1. How can NGOs work effectively
with companies?
6 November 2014
Lessons from Oxfam-Unilever Project Sunrise on inclusive
business models with smallholder farmers

2. Page 2
About this presentation
Objectives
• Share lessons from Project Sunrise on inclusive
business models
• Offer guidance on strategic considerations in NGO-
corporate partnerships
For whom?
• NGO practitioners in private sector partnerships
• Governments and donors that support PPPs and NGO-
corporate partnerships

3. Page 3
Intro: Joint Oxfam-Unilever project “Sunrise”
Objective: To learn how to do business with smallholders in
a way that improves their livelihoods and that can inform
Unilever’s business model and Oxfam’s development model
From“SunriseAzerbaijanCaseStudy”byReosPartners

4. Page 4
What are the key messages from
Project Sunrise lessons?
1. “Clarify mutual expectations in the corporate-NGO partnership”
• Is it an implementation partnership or a learning partnership? Be clear on each
partner’s skills & capabilities
• Partners should manage mutual expectations and continually clarify roles
2. “Go beyond the buy”
• Lead firms can drive best practice in buying, and also in investing in smallholder
capacity
• Sharing the benefits, costs, and risks e.g. Farmer field schools, pre-harvest
payment, cost-plus pricing
3. “Look for the women”
• Lead firms can identify the women hidden in the supply chain, and target
interventions directly to them e.g. Separate remuneration for women’s activities,
organising women’s groups
4. “Think twice before going greenfield”
• Building new supply chains with smallholders requires rigorous analysis & risk
management/sharing
• Deepening social impact in existing supply chains with smallholders may
work better

5. Page 5
What have we learnt from
Project Sunrise about
inclusive business?

6. Page 6
Summary of events in Sunrise
Phase I:
Phase II:
2013
Project shifts focus away
from Azerbaijan and setting
up “greenfield” new supply
chains. However, the
farmers in Azerbaijan are
supported with Good
Agricultural Practices
guidelines, and Oxfam in
Azerbaijan continues work
on vegetable value chains.
2013-2014
Research into 3 Unilever value
chains with smallholders (India-
tomatoes, Kenya-tea,
Indonesia-soybean) and
research into other companies’
work with smallholders.
Guidance is produced for
Unilever’s procurement staff on
sourcing from smallholders.
From“SunriseAzerbaijanCaseStudy”byReosPartners
2010-11
Oxfam & Unilever
conduct feasibility
studies for
smallholder supply
chains across
several countries in
Latin America,
Africa and Asia

7. Page 7
Avoid optimism bias at the research stage
• Starting a new smallholder supply chain with a combination of commercial and social-impact
objectives is complex.
• Participants need to carefully consider a wide range of issues and consider both positive and
negative factors likely to impact on the supply chain proposed.
Assess the impact of the proposed buying model
• The buying model has an enormous domino-like effect on the dynamics of the supply chain.
• For example, a surplus-buying model can be established more quickly than a contract-buying
model, can develop a broader market and can increase the number of farmers involved in the
long term.
• On the other hand, a contract-buying model offers more scope for specific produce
requirements to be met, and can also provide a framework for all parties to justify upfront
investments.
Invest strategically in greenfield sites
• Greenfield projects afford a great degree of freedom to design a supply chain “from scratch.”
• Project leaders must strike a strategic balance between factors such as direct control and
innovation on the one hand, and outsourcing and efficiency on the other hand
Leave room for trial and error
• In supply chains where new approaches are being introduced and where innovation and
learning are critical, there must be room for trial and error.
• Experimentation enables current understanding to be challenged and improved.
Key lessons from Sunrise phase I
From“SunriseAzerbaijanCaseStudy”byReosPartners

8. Page 8
Agree on how systemic the approach will be
• Systemic approaches seek to address problems by dealing with their root causes rather
than just addressing symptoms.
• Project teams taking this approach must make this choice clear upfront, and get all
partners’ agreement on it.
Make objectives crystal-clear
• When two organisations are highly motivated to collaborate, there is a danger of
avoiding the difficult and sensitive conversations needed to identify differences in
objectives, drivers, priorities and agendas.
Define “success” carefully
• In a project that entails collaboration between a business and a development
organisation, establishing success criteria becomes exceedingly complex.
• It is important to ensure that the outcome measurements selected match the objectives
of the project.
Agree on an exit strategy for all parties
• In the event that the project needs to be disbanded, all parties need an exit strategy.
• Formulation of such a strategy is best done at the start of the project, rather than when
the first cracks appear.
• That way, each partner organisation understands from the outset what pathways are
open to them as the project evolves.
Key lessons from Sunrise phase I (cont.)
From“SunriseAzerbaijanCaseStudy”byReosPartners

