Shaping a Market for Nutrient Economies – Part 2: The Value of Partnerships
By Lisa Smith, Writer for NextBillion
The forces of supply and demand generally keep a free market humming – but not always.
In Part 1 of this blog, we explored what happens when a thriving market doesn’t emerge for needed products, and how supply-side market interventions can help. But how do these interventions work in practice?
As we’ve seen in Ashoka Changemakers’ Nutrients for All campaign, there are several markets involved in bringing nutrient products to consumers. Interventions in these different markets can have a major impact, starting at the earliest stages in a product’s development - and they often involve multiple partners.
These partnerships can take place between for-profit companies, or between for-profit and non-profit entities, and they can happen at various points in the value chain. For instance, providing farmers with high-yield seeds at a fully or partially subsidized price may improve the market for a key ingredient of an unfinished product, making the final product more affordable and accessible. This type of market intervention can have an impact that goes beyond nutrition.
For example, extractors distribute free high-yield seeds to farmers to encourage the production of Artemisia annua, the agricultural product in artemisinin combination therapies, the first line treatment for malaria. This benefits the farmers and the extractors, who ensure an available supply of the product through a guarantee that farmers who receive the seeds will sell it to that extractor.
A recent partnership between PATH (an international non-profit), Abbott (a global, for-profit health care company) and the Abbott Fund (the company’s philanthropic foundation) provides another example. This partnership has used a similar intervention to influence the fortified food market, shaping the production of a new fortified rice product to address micronutrient malnutrition.
Micronutrient malnutrition is characterized by a lack of essential vitamins and minerals, which can compromise children's immune systems and their physical and cognitive development during their formative years. The PATH Abbott partnership has initially focused on India, where rice is a staple food for over half of the population, resulting in the production of fortified “Ultra Rice.”
According to the Abbott press release, PATH's Ultra Rice®, utilizes “a micronutrient delivery system that packs vitamins and minerals into rice-shaped "grains" made from rice flour and manufactured using pasta-extrusion equipment. When the grains are blended with milled rice, typically at a 1:100 ratio, the resulting product is nearly identical to traditional rice in smell, taste, and texture. It is also more nutritious, offering rice-consuming populations a chance at healthier, more productive lives.”
The partnership between the two groups has helped strengthen the market for their fortified product in the following ways:
-Increasing the local production capacity of fortified grain manufacturers in India, resulting in new supply competition that will lower costs and meet future anticipated demand for fortified rice
-Developing low-cost quality control equipment and systems to ensure that fortified rice meets appropriate standards, ensuring consistent customer experience with the product/brand
-Developing high-quality, low-cost blending equipment to enable small and medium-sized rice mills to blend the fortified grains with milled rice, also ensuring consistent customer experience with the product/brand
-Expanding scaling efforts of fortified rice in public sector programs, demonstrating the feasibility of market creation and increasing the overall size of the product market
-Continuing to optimize the product formulation to lower production costs, increasing the attractiveness of the manufacturing market, enhancing nutritional and product value to end-users, and maximizing affordability for suppliers
Smart partnerships can improve the impact of nutritional products and pave the way for new nutrient economies. When effective, they can be a powerful tool in shaping markets that provide the nutrient products needed for good public health.
Editor's note: This article is cross-posted from NextBillion Health Care, and is part of their week-long collaboration on Ashoka Changemakers "Health Ideas" Week.