What would you do for a paycheck?

Every year thousands of young men in Zambia leave their rural communities, their families, and life on the farm behind to go work in the copper mines.  They choose to work underground, doing physically demanding work in suffocating, claustrophobic environments, where there is a real risk of death.  Why would anyone choose to leave the farm and work in such a place?  Simple: the lure of a regular paycheck.

This is the story Joseph Mutale told me as we travelled together to Lusaka.  He spent 30 years in the mines before retiring to Katete, where he and his wife now manage a small farm and grow vegetables.  Still, most of his income comes from renting out his old house in the Copperbelt and from remittances from his children.  It rings true with my experience: most people I’ve talked with would prefer a steady job to fertilizer subsidies or agricultural extension support.

Life on the farm often means working tremendously hard to coax crops out of increasingly infertile soil, worrying about droughts or floods, and hoping that there will be a market for what does grow.  The seasonality of farming in Zambia leads to farmers getting relatively large influxes of cash once per year.  With a regular income there is greater predictability and forced budgeting, which allow people to make better investments for the future (think about the last time you received a large influx of cash and how much you saved versus how much you spent right away).

Paul Collier comments:

This is not how I see rural Africa: I see not a paradise but a prison. Peasant agriculture offers only a narrow range of economic activities with little scope for sustaining decent livelihoods. In other societies people have escaped poverty by moving out of agriculture. The same is true in Africa: young people want to leave the land; educated people want to work in the cities. Above all, people want jobs: peasants are unavoidably thrust into the role of risk-taking entrepreneurship, a role for which most people are unsuited.

There are many entrepreneurial small-scale farmers who are finding innovative new ways of pushing up their yields and earning higher profits; but these are the minority, just as entrepreneurs (and farmers) are the minority in developed countries.  Most would quickly leave the precarious life of a farmer.  With so much money now pouring into agricultural development, it will be important to remember how far people will go to secure a paycheck.

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Let’s wait and see…

I've got what you want, so why don't we meet more often?

I've got what you want, so why don't we meet more often?

It’s an all-too-common scene: an NGO sets up a meeting between farmers and buyers, but few of the farmers or buyers actually attend.  The NGO invests time and money into engaging potential buyers of farmers’ products and advertizing the meeting to farmers with the goal of creating a link.  It seems like a win-win situation, but often things don’t go as planned.

Last week our project set up a cattle sale day.  The day was advertised widely, a large scale was procured, and the buyers came with trucks and cash, ready to take home purchased cattle.  Four farmers arrived a few hours after the scheduled start time, with only two heads of cattle between them.

Why didn’t more farmers come with their cattle?

We put the question to the farmers that did show up: “We wanted to see if the buyers would actually come, and what price they were offering.”

To get cattle to the sale yard, a farmer would have to walk their cattle as far as 30 km.  If farmers did come with their cattle, they could lose bargaining power with the buyers because the buyers know that the farmers don’t want to walk their cattle all the way back to the farm, and so the buyers can offer reduced prices.

During a previous sale day, the opposite occurred.  Farmers arrived, but only one buyer arrived with a truck.  Just the same, it’s a significant loss for a buyer to bring a truck to a sale only to find no cattle, so they also play wait-and-see.

At the root of this failure to coordinate are issues of trust and power.  Farmers and buyers do want to transact with each other, but they mistrust each other, each seeking to gain bargaining power over the other.  The typical result is that neither party shows up, and no deal occurs.  It’s a classic Prisoner’s Dilemma.

An NGO or other third party can play a role, acting as an honest broker to bring farmers and buyers to the table (or sale yard), but you don’t build trust overnight.  There’s another sale day on September 4th.  We’ll see how many more cattle get sold.

Witchcraft and Performance Anxiety

What do you do when a human-headed snake is found sneaking up on your child?  This is the problem Crispin, a member of the team at Chanyanya had on his mind.  His wife, unhappy with the situation, left the community to go live with her family in the nearby town, leaving him to live in the community by himself during the week and return to his family on the weekend.  Crispin said he was having trouble sleeping because of other strange noises at night.  The scale of the farm was increasing, and Crispin had growing responsibility on his shoulders.  Witchcraft was an unwelcome burden.

