Production and Business Services El Salvador Productive Development Project (PDP) Final Report

SEPTEMBER 2012 PDP Production and Business Services El Salvador Productive Development Project (PDP) Final Report

Contract No. 46 Nancy Mejía, a young woman from the Northern Zone, poses in front of a refrigerated milk storage tank located in the Cassie Stern Center (Suchitoto municipality, Cuscatlán department). CONTENTS

Introduction...... 1

Results...... 7

Beyond the Numbers — the Strategy...... 17

Tools that Contributed to Success...... 69

Lessons from the PDP Experience...... 79

Conclusions...... 87

Beyond PDP...... 91

COVER: Oscar Edgardo Moscoso, member of the San Carlos de R.L. Cooperative, plants a plantain seedling of the dwarf horn variety (El Paisnal municipality, San Salvador department). PDP

INSIDE COVER: Vegetable plot in Cantón Las Pilas (San Ignacio municipality, Chalatenango department). PDP

BACK COVER: A member of the horticulture technical team enters data about a vegetable plot, which will be uploaded to PDP’s comprehensive monitoring system. PDP

PDP Contents iii A farmer holds a tomato seedling that is ready to be transplanted. CHAPTER ONE Introduction

In 2006, the Millennium a grant agreement between the Challenge Corporation (MCC) U.S. and Salvadoran govern- announced that lower-middle- ments. The government of El income countries1 would be eli- Salvador then created the Mil- gible for funds from the Millen- lennium Fund of El Salvador nium Challenge Account. The (known by its Spanish acronym, government of El Salvador cre- FOMILENIO) to manage the ated a high-level commission to agreement. work on meeting the eligibility requirements, and on November A national program to promote 8, 2006, MCC’s board of direc- sustainable development in the tors selected El Salvador as a Northern Zone, FOMILENIO funding recipient, approving the aims to contribute to poverty country’s proposal to help lift reduction through economic more than 150,000 Salvadoran growth, with three objectives: men and women out of poverty and improve the standard of • Boost the production of living for 850,000 people in the goods and services and in- country’s Northern Zone. crease job opportunities (Pro- ductive Development Project) A month later, the Salvadoran Legislative Assembly unani- • Increase education and mously ratified and approved skills among Northern Zone

1 . According to the World Bank, countries with per capita income less than $1,025 are considered “low income ”. (Middle income is $1,026 to $4,035, upper-middle income is $4,036 to $12,475, and high income is $12,476 or more) . Source: http://data worldbank. . org/about/country-classifications/country-and-lending-groups . Accessed August 2012 .

PDP Introduction 1 MAP 1. Poverty Rates in Northern Zone Municipalities

GUATEMALA HONDURAS

Northern Highway

San Salvador

Bodies of Water Northern Zone of El Salvador

Levels of Poverty in the Northern Zone Low Moderate High Severe residents so they can take so that they can participate in advantage of employment and the economic and social life business opportunities and of the rest of the country, and improve basic social infra- the region. The Northern Zone structure in their communi- spans 7,500 square kilometers ties (Human Development — one-third of the country’s Project) total area — and its 850,000 inhabitants represent 12 percent • Reduce the time and cost of of the country’s population. The moving people and commodi- Northern Zone comprises 94 ties within the region (Roads municipalities in the depart- Connectivity Project) ments of Santa Ana, San Salva- dor, Chalatenango, Cuscatlán, Using a public consultation pro- La Libertad, Cabañas, Morazán, cess, the government of El Sal- San Miguel, and La Unión. It vador concluded that the North- is an important source of water, ern Zone is home to half of the energy, and biodiversity. Four country’s poorest municipalities electrical plants operating along (see Map 1) and is regarded the Lempa River generate one- as the region most affected by third of the country’s power. the civil war of the 1980s. For The Lempa River also provides these reasons, its inhabitants one-third of the water supply for need specific types of support the San Salvador metropolitan to boost their development, area.

2 Introduction PDP A spray irrigation system waters a vegetable plot in Cantón Las Pilas (San Ignacio municipality, Chalatenango department). A horticulture program beneficiary prepares some flowers in Cantón Las Granadillas (La Palma municipality, Chalatenango department).

PDP 4 Introduction Project timeline

3/10 9/10 Design and approval Phase 2 begins: 10/11 1/09 of Phase 2: Expand 25 grant Target 7/12 9/08 PDP registers the grants fund and agreements, number of Grant Project its rst seven open the Escuela $25 million bene ciaries agreements begins bene ciaries de Proyectos contracted reached end

Phase 1 Phase 2

9/12

9/08 9/09 9/10 9/11

11/08 6/09 8/10 9/12 PDP establishes FOMILENIO Phase 1 ends Contract consortium for approves the 15,319 ends Phase 1 and project’s strategic bene ciaries launches eld plan: De ne activities intermediate objectives, impact indicators, and implementation strategy 6,233 bene ciaries 12,929 jobs created 3,802 jobs created $106,091,569 $5,818,773 in sales in sales A young Hass avocado fruit in Cantón Las Granadillas (La Palma municipality, Chalatenango department). CHAPTER TWO Results

FOMILENIO contracted with from productive activities of Chemonics International for 13,000 people in the Northern the Production and Business Zone by at least 15 percent and Services activity in September create at least 10,500 new jobs. 2008, beginning a 48-month These figures represent FOMI- implementation period that LENIO’s intended impact ended on September 18, 2012. through this project. To grasp the magnitude of these targets, During this period, Chemon- it is useful to describe both the ics and its partners worked to situation in the Northern Zone increase the net annual income when PDP started and the rea-

PDP aimed to boost production of goods and services and employment opportunities through activities in three areas:

Activity 1: Support for Production and Business Services Technical assistance and training for production systems development

Activity 2: Private Investment Support Investment loans through the Investment Trust Fund for the North- ern Zone (FIDENORTE)

Activity 3: Financial Services Credit guarantees (PROGARA NORTE) and rural securities and guarantees Technical assistance in financial services

PDP Results 7 Sebastián Menjivar, a papaya grower associated with the Business Development Demonstration Center in Cantón El Paraíso, carries papayas from his orchard (Chalatenango department).

sons the project team chose to Institutional work as it did. Framework The Productive Development Although the Northern Zone Project was created to help accounts for just one-third of reduce poverty through eco- the country’s territory, it is nomic growth in the Northern home to half of El Salvador’s Zone. To spur economic activity poorest municipalities and that would boost incomes and generally has not managed to demand for labor through pro- integrate into the economy of ductive initiatives and services the rest of the country. tailored to rural settings, the PDP team identified three core

8 Results areas for its work: technical Exceeding assistance and training services Expectations for production and business, The project team’s original investment support, and finan- mandate was to contribute to cial services. boosting the annual net income of 9,500 men and women in the Each area was set up as a Northern Zone by 15 percent separate activity with a sepa- (referring to income from the rate budget and staff resources. productive economic activities Activity 1 initially consisted of targeted for assistance). For 13 pilot projects implemented example, a dairy farmer earn- by national development service ing $3,000 a year would see his providers; Chemonics began or her income rise to at least its work in September 2008, $3,450. Increased incomes were in what was termed the “full expected to generate a greater implementation phase.” The demand for labor; the projected Multisectoral Investment Bank target was 7,800 new full-time (now BANDESAL) was the equivalent jobs (at least 250 implementer for Activities 2 work-days a year). At the end and 3. of the second year, these pro- PDP

Exhibit 1. Productive Development Project Operational Structure

13 Pilot Projects Activity 1 Production and Business Services Chemonics International

FOMILENIO Productive Development Activity 2 Implementation Consortium PROGRAM Project Private Investment Support Chemonics Phase 1 Grant Agreements with Business Service Providers Activity 3 Grant Agreements with Technical Financial Services Service Providers

Results 9 jections were expanded: PDP A Foundation for would be able to reach at least Success 13,000 beneficiaries (with the PDP had sufficient resources, same increase in income) and highly trained professional EXHIBIT 2. Percent contribute to the creation of at teams, qualified national and Increase in Annual Net least 10,500 new jobs. international advisors, and an Income in PDP-Supported adequate operational budget Value Chains The project team worked in five that could draw on two funding 350 sectors — fruits and vegetables, sources. In-kind contributions 323 agroforestry, dairy, tourism, and were used to set up demonstra- handicrafts — with the option tion areas that modeled and 300 of incorporating other sectors encouraged beneficiaries to that were likely to contribute adopt new technologies. Funds 250 240 to project targets. Specialty and for productive projects followed conventional coffee, aquacul- the model of working through ture, and apiculture (honey) local service providers, used 200 184 value chains were added in during the pilot phase. August 2010. With forest 150 resources in an advanced state of In PDP’s original design, ben- depletion, the team determined eficiaries were expected to be 115 105 that the timber sector was too able to grow their investments 100 92 risky; rather than working by obtaining credit through 73 66 directly in those value chains, FIDENORTE while reducing 50 PDP’s forestry-related work risks through rural insurance sought to promote appropriate and guarantee systems set up forest policies for the Northern through the project’s other 0 Zone and the country. activity areas. Total Crafts Coffee Dairy Tourism Aquaculture Horticulture The message from FOMI- As the project evolved, more Apiculture (Honey) LENIO’s beneficiaries and civil resources became available for society was clear, reflecting a the Production and Business The exhibit above illustrates the combination of frustration and Services activity and resources increase in beneficiaries’ annual for Activity 2 were reduced; this income, calculated by taking annual hope: “We are not interested in net income after Year 4 vs. the more of the same.” Echoed in shift led to the decision to raise annual net income they were earning nearly every setting, this state- the project’s targets. Project when they began working with ment was a call for a different funds for financing productive PDP (the baseline). This calculation kind of program. No more projects were also increased, only considers income from the productive activity in which each projects that leave producers in from $4 million to more than beneficiary participated. the “same” situation, without $12 million. In addition, the The total represents average clear progress or benefit to their project’s sustainability man- weighted net income for the value incomes or family well-being. date meant that it operated as chains strengthened by PDP. No more projects that seem an umbrella organization for (from the individual producer’s national or regional (Central perspective) only to benefit American) managing entities, nongovernmental organizations which would be trained to con- (NGOs) and technical teams. tinue providing services to other

10 Results beneficiaries. In other words, Farm plots averaged less than 1 local capacity building was a manzana (about 0.7 hectares), guiding principle for PDP’s hindering the production of interventions. basic grains. In areas with access EXHIBIT 3. Relationship to water for irrigation, the PDP between Beneficiary Initial Findings team found average plot sizes of Investments and In-Kind After the project’s value chain one quarter of a manzana. Stock Grants Fund (Million specialists conducted diagnostic farms were far smaller than Dollars) studies, they found that none of what is required for efficient, 30 the target value chains was com- competitive production on dual- petitive in its own right. Most of purpose cattle ranches. 25 the producers, microenterprises, and medium-sized enterprises Low productivity, limited access that had invested in those value to productive resources, and 20 chains — or were using tradi- scant market vision are discour- tional production — were either aging, but they are not uncom- 15 losing money or not earning as mon in the world’s developing much as they had anticipated. nations. In El Salvador’s North- Many farms were going under, ern Zone, these circumstances 10 private investment was scarce, were exacerbated by major and productive resources were climatic risks, high levels of 5 underutilized. Appropriate, migration and the aging of the modern, and efficient produc- producer population, crime- tion technologies were not in related risks, and lack of pro- 0 0 1 2 3 4 use, except in a few areas that ductive infrastructure, especially Years had been supported through for the post-harvest and process- previous interventions. Lack of ing stages. For example, most In-Kind Grants Fund competitiveness was mainly due dairy producers’ lack of access Beneficiaries’ Investment to low productivity. For exam- to cold storage for milk meant 120 ple, the team found that aver- they had to sell much more age daily milk production for quickly, leaving them vulnerable The exhibit above shows the 100 traditional dairy farmers who to predatory intermediaries and relationship between MCC’s net condemning them to perpetu- investment in productive processes had fewer than 10 cows was seven bottles per cow — well ally low prices because they through80 PDP and direct investments of farmers in technology adoption. below the regional daily average could not preserve the milk long As the graph illustrates, beneficiaries’ of 15 bottles per cow found at enough to reach formal markets. investment60 doubled the MCC funding well-managed dairy farms in the aimed at promoting new technologies. Northern Zone. PDP also identified a vibrant domestic market stocked mainly 40 At the same time, there was a by imports. With slight varia- lack of market vision in produc- tions, certain characteristics 20 tive processes. Almost no one were evident across value chains: was producing in the condi-

0 tions required by the market. • A few well-organized whole- 0 1 2 3 4 The land — especially farm- sale buyers Years land — was highly segmented.

