In December 2007, the Executive Board of the International Fund for Agricultural Development (IFAD) requested the Office of Evaluation (OE) to undertake a completion evaluation of the Rural Development Project for the Northeastern Provinces of Argentina (PRODERNEA).

Evaluation objectives, methodology and process. Pursuant to IFAD's Evaluation Policy, the main objective of the evaluation is to assess project performance and impact, seeking at the same time to generate insights and recommendations for similar operations to take place in future in Argentina and elsewhere. The evaluation will also inform the country programme evaluation to be conducted by OE in 2009.

The evaluation was carried out in accordance with OE's Evaluation Manual. A preparatory mission took place from 2 to 6 June 2008, and the evaluation mission visited the country from 7 July to 1 August 2008. At the end of the field visit, an aide-memoire was presented in Buenos Aires introducing the main preliminary findings and salient points.

Socio-economic context and rural poverty. The period of more than 10 years encompassed by the PRODERNEA project cycle (from design in 1995 to closing in 2007) was a particularly complex and unstable one economically, socially and politically. The resulting environment was not favourable to rural development. In 2001 and 2002, the country underwent a severe economic and social crisis that slashed gross domestic product (GDP) by 20 per cent and brought significant setbacks to living conditions.

Since then, the Argentine economy has made a rapid recovery and is today one of the continent's most dynamic with annual growth of around 8 per cent. Agriculture plays a key part in Argentina's economy. In 2004, the sector contributed 58 per cent of total exports, employed 9 per cent of the active population and generated 9 per cent of GDP. Argentina is classified as an upper middle- income country under the World Bank's classification system, with gross national income (GNI) per capita in 2006 of USD 5,150.

The percentage of the population earning an income below the poverty line fell to 26.9 per cent in 2006, after having reached 48 per cent in 2003 and 57.7 per cent in October 2002.¹ The incidence of poverty is much higher in rural areas, with marked differences among regions. The north-eastern and north-western provinces post the highest rates of rural poverty.

The project. PRODERNEA is the second phase of the Programme of Credit and Technical Support for Small Producers in Northeast Argentina (PNEA), completed in 1996. PNEA was a pioneering programme in a region – and a country – that had very little prior development experience focused on small-scale producers.

PRODERNEA has been implemented in the four provinces of north-eastern Argentina (Chaco, Corrientes, Formosa and Misiones). The target population identified in 1996 was 53,000 families, including 10,550 indigenous families. The overall objective was to contribute to overcoming the root causes of poverty in the north-east by strengthening the productive capacity of human and natural resources among poor people, small producers and indigenous people in the region, through a sustainable increase in incomes and self-management capacities. In order to achieve its objectives, the project included four main components: (i) technical services in support of production; (ii) financial services in support of production; (iii) an assistance fund for aboriginal communities (FACA); and (iv) project organization and administration.

The IFAD loan for USD 16.5 million was approved in April 1996, signed in September 1997 and declared effective in October 1998. The total cost of the project as originally designed was an estimated USD 36.4 million, including USD 8.3 million in cofinancing from the Inter-American Development Bank (IDB) and a counterpart contribution of USD 11.6 million. After the first four years of implementation delays, the Government of Argentina (GoA) and IFAD decided to reorient the project. An amendment was approved in December 2003 to introduce adjustments to current country conditions, which resulted in changes to: (i) the project term and scope; (ii) the strategy of some of the components; (iii) project coordination and administrative execution; and (iv) budget allocations for some components and categories of expenditure. The IDB cofinancing was cancelled and the total budget was reduced to USD 20.4 million. As of December 2007, 99 per cent of the IFAD loan had been disbursed. 

