Public Private Partnership in Agriculture Development

Govinda Prasad Sharma NPDP Khumaltar

Content to deal

a. Concept of PPP b. Need of partnership and contract out c. Process of partnership and contract out d. Partnership and contract out in DoA: Challenges and future prospects

Presentation Outline

Background Concept Policy Outlook Need for partnership & Contract out Models Assessment of partner organization Public Private Partnership

Need, Scope, Areas for joint venture, Some intervention in MoAC, potential stakeholders

Process of Partnership and contract out Partnership and contract out in DoA

Scope, Challenges, problems and future prospects (key factors for success of partnership)

Introduction

Background

Single public efforts in the past could not meet the demand of people. Several institutions emerged as alternate service providers after economic liberalization. Single efforts of neither public nor private organizations can be effective in agriculture extension and development. Growing demand for services complex and specialized services. Downsizing of public sector budget Changing role of government ( Government as service provisioner rather than service provider). Private sector willing to work with public sector.

Changing environment

Policy outlook

National Agriculture Policy, 2061 National Agriculture Extension Strategy,2063 Agribusiness Promotion Policy, 2063 Sectoral Policies, Regulation, Directives and Orders MoAC Program Implementation Guidelines on Contract and Partnership, 2061 DoA's Agriculture Extension Program Implementation Guidelines and Norms ''Government policy enables the opportunity for private sectors to come under economic liberalization.''

Concept

Partnership

Winer & Ray: Mutually beneficial and well defined relationship entered into by 2 or more organizations to achieve results they are more likely to achieve together (cited in DoAE proceeding). Rosenbeth Moss Kantor (1990): Productive partnership yield benefits, create value, work through interpersonal connection and internal infrastructure that enhance learning. She identifies eight characters of partnership: each partner creates something of value. strategic objectives of each partners addressed. complementary skills and assets. investment in each other.

Concept cont.....

open communication. smooth working mechanism (together). each partner become both teacher and learner. integrity and mutual trust among partners.

In the partnership, equal authorities is vested among the parties involved. Public Private Partnership (PPP)

Broadly refers to long term, contractual partnerships between public and private sector agencies, especially targeted towards financing, designing, implementing and operating infrastructure facilities/services that were traditionally provided by the public sector.

Concept cont.....

Each partner through legally binding contract(s) or some other mechanisms agrees to share responsibilities related to implementation and/or operation and management of a project. This partnership is built on the expertise of each partner that meets clearly defined public needs through appropriate allocation of (4Rs):

Resources, Risks, Rewards and Responsibilities.

The allocation of these elements and other aspects of PPP projects such as detail of implementation, termination, obligation, dispute resolution and payment arrangements are negotiated between the parties involved and are documented in a written contract agreement(s) signed by them.

Concept cont.....

MoAC Guidelines, 2061: Cooperative action agreed to be performed by two or more than two government or non government organization/sector (registered under law) having similar interest to achieve defined objective. In a nut shell, PPP in agriculture is a space for joint venture :
Public sector

Common interest/space

Private sector

Farmers & entrepreneurs

Contract out:Concept

Synonymously known as out-sourcing. A way to hire private sector/NGO/CBOs to provide extension/development service by providing budget directly or through competitive bidding system. A process of achieving objectives and outputs by providing resources (funds, capital, etc) to the institutions selected through the formal procedure. An alternative way to economize government cost and get effective and efficient service delivery to the targeted people. A way of shifting responsibility for the role of public sector. An alternate way of governance.

Need for Partnership

Agriculture as the dominant sector.

main source of livelihood. contributes 32% to GDP. employs 65% of the people.

Increasing complexity in agriculture development and meet for diversified demand of services. Globalization and liberalization Provide benefit to farmers/agr enterpreneurs of skills and resources of variety of institutions. Pulling resources in context of downsizing government cost on agriculture sector and increased cost of infrastructure and social service. Need for linking agriculture in a value chain/high value crops

Preproduction Production Post production

Need for Partnership condt.

To increase the coverage of extension service as there is low service coverage by public sector institution & demand for service is increasing.

FLEW: Farm family ratio = 1:>2000 FLEW:cultivated land ratio = 1:>1500 ha ASC:VDCs ratio= 1:>8

Include the growing NGO/private institutions and CBOs in agriculture extension and development. To utilize the expertise and experience of private sectors, NGOs and CBOs. To reduce duplication and minimize overlapping in service provision. Maintain team spirit and carry out effective implementation of agriculture extension & development

Need for contract out

To reduce the Government cost. To utilize the experience and expertise of NGO/CBOs in agriculture research, extension, technology dissemination and especially for social mobilization. To ensure that services are delivered in a efficient and effective way. To increase the coverage of service.

