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Title: Strategies for small farmer development
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Title: Strategies for small farmer development an empirical study of rural development projects : executive summary
Physical Description: 52, 6 leaves : ; 30 cm.
Language: English
Publisher: Development Alternatives, Inc.
Place of Publication: Washington D.C
Publication Date: 1975
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Subject: Agriculture -- Developing countries   ( lcsh )
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General Note: "A report prepared for the Agency for International Development under contract no. AID/CM/ta-C-73-41."
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Table of Contents
    Cover
        Cover
    Title Page
        Title Page 1
        Title Page 2
    Front Matter
        Front Matter 1
        Front Matter 2
    Title Page
        Title Page 1
        Title Page 2
    Table of Contents
        Table of Contents 1
        Table of Contents 2
    Highlights of the report
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
    Summary of findings and their implications for aid
        Page 6
        Study design
            Page 7
            Page 8
        Key determinants of project success
            Page 9
            Page 10
            Page 11
            Page 12
        Key determinants of local action
            Page 13
            Page 14
            Page 15
            Page 16
            Page 17
            Page 18
        Project components
            Page 19
            Page 20
            Page 21
            Page 22
            Page 23
            Page 24
        A process for project design and implementation
            Page 25
            Page 26
            Page 27
            Page 28
            Page 29
            Page 30
            Page 31
            Page 32
            Page 33
            Page 34
            Page 35
            Page 36
            Page 37
            Page 38
            Page 39
            Page 40
        Implications for aid and other major donors
            Page 41
            Page 42
            Page 43
            Page 44
            Page 45
            Page 46
            Page 47
            Page 48
            Page 49
            Page 50
            Page 51
            Page 52
    Annex A. Projects included in the study
        Page 53
        Page 54
        Page 55
        Page 56
        Page 57
        Page 58
Full Text








STRATEGIES FOR SMALL FARMER DEVELOPMENT:
AN EMPIRICAL STUDY OF
RURAL DEVELOPMENT PROJECTS






EXECUTIVE SUMMARY




FINAL REPORT




A Report Prepared for the
Agency for International Development
under Contract No. AID/CM/ta-C-73-41
May 1975












DEVELOPMENT ALTERNATIVES, INC.
1823 Jefferson Place, N.W.
Washington, D.C. 20036









STRATEGIES FOR SMALL FARMER DEVELOPMENT:

AN EMPIRICAL STUDY OF RURAL DEVELOPMENT PROJECTS




This study contains three separately bound documents as
listed below.


VOLUME I

Contained in this volume are the following chapters:


IV.
II.
III.
IV.
V.


Research and Focus
Project Success
Local Action
Project Components for Small Farmer Development
Summary of Findings and Their Implications for AID
and Other Major Donors


Appendix One:
Appendix Two:

Appendix Three:


Methodology
Information Systems to Support Rural
Development Projects
Implication of the Findings for Future
Research


VOLUME II

This volume is comprised of 36 write-ups of the projects
studied, a complement to the analysis in Volume I.



EXECUTIVE SUMMARY

Sections in this volume include the following:

Highlights of the Report
Summary of Findings and Their Implications for AID
Annex A: Projects Included in the Study









STRATEGIES FOR SMALL FARMER DEVELOPMENT:

AN EMPIRICAL STUDY

OF RURAL DEVELOPMENT PROJECTS



EXECUTIVE SUMMARY




Elliott R. Morss, Project Director
John K. Hatch
Donald R. Mickelwait
Charles F. Sweet

Assisted by:

Virginia L. Anderson
Keith M. Moore
Mary Ann Riegelman
Roger S. Swenson






A report prepared for the Office of Development Admini-
stration, Technical Assistance Bureau, Agency for International
Development (TA/DA, AID), Washington, D.C. Jerome T. French,
Acting Director of the Office of Development Administration,
was the project originator and monitor. This report presents
research and conclusions drawn by Development Alternatives,
Inc. It is not a statement of the views or official position
of the Agency for International Development.


DEVELOPMENT ALTERNATIVES, INC.
1823 Jefferson Place, N.W.
Washington, D.C. 20036


May 1975








TABLE OF CONTENTS -- EXECUTIVE SUMMARY



HIGHLIGHTS OF THE REPORT . . . . . ... . .1

SUMMARY OF FINDINGS AND THEIR IMPLICATIONS FOR AID . .6
INTRODUCTION . . . . . . .. .. . .. .6

SECTION A -- STUDY DESIGN. . . . . . . . .7

SECTION B -- KEY DETERMINANTS OF PROJECT SUCCESS .. .9

Summary of Findings... .. . . . . . .9

SECTION C -- KEY DETERMINANTS OF LOCAL ACTION. . . .13

Summary of Findings . . . .. . . .13
Detailed Analysis . . . . . . . .15

SECTION D -- PROJECT COMPONENTS. . . . . .. .. .19

Developing Technological Packages for Small Farmers .19
Transferring Knowledge to Small Farmers .. . ..20
Small Farmer Credit . . . . . . .21

SECTION E -- A PROCESS FOR PROJECT DESIGN AND
IMPLEMENTATION . . . .. . . . . .25

Introduction. .. .. . . .. . . . 25
Determining the Design Requirements . .. .... .26
A Process for Project Design. . . . . . .33
A Process for Project Implementation. . . . .36

SECTION F -- IMPLICATIONS FOR AID AND OTHER MAJOR
DONORS . . . . . . . . . . . .41

The Time Constraint . . . ....... .44
The Knowledge Constraint. .. ... . .... .45
Assumptions Regarding Small Farmer Behavior Changes .46
Restrictive Benefit Measures. .. . . . . ..47
The Need for Ongoing Information . . . ... .48
The Need for Flexibility . .. . . ...48
The Most Valuable Message . . . . .. .. .49
General Conclusion. . . . . . . . 50


ANNEX A: PROJECTS INCLUDED IN THE STUDY. . . . . .A-1









HIGHLIGHTS OF THE REPORT




OVERVIEW

This study was contracted .to help the Agency for Inter-
national Development (AID) improve the design and implementa-
tion of projects to assist small farmers -- i.e., farmers
engaged in subsistence agriculture.

The work involved a detailed examination of 36 rural
development projects sponsored by various institutions operat-
ing in 11 African and Latin American countries. In all, 81
local sites in the field were visited for the purpose of col-
lecting information.

The primary findings are that to maximize the chances
for project success, the small farmer should be involved in
the decision-making process and should also be persuaded to
make a resource commitment to the project. The study also
includes the description of a process for project development
and implementation which leads to the involvement and resource
commitment of small farmers. The process forces one to make
allowance for local economic and social/cultural factors that
impede project success.


PROJECT SUCCESS

Projects were scored on the basis of four distinct com-
ponents of success:

The project's income to cost ratio;

The acquisition of agricultural knowledge
by small farmers;

The increase in self-help capabilities as
a result of project activities; and

The chances of project benefits to small
farmers becoming self-sustaining.


The scores on these components were then summed to provide an
overall success score for each project. Subsequently, a large
number of possible success determinants were selected





2


and examined. Quantitative analysis showed thatwhen weighed
together, small farmer involvement in project decision-making
and his resource commitment to the project accounted for nearly
50 percent of the differences in success scores of the pro-
jects.

The policy implications of these findings are straight- I
forward: every effort should be made to foster small farmer
involvement and resource commitments to projects in the early
phases. The small farmers' involvement should complement
(and ultimately replace) the work of the project's outside
staff. The resource commitments (labor and cash) should comple-
ment (and ultimately render unnecessary) resources from outside
sources.


LOCAL ACTION I

Local action was the term used to define smallfarmer in-
volvement and resource commitment. We found local action
significantly increased as a result of the following:

An effective two-way communication between
small farmers and project staff;

Functioning local organizations controlled.
in large part by small farmers themselves;
and

Crop-specific (as distinct from general)
extension advice offered.

An analysis of the components of local action revealed
that small farmers will become involved in development projects
if presented with the opportunity for meaningful cooperation --
sharing in decision-making responsibility, testing new tech- I
nology and spreading new knowledge as paraprofessionals.

Small farmers committed more resources, proportionately, g
than did larger, wealthier farmers. Literacy, land tenure and I
involvement in decision-making were positive influences on
resource commitment; the size of the subsidy for adoption of
new practices and the provision of social services in early
project stages both appeared to have a negative effect on re-
source commitment.

