Tuesday, October 28, 2008

Evaluation of African organic farm products-export programme

This evaluation of an organic agricultural products export programme,in Africa, may be of interest to readers. The complete booklet isdownloadable from the SIDA website and from:http://www.grolink.se/epopa/Publications/Epopa-end-book.pdf

Extract from Executive summary pasted below.
Export Promotion of Organic Products from Africa. An evaluationof EPOPAseries: Series - Sida Evaluationissn: 1401-0402isbn: 91-586-8864-1format: Booklet
EPOPA is a programme for development of production and export ofdifferent organic products from Africa. It is a trial and researchprogramme and comprises three projects in Uganda and two in Tanzania.The rationale of the evaluation was to consider the programme fromdifferent aspects such as the EPOPA concept, achievements of theprojects, the performance of the different actors as financier,consultants, exporters, field officers, small farmers etc. Based onthat draw conclusions and make recommendations.
Executive SummaryThe Export Promotion of Organic Products from Africa (EPOPA) programmewas initiated in the mid-1990s by Sida. In the period 2002 to 2007 itwas considerably scaled up and subsequently phased out in 2008. Itoperated in Tanzania and Uganda and briefly in Zambia. EPOPA was a"development through trade" programme with the objective of improvingthe livelihoods of rural communities through exportsof organic products. Exporters were the main partners and theprogramme worked directly with them to develop exports of organicproducts. In addition, the programme worked to support emerginginstitutions in the organic sectors.A summary of key data for the export projects in Tanzania and Ugandashows that farmers have sold organic products for approximately US$15million per year and the total export value is more than double thatamount. A total of 110,000 farms have participated, but only 80,000have actively delivered products to the exporters. Considering thesize of households, it means that some 600,000 peoplehave been beneficiaries of the programme. The cost of the programmefor the Swedish taxpayers is one cup of coffee per taxpayer....Some projects are yet to reap the benefits from EPOPA support, as theyare not yet certified and therefore can't access the organic market.EPOPA leaves behind a very vibrant organic sector in Uganda and anestablished sector in Tanzania; 30 export projects in operation;consolidated organic movements; internationally accreditedcertification bodies in Uganda and Tanzania; and finally a largenumber of people with increased understanding of organic agricultureand capacity to develop the sector. In Zambia EPOPA worked too short atime to make any strong impact.In order to set up a successful export project, there was a need tofind the right mix of the following:– a willing and capable exporter– a production base, i.e., willing farmers in an area with suitableconditions and basic knowledge of production– market demand– products that could be competitive in quality and priceHardly any funds were made available for investments or otherincentives for the participating exporters. The focus of the programmewas to create viable business,and EPOPA assisted the actors through awide range of services, from farmer and field officer training tomarketing and certification.The participating farmers were smallholders. Most of them were"organic by default"'; i.e., they used almost no agrochemical inputsbefore participating in the programme. Organic farming itself posedfew problems for the participating farmers. Despite the great varietyof crops and the large number of farmers, there were no insurmountableproblems in the production or with pests.There were expectations from the project implementers, Agro Eco andGrolink, that the farmers would respond to the project by theimplementation of all the positive features of organic farming(improved crop rotations; better nutrient recycling; cover crops andgreen manures and soil conservation) but that didn't happen to a verysignificant extent. Farmers experienced improved food security,largely as a result of increased income, as well generally improvedlivelihoods, as demonstrated by improvement in housing, childrenattending school, and investments in farming.A number of projects were very successful; some were moderatelysuccessful; a handful completely failed. Reasons for failure includedlack