity and proactivity (vs
  only legal compliance)
• Implies communication effort (but is not
  face-wash marketing)
• Requires will, commitment and investment at
  highest level
• Indicators make it possible to measure progress
  and compare companies at national and
  international level

23
Roles in applying CSR to market chains
COMPANIES Market products with CSR
Develop-ment impact
Stakeholders platforms NGOs Access to farmer
Institutionalize mechanisms to guarantee and
promote CSR
CIP/Papa AndinaAccess to research facilities
Facilitate definition, institutionalization and
promotion ofCSR practices