Regarding the adoption of a new technology, our work sug-
gests the small farmer will take advantage of a good idea, when
"good idea" is defined to allow for constraints such as risks I
(i.e., chances of loss) and his assessment of the costs of tak- I
ing such risks.

I









PROCESS OF DESIGN -- GATHERING CRITICAL INFORMATION ON LOCAL
CONDITIONS

The most successful projects were either those that started
by acquiring a knowledge of the local area prior to initiation
or those that structured the project on the basis of a simple
idea and developed this knowledge base during the initial pro-
ject stages.

Primary collection requirements during the process of pro-
ject design are:


SData on existing agricultural production
practices and sociocultural patterns in
the area to determine what behavior changes
are required for a project to achieve its
objectives and how they might be obtained;

Data on the income, land and power struc-
ture of the local area and the existing
local organizational capabilities to deter-
mine if special means are required to reach
small farmers and the most effective mechan-
isms for doing so; and

Data on the capability of local institu-
tions to provide the project components
deemed necessary for success.


Data collection can best be accomplished by rural develop-
ment specialists assisted by local staff using small sample
surveys and open-ended interviews. This effort should be sup-
plemented by measurement of the inputs and outputs for critical
crops so that the profitability and variance of existing agri-
cultural practices can be accurately assessed.

Provision should be made for persons serving as data col-
lectors for the design phase to be integrated into the project
staff. Discussions initiated by these collectors with local
leaders and farmers can form the basis for an ongoing, two-way
communications system.

Little value was found in large-sample, census-like sur-
veys, either for project design or as baseline data for use in
measuring project success.





4 I

I
PROCESS OF IMPLEMENTATION

The first requirement of an implementation process is
the recognition that revisions in project design are desir-
able and constitute attempts to improve overall success and I
not proof of design inadequacy.
One necessary input into the revision of project activities *
is a two-way communications system which allows project staff |
to obtain a feedback from small farmers on basic directions
and operations.
This system should be incorporated into project plans
and initiated in the implementation phase. Such a system
should provide monitoring, evaluation and diagnostic functions
to improve project performance. It is particularly vital to
gain a clear understanding of who (i.e., large or small farmers)
is receiving project benefits. This can be accomplished
through the development and use of an indicator system with
low-level project staff and participants themselves as primary
data sources. Indicator systems require customization for
each project; they should be cooperatively designed by pro- I
ject staff, participants and professional information special-
ists.
A special concern during the implementation phase should
be how to make project benefits self-sustaining after outside
staff and funding have been withdrawn. While many projects
deliver income benefits as long as subsidies continue, few
are operated in such a manner that, over time, participants
can assume payment for essential services from their earnings.
This requires training programs which gradually substitute
local participants or their families for outside experts and
the development of a self-tax mechanism to recover essential
expenses.


LARGE DONOR PROJECTS

Development projects receiving funds of over one million g
dollars scored poorly on success, local action and self-suffi- |
ciency. Major problems include:

*A time constraint caused both by a need on
the part of the donor agencies to commit
large sums of money and to show quick results;


I


I









SA knowledge constraint, originating from
the belief of foreign and host country
government staff members that small farmers
have little to offer. We found that small
farmers can be a basic data source on local
constraints, behavior and risk;

SAn assumption in project design that small
farmers will change their behavior without
an assessment of what changes (in terms of
involvement and resource commitment) are
required if the project is to achieve its
objectives and of how they might be realized;'

* The use of restrictive benefits measures
such as cost-benefit ratios or repayment
rates which narrow the focus of the project,
instead of applying measures such as the
increase in self-help capability, the acqui-
sition of agricultural knowledge and pro-
gress towards making benefits independent
of outside assistance.









SUMMARY OF FINDINGS
AND THEIR IMPLICATIONS FOR AID


I

INTRODUCTION


The purpose of this study was to identify the key compo-
nents for successful small farmer development projects. As
part of this, we tried to determine the proper role for small
farmers in these projects. In this extract we summarize our I
findings and their implications for AID and other major national
and international donors. I

We start with a brief statement of the nature of the study
(Section A). This is followed by a summary of our findings
concerning the key determinants of project success (Section B).
A statement of our conclusions concerning the type and level
of small farmer activity required is presented next (Section C).
A brief summary of our findings concerning selected project
components follows (Section D).

We then discuss a process for project design and implemen-
tation that our work indicates should be followed to maximize I

the chances for project success (Section E). From this we turn
to the implications of our work for AID (in Section F). Here
we examine the degree of success and local action in different
projects in an attempt to identify the major shortcomings and
possible solutions in AID's current and planned future activities.









SECTION A

STUDY DESIGN




This is primarily an empirical study. Our findings are

based on a detailed examination of how 36 rural development

projects operate in 11 African and Latin American countries.1

To obtain the necessary data we made visits to 81 project and

subproject locations. The information gathered on these visits

was complemented by an extensive review of the literature on

rural development. The work was carried out by four senior

members of the firm's staff, all of whom have had experience

working in developing countries.


We have not attempted to limit our study to a particular

type of project. Rather, we have tried to include a wide

range of project types in hopes of being able to draw conclu-

sions that have general applicability. However, the reader

is reminded that our conclusions are based primarily on the

projects we studied in detail and we cannot claim these pro-

jects constitute a representative sample.


The study focused on what can be done to assist farmers

who own or control enough land to provide a subsistence income



1 Detailed project write-ups appear as Volume II of Strategies for Small
Farmer Development. A summary listing of the projects reviewed is appended
to the Executive Summary, page A-i.





8



for their families. While many of our conclusions may be

relevant to efforts to assist landless laborers, it should

be stressed that our conclusions affect them incidentally

and that no attempt has been made to develop a specific set

of recommendations that apply to them.









SECTION B

KEY DETERMINANTS OF PROJECT SUCCESS





Summary of Findings


Our methodology has been to develop measures of project

success and their possible determinants. We have concluded

that four dimensions of success are of primary importance:


1. An increase in the small farmer's income
and its attendant costs;

2. An increase in the small farmer's agricul-
tural knowledge;

3. An increase in the small farmer's self-help
capability; and

4. A high probability that the benefits of
the project will become self-sustaining.


Using both qualitative and quantitative modes of analysis,

we drew conclusions from a list of about 25 possibilities

concerning the key determinants of project success.' We found

that overall success ratings were most affected by:


The Local Action taken by small farmers to
complement outside development management
and resources. By itself, this factor
explained 49 percent of the variation in
the overall success rankings.



SThe 36 projects are scored on these dimensions and on overall success.
See Table II-1, Volume I.










When the components of Local Action were examined, two proved

to be most important in promoting overall success:


SSmall farmer involvement in decision-making
in the implementation phase of a develop-
ment project;' and

SSmall farmer resource commitment (labor and
cash) to a development project.


Small farmer involvement in project decision-making and

resource commitments also appeared important as determinants

in each of our success criteria, providing firm evidence of the

importance as well as the consistency of local action as a

necessary ingredient in building successful projects.


These conclusions imply that project success is dependent

upon a set of positive actions by small farmers:


Their participation in project decision-
making ;(which appears more significant in
the implementation stage than in the design
phase);

Their willingness to contribute labor and
money to the development effort.


Those development projects which took the time and effort

necessary to build in an active and cooperating role for small

farmers were significantly more successful than those projects



1 As one might expect, there is a high correlation between involvement and
our measure of the effective functioning of a two-way information system
between staff and project participants.









which followed more traditional (externally-dominated) develop-

ment approaches.


Of course, project success was also affected by a number

of other factors. As might be guessed, the chances for pro-

ject success are greater if one works with more progressive

farmers as measured by per capital income and the percent of

output.sold for cash. Somewhat surprisingly, greater project

success appeared to occur in projects located a considerable

distance from all-weather roads and in projects where the literacy

rates of participants were low. We believe this is a reflec-

tion of a deliberate decision by leaders of some of the most

successful projects in the sample to work in remote areas and

not the influence of these two factors as such.1


Many factors thought to be important in project success

did not turn out to be so in this analysis. Cost per participant

was not, which suggested that large outlays spread over few

people will not necessarily improve chances for success. The

degree of subsidization offered for adoption of new technology was

not, suggesting that small farmers will adopt new technologies

without further incentive if it appears in their interest to

do so. In addition, the growth rate in the number of project

participants showed no relation to project success, thereby

raising obvious questions concerning the frequent use of this


While literacy did not appear necessary for project success, it was signifi-
cant in bringing about a small farmer resource commitment.









measure as a success indicator. And finally, the quality of

the physical environment did not appear to be of overriding

importance, as successful projects were launched under good

as well as poor farming conditions.


