Saint Lucia: Small Farmers Agricultural Development Project - IOE
Saint Lucia: Small Farmers Agricultural Development Project
Completion evaluation
The Completion Evaluation mission of the Small Farmers Agricultural Development (SFAD) project worked in St. Lucia from the 2nd to the 19th of November 1994. The project faced several difficulties stemming from its objectives, target group specification, organization, staffing and implementation, which are rather well known. Therefore, instead of concentrating on these shortcomings, or attempting to estimate effects and impact without having the necessary quantitative base, the mission sought to analyze and synthesize the project's experience in a constructive, forward looking way, with a view to learning lessons for future interventions in the country and/or region.
An old project seen from a new perspective
St. Lucia's farmers have been progressively locked-in banana production due to several reasons which are discussed in this evaluation report. The SFAD project, appraised in 1981, though in a rather marginal way, has provided some opportunities for an alternative path, not dependent on banana exports, as shown by the Completion Evaluation. Therefore, the SFAD can be considered as a first stage of a development process in which IFAD's intervention has played a role as catalyzer.
Project objectives and assumptions
The project's main objective was to bring about the diversification of small farmers' agriculture from a few export crops (mainly bananas) into food crops. In fact, contrary to a widespread perception of the SFAD as a "banana project", less than one third of the project's loans were allocated to bananas. However, banana output and exports expanded throughout the project period at the expense of other crops due to the improvement of the market and prices during this period. This brings home the lesson that agricultural diversification cannot be achieved when macro-economic conditions, producer incentives and government support policies are actually pointing in the opposite direction.
Two of the projects's key assumptions were inadequate: firstly, that it would be in the small farmers' interests to diversify out of bananas, and secondly, that (given the project incentives and services) they would willingly do so. The first assumption proved to be incorrect. The small farmers' income has improved as never before precisely because of planting bananas (see Chapter IV, Sections A and K). With regard to the second assumption, there is no indication that the farmers were ever consulted as to whether they would be willing to diversify out of bananas or that any attempt was made at appraisal to understand the reasons why the farmers had such a mark preference for bananas.
The project set an upper limit of 4 ha (10 acres) for defining its target group. However, 88% of all farmers would qualify under this limit - which proved too high. In fact, 78% of all farmers hold less than half that amount (5 acres) and an estimated 50% of all farmers hold less than 2 acres (one-fourth the area limit allowed by the project). The project also imposed an income criterion: that no beneficiary should have an income of over USD 400 per annum. This limit was pitched too low and most of the beneficiaries were found to be earning much more than that. Moreover, this applied only to agricultural income. This meant that even part-time farmers with high salaried incomes could qualify. The target group selection criteria, therefore, left much to be desired.
In order to ensure better targeting, it is necessary to have a clearer picture of the target groups. The lessons to be learned are, firstly, that non-farm income and employment should be taken into account in targeting; secondly, that the entire family/household should be considered. Thirdly, a greater number of women-headed households tend to fall within the category of the poorer households. Even if their number is conservatively estimated at 35% (of poor rural households), the poor women-headed households could be the target group of an IFAD project.
The above features relating to IFAD's target group in St. Lucia indicate that the target group could be confined to those farming less than 2 acres (less than one-fourth the level allowed by the SFAD project), with preference being given to women-headed households among them. If any future intervention is to be focused mainly on small farmers, it could be confined to those households who gain more than 50% of their income from agriculture. On the other hand, the nature of interventions should not only cover agricultural diversification, but be broader based on opportunities for income diversification.
Project activities, achievements and limitations
The project constructed two Rural Service Centres (RSCs), (although one was later destroyed by fire). These supplied inputs to farmers and bought their produce on the basis of contracts, at previously agreed prices. Small farmers' produce was also bought directly by the project (outside the RSCs), sometimes even at a loss.