Models of Partnership

Public Private Partnership Public Public Partnership Private Private Partnership Our concern is to create environment for Public Private Partnership. Since single organization can not meet the growing demand for services and development from market side. The JV (Partnership) is necessary. Each of the stakeholders has its own strengths and weakness.

Public Private Partnership in Agriculture

PPP Initiation in Agriculture

Agri Fair and Exhibition

Cost sharing based on agreement and MoU. Commodity and district (pocket) identified. Component: Commercialization, infrastructure, Marketing Model : MoAC+AEC/FNCCI+Farmers Practiced under APPSP districts.

One Village One Product (OVOP)

District Program : DEF and LIF

NARDF Competitive Grant System Small Irrigation Program and Program based on cooperative farming. PACT modality : Competitive and cost sharing basis HVAP : ? RISM : ?

Public Private Partnership.....

PPP Initiation in Agriculture

CADP: Agricultural Commercialization

Model: MoAC+CAA+Farmers Cost sharing for infrastructure and non-infrastructure Infrastructure package: 50% CAF + 50% CAA Non-infrastructure package: 85% CAF + 15% DDC

Seed multiplication Development of Collection Centers and Cold Store

Example: Butwal Agriculture Commodity Wholesale Market Model: MoAC+Butwal Municipality+ Lumbini Fruit and Vegetable Wholesalers' Association @ 60:20:20 of total cost.

Process of Partnership and Contract out

No single modality for partnership. Process and modality depends upon:

Specific programs: small irrigation, cooperative farming Project nature (as Signed and approved through MoU) Directives Nature of the projects to be accomplished. Program implementation guidelines.

Separate directives have been approved for the process of partnership and contract out. The process of partnership and contract out was outlined in ''MoAC Program Implementation Guidelines for Contract and Partnership 2061''. Presently, provision for contract out is well defined in Public Procurement Act,2063 and Public Procurement Regulation 2064 (Sarbajanik Kharid Ain 2063 and Niyamawali 2064).

Process of Partnership and Contract out

The steps outlined in contract out through Public Procurement regulation :

Preparation of ToR Preparing roster by calling LoI. Calling proposal Preparing guidelines for proposal. Proposal selection methodology Opening the proposal Evaluation of technical proposal Preparation of evaluation report Informing the selected proposer Opening and evaluation of financial proposal Selection of bidder and negotiation

Major points to consider during contract out

Budget ceiling

Changed as per Gazette of Ashar 6, 2068 check it out. up to 0.35 million : direct agreement >10 lakh: approval required from higher authority > 2 million: LoI required.

Preparation of ToRs and relevant documents. Quality and cost method for evaluation Evaluation system

Technical proposal: 70-90% weightage Financial proposal : 30-10% weightage

Selection of best bidder from evaluation Agreement and work order.

Major (Preliminary) task to be accomplished for partnership and contract out

Preparation of roster on national/local NGOs. Need assessment of district (farmers) employing participatory approach. Identification of appropriate (partnership/contract) program based on feasibility and comparative advantage. Approval of annual program budget.

Potential stakeholders for partnership

Government organizations NGOs

INGOs National NGOs Local NGOs DDC VDC/Municipalities

Local government bodies

CBOs/FBOs Private organizations

FNCCI and its branches AEC Trade associations Commercial alliances Firms & company

Other potential stakeholders

Scope

Scope of Partnership and Contract out in DoA

Partnership program activities (scope) Need identification Feasibility study and baseline survey. Organizational development such as group formation, mobilization, development, capital formation and so on. Technology development (research). Delivery of extension services. Capacity building, training and workshop. Program planning, monitoring and evaluation. Market infrastructure development and management High value crops

Scope of Partnership...
Production and distribution of agriculture inputs. Community based income generating activities. Impact assessment. Natural resource management and organic farming Other agriculture related activities that can be performed as per guideline. Contract out Activities Consultant services covers broad sprectum of area. Field team (Social mobilizers) and Team Supervisor Enumerators

Challenges

The demand for partnership have been raised by various agency. It seems that there is lack of priority for partnership and contract out activities. Issues of ownership have been raised. The process of partner selection is difficult, lengthy and cumbersome through competition as envisaged by public procurement law and regulation. Frequently changing fiscal act and regulation has challenged for the stability of MoAC policy to employ partnership and contract out strategy. Limited resources from public sector and stability in budget have created problems in continuity and stability of program. In some cases, mobilization of staff have been problem under partnership program. Issue of coordination.

Example : OVOP program- DADO and AEC.

Some learning
Partnership approach have been experienced more fruitful than contract out in agriculture. Different incentive structure and opportunity for private and public sector within the same project. The issue of cost reduction have been raised in partnership and contract out activities/scheme. Existence of mutually negative perceptions and attitude towards partnerships and contract out approach. Should public agency should provide enabling environment or act as a active partner for agriculture and overall development.

