Carlos Pacheco is one of 17,000 beneficiaries of the CRIAR program in Bolivia. The program provides financial support to small-scale farmers to buy low-cost agricultural technologies, along with technical assistance to use and apply them. CRIAR organizes technology fairs in rural areas of Bolivia so that small-scale farmers like Mr. Pacheco can obtain information regarding various agricultural technologies and purchase those that best fit their needs.
Farmers have purchased an assortment of technologies that range from greenhouses, irrigation systems, and metal ploughs to small barns and milling equipment.
“When I heard people talk about the fair, I thought that with these kind of technologies I could find my way out of poverty,” said Mr. Pacheco.
The adoption of low-cost technologies can generate important changes in production patterns and productivity, resulting in higher incomes and improved well-being for families. Nonetheless, many short-term mechanisms are required to create a virtuous circle in which the adoption of technologies results in an increase in productivity. What are these mechanisms?
Many factors can generate this virtuous circle in agricultural production, including greater use of inputs; increased sales; and increased production of high-value crops. Despite the importance of these factors, there have been no rigorous studies that analyze the mechanisms through which this process is triggered. There was a black box to open.
Opening the black box
IDB researchers embarked on the task of opening this black box to understand what short-term mechanisms generate a long-term impact. The researchers analyzed the impact of the CRIAR program using a Propensity Score Matching methodology. This econometric approach, along with a careful data collection strategy, allowed the identification of a proper control group of farmers comparable to the beneficiary group.
Specifically, the researchers aimed to answer the following questions: Is the CRIAR program generating the initial impacts that were expected? Are short-term mechanisms being triggered so that long-term increase in productivity and income of the beneficiary households will take place? And, most importantly, what are these mechanisms and how do they work?
The researchers show that the most important short-term impacts of the CRIAR program are greater crop diversification, increased input expenditure, and higher sales of agricultural production.
Specifically, the program decreased the allocation of land to traditional crops such as potatoes and corn and increased the area allocated to modern crops with higher value added like peas and green beans. The CRIAR beneficiary households increased the production of modern crops by 11 percent compared to nonbeneficiaries. In addition, input expenditures on fertilizers, insecticides, and fungicides increased by 56 percent. Finally, production allocated for household consumption fell by 10 percent, while agricultural sales rose by the same proportion.
What are the initial mechanisms that take place among the beneficiary households that receive the new agricultural technology? The researchers suggest that beneficiary households diversify their crop portfolio, producing nontraditional crops with greater value added in larger areas.
At the same time, the increase in agricultural production for sale, together with the decrease in the proportion allocated to household consumption, indicates that beneficiary households are modifying their household economy, moving from self-sustainment toward a more market-oriented structure. Finally, the greater use and expenditure on agricultural inputs indicates that the household productive structure has changed.
The importance of understanding and assessing the short-term mechanisms that take place with this type of agricultural programs is essential for achieving long-term effectiveness. In other words, to identify, measure, and determine how these initial mechanisms trigger productivity increases is essential for policymaking decisions.
In particular, in the case of the CRIAR program, the importance of providing technical assistance, together with the delivery of technologies, was crucial to achieving program’s impact. The mere delivery of a technology is insufficient to obtain sustainable results in the long run.
Also, it is important to provide training to farmers in the management of higher value-added crops and the efficient use of inputs, while providing them with information on access to new markets. This will ensure that initial impacts of the program are sustainable over time and will ultimately result in improvements in both productivity and income of small-scale farmers like Mr. Pacheco.