Credit was linked to marketing, through marketing contracts. Concerning the provision of credit via the St. Lucia Development Bank (SLDB) it has been observed that although it was more liberal in its lending to small farmers than the commercial banks, its transaction costs were higher, and its procedures more dilatory. The mission's field investigations revealed that the SLDB had been able to reach even small farmers with no individual title to land (being owned in undivided shares as "family land"), by utilizing one or more (usually at least two) of the following instruments: chattel mortgage (usually of the farmers' wooden houses), cash deposit and/or one or more guarantors. Although the arrears in repayment were high at one point, continuing collection has left arrears at about 7% on total loans, while more collections are ongoing. The SLDB made no provisions for bad loans, and its portfolio analysis is deficient, facing serious difficulties in estimating in an appropriate way the level of arrears. The SFAD had no savings mobilization feature in its design and the SLDB has not been engaged in any mobilization of savings.
Agricultural research and extension were areas of weakness in the project, with little support being provided by the agricultural extension service of the Ministry of Agriculture. This is partly because the extension officers/service had not been integrated into the project structure, and partly because no incentives (such as transport allowances) had been included in the project to attract them to provide the needed services. The link with the Caribbean Agricultural Research and Development Institute (CARDI) for on-farm trials and propagation of planting material was not as good as it could have been.
Marketing proved to be the most important activity of the project, as intended. In addition to the marketing of export crops, the project undertook even the direct farm-gate purchasing of crops from contracted farmers at fixed prices. Despite its many problems, the project definitely contributed to the introduction and propagation of certain crops, such as hot peppers and new (improved) varieties of yams, plantains and mangoes, which still continue to be produced by farmers and exported, although in very small quantities. Above all, the project has shown the efficacy of approaching the problem of crop diversification from the marketing end. It has also shown that the farmers of St. Lucia are quick to respond to positive market or export possibilities, once the marketing end is secured. It has also served to foster a small set of exporters who have developed the confidence, contacts and the capability to carry on further exports in support of diversification. In this light, the project has provided an important basis for any future project with this objective.
The project constructed and equipped a Veterinary Laboratory. However, the mission found that not only were the laboratory facilities hardly being used, but also that its equipment was in neglect and disrepair, due to the lack of adequate trained staff. This underlines the need for capacity building in setting up infrastructure, institutions and services in new technical/institutional areas.
Furthermore, the project could not provide successfully drums or tanks for storage of rain water for drinking purposes because of the fairly widespread provision of piped water systems by the Government. On the other hand, the supply of slabs and material for latrines was implemented successfully as part of the Ministry of Health's ongoing programme.
There were flaws in the project management structure, compounded by inadequate staffing. The project management was supposed to be integrated into the Ministry of Agriculture. But this did not really happen, resulting in it falling between stools. On the one hand, the project was used for ad hoc work of the Ministry, with the Project Coordinator (a Ministry employee) being assigned non-project work. On the other hand, it was also considered an external appendage, and was not able to draw even upon the extension staff of the Ministry for its work. On the other hand, no provision was made in the project for its own staff. e.g. in extension or in accounting.
Nor did the Project Coordinator have the authority or ability to coordinate the inputs expected to be provided by other agencies, either within or outside the Ministry of Agriculture. Nor was the Project Management Committee (referred to in the project document for this purpose) very regular or effective to this end.
Project management lacked trained staff for the functions to be undertaken, while no provision was made for capacity building. The Project Coordinator himself had no previous management experience. Nor was there any trained staff to undertake the project monitoring functions. This was compounded by the inability of the Project Coordinator to hire external staff to carry out these functions.
A major lesson to be learned from this project, therefore, relates to the institutional location and structure of the project. A project, which is by definition, an undertaking with a well defined time-frame and resources, with its own accounting needs (due to the different sources of financing) cannot be involved in the day-to-day operations of a Ministry, nor subject to its operational and procurement procedures. This type of arrangement provides the illusion of sustainability. A separate project management, with staff paid from project funds to carry out the functions expected of it, would have been much more effective.
