Have you ever had that experience when you hear about a new band, but before you listen to them all your friends tell you they’re no good? You get discouraged, but then you decide to listen to them for yourself and you realize they’re not so bad. And actually, some of the tracks are really good. That’s kind of what happened to the New Alliance.
Back in May, at the G8 Camp David Summit, President Obama announced the birth of a new initiative targeted to promote global food security called the New Alliance for Food Security and Nutrition (“New Alliance”). It’s a bold initiative that aims to lift 50 million people out of poverty over the next 10 years. The New Alliance involves a lot of important players in the global agriculture world including large donor governments (e.g. the United States, Germany, etc.), African governments, and a host of private sector companies.
Companies in the Alliance have submitted “Letters of Intent” describing how they’re going to do business and improve the lives of smallholder farmers. As an example, the African Cashew Initiative is a public-private partnership that is working to create a better business environment for cashew processors and farmers. African processors collaborate with experts, such as TechnoServe, on how to expand operations and stay on top of changes in the market. The goal of this project is to create 5,500 new processing jobs and raise the incomes of 150,000 farmers.
Here at ONE, when we think of the New Alliance, we immediately think of this ambitious goal of lifting 50 million people out of poverty. However, to others, the New Alliance remains a mystery, shrouded in confusion and misunderstanding. Some of the criticism of the initiative has been fueled by an assumption that it is dominated by large U.S. multinational companies and in particular by large seed and fertilizer companies. We decided to dig deeper and find out which companies are involved, where they’re based, what they intend to do, and how much money they’re planning to invest.
The results were striking, and will surprise the initiative’s critics. Without further ado, here are five things you probably didn’t know about the New Alliance:
1. Contrary to popular misperceptions, several large investments come from African companies. It is encouraging to see companies based in Tanzania[1] and Cote D’Ivoire[2] show sizeable investments.
2. Many of the projects are led by African-based companies. Although it’s not the most important number, knowing the number of projects remains helpful to see how many of them are being submitted by African-based companies. The graph shows the quantity of projects based on where companies are headquartered.
3. Companies are diverse in size – and include many small businesses. The companies were classified as a big business (Multinational, African or Non-African), small business (small-to-medium sized enterprises or “SME”), Public-Private Partnership (PPP), or Business Association (Association). Nearly half are either small or medium businesses, public-private partnerships, or business associations.
4. European investment is higher than that of the United States, but indeed a few companies have very large investments. Contrary to the criticism that the New Alliance is primarily U.S.-focused, our findings show that European companies are actually committing more dollars than U.S. ones. A few European multinationals, including Norway-based Yara and France-based Groupe MIMRAN are each single-handedly out-investing all of the US projects combined.[3]
5. United States investments are not dominated by one company. Although AGCO constitutes a significant portion, our findings have countered the notion that the New Alliance was a public relations creation of Cargill and other US MNCs. Cargill’s investment is just one tenth of one percent of total investments under the New Alliance and as you can see in the graph below, there are several small contributions from US companies.
Our findings show that, although not perfect, the New Alliance is comprised of a diverse group of companies – including many small businesses – which are trying to expand economic opportunities for farmers and their families. It’s high time to recognize the importance of this initiative and encourage the UK to expand and enhance the New Alliance by adding at least 12 new countries, and ensure current compacts have time-bound commitments. Being clear about the facts and encouraging more transparency from companies will demystify the New Alliance and improve its chances of success, which is music to our ears.