The policy implications of the analysis are clear. Pro-

ject designers can most strongly influence potential success

in rural development projects by deliberately working to gen-

erate various types of small farmer involvement and resource

commitment to project activities.









SECTION C

KEY DETERMINANTS OF LOCAL ACTION





Summary of Findings


Having ascertained the overriding importance of small

farmer involvement and resource commitment to project success,

we then used qualitative and quantitative methods to study

how these needed small farmer activities could be realized.

We started by breaking local action into four component parts:


SSmall farmer involvement in project decision-
making during the design stage;

Small farmer involvement in project decision-
making during the implementation stage;

Small farmer labor commitment to the develop-
ment project; and

SSmall farmer money commitment to the develop-
ment project.


Through study of overall local action (the aggregate of

the four components), three variables were found to be posi-

tively associated with the level pf local action:


The specificity of the agricultural infor-
mation offered by the extension service;

The importance of local organizations in
the project; and

An effective two-way communications flow
between project participants and project
management and staff.









The size of the subsidy offered to farmers by the project

appeared to have a negative impact on the overall level of

local action. Perhaps most importantly, the following vari-

ables did not appear to have a significant impact:


Farm units per extension worker;

Reasonable security over landholdings;

Average size of farm in project;

Past experience (good or bad) with develop-
ment efforts;

Provision of social services;

Increase in agricultural knowledge gen-
erated by the project; and

Percent change in farm family income re-
sulting from the project.


When the involvement components of local action were

examined individually, the most important variables were the

existence of effective two-way communications systems and func-

tioning local organizations or groups. The analysis showed that

poor smallholders with less security over the land they farmed

are more likely to become involved in decision-making during

project design and implementation than are wealthier, larger

farmers. This finding should signal the policymaker that small-

farmers will contribute if given an opportunity.


A review of the variables which influenced small farmer

resource commitments of additional labor and money revealed

again that poor small farmers are more likely to make greater








relative resource commitments than are larger, wealthier farmers.

Our quantitative work suggests further that small farmer re-

source commitments would be higher if project planners focused

on increasing rural functional literacy,,improving land tenure

security, offering crop-specific extension instruction and

promoting small farmer involvement in project decision-making

at the local level. Large subsidies for adoption or the pro-

vision of social services appeared to have a negative impact

on the willingness of small farmers to make a resource commit-

ment. Income increases, in absolute or percentage measures,

did not bring forth larger commitments, suggesting the decision-

making calculus for farmers near subsistence is complex and

involves far more than the size of net income gains.


Detailed Analysis


While the determinants of local action discussed above

are important, we carried out a more detailed examination to

uncover the most vital factors influencing small farmer be-

havior. These included:


Small Farmer Perceptions and Behavior


A review of the literature as well as the projects studied

revealed a set of local constraints, actual and perceived,

which hinder the possibilities of behavior change by small

farmers. While local cultural and social impediments may require

modifications in project design, a key to predicting small

farmer behavior is an understanding of his perception of the





16


risk involved in adopting a new technolgoy. Both the prob-

ability and the size of loss enter into the small farmer's

risk consideration, and these farmers have very strong and

rational requirements for their crops to come in each year at i

or above the subsistence level. While new technology may

significantly increase output and net income, the risks in-

evitably go up -- not only because of increased cash and labor

commitments, but also because of the small farmer's increased

dependence on alien institutions or individuals (input sup- .

pliers, extensionists, marketers) over which he has no control.


Local Involvement in Development Projects

Dividing projects into two phases -- identification/design

and implementation -- we analyzed small farmer involvement.

While we found that good ideas were often brought in from the

outside before a project gets under way, small farmers can play

a critical role in tailoring ideas to fit local conditions,

act as experimenters by testing new technological packages

and participate in decision-making at the subproject level

regarding activities, priorities and mechanisms for implementa-

tion.

During the project implementation phase, small farmers

can contribute to a dialogue on project activities and results, I

assume responsibility and control for subproject decision-

making, continue to test new technology and share in the man- I

agement of the project. Examination of our projects revealed









that a sharing of responsibilities between project and farmer

was a superior arrangement to domination by either group in

achieving project success. The use of small farmers as para-

professionals was one cost-effective way to spread new tech-

nology. Training and other programs to meet local needs and

effective communications systems were helpful in eliciting

involvement, while accountability systems which allow local

leadership to form, coalesce and change improved the provi-

sion of farmer (client) services and helped insure continued

farmer involvement.


Small Farmer Resource Commitment


Small farmer involvement in decisions increased his

willingness to make a commitment of increased labor or money

to complement the project's activities -- i.e., a "shared"

decision-structure between farmer and project staff increased

farmer commitment. Other factors were also important. "Neces-

sary" services of a development project -- technology, exten-

sion of agricultural knowledge, agricultural inputs, credit

(in some instances) and marketing -- had to be there for the

farmer to make a resource commitment and for a project to suc-

ceed. In circumstances of high risk, particularly when large

upfront cash costs were involved, various risk-sharing plans

were in place, ranging from crop insurance (which worked poorly

in our sample) to input-provision/output-sharing arrangements

(which showed promise in several projects).




18


Local Organizations

Small farmer-directed local organizations contributed
importantly to the level of local action and project success. .

These organizations performed the following functions: U

Provision of a vehicle through which
farmers can share in decision-making;
SAssistance in developing a two-way com-
munications system between project staff
and farmers as well as among farmer parti-
cipants themselves;
SPromotion and reinforcement of behavioral n
changes such as the adoption of new agri-
cultural production practices;
Facilitating the provision, integration,
and administration of farmer services;
and
SMobilizing local resources for local infra-
structure creation and maintenance.

I

I

I

I

I

I

I

I









SECTION D

PROJECT COMPONENTS





Developing Technological Packages for Small Farmers


For the projects we studied, most technological recom-

mendations were developed in distant research stations under

conditions which did not reflect an awareness of the small

farmer's resource commitments, risk-perceptions or production

preferences. The new practices being promoted -- even when

locally tested -- did not reflect an active attempt to search

out and incorporate the strengths of the traditional technology

into the modern practices. Given these circumstances, it is

understandable that many of the technological packages that the

small farmer was urged to adopt were inadequate in at least

one aspect. When the meaning of an adequate technological package

is broadened to include the complementary prerequisites of

capital, land, agricultural inputs and marketing services which

must accompany a new technology, a large proportion of the

externally-generated technological packages were found wanting.1


Adaptive research was carried out in several projects,

where outside recommendations for increased output were tested

under local conditions. These efforts suggest that modern



Out of 51 technological packages recommended by the 36 projects, 31 were
found inadequate in one aspect or another.








agricultural technology needs to be "customized" for small

farmer agricultural use. Only through development of increas-

ingly specific recommendations which offer different trade-

offs between yield-maximization/risk-minimization, within vary-

ing physical environments, can the best solution for a particu-

lar area be reached.


The "best" solution is a judgment determined through dia-

logue with the client involved -- the small farmer. The solu-

tion cannot be achieved without careful testing by these pro-

ducers -- with the risks of experimentation subsidized by or

shared with the project. With the exception of wetland rice

projects, we did not observe an instance in which the "best"

solution involved a complete displacement of old methods by

new; rather, these solutions entailed a synthesis of parts of

both.


Transferring Knowledge to Small Farmers


After examining extension techniques in projects grouped

by profitability, we turned to knowledge acquisition (measured

by major behavior changes in farm production practices) by

the local population. The measures of success in the knowledge

transfer/acquisition process were set against various extension

services, methods, accountability and frequency of contact.

Overall, traditional extension services delivered by area-

based agricultural experts dealing with individual farmers --

were found to be the least effective mechanisms for transmitting









useful and used agricultural knowledge. On the positive side,

our work suggests that the accountability of extension workers

to the local population contributed significantly to the effec-

tiveness of extension work. In addition, the case studies

identify various innovative extension techniques which success-

fully transferred knowledge to small farmers, particularly when

the technology being recommended was single crop-specific.


Small Farmer Credit


Not all successful projects required institutional credit

as a part of development assistance. In some projects, particu-

larly in Africa, farmers drew from their own cash resources

to make the purchases necessary to complement new technology.