No management information system was created within the project. There was no regular feed-back of information to the project manager for decision-making, and hence, no effective monitoring of project performance. However, the Project's Coordinator did not really have the decision-making power to take action, except in minor cases, while the Planning and Statistical Unit of the Ministry (responsible for M&E) did not really partake in project management decisions. Furthermore, there was no officer to operate the M&E system. A "baseline survey" was carried out four years after project inception. Evaluation activities were not undertaken (the University of West Indies, with a potential for evaluation activities in St. Lucia and other OECS, was not provided with an opportunity to participate in the project).
The project had received three different consultancies to help establish an M&E system. However, their short duration and discontinuity did not result in the design and installation of a complete M&E system, nor was the local staff trained in its operation. But given the importance of technical assistance in other components of the project, it will be discussed in the following paragraphs.
The project experience (especially in St. Lucia in 1981 or 1985) confirms that a much more positive result could have been achieved with adequate technical assistance (TA) and training, especially at project inception. This is confirmed by the positive experiences in the case of the marketing and communications consultancies, on the one hand, and the inadequacy of the partial or inadequate TA in other cases. As pointed out earlier, the staff and skill situation in the country called for a more comprehensive TA programme for most of the project activities (such as M&E), as well as training. The same applies to the training of local staff where necessary - as in the case of staff for the Veterinary Laboratory.
(i) Crop Diversification Effects: The project's impact on diversification was not significant, mainly because during the period of project implementation it was not in the interests of the small farmers to diversify out of bananas into food crops. Despite this, the project was able to establish a small bridge-head of export crops, mainly of ethnic crops to niche markets in the metropolitan countries. Above all, it was able to create an outward-looking mentality among small farmers, which makes them more amenable to future attempts at diversification. It also undertook the identification of appropriate marketing outlets and likely exporters. Last but not least, the marketing contract which was developed proved to be a useful mechanism.
(ii) Income and Employment Effects: Since the project's total acreages and tonnages of diversified crops were small, the total income and employment effects of the project could not have been significant. As already indicated, no quantitative information was generated by the project or by other sources, which would permit a quantitative evaluation of impact on this dimension.
(iii) Beneficiary Participation: The extent of beneficiary participation was negligible. In fact, although the project decided to diversify out of bananas, the would-be target group was not consulted and the reasons for their persistence in banana production were not taken into account by the project design. Nor were farmers' organizations actively involved in any aspect of implementation. A Group Dynamics Specialist was brought in at the closing stages of the project in order to strengthen farmers' organizations, although this did not materially alter the farmers' ability to actively participate in the project's activities. A conscious effort was also made to establish the second Rural Service Centre around the Desraisseux Cooperative Society; but this too was a top-down affair. The experience with farmers' groups has not been positive in St. Lucia, while the attempts to promote them has not been marked with success.
(iv) Impact on Women: Women were not specifically targeted by the project. Nor is there any information available as to the proportion of women among total project beneficiaries. The mission's field work showed, however, that women's share of credit (7%) was much smaller than their participation in agriculture (31%).
(v) Land Tenure Effects: In many areas, especially among the small holders, a considerable portion of land is held as "family land",in undivided shares, with no individual title. This has not acted as a constraint to banana cultivation by the small holder. Nor has it really affected the project's diversification effects, especially since only short-term crops were involved and, therefore, long-term tenurial security was not so relevant. The type of tenure became a problem mainly because credit systems have not been adapted to accept anything but individual registered titles as collateral. In fact, project credit, to the extent that it accepted other types of security (other than land), enabled small farmers on family land to participate in its production/diversification programmes. Thus the land tenure system has not affected project outcomes, or vice versa. It is necessary to recognize, however, that any future project which tries to diversify out of bananas and annual crops into (longer-maturity) tree crops or into other more capital-intensive activities (intensive livestock or non-agriculture) will face greater problems with regard to investment and credit , due to the type of tenure of the majority of small holders.
