Small farmer credit : profitability and repayment

Evaluation covers the period 9/79-9/80 and is based on an annual review by A.I.D. and contractor -- Colorado State University (CSU) and Oklahoma State University (OSU) -- personnel. Project activities in Honduras and the Dominican Republic have yielded improved methodologies of budget analysis and cost-effective means of data collection. Efforts to better understand factors affecting farmers" ability and willingness to repay credit and analysis of the impact of potential changes in credit programs are proceeding. Despite massive personnel changes resulting from a mismanaged reorganization of the Agricultural Development Bank, the OSU-implemented subproject in Honduras has yielded improved farm management and Bank credit administration, training for Bank employees and other technicians, and an apparent increase in small farm income. After being forced to abandon plans in the Philippines and then in Nicaragua, the CSU subproject is now underway in the Dominican Republic and has been granted a 1-year, no-cost extension. Progress, however, is being hampered by the politicization of the Agricultural Bank. Project experience has taught several lessons: (1) Pre-project preparations (e.g., determining time frame, counterpart institutions, and budgets) must be thorough and should be in line with Country Development Strategy Statements. (2) USAID"s should not rely on verbal agreements for logistical support to contractors. (3) Rather than force contractors to cooperate with host country groups, USAID"s should either take the lead in these efforts or leave contractors to determine the needs, areas, and extent of cooperation. (4) Activities designed to build inter-institutional cooperation (e.g., seminars) must be specifically budgeted. (5) Local pressure to expand the scope of a research project should be anticipated. (6) Applied research projects should first be tested in a small geographic area before use on a national scale. It is recommended that: (1) OSU submit its final two studies; (2) an OSU Contractor Performance Evaluation Report (herein attached) be prepared; and (3) on-site discussions be held with the CSU principal investigator.