In Latin America, although cash incomes are higher, it appears

that small farmers believe they must make other essential pur-

chases, and they often lack the cash or will not use their cash

to buy needed inputs.


Group repayment responsibilities, with some exceptions,

provided better repayment rates and other benefits than did

programs in which farmers were individually responsible for

repayment. However, the exceptions were striking and important

for the design of credit programs. Two types of credit arrange-

ments -- the use of local organizations (e.g., cooperatives)

which served as credit intermediaries between large institu-

tions and small farmers, and the use of group credit liability

-- successfully generated a "commitment" to the project. With





22


such a commitment the local group, either the holders of credit
funds or the combined borrowers, can exert pressure on non- I
payers, action which significantly affects the repayment rate.
From this we drew the following conclusions: |

Good credit program performance, measured I
by low administrative dosts and high repay-
ment rates, can be developed either through
the use of an intermediary composed, at
least in part, of small farmers or through
the use of group repayment liability. This
generates a "commitment to the project"
which is more important than the institu-
tional arrangements which structure the
credit program. I
Credit-in-kind was found to be a useful method
of risk-sharing, but the ability of the pro-
ject to recover input costs depended upon the
availability of alternative markets. When
such markets were open, only a strong local
organization was able to prevent diversion
of the output from the project and credit
default.

I
Interest Rates

There was a significantly positive correlation between the
level of interest rates charged small farmers and: I

Repayment rates ,I
Overall local action measure; and
The use of credit intermediaries. I

The conclusions to be drawn are that high interest rates.
do not appear to affect small farmers' willingness to borrow
or ability to repay borrowed funds. I


I


I









Seven of the most successful projects deliberately encour-

aged local savings by the use of high interest rates paid local

lenders. This was accompanied by still higher interest rates

charged to small farmer borrowers, adding further weight to

the conclusion that high unsubsidized interest rates are a

feature of good credit program design.


The case studies also:supported the hypothesis that high

interest rates serve as a screening device which restricts pro-

ject benefits to small farmers and eliminates larger farmers

who can draw upon cheaper credit elsewhere. Because of the

very great difficulty in obtaining distributional data on pro-

ject beneficiaries, this hypothesis could not be tested with

any rigor.


Finally, there is a qualitative argument for the offer-

ing of concessionary interest rates, not to the small farmer,

but to small farmer organizations. Most international assis-

tance organizations lend to Third World countries at rates

that are far below what small farmers, who clearly need credit,

are willing to pay. In lieu of making these low rates avail-

able directly to small farmers, we suggest that the low-cost

credit be offered directly to local intermediaries and that

small farmers be offered the credit by the intermediaries at

significantly higher rates. The resulting spread will allow

the local organization to pay for extension, management and

marketing services in the early years when adoption of new

technology is slowly evolving.









Many projects with external credit utilize the repayment

rate as a proxy for overall project success. This concept was

examined, found wanting and rejected. The repayment rate is

an aggregate of a number of possible explanations for non-

repayment -- some technological, some biological, some problems

of human motivation. For the credit programs in the projects

surveyed -- including external development credit, locally

generated savings and loan association credit, and upfront.input

credit -- the repayment rate was a function of:


The past history of the local participants
in similar development or government projects;

The utilization of credit intermediaries to
dispense and collect small farmer loans;

The initiation of a savings component
within the project;

Group rather than individual credit lia-
bility; and

Compulsory marketing through an organization
established by the project.









SECTION E

A PROCESS FOR PROJECT DESIGN AND IMPLEMENTATION





Introduction


Our analytical work documented the need for small farmer

involvement and resource commitment to a development project.

Clearly, involvement and the willingness to make a resource

commitment are only necessary conditions for project success.

sufficient conditions require that the following objectives be

met, either by the project or other institutions:


An adequate technological package;

Needed agricultural inputs are delivered
on time;

Extension services are adequate; and

There are favorable markets for the agri-
cultural produce and a means of getting it
to market.


All of these factors are important and interrelated. Unfortu-

nately, it is impossible to specify precisely what is needed,

when it should be provided and by whom without a detailed know-

ledge of local conditions.


The purpose of this section is to specify a process which,

if followed, will properly allow for the particular circumstances

that exist in every location. The process will maximize the

chances that the proper amount of local action will be generated









and that the project will succeed.


Determining the Design Requirements


Our study suggests that the most successful projects are

those which have attempted to gain a knowledge of the local I

area prior to project initiation or have structured the pro-

ject in such a way as to start with a simple idea and to develop 3

this required knowledge base during the initial project stages.

Essential data requirements include the following:


1. Data to understand and overcome the con- I
straints imposed on small farmers by the
local environment; I

2. Data to insure that project components are
adequate or to determine alternative ways
of providing the needed services and know-
ledge; and

3. Data to determine project focus and organ-
izational capabilities within an area so
that small farmers receive the benefits
of project activities.


These are discussed below, along with our conclusions regard-

ing their significance in project design.


.1. Understanding Small Farmer Constraints I


An understanding of small farmer constraints will enable I

project designers to determine whether a new technology is suited

to small farmers and what it will take to gain its adoption.

To make these determinations, designers must first examine the 3

farmer's existing production patterns and identify the physical,









social/cultural and political factors that influence his

decision-making. After ascertaining the farmer's current

activities and the pressures on him, the designer or planner

must determine the changes required in behavior and resource

commitment by small farmers if project activities are to be

successful.


The gap between present small farmer behavior and what

is required by the project may be significant, entailing changes

in agricultural practices, in the commitment of family labor,

funds and land, and in patterns of cooperation and account-

ability. Whether a farmer will make these changes will depend

on his perception of risk -- which should be the primary con-

sideration when planners study how to bridge the gap between

present and anticipated behavior. Through an active dialogue
with local participants, it should be possible to identify

the major impediments in making the changes called for by new

technology. Once identified, it is the responsibility of

designers to insure that the project is designed in a way to

provide the farmer with the motivation necessary to overcome

the constraints to change.


This discussion identifies one of the basic shortcomings

of much of the past design work: the failure of planners to

define the behavior changes required by small farmers. In-

stead, it has been assumed that these changes will be forth-

coming if all other project components are in place. Rather.









than make this "assumption", we would argue that the starting
point in building a project design should be the determination
of the requirements for small farmer behavioral change and the

development -- with farmer involvement -- of the elements neces-
sary to effect these changes.

2. Determining Project Components I

A second set of data is needed to determine what services I

and knowledge must be provided, either by the project or by
other institutions in the area. A study should be made as to
the adequacy of the following:
I
1. Agricultural research and the development
of technological packages suitable for
small farmers;
2. Mechanisms for transferring agricultural
knowledge to small farmers;

3. Provision of agricultural inputs (land,.
labor and supplies); I

4. Small farmer credit; and
5. Marketing services. I


3. Determining Project Focus and the Capabilities of Local Organizations

Third, data are needed to determine the size and location I
of the population to be covered (focus) and the local mechan-
isms through which the project can most effectively'be implemented.






I









Project focus assumes particular significance if the objec-

tive is to reach small farmers. In areas with a relatively

equitable distribution of land, income and power, broadly-

based development efforts are possible. On the other hand, if

there is a high degree of disparity among landholdings, wealth

and power, a telescoping (narrowing) of project activities or

focus on a defined portion of the population is necessary to

limit participation to small farmers. Because distributional

patterns are not always readily apparent, project designers

must research the local environment.


In either case, local organization can assist in the im-

plementation of the project. In the projects we studied, the

presence of a local organizational structure contributed

significantly to generating local action and to improving

chances for project success. Many of our most successful pro-

jects either created new organizations or worked through exist-

ing groups in an intensive attempt to involve all farmers in

a specific locality. This was most effective in areas where

land and wealth were relatively equally distributed. In areas

where this was not the case, projects generally attracted the

larger, more progressive farmers unless special efforts were

made to get smaller farmers as project participants.


A design team must first identify the existing patterns

of organization in the project area. Except in very unusual

circumstances, there will be leadership, communications and









combined efforts in some undertakings. Even if not formally

recognized, these groupings may serve as a useful vehicle for

project cooperation. Our analysis has shown that the distribu-

tion of power within the local area is most important as a

determinant of whether existing local organizations can be

incorporated into development projects, or whether new organiza-

tions can be formed without special screening provisions. In

19 of our projects, small farmers alone lived in the local areas

served by the project; in 17 of the projects, large and small

farmers coexisted.' In the latter case, special measures are

necessary to insure that project benefits are not channeled

directly or indirectly to the already wealthy.2 Examples of

such measures include:


Restricting membership to a landholding
size which excludes the large farmer;

Increasing the cost of services (including
credit) until large farmers find lower cost
alternatives; and

SPutting an. upper limit on the levels of
services (including credit) one can draw
so they are appropriate only for the amount
of land a small farmer could maintain.


