Donor Contributions – Enhancing Infrastructure Support

ThaiThresherOptTechnical Support & Micro-Finance: Donor funded projects could make some major contributions to facilitating the development of the community support services. One area would be working with the small village enterprises to expand their capacity to assist the farmers with supplying inputs, buying produce and even production credits. This could represent an enhancement on the USAID funded CARE implemented Rural Enterprise Agribusiness Project (REAP) in Zambia. This type of project could be expanded to allow the village enterprises to manage most of the production credit assistance as they have been doing. It might fall under the informal credit conditions, but they are able to deal with farmers as the individual entrepreneurs they are and have a reasonable good credit repayment record. As mentioned above, the real interest may be substantially lower than the quoted rate depending on the games the producers may play and in-kind discounts available for timely high quality in-kind payments. It must be appreciated that most institutional sponsored production credit programs trying to subsidize interest rates have not been sustainable without a continuous influx of funds, as the farmers played the same games with the donor projects as they did with the village enterprises, and the donor projects do not have the mechanism to increase interest rates to cover the additional administrative costs. The bottom line is it is better to quote high interest rates and discount for fast repayments, then quote low rates and get caught with excessive supervision costs.

In assisting with village retail outlets, care should be taken to provide any short term credit needed to make cash purchases of produce at the end of each growing season. This was where the REAP project experienced difficulty after continuing for two years beyond CARE’s facilitation, while the follow-up project was caught up in political wrangling. However, these village enterprises could be depended upon to deal with the whole mix of produce being grown in a community instead of single commodities such as paprika or cotton as is currently being done with the out-grower schemes in Zambia. This would allow the consolidation of loads being transported out of remote rural communities with the corresponding savings in transport cost charged at the off road premium rates, that can be triple the paved road rates. Transport costs increase with the extent of remoteness and must be absorbed by the smallholders.

Perhaps the projects that could have the biggest impact on smallholder productivity would be those addressing drudgery relief by providing access to mechanization. One suggestion would be to obtain Used Reconditioned 65 hp Tractors as they are being traded-in such as Massey Ferguson 165’s, recondition them, equip them with simple tillage implements as well as trailers, and make them available to individual members of smallholder communities for micro finance credit purchase. The tractor reconditioning could be combined into a training program on tractor maintenance for potential buyers. The buyer would then drift out of farming into the contract mechanization service business. This could also be extended to include small combines such as that shown which are progressively being used for contract custom threshing of paddy in Thailand and elsewhere in Asia and can easily maneuver in one rai (1/6th ha) fields. Such projects would most likely substantially reduce the basic crop establishment time and allow the producers to more quickly return to their field to improve the weed and pest control needed for higher yield or higher quality so they can take fuller advantage of the premium prices available for high valued quality sensitive crops, as part of value chain enterprises.

Donor funded micro-finance projects could assist with funds for increasing the capacity of village shops as well as funds for individuals to obtain the reconditioned tractors, etc. In addition micro-finance could be used to assist individual community members to provide other drudgery relief enterprises such as Grain Mills although the latter is rapidly approaching facto accompli in much of Africa at least to the optimal economic density the economy will support and represent an opportunity missed for the donor community. Micro-finance for capital goods could also use the goods as collateral in case of defaults and have a better chance of becoming sustainable revolving funds than production credits providing consumable inputs that offer no collateral. An interesting and appropriate question would be to evaluate the agronomic impact grain mills have on other farm enterprises including those involved in value chain enterprise promotions. It would make a great Peace Corps Master’s paper.

Infrastructure Development: Other areas where donor projects could substantially enhance the community infrastructure and free labor for improved crop management or reduce costs so smallholder producers could obtain better returns would be Domestic Water Supply and all weather feeder roads. While domestic water supply is fully appreciated for the impact on health, it also reduces the domestic drudgery that could lead to better crop management. An example would be Mityana, Uganda where the water table can be as much as 100 meters below the homesteads and banana/plantain fields. This is too deep for most community resources to dig wells without external assistance that can provide well drilling equipment. Community members, particularly women, in this area have to trek up to two km to obtain water and return including the 100 meter climb back up the hill. This can result in up to 20% of daylight hours being devoted to the exhaustive task of obtaining the minimum World Health Organization recommendation of 50 liters of water per person per day for a couple, with additional time depending on the number of children involved. This again is time taken away from more intensive crop management. This would be good justification for expanding the efforts of UNICEF, Engineers Without Border (EWB), Save the Children, or other organizations equally committed to developing domestic water supplies.

While major roads are fully appreciated by the donors and frequently built, such as the Tan-Zam highway between Dar es DSC03070-webSalaam and Lusaka, it is the feeder roads that most impact smallholder communities and the costs they have to absorb to obtain inputs and market goods. Typically, as reported in Zambia transport costs will triple when leaving the tarmac. This is almost Transparently Justified when evaluating the extra time and fuel required as well as the additional spare parts from the additional wear and tear of bouncing over the rough roads. It can become very severe in areas like the transmigration settlements of Indonesia. Here the roads are so rutted along with streams that have to be forded for lack of bridges or causeways without culverts that the only vehicles that can access the area in the rainy seasons to deliver inputs or obtain produce are 4-wheel drive Land Rover type pickups as shown in photo. This very much limits the volume that can be handled at any time, resulting in higher transport costs that has to be absorbed by the farmers, as once back on the tarmac the produce has to compete with less remote producers and their reduced transportation costs.

Last Revised: 4 April 2006

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