FUNDACEN experience : factors for success and failure in a Guatemalan land purchase program

The program has made land available to over 1,300 families and provides a model for the design of similar public and private reform measures. The ultimate objective is to create independent owner-operators based on cash crop systems. As the beneficiaries pay for their parcels, funds are released to assist other families. The immediate objective is to reach full production rapidly on the parcels. This can conflict with the initial welfare of the beneficiaries and establish institutional patterns that work against the eventual independence of the farms. The current report is based on 10 months of fieldwork in 1988 and 1989/90 and visits to 25 farms in the FUNDACEN program and in a similar program run by INTA, a Guatemalan government agency. A formal survey was conducted on 10 farms and involved interviews with 144 randomly selected beneficiary households. Beneficiaries were asked about demographic characteristics, cultivation of corn or coffee in the 1989 growing season, fertilizer purchases, output sales, and opinions about life on the farm. Survey interviews were also conducted at the farm level for information about the group. The initial stage of the program involves the selection of farms and beneficiaries. Although FUNDACEN has generally selected properties well, isolated farms are sometimes chosen, leading to higher commercial and social costs. A serious mistake of the FUNDACEN program has been the failure to provide for the nutritional needs of the beneficiaries in the early years on the farm. The quality of housing is uneven across farms due to a changing housing credit policy. A school and teacher(s) are provided on the farm for those who can afford the school supplies. Attention to health and sanitation is less than satisfactory, and access to medical care may not be possible if transportation is unavailable. Rapid progress toward full agricultural production has been achieved, but at the cost of beneficiary training and participation in decisionmaking. Beneficiaries generally do not participate in input selection. Output is often reduced needlessly by the late arrival from the FUNDACEN central office of production credits and inputs. Corn production is discouraged on the farms even though it may form an essential component of the family"s nutrition strategy and represent a complementary use of productive resources. Corn provides insurance against price fluctuations and production risks in the cash crop and a hedge against inflation in food prices. As the farms come into full production, there are second-generation marketing and processing problems to be addressed. The distribution of cash proceeds from the 1989/90 coffee harvest was delayed by the FUNDACEN central office, creating conflict and interfering with the goals of the program. Similarly, a shortage of beneficio capacity led to serious problems on one of the farms in the survey. To develop knowledge about marketing, the beneficiaries need to begin to participate in the purchase of inputs and sale of outputs. FUNDACEN employs an outstanding group of field personnel. The technicians are responsible for all of the activities on the farm, but are under pressure to concentrate on the size of the harvest. In a few cases, there are technicians who fail to comprehend the nature of the program. The regional supervisors occupy a unique position in that they understand both the daily problems on the farms and the constraints faced by the central office. They have been instrumental to the success of the program. An effective system for providing the beneficiaries with complete information about their credit accounts has not yet been designed. Information and decisionmaking power is generally retained at the top of a hierarchical system. The formation of permanent subgroups among the beneficiaries on each farm may provide an appropriate institution for beginning the necessary process of decentralization and beneficiary training. Establishing a legal identity for each farm community will also promote a successful transition to the day when the farms operate independently of FUNDACEN. Specific recommendations for improve- ment of the FUNDACEN program are provided at the close of the report. (Author abstract)