Synthesis Documents

Facilitating the Development of Outgrower Operations: A Manual (USAID 2009)

    The manual aims to provide development organizations (DOs) with knowledge and tools that can assist them to build the capacity of companies (buyers) to develop and operate mutually beneficial outgrowing operations with farmers. The manual is divided into five sections.

    Section One contains a series of fourteen Question Guides that present the critical questions and decisions that a company must make before engaging in an outgrowing operation. DOs can use the questions to guide a company through the thinking that needs to take place, the decisions that need to be made, and the tasks that need to be carried out to help ensure the successful development and operation of an outgrowing operation.

    Section Two presents General Lessons Learned, from a company perspective, on managing outgrowing operations. These points are drawn from existing companies as well as technical specialists who have a broad range of experience.

    Section Three addresses the critical issue of Side Selling and presents a range of strategies and methods that companies can use to help avoid this.

    Section Four presents the Role of the Development Organization in Facilitating the Development of Outgrowing Operations. This section, from the perspective of a DO, presents principles and lessons learned that can help a DO structure its collaboration with targeted companies in a way that maximizes the chances of success and sustainable impact - for both the company and the producers they buy from who are, in most cases, the ultimate DO target group.

    Section Five comprises a series of Intervention Briefs that provide concrete and practical examples of how DOs can help build the capacity of companies to successfully develop and manage the different outgrowing operation components. Each brief presents examples of capacity-building activities, cost-share options and the typical mistakes that DOs make.

    The Appendices introduce Case Studies of outgrowing operations in Asia and Africa. These cases provide real-life examples of how companies are managing outgrowing operations and how DOs are helping to build their capacity to do this.

    Summary of results
    The report gives the following recommendations for DOs interested in supporting companies engaged in outgrowing operations:

    A. Respect the company's experience and knowledge
    B. Establish credibility
    C. Develop an appropriate memorandum of understanding with companies
    D. Do not undertake the role of intermediary or negotiator
    E. Develop professional relationships between DO and company staff
    F. Create the right incentives
    G. Structure cost-sharing appropriately
    H. Develop company competitiveness
    I. Monitor agreements with companies.