9. Page 9
Phase II: Looking at existing supply
chains, what is the role of the lead firm in
smallholder inclusion?
Lead firms are rarely in a direct trading relationship with
smallholders
•So how can lead firms support suppliers to trade with
smallholders?
•How can lead firms reconcile inclusion of smallholders with
commercial drivers?
Farming
households
Farmers
Aggregator
/ Trader
Processor Lead firm

10. Page 10
Phase II: Success factors for lead firms to
shape inclusive procurement
A clear business
strategy for inclusive
procurement
A clearly defined
business case
makes the
difference between
inclusion of
smallholders via ad
hoc projects, and
inclusion through
the commercial
operations of the
company.
A clear business
case exists when
value is generated
for the lead firm,
supplier and
smallholder.
For the lead firm,
the value
proposition may be
security of supply,
or brand &
reputational value.
Alignment of the
lead firm
procurement
practice with
strategy
Embedding the
‘inclusive
procurement’
strategy into the
core procurement
function, and
aligning policies
with this strategy, to
ensure consistency
of messages to
suppliers.
A relationship-based
procurement model
Full supply chain
visibility for lead
company buyers
right through to
primary production,
to understand the
consequences of
buying decisions.
Collaboration and
co-investment with
suppliers, supported
with buyer
education and
incentives, even
when dealing with
preferred suppliers.
Transparency and
risk sharing all
along the chain,
including producer
organisations
Tailoring the
approach to the
product and supply
chain structure
Companies and
their suppliers
need to adjust and
tailor their strategy
based on specific
factors related to
the product and
supply chain.
There may be
greater business
rationale for niche
high-value
products than for
commodities.
Pilots that are
implemented with a
view to scale and
mainstream
business
Giving pilot
interventions time
to be successful,
with patience,
persistence,
access to know-
how, learning and
adaptation.
Even with
enablers in place,
getting from pilot
to
commercialisation
can be hugely
challenging, and
failure is under-
reported.
From“SuccessFactorsforleadfirmstoshapeinclusiveprocurement”byIIED

11. Page 11
What are the implications of these
success factors for NGOs? (1)
A clear business
strategy for
inclusive
procurement
 Understand clearly the business drivers for inclusion.
These business drivers will sustain the inclusive
business model for longer than purely philanthropic
objectives.
 When recommending more or better inclusion, link the
recommendations to business strategy as far as
possible.
e.g.
e.g. Indonesia – black
soybean. Securing supply of
the product was an important
business driver. Sourcing
from local smallholders also
added brand value.

12. Page 12
What are the implications of these
success factors for NGOs? (2)
Alignment of the
lead firm
procurement
practice with
strategy
 Recognise that the internal incentives at lead firms and
suppliers may conflict with the goals for inclusion.
Pinpoint these internal incentives, and negotiate for
greater flexibility as far as possible.
 NGOs can be ‘honest brokers’, understanding the
incentives both at the lead firm and at the farmer level.
This can help make inclusive value chain connections.
In this process, it’s also important to train farmers to
improve their skills for trade and negotiation.
e.g.
e.g. India – tomatoes. The
contract with farmers allows
them to sell upto 25% of
produce to other buyers. This
flexibility helps reduce tension
around “side-selling”.

13. Page 13
What are the implications of these
success factors for NGOs? (3)
A relationship-
based
procurement
model
 Encourage relationships that share risk along the
supply chain. Smallholders are the actors least able to
absorb risk, but they often bear the greatest burden.
 Build the capacity of producer organizations to be able
to engage effectively with buyers.
e.g.
e.g. Kenya – tea. Farmer Field
Schools trained smallholders in
managing environmental risks,
as well as increasing yields and
profitability. Farmers are well-
organised through the KTDA.

14. Page 14
What are the implications of these
success factors for NGOs? (4)
Tailoring the
approach to the
product and
supply chain
structure
 Help with “poverty footprint” analysis for particular
supply chains. This is where NGOs’ field experience
can be essential in understanding what type of inclusion
is needed for a particular crop in a particular area.
 Accept that, for some crops and some areas, there may
be no business interest in inclusion.
e.g.
e.g. Azerbaijan – onions. As a
widely available crop, it was
difficult to compete in the
global market. There was
also little added brand value
in this case.

15. Page 15
What are the implications of these
success factors for NGOs? (5)
Pilots that are
implemented with
a view to scale
and mainstream
business
 Have a clear exit strategy for NGO and donor support.
 Manage expectations on the time it takes to build a
viable inclusive business model.
e.g.
e.g. Practically all case
studies show that it takes
several years to get a supply
chain from conception to pilot
and then to full
implementation.

