Poverty reduction for smallholder farmers, Brazilian-style: Can it work in Africa?

The following post, written by Kate Ambler, Alan de Brauw, and Susan Godlonton from IFPRI’s Markets, Trade, and Institutions Division, is the first in a series of researcher-authored blog stories highlighting ongoing applied microeconomics research at IFPRI.

Brazil has achieved impressive results in reducing poverty with “Fomento,” a set of large-scale, government-run social programs targeting smallholder farmers. Rural poverty in Brazil dropped dramatically from 51.4 percent in 2002 to 29.1 percent in 2011; during the same period, family farmers’ incomes also grew by 50 percent. When an initiative shows these kind of positive impacts, it raises questions for further research: What are the keys to its success? Can it be replicated in other countries where alleviating rural poverty is a similarly critical issue?

To study the potential for adopting poverty reduction programs, the Markets, Trade, and Institutions Division of IFPRI is implementing and evaluating a pilot project modeled after Brazil’s Fomento. Adapted for differences in climate, market, and local economic conditions, such a program could have a significant positive impact on smallholder farmers in rural Africa.

Fomento combines extension services with cash transfers over a two-year period. The extension services enable farmers to create individualized strategies that take into account the ups and downs they commonly experience in the course of the year, whether they are the result of weather events, market prices, or labor availability. An improved strategy for managing household production in the long term helps households more successfully plan for the long term. The cash transfers, in turn, are contingent on “sticking to the plan,” and can help the household catalyze investments suggested by the extensionist.

For its pilot project, MTID has designed similar programs built around the core Fomento elements but specifically tailored for local conditions in Malawi and Senegal. In both contexts, researchers are using randomized controlled trials to evaluate key aspects of these programs and learn about their scalability. The following description focuses on ongoing efforts to implement the pilot project in Malawi.

In Malawi, the evaluation focuses on the efficacy of developing a farming business plan and individualized extension services and on providing farmers with inputs. We have partnered with the National Smallholder Farmer Association of Malawi (NASFAM) to work with approximately 1,200 farmers in 120 distinct farming clubs in Dowa and Ntchisi districts. The farmers in our study also have the opportunity to participate in a broader NASFAMprogram, a seed replicability program, allowing us the opportunity to not only examine how the Fomento-inspired program affects agricultural yields and overall household wellbeing, but also how it may improve participation in other agricultural production enhancing initiatives.

While agricultural extension services are common place in developing countries, knowledge gaps remain when it comes to how to maximize these services’ effectiveness. Moreover, extensionists are often spread very thin over large swaths of land; thus overwhelmed, visits to individual farmers can be infrequent. The 2006/2007 Agricultural and Livestock Census in Malawi reported that only 18 percent of farmers participated in any type of extension. Making agricultural extension services both more available and effective could have important effects on poverty reduction among smallholders. By offering farmers the opportunity to carefully plan ahead for the agricultural season in consultation with an extension agent, a unique service is being offered, providing assistance with both agricultural practices and technologies and general farm management.

Policymakers often use conditional transfer programs to ensure that resources transferred to farmers or other beneficiaries are used as intended; but framed transfers, which emphasize the purpose but do not monitor adherence to program requirements, have been shown to be equally effective in some settings and are less costly. We are testing two versions of transfers framed for agricultural inputs to determine the most appropriate modality in this setting: cash transfer to farmers and transfers of in-kind inputs. Our experiment is designed to enable us to measure the complementarity between the planning and transfer interventions, so that we can determine whether future programs should focus resources on one of these strategies exclusively or bundle the two together.

Some of the key questions we hope to address in this study include:

• Will cash transfers framed for agricultural production or equivalently-valued input packages significantly improve farmers’ welfare? Which transfer modality is more effective?
• Will framed transfers be effective at increasing participation in sustainable farming initiatives (such as seed replicability programs)?
• Can intensive extension services coupled with a farming business plan improve planning of resources through the agricultural season, and improve productivity?
• To what extent are “planning” and “transfer” interventions complements or substitutes in this context?

Farmers are currently being interviewed as part of an initial midline survey that will enable us to examine measure intermediate outcomes while the intervention is ongoing and better understand the mechanisms through which final outcomes will be achieved. A second midline will be conducted later this year to help inform modifications of the program for the second phase of this project.

The implementation of this project would not be possible without the support of our partners. In Malawi we are collaborating with the National Smallholder Farmers Association of Malawi (NASFAM) and Innovations for Poverty Action (IPA) is assisting with data collection; in Senegal we are working with the Fédération des Organisations Non Gouvernementales du Sénégal (FONGS) to implement the pilot project there. The United Kingdom’s Department for International Development (DFID) provided financial support to the entire project, known as “South-South Cooperation between Brazil and Africa.” Evidence collected at the midline and then at the end of each project will help us understand whether the modified Fomento project can catalyze agricultural production in sub-Saharan Africa.