If a project area has a local organization which meets or

can-be convinced to meet the above requirements, then the



We used comparative landholdings to distinguish large and small farmers
(see Table I-11, Volume I, page 25.)
2 It should be stressed that wealth is not the only index of a significant
social stratification calling for particular attention. We found tribal
and religious groupings that also called for special allowances.










project can use positive incentives to help strengthen its

internal management, leadership and coverage of potential pro-

ject beneficiaries. This can take place through training,

temporary subsidies, the use of the organization for distribu-

tion of inputs, marketing assistance and extension services.

Local organizations may also be able to perform certain added

functions -- e.g., credit and extension services to small

farmers. This approach has been successful in the Directed

Agricultural Production Credit Program in Latin America.1


If there are no viable local organizations to carry out

the tasks mentioned above, then projects have two alternatives.

First, local promoters can be involved in building local organi-

zations.2 A second approach is to encourage formation of local

institutions at later stages of project development, using the

incentives of the project to foster such organizations.3 One

useful method may be the use of credit, extended through groups

rather than through individuals, to build local associations

which may over time turn into more formal local institutions.4



See the CREDICOOP write-up, p. K-12, Volume II.

2 See the DESEC project write-up, p. G-2, Volume II, for a description'of a
successful local organizer.

3 The Caqueza project in Colombia encountered difficulty in launching local
organizations. Hence, the project began with an individual focus, and over
time (without much encouragement from project staff) small farmers requested
and participated in the formation of an input center and marketing coopera-
tive. See the Caqueza Project write-up, p. H-2, Volume II.

4See the Nigeria Tobacco. Company, p. F-13, Puebla, p. J-2, and Plan Maize,
p. J-17, Volume II, for discussions of credit groups.










Our data did not allow a detailed analysis of other key

questions concerning local organization (the optimum size,

regional groupings, etc.). However, it was clear from those

cases examined that ideally the local institution should be

locally controlled (perhaps with .outside technical assistance)

and that most of its members should know one another personally.

If there is a need for an affiliation with higher-level group-

ings, these should be accountable to local organizations through

direct or indirect contacts with local participants. In some

cases this has led to non-subsidized purchasing and marketing

units, not only for income benefits, but to increase the bar-

gaining positions and self-help capabilities of small farmers.

For project success, however, it is the local organization,

at the lowest geographic level of the project, which is most

important in generating local involvement and resource commit-

ment to a development project.


AID and other international donors have placed a high

priority on institution-building in the past. However, insti-

tution-building should not be viewed as an end in itself.

Rather, the focus should be on whether existing small farmer

organizations can be used or new ones are needed as a means

to equip small farmers with the wherewithall to help themselves.

With the understanding that local organizations can be vital.

to project success, the strengthening or.creation of such

institutions can be integrated into the other necessary phases-

of the design and implementation process.









A Process for Project Design


Collecting the Necessary Data


Much of the knowledge necessary for meeting the three

sets of data requirements described above resides with the

local population. A systematic and cost-effective method of

extracting this knowledge and making it available to project

planners is a requirement particularly for large, multi-dimen-

sional projects. Experience with various collection systems

suggests that professional rural development specialists,

assisted by local staff members, can effectively collect data

from small farmers. Working through one crop cycle or agri-

cultural season, they can obtain the necessary information

on social/cultural and agricultural production patterns.


Using small sample surveys and open-ended interviews,

professionals can elicit the views of leaders and influential

farmers on constraints to change as well as their reactions

to the introduction of the development project. Discussion

with local residents about current production patterns should

be supplemented by measurement of the inputs and outputs for

critical crops so that the profitability and risks associated

with existing agricultural practices can be accurately assessed.

To insure that the data will"be used, data collectors should

be incorporated in either the project leadership structure or

at a minimum in the planning and evaluation unit. Much of

the understanding gained from the collection effort will be









reposited mainly in their minds.

This type of data collection may entail nine months of

field work. However, it is more efficient and yields more

operational insights than the commonly used survey. In pro-

jects reviewed, we found little value in large-sample, census-

like surveys, either for project design or as baseline data

for use in later attempts to measure project success.


Using Data Collection to Ease Project Implementation


While data collectors are tracking the agricultural pro-

duction cycle and determining the local social/cultural

dynamics, they can simultaneously be identifying local leaders

and organizations which would be most useful during project

implementation. By establishing a good system of contacts

with these leaders and groups, data collectors can begin to

build a two-way communications system for channeling informa-

tion from the project to participants as well as channeling

participant reaction and ideas on project activities to the

project.


Data collectors must pay particular attention to existing

patterns of landholdings, income and power distribution if

the project is to focus successfully on small farmers and be

effectively integrated into the local institutional setting.

As mentioned above, information should be gathered on the exist-

ing organizational arrangements at the local level to assess









the need for special mechanisms for restricting project bene-

fits to the intended project participants. These arrangements

will vary from village to village and will in all probability

necessitate modifications in project approach, according to

village-specific circumstances.


Both the building of the two-way communications system

and the need for a continuing assessment of local circumstances

that affect operating procedures provide two more reasons for

integrating the original data collectors into the project staff.


Alternative Design Processes


Not all projects require nine months of collection effort

before implementation can commence. If the project is to be

a reiterative research effort (whose goal is to obtain the

information necessary to develop improved recommendations for

increased agricultural production and income), the project

can begin with little more than the active cooperation of local

participants. Various projects have successfully started with

a base of one simple activity -- e.g., the distribution of

fertilizer -- when there was reason to believe that the activity

would benefit small farmers. Through this activity, infor-

mation on the local area can be gathered and subsequently

applied to the design of other project programs.









A Process for Project Implementation


Introduction: The Need for Flexibility


Few projects can survive a rigid blueprint which fixes

at the time of implementation the development approaches,

priorities and mechanisms for achieving success. Most pro-

jects scoring high on success experienced at least one major

revision after the project determined that the original plan

was not working. This flexibility is critical, particularly

if the technology is uncertain or if the local constraints

facing small farmers are not well known. The first require-

ment for an implementation process is the recognition that re-

visions in project planning are desirable and can constitute

attempts to increase the chances of project success.


Obtaining Small Farmer Involvement and Resource Commitment I


We have found that small farmer involvement and resource I

commitment'are key determinants of project success. This

local action can be significantly advanced if project staff

view small farmers as a vital and knowledgeable resource to

be tapped and share with them information collection and

decision-making responsibilities in project implementation. I

To this end, communication links should be established in the U









design stage between data collectors and local leadership

and organizations.


As small farmer perceptions and priorities (as they re-

late to project activities) are being fed into the'project

staff through such an information network, project activities

must simultaneously be monitored. Data should indicate pro-

gress on all component parts of the project, including the

"proving" of the recommended technology and its adaptation to

local circumstances, use of extension methods to spread new

agricultural knowledge, adequate provision of agricultural

inputs, credit and credit repayment programs and marketing

outlets. This data collection requirement and the data neces-

sary to determine if the project is accomplishing its goals-

(and if, in fact, its goals will benefit small farmers) calls

for an ongoing information system.


Ongoing Information Systems in Support of Rural Development Projects


An information system to provide ongoing data should be

a part of the project beginning with the implementation phase.

Such a system should include monitoring, evaluation and diagnostic

services to improve project performance. It is particularly

important to determine the incidence of project benefits.

This can be accomplished through the development and use



1 This is a very brief summary of a detailed analysis of ongoing infor-
mation systems presented in Appendix Two.
I




I38


of an indicator system with low-level staff collectors and

project participants as primary data sources. Indicator

systems require customization for each project; they should

be cooperatively designed by project staff, participants and

professional information specialists.


The size and sophistication of this system should depend

on project complexity and scale; the system's sophistication

should not exceed the capabilities of project staff to collect

and analyze such data. From our review, we found that when no I

pressure or funds were being provided by the outside, the sys-

tem was usually inadequate to meet the elementary needs of

project staff. With outside funding and pressure, the results

were frequently that a lot of data were being collected (some-

times at considerable expense) but little use was being made

of the information.