The SLDB is the only development bank in St. Lucia and a special SFAD window was opened in the SLDB for credit to small holders. First, with regard to total lending performance, the SLDB was able to lend out only 68% of the credit line made available to it. This was due to a great extent to the fact that there was little demand for credit for crops other than bananas. As soon as loans for mixed banana cultivation were allowed, SLDB's loans almost doubled in two years. The SLDB had a sum of EC$ 127 000 in arrears corresponding to the SFAD project, which constitutes a 7% of the loan disbursed SLDB under the project. It should be noted that the SLDB had not been carrying out an adequate loan portfolio analysis, nor has it made provisions for bad loans, partly because of lack of training.
Concerning the SLDB's outreach under the SFAD, compared to other SLDB's programmes, the average loan size per loanee under the SFAD project was less than half the average size of loan given under the Caribbean Development Bank (CDB) window and ten times less than the SLDB's average loan size to its own borrowers. The small size of the average project loan indicates that it reached mainly the small farmers. This was confirmed through the mission's field work, which showed that 70 % of the farmers receiving credit did not have title to their lands and had used other instruments such as chattel mortgage plus one guarantor or a cash deposit (escrow) plus guarantor, etc., to obtain loans. It was also found that approximately 7% of the loanees were women whereas the proportion of female-headed households among agricultural households was 31%. The SLDB was not given any direction by the project that women should be specially targeted. And it has not taken any initiative to cater to this important market segment. Some evidence points out that women may have had greater difficulty with land collateral and in finding guarantors.But the real costs of such lending have proved significant for the small farmer considering especially the small size of loans. These costs include an appraisal fee of 0.5%, an application fee of EC$ 10, trips to the capital and (in many cases) the costs of chattel mortgage.
The SLDB also considers that its costs of lending to the smaller farmers are too high and cannot be covered by the interest rate spread of around 6%, which it received under the project. One possibility would be to raise the interest rate to the borrowers, for whom the transaction costs and delays are much more objectionable than a higher interest rate.
From the point of view of the rural poor and of IFAD, however, the SLDB suffers from a serious shortcoming: it does not accept savings deposits, nor it is interested in doing so. Given the shortage of other appropriate institutions capable of retailing credit to the poor it is likely that if credit for the rural poor would be a component of a future project in St. Lucia, the SLDB will have to be involved. But, in that case, an important TA sub-component should be included.
Beneficiary participation, farmers' organizations and diversification:
As this was one of IFAD's "first generation projects" (formulated in 1981), provision for beneficiary participation was not made an essential part of project design or implementation. Thus the small farmers were almost not consulted as to whether they would be willing to diversify out of bananas. In fairness to the project, however, it must be said that it did seek to involve farmers' organizations in the running of the Rural Service Centres (RSC). Recognizing the weaknesses of the first RSC,it was decided to build the second at Anse Ger, basing it on the Desruisseaux Cooperative Society, which was promoted and strengthened for this purpose. A Group Dynamics Specialist was recruited in the final years of the project to help establish and strengthen existing farmers' organizations. Many of these were given formal structures and trained to undertake their business in a more organized manner. However, it is necessary to recognize that farmers' organizations are very weak in St. Lucia: weak in membership, in awareness of cooperative principles, in participation at meetings, and in programming. Particular cooperatives have flourished at particular times under the leadership of one member, but have been known to collapse when that member left (e.g., the STAFF-COOP).
The experience of the project in setting up and strengthening the Desruisseaux cooperative society has resulted in a top-down process, which is not leading to greater responsibilities by its members. At present, the RSC, which is supposed to be run by the cooperative society, is in fact being run by a manager seconded from the Ministry of Agriculture. While any future project should undoubtedly provide assistance to farmers' groups to build up their organization, capabilities and services, it would not seem advisable to build any future project on the basis of existing cooperatives or new ones to be created by the project.
Under these circumstances, the only farmers' organization that has the coverage, organization, institutional presence and infrastructure to carry out such an agricultural diversification programme over the whole country, is the St. Lucia Banana Growers' Association (SLBGA). It is also a stable organization, having been in existence from 1953. It also has some weaknesses, e.g., its rather high degree of politicization. But it is undisputedly the farmers' organization with the widest membership (over 10 000 registered members, of whom at least 7 000 are active). It has countrywide coverage, with 16 Inland Buying Depots as well as depots for the distribution of inputs. It has more than 600 daily and monthly paid workers, including information and extension workers, a fleet of over 15 vehicles and even an aeroplane for pesticide spraying. It is known and welcomed by all farmers in St. Lucia, most of whom have dealt with it at one time or another, in respect of their banana production and marketing.