Performance and results

The original design of the project was relevant to the socio-economic context prevailing in Argentina in the mid-1990s, characterized by a predominantly liberal vision with the State reserving a compensatory role. The project stressed the provision of production support services – technical assistance and supervised and subsidized credit – as essential levers of development for the target population (IFAD 1996). ²

Project design following the reorientation approved in 2003 was consistent with the new political outlook and with IFAD's strategy in Argentina as set forth in the country strategic opportunities programme (IFAD 2004): favouring a development model with greater social inclusion of beneficiaries, selecting high-potential production units, moving closer to markets and positioning beneficiaries within virtuous value chains. Indigenous peoples continued to be supported through social development measures and specific instruments, such as subsidies rather than credit and greater coverage of training activities. On the other hand, the design did not assign sufficient importance to two key issues: (i) the land tenure situation; and (ii) the region's ecological conditions.

PRODERNEA's decentralizing approach is consistent with the principles underlying Argentina's constitution, and is widely recognized as having been successful. The provincial governments took on financial responsibilities (subsidiary loan agreements) as well as operational ones (administration and implementation), and developed a sense of relevance around the project. However, the complex design – involving five implementing units, four provincial and one national – led to initial delays in implementation, slow incorporation of provinces, cost increases and rescheduling of deadlines.

In terms of effectiveness, the project overall achieved most of its objectives, albeit with some limitations in scope and with varying results on meeting quantitative targets by component.³ As to credit, although the amounts granted exceeded post-reorientation targets, the approach adopted by PRODERNEA did not contribute to ensure access of the rural poor to rural financial services, but rather provided loans to a relatively small group of people for a relatively short period of time. The objective of institutional sustainability was not achieved, since the credit fund was not institutionalized in a way that would have enabled it to operate beyond the confines of the project and after closing. The lack of a rural finance policy places a major constraint on financial services development in Argentina. In addition, the relative delay in this area as compared to other countries in the region compromises the sector's competitiveness. By means of the production support services, affordable technologies were disseminated that proved to be consistent with the nature of small-scale production and had a largely positive impact on employment.

Services provided focused on production issues and, to a lesser extent, commercialization, despite considerable challenges in this area. The engagement of private partners for the provision of technical assistance is very limited.

Several factors affected efficiency by increasing the share of administrative costs to the detriment of resources directed to beneficiaries. These included the characteristics of the region and the geographical dispersion of beneficiaries, initial delays in implementation – which led to postponing project completion from June 2004 to June 2007 – and the structure of the implementing agency, with one central unit and four provincial units.

The project had a positive impact on improving the incomes and assets of the family farmers assisted, as well as their food security as a result of increased production. There is also a demonstrated improvement in the living conditions of aboriginal communities benefiting from the project, including basic services such as electricity and water as well as food security, although the latter continues to be precarious. In addition, despite shortcomings in participation mechanisms, beneficiaries continued to play a leading role in identifying projects, and the project's social acceptance rate was high.

On the other hand, project implementation did not make a positive contribution either to resource conservation and the environment generally, or to developing an environmental awareness to create conditions for future demand of sustainable development policies.

The component in support of indigenous peoples is regarded – in the context of public intervention in the north-eastern provinces – as a unique and valuable differentiation targeted to highly vulnerable social groups in rural areas, offering an alternative to the traditional welfare-based approach. The results have been positive, mainly in social capital, though also in the visibility and recognition of indigenous peoples as economic agents and interlocutors for provincial governments. However, insufficient consideration was given during formulation to the critical level of poverty – in terms of unmet basic needs – evident in the communities. Also, the lower relative importance assigned to this project component, together with the limited capacity of implementing units, resulted in insufficient attention being given to indigenous cultural issues. No actions were taken to influence public policies directed towards indigenous peoples.

The project promoted a gender approach to its activities overall and trained technical and implementation teams to build this dimension into project management. Nevertheless, the percentage of women, as direct beneficiaries and as loan recipients, is low. In addition, the inclusion of young people (not provided for in the original project design) came about only after reorientation, along with recognition of the importance and need to identify a strategy and activities to address this crucial segment of the population, particularly in less favoured rural areas. This objective was achieved only in part, through training, a young entrepreneurs project competition in Chaco province, and a course to train local development agents in Corrientes.