16. Page 16
How does Oxfam assess
whether to work in partnership
with a company like Unilever?
(This section includes Oxfam’s generic internal
guidance on working with companies, and is not
a specific learning from Sunrise/Unilever)

17. Page 17
Oxfam’s multi-faceted approach to
the private sector
How do we
achieve the
change we
want to
see?
Influencing
governmental
regulation
Campaigns &
advocacy
Private sector
partnerships
Doing
business
(goods &
services)
Fundraising

18. Page 18
SIX STEPS
1.
• Identify your objectives and carry out a power analysis
2.
• Identify your private sector approaches
3.
• Assess and manage your risks and carry out an ethical
screening
4.
• Communicate, consult and get sign off
5.
• Articulate your Theory of Change and incorporate Monitoring,
Evaluation and Learning from the start
6.
• Get planning and resources right

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Ethical screening + Strategic fit
Two particularly important considerations when considering
a partnership
Ethical screening
If there are risks of
working with a company,
we could rule out
partnership
Strategic fit
If there is alignment of
objectives between the
company and Oxfam, we
could favour partnership

20. Page 20
Link private
sector work
to Oxfam’s
change
goals
• e.g.
Sustainable
food
• e.g. Fair
sharing of
natural
resources
Focus on
priority
sectors
• e.g. Food &
beverage
companies
• e.g.
Extractive
industries
• e.g. Finance
sector
Identify
your exact
objective
• What
problem are
you
addressing?
• What is
Oxfam’s
added
value?
Map private
sector
stakeholders
• Who is most
important?
• Identify
champions/
swingers/
blockers
Assessing strategic fit:
Objectives & Power analysis

21. Page 21
Risks & Ethical screening
Assess your risks
• Risks to brand or
identity, e.g. through
“green washing”
• Risks of legal action by
the company towards
Oxfam
• Risks of reprisals to
Oxfam’s work, staff and
partners
• Risks of inconsistency
with other Oxfam work
Manage your risks
• Assess the impact and
the likelihood of each
risk
• Focus on managing
risks that have the
highest impact and may
cause the biggest
losses
Carry out an ethical
screen
• A screen provides an
input for a risk
assessment
• A screen is not green or
red itself - the decision
about taking on a piece
of private sector work
balances the risks with
the opportunity

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What have we learnt from
Project Sunrise about
NGO-corporate partnerships?

23. Page 23
Potential roles of the NGO in
corporate partnerships
Forming producer
groups
Coordinating project
implementation by
various stakeholders
Knowledge-sharing
on particular
area/crop context
Direct technical
support to producers
Multi-stakeholder
initiatives
Brokering
relationships
between
stakeholders
Commenting on
inclusion strategy
Convenor &
agenda-
setter
Service
provider
Strategic
advisor
Broker &
coordinator
Knowledge-sharing
on sector-wide
issues
Development strategy advice
Technical project implementation
Multilateral
(NGO works across
many actors)
Bilateral
(NGO works across
many actors)

24. Page 24
Project Sunrise: Evolution in Oxfam’s role
• Phase I
• Broker & Coordinator to connect Unilever with
smallholder farmer groups
• Service Provider to design pilot projects
• Phase II
• Strategic Advisor to research existing supply chains
and produce guidance
• Convenor & Agenda-setter to share guidance with the
sector (wider than Unilever)

25. Page 25
What are the NGO’s strengths?
Often, an inclusive business model will require input in all four
quadrants
However, one NGO usually has strengths only in particular roles
Some Qs to consider for effective engagement:
• What role should the NGO play in supporting companies to adopt more
and better inclusive business models?
• Are the producers, the lead firm, the supplier and other actors clear on
what to expect from the NGO?
• If the NGO is focusing on particular roles, do roles in the other
quadrants need to be filled by other actors?

26. Page 26
Learning resources from
Project Sunrise

27. Page 27
Learning resources with more details on
the content of this presentation
IIED paper: “Success factors for lead firms to shape inclusive procurement”
http://policy-practice.oxfam.org.uk/publications/success-factors-for-lead-firms-to-shape-inclusive-procurement-332111
IIED-Kent Business School paper: “Measuring fairness in supply chain trading
relationships: A methodology guide”
http://policy-practice.oxfam.org.uk/publications/measuring-fairness-in-supply-chain-trading-relationships-332135
REOS case study: “Sunrise Azerbaijan”
http://policy-practice.oxfam.org.uk/publications/sunrise-azerbaijan-case-study-324753
Unilever guidance for lead firm procurement on smallholder inclusion
Unilever training module on smallholder inclusion
Case studies on Unilever: India-tomatoes, Indonesia-soybean, Kenya-tea