Results 11 Julian Oscar Escamía, a member of the San Carlos de R.L. Cooperative, cuts a bunch of dwarf horn plantains in Aguilares municipality (San Salvador department). 30

10 • A host of intermediaries Measuring PDP’s 5 provisioned locally and with Success imports PDP achieved all of its objec- EXHIBIT 4. Relation tives, and not only in terms bet0 ween Direct Sales 0 1 2 3 4 • Emphasis on price rather of figures (the project’s overall from BeneficiYearsaries than quality results are listed in Exhibit 5). and the Total MCC The team also tackled some of Investment through PDP • Few formally established the root causes of low competi- (Million Dollars) businesses; disorganized and tiveness in the Northern Zone’s 120 scattered suppliers value chains — focusing on those that would benefit from 100 During PDP’s first two years, a finite program working on the team could not work in productive processes in national the Northern Zone regions or and regional contexts. 80 municipalities that showed the most potential, because the proj- Such an undertaking requires 60 ect began after the pilot projects relationships with thousands of had already begun activities in people. Directly and indirectly, the same value chains. Exhibit 2 PDP’s production and market- 40 on page 10 describes the base- ing work touched the lives of line situation for PDP ben- more than 15,000 people in 20 eficiaries and the value chains the Northern Zone and forged added during implementation many lasting relationships. (specialty coffees, tilapia, and PDP knew producers’ busi- 0 0 1 2 3 4 honey), which all demonstrated nesses — what and how much Years strong potential to contribute they produce and sell, and how to the economic development of much and to whom it is sold — Total MCC Investment through PDP the Northern Zone. almost as well as they did. Sales

The exhibit above shows the direct impact in sales in the PDP-supported value chains, relative to MCC’s total investments under PDP (the Chemonics contract, in-kind grants, and technical assistance grants). Each dollar invested by MCC generated EXHIBIT 5. Targets and Outcomes $2.20 in direct sales. Performance Measure Life-of-Project Target Outcome

Beneficiaries 13,000 15,319

Jobs created 10,500 12,929

MSMEs* assisted 933 602

Hectares assisted 17,554 22,207

Sales $82,254,521 $106,091,569

Private investment $10,112,974 $27,058,024

*MSMEs = Micro-, small, and medium-sized enterprises

PDP Results 13 EXHIBIT 6. Number of Beneficiaries (September 2008– September 2012)

15,319 Achieved 14,389 Planned 13,000 6,233 9,259 2,427 4,275 1,425

Year 0 Year 1 Year 2 Year 3 Year 4

By working through local part- improving access to markets, ners, the PDP team made sure or improving business manage- every participant benefited from ment. at least one of its three production and business services — Based on this strategy, the training, technical assistance, or project’s 15,319 beneficiaries small, in-kind contributions. saw their incomes grow, and an increase in economic activity PDP also influenced ben- that created 3,232,250 work- eficiaries’ business activities in days. Exhibit 7 summarizes the at least one of the following number of beneficiaries in each areas: boosting productivity, project-supported value chain.

14 Results PDP EXHIBIT 7. PDP Beneficiaries by Value Chain

8,000 7,482

7,000

TOTAL: 6,000 15,319 Bene ciairies

5,000 4,391

4,000

3,000

2,000

1,192 1,000 574 610 420 530 120 0

Dairy Crafts Coffee Tourism Apiculture Horticulture Aquaculture Forest Products

Carmen Ortiz of the El Salvador Produce cooperative association prepares scallions for market.

Results 15 Juan Ramón Rivera harvests his greenhouse tomatoes in Cantón Los Planes (La Palma municipality, Chalatenango department). Chapter three Beyond the Numbers — the Strategy

To achieve the project’s goals, competitive bidding for devel- PDP identified beneficiaries opment projects in the selected and encouraged them to accept value chains. technical assistance and small grants. In early 2009, after To begin, the PDP team con- a review of the initial work ducted rapid assessments in plan, the team launched a new each value chain, basing their approach. work largely on previous studies by the Multisectoral Invest- Adjusting the implementation ment Bank of El Salvador and process entailed risky decisions, FOMILENIO, which were then a large dose of trust on the part validated by PDP’s experts. The of FOMILENIO, and a coher- team spoke with stakeholders in ent, evidence-based proposal. In every value chain — including defining its strategy, the PDP trade associations, producers, team identified new paradigms banks and other financial insti- and principles for defining suc- tutions, wholesalers, intermedi- cess. aries, retailers, processers, and transport companies — to glean The team applied these new information for program design. principles as they developed PDP then presented its findings manuals on how to obtain and to FOMILENIO and integrated use project resources. Adhering them into a work plan, which strictly to these guidelines, PDP was approved in June 2009. put $19 million (through the The team’s interpretation of the Technical Assistance Fund and rapid assessments was informed in-kind contributions) up for by the following elements:

PDP Beyond the Numbers — The Strategy 17 Exhibit 8. PDP Development Paradigms and Principles

PDP’s Initial Design PDP: Re-imagined

Technical assistance Technology transfer

Design based on supply of services Design based on market demand and capacity of national technical and production needs to meet that service providers demand

Project designed without producer Project designed by the producers involvement

Technical service providers as the Beneficiaries and producer primary actor; beneficiaries are organizations are the main agents of passive recipients of development development

• Real and specific market op- receiving project assistance from portunities the outset.

• Competitive potential of the PDP issued its first public Northern Zone and specific request for proposals in July regions 2009 under its new market- and beneficiary-driven model. After • Benchmarks in the target holding several workshops and markets informational meetings in the Northern Zone on how to sub- • Bottlenecks limiting competi- mit requests for productive assis- tive access to target markets tance, PDP received 89 project ideas. Realizing that they would • Accessible, replicable technol- have to support the producer ogy to address bottlenecks organizations and MSMEs in preparing their proposals, PDP also conducted economic the team set up the Escuela de assessments of technological Proyectos (Projects School) to innovations and sketched an help potential applicants define outline for each program. their assistance needs. From that time on, no project proposal was As the project team continued submitted for FOMILENIO’s providing field-based techni- approval without the beneficia- cal assistance and promoting ries’ involvement and consent. increased productivity, they used the findings from the PDP’s “Territorial” assessments in meetings with Approach producer groups that had To boost competitiveness within responded to the announce- a defined geographic area, ment. This group included some PDP’s work necessarily incor- beneficiaries that had been porated natural and productive

18 Beyond the Numbers — The Strategy Escuela de Proyectos: A Shift toward Participatory Management The Escuela de Proyectos was a PDP-sponsored initiative, led by producers and MSMEs in the Northern Zone, which developed project proposals using a participatory approach and ongoing consultation with beneficiaries .

resources, private investment advanced state of deforestation levels, and technology. The and erosion of genetic forest project team used geographic resources PDP recommended information systems and satel- that FOMILENIO pursue lite information to analyze public consultation on forest each area’s potential. Map 2 on policy, rather than productive page 20 offers a detailed view projects. At the heart of this of soil types in the Northern recommendation was a shift Zone — one example of how from a forest-timber approach to the project used technology to one focused on environmental understand beneficiaries’ needs service provision. and potential. Using this type of information as a baseline, PDP’s During the PDP implementa- staff carried out field visits and tion period, a national forest consultations with producer policy was developed in con- groups and established organiza- junction with civil society and tions to clarify each target area’s submitted to the Salvadoran competitive potential. Local government. Exhibit 9 on page government support was crucial 21 illustrates the consensus- in helping to legitimize PDP’s building process that was used presence and win the people’s to develop the proposal. As of trust. August 2012, the proposal was before the executive branch. PDP designed specific interventions for each program based In addition to designing spe- on the local potential identified cific interventions for each during the mapping and consul- value chain it supported, PDP tation exercises, subdividing the developed productive projects Northern Zone according to its for related value chains, begin- physical and social productive ning with a productive unit (a features, mainly in the dairy farm, workshop, or tour opera- and horticulture value chains. tor) and then working through a centro de desarrollo empresarial The team’s research also demostrativo (business develop- informed decision-making ment demonstration center) — a related to the forest products model productive unit used value chain. In light of the for disseminating technology.

Beyond the Numbers — The Strategy 19 GUATEMALA

Map 2. Soil Types in the Northern Zone

HONDURAS

Northern Highway

Bodies of Water Northern Zone of El Salvador Swamp Urban Zone

Soil Types Class I Class II Class III Class IV About 25 productive units are each field school, working with Class V grouped around each demon- two assistants (recent graduates Class VI stration center, and their owners of a university or technical pro- Class VII or managers attend escuelas de gram related to the field school’s Class VIII campo (field schools) or classes area of focus). The productive at the demonstration units at specialist conducted most of scheduled intervals. the training sessions, with the assistants conducting follow-up The field schools were the core visits to confirm that producers of PDP’s technology transfer were using the new technology model, replacing the traditional on their farms. After 10 to 15 approach of providing techni- months of training, a producer cal assistance during visits to had a significant level of mas- individual farms. A productive tery over the productive phase specialist was responsible for and was ready to take over man-

20 Beyond the Numbers — The Strategy Exhibit 9. Consensus-Building agement and development describes the main functions of Process to Develop the of his or her business. each entity. Forestry Policy PDP also offered tech- Working with organized pro- nical certification to ducer groups to clarify how pro- demonstration center ductive projects would be imple-

Nine Months Draft Paper owners, many of mented, PDP used this format 2of Discussions Prepared3 whom doubled as to organize its activities in the local promoters dairy, horticulture, tourism, and of technology handicrafts value chains, and in Coordination: Advisory Services Externally and were in three new value chains: coffees, Moderated Consensus and Support from a position aquaculture, and apiculture. Group Chemonics, with Discussion 1 Ministry of 4 to provide After receiving project terms Agriculture in ongoing sup- of reference, FOMILENIO’s a Steering Role Proposal port for local pre-certified service providers Validated and Problem Analysis Presented to and Proposed productive prepared project proposals, and Ministry of Vision, Solutions processes. implementers were selected by Agriculture Objectives, FOMILENIO and producer and Policies 5 The productive committees. According to the 7 Drafted units, including the producers, this was the first 6 demonstration units, time they had been given the could choose to concentrate opportunity to select the service their offerings in centros de providers and professionals that acopio y servicios (collection and would be responsible for tech- service centers), some of which nology transfer and training; operated with PDP’s support. it was also their first access to These centers formed part of the transparent information about centros de negocios y multiservi- the budget for each activity. cios (business and multiservice centers) or were connected to The producer committees the market. PDP’s work created operated throughout the life or strengthened these centers in of the productive projects and the dairy, handicrafts, horticul- participated in monitoring and ture, coffee, and tilapia value supervision alongside PDP’s chains. technical team.

The productive units, demon- As a result of this process, stration centers, and collection FOMILENIO signed 25 grant and service centers were essen- agreements with local service tial elements of PDP’s strategy providers for five projects, 22 for for creating and strengthen- technical aspects and three for ing productive capacity in the business services. In this way, all Northern Zone. The business available funds were allocated and multiservice centers con- two years before PDP closed tributed to the project’s business and results were assured, even strategy. Exhibit 10 on page 22 though the expected results had been increased significantly.

Beyond the Numbers — The Strategy 21 A member of PDP’s horticulture technical team records follow-up information from Federico Quijada’s tomato plantation in Cantón Los Planes (La Palma municipality, Chalatenango department).

Exhibit 10. Intervention Model

Business Development Collection and Services Business and Productive Unit Demonstration Center Center Multiservice Center

Collection and distribution Model farms and business Business and multiservice Beneficiary-owned centers for agricultural development schools centers inputs and products

Collection of inputs for the Technology transfer development of production Planning systems

Collection, classification, Business management Capacity building and and quality control of knowledge transfer horticultural products Collection, classification, and packaging

Primary production Collection Processing and marketing

Development intervention strategy Business strategy

Technical service providers Business service providers

22 Beyond the Numbers — The Strategy 15 2 1 5 5

9 8

5 3

2 2 1 1 1 0

Coffee Crafts Dairy Tourism Apiculture Aquaculture Horticulture

Exhibit 11. Territorial Intervention Matrix

Farms Business Development Demonstration Center Collection and Services Center

MARKET

COMPANY PDP

Horticulture “horticulture” program. The Program combined value chain became El Salvador is a net importer the largest PDP-supported pro- of fruits and vegetables, many gram, accounting for nearly half of which can be produced of the total project costs and competitively at the local level. beneficiaries and demonstrating This was common knowledge significant results: long before FOMILENIO, but despite the efforts of a number • The program enabled 84 per- of programs, attempts to har- cent of producers to include ness the enormous potential of fruit or vegetable production the domestic market had not among their activities for the been successful, at least not on first time. an adequate scale. • FOMILENIO’s investment The fruits and vegetables value in horticulture generated chains were conceived as sepa- $25,043,144 in incremen- rate programs, but their simi- tal sales and leveraged larities — and the overlap in $17,922,860 in investments wholesalers, retailers, logistics, from small and medium pro- and beneficiaries — led PDP ducers for the development of to integrate them as a single their businesses.

