Promoting the role of farmer-based organizations for value chain integration in

Ghana:

an impact evaluation based on organizational diagnostics

Nicola Francesconi, CIATFleur Wouterse, IFPRI

Did you know?• the UN declared 2012 as the International Year of Cooperatives

• cooperatives play a major role in rural financial and extension services worldwide

• 50% of global agricultural output is marketed through cooperatives

• cooperatives were instrumental for the success of family farms in the US and EU

Coops prevalence in Africa

% of rural villages with at least one coop

Senegal 47Burkina Faso 56Ethiopia 35Uganda 31

Recent data from CIAT shows that 80% of Ugandan bean producers are members of at least one farmer

organization based on cooperative values and principles

What is a cooperative?

Not an NGO or a parastatal because it is a for profit organization

Not an Investor-Owned Firm (IOF) because it is:

an organization owned and controlled by the individuals benefiting from its servicesora user-owned, user-controlled and user-benefitted organization

The History of Rural Cooperation in Ghana (from defensive to offensive)

Time

Market-driven

State-driven

Community-driven Mutuals

Coops

FBOs

Pre-colonial Colonial & Post Independence

Post StructuralAdjustment

GovernanceIn 2010:

10,000 FBOsand growing rapidly…

but informal, at an infant stageand still uncompetitive

How to support the development of FBOs in order to boost agri-commercialization among Ghanaian farmers?

The MiDA program

• Initial population: 3,052 voluntarily enlisted and surveyed FBOs from target horticulture/maize areas

• Selection criteria: approx. 50 members, women’s equal participation, community-based, recently established (or re-established), strong leadership

• Intervention: collateral to facilitate FBOs’ access to credit for collective investments to improve farmers’ vertical integration into value chains (warehouses, vehicles, processing plants, etc.)

• Incentives for participation: starter packs to member farmers (fertilizer, seeds, equipment, cash, etc.)

• Selection outcome: 1,242 FBOs were selected into the program

MiDA’s failure:• Only 269 loans disbursed, for 1,242 participants!!!

• Many FBOs did not apply for a loan

• Many other FBOs were not successful in their application due to the poor quality of their business plans

• Due to this shortfall the MiDA program was widely considered to have failed in improving farmers’ commercialization.

To what extent did the program fail (negligible or negative impact)? And what are the reasons for this failure?

Theory of Change

Intervention

Negative impact on organizationalperformance

Negative impact on farmers’

commercialization

MiDAProgram

No impact on organizational performance

No impact on farmers’

commercialization

The incentives and selection criteria introduced by the program had either a negligible or negative intermediate impact on FBOs’ performance in mobilizing collective investments, and therefore the ultimate impact on farmers’ commercialization is also expected to be either negative or insignificant.

How to test this theory of change?

Impact Evaluation based on Organizational Diagnostics

• The programs’ ultimate impact can be defined and explained on the basis of its intermediate impact on organizational performance.

• But impact evaluations are usually designed to identify ultimate impacts at the farm household level, providing little insights about organizational reasons for success or failure (they identify unique and static impacts for a given place and point in time)

• Ultimate impacts are also indirectly related to a program and thus their identification and attribution tends to be uncertain and partial.

• Measuring intermediate impacts on organizational performance has the potential to identify more directly attributable, holistic and longer term, behavioral impacts.

• Therefore we adapted impact evaluation techniques to evaluate intermediate impacts on organizational performance.

Data collection

• Survey data on 500 FBOs collected by 17 MSc students using questionnaires uploaded into smartphones.

• The sample was randomly drawn from the original MiDA list of 3,052 FBOs: all surveyed FBOs wanted to participate (< self-selection bias)!!

• Semi-structured interviews and games with three board members per FBO to capture: collective investments, participation in the program, proxies for selection criteria and fixed effects.

Data descriptives500 observations, fixed effects excluded

Risk-game (with three leaders per FBO)

Sequence of the game• the three board members were separated (no hear, no see) • they were explained the rules of the game through a demo • they were asked to pick a risk option from 0 to 7 (Binswanger 1980)• they were gathered in a central place and a coin was tossed • players’ individual payoffs were calculated and handed out • Leadership strength was measured by the average standard deviation

(from the median) of the risk options picked by the three players, i.e. by the level of homogeneity in leaders’ risk preferences

Binswanger’s risk game

IV regression: first stageR-squared 0.18, 500 obs., Kleibergen-Paap and Hansen J tests

IV regression: second stageR-squared 0.10, 500 obs., consistent with OLS

Conclusions

• Likely negative impact on farmers’ commercialization because the:I. program incentives may have induced shirking among member-

farmers (avoidance to invest in the common cause)II. program selection strategy failed to promote participation by

older (more consolidated) FBOs with stronger leadership, which are more likely to develop feasible investment plans

• The evaluation of an intermediate impact on organizational performance allows to explain a program’s success or failure, which can be more important than identifying ultimate outcomes at the farm-household level (as in this case).