Because they may not fully understand the reasons for an

information system or how the results will be used, project

staff and participants may not enthusiastically support data

collection requests or promote the utilization of the data to

influence policy decisions. The key is to convince potential

collectors and users of the system that it will provide bene-

fits rather than pose a threat. This is no easy task; however,

it is easier to accomplish if the information system is de-

veloped in the early stage of the project design process.









Making Project Benefits Self-Sustaining


A special concern during the project implementation

phase should be to make the benefit-generating activities of

the project self-sustaining. Too often, we observed the

"balloon effect," whereby the project steamed along so long

as outside staff and funds were forthcoming but collapsed

when they were withdrawn. We believe there are two avenues

to making project benefits self-sustaining that should be

pursued jointly. First, it may be possible to gradually reduce

the cost of providing services by substituting local partici-

pants for expensive "outsiders". This calls for a training

component so that at some specified time local leadership

and capabilities can be developed and employed by the project.

The time frame may be longer than one generation, as small

farmers do not overnight turn into expert business managers;

however, there are cases where gradual substitution of newly-

trained and educated farmers, or members of their families,

has significantly reduced the requirement for development

assistance.


The second component in the move to self-sufficiency is'

a vehicle where the project can recapture some of the income

benefits of the project. This generally is handled by a local

organization which provides services to its constituents

and charges for those services as the participants receive in-

come benefits. Although a local organization may require




40

subsidies in early years, at some point in time it should be
able to meet the expenses involved in providing extension,
credit, inputs and marketing services, and charge participants
for benefits received. This requirement in the process of
implementation is one further argument for the utilization of
local organizations as an integral feature of development pro-
jects.

I

I

I










I

I

I

I









SECTION F

IMPLICATIONS FOR AID AND OTHER MAJOR DONORS





In the above sections, we have identified critical factors

and attempted to delineate a process which, if followed, will

maximize the chances for project success. The purpose of this

section is to be more pointed in terms of how this process re-

lates to current AID (and other major foreign donor) approaches

to project development and implementation. As an introduction,

the following tables present an overview of the role of foreign

donors in the projects we studied.


In this context, it is instructive to compare the perform-

ance of projects that have had a large dose of foreign govern-

ment (national or international) funding in the early years of

operation, with other projects. Table 1 presents details on

how projects ranked on three of our measures -- Overall Success,

Overall Local Action, and the Prospects of Becoming Self-Sufficient

- as well as the source and level of financing for each project.1



1 For purposes here, three projects are excluded from Table 1. Two of these,
the Agricultural Enterprise Promotion Program (PPEA) in Ecuador and the
IBRD Agricultural Development Project in The Gambia, were irrigated rice
projects. They were excluded because in our sample, we found that irrigated
rice projects worked regardless of the process used in project design and
implementation. The National Community Development Service (NCDS) in Bolivia
was dropped because the large AID loan was extended many years after the pro-
ject had been started and developed its own process for successful expansion.






TABLE 1 SELECTED MEASURES FOR RURAL DEVELOPMENT PROJECTS WITH SOURCE AND TYPE OF FOREIGN DONOR ASSISTANCE


Uboma/Nigeria
Tiv Barns/Nigeria
IBRD/ADP/The Gambia
DESEC/Bolivia
PPEA/Ecuador
NTC/Nigeria
CREDICOOP/Paraguay
Biriwa/Ghana
CHIRPP/The Gambia
ARMDP/Nigeria
KTDA/Kenya
Lirhembe/Kenya
Puebla/Mexico
ASAR/Bolivia
NCDS/Bolivia
Plan Maize/Mexico
ZTPP/Nigeria
CAIl/Paraguay
CGPD/The Gambia
FECOAC/Ecuador
MRTC/Kenya
CSC/Ghana
GG/FAO/Ghana
Caqueza/Colombia
MVS/The Gambia
Vicos/Peru
MFC/The Gambia
Denu/Ghana
Tetu/Kenya
Leribe/Lesotho
Cauca/Colombia
GGAP/Ghana
Vihiga/Kenya
Thaba Bosiu/Lesotho
Futuro/Colombia
ORDEZA/Peru

Average4


Overall
Success
Score1

1.854
1.784
1.158
1.034
.983
.969
.659
.575
.384
.327
.316
.306
.299
.277
.043
-.029
-.050
-.118
-.142
-.211
-.258
-.299
-.397
-.419
-.471
-.769
-.800
-.852
-.857
-.896
-1.058
-1.219
-1.230
N.A.
N.A.
N.A.


Overall
Local
Action
Score2

1.650
4.432
1.650
3.011
-2.269
2.601
1.776
2.016
-1.052
-.412
4.107
3.527
.270
4.165
1.536
1.344
-1.730
-1.594
-2.204
-.786
-.614
-.478
-1.120
-1.811
.064
-.234
-1.772
-3.651
-1.973
-.647
-2.567
-3.045
-3.643
-3.718
3.229
-.060


.027 .000


Prospects of
Becoming
Self-Sustaining
Score3


1.435
.727
1.199
.963
.727
1.671
1.435
1.435
-.924
.020
.963
.727
-.216
.256
.256
-.452
.727
-.216
.727
.020
.020
-.688
-.452
-.924
-.924
-1.160
-.924
-.452
--.924
-1.396
-1.160
-1.632
-1.396
-1.637
1.435
.727


Sources of Foreign Funds

Private Commercial
None
IBRD
Private Organization
AID
Private Commercial
AID
German Government
Chinese (Taiwanese) Government
None
IDRD, CDC, Private Commercial
Private Charitable
Private Foundation
Private Organization
AID
None
Private Commercial, FAO
None
None
AID
Private Charitable
Private Charitable
FAO
Canadian Government, AID
Private Charitable
Private Foundation
None
None
None
FAO/UNDP
AID
German Government
AID
AID, IBRD
Private Charitable
AID


Government Projects Receiving more than
$1 Million in Grants or Loans from
Public National or International Donors
in First few Years of Project Operation


No
No
Yes5
No
Yess
No
No
No
No
No
No
No
No
No
Yess
No
No
No
No
No
No
No
No
No
No
No -
No
No
No
-No
Yes
No
Yes
Yes
Yes
No
Yes


.000


SSource: Column 5 of Table


II-1, Volume I.


2 Source: Column 5 of Table III-1, Volume 1.

Source: Column 4 of Table II-1, Volume 1.

SFor projects where data are available.

I 'roj xcli fr or :isti cal4 l ion"l rea m dis djjtd ii te i M M









In Table 2, the scores for projects receiving consider-

able foreign public funding in the early years of operations

are compared with other projects. For all three measures, the

average scores of the projects receiving large amounts of foreign

funding in early years were significantly lower than the aver-

age scores of the other projects.1


TABLE 2 A COMPARISON OF AVERAGE PROJECT SCORES


Overall
Success
Score2


Government projects receiving more
than $1 million in grants or loans
from foreign public donors in first
few years of operationI -1.115

All other projects .076

Average of projects included in
the above comparisons -.043


Overall.
Local Action
Score
Score


-2.222

.364


-.028


Prospects of
Becoming.
Self-Sustaining
Score4


-1.066

.112


-.066


SSource: Column 5 of Table 1.
sons discussed in the footnote on

2 Source: Column 1 of Table 1.
sons discussed in the footnote on

Source: Column 2 of Table 1.
sons discussed in the footnote on

Source: Column 3 of Table 1.
sons discussed in the footnote on


IBRD/ADP,
page 41.

IBRD/ADP,
page 41.

IBRD/ADP,
page 41.

IBRD/ADP,
page 41.


PPEA and NCDS excluded for rea-


PPEA and NCDS excluded for rea-


PPEA and NCDS excluded for rea-


PPEA and NCDS excluded for rea-


1 t-ratios for the differences in means between the two groupings were -2.72,
-2.37, and -2.60 for success, local action, and the probability of becoming
self-sustaining, respectively, All three t-ratios are significant at the
five percent level.









In short, the government projects included in our sample U

that received considerable funding in the early years of opera-

tion do not appear to be turning out well. One possibility is

that serious deficiencies exist in the current design and imple-

mentation processes of AID and other large donors. In the follow-

ing paragraphs, we give some thoughts on these deficiencies and

suggestions for improvement.