Beyond the Numbers — The Strategy 23 Exhibit 12. Number of Operational and Monitoring Structures by Value Chain

15 2 1 5 5

9 8

5 3

2 2 1 1 1 0

Coffee Crafts Dairy Tourism Apiculture Aquaculture Horticulture

Regional boards Company boards of directors Project management committees

MARKET

COMPANY These tomatoes were gathered at the Río Chiquito Collection and Services Center in the northern region of Chalatenango. PDP A natural resources assessment associations, and promoted a confirmed that there were no strategic partnership between ecological barriers to producing El Salvador Produce and Grupo an array of fruits and vegetables Calleja, which owns some 86 in the Northern Zone. On the supermarkets in the country contrary, the differing altitudes and is committed to supporting in the region are conducive to a domestic production. USAID diverse supply of produce dur- was also brought into this ing much of the year. The one partnership, funding a public- important obstacle to harness- private partnership through its ing the potential for increased Global Development Alliance. productivity was farm surface At the time, this partnership area. Conditions are best on between two U.S. cooperation the smallest plots: the size of agencies (USAID and MCC) a minifundio, or small land was the only one of its kind in holding, correlates directly the world. with soil quality and climate for horticulture. However, the PDP established 245 business small farm size prevalent in the development demonstration region represents a challenge for centers, which were visited by technical assistance and access more than 7,400 producers to markets. (men and women) for training in the type of horticulture To tackle these limitations, PDP production most appropriate for designed a program to create their areas. As a result, 10,601 economies of scale through additional hectares of fruits and associations, which would act vegetables were farmed during

as conduits for technical assis- the life of the project, producing PDP tance, training, inputs, and 107,851 additional tons of pro- marketing services. The project duce. Nearly all of this (94 per- team supported the establish- cent) was sold on the domestic ment and operation of El Salva- market; the remaining 6 percent dor Produce, a cooperative that went to on-farm consumption. included more than 40 producer

EXHIBIT 13. Horticulture Program Achievements

Life-of-Project Percent of Target Indicator Project Target Achievement (09/2012) Achieved

Beneficiaries 7,482 6,200 121%

Jobs created 8,122 6,800 119%

MSMEs assisted 70 20 350%

Hectares assisted 10,601 8,374 127%

Sales $25,043,144 $15,180,427 165%

Private investment $17,922,860 $5,570,252 322%

26 Beyond the Numbers — The Strategy Vegetable farmer José Florencio Villeda harvests radishes on his plot in Cantón Las Pilas (San Ignacio municipality, Chalatenango department).

PDP worked with beneficiaries 3,622,856 fruit seedlings, and to install farm technology and introduced $143,000 worth establish producer technical of high-quality seeds. This assistance services that raised represents an investment of the quality and productivity of $17,922,860 in assimilating horticulture. Project contribu- recommended technology tions included the following: and crop establishment and management by PDP’s benefi- • Installing 598 hectares with ciaries. irrigation and 224,000 square meters of greenhouses. The • Installing and certifying 12 project also built macro- plots farmed with good agri- and micro-tunnels, planted cultural practices (GAP) to

Beyond the Numbers — The Strategy 27 serve as sources of technology way for small-scale producers to dissemination and models of gain a significant market share environmentally friendly pro- and strengthen their bargain- duction. Five of these plots ing capacity, their preference were certified, one for each for negotiating directly with region in the Northern Zone, intermediaries made it difficult and four of the 12 plots were to persuade them to direct their installed on commercial supply through the collection farms, each with a surface centers. area of more than 5 hectares. Demand in El Salvador remains • Setting up five collection and high. Despite significant service centers, three of which increases, however, production were still operating commer- still cannot meet that demand. cially when PDP ended. One Meanwhile, small local markets of these, known as the Busi- that usually provision them- ness and Multiservice Center, selves in San Salvador can now is equipped with cutting-edge stock locally. This is part of technology for post-harvest what made it difficult to struc- management and refrigerated ture the supply, but it means transportation. The center is that PDP’s beneficiaries are owned by producers’ organi- doing good business. zations through El Salvador Produce. PDP also promoted private investment to encourage the cre- PDP encountered significant ation of more medium or large challenges in structuring the commercial farms, and selected supply (in other words, orga- avocado, pineapple, plantain, nizing producers and their and greenhouse tomatoes as production flow). Although the crops with the best export this may be the most effective potential. The project team

EXHIBIT 14. FOMILENIO and Private investment in Special Projects for Crop Establishment

FOMILENIO Private Investment Total Cost

Pineapple: 10 manzanas $96,000 $54,000 $150,000

Papaya: 13 manzanas $51,000 $40,000 $91,000

Plantain: 50 manzanas $180,000 $220,000 $400,000

Avocado: 10 manzanas $20,000 $20,000 $40,000

Total investment $347,000 $334,000 $681,000

Percent of total investment 51% 49% 100%

28 Beyond the Numbers — The Strategy Map 3. Distribution of Horticulture program Beneficiaries

GUATEMALA HONDURAS

Northern Highway San Salvador

Bodies of Water Northern Zone of El Salvador Beneficiaries

Regions Region 1 Region 2 Region 3 Region 4 Region 5

also identified private invest- By the time PDP ended, this ment models for greenhouse situation had reversed. Salva- tomatoes. As Exhibit 14 illus- doran dairy producers were trates, PDP partnered with farm commanding high prices and owners and one cooperative to demand was steady. PDP’s dairy establish 83 manzanas of com- sector beneficiaries were better mercial crops. able to harness market advantages than their peers who did Dairy Program not have access to support for Before PDP, dairy produc- production, nutrition, hygienic tion in the Northern Zone was milking practices, efficient orga- hindered by low prices, fierce nizational management, and competition with Honduran agribusiness. and Nicaraguan products, low productivity, expensive food PDP’s dairy program boosted inputs, and a lack of specific producers’ net incomes, created policies to protect and support jobs, and improved productivity the sector. and sales. The program’s success

Beyond the Numbers — The Strategy 29 Exhibit 15. Dairy Program Achievements

Life-of-Project Percent of Target Indicator Project Target Achievement (09/2012) Achieved

Beneficiaries 4,391 3,780 116%

Jobs created 3,251 2,705 120%

MSMEs assisted 142 19 747%

Hectares assisted 9,843 7,417 133%

Sales $66,209,692 $53,648,288 123%

Private investment $4,292,843 $1,938,063 222%

can be attributed to a combi- 488 new milking parlors and nation of factors that helped 79 milking machines. The dairy enhance the competitiveness program covered 9,843 total and market presence of dairy hectares, including the instal- farmers in the Northern Zone. lation of 1,538 hectares with Dairy farms increased their improved pastures, 364 hectares productivity significantly with with spray irrigation systems, PDP’s assistance: net annual and 542 hectares of grasslands milk production increased by for ensiling. The project team 12,207,833 bottles. also established 144 business development demonstration The quality of the milk supply centers to transfer technology improved as volume increased. through field schools and on-

Each year, 24,712,740 bottles farm technical follow-up. PDP were classified as having been produced with “hygienic To help improve market access, practices” (ideal for PDP worked with two coop- human consumption). erative ventures to outfit 81 Most of the country’s refrigerated tanks with a daily most-developed dairy capacity of 200,000 bottles, industries (members of transported in six refrigerated the Salvadoran Associa- tanker trucks also provided by tion of Dairy Farmers the project. The two produc- and Industries) regularly ers’ cooperatives, Sociedad source milk from the Ganadera de la Zona Norte Northern Zone. This was and Lácteos Morazán, are ready rare before PDP. to tackle new challenges and continue competing in domestic Working with 4,391 dairy markets. The “Agribusiness Pro- farmers, who owned a com- gram” section at the end of this bined total of 42,041 head chapter describes PDP’s work to of dairy cattle, PDP installed strengthen these ventures.

30 Beyond the Numbers — The Strategy PDP beneficiary Rosa Mélida Meza, a dairy farmer, is interviewed by a member of PDP’s technical team, for the project’s monitoring system.

This new capacity to supply and processed through La Salud Glass of Milk: A high-quality milk emerged Cooperative. The program is a True Partnership alongside a Salvadoran govern- successful public-private part- Public-private partner- ment policy to improve the nership with significant social ships like the Glass of Milk health of public school students value. program — involving dairy in the country’s poorest munici- farmers, large enterprises, palities. This fortunate timing To complement its other inputs, and the state — are possible helped bring about the presi- PDP trained personnel at dif- when all sides benefit from dential Glass of Milk program, ferent levels to ensure access the outset and there is a which uses milk produced to technology: 47 specialists clear plan guided by experts . exclusively by members of Socie- working in the Northern Zone dad Ganadera de la Zona Norte trained 36 new professionals

Beyond the Numbers — The Strategy 31 “ Our hope has been restored, and for this we thank FOMILENIO and the technical service providers. ”

Saúl Aguilar, cattle farmer, Aguilares municipality, San Salvador department PDP Map 4. Distribution of Dairy Program Beneficiaries

GUATEMALA HONDURAS

Northern Highway San Salvador

Bodies of Water Northern Zone of El Salvador Beneficiaries

Regions Region 1 Region 2 Region 3 Region 4 Region 5

in PDP’s technology package needed to produce hand-crafted and 287 community promot- products are passed from parent ers in dairy herd management. to child over generations (espe- They also trained 37 insemina- cially from mother to daugh- tion technicians. These human ter). In El Salvador, a typical resources are now available to example is mat- and hammock- ensure continual technological weaving. advancement and help foster sustainability for PDP-promoted The PDP team selected handi- businesses. crafts as a project-supported area mainly for the reasons Handicrafts outlined above: a large group Program of women needed and wanted In El Salvador, most producers to improve their incomes, but and vendors of rural handi- had little or no access to land, crafts are women, who turn to water, or capital for agricultural handicrafts because they do not production. In addition, there have access to other productive were clear market opportunities resources or opportunities to and clear potential to increase earn income. Many of the skills participants’ incomes.

34 Beyond the Numbers — The Strategy PDP identified artisans’ orga- capacity to design new prod- nizations and workshops that ucts and use modern marketing were doing good business in the techniques. The project team Northern Zone as sources of designed the handicrafts pro- good practices and as manage- gram based on good practices ment models that could be repli- in technology transfer, potential cated or, better yet, connected for sustainability, and the fol- with individual artisans. lowing principles, drawn from the initial assessment: PDP’s initial assessment of the “ Our handicraft handicrafts value chain identi- • Market opportunity fied several challenges: limited collections are a joint local raw materials, lack of • Use of locally available raw effort of artisans, innovation in designs, and obso- materials (new and recycled) lete marketing methods. designers, and • Methods easily assimilated by technical support, In keeping with its overall small-scale artisans in terms strategy, the project team sought of cost and process which allows us to to boost productivity, improve position ourselves market access, and support the • Cost-efficiency (generates net business management capacity income) in the market of of cooperative ventures working innovative handicrafts. ” in handicrafts. PDP selected the • Uniqueness two most established handi- Marisol Ramírez, craft businesses, El Renacer PDP’s team culled marketing Manager, Chalateco and Moje, and 148 techniques from the fashion ACOPROARTE, El Renacer, craft workshops for support. Of industry, such as seasonal col- Chalateco the workshops, 74 were run by lections and national events to individual artisans and 74 repre- present new designs to wholesal- sented groups of artisans. ers and the general public, as well as more traditional industry PDP’s approach was to techniques such as participa- strengthen its beneficiaries’ tion in fairs, sending samples

Exhibit 16. Handicraft Program Achievements

Life-of-Project Percent of Target Indicator Project Target Achievement (09/2012) Achieved

Beneficiaries 1,192 (1,009 women) 889 134%

Jobs created 289 209 138%

MSMEs assisted 124 69 180%

Hectares assisted - - -

Sales $1,214,428 $995,646 122%

Private investment $756,554 $354,100 214%

Beyond the Numbers — The Strategy 35 Two PDP beneficiaries from the Pájaro Azul workshop mark out a pattern for an item of clothing (Suchitoto municipality, Cuscatlán department).

to importers, and direct contact productivity and facilitated with individual wholesalers. technology assimilation through The development model ACOPROARTE (a social and based on select markets, as PDP’s original design did not economic development coop- in the fashion industry, is also anticipate in-kind contributions erative) and Moje (an artisans’ effective for crafts . Borrow- for this value chain. Recogniz- organization) using a revolving ing a strategy used in the ing the limited investment fund model. high fashion industry, season- capacity of small-scale artisans al collections are created for and others entering the business Through its work with 1,192 pre-identified niches, with a for the first time, however, the artisans, nearly all of whom supply of designs tailored to project team sought FOMI- (1,009) were women, PDP cre- the requirements of those LENIO’s approval for resources ated the equivalent of 279 new niches . to provide small equipment and jobs and generated more than other supplies. These dona- $1 million in incremental sales tions helped boost workshops’ for its beneficiaries.