of commitment from the exporter or the owners of the company;problems in food processing; a vanishing resource base (for thefishing projects); and management problems. Successfulprojects featured a well-managed and committed company, good fieldwork, and farmers seeing the exporter as a partner and a good market.Generally, EPOPA was more successful in Uganda than in Tanzania. Thisis attributed to implementation and management factors, but it ismainly the case that logistics and geography are more challenging inTanzania and that Uganda has more enabling policies and a betterbusiness climate.EPOPA worked very little with the governments, although towards theend of the programme this changed and EPOPA participated in theorganic-policy development of the countries. The importance of propergovernment policies is felt by the organic sectors in East Africa. Itconcerns both the lack of supportive policies,but perhaps even morethe existence of policies that are harmful to development.Therefore, a programme like EPOPA, despite its private-sector focus,also has to engage in policy dialogue and action.The continued strong demand of organic products and the increasedpolicy support contributed to the success of EPOPA. Other importantsuccess factors were:– Clear market focus of the projects and focus on tangible results;using commercial actors to link farmers to markets– Integrating extension work into the commercial chain so that theexporters are responsible for extension work, financed by income fromthe trade– The use of group certification to facilitate the certification processCentral to the implementation of the projects was the establishment,by the exporter, of a field organization for extension work and forinternal control of issues related to certification. All in all, thefield organization worked, but most of its energy was absorbed bycertification issues, and the efficiency of the agronomic advice inmany of the projects can be questioned. This is not a main interest ofthe exporter.A main challenge to the programme was finding competent and committedexporters. The organic market represented something new for theexporters, and it took quite a while to adjust to. Project periodswere three years, but this clearly was too short in most cases;agricultural projects need longer time in general. Extensionswere awarded mainly to improve the sustainability of the venture.Value addition in developing countries is an appealing proposition,but it is not always so easy to do. Many of the projects that includedvalue addition experienced big challenges, inparticular regarding product design and imported packaging materialsand inputs. In most of the projects, large groups of farmers wereinvolved, and they did experience a substantial increase in income,expressed as a percentage. However,especially for those producingbasic commodities, the increased income was not sufficient to liftthem out of poverty. For farmers producing high-value crops, suchas cashew, fresh fruits, and spices, the increased income issubstantial in absolute terms also.The support to emerging institutions, such as local certificationbodies and national organic movements, was successful. There are noworganic standards and internationally accredited certification bodiesin Tanzania and Uganda and the national organic movements are involvedin local market development, advocacy,and policy development.Working with the commercial sector to develop agri-business involvingmany smallholders has proven to be successful. One needs to keep inmind that the business objectives of the commercial actors may not bethe same as the objectives of development cooperation, but with gooddesign, dialogue, and pragmatic implementation, they can work welltogether.Much of what was accomplished by EPOPA could also be accomplished byother programmes, also without the organic component. However, theorganic markets do provide special incentives. The organic productionsystem is well-adapted to African smallholders and is sustainable.Apart from the effects on income, organic farming also produces publicgoods and ecosystems services such as carbon sequestrationand biodiversity. In future development programmes such services suchpublic goods should be part of the package. The EPOPA programme, orprogrammes with a similar market-led approach, can be recommended formany other African countries. The market is there and the farmers arethere.