The Time Constraint


Past behavior of AID and other large donor agencies sug-

gests that time is a more serious constraint than the lack of

funds. As we have demonstrated, good project design calls for

a considerable knowledge of local circumstances, both techno-

logical and social, both static and dynamic. We also indicated

that in successful projects, the small farmer is involved and

local organizations are either brought in or developed at var-

ious project stages. All of these -- the acquisition of know-

ledge on local circumstances, the involvement of small farmers

and local organizations -- take time. AID appears constrained

as regards time for at least two reasons.


The first is the pressure to get annually appropriated

funds committed to projects and spent. This objective, which

seems to stem largely from the fear that Congress will reduce

AID appropriations in following years if this year's funds

are not committed, often seems to be given higher priority than

concerns over whether or not projects will be successful. The

second time pressure, as counterproductive as the first, is
.. ^ ' ** *- -U









the apparently felt need to demonstrate quick and broadly

significant results.1 Our work suggests that with abundant

resources, it is not difficult to produce immediate results,2

but usually this is accomplished-at the expense of small

farmers and local institutions and frequently leads to project

failures. It is done at the expense of small farmers in the

sense that immediate effects are easier to achieve through work

with the larger, more progressive farmers. It causes the demise

of local institutions that cannot compete with heavily subsi-

dized project activities. It often leads to ultimate project

failure because implementers often must impose a new system on

a local area rather than go through the time-consuming process

of working with local people and their leaders. We have alluded

to the balloon effect once before: it is appropriate; once

the external money stops and the foreigners pull out, the sys-

tem or network made possible by the external funding collapses.


The Knowledge Constraint


A second reason why the large national and international

donors score poorly on success in the types of development pro-

jects we examined is the belief of foreign and host government



1 Other major national and international donor agencies appear susceptible
to these same pressures, although for different reasons. While the largest
donors do not run the risk of having their funds cut off if they are not
committed, there is a pressure to "recycle" funds, and regrettably, the capa-
bility to generate sound development projects severely constrains the amount
of funding that can be used for this purpose.
2
In recent years, this has frequently been accomplished by providing sub-
sidized fertilizer through subsidized credit programs and often by means of
a subsidized distribution network.








staff members that they know what is best for small farmers. n

Even more serious is their unwillingness to enter into a mean-

ingful dialogue with small farmers concerning their problems

and how the project might assist them. Particularly in Africa, 3

where the foreign degree and foreign expert are treated with

undue reverence, it is time to set aside the notion that

"educated" outsiders (even those with excellent tech-

nical qualifications) know all the answers to problems of low

rural productivity. This attitude is reinforced when short- I

term consultants are brought in to provide project design or

implementation assistance. While these people can be helpful

in certain circumstances, it has been our experience that they

are not a substitute for an information exchange between small

farmers and project staff that truly operates in both direc- I

tions. When such exchanges have occurred, the outside.experts

have usually admitted that they learned as much as or more than

did the farmers. 3


Assumptions Regarding Small Farmer Behavior Changes 3


Directly related to the knowledge constraint is the fail-

ure of projects to define clearly what behavioral changes by

small farmers are required if project activities are to suc- -

ceed. Desired behavior changes must be defined at the start

of project design, rather than "assumed" in design work, as I

was the case in several large donor projects. In contrast, g









some projects funded by private commercial firms carefully

spelled out behavior change requirements and entered into a

dialogue with farmers to determine barriers to making changes

and how to overcome them. Specification of what types of

farmer involvement and resource commitment are needed is funda-

mental if a project is to achieve its objectives.


Restrictive Benefit Measures


Most large rural development projects relied on highly

restrictive benefit measures: some used cost/benefit ratios

exclusively, others focused on cost per participant, and still

others measured aggregate output for the area as a whole or

assessed factors such as the repayment rates on loans extended.

Frequently, such limited benefit measures become ends in them-

selves. They limit the project staff to seeking results pre-

scribed by these indicators. More broadly defined success

measures could provide the incentives needed to prod the pro-

ject staff into thinking in terms of how a project might build

self-help capabilities, increase agricultural knowledge and

promote self-sufficiency as external funds are withdrawn. When

these measures are introduced into project analysis, there is

the possibility that more projects might begin to deliberately

involve the local population in decision-making and resource

commitment. Using at a minimum the success measures we have

defined and evaluating AID projects by these measures would,

we believe, constitute an improvement over present evaluation

procedures.








The Need for Ongoing Information U


Assuming that a project staff is committed to monitoring, I

evaluating and readjusting project approaches to improve results,.

there is also a need for a continuous flow of specified infor-

mation, a system of analysis and a method of moving from recom-

mendations of the planning and evaluation units into project

revision. Insofar as we could determine, there are few if any I

ongoing information systems of this sort presently in operation. i

It is time AID made provision for experimentation with low-cost

indicator systems; once the findings are in, provision should

be made for such systems in all AID-sponsored projects -- infor-

mation to support the daily operations of the project, as well

as to track success and to recommend adjustments to existing

approaches.


The Need for Flexibility


Information, good intentions and local action will not

save a project locked into a rigid and poorly designed format. i

Flexibility is required, not to change overall-objectives

but to change approaches, organizational vehicles, methods I

of extension and adaptive research until solutions to pro-

blems are found which are proven and accepted by small farmers

in the area. Because of the manner in which projects are I

funded, or perhaps more because of an internal dynamic which

overtakes large projects with many foreign experts, it is I

difficult to change directions, even in failing projects. M









We believe that if post-mortems were conducted, the inability

to listen, to involve, to obtain resource commitments and to

change project design would explain many of the shipwrecked

development projects which have been initiated in the Third

World.


Certainly, one clear message comes out of this that bears

directly on AID and other donor project justification pro-

cedures. Far too much time and paper is devoted to detailing

exactly how a project is going to operate throughout its life-

time. The detailed cost-benefit work on how each project com-

ponent will operate turns out in retrospect to be meaningless.

While it makes amusing ex-post reading, it frequently has the

negative impact of freezing in a project design that simply

has no chance of working.


The Most Valuable Message


One point comes out of our work that is of such importance

as to warrant frequent repetition. The most valuable assis-

tance a foreigner can give small farmers will rarely be large

amounts of money for machinery or infrastructure development.

Rather it is a plan, based on the realities of the small farmer's

own situation, whereby he can move himself ahead without becom-

ing dependent on outside foreign assistance.










General Conclusion


Our general conclusion, and indeed the one to which our

research is addressed, is that getting the benefits of develop-

ment to the small rural producer in a manner which can become

self-sustaining will require fundamental changes in the pro-

ject identification, design and implementation procedures of

AID and other external assistance agencies. Projects have

failed frequently in the past because of mistaken conceptions

or inadequate information on the small farmer's priorities and

the alternative mechanisms by which they might be realized.

Regrettably, these are not things an outsider can uncover in

the short time frame during which external assistance projects

are usually generated. It calls for a detailed knowledge of

the thinking processes and behavior of the small farmer and

it requires the small farmers's trust; these things take time

to develop.


Gone should be the initial ten-day, ten-man expert team

that flys in, around and out of a country to identify projects

consisting of more than ten million dollars. Gone should be

the amazingly detailed 150-page reports which specify exactly

the procedures and steps to be taken when the project is imple-

mented. Gone should be the extremely long and detailed outside

evaluation of projects based upon the inputs used, construc-

tion completed and money spent. In its place should be a

healthy appreciation for the perceptions, interests and risk

considerations of small farmers.









At this point, a fundamental question needs to be addressed:

given the constraints under which large donor agencies operate,

is it reasonable to think they can carry through on the process.

we have outlined to design and implement projects for small

farmers? This is not a question that can be answered at this

point in time, for only now is there growing awareness that the

traditional procedures are not adequate.


In recognition of the time, knowledge and procedural con-

straints under.which large donor agencies operate, we offer

several possible approaches that are consistent with the pro-

cess we have outlined that these agencies might follow.


One possibility would be to take an "organic" approach

to project development. This would involve identifying a very

simple activity that would clearly be of assistance to small

farmers.' The first year or two of the project (during imple-

mentation of the initial project objective) would be used to

determine what might further be done to involve and benefit

the small farmer. Although the approach calls for individual

attention to the needs of each local area (to insure that rele-

vant local constraints to the adoption of new technology are

overcome), it does not prevent national or regional programs

from being developed and implemented. For example, there is no

a priori reason why this approach could not be attempted



1 A warning note should be inserted here: our study suggests that this in
itself is no easy task.








simultaneously in a number of separate geographic locations in

a country, since it is the process by which project activities

are designed and introduced at the local level which are critical

to success rather than the number of localities being assisted

by a small farmer development program.1


A second possibility is to assume that large donor agencies,

because of constraints imposed by operating procedures and ex-

ternal pressures, are unable to be effective directly in the

design and implementation of projects in accordance with the

patterns suggested by our findings. This would suggest that the

attention of the donor agencies might better be focused on iden-

tifying or creating and supporting smaller institutions operating

in developing countries that are in a better position to follow

the process we have outlined, and in so doing, operate as inter-

mediaries for the large donors. It may be that this will require

as dramatic a change in the operations of large donor agencies as

would be necessary for them to follow the process we have outlined

directly. However, we see no choice other than these two alter-

natives, if large donors truly wish to help small farmers.