36 Beyond the Numbers — The Strategy Other Value Chains Aquaculture Support to aquaculture, coffee, The PDP team identified and apiculture were not part of aquaculture, mainly tilapia, as FOMILENIO’s original design an alternative for small- and for PDP. Project support for medium-scale producers in the these value chains emerged after Northern Zone. Small tilapia the decision not to participate farming projects can be viable directly in the forest products and competitive, especially value chain (except for three given the existing and poten- small experiences with timber tial demand. PDP identified processing and sales and an a significant market demand effort to promote bamboo farm- — nearly 50 percent of domes- ing and processing). Instead, the tic demand for tilapia was not project team selected three other being met. The team also found value chains that relate to or are potential market opportuni- dependent on forests or non- ties in Guatemala and Mexico, timber forest products: aquacul- where demand was so high that ture, specialty and traditional it could triple the Salvadoran coffees, and apiculture. supply. PDP

Map 5. Distribution of Handicrafts Program Beneficiaries

GUATEMALA HONDURAS

Northern Highway San Salvador

Bodies of Water Northern Zone of El Salvador Handicrafts Program Municipalities Beneficiaries

Beyond the Numbers — The Strategy 37 The project team identified in the sector. PDP had neither groups of tilapia producers in the time nor the resources to the Northern Zone, most of start from scratch. Bearing these which were producing without limitations in mind, PDP began the benefit of technology, result- shaping this productive project ing in poor yields. The situation in June 2010. seemed to fit PDP’s criteria for support: After meeting with producer groups and conducting initial • Market opportunity and assessments, PDP worked with producers were present. participants to design a productive project to boost on-farm • Producers were somewhat productivity and improve organized, and were open to marketing and sales. The project improving their productivity team worked through an associ- and sales. ation of producer organizations, equipping it with infrastructure • Productivity was low, but and equipment for fish cleaning technology was available. and packing, cold chain handling, and distribution.

There was some risk to working PDP in this new value chain. Unlike In December 2010, in collabo- other value chains, PDP had no ration with 17 organizations choice but to work with exist- and 530 tilapia producers, PDP ing producers; the team could launched the Increased Com- not encourage people to start petitiveness of the Aquaculture this type of business, mainly Value Chain in the Northern because of the development Zone project. PDP’s assess- cycle for this productive activity ment had revealed that some and the timing in the project producers were more established period. Another risk was the than others, and that tilapia maturity of the organizations production was not the main

Exhibit 17. Aquaculture value chain achievements

Life-of-Project Percent of Target Indicator Project Target Achievement (09/2012) Achieved

Beneficiaries 530 519 102%

Jobs created 240 129 186%

MSMEs assisted - - -

Hectares assisted - - -

Sales $2,458,849 $1,576,539 156%

Private investment $815,560 $658,960 124%

38 Beyond the Numbers — The Strategy Claudia Portillo of the Cerrón Grande Dam Fishermen’s Association harvests tilapia for market.

source of income for all benefi- growth stage, and improper ciaries. Using this information, feeding practices. the team created customized PDP’s model for develop- assistance packages to meet the • Long production cycles sig- ing the aquaculture value needs of more established pro- nificantly reduced the yield in chain focused on ensuring ducers and less developed ones. each pond or cage. more efficient production and fewer losses through Both types of producers faced • Water quality is crucial for sampling, registries, use of technological limitations that tilapia development. Water measurement instruments, undermined their productiv- must be tested regularly, but and proper feeding . The ity, and PDP’s work focused most producers did not have project also promoted high- on remedying this situation. access to basic testing instru- er densities, additional sales Lacking registries or sampling, ments or know how to use of value-added products, producers had no information them. and self-managed business about the biomass present in the development . water. Several other problems • With few producers using hindered production: aerators to oxygenate their ponds, stocking density was • Improper food management, very low (just four fry per especially management of square meter). Pond manage- protein content for each ment did not include proper

Beyond the Numbers — The Strategy 39

Jenny López and Claudia Portillo of the Cerrón Grande Dam Fishermen’s Association spread a net they use to harvest pond- raised tilapia. PDP post-harvest practices, and with project funds. Not every producers were not using geo- group was interested in partici- membrane (plastic) or high- pating in this new organization, density polyethylene liners to mainly because of the location prevent pond runoff. of the processing plant, which is owned by all of the participants • In the processing stage, pro- rather than a single group. ducers could not add value to their products without a pro- The plant has facilities for fish cessing plant (to scale, gut, scaling, gutting, packing, ice pack, and market fish on ice) production, and a refrigerated or refrigerated transportation. transportation service. The plant was installed through a conces- • Business management was sion arrangement on the lands poor. The sector was not of an organization with the united through a representa- largest number of tilapia-pro- tive organization that could ducing members and affiliates pursue business deals. of the business association in El Paraíso, Chalatenango. In this In keeping with its overall way, PDP leveraged funds from strategy, PDP sought to boost the Italian Ministry of Foreign productivity, create added value, Affairs. An Italian NGO will improve market access, and continue the work PDP started, build capacity for business man- bringing the tilapia producers’ agement among aquaculture organization to the point of associations, fishing associa- sustainable management. tions, and cooperatives farming tilapia in ponds and cages. Through these interventions, The team tackled bottlenecks PDP generated more than in the value chain, taking into $725,915 in incremental income account each organization’s level from $2,187,271 in sales of of development and introducing more than 2.5 million pounds practices such as registries and of fish. More than 240 perma- sampling at two-week intervals. nent jobs were created in the PDP also provided water quality process of boosting competitive- testing equipment and aerators ness in the chain. to allow producers to increase production density, and demon- Specialty Coffees strated the use of geomembrane In recent years, El Salvador has liners. distinguished itself in the specialty coffee market, mainly for In addition, PDP supported its high-altitude and medium- the establishment of a busi- altitude coffee. In 2007 and ness association for small-scale 2011, the winners of the Cup tilapia producer associations, of Excellence — the specialty enabling them to generate added coffee competition and auc- value through a processing plant tion held throughout the world that was equipped and upgraded — were from canton El Túnel,

42 Beyond the Numbers — The Strategy Exhibit 18. Specialty and Traditional Coffees value chain achievements

Life-of-Project Percent of Target Indicator Project Target Achievement (09/2012) Achieved

Beneficiaries 610 600 102%

Jobs created 311 301 103%

MSMEs assisted 3 - -

Hectares assisted 828 828 100%

Sales $2,012,663 $650,000 310%

Private investment $2,290,994 $917,501 250%

Chalatenango, the mountainous PDP found strong potential region in the Northern Zone. for high-quality coffee, at least Roberto Ochoa of La Montaña in the pre-harvest stage. After farm and Ignacio Gutiérrez of the harvest, however, a series La Roxanita farm both placed of inadequate practices under- with a Pacamara variety. Coffee mined that quality, narrow- producers from the Northern ing producers’ options in the Zone participate in the Cup of generic coffee market. Much Excellence every year, and their of what was happening (and coffee always places in the top continues to happen) has to do 10 to 15 best specialty coffees in with traditional sales from the the country. farm through generic coffee exporters, where the emphasis PDP’s assessment revealed the is on export volume rather than following barriers to improving quality. In addition, producers coffee producers’ incomes: lacked a platform for ensuring quality in production, process- • Deficient harvesting and ing, and marketing. post-harvest processing methods and technology The PDP team selected the coffee value chain due to the high • Lack of access and oversight quality of the coffee produced in final processing in the Northern Zone and the potential to correct the prob- • Lack of familiarity with lems that were keeping small- marketing mechanisms in the scale producers from making specialty coffee market a qualitative and quantitative leap in their business dealings. • Practices detrimental to envi- By providing access to train- ronmental conservation ing programs based on final product quality; incorporating

Beyond the Numbers — The Strategy 43 Specialty coffee producers Angelino Landaverde and Rosa Élida Flores are satisfied with the quality of coffee beans dried on African style beds in La Palma municipality (Chalatenango department).

simple wet processing technolo- reduced wet processing times by gies, state-of-the-art technology introducing manual, ecological for dry processing, cupping pulping machines, and virtu- laboratories, certified cuppers, ally eliminated the cost of water and promotion and marketing use. Pre-drying costs decreased programs targeting specialty significantly with the reduction coffee; and bringing in buyers in spending on machinery and to deal directly with producers, equipment for traditional wet PDP successfully positioned the processing. In addition, concrete Northern Zone in the world of and adobe drying patios were specialty coffees, making the no longer needed, having been marginalization of the region’s replaced with low-cost infra- coffee sector a thing of the past. structure such as African-style drying beds. By introducing PDP-supported producers wet processing techniques that received technical assistance did not use water or electricity and training in the produc- and keeping residual water from tion and marketing of “honey” polluting local watersheds, PDP coffee and “natural” coffee. also contributed to environmen- These production methods tal conservation.

44 Beyond the Numbers — The Strategy An important part of the new and packing plants, increasing marketing strategy was direct the value of their products and involvement in the export busi- improving their business man- ness to penetrate international agement practices. specialty coffee markets. PDP’s team held face-to-face negotia- Apiculture tions between producers and With their small farms, most roasters from around the world of PDP’s beneficiaries had little and succeeded in introducing access to productive resources. Salvadoran coffee in specialty Management of beehives for coffee houses in the United honey production, however, States, Australia, Europe, and only requires small plots of Asia. land and uses a resource that is available in primary and sec- “Honey” coffee process- With PDP support, coffee pro- ondary forests in the Northern ing consists of harvesting ducers built more than 38,700 Zone: flowers. In addition, the the bean at peak maturity, meters of African-style beds country’s climate is conducive so that the pulp is removed for coffee drying, produced to apiculture nine months of the without water . This process some 6,091 quintals of specialty year, making this a competitive avoids the fermentation coffees (1 quintal is equivalent value chain.

PDP stage of wet processing, to 100 pounds, or about 45 and the coffee is dried as kilograms), and sold them at PDP’s assessment revealed pergamine (“parchment”), a higher price than traditional low domestic consumption of retaining a large concentra- coffees. This boosted producers’ honey and honey products; the tion of sugars in the bean . overall incomes by $1,605,860, national beekeeping industry creating 219 new jobs in the relied mainly on exports. The “Natural” coffee is process. assessment also showed that harvested at peak maturity although there were enough and transferred directly to Traditional Coffee companies involved in honey African beds for drying, Although PDP focused on production, collection, bottling, bypassing the pulp removal, specialty coffee production, the and export to make El Salvador fermentation, and washing training and technical assistance competitive, those companies stages . the project team provided also were unable to meet interna- enhanced coffee production in tional demand because they general through a second project could not obtain the quality in a micro-region of northern they needed from local produc- Morazán. The 104 farmers ers. This meant producers in the PDP supported in improving Northern Zone were missing the productivity of their tradi- opportunities to connect with tional coffee in Morazán sold exporters mainly because they $406,803 of pergamine, gold could not meet quality and grape, roasted, and ground safety standards for export. coffee, increasing individual Other limiting factors included income almost $4,000 and the size of their apiaries, the dis- creating 92 jobs. These farmers persed locations of beekeepers, also installed their own roasting and the lack of links between

Beyond the Numbers — The Strategy 45 beekeepers, honey processing honey processing and added plants, and export firms. value in collection and service centers, organized production, PDP’s assessment also showed and designed training and tech- that if the apiaries with the nical assistance plans. To ensure greatest potential were con- successful, replicable technology nected to exporters, smaller transfer, PDP prioritized train- apiaries would have more oppor- ing, technical assistance, and tunities for sales in local and distribution of inputs, materials, domestic markets. and equipment in the following areas: Producers in the Northern Zone had the potential to make the • Colony division methods qualitative and quantitative improvements that would help • Year-round colony manage- them meet this demand. The ment in tropical zones challenge was to forge sustainable ties between those pro- • Artificial feeding ducers and the market. PDP’s work was designed to boost the • Melting techniques for hon- incomes of 420 beekeepers in eycombs and cappings the Northern Zone (350 producers using honeybees and 70 • Beeswax extraction, laminat- using stingless miliponine bees) ing, and stamping by creating new jobs, improving honey yields, and enabling • Hygienic honey harvesting, honey producers to penetrate extraction, bottling, storage, and compete in the market by and transportation promoting their participation in other parts of the value chain. PDP also strengthened the capacity of the National Apicul- The PDP team pursued tech- ture Commission as an umbrella nology transfer initiatives to organization for beekeepers. increase honey yields, improved

Exhibit 19. Apiculture (honey) value chain achievements

Life-of-Project Percent of Target Indicator Project Target Achievement (09/2012) Achieved

Beneficiaries 420 405 104%

Jobs created 44 40 110%

MSMEs assisted - - -

Hectares assisted - - -

Sales $1,351,217 $1,027,321 132%

Private investment $553,007 $363,598 152%

46 Beyond the Numbers — The Strategy PDP Beekeeper Fidel Chinchilla checks a hive frame in an apiary administered by the National Apiculture Commission of El Salvador (Hacienda Colima, Suchitoto municipality, Cuscatlán department). Map 6. Distribution of “Other Value Chains” Program Beneficiaries

GUATEMALA HONDURAS

Northern Highway San Salvador

Bodies of Water Northern Zone of El Salvador Beneficiaries

To boost honey collection ing strategies. PDP invested and processing, honey value, $513,165 in this value chain. and honey marketing, PDP supported two producer orga- An important milestone was nizations, ACOPIDECHA the establishment of a queen and ECOMORAZÁN, and bee production center, funded strengthened their processing by PDP and equipped with centers. Besides collecting the facilities to produce virgin and honey produced in each area, fertilized bees, on an ecological these processing centers have reserve in Chalatenango depart- a strategic operational role in ment. With breeding stock the distribution of inputs and imported from Italy, a labora- equipment to beekeepers. PDP tory for queen larvae grafting supplied ACOPIDECHA and and insemination, three 90-hive ECOMORAZÁN with equip- clusters, and distribution logis- ment for honey extraction, tics in place, the center is able to decapping, homogenization, and provide beekeepers with genetic bottling, and with vehicles to material to renew queen bees help them pursue their market- on an ongoing basis. The queen

