Pierre Ferrari: Taking Stock at Heifer International

I was born in the Belgian Congo in Africa, which exposed me to a lot of issues that Heifer deals with in terms of poverty, hunger, inequities and all of the impacts of colonialism. I went off to high school and then college in England and finally decided I would immigrate to the United States and make a career here. I completed an MBA degree and ended up working for Coca-Cola for a couple of decades and finally decided that wasn’t really my life’s calling. I left that and went to work on corporate social responsibility activities. I started a small venture fund called Hot Fudge, which invested in startup companies with the bottom-line goals of community development — meaning that we were going to make a profit, but we also wanted to have impact on workers. At Heifer International, I’m back to managing a large organization but with the resources and good team members to have an impact at scale.

Fundamentally, the work we do is psychosocial in the sense that we are working with communities where we’re invited and tap into the sustainable and self-reliance energy that exists in those communities. They have a lot of assets, but they need a little help. Perhaps some additional assets, some training — but perhaps more importantly, a sense of hopefulness.

When I got there in 2010, Heifer was working with 125 or 150 families to do a project; now, wanting to scale up our impact, we mobilize and link a large number of these communities behind a particular value chain or value chains, whether it be chickens or milk or goats or cattle. We aggregate them all so they can be competitive and find access to markets that are quite profitable for the farmers themselves. So we not only continue the community development work and the value-chain work that we do, but link it quite efficiently and effectively with what the market needs in terms of quality, consistency, cost structure and that type of thing.

Connecting the two pieces is where we’re innovating. We’ve found a way through our Cornerstones, our values and passing-on-the-gift concept, of mobilizing very large numbers of farmers, all aligned behind a particular market opportunity.

I think what I’ve brought to this organization is systemic thinking and the financial skills to be able to analyze value chains and understand how these systems work.

The development world thinks in terms of productivity — how to get more tomatoes or more lettuce or more spinach or more milk — with the assumption that demand exists. I’ve been too long in business to know that that assumption is a very dangerous assumption. So we begin our work now by saying, “What is the demand? What’s the value chain? Who are the players? What are the submarkets? What are the niches?” And that experience working for Coke and launching a bunch of new products and working in venture capital is a very strong basis with which to look at the conditions of various value chains and markets for farmers and set up criteria on how to analyze and look for what we call pro-poor, wealth-creating value chains.

There are some things the market can fix if the incentives are right, and there are some things the market can’t fix. The role of philanthropy actually could be to fix market failures and connect up to where the market can then pick up.

In the United States, where you have very complicated and well-oiled and sophisticated value chains, if Walmart was looking for more cherries, it wouldn’t be long before there are sellers. The chains are very smooth and very efficient, and cherries would appear from some farm in Washington or Oregon.

But in [other] countries there’s all sorts of breakdowns because you don’t have processing equipment; you don’t have infrastructure. One of the major breakdowns in markets in developing countries is that the farms themselves don’t have the capacity to be able to produce whatever the commodity is at the right price and the right quality consistently. So we go in and we place animals, or we train [the farmers] on how to take care of chickens or whatever it is that the value chain is missing. But the early part of the inputs of the value chain is where we work most effectively, and this is key and increasingly important in terms of our model, after we’ve done the convening development model.

The model in the United States is that individual values, market-driven beliefs such as price incentives or margins, are sufficient to drive the value chain. Where we work, that is not sufficient. We need to create community development so that there are support systems, shared learning, risk mitigation on the part of the farming community, gender empowerment — a whole set of social capital and general empowerment activities that allow these communities to be effective in these new value chains that are opened up.

It’s gradual. It varies by value chain. Draw two circles that overlap maybe a quarter each. On the left-hand side, that’s the values space for the community development model. That is where we talk about values such as accountability, sharing and caring, environment sustainability, animal management, the importance of nutrition and income — remember, we’re dealing with very poor people — gender and family focus, empowering the community, training and education. All of those aspects are developed there, and that requires philanthropic dollars. That will not be supplied or paid for by the market, period. So philanthropy is very important to prepare the communities for a more dignified life, which in our case is to connect them to markets. It doesn’t mean they have to be connected to global markets. It could be local markets, regional markets, national markets. Again, that’s part of the analysis.

The other circle on the right-hand side is market-driven values: price competitiveness, quality, a whole variety of incentives, consistency of production, infrastructure and that kind of thing. And that’s the demand side.

Now how do you bring those two worlds, those two value sets together? That’s part of the work we do. The overlap between the two circles is what you call a hand-off between the philanthropy world and the business world — a local businessman or a regional player or even international corporations.

I’ll give you an example. Nestlé is very interested in buying milk at a certain level of quality from a group of farmers with mobilized lifestyles in a town in Kenya . . . so where there’s this overlap is where we’re working with Nestlé in terms of determining the consistency, the quality issues and the material they need which Nestlé will then process to put into their brand of products. If it goes well, it’ll grow. So Nestlé’s made all the investments on the right-hand side. They want to be able to not import. Right now they are basically importing all the products that go into their brand of products that are sold all over Africa. This of course causes tremendous pressure from local governments to buy local milk and process it, but the quality is not consistent. It’s not high enough. But we are doing all of the training for the farmers to be able to step up to the specifications Nestlé has for the milk they’re going to process.

Yes, or the local place. We prepare them. And once they’re ready, they’re on their own. We have a very strong value here of self-reliance. We don’t think it’s sustainable if we can’t walk away three to five years after we started with a community. Our exit strategy is actually this strong ethic of self-reliance and accountability.

It’s easier for NGOs because all of us work in the more marginal, activated communities and fundamentally it’s about community development. You absolutely have to work with the community, give them the confidence, the hopefulness, the training, the sense of self-reliance. You can almost think about it like an insurance system: You’re working with a community which then essentially promises that they will take care of each other as they deal with the markets and the inevitable setbacks with climate and politics and everything else. They’re very vulnerable individually but very powerful as a group. And they get that, or with the training they get it.

Corporations are always saying, “We want to play. We want to come, but these communities aren’t organized.” So it’s the same message but with a different set of language. And so we keep empowering. It’s expensive, it’s time-consuming, and in our opinion, it’s totally necessary. If you don’t do it, you’re wasting the rest of the money.

Yep. But I think it needs to be defined. I think it’s to develop capacity. An individual farmer who is responding to a market signal is empowered to respond or not, but it’s not that kind of empowerment. It’s not individualism. It is community-developed, community empowerment. And remember, we work in isolated and distressed communities; women are an important part of that. So, community development with gender empowerment.

The next step is moving them to hopefulness. If you don’t capture and generate that sense of hopefulness, very little that needs to follow will happen. They’re just going through the motion because they’re expecting something free.

The third piece is to talk about how to improve their skills. And they do it because they believe they can improve their skills. They believe improving their skills will pay off.

The fourth piece has to do with beginning to understand who the actors are going to be outside of their village, and beginning to work with other partners. That could be transportation people, aggregation businesses. But beginning to understand the need to connect with the bigger world in a systemic way, one that’s genuinely value added and lasting, sustainable.

And the fifth thing is advocacy. Once they have a solid sense of community, a solid track record of accountability and performance, the value chain is being supplied, income is growing — then they can begin to impact the governmental system for infrastructure improvement. They want electricity; they want running water; they want the roads. Until they have some power and some cash flow coming into the community, they will be ignored. And that’s beginning to work in places, because money talks whether you’re in Cambodia or Kenya or Ecuador.

Absolutely. The fundamental exit strategy is the constant repetition for all the five years we’re there — that they have to be self-reliant. Dependency is not what we do. It’s kind of a tough love thing.