Local supply chains in the developing world are often fragmented and inefficient, resulting in higher prices, greater losses and less access to food for the poorest. Millions of small and medium-sized businesses and smallholder farmers are made poorer by the inability to access markets and support themselves. In fact, most smallholder farmers produce barely enough to feed their families. Difficult access to credit impedes investment and lack of insurance means that the loss of a harvest can push entire communities into hunger. Poor transport links hinder trade and drive prices up.
Every year, the World Food Programme (WFP) spends more than US$ 2 billion in locations where we run operations. As a large buyer of commodities and services, our purchasing power allows us to strengthen markets in a way that promotes development and resilience to shocks, while addressing the root causes of food insecurity. By contracting local businesses and working with in-country partners, WFP contributes to more sustainable food systems, more dynamic retail sectors, and more robust transport networks.
Combining our demand with that of the private sector, we create stable, predictable outlets for smallholder farmers, allowing them to access markets beyond WFP. We support smallholdings to become viable businesses, by connecting them with local banks that can grant loans, and with providers of quality seeds, equipment and storage units to protect their harvests.
To combat stunting and malnutrition and develop a market for nutritious food, we have assisted more than 70 small and medium enterprises in producing safe, affordable and nutritious products in developing countries. In Rwanda, WFP is teaming up with Africa Improved Foods, the Clinton Health Access Initiative (CHAI) and other public and private sector actors to establish the first Africa-based factory that produce SuperCereal+, a nutritious food used to treat malnutrition in children under 5. WFP’s demand for five years will act as the initial catalyst, giving the factories time to create sustainable sources of demand, while providing nutritional benefits.
WFP’s extensive experience in moving, handling and delivering large quantities of goods enables it to support local transport companies in increasing efficiency and reducing costs. This includes providing them with fleet management software that offers cargo tracking, utilization rates, fuel consumption and other key indicators, and training on how to use it. Strengthening national commercial transporters to bring them into line with best industry standards will drive transport costs down, too.
Working with local retailers through its cash-based assistance transfers, WFP is helping make local commercial markets more professional and efficient. Lower costs translate into lower prices, giving vulnerable people the possibility to have more money to meet their basic needs. In Jordan, WFP’s retail engagement strategy changed the existing contractual arrangement and has, so far, boosted by 8% the purchasing power of 80,000 Syrian refugees living in the sprawling Zaatari refugee camp. By working with the camp’s shopkeepers to use their store’s itemized sales data, WFP is in the process of helping them make their supply chains more efficient (sourcing and delivery) with a potential to further reduce selling prices (thus further increase purchasing power) by another 7-9%.