48 Beyond the Numbers — The Strategy bee center boosts productivity, promotes economic activity in a reduces the aggressiveness of region. colonies of Africanized bees, and prevents bees from swarm- PDP’s tourism program boosted ing and abandoning their hives. the competitiveness of tour- The center will remain under ism service providers in the the administration and manage- Northern Zone by enhancing ment of the National Apiculture their products and services, Commission, whose adminis- improving market access, and trative and technical capacity strengthening business manage- was strengthened with PDP’s ment. The team focused on five support. Through these efforts, geographic areas: PDP has extended apiculture beyond the Northern Zone. • Metapán – Santa Rosa Gua- chipilín As a result of these interventions, 420 honey producers sold • The highlands of Chalatenan- more than $1,438,483 worth go, including the municipali- of honey, equivalent to about ties of La Palma, San Ignacio, 433,795 kilograms. The honey and Citalá (known as the was produced in more than Ruta Fresca) 12,900 hives, with per-hive yields increasing from 17 to 19.5 • Suchitoto and adjacent mu- kilograms. With project sup- nicipalities in the Cabañas port, the beekeepers’ incomes department grew by $532,767. • The lowlands of Chalat- Tourism Program enango, including numerous El Salvador’s Northern Zone municipalities such as Dulce features many natural and Nombre de María, Concep- cultural attractions that tour ción Quezaltepeque, Azacu- operators and associations can alpa, and others draw on to market their products and services. When PDP • Ruta de la Paz en Morazán, began working in tourism, the made up of seven municipali- team discovered an untapped ties potential that needed support to attract more tourists, especially The initial assessment detected more affluent tourists. several bottlenecks: low-quality tourism products and services, The project team selected this lack of structured tourism prod- value chain for its market poten- ucts, poor tourism development tial and for its potential to gen- management, and failure to erate employment and income. promote tourist attractions. In addition to being a catalyst for environmentally sustainable PDP assisted tourism service development, tourism inherently providers, focusing on the needs

Beyond the Numbers — The Strategy 49 Exhibit 20. Tourism Program achievements

Life-of-Project Percent of Target Indicator Project Target Achievement (09/2012) Achieved

Beneficiaries 574 487 118%

Jobs created 662 306 216%

MSMEs assisted 261 - -

Hectares assisted - - -

Sales $7,773,277 $9,148,000 85%

Private investment $265,107 $149,400 177%

and maturity of each business teamwork and bolstered their category, such as lodging and ability to implement their work restaurants. Accessing funds plans. A business vision was from an in-kind donations fund, consolidated through the forma- the project provided nearly tion of the Red, a tour operators’ 140 beneficiaries with light association for the Northern equipment and materials (such Zone. Made up of 10 companies as cooler chests, microwaves, working together to develop radios, tour guide kits, first aid tourism products and negoti- kits, and kitchen utensils) for ate business deals, the Red has demonstration, to encourage become a marketing channel for them to adopt technology that tourism service providers. would improve their services. Through these efforts, PDP Before PDP, the Northern helped disseminate standards to Zone did not have multi- influence the quality of tourism destination tourism products, products and services. Spending and it only had a limited supply on equipment and materials to of structured products. In the support tourism development in least-developed tourist areas the Northern Zone amounted to (Metapán – Santa Rosa Gua- $109,199. chipilín and the lowlands of Chalatenango), the vision for Tourism associations and com- tourism development did not mittees were already operating include the region’s environ- in PDP’s target areas in the mental, cultural, and productive Northern Zone, but they were riches. PDP equipped the Red poorly organized and had lim- with tools to organize tourism ited ability to collaborate with products in multi-destination other groups on tourism devel- packages and by geographical opment. They also lacked a busi- area. It also assisted munici- ness vision. Working with these palities in Metapán and the groups and engaging other local lowlands of Chalatenango to stakeholders, PDP strengthened develop concept papers present- the associations’ capacity for ing a unified vision for tourism.

50 Beyond the Numbers — The Strategy PDP Carlos Martínez and other boat operators from Puerto San Juan, Lake Suchitlán, used the grants they received from PDP to improve services to tourists visiting the lake (Suchitoto, Cuscatlán department).

A panoramic view of Suchitoto — a popular tourist destination in the Northern Zone — with the cupola of Santa Lucia church in the foreground. PDP Map 7. Distribution of Tourism Program Beneficiaries

GUATEMALA HONDURAS

Northern Highway San Salvador

Bodies of Water Northern Zone of El Salvador Tourism Program Municipalities Beneficiaries

Prepared by international con- tional materials to 270 tourism sultants through a participatory service providers. These activi- process, these papers led to ini- ties helped publicize the attrac- tiatives such as a limestone tour tions in the Northern Zone and in Metapán and the develop- boosted tourism levels. ment of a marketing image that has rebranded municipalities Agribusiness of the Chalatenango lowlands Program as “pueblos festivos,” (festival Under its agribusiness program, towns). PDP worked with three business cooperatives: El Salvador PDP sponsored familiariza- Produce, Ganadera de La Zona tion trips (site visits for tourism Norte, and Lácteos Morazán. operators) and press trips, business roundtables, and tour- To ensure that incremental ism events. The project team production of fruits, veg- also helped develop or refresh etables, and dairy products brands, encouraged participa- could compete in the domestic tion in trade fairs and missions market and be profitable, PDP’s abroad, and provided promo- strategy incorporated farmer-

54 Beyond the Numbers — The Strategy owned businesses that were in For agribusiness development, a position to channel access to PDP’s two-pronged approach competitive markets. This strat- supported marketing and sup- egy was designed to improve ply of inputs. Given the small the availability of food and scale of beneficiaries’ productive reduce dependency on imports, activities, the team realized that particularly because there was the only way to create econo- a defined market segment that mies of scale was to gradually was willing to pay more for set up a revolving fund, begin- quality. ning by channeling materials and inputs from companies For large, formal buyers — the through PDP’s in-kind dona- supermarkets and dairy indus- tions fund. tries that were supplied by thousands of producers — an One of the main competitive- inefficient intermediation chain ness strategies was to establish is unappealing. In this context, potentially profitable business PDP’s approach was to establish initiatives with a broad social efficient, formal intermediaries base and a view to optimizing that were producer-owned, able the sustainable use of natural to concentrate and structure resources for the benefit of supply from planning to the farmers. point of sale, and capable of serving thousands of small-scale Each trading company was set producers. The project team up as a cooperative associa- supported the establishment tion to ensure broad member- of two trading companies, one ship and distribute the benefits for fruits and vegetables and among the largest possible another for refrigerated raw number of owner-members. This milk, and strengthened an exist- approach gives the cooperatives ing dairy products company. a strategic advantage by ensur- These companies were inte- ing a continual supply of raw grated into PDP’s horticulture materials at mutually beneficial and dairy programs. prices and conditions.

Following its overall strategy for Fruit and vegetable farming in value chain development, the response to a growing domestic PDP team established specific consumption and export market plans for each program and has been one of the most impor- subregion and set up business tant rural activities in other development demonstration Central American countries. In centers and collection and the 1980s and 1990s, accord- services centers. These structures ing to a 2008 study by USAID/ were linked with the business Central America, exports in and multiservice centers owned these categories increased ten- by cooperative associations. fold in neighboring Guatemala

Beyond the Numbers — The Strategy 55 and Honduras. Pea, mustard, products, and net purchases and okra exports alone exceed have increased by more than 5 40,000 metric tons annually. percent in the past four years. Honduras exports 20,000 metric tons of melon annually These factors have delayed — an estimated value of $130 consolidation of the local fruit million. The United Nations and vegetable processing indus- Food and Agriculture Organiza- try in innovation, compliance tion lists the main destinations with standards, and distribu- for this produce as the United tion infrastructure, and stalled States, Canada, England, and growth in exports of dairy prod- Germany. Due to the world ucts, because the unavailability economic recession and com- of high-quality raw materials at petition from other countries competitive prices reduces their — including China, Ecuador, competitiveness. The PDP- Mexico, and Peru — exports supported cooperative societies from Guatemala and Honduras face a complex set of circum- declined between 5 and 8 per- stances, but they also have a cent beginning in 2008. critical role to play in harnessing the productive potential of the One result of this broader Northern Zone. panorama is that El Salvador became a consumer market El Salvador Produce: On for fresh produce, offering an the Path to Profit attractive outlet for un-exported The Business and Multiservice produce and surplus crops. Cooperative Association of the Northern Zone R.L. de C.V., Milk and dairy production known as El Salvador Produce, followed a different pattern. was legally incorporated on Despite trade barriers for raw April 26, 2010, and formally materials, raw milk and some launched its operations that cheeses from Nicaragua and November. Dedicated to the Honduras account for a large collection, processing, distribu- part of the market of products tion, and marketing of fruits that are homemade or not reg- and vegetables, El Salvador Pro- istered at the border. For most duce promotes the cultivation of dairy products, the raw material crops with high market demand yield accounts for more than 85 by assisting its members to percent of the total cost; there- obtain inputs, equipment, and fore, the price of milk is critical materials. The association also to the success or failure of the promotes the well-being of its consumer market. El Salvador members by offering group is a growing marketplace in this health, safety, and legal and category: a 2011 health market accounting services, and chan- study revealed that four out of neling profits into areas that five Salvadorans consume dairy boost business productivity. Its

56 Beyond the Numbers — The Strategy membership of 41 small pro- Integration at the high end of ducer associations represents the commercial chain (such as more than 2,000 farmers. supermarkets) requires strict adherence to quality standards El Salvador Produce has five and the ability to meet order collection and service centers deadlines and volumes at least with adequate facilities for 90 percent of the time. El Sal- product intake, storage, wash- vador Produce’s highest average ing, and packing. It also houses during the life of PDP was 75 a unit for supply administra- percent due to several factors, tion and equipment inventory. including lack of synchroniza- PDP equipped the association tion between planting cycles with refrigerated transportation and weekly demand; depen- that has a capacity of 20 metric dence on bargain prices (espe- tons per day, and with basic cially for products from Gua- equipment for collection and temala) among major clients, handling. The center has created which tend to put in orders with between 35 and 40 permanent 48 hours’ notice; and aggressive jobs and up to 50 work-days for individual buyers who use cash preparing and packing orders. It payments and other methods to also provided five farm vehicles, buy already committed product. as well as office and administrative equipment for the seasonal When PDP closed, El Salvador business and multiservice Produce was filling less than 2 centers. percent of the demand from its main client. There was imme- The association’s products are diate purchase availability at headed for the formal market least three times higher than segment, especially large retail- the demand, indicative of the ers such as supermarket chains considerable growth potential in and restaurants, with a broad this market. range of products. Its portfolio includes eight buyers in this Between September 2011 and segment. Most of El Salvador August 2012, El Salvador Produce’s products are sold Produce sold products from under its own brand name (a producers who delivered at least percentage is processed with one of the 59 types of produce private brand names). Aver- considered to be first, second, or age market placement was 65 third quality. (Quality ratings percent for 2012, the last year are based on size, shape, matu- of PDP. For a variety of reasons, ration, external damage, color, the remainder was sold in local and taste.) Of these products, 18 markets, where prices are typi- to 20 were supplied based on a cally 50 percent lower. minimum purchase volume of 2 metric tons. The products were

Beyond the Numbers — The Strategy 57 An employee of the Rio Chiquito Collection and Services Center prepares scallions for transport to El Salvador Produce. sold at a profit, with an average program of El Salvador. This 30 percent differential between business and multiservice center the purchase price and the sale has a membership of 25 groups price in the formal market, representing 1,083 small-scale yielding gross revenues of more cattle ranchers in the Northern than 15 percent. Although the Zone. Its board of directors operation began with a 30 per- includes five members and two cent loss (the difference between alternates. weight purchased and weight sold), by the end of the initia- Ganadera de la Zona Norte tive losses had been reduced to is dedicated to the collec- about 8 percent, demonstrating tion, processing, distribution, that El Salvador Produce had and marketing of raw milk. It established control over pro- promotes good herd manage- cessing, distribution, business ment practices for reproduction, administration, and inventory nutrition, and hygienic milking rotation. by making supplies, equipment, and other inputs available to The association’s monthly sales its members at below-market totals, which began at about prices. The association also $15,000, had reached a steady provides legal, technical, and average of $65,000 when PDP bookkeeping support to help closed in September 2012. improve the performance of its Once El Salvador Produce has member cooperatives. finished installing its processing facilities, infrastructure, Ganadera de la Zona Norte transportation, and equipment, began with 32 member-owned its annual sales are expected to refrigerator tanks, each with reach $1.4 million. This figure a capacity of 2,000 to 4,000 exceeds the break-even point bottles, and achieved an initial of $130,000 and represents a installed milk collection capac- net margin of about $0.06 per ity of 39,000 bottles per day. By pound. the time PDP ended, capacity had climbed to about 107,000 Ganadera de la Zona bottles a day, with 62 refrigera- Norte: Grade-A Milk Sales tor tanks to collect milk and La Sociedad Cooperativa distribute it in areas strategically Ganadera de la Zona Norte selected for raw milk delivery de R.L. de C.V. — the Cattle in compliance with national Cooperative Association of quality and safety standards. the Northern Zone — was The association also had four established on June 25, 2010, refrigerated cistern trucks for and launched regular buy/sell milk collection and distribution, operations in February 2011, each with a daily capacity of after signing a contract with 60,000 bottles. the presidential Glass of Milk