Word had spread, and I heard the story of the snake again from some other people in the community.  I probed to find out more.  Though most were thrilled at Crispin’s performance to date, some members of the community were unhappy that an outsider had been brought in to manage operations: motives.  Crispin leaves his house during the day for work, and his wife often has to fetch water a distance from the house: opportunity.  But the human-headed snake?  The means were still unclear to me.

I spoke to Crispin about the situation.  Our chat quickly turned away from the snake and on to the job.  The responsibility of the work was starting to wear on him.  He said he felt unqualified and didn’t want to let the community down.  We agreed that we would add some extra support, see how things went for a month, and then reassess.  He left less than a week later without a word.  It was uncharacteristic behavior.  Eventually we got hold of him; he was thousands of kilometers away near the Tanzania border.  He revealed that he was collecting some loan money to finance a year in school.

Performance anxiety, alternative plans, a family unhappy with conditions in the village, some tension with a few community members.  The evidence started pointing away from a human-headed snake, but Crispin’s story and the talk of witchcraft in the community can’t be dismissed wholesale.  Regardless of whether or not there was actually a snake, the story appeared to have strong effect on Crispin and the discourse in the community.  In that sense at least there’s something real behind it.

A Nudge or a Battering Ram?

(c) Panos / Jan Banning

Malawi is going through another round of massive fertilizer subsidies, with MK10,000 bags of fertilizer going for MK500 — taking a battering ram to the problem of low fertilizer usage in the country.  The subsidies have been hailed  in the media and some other reports as a success, having boosted maize production to a record 3.4m metric tons this past year.

Taking a quick look at Malawi’s budget speech, we see fertilizer subsidies are going to cost MK19bn (about $135m).  Compare that to spending on health (MK31.4bn), education (MK26.1bn), roads (MK15bn), and irrigation and water development (MK7.7bn).

An assessment of the input subsidy program put the direct benefit-cost ratio at between 0.76 and 1.36, meaning that an investment of $1 got about $1 back.  Think it’s worth it?  What’s important to consider?  What would you do with $135 million?

Freakonomics notes that Esther Duflo and crew have published a new piece, which suggests that gentler nudges can induce farmers to use fertilizer without such a massive subsidy.

The paper describes a more clever way of getting farmers to take up fertilizer use.  Farmers are used to getting a big lump sum right after the harvest.  Just like that rebate in Alberta that led to a massive spike in ipod sales, one-time injections of cash typically get spent quickly.  Farmers use the money from the harvest to pay school fees, maybe put some iron sheets on the house, kick back with the buddies with some drinks to celebrate a good season.  When the time to buy fertilizer rolls around, most of the money is goen.

Duflo et al suggest that selling farmers discount vouchers at the small price right after the harvest is a far more cost-effective and far less distortionary way of getting farmers to take up using fertilizer.   The farmer buys a coupon for a few dollars right after harvest, to get a bit more off the full fertilizer purchase later.  The farmer saves money to buy fertilizer because he’s already committed a small amount of money early.  It turns out that farmers who buy the cheap discount voucher and get a small subsidy take up fertilizers as much as farmers who don’t get access to the early voucher but get a much larger subsidy at time of sale.

Appears to be cheap and effective; too bad it’s a lot harder to sell the idea of a nudge than handing out freebies.

If the country could cut it’s fertilizer subsidy costs, it would free up a lot of money for schools, clinics, roads, and irrigation dams.

NGO Hiring: Braindrain or Match-and-Wait?

I’m privileged to work at with some very talented colleagues at a project in Zambia.  We’re working to facilitate improved competitiveness in the agricultural sector, working with input firms and private vets to help them connect with rural farmers.  Some of firms (and vets) are resistant to start targeting smallholder farmers.  The firms are geared towards servicing larger commercial clients, and are reluctant to move from a low-volume/high-margin to a high-volume/low-margin business model, which would require investment in new systems and skills.

