Empowerment of Small-scale Farmers in Bolivia (1997)

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This document has been made available in electronic
format by the International Co-operative Alliance (ICA)
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June, 1997
(Source: ICA News, Issue No.3/1997- pp.4-5)

Empowerment of Small-scale Farmers in Bolivia
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The province of Chuquisaca outside the city of Sucre is one of the
poorest regions of Bolivia, which itself is the second poorest 
country in Latin America.  In this region, the ICA-FOPROPE
project, Empowerment of Small-scale Farmers, began in September
1994.  The programme is financially supported by the Finnish
government and by community counterparts, such as the saving and
credit co-operative COSAL, local authorities and local non-
governmental organisations. 

The president of Bolivia, Gonzalo Sanchez de Lozada, in a September
1996 speech to the presidents of Latin America, stressed that all 
Latin American countries "should make accessible to the poorest 
parts of the population small loans and appropriate technology... 
instruments that could allow these people to free themselves from 
poverty."  ICA, in conjunction with the Finnish government, 
instituted their programme with objectives that encompassed those
of the Bolivian president.  The main goal of the project is to 
empower rural small-scale producers by providing small loans
and technical assistance;  other objectives include a general 
improvement of living conditions, combating migration to urban 
areas, and providing training and educational services to improve 
utilisation of scarce resources. The programme's most important
aspect is the credit scheme; however, in order to overcome the 
technical and economic constraints of rural producers, the scheme 
is accompanied by training courses, information programmes and 
technical  supervision at the grass-root level.  The credit
scheme involves giving loans to small-scale farmers, limited to 
UUS$ 50 to 200, which are used for commercial production and 
subsistence farming. The annual interest rate is 24 per cent, 
the lowest market price for this type of loan in Bolivia.  Loans 
are typically repeated several times to the same families, but 
new access is contingent upon the repayment of the previous
loan.  The credit scheme began in May 1995, when the first 
US$ 170,000 was put into the credit and guarantee fund of COSAL.  
Little demand existed in the beginning of the project, with only 
31 per cent of the money in the fund circulating.  However, demand 
has grown steadily, and in August 1996, 100 per cent of the money 
was in circulation.  The fund grew to US$ 300,000 by the end 
of 1996, but due to requests by new communities to enter the 
credit programme, along with heavy demand from participating 
communities, the fund was unable to grant loans to all who
applied. However, with the extension of the programme by the 
Finnish government through the year 2000, demand will be met 
and new communities will soon be able to participate. 

ICA-FOPROPE and COSAL supply loans for a variety of different
projects, but families mainly take loans to help with agricultural 
production. Agricultural loans are broken down into two categories
in order to be better able to examine the results:  loans in 
regions with irrigation and loans in areas of rain-fed irrigation.
In areas with irrigation (all figures approximate), the production 
of families rose 35 per cent, the area of land under cultivation 
was extended by 30 per cent, and the average income increased 
40 per cent.  Food security remains the principal objective in
regions of rain-fed agriculture, and the main function of loans 
is subsistence rather than commercial production.  In all cases 
in these areas, the harvest value was slightly higher than the 
production costs, with the sales income covering all the financial 
inputs for production but covering only partially the labour costs.
People in the participating communities have also taken the
initiative to borrow money for projects other than agriculture.  
In two communities women took loans to purchase sewing materials 
for the commercial production of clothing.  They earned a monthly 
net revenue of $US 50 to 60, $US 20 to 30 higher than what they 
would have earned in the city as servants;  this therefore 
successfully combats migration to the cities and prevents the 
separation of families. Other groups took loans to buy cattle 
and dairy cows, both of which proved to be sound investments. 

Another important  aspect of the programme is the training courses.  These
courses are available not only to the loan recipients, but to all 
members of the community. Organisation of the courses began in 
April of 1996, and currently 42 courses are being offered in the 
communities participating in the credit scheme. In addition, 
there are 26 courses offered in communities not involved in the 
scheme. Courses are given on better production techniques, 
co-operative organisation and management, administration and
book-keeping, and other relevant topics.  

Although the impact of the training courses is hard to measure 
qualitatively, it is certain that they help to guarantee 
profitability of loan investments, as well as provide the families 
with better technical knowledge to improve production and raise
their quality of living. 

The programme also incorporates feasibility studies to support 
The decentralisation of development resources in Bolivia.  
Studies are done on the micro-investments of municipalities, 
co-operatives and other institutions favourable to the communities.
The goal of these studies is to create favourable developmental
conditions in the villages and encourage the adoption of new 
technology.  Another component of the project is support for 
trading and the commercialisation of handicrafts and agricultural
products.  Communities are given help in planning their production 
so as to maximize commercial profit.  

In addition, the project supports rural co-operatives and works 
with co-operative organisers to help them maximize investments 
with the ultimate goal of self-sufficiency.  There are also plans
to support a women's service co-operative for the commercial 
production and sale of traditional textiles made in the communities.  

It is unarguable that this project has had a very positive 
impact on the communities involved.  Both ICA-FOPROPE and COSAL 
believe that what is needed to continue the success of the project 
is a sustainable credit scheme, not simply a short-term programme.  
At  present, the credit scheme is not self-sustainable, as it 
does not cover the costs of credit distribution, of recovering 
loans, nor of the technical supervision necessary to help families
maximize the productive capacity of their loans.  The scheme is 
effective due to external financial support during the first 
two years of the project, covering the cost of technical assistance 
as well as 50 per cent of the credit fund.

With the extension of the projectto the year 2000, self-sustaina-
bility may be reached with the implementation of other supplementary measures, such as an increase in credit co-operatives' total credit funds, 
more active and organised community representatives in the governing bodies of COSAL, and continued support at the grass-root level to supervise 
the loan destination and utilisation by the families.  It is the 
hope of ICA-FOPROPE and COSAL that with the progressive 
implementation of these measures the credit scheme will one 
day be able to operate with no external assistance.