PDP Beyond the Numbers — The Strategy 59 In addition to creating between Traditionally, only 5 percent of 20 and 30 permanent jobs milk production in the North- Ganadera de la Zona Norte ern Zone is destined for formal has a centralized collection and markets. About 25 percent goes distribution plant, a perma- to small local processers, 40 per- nent analysis laboratory, and cent goes to informal interme- a mobile analysis laboratory. diaries, and nearly 30 percent is It is equipped with office and retained for local consumption. administrative equipment Ganadera de la Zona Norte has and light vehicles for travel by important role in linking small- administrative and field staff. and medium-scale producers with the formal market, which The association’s services are offers better prices but also geared toward the industrial has higher quality and safety market segment: milk pro- standards. cessing plants that produce dairy products or pasteurized With the processing industry’s milk in volumes of 10,000 to growth potential and growing 100,000 bottles each day. Its internal demand, El Salvador’s portfolio includes eight buyers market often experiences short- whose orders vary in quantity ages in the supply of liquid with the time of year. (The raw milk. In 2011 and 2012, two milk supply cycle, with higher factors made these shortages production in the rainy season more frequent: reduced dairy and lower volumes in the dry imports from Nicaragua drove season, is due mainly to the up domestic consumption, and availability of forage for dairy two tropical storms battered the

cows.) region. Because of these fac- PDP tors, the association was able to One of Ganadera de la Zona fill only a fraction of the orders Norte’s most important clients it received during its start-up is the government of El Salva- period. dor, which it supplied for two years as the presidential Glass During this period, Ganadera of Milk program was starting. de la Zona Norte sold milk This government initiative aims from at least 40 different pro- to reduce chronic malnutrition viders. Under Salvadoran law, in rural areas by giving a daily the product had to meet the “A” glass of liquid milk (packaged quality standard to be sold in in 250 milliliter, ultra-high- the formal market (with a price temperature containers) to differential of 5 to 10 percent every public school student in between the purchase and sales the poorest municipalities. The prices). program served 250 schools in its first year and was expected to Initially, Ganadera de la Zona reach 600 schools in 2012. Norte’s total monthly sales

60 Beyond the Numbers — The Strategy Edwin Daniel Meza, a milk collector from Lácteos de la Zona Norte, shows the level in the collection tank to Noel de Jesús Iraheta Vásquez, head of the Cassie Stern Center.

averaged less than $75,000. By exceeding its equilibrium point the end of PDP, the associations of $3.3 million (a net margin total monthly sales had climbed of about $0.035 per bottle) and to a sustained average of representing gross earnings of $175,000. Once it has finished more than 7 percent. The small setting up its infrastructure, margin between the sale price collection facilities, and equip- and the purchase price indicates ment for smaller processes and that this is a business with con- enhanced quality control, the siderable production volumes association is expected to bring and good cost management in annual sales of $3.5 million, practices.

Beyond the Numbers — The Strategy 61 Francisco Portillo checks the quality of the milk that dairy farmers have supplied to Lácteos de la Zona Norte.

Lácteos Morazán: A Bright to the sector. Initially, Lácteos Future Morazán’s membership included Established in 2008, the just four dairy farming organi- Sociedad Cooperativa Lácteos zations, but by the end of PDP, Morazán de R.L de C.V. collects the cooperative had increased and processes milk and dairy its membership to 16 organized products. The members of this groups representing at least cooperative association include 1,700 small producers in the individuals (mainly local dairy region. farmers), producer associations, and other institutions linked

62 Beyond the Numbers — The Strategy For the first few years, organiza- capacity of 39,000 bottles, and tional, operational, and market- transportation infrastructure related problems meant Lácteos for milk collection and distribu- Morazán fell short of its production — two cistern trucks that tion and sales targets, despite keep temperatures below 5ºC having more than $1 million in — of up to 17,000 bottles per infrastructure and equipment day. The association has created in place for pasteurized milk between 10 and 20 permanent production. The association had jobs. PDP provided office and obtained this infrastructure administration equipment, from the U.S. Department of two light vehicles, three trucks Agriculture and had received equipped with Thermo King technical and financial assis- mobile refrigeration systems, tance from other international and equipment to process and funds channeled through a local produce pasteurized milk and NGO, ADEL Morazán. different types of cream and cheese. PDP also invested in In 2010, Lácteos Morazán equipment and infrastructure became a PDP-supported busi- for quality analysis and support ness and multiservice center for systems, including a vapor gen- the eastern part of the country. erating boiler and water treat- ment plant. Working with an established operation offered advantages Lácteos Morazán has two — the means of production product lines: liquid raw milk were already in place — but it destined for the industrial and also brought other issues into semi-industrial milk process-

PDP play, such as a longer process ing market, and dairy products. for finalizing grant agreements Although its main focus is the (given the board members’ formal market segment, Lácteos varying perspectives). After Morazán also offers products about eight months of negoti- for local farmers’ markets on a ating and creating an organic seasonal basis, due to its loca- structure, Lácteos Morazán tion and local demand. Its formally launched operations in portfolio includes two clients the second half of 2011 with the for raw milk and more than 20 purchase of raw milk for pro- retail buyers for dairy products cessing into cheese and cream. through an outlet store and two This period laid the groundwork sales routes in the Paracentral for the association to admin- and Eastern zones. istration of the technological package (services, equipment, The unique situation in this part and inputs) PDP provided to of the country — small-scale beneficiaries in the area. producers with little technology and fierce competition from Lácteos Morazán has 19 milk- local farmers’ markets that do cooling tanks with a total daily not monitor quality standards

Beyond the Numbers — The Strategy 63 — has hampered efforts to con- creams under its brand name. solidate minimum volumes of Another factor is the establish- “A” quality raw material (4,000 ment of a processing plant for to 5,000 bottles per day). institutional clients, such as supermarket chains, that order Supply, as negotiated with cheeses to be produced under interested buyers, has grown at a their own private brand names. conservative pace. Current and Once it is fully functioning, potential clients’ feedback, how- this plant could generate sales of ever, indicates that orders could $1.5 million, using more than expand if greater quantities are 75 percent of its capacity, with obtained from the farms. minimal additional investment.

Between 2010 and 2012, all Human Capital of the milk Lácteos Morazán In the process of establishing purchased for processing and El Salvador Produce, Ganadera direct sales met clients’ quality de La Zona Norte, and Lácteos standards, which are generally Morazán, PDP’s investments more rigorous than national targeted several areas that are minimum standards. Combined crucial to commercial success. product sales are expected to feature a price differential of 15 The project team began by regu- percent (relative to the purchase larizing the legal status of each price) for liquid milk — 30 business and supporting the percent for cheese and cream. establishment of the associations These figures suggest a profitable that became each company’s venture with average gross earn- partner-owners. One important ings of more than 20 percent. activity was to strengthen the Unlike Ganadera de la Zona boards of directors, improv- Norte, value-added products ing their ability to engage in play an important role in profit. decision-making, strategy devel- Given taxes and the origin of opment, and conflict manage- the milk, the minimum margin ment for consensus-building. can only be achieved in the for- PDP’s support helped improve mal market — mainly in urban policies and procedures, develop areas. organizational charts and align functions, and create incentives Lácteos Morazán’s total cumula- and rewards for personnel and tive monthly sales in 2011 were producers. just $110,000. A major factor in boosting sales is the opening of To assist Lácteos Morazán, the two public outlets, one in San more established of the three Salvador and another in Jocoro associations, PDP met with the Morazán, where the association company’s partners and owners has placed eight cheeses and two to amend the owners’ statutes

64 Beyond the Numbers — The Strategy PDP María del Carmen Rosalba de Mejía, a milker from the Cassie Stern Center, displays the milk in a collection tank. Andrés Orlando Sola cuts wood in the Renacer Chalateco/ ACOPROARTE workshop in La Palma (Chalatenango department). so that other associations could following operational, financial, join. The PDP team was directly administrative, and business involved in reorganizing the activities:

Exhibit 21. BUSINESS FUNCTIONS

• Setup and adaptation of accounting systems, financial analysis spreadsheets, inventory and warehouse management systems, and collection routes and Processes procedures • Construction and implementation of process lines and distribution routes

• Design and implementation of communications and marketing campaigns Clients • Development of protocols to comply with U.S. National Science Foundation certification standards • Market testing of new presentations and products

• Business roundtables with the country’s main Cattle industrial processers Ranchers • Written and radio advertisements Congress • Meetings with the government to implement the Glass of Milk program

• Call for capital to expand company activities and obtain partner buy-in Finance • Cost control and reduction programs • Long-term loan contracts to leverage funds

PDP Beyond the Numbers — The Strategy 67 Leticia Valdivieso de Mancía paints a piece of wooden furniture in the Renacer Chalateco/ACOPROARTE workshop in La Palma (Chalatenango department). Chapter four Tools that Contributed to Success

Monitoring and and job creation.” Indicators for Evaluation System effects included increased pro- For PDP, monitoring was an ductivity, better market access, important decision-making tool and improved business manage- that the project team saw as part ment. Product-related indicators of the day-to-day routine. Moni- covered sales, surface area under toring was a means of detecting cultivation, head of cattle pro- errors so they could be corrected ducing, handicrafts workshops, and identifying successes so tourist establishments, business they could be replicated. development centers, and collection and processing centers. When redesigning PDP’s work Indicators for activities mea- plan in the first quarter of 2009, sured training events, meetings, the team focused on fine-tuning field visits, promotional events, its strategy and creating a logical and operational field schools. framework that would serve as a plan for implementation, incor- The project team developed a porating the project’s overall system that replicated the logi- methodology and the hierarchy cal framework as a database for of objectives and indicators. aggregating information and generating reports and graphic PDP measured its progress using elements to illustrate the moni- indicators for impact, effects, toring and evaluation data the products, and activities. Impact team collected. The satellite indicators included factors information obtained during such as “enhanced income of a the initial assessment was used certain number of beneficiaries to create a platform — fully

PDP Tools that Contributed to Success 69 A Symbiosis between Academia and FOMILENIO’s Productive Projects Among PDP’s successes was its work to link universities with FOMILENIO’s productive initiatives . The School of Econom- ics and Business and the National University of El Salvador were both involved in the design of development projects . By sharing its methodology with students at these academic institutions, PDP placed a wealth of academic expertise at the service of producers in the Northern Zone . One tangible result of this connection was the host of proposals developed through the Escuela de Proyectos. For National University students, work on productive projects met the thesis requirements for a master’s degree in business consulting . In fact, the best master’s thesis was based on a project written for pineapple producers from northeastern El Salvador .

integrated with the database — for best management practices, for geo-referencing (mapping) and El Salvador’s Ministry of project results. Agriculture has adopted it for oversight and reporting on the This ambitious system was fully Family Agriculture Plan. integrated as PDP completed its second year. The team had Special Funds uploaded data and information Management from 100 percent of the produc- In designing an approach that tive projects, taking special care would enable initiatives to to preserve the overall logical flow from the market and the framework even as they refined beneficiaries to FOMILENIO it for each productive proj- for funding, PDP’s challenge ect. This link allowed them to was to create instruments and monitor progress with a higher methodologies that encouraged degree of precision. Each of the stakeholder participation. 25 service providers submitted quarterly reports, reporting with Initially, no manuals or proce- an accuracy rate of more than dures were in place for imple- 85 percent on a set of indicators menting a competitive grants that covered more than 10,000 program; the project operations beneficiaries. manual was not suitable for special funds management. To fill With four modules for plan- this gap and ensure participa- ning, monitoring indicators, tion at all stages of each pro- human resources management, ductive project, the PDP team and budget management, the developed a set of tools, tailored system evolved to a degree that to the needs of beneficiaries in the project team could not have the Northern Zone: anticipated. Chemonics is now using this system as a model

70 Tools that Contributed to Success • A procedures manual for the innovative approaches to apply- Productive Initiatives Fund, ing for available funds, such as including a proposal-writing shared fundraising and direct guide proposals from other programs.