1 Of course, this process does require high-caliber people -- both locals and
outsiders -- and this can and does serve as a real bottleneck to the develop-
ment and implementation of good projects.







ANNEX A

PROJECTS INCLUDED IN THE STUDY




M M M R M M M Mm m


Volume II
Annex and
Page No.

AFRICA

GAMBIA .


B-2


Crop-specific


Chinese Irrigated Rice Production
Project, Upper River Division

IBRD Agricultural Development Pro-
ject, MacCarthy Island Division



Mixed Farming Centers (nationwide)



Mixed Vegetable Scheme, Western
Division


Confectionary Groundnut Package
Deal, Western Division



Christian Service Committee's Agri-
cultural Program, Northern and
Upper Regions

Ghanaian-German Agricultural Pro-
ject, Northern and Upper Regions


Ghanaian Government/FAO Fertilizer
Use Project, Volta Region


Taiwan


IBRD; government of The
Gambia



Government of The Gambia



Government of The Gambia;
Gambia Cooperative Union;
Freedom from Hunger

Gambia Cooperative Union;
government of The Gambia



Christian Council of Gambia;
World Council of Churches


West German government;
government of Ghana


UNDP/FAO; government of
Ghana


Project


Type


Sponsor


Irrigated Rice Production, with
component for designing an inte-
grated agricultural development
project

Farmer training and extension
follow-up with the use of para-
professional workers

Introduction of onion production
and the creation of women's
farmer associations

SCrop-specific innovations through
the cooperative movement



SIntroduction of simple techno-
logical innovations through agri-
cultural stations

: Fertilizer distribution evolving
into an effort to help small
farmers

Cooperative development, and the
introduction of improved maize
seed and fertilizer use


B-12




B-22



B-31



*B-40


GHANA


C-2


C-15



C-24




-----mm---- M - --



Volume II
Annex and
Page No. Project Type Sponsor

GHANA (Cont'd)


C-31



C-38


Biriwa Development Project, Cape
Coast Area


Denu Shallots Project, Denu Dis-
trict, Volta Region




Vihiga Special Rural Development
Program, Western Province

Tetu Special Rural Development
Program, Central Province


Lirhembe Multi-Service Coopera-
tive, Western Province



Kenya Tea Development Authority,
Highland areas


Maasai Rural Training Centre
Kajiado District


Development of fishing village
through commercial and community
development activities

Short-term and medium-term credit
for expanding shallot production




Integrated rural development pro-
gram

Experimental agricultural exten-
sion project to reach less-
progressive smallholders

Agricultural and social develop-*
ment project in a small geogra-
phic area initiated by local
Member of Parliament

Government-controlled commercial
effort to expand production by
small farmers

Improve cattle production prac-
tices, training of Maasai, and
establishment of commercial
activities


West German government;
government of Ghana


Local Cooperative; Agri-
cultural Development Bank
of Ghana



USAID; government of Kenya


University of Nairobi;
government of Kenya


-NOVIB, Dutch charity organ-
ization; government of Kenya



Government of Kenya; British
Commonwealth 'Development Corp-
oration; IBRD/IDA

National Christian Council
of Kenya


KENYA


D-2


D-ll



D-20




D-31



D-43







Volume II
Annex and
Page No. Project Type Sponsor

LESOTHO


Thabu Bosiu Rural Development Pro-
ject, Thaba Bosiu District


Leribe Pilot Agricultural Scheme,
Leribe District


Abeokuta Rice and Maize Develop-
ment Project, Western State



Nigerian Tobacco Company,
Western State


Zaria Tomato Production Project,
North Central State


Intensive effort to improve agri-
cultural production, rural infra-
structure and conservation practice

Experimental project to develop
technological packages and
approaches to improve agricul-
tural production, for replication
in other parts of Lesotho


Introduction of improved inputs,
including mechanization, through
farmer groups


Introduction of flue-curing
through Farm Family Units


Irrigated tomato production,
introduced through farmer asso-
ciations for commercial process-
ing


IBRD/IDA; USAID; government
of Lesotho


UNDP/FAO; government of
Lesotho


Western State and Federal
Ministry of Agriculture;
FAO and USAID in earlier
stages

Nigerian Tobacco Company,
British American Tobacco
Company

North Central State Govern-
ment; FAO; Cadbury, Ltd.


Tiv "Bams" and Farmers' Associa-
tion, Benue Plateau State


Uboma, East Central State


Indigenous small farmer savings/
credit program

Integrated rural development pro-
ject


None


Shell-BP Nigeria;
East Central State Govern-
ment


E-2



E-12


NIGERIA


F-2




F-13



F-23


F-32


F-42







Volume II
Page and
Annex No. Project Type Sponsor

LATIN AMERICA


BOLIVIA


G-2




G-15




G-24


DESEC, Center for Social and
Economic Development (nationwide)



ASAR/ARADO Potato Production and
Seed Improvement Project, Cocha-
bamba


National Community Development
Service (NCDS) (nationwide)



Caqueza Project, ICA Rural
Development, Eastern Cundina-
marca

ICA Rural Development Project for
Northern Cauca, Valle de Cauca


Future Para La Ninez (Futures
for Children), Antioquia


Promotion of rural base institu-
tions and rural assistance agen-
cies which sponsor income-generat-
ing projects by small farmers

Promotion of yield-increasing
potato technology on a risk-
sharing basis with organized
small farmers

Community development in the
rural sector



Pilot project to adapt high-yield
crop technology to small farm
requirements

Pilot project to adapt high-yield
crop technology to small farm
requirements

Community development program
promoting self-help projects which
benefit children


MISERIOR (German Catholic
Bishops); OXFAM; other pri-
vate European donors; Inter-
American Foundation

Association of Artisan and
Rural Services (ASAR), agency
of DESEC; MISERIOR


National Community Develop-
ment Service; government of
Bolivia; USAID


Institute of Colombian
Agriculture (ICA), USAID


Institute of Colombian
Agriculture (ICA); USAID


Future Para La Ninez;
government of Colombia
(Ministry of Health)


H-2



H-17



H-28




mMM-MmM m m mm M mm


Volume II
Annex and
Page No.


Agricultural Enterprise Promotion
Program (PPEA), Guayas Basin


FECOAC Directed Agricultural
Production Credit (nationwide)



Plan Puebla, State of Puebla


Plan Maize, State of Mexico


Production and infrastructure
development credit for agricul-
tural cooperatives

Directed agricultural production
credit to small farmers



Pilot project to adapt modern
corn technology to small farm
requirements in dryland regions


High-yield corn production credit
program


Financial Funds Department,
Central Bank; USAID; National
Development Bank (BNF)

FECOAC; Cooperative Bank;
SAID



International Maize and
Wheat Improvement Center
(CIMMYT); Rockefeller Founda-
tion

State of Mexico, Department
of Agriculture and Live-
stock Development (DAGEM)


PARAGUAY


CAH Associations of Agricultural
Credit Users


CREDICOOP Directed Agricultural
Production Credit



The Community of Vicos, Depart-
ment of Ancash


ORDEZA/RDD, Rural Enterprise
Development, Huaraz, Department
of Ancash


Technical assistance, credit,
and group marketing project with
organized small farmers

Directed agricultural production
credit to small farmers



Community development and rural
modernization via democratic
institution-building in an
indigenous society

Planning, construction and financ-
ing of income-generating projects
in rural communities


Caja Agraria de Habilitacion
(CAH); government of Paraguay


CREDICOOP; CUNA; SAID




Cornell University; Peruvian
Indigenous Institute



Rural Development Division
of the Peruvian Earthquake
Relief Agency; government of
Peru, SAID


Project


Type


I-2



1-14


MEXICO


J-2


J-17


Sponsor


K-2



K-12


L-2


L-14


PERU




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