Once in a while, my colleagues voice their frustration: “I could run an agricultural input company focused on smallholder farmers and make it work.”  And I think they’re right—they probably could start such a company.  But they don’t, they work in the NGO sector, where the pay is good and the accountability for results is low.  The NGO sector drains the government and private sectors of some of best human resources.  Why would you go work in an underfunded government ministry for $500/month when you could go make $1,500/month at the Large International NGO?  Why bust your ass starting a company, taking on immense risks, when you can kick back in the morning with a newspaper and fill out some donor reports?  It could be argued that the NGO sector is hollowing out the government and private sectors.

But looking at it another way, it might just be that a company that focuses on selling ag inputs to smallholder farmers isn’t all that profitable, and my colleagues are just biding time until conditions change that make the venture profitable.  In the meantime, they prefer to match themselves with other high-quality people.  When asked why he works at this NGO, the first thing my colleague says is “because I get to work with good people.”  Good NGOs can serve as places where talented, socially-minded individuals can converge and build off each other.  All four of my close colleagues have started master’s degrees since they started at this project, and they talk to each other all the time about the coursework they’re doing.  Matching talented people together leads to virtuous circles.

The reality is that relatively high-paying NGOs aren’t going away any time soon, so what can the donor community do to support the virtuous circles?   Two things come to mind:

First, move away from punctuated projects that encourage the regular dispersal of teams and little staff capacity development in favour of funding approaches that cultivate strong teams on the ground.  Second, create funding streams for alumni of organizations who go off to become entrepreneurs and start a venture.

Maybe NGOs and projects won’t create that ever-elusive “transformational change”, but if they aren’t going away they could better serve as talent incubation tanks while developing countries find their own paths to prosperity.

Just wait a little

fm-090715

The plan was to spend the day out in Chanyanya seeing how the farmers who have pooled their land to start a commercial farm distribute the returns from their first harvest.  But I’ve been stranded waiting for my motorcycle tire to get fixed.  Patch, burst, patch, burst, out of patches, waiting for more to arrive, “just wait a little,” said the mechanic. “I’ll be back…” One of those days.

With the recent G8 announcement, there is a lot of momentum behind investment in agriculture.  And with the Millennium Development Goals (MDGs) target date of 2015 looming on the horizon, there is a strong desire to turn that momentum into results.  Results right now.

Unfortunately, turning investment into results doesn’t happen immediately, especially in agriculture, and the push to make it happen can be counterproductive.

It takes time for repeated interactions between farmers, input providers and output markets to develop into trusting relationships, on which productivity enhancement can be built.  Institutions need to change, but often the agricultural sector is highly politicized.  The seasonality of agriculture leads to long cycles between learning and adjusting.  Sometimes, like fixing a persistently punctured tire, things just take time to get done well.

The push to get quick results can be self-defeating.  Companies pull out funding when early return on investment figures don’t add up, when the big money comes in later.  Donors create short lifespan projects, but try to compensate by increasing the annual budget.  By the time the first seasons are over, project staff are looking to the next contract, shiny reports are written, and the next project kicks off.  Later, when (if) evaluations come in showing poor results, donors become disenchanted and move on to different approaches.  (See Easterly’s article [pdf], top of pg 69, for a brief synopsis).  There’s no time to develop and capitalize on that crucial tacit knowledge that comes with working in one locale for an extended amount of time.

Donors, investors: with long-term commitment, there is tremendous opportunity to create positive change and generate wealth through agriculture.  We hope you’ll stick around.

Eventually another patch showed up, and the motorbike sprung back to life.  I guess I’ll be going out to Chanyanya tomorrow.


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Working to include smallholder farmers in agricultural markets, we know there are no easy answers. This blog is a place to ask "What does it take to make it work?" and to share what we're seeing and learning.
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