• An operations manual for the The project team also designed a Productive Development Sup- customized procurement system port Fund tailored to FOMILENIO’s requirements. Although the • A manual for the in-kind project’s role was confined to donations fund monitoring, it became clear that the information from PDP’s • A revolving fund manual procurement system was more accurate than FOMILENIO’s • A warehouse storage manual data. The new system also facilitated ongoing auditing of each • Rules for assigning and using project in a way that enabled goods provided for “tempo- better inventory management. rary use” Communications • Rules for management com- Service Promotion mittees and regional boards PDP began with two campaigns to inform interested To ensure that the fundraising individuals and groups about model was suited to FOMI- how to access its productive and LENIO, PDP incorporated business services, including the

Exhibit 22. Service Promotion Campaigns

Target Audiences Strategic Activities Results

Campaign 1 • Links to municipal liaison committees, local governments, and other local entities Potential beneficiaries: people living in socially • Information sessions Identification and economically Targeted Outreach • Visits to farmlands, workshops, and and selection disadvantaged conditions businesses of beneficiaries • Delivery of informational materials and service requests

Campaign 2 Potential beneficiaries: Stakeholders producer organizations • Publication in the country’s main newspapers Public Call for present requests and individual or • Announcement on FOMILENIO’s website Beneficiaries to for productive associated micro-, small, Request Productive • Information sessions projects and medium enterprises Assistance

Tools that Contributed to Success 71 Exhibit 23. Campaign Outcomes

Campaign 1 Campaign 2

18,199 requests received 89 requests for productive assistance (5,490 women, 12,709 men) presented

15,619 requests approved 10 projects funded by the Productive (4,600 women, 11,019 men) Initiatives Fund

requirements and procedures for ing the project’s work. The participation. Facebook page gained 1,220 “friends.” On YouTube, By disseminating results, success 99 project videos received stories, and other information 64,995 views. about its work, PDP made a significant contribution to boost- • PDP distributed 37 bulletins ing FOMILENIO’s image and to the Chemonics contacts empowering its beneficiaries. list, on the Web, and on Face- PDP used traditional commu- book. nications networks, including the 33 national and local media In addition, local and national outlets, to produce 135 reports, fairs, events, and field tours, supplements, articles, and other including missions by the materials from press trips, MCC, USAID, and the U.S. conferences, and releases. The Congress, provided important project also used nontraditional opportunities to disseminate communications, such as social information to national and networks, to disseminate infor- international audiences. mation nationally and inter- nationally about its progress, Market Price Surveys, achievements, and beneficiaries. Processing, and Dissemination • Launched in early 2010, the Through a cooperation agree- Production and Business ment with the Ministry of Services website (www.pdp- Agriculture, signed September fomilenio.gob.sv) provided 5, 2009, PDP strengthened the information to users from El Market Information Division in Salvador, the United States, the ministry’s General Bureau Guatemala, Colombia, and of Agricultural Economy in two Mexico. key ways:

• PDP established a Facebook • High-level technical as- page (www.facebook.com/ sistance to ensure proper fomileniopdp.chemonics) and functioning of the Com- a YouTube channel (www. modity Price Database, a youtube.com/user/fomileni- software program developed opdp), both of which had an by Chemonics. The Ministry important role in disseminat- of Agriculture can use the

72 Tools that Contributed to Success Exhibit 24. Communications Results

Product Reports Text Messaging Campaigns

31,000 reports from price sources 4,100 text messages that delivered 1,300 public service bulletins broadcast for fruits and vegetables sold in the market price information to weekly between 4:30 a.m. and 5 p.m. “La Tiendona” wholesale market producers, made possible by a on Radio Cadena Cuscatlán, a national partnership with the communications station with one of the largest listening company MOBILE audiences

software to provide national In Phase 1, the project subcon- producers with accurate and tracted with the El Zamorano timely information on the Pan American Agricultural prices of agricultural products School to plan and implement in wholesale markets. actions in each of the crosscutting areas. • A subcontract with the Hon- duran Agricultural Research Gender and Social Issues Foundation — which has In Phase 1, working with the most experience using El Zamorano, PDP held a the Commodity Price Da- workshop series to strengthen tabase and gathering field women’s leadership in produc- data through the Honduran tive activities and launched Agricultural Products Market a public awareness campaign Information System — to focused on eradicating child train bureau employees and labor throughout the Northern monitor database functions Zone. The awareness campaign during the project. was designed to raise awareness about children’s and adolescents’ Gender, Social rights to education, health, and Inclusion, and development — and their right Environmental to live in an environment free of Protection threats to their safety. Each FOMILENIO program incorporated three crosscut- In Phase 2, the technical and ting issues: gender equity, social business service providers inclusion, and the environment. implemented activities in each PDP’s implementation strategy crosscutting area. Beneficia- aligned each of these issues with ries participated in awareness the overall objectives of income and training sessions and field generation and job creation. visits on gender equity, eradica- This approach made it possible tion of child labor, and occu- for the project team to incorpo- pational safety. PDP printed rate these important issues into informational materials on each productive project, while these issues, distributing them maintaining its focus on achiev- to 12,000 beneficiaries, and ing PDP’s primary targets. developed a compilation of 18

Tools that Contributed to Success 73 gender-related success stories. assessments, PDP determined These efforts contributed to new that water and soil were the two understanding, higher incomes, key resources that stood to be and improved prospects for the the most affected. For pro- future. cessed commodities, the project team focused on compliance PDP’s most important contri- with environmental law in all bution to gender equity was in processing stages and in the dis- giving more women the abil- posal of solid and liquid waste. ity to participate in productive activities. In the Northern PDP provided training and Zone, women’s participation broadly disseminated informa- in activities such as farming tion on best practices in agri- tends to be low. The project’s culture, manufacturing, and support allowed 4,462 women hygiene. The team provided (29 percent of the beneficiary legal guidance to help beneficia- population) to gain access to ries prepare required environ- the technology needed to create mental documentation for pro- worthwhile jobs, products, and ducing and processing different services. products, and made provisions for the final disposal of solid Five Criteria for Environment and liquid waste in compli- Environmental PDP’s work to boost net income ance with environmental law. Management and employment focused on PDP also disseminated legal • The market the adoption of new technol- requirements to its stakeholders, ogy. By proposing and installing emphasizing the importance of • Rational use of agro- new technologies based on the adhering to them in all appli- chemicals, and only as a sustainable and rational use of cable activities. last resort natural resources on farms and • Environmental law in processing plants, the project To ensure the rational use of created incentives for competi- agrochemicals and encour- • Rational use of water tive agricultural practices that age environmentally sound and soil meet domestic and international management of soil and water • Processing in compliance legal environmental require- resources, PDP provided train- with legal standards ments. ing and information to technical personnel, operators, and For agricultural value chains, farmers; promoted integrated PDP applied several criteria for pest management; and tailored environmental performance: the Pesticide Evaluation Report recommending the exclusive and Safer Use Action Plan to use of authorized agrochemi- the selected crops. The team cals — and only as a last resort; monitored the proper use of applying a legal framework authorized agrochemicals in the based on U.S. and Salvadoran field and ensured and verified environmental law; and requir- the implementation of preven- ing a preliminary assessment to tive, mitigative, or corrective define the regions and environ- measures to prevent negative mental impacts. Based on these effects on soil, water, vegetation,

74 Tools that Contributed to Success Map 8. Distribution of Female Beneficiaries

GUATEMALA HONDURAS

Northern Highway San Salvador

Bodies of Water Northern Zone of El Salvador

Women in PDP programs: 4,462 Aquaculture: 208 Apiculture: 121 Crafts: 1,009 Coffee: 194 Forest Products: 36 Horticulture: 1,914 Dairy: 666 and human health. PDP also • Mitigation measures table, Tourism: 314 promoted increased vegetation objectively verifiable indica- cover by planting trees, shrubs, tors, and scenario analysis legumes, and squash. with and without the project

PDP adhered to lawful process- • Environmental considerations ing methods for each product, and proposed mitigation standards for final disposal of measures solid and liquid waste, best hygiene practices, and industrial • Specific, environmentally security measures. The team focused logical framework developed the following instruments to monitor the environ- • Monitoring and evaluation mental impact of field activities: forms

• Environmental assessment A main action was the install- checklist for projects ment of 12 demonstration plots based on good agricultural • Guide to identifying and practices. Producers, marketers, describing environmental and consumers in El Salvador impact are increasingly interested in

Tools that Contributed to Success 75 products grown or processed offered technical guidance based using GAP because they con- on certification protocols such tribute to the public good, boost as GlobalGap and USGap. the competitiveness of agro- These guidelines contributed GAP encompasses all industry, and instill confidence to environmentally sustainable, activities involved in growing, in Salvadoran products in both hygienically acceptable, and managing, harvesting, and domestic and international economically feasible practices post-harvest management markets. that are improving the competi- of agricultural products, and tiveness of crops produced in El is geared toward ensuring The application of GAP was Salvador. product safety, environmen- premised on PDP’s commit- tal protection, and adequate ment to ensuring that its field Implementation of good prac- working conditions along the activities adhered to sustainable tices was possible because pro- supply chain . agricultural practices, optimized ducers were open to change and project and environmental continuous improvement, and resources, and complied with because technical support staff domestic and international were committed to ensuring market requirements and trends. proper monitoring and satisfac- tory implementation of those To implement a GAP system practices. for fruits and vegetables, PDP

76 Tools that Contributed to Success PDP Farmers affiliated with San Carlos de R.L. Cooperative stand in the midst of their crop of dwarf horn plantain (Aguilares municipality, San Salvador department).

Tools that Contributed to Success 77 Daniel Antonio Alas transports a crate of plantains to El Salvador Produce’s facilities (El Paraíso municipality, Chalatenango department). CHAPTER FIVE Lessons from the PDP Experience

Ten Key Lessons stances and local productive The selection process is criti- capacity. It is not appropriate cal to success. Not all small to carry out research, attempt producers are in a position to to prove hypotheses, or allocate participate in a project like poverty-reduction grants that PDP. It is important to identify do not contribute to sustain- areas where competitiveness is ability. Projects must follow possible without project assis- the demands of the market and tance and concentrate on the provide assistance that enables market as the start and end small producers to take advan- points. The goal should be net tage of market opportunities. business growth in each value Rather than interfering in the chain rather than the number of market, the project should sup- beneficiaries. port market access.

All that glitters is not gold. Work with known quantities. Similarly, when choosing service An entity that was successful providers, it is important to pay in another area may not excel close attention to each institu- at implementing a development tion’s experience and capac- program. Work with those that ity, particularly the expertise have already earned their repu- required by the implementation tations in the sector and have strategy. the trust of the target beneficiary group. Follow the market. Demand- driven projects are no place for Poor producers can develop a experiments, because they are business vision — as long as their based on the producers’ circum- basic diet is ensured. By diver-

PDP Lessons from the PDP Experience 79 sifying production through holders through roundtables, horticulture while continuing management committees, and to produce basic grains for food conferences, so that solutions security, PDP distributed the were implemented based on the economic risk and fostered an needs and competence of both entrepreneurial vision. the public and the private sectors. Coordination is possible. Public- private ventures involving Link beneficiaries to results. organized producers, large Timely access to the funds is corporations, and the state (and, crucial — and contingent on in some cases, international the producers’ participation and cooperation) must be based on ownership of productive proj- agreement about the benefits to ects. PDP stressed the inclusion all and a clear process, facili- of beneficiaries in decision-mak- tated by experts, throughout ing processes, using recognized implementation. mechanisms such as management committees to tie them Contextualize project interven- genuinely into decision-making tions. Unrealistic expectations processes. raised by a project can result in less profitable private invest- Subsidies must be specific. Project ment. As PDP demonstrated in grants to producers should its support to the tourism sector, use a competitive process (for it is important to thoroughly example, requiring matching examine the context and pin- funds) and amounts that will point opportunities to develop meet specific needs or provide potential in each value chain. El specific technology packages. Salvador is not an internation- Offering subsidies where they ally recognized tourist destina- are not needed creates depen- tion, so PDP focused on tourist dence and discourages effort, products tied to regional cor- both of which run counter to ridors and demand from specific the philosophy of competitive- groups, such as Salvadorans ness in the market. living abroad. Key Factors for Recognize the role of the state. A Success comprehensive market-driven Innovation and Technology approach includes the govern- Transfer ment’s role in setting sector- • Training is essential for specific standards and regula- results and sustainability. The tions, promoting development Escuela de Proyectos and the through public policy, and interactions between techni- providing security for private cal staff and producers played investment. This role includes a critical role in transfer- managing the risks and effects ring the capacity to identify of climate change. For PDP, it problems and find relevant, was critical to facilitate interac- market-oriented solutions. tion and dialogue with stake- This participatory approach

80 Lessons from the PDP Experience empowered producers by ing commercial and business instilling a “Yes, we can!” relationships to supply large, attitude. well-situated buyers such as Super Selectos and Walmart. • The business development centers PDP introduced • Beyond the benefits for those became communities of who adopt the market access learning for producers in each approach, the businesses cre- “micro-region” — no-cost ve- ated by PDP and managed hicles for knowledge transfer by producer associations also between technical staff and regulate market prices (as producers and between the verified in the dairy, horticul- producers. The centers also ture, and coffee value chains). strengthen social bonds by They influence fairer prices giving people the opportunity by consolidating the supply to get to know one another as from many producers. The they collaborate on an activ- project team confirmed that ity with a shared vision of these benefits extended to improving their lives. nonparticipating producers, who used the prices paid by • PDP’s geographic approach PDP-supported businesses facilitated technology trans- as a benchmark in their own fer through field schools and price negotiations. stratification of producers based on their productive • Focusing on a limited num- potential. Such an approach ber of products based on mar- focuses technical assistance ket demand and potential for and builds trust in the service low-cost market access makes provider while facilitating the it possible to have a more sus- shared use of machinery and tainable impact on the value equipment. chain and, therefore, to have a lasting effect on income and • Continual promotion of good jobs. production practices is essential to the operations of newly • A development model pre- formed businesses, which mised on select markets is require products of standard- valid for handicrafts. The ized quality from the greatest model applies the same possible number of producers. strategy used in the fashion Without this support, they industry, such as seasonal have little chance of compet- collections targeting niche ing with the informal market. markets.