The SLBGA has recently come to accept the fact that it is in its best interest and that of its members to help them to diversify out of bananas - at least partially. It is, therefore, now willing to carry out a diversification programme, using its membership, staff, institutional and infrastructure capability to do so. The fact that its Interim Board of Directors also includes government representatives would also encourage it to assist in the government's avowed diversification policy.
Elements for an effective income diversification strategy
Given the difficulties of the diversification venture, in order to minimize transaction and transition costs it is advisable to capitalize on the strengths of those institutions that have already worked in an acceptable way with the rural poor of St. Lucia, cooperating in their upgrading and adaptation to the current and future needs of IFAD's target group. This is particularly the case of the SLBGA which could play a key role in the process of diversification. The institutional and operational feasibility of such an approach has already been demonstrated in other parts of Latin America (e.g., in Costa Rica, where its Banana Growers Association (ASBANA) has spearheaded its diversification programme out of bananas, while Colombia has used its coffee growers association to help it to diversify out of coffee).
The small farmers are usually mixed farmers, with (today) the largest part of their farms under bananas. Responding to a fall in the price of bananas, they will only reduce the area planted to bananas and increase the area under other crops. Diversification will come only in small doses from small farmers, and any programme of diversification should plan accordingly.
Moreover, over 50% of small farmers are only part-time farmers. Even in the case of the farmers whose main occupation is agriculture, they are likely to be more part-time farmers, a large part of whose total household income coming from off-farm sources. This is even more so in the case of female-headed households. Hence, the objectives of any future project needs to be based on the realities of the target group and their needs and should, therefore, aim at income diversification rather than at crop diversification alone .
It is also necessary to take a broader view of the possible of bananas than as merely fruits for export. Bananas have a potential market as a food to be cooked and eaten when still green, while it can also be refined through agro-processing into other food/forms such as banana chips and snacks. Bananas also have great potential as a main constituent of animal feed. For example, the IFAD-funded technical assistance grant to CARDI has shown that bananas can be used as a raw material to feed small ruminants up to 40% of their total food intake with equal food efficiency as presently provided by commercial concentrates and imported feed, but at much lower cost. Thus, bananas have a future in the context of any diversification programme based on intensive small livestock production by small farmers. Banana products and handicrafts made from banana leaves and stems also have a market. For all these reasons it is necessary that a diversification programme be preceded by, or done concurrently with, an equally important programme aimed at exploiting the full potential of bananas and their by-products, including spin-off effects in other sectors such as the livestock industry.
Due to all the above factors, the need is one of gradual diversification over time, in response to falling banana prices. But this must be done in the context of the development of alternative proven cropping/product mixes for the small farmer. This should be done before the small farmer is asked to diversify, and not before viable alternatives are found, as in the case of the last project.
It is also clear that any substitute must be in terms of an integrated system, made up if necessary of many strands, which together could hopefully meet most of the production, cash flow and land use criteria of the small farmers, all of which are presently met by their banana cultivation (alone). This would require intensive production systems, which could involve multi-tiered cropping, e.g. a field crop (say pineapples), a middling "tree" crop (say plantains, instead of bananas), a vine crop (which can grow vertically upwards without taking too much space on the land - say black pepper), a tree crop (say cocoa, breadfruit or a fodder tree), etc. Into such a multi-layered system could be inserted small livestock at ground level and bees (apiculture) above. It is not presumed to recommend the components of a system which can be accommodated within a farm of two acres (the average holding of a small farmer) but to indicate lines along which solutions will need to be found. In this case, much can be learned from the CARDI/IFAD On-Farm Small Ruminant Development Project. It is interesting to note that the Interim Final Report of that Technical Assistance Grant (July 1993) records that small flock sizes bring in higher returns per person day than larger flock sizes and that the 5-ewe flock model provides the highest return per ewe, as well as the highest estimated annual cash flow. This offers the hope that integrated crop-livestock systems can be devised which could meet the income, labour and environmental criteria essential for the small farmers' production and coping systems.