The project planned an exit strategy, reflecting its concern and commitment to ensuring continuity following the conclusion of external support. Among the achievements of this strategy, and also important pillars of sustainability, are the institutionalization of the policies by the Secretariat of Agriculture, Fisheries and Food (SAGPyA), new rural development institutions within provincial governments, and advanced negotiations on a new IFAD loan for the National Rural Areas Development Programme (PRODEAR) in the country's north-eastern and other provinces. On the other hand, staff and budget resources are limited among the institutions involved post-completion, and it is unlikely that the credit fund will be sustainable.

Innovative experiences for Argentina promoted by the project included provincial management combined with national coordination through the national coordinating unit within SAGPyA. In addition, new instruments were adopted, including liaison with regional producers' organizations and linkages with commercial value chains. The project promoted public-private partnerships to provide services to beneficiaries in organizing crafts production and commercialization, commercializing livestock production (livestock fairs) and farming insurance for market gardeners.

Also of note are PRODERNEA's contribution to and promotional role within the MERCOSUR Commission on Family Farming (REAF) as an innovative element, in respect to both IFAD's programme in the region and other SAGPyA-supported projects in Argentina.

IFAD and the GoA showed a high degree of commitment, flexibility and responsiveness in introducing needed changes during the 2002 reorientation. Nevertheless, during the design stage, IFAD was not able to ensure the necessary level of local participation and did not give sufficient consideration to lessons learned from the previous project. In addition, the Government's performance during the first phase was lacklustre, exacerbated by poor relations with the provinces, but improved substantially during the second phase. The Andean Development Corporation (CAF) covered loan administration satisfactorily.

Rating Summary

 

Conclusions

PRODERNEA, taking up efforts begun in the north-east by PNEA (the first programme addressed to small farmers in the region), was strongly marked by an extremely variable social, economic and political context, including different development approaches as well as highly diverse national and sectoral policies, which generated an unfavourable environment for rural development. During the project cycle, four different administrations came to power in the Executive Branch, and the country temporarily lost 20 per cent of GDP.

Nevertheless, the project as a whole achieved most of its objectives and – albeit with certain limitations – executed all of the funding allocated under the reorientation, and generated a series of complementary outputs and positive externalities.

The reorientation initiated in 2003 showed sufficient flexibility and responsiveness in modifying areas that were not performing well in a new socio-economic and public policy framework. In this new context, the project evolved and contributed to establishing a more complex and comprehensive vision of rural development, which extended beyond the agricultural sector to encompass all existing actors and rural-urban linkages in a given territory, highlighting the importance of producers' organizations and social and production networks.

Reorientation reinvigorated implementation under a more socially and economically inclusive approach, promoting beneficiary participation in all project actions and helping to incorporate production units into commercial value chains.

Beyond the results obtained – which are limited by its modest scale of investment in a country as large as Argentina – the project stands out for its contribution to mobilizing social, financial and physical assets and leveraging investment by the public and private sectors. PRODERNEA was successful and innovative in combining the implementation of direct project components with promotional activities to strengthen the visibility of the small-scale family farming sector – in a country characterized by an extraordinarily entrepreneurial agricultural sector – and support for formulating specific policies reflecting the importance of family farming at the national level.

This activity, centred on actions by the national coordination unit, was carried out in several ways: encouraging national debate on related issues, supporting activities in connection with Argentina's participation in REAF, and helping to promote the movement known as the National Family Farmers Forum. The latter two activities have taken shape as of 2004. One important impact to which this effort contributed is the creation – in March 2008 – of the Under-Secretariat for Rural Development and Family Farming within SAGPyA.