Market Linkages • Tailoring supply to high- • It is possible to influence priced niche markets, such market rules to enable poor, as specialty coffees, was only small-scale producers to possible when private op- obtain substantial returns on erators partnered with PDP’s their investments by creat- team, serving as technical

Lessons from the PDP Experience 81 service providers to help pro- operations, without excluding ducers improve their market anyone from participating in access and position with decision-making. Boards of sufficient volume and high- directors should include those quality products. who have made the greatest social and financial invest- • The public-private partner- ments in a venture. The proj- ship is a solid approach to ect must have an exit strategy creating associative busi- — a secure means of transfer- nesses. Having supermarket ring the company’s assets to chains such as Super Selectos the producers, accompanied as the main buyers builds by sound post-project finan- confidence that the venture cial instruments to ensure can forge a path to the mar- that assets remain stable for a ket and sustain its presence reasonable period of time and there. Similarly, by situating are not misused or sold. itself as a buyer to foster the development of a sector (for • Business management, with example, through a business its longer-term vision, should arrangement like the Glass of be separate from project man- Milk program), a government agement, which is initially can create a source of income defined by the donor. Project that offers stable prices and costs should be kept separate payments and has a positive from business costs, to im- social impact. prove business performance and make a better impression Business Management and on potential investors. Competitive Association • Participation is more than • Capital and operational physical presence; beneficia- financing of businesses should ries must be involved in deci- occur on the investors’ terms. sion-making throughout the In addition, stockholding project cycle. The manage- and sales should be a part of ment committees showed that the business from the outset; the owner of the project is the they are also useful in vet- organized producer whose ting potential partners. From capacity to exercise his or her its inception, the business’ rights and perform his or her ability to access financial duties has been strengthened. products from commercial Under these conditions, it is banks should be strength- possible to ensure ownership, ened. Working capital should operations, and sustainability. be included in the project structure, but only until • Associations should be more sustainable, longer-term governed by a business financing can be accessed. philosophy, and decision- making should be led by the • It is important to examine partners who risk the most factors related to organiza- in the company’s financial tional culture when using

82 Lessons from the PDP Experience existing companies as models are important. For PDP, this to support market access for meant creating an integrated associated producers. Former platform for strategic and projects may have instilled operational planning, results- the expectation of fresh based organization, and funding from the new project monitoring and evaluation to rather than a commitment inform timely decision-mak- to benefiting the producers. ing and ensure the incorpora- Market assessments play a key tion of lessons for continuous role in defining these factors; improvement. they can also indicate the need for an early exit strategy • Working with small NGOs if the company is not adopt- and local consulting firms is ing the project’s philosophy. challenging. They often face managerial, technical, admin- Project Management istrative, and financial con- • Project management must be straints that make it difficult comprehensive and ensure for them to manage medium- that the intervention is sized projects. PDP spent sequential and systemic. To considerable time and effort ensure producers have timely to make sure these partners access to the resources they had incorporated best man- need for competitiveness, agement practices, but three the implementing entity and of the eight local organiza- management committees tions that implemented pro- should have decision-making ductive projects were unable authority over human, tech- to fulfill their agreements. nical, and material resources Working with the local offices (equipment and other dona- of NGOs and international tions). entities is a more efficient route, even though it can be • The project must be regarded harder to persuade them to as a temporary player to adopt new approaches. Their ensure sustainability and existing capacity — especially avoid creating unrealistic in administration, finance expectations. Its role and and specific types of technical intervention strategy should support — facilitates produc- be clear to the permanent tive project management, par- stakeholders, and its exit ticularly when time is of the should be planned carefully, essence. concentrating on results that are replicable and can ensure • By designing market-driven sustainability. strategies and a rigorous methodology for productive • Project management tools project implementation, it that track progress toward is possible to align a large results and the ability to find number of technical service timely and effective solutions providers and their human to problems along the way resources. Well-structured

Lessons from the PDP Experience 83 terms of reference help avoid manual that provides clear fragmentation; although they guidance for messaging in limit creativity, they also activities and communica- ensure fair competition, a tions materials. consistent approach, and successful outcomes. • Monitoring and evaluation, though it is an effective • When construction is in- oversight mechanism, is more volved, the time frame must powerful when it is used for be lengthened and synchro- results-based learning and nized with productive opera- management. PDP’s integrat- tions. PDP’s work with pro- ed system facilitated internal cessing plants — an integral and external communica- part of the business model tions and motivated technical — was not finished until the service providers to meet their end of the initiative. This targets. increased operational costs and difficulties with value- • Information quality is added production. The most essential for building confi- effective approach is to follow dence that a project is on the the natural progression: begin right path. Information must with smaller operations and follow a clear path from its build on them in an organic origins with the producer and manner. his or her plot or herd, and be handled by experts who are • To avoid confusion in han- aware of its importance for dling the client’s image, it is decision-making processes. important to have a branding

84 Lessons from the PDP Experience

Bunches of scallions are branded and ready for delivery to the formal market by El Salvador Produce. CHAPTER SIX Conclusions

Built-in sustainability — achieved criterion for replicability is the through the following elements availability of the good or service — is essential for any innovation in related parts in the value chain. to improve the competitiveness of For example, using cardboard a value chain. boxes to export a fruit without a local manufacturer or importer of Technology those boxes will make it difficult In the context of sustainabil- for others to replicate this innova- ity, technological innovation tion in their businesses. Similarly, must result in a final product local professionals with expertise that responds to the demand in a particular area must be avail- for quality, volume or quantity, able to ensure the transfer of that season, and availability. Of these expertise to others. demands, quality is paramount. Access to capital is a must to Technology must be cost-efficient. cover the producer’s initial cost A producer who adopts technol- or investment in machinery, ogy should be able to market a equipment, supplies, or technical product at a lower cost or produce assistance. The project’s role is to at a new level of quality that facilitate and, in some cases, cover brings a higher price. this cost for demonstration purposes. More permanent funding Technology must be replicable. sources (such as private invest- Once an innovation is installed, ment or bank loans) are required other actors in the same part of to cover this cost in the medium the value chain should be able to and long term. emulate the innovator. The main

PDP Conclusions 87 A Clear Role for because the products are sold Government mainly in the domestic mar- The state must provide incentives ket, hygienic practices ensure for innovation and adoption of safer products that have a direct technologies that boost the com- impact on Salvadoran health petitiveness of the value chains. and nutrition. Without regula- Without regulation of goods and tions, enforcement, and penalties services, it is nearly impossible to related to hygienic milk handling make progress in breaking down and transportation, it is unlikely obstacles to the efficient and sus- that significant numbers of dairy tained growth of value chains. farmers will adopt these innovations. When poor practices The state must promote trans- are the norm, the public has no parency and formalization of choice but to consume poor-qual- business activities to ensure fair ity products or turn to imports. competition and create incen- Worse yet, substandard products tives for the efficient, ethical, will continue to be imported and and sustainable use of productive sold in public markets, discourag- resources. ing technological innovation and process improvements. This regulatory role is especially important for food security and Incentives for safety. A country that does not Private Sector produce enough food is vulner- Participation able to an influx of food products Understanding that much of that do not meet basic quality the demand channeled toward standards to protect people’s producers and producer coopera- health. tives comes from major buyers in the private sector, PDP focused Regulations must include sanc- on the relationship between these tions for the production, market- stakeholders. The project team ing, and sale of products that promoted technological innova- do not meet minimum quality tions to improve the productivity standards, whether those products and quality of local products and are foods, handicrafts, or tourist services and encouraged wholesale services. Ideally, there should be buyers to give preferential treat- incentives for adhering to regula- ment to these products to save tions governing the production foreign currency, reduce depen- of goods and services in the value dence on imports, support the chain, including tax or credit local economy by generating more incentives, technical assistance, income and jobs, and ultimately or other fiscal measures that do create a climate of improved not directly subsidize production security and social harmony in El costs, except for demonstration Salvador. purposes. For example, production and handling of hygienic A project design like this one milk add to costs for producers must also guarantee that the and other stakeholders along the private buyer — the exporter, value chain. At the same time, supermarket, industrial plant, or

88 Conclusions tour operator — can make deals the future will do little to address that are comparable to or better the food crisis or rural unemploy- than imported products. At the ment. PDP’s partnership with same time, the hope was that the Super Selectos demonstrates that private sector would be deliberate it is possible to attract private in its support for local products, enterprise to development efforts at least until the project-supported and work together toward com- businesses had made progress in mon objectives. organizational development. When a project such as PDP If the private sector is unwilling ends, the sustainability of its to support these processes by actions depends more on gov- placing orders with local produc- ernment and the private sector, ers, paying promptly, and agree- which represent demand, than on ing to price differentials that the producers. The state and the reflect higher quality, it will be private sector should create and difficult to sustain and expand maintain a climate that encour- innovations. A private sector that ages quality and productivity and is only interested in the best deal ultimately promotes durable and and is not willing to join small- replicable technological innova- scale producers in investing in tion.

Conclusions 89 Gerardo Sánchez of Santa Barbara Cooperative displays a watermelon crop in Cantón El Paraíso (Chalatenango department). Chapter seven Beyond PDP

In development, “sustainabil- • How can we make sure busi- ity” is often used to describe nesses will continue to produce the future after a project ends, the goods and services they im- but the term can have different proved or learned about with definitions. Conscious of this PDP’s assistance — and how context, the PDP team made will they sell those products and an effort to define sustainability do good business? as thinking through specific Outcome: Sustainability actions that would make sure of Businesses. Through the parts of the project’s work really project’s interventions, the would continue after September new and increased supply 18, 2012. produced by beneficiaries penetrated the market, and The team asked itself two ques- they were able to make good tions as it carried out its work: deals.

• Who will make sure these Rather than waiting to tackle services are available to project these issues, PDP addressed beneficiaries in the future? each concern in the design Outcome: Sustainability of of productive programs. To a Services. Technology transfer certain extent, this meant it was through technical assistance not necessary to take deliberate and inputs in the areas of pri- actions to keep businesses opera- mary production, marketing, tional or ensure that people can and business management. continue to obtain services.

PDP Beyond PDP 91 In designing each program and farming or handicrafts as a value chain, in addition to pro- means of feeding their families viding basic technical assistance and generating a surplus. They and inputs, PDP integrated were unable to fully master the companies that could concen- production and sales techniques trate the producers’ supply and that would guarantee success. In channel it to the market. For addition, for a variety of reasons value chains in which there were PDP was unable to connect all no such companies, PDP took of its beneficiaries with coop- the risk of creating them. The eratives or anchor firms — for overall approach was to trust some beneficiaries’ businesses Salvadoran capacity to recog- and services, sustainability is nize opportunities and translate not guaranteed. It was with this them into good business. group in mind (as well as those who did not participate in the PDP helped equip its benefi- project) that PDP designed a ciary companies with the means replication process to enable to continue providing basic other development actors to services to producers seeking replicate the factors that boosted marketing, technical assistance, incomes and created jobs for and finance inputs: strategic more than 15,000 PDP benefi- partnerships with large buyers, ciaries in the Northern Zone. revolving funds for supplies, infrastructure and working To ensure that replication initia- capital, and skilled human tives would resemble the PDP resources. model, the project team met with stakeholders to identify The project team also strength- lessons from the implementation ened the capacity of local service process and define the aspects providers, applying instruments that should be included in and methodologies to support future interventions: rural economic development more efficiently and effectively. • Shared vision of development These steps ensured that new among all stakeholders in the interventions in the geographic value chain area or in the target value chains would preserve the inclusive • Programs and projects to rural business approach and the boost the value chain’s methodology based on geo- competitiveness (emphasis on graphic concentration of supply. productivity, business management, and market access) Many beneficiaries are new to this type of business and have • Technological innovation and only recently come to regard technology transfer

92 Beyond PDP • Participation and empower- security strategy) is now based ment (competitive bidding on the design of PDP programs. opportunities, beneficiary This is the best example of how participation in project PDP’s work is being replicated design) and sustained in El Salvador.

• A business approach Although the future is always uncertain, PDP has made every PDP was fortunate that the possible effort to ensure that Ministry of Agriculture higher incomes will be main- and Livestock presided over tained, that the new jobs will the FOMILENIO Invest- last, and that the Northern ment Committee, which was Zone will continue to have responsible for approving the access to technical assistance productive projects. After (from the Family Agriculture carefully studying the strategy Plan and the businesses the and results, the ministry was project created and supported), inspired to replicate the model marketing (through the compa- in its own programs. One of the nies and the market itself), and components of its Family Agri- business management support. culture Plan (the national food

Beyond PDP 93