Evaluation of the El Salvador non-traditional agricultural export strategy

The program comprises four projects implemented by three organizations using widely different approaches: (1) Agribusiness Development (5190327), implemented by DIVAGRO, the agricultural diversification unit of the Salvadoran Foundation for Economic and Social Development (FUSADES); (2) Rural Enterprise Development II (5190382), implemented by Technoserve; (3) NTAE Production and Marketing (5190392), implemented by the Cooperative League of the United States (CLUSA); and (4) a subcomponent of the National Reconstruction Project Support for Transition to Peace in El Salvador (5190394), implemented by CLUSA and the Asociacion de Productores y Empresarios Salvadorenos (PROESA). The evaluation serves as the final evaluation for the DIVAGRO (1987-6/95) and Technoserve (1990-4/95) projects, and as a mid-term for the two CLUSA projects (begun 6/91 and 5/94) respectively. The individual evaluations are attached. Overall conclusions are as follows. (1) CLUSA's highly focused approach of providing intensive support to NTAE production and export had the greatest impact on the value and volume of product exported, employment generated, and benefit to the rural community. (2) DIVAGRO's approach was to provide a combination of credit, production technology transfer, and market assistance to private investors; there was limited follow-up activity and minimal "hand holding." The project, designed to encourage agricultural investment, was carried out in a difficult investment climate, which, coupled with mediocre implementation performance, resulted in considerably less impact than was expected. (3) Technoserve's approach focused on strengthening cooperatives and helping them become better-managed businesses, not on NTAEs; its impact on NTA production and exports was therefore rather limited. Furthermore, it was not possible to measure impact, given Technoserve's method of tracking progress. (4) The private investment projects assisted by DIVAGRO are more sustainable than the NTAE export programs promoted with cooperatives and producer associations by CLUSA and Technoserve; 36 of the 50 DIVAGRO-assisted investment projects have survived and are considered sustainable. (5) Several CLUSA-assisted export programs are sustainable because supporting institutions are in place and marketing linkages have been created. The sustainable programs include: watermelons, honeydew melons, organic exports, sesame exports, and vegetable production for local processing and later export. An estimated six NTAE cooperatives could continue exporting fresh NTAE products without outside support. (6) Further growth of NTAEs is not sustainable because it requires that mechanisms be in place to help new producers and exporters, and promote innovative development of new products and new markets. (7) The institutional development of cooperatives assisted by CLUSA and Technoserve has been severely affected by the frequent changes in cooperative boards of directors and managers. Unless this situation changes, CLUSA's work will never end. (8) CLUSA's efforts have opened competition in NTAEs, which has brought both stability and ethical business arrangements to the NTAE arena and effectively eliminated the earlier situation where local exporters manipulated both growers and foreign importers. (9) The three implementing organizations collaborated very little with each other, primarily due to differences in ideology, personality, and "turf." Opportunities to leverage individual efforts for a greater overall impact were lost. USAID should continue to support NTAE development in El Salvador. it continues to be a valid developmental strategy and merits ongoing support. The evaluation team strongly disagrees with the blanket, sweeping indictment expressed in the final evaluation of the FIDEX portfolio, which maintained that El Salvador is unsuited to be a producer and exporter of NTA products. USAID should try to increase its impact on NTAEs, preferably by using producers/exporters as a nucleus from which to promote outgrower arrangements with small/medium farmers and cooperatives. The following lessons were learned. (1) There is no substitute for having the right project in the right place at the right time with the right implementor. If the Agribusiness Development Project were launched in today's improved environment, even with the same implementor, the impact would likely be much greater. (2) Project goals, objectives, performance indicators, and performance measurement should be consistent. For example, the performance measures established for Rural Enterprise Development II were inadequate to measure progress toward the goals of incremental employment, income, and production. (3) When an adverse operating environment cannot be changed, it is necessary to change the implementation strategy. DIVAGRO would have achieved greater impact had it used a different strategy for investment promotion. (4) The creation of viable cooperative businesses in El Salvador requires cultural changes and therefore education and not merely training.