Hydropower in Uttarakhand: Is `Development' the Real Objective?

This superb Article by Sri Dunu roy, a man who as the EPWtruly says is known for his outstanding work in rural development and inspreading environmental awareness.The facts that he has stated including the ones regarding all the dam sitesfalling within Seismic Zone IV bordering Zone V, or in Zone V near centralthrusts or regarding having ignored or being silent on so many issues likeenvironmental assessment, damage to flora and fauna etc are in themselves ofgreat relevance. Similarly, the examples he has quoted from USA, the ultimatelocation for scientists and development managers are equally revealing andstartling.The alternatives he has suggested have come from his long experience in thesefields and would prove highly beneficial for our country if they are properlyadopted.
The entire article can be downloaded from: http://www.epw.in/uploads/articles/12742.pdf

Mobile poverty research: Substitutions for mobile phone services

Does owning a mobile phone drive people further into poverty, or is it advancing the livelihoods of the poor? A study conducted by Kathleen Diga in a rural district of Uganda found that owning a mobile phone did both, depending on how it was used.
The research looked broadly at technology spending patterns, specifically mobile phone use in households and what people were giving up to get mobile phones. This ethnographic study in rural Uganda focused on women. The study found that the women got income either from husbands – about $1 a day, or from small business. In 2007, when the study was conducted, 3 minutes off-peak talk time on the same network cost about 40c – which equated to about 40% of the daily household budget.
Given this substantial comparative cost of communication, the question was hence what were they giving up in order to use mobiles? Giving up travel, for instance was seen as a benefit given the costs of transport. Other households were giving up store-bought food – sugar, flour, oil, etc. In this case, those who had gardens could substitute with home produce while those without gardens actually gave up food.
Women were still disempowered in terms of access to the mobile phone because in most instances the male head of the household controlled it. An interesting question not covered in this study is the phone as a status symbol, because it would appear that even when possessing one was seen as beneficial, the costs of operating were eating into the meager household income. Hence it would seem that the benefits might be overstated.
It emerges that whereas there are organized groups that are moving ahead in terms of innovative and cost-effective phone usage, at the level of individual usage, where the phone is already in the hands of an individual, there is little concern with education/ information outreach and training to reduce costs and increase efficiency and benefits. This need for outreach must be the onus of service providers, NGOs, or governments through regulation and licensing procedures.
Consumer protection organizations that should be taking up this fight are frequently weak and ineffectual. The mobile phone, like any form of technology needs to be used appropriately, and its users empowered, for it to yield any positive change.

Increasing World Food Prices: south Asia at Risk

Expanding existing social assistance programs that directly targets poor households is necessary to protect South Asia’s poor in the face of a dramatic increase in global food prices, a World Bank South Asia expert said today.Shanta Devarajan, World Bank Chief Economist for South Asia, said many countries in the region have cash-transfer programs and schemes that provide grains at lower costs directly to the poor. He advised the governments “to enlarge the safety nets by increasing the amount of cash- transfers and the number of people receiving low cost grains while still passing on the price increase to other domestic consumers who can better afford it.”World food prices have been increasing rapidly since 2006, and the rate of increase during 2007 had been much higher than average. According to the Food and Agriculture Organization (FAO), overall food prices have increased by 75 percent in dollar terms since 2000. “Most countries in South Asia are net importers of food and have suffered severe terms of trade shocks of 1 percent of GDP,” said Devarajan. The foreign exchange earnings and international purchasing power for these countries have also decreased.Devarajan believes that food prices are likely to continue to increase in the near future. He attributed this phenomenon to raising standards of living in countries like China and India, increased use of food crops for bio-fuels and animal feeds, and increased oil and fertilizer prices.In South Asia, which has the largest concentration of poor people in the world, the increase in food prices is particularly damaging since food accounts for a substantial share of poor people’s income. South Asian countries, however, have very few options available to deal with the challenge. Devarajan advised that governments have to be careful that such measures do not end up hurting those they want to help.

