Project reprogramming considerations : Guatemala small farmer marketing project

Special evaluation covers the period 1/81-5/82. No methodology is stated. The new cooperative, CECOMERCA, is not economically viable, although gross margins did increase during the period 1-5/82, indicating that management is acquiring enough skills to make CECOMERCA viable over the short run. However, sales volumes dropped by half due to the 6/81 loss of the Nicaraguan market. Further, high costs of sales and operations (204% over budget) are prohibitive over the long run. Shortfalls are due to a variety of causes. The two participating federations, FENACOAC and FECOAR, made no sustained efforts to recruit vegetable and fruit growers. Technical requirements of GTQ90,000 capital and 2,000 new members were falsely reported as fulfilled to satisfy legal demands, i.e., CECOMERCA was created without a membership base. The federations and local cooperatives never disbursed the required GTQ800,000 production credit to local farmers. CECOMERCA management personnel, selected for loyalty to their respective federations, were not knowledgeable about Guatemalan and Central American produce markets and technical assistance (TA) was ineffective. CECOMERCA, consequently, had no produce marketing specialist and no sales thrust, and received no on-the-job training in cooperative organization, management, and operations. Moreover, because USAID/G did not effectively monitor the 1979-81 start-up period, the above problems were not recognized in a timely manner. Recommendations are to provide TA to CECOMERCA in order to: (1) develop a membership base of 1,000 dues-paying owner/members by the end of 1984; (2) identify needs and provide local and international short- and long-term training in sales and marketing, financial management, and produce handling and packing. Additional equipment and facilities procurements should be deferred until the cooperative is solidly viable. Previous losses should be covered with U.S. funds; if the two federations do not release the committed production credit to CECOMERCA, A.I.D. should seek some other institutional base for project continuation. According to the new budget and operation designs, breakeven is expected in 1985.