In addition, PRODERNEA successfully introduced and consolidated innovative institutional proposals for Argentina by improving the climate for relations between the Nation and the provinces, which initially did not favour concerted action. The project's inclusion within provincial government structures as called for in the design was highly positive in improving local ownership and future sustainability, thus building capacity nationally and above all at the provincial level to implement rural development programmes. Innovations with respect to regional liaison, value chain linkages and public-private efforts are highlighted.

The project carried out an important effort in identifying good practice and distilling lessons, and it has generated a notable volume of participatory evaluations. The project has provided an opportunity for collective reflection with all actors, helping to create a culture of dialogue and learning among regional participants, and has served as a platform for important policy dialogue initiatives.

Recommendations

The evaluation puts forward the following recommendations:

Negotiate a framework agreement at the national level, within which specific projects will be negotiated with each jurisdiction. In large countries with federal constitutional structures such as Argentina, additional review is needed for any future project proposals calling for decentralized implementation in the provinces. More in-depth consideration needs to be given to the impact of gradually incorporating the provinces over time, as naturally occurs, and to the specificities and autonomies involved in different administrative and political jurisdictions. Each of the projects under the framework agreement would be negotiated with the provincial authorities accompanied by explicit statements of political intent to implement them by stakeholders. Also, operating regulations – beyond general guidelines – should be established in the course of each specific negotiation process.

Strengthen social capital through partnerships among various economic actors in rural development, as a strategic thrust for development policies and projects. It is important to transcend the bounds of family farming to encompass the development of all relevant territorial actors. The following elements should be integrated in rural development: supporting the consolidation of existing local and regional organizations; linking producers and the entire rural population with virtuous commercial and industrial value chains; linking producers with all public and private services providing support for production and a better quality of life for rural society.

Promoting dialogue, research and design of sound rural finance policies in Argentina. Some processes under way such as the policy discussion on rural finance around REAF initiatives provide an opportunity for dialogue in this regard. IFAD, in particular, should support such discussion and policy-making processes, identifying success factors in other countries and facilitating exchanges with other projects. In addition, important lessons can be drawn from successful experiences in the country, such as the Social Capital Fund (FONCAP) and the examples of cooperatives receiving funding from PRODERNEA in Misiones.

Strengthen the rural technical assistance services system able to provide holistic responses to the producers' demands. To this end it is recommended, first of all, expanding the range of technical services -beyond the current concentration on aspects of production- to include multi-disciplinary teams with experience in areas such as marketing, commercialization and organizational strengthening, making sure the continuity of the technical assistance is guaranteed throughout the process. Second, it is necessary to support initiatives to develop or strengthen inter-institutional partnerships with public and private organizations, such as for example the National Institute of Agricultural Technology (INTA) and others. Third, it is important to promote the development of institutional frameworks that promote cooperative contracting of private technicians, with the collaboration of public authorities when necessary, particularly at the project organization and start-up stages.

Design and implement differentiated and specialized projects to improve living conditions for the indigenous population. These projects should be independent of those targeted to commercially-oriented family farmers, leading to effective affirmative action. Such projects should be designed and implemented by multidisciplinary technical teams trained to work with indigenous people, in participatory initiatives under the leadership of social actors that focus on improving the lives of the target groups. It is also necessary a consistent institutional framework that provides for advocating and developing policies that meet the needs of beneficiaries.

Environmental sustainability should play a central role in rural development strategy. The challenge associated to a larger pressure on natural resources (water, soil, vegetation) as a consequence of the expansion of the agricultural frontier, more intensive production methods, and a limited environmental awareness is a key issue that needs to be addressed beyond the possibilities of individual projects. This situation calls for policy dialogue at local, provincial and national levels focusing on sustainability.

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1/ UNDP (2007): Argentina: Millennium Development Goals. Country Report.

2/ This comment does not apply to indigenous people, for whom a differentiated strategy was developed.

3/ The target number of beneficiaries under technical assistance and credit was not met. However, the targets set for the amount of credit and a number of projects under FACA were exceeded.