Future Prospects
The importance of partnership can not be neglected in agriculture development. From the experience of past, emphasis has to be concentrated on the factors that make partnership more effective, fruitful and result oriented. Following are some of the components that need to be considered in future. Analyze the context with identification of key target groups for program and clarification of their needs in order to identify major policy areas where partnership can yield added value. Assess rationality of partnership and its implementation mechanism. Promoting and enabling environment through declaration of guidelines to increase partnership skill and expertise. Identification of synergies by connecting and interlinking concerned agencies under program. Identify stakeholders in analysis, design and implementation process.

Future Prospects....
Drawing expertise of stakeholders in assessing proposal. Building capacity of stakeholders to actively participate in overll governance. Promoting and encouraging ongoing successes and failures of partnership and ensure that lessons from these are shared.

AnnexAssessment of different Service/Development Organization

Strength of Public sector organization

Wide network of staff covering geographical areas. Permanent structure and sustainable institution Well structured institution mechanism with institution at grass root level. Have highly competent technical team at district extension offices and farm/centers. Well defined cliental, political and procedural accountability of staff

Assessment....
Weakness of Public sector
Oriented more towards supply driven strategy. Extension service include general in nature rather than specific and intensive. Lack of buildings and physical facilities at service centre level. Charged of being more target oriented and less participatory. Larger command area and domain to be served. Lack of adequate technical staff at the site offices (ASC and contact centres). Private Sector Strengths Provide opportunity of provision of service and inputs at competitive basis. Better and competitive service offered for commercialized and market led farming which are otherwise not available by government sector. Help to increase efficiency and productivity of enterprises. Increased investment in new business opportunities, commercialized and market led production as well as technology adoption. Some private organizations are influential in generating capital for alternative business such as floriculture, poultry business and the like. Government policy enables the opportunity for private sectors to come under economic liberalization.

Assessment......
Private sector Weakness Private sectors enterprises are generally profit oriented; hence, investment is concentrated where profit margin is high such as supply of input and services for commercial production. Farmers enjoy better service from private sectors only in competitive markets. Private sector florish well only when customers are ready to pay the cost for services and input. Nepalese private sector generally lack corporate culture thereby leading to poor success of private sector involvement in service provision. Private sectors are offering services comparatively in accessible areas. NGO Strengths

Have small and horizontal structure with short lines of communication thereby responding flexibly and rapidly to clients' needs and to changing circumstances. Characterized by a work ethic conducive to generating sustainable processes and impacts. NGOs' comparatively maintain better presence in remote locations, where it is difficult to keep government staff in post.

Assessment....

NGOs' are successful in identifying the needs of the rural poor in sustainable agricultural development. They employ more participatory methods for diagnosis and in development and introduce systems approaches for testing new technology, NGOs' rapport with farmers has allowed them to draw on local knowledge systems in the design of technology options and to strengthen such systems by ensuring that the technologies developed are reintegrated into them. NGOs have also developed innovative dissemination methods, relying on farmer-to-farmer contact, whether on a group or individual basis. In some cases, NGOs have developed new technologies such as by Li-BIRD and CEAPRED NGOs demonstrate better competency at facilitating farmers to learn more from their own experience and from each other. NGOs has been successful in group formation, social mobilization, lobbying, advocacy of right based development as well as empowering people.

NGO Weaknesses

NGOs small organization rarely permits to address the structural factors that underlie rural poverty. Small size, independence, and differences in philosophy also militate against learning from each other's experience and against the creation of effective forums, whether at national or district levels. NGOs focus on accessible areas in such a way that problems have arisen for competition for same client.

Assessment....

NGOs have limited capacities for agricultural technology development and dissemination and limited awareness of how to create effective demand-pull on government services. Some NGOs are more accountable to external funding agencies than to the clientele they claim to serve. Donor pressure to achieve short-term impacts, combined with a lack of cross-learning, has led in some cases to the promotion of inappropriate technology,

CBO/FBO Strengths

Work as vehicle for rapid and effective transformation of agriculture technology. Farmers' capacity enhancement through belongingness in organization and experience sharing. Creation of unified and strong voice and pressure group. Capital formation through collection of scattered resources of farmers. Increase in people's participation through active involvement of farmers Democratic value.

Assessment....
CBO/FBO Weaknesses

Lack of proper knowledge, skill and experience to run the group/organization. Motivation to group formation through limited benefit and collapsing. Tendency of getting personal benefits by limited group members/leaders. Possibility and tendency of social loafing (escaping from responsibility in group/organization). Inactiveness of group/organization and dissolution before the attainment of group goal. Lack of strong legal authority for group conduction, CBOs has their own rules and regulation thereby denying changes sometimes.

Dont walk behind powerful persons Move with powerless to empower them

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