Shantayanan Devarajan, World Bank Chief Economist for South Asia talks about the impact of high food prices on South Asian.
Options for South Asian Governments
Price Controls:
In the past, South Asian governments have resorted to imposing price controls which actually created food shortages that ultimately hurt the poor. “Imposing price controls benefits the middle-class families and the non-poor,” said Devarajan. If food prices are controlled, it makes farmers less likely to produce crops to meet the increasing demand. This will have an even more adverse impact on food prices.
Devarajan also recommended against untargeted subsidies, which are mostly counter-productive as they put bigger stress on the budget because governments have to pay for the support. Borrowing from the central bank is one way of financing the subsidies, but this lead to higher inflation.Devarajan said targeted subsidies are a better option. They have been used in South Asia to provide relief for poor families in the past, and, by definition, they are not universal and exclude the better-off who can afford to pay market price. As an example, he cited Bangladesh where mostly poor people consume low-cost coarse grain. The government was able to provide relief following the recent floods and cyclones by targeting poor people with this type of grain.By using targeted subsidies, governments will be able to protect poor families without distorting the relative prices of food products, while reducing the overall cost to the budget.
Long-term Solution:
Even with targeted subsidies, many of the programs will be seen as permanent if food prices continue to rise. Targeted or untargeted, eventually these programs will be a drain on the treasury. Therefore, such schemes have to be time bound, and governments have to develop a long-term strategy to address food price increases.One of the best ways to reduce food prices is to increase agricultural productivity. The World Development Report 2008, entitled "Agriculture for Development," has called for a revival of agriculture in South Asia.
Suggestions for South Asia
Most affected by price increase:Bangladesh, which imports a substantial portion of major grains consumed by its people, has been particularly badly affected by the continued increase in world food prices. Natural disasters in the past year – two major floods in July and August 2007 and a cyclone in November 2007 - destroyed about 2 million metric tons of rice crops.Bangladesh is currently importing rice from its immediate neighbors, India and Myanmar, to meet the shortage. Devarajan pointed out that this has already created a problem because, several times in past few months, India has imposed ban on rice exports or has increased the minimum export price, and each time, the price of rice in Dhaka spiked. (Read Beggar thy neighbor?)However, Devarajan is confident that Bangladesh “has the potential to cushion the blow on its poor. The country has very well run social assistance programs that have worked well during the floods and cyclone of 2007. At the same time, Bangladesh should try to avoid measures such as price controls or untargeted subsidies even if they are politically popular,” cautioned Devarajan.
New Government:Unlike Bangladesh, Pakistan does not have a widespread social assistance program that targets the poorest of the poor. In addition, most Pakistani families consume the same kind of wheat, making it difficult to target poor people. Any subsidy on wheat will thus be an untargeted subsidy. Since a newly elected government has just come into power, it is imperative that it withstands pressure to act in ways that may not be efficient in addressing the needs of poor.During a recent visit to Pakistan, Praful Patel, World Bank Vice President for South Asia, said that high international prices for petroleum and food commodities are creating challenges for the Pakistan’s economy. Patel discussed with Pakistani leaders ways to protect the poor as domestic prices are adjusted. Patel offered World Bank technical assistance to build upon international best practice in responding to the current situation.“Any adjustment will be painful,” said Patel. “But there must be an appropriate safety net for the poor. The incoming government has requested our support, and we will help ensure there are smart subsidies to the poorest. These must be well targeted and efficient programs, including cash transfers, where leakage is minimized. We know this can be done because we saw the excellent response from the government after the earthquake where affected families were provided relief and cash transfers quickly and effectively.” (Read More)
Phase out Minimum Support Price (MSP):The Indian government buys wheat from farmers at a Minimum Support Price (MSP), which is highly distortionary and contributes to high costs for its budget. Devarajan suggests that the government should use this opportunity to do away with this policy, since the world food prices are about the same as MSP. “The subsidy has a high leakage to higher-income groups,” he said.
Sri Lanka:
High Inflation:Devarajan said Sri Lanka is also a net importer of food products, and food price inflation is estimated at 34 percent. However, the country is already facing high inflation with an average of 20 percent, independent of food prices. The high inflation is partly due to government borrowing a large amount of money from the central bank.
Scale up:Nepal also depends on food imports from India and other countries to manage its needs. Devarajan said “Nepal needs to expand already existing social assistance programs in rural areas.” However, he pointed out that Nepal has a limited social assistance program to protect the urban poor.
Urban and Rural Poor
While almost all urban poor people are net food consumers, the situation with the rural poor is different. Farmers who are net producers are benefiting from higher food prices. However, farmers with small arable lands and landless laborers are net consumers of food, as they may not produce sufficient amounts for their families’ requirements.

Global Financial Crisis: Effect on South Asia

October 21, 2008 - Over the last 10 years, South Asia witnessed a rapid and robust growth of more than six percent per annum, which enabled millions of people to escape poverty. In 2006, the region recorded a growth rate of nine percent – the highest in the last 25 years.However, in the last five years, price increases of global commodities, especially those of oil, metal, and food, took a toll on South Asia. Budget deficits widened and trade balances worsened. With this, the growth softened and inflation reached double digits. Before the region could recover from the adverse impact of high commodity prices, the global financial crisis has come knocking. The cascading effects of these crises will present daunting policy challenges to South Asia.The adverse impact has the potential to reverse elements of the impressive development gains that South Asia has achieved over the past decade and impede its progress towards achieving the Millennium Development Goals (MDGs).“The slowdown in the global economy will adversely impact South Asian exports and thus foreign earnings,” said Sadiq Ahmed, World Bank Acting Chief Economist for the South Asia region. “Coupled with lower foreign capital flows and domestic investment, this will significantly reduce growth for South Asia.” (Download Analysis - pdf)

Read analysis about the global financial crisis and its impact on South Asia