It is necessary, however, to add another dimension to the diversification debate. And this is to ensure that the small farmers are not eliminated in the name of diversification. The government strategy at present is to reduce banana cultivation by taking "marginal lands" out of banana production, the latter being confined only to those well-endowed farms, which are supposedly capable of producing the high yields, which alone can make St. Lucia competitive in the world banana market. It is not a coincidence that these "marginal lands" are operated by small farmers, often without registered titles (even if owned by them).
Firstly, it is necessary to note that the only comparative study on productivity and cost of banana cultivation in St. Lucia (quote reference), shows that the smaller farmers on these "marginal lands" have attained the same levels of land productivity (yields) as the larger farmers on the richer lands. Secondly, since these latter lands are the better-endowed lands, it is logical that they will better be able to bear the costs and risks and positive gains of diversification. But thirdly, it is the smaller farmer, on the more difficult lands, who does not have the resources (nor the title for credit), who is being asked to pay the price and take the risks of diversification, into as yet unspecified crops. This is really asking too much. Bananas provide the means of survival for these people and IFAD should not connive in taking the food out of their mouths, unless it can ensure a remunerative and workable alternative - which is still not in sight.
It is again necessary to state the odds which the small farmers would have to face in the proposed process of diversification. First, they suffer from the structural disability of inadequate holdings. Secondly, they suffer from the physical disability that their holdings are often on sloping lands, which present particular technological and environmental problems when it comes to diversification (which are not faced by the lands "exempted" from diversification). These problems are compounded by the tenurial difficulty that these small farmers (usually) do not have title to the lands they cultivate. This in turn brings on the institutional difficulty that they cannot obtain credit due to the fact that the credit systems (requiring collateral) cannot presently cater to these lands (unless of course, new means can be found). To add to this already tangled web of difficulties, is now added the technological difficulty of finding adequately rewarding crops which can be grown on their already disadvantaged (sloping)lands, while also avoiding the environmental hazards that go with them. The desirable and feasible types of agro-technological options available would require the planting of tree crops (for environmental conservation) on these sloping lands). But it is these same small holders who, for the reasons set out above, cannot afford the long wait for the income from these tree crops, nor command the necessary credit (due to their tenurial situation) to meet the costs of these and other possible crop/livestock options. IFAD needs, therefore, to be careful that it does not compound the structural and institutional dispossession of the small farmer by a further technological dispossession, in the name of diversification.
Another important aspect to take into account in the design of an effective diversification strategy springs from an analysis of the characteristics of IFAD's prospective target group. The incidence of part-time farming is likely to be well over 50% among the smallest holders and especially among female-headed households, while it is also possible that even in the case of a so-called full-time farmer, a greater part of his/her total household income may derive from non-farm earnings of other household members.
This suggests that solutions to the small farm and poverty problem (in the case of diversification out of bananas) should be in the direction of income diversification rather than agricultural diversification only. This could also include small industries and enterprises, which could tap the expanding frontiers of the tourist trade. The need for changes in this direction is also borne out by the structural changes in the economy, in which the tourist trade has become the engine of growth. Instead of looking to agriculture alone for increasing the incomes of the poor, any future project must try to catch these favourable winds of change for the benefit of the target group by linking both agriculture and non-farm activities to the growth pole of the economy, namely, hotels and tourism.
To sum-up, the St. Lucia farmers have been progressively locked into banana growing due to several reasons which are discussed in this evaluation report. The SFAD project, though in a rather marginal way, has provided some opportunities for an alternative path, not dependent on banana exports. The challenge of any new IFAD project is to accelerate the process of the rural poor's income diversification in the context of a shrinking market for bananas.