"Subclassing and Composition – A Pythonic Tour of Trade-Offs", Hynek Schlawack
Sustainable Financing of EAS, by Paul McNamara
1. Modernizing Extension and Advisory Services
Sustainable Financing of Extension Services in
Developing Countries
MEAS Global Learning Exchange Dr. Paul E. McNamara
on Best Fit Approaches in
Extension and Advisory Services
Associate Professor, Department of Agricultural
Washington, D.C., June 7, 2012 & Consumer Economics, University of Illinois at
Urbana-Champaign; Project Director,
Modernizing Extension and Advisory Services
Project (MEAS); and, Extension Specialist,
University of Illinois Extension.
2. Sustainable Finance -- Quotes
• “The quality of spending to agriculture is
more important than the overall level of
spending.” Akroyd and Smith, 2007,
“Review of Public Spending to
Agriculture,” p. 20
• “…most donors have a strictly ahistorical
view of development and they lack an
institutional memory.” Eicher, 1989,
“Sustainable Institutions for African
Agricultural Development,” p. 12
3. Sustainable Finance -- Motivation
• Extension represents a very substantial investment in
agriculture in many countries.
• 100,000 extension agents in India (Eicher 2007)
• 15,000 public sector extension agents in Vietnam
• Many countries have committed to mobilizing more
funds in their budgets for agriculture
• 10% target of CAADP countries
• For this investment in extension to yield agricultural
development, agricultural productivity gains, and
reduced poverty, it must be financed in ways that
promote efficiency and impact
• Enhance likelihood of demand-driven services, build support for
funding of services, promote good performance
4. Outline
• The Financing Challenge
• Conceptual Framework
• Best Fit Approaches
• Knowledge Gaps -- Research
Needs
• Conclusions
5. The Financing Challenge –
Key Issues Identified
Sustainable finance question –
– How should funds flow?
– Who should pay?
– Who can pay?
– Why invest in this activity?
– How to ensure control of spending?
– How to measure impact of spending and
performance of activities?
6. The Financing Challenge –
Key Issues Identified
1. Low level of support for agriculture in
government budgets
Source: Akroyd and Smith, 2007
7. The Financing Challenge –
Key Issues Identified
2. Projectization of finance for extension
– Sometimes →no extension program, rather
a series of projects
– MOA becomes about being involved in a
project
– Without projects to fund transport, training,
etc. little happens
8. The Financing Challenge –
Key Issues Identified
3. Recurrent cost problem in extension
– Budgeting for staff but not for transport,
programming materials, in-service training,
coordination, M&E
– Longstanding issue in development finance
• Budget vulnerability of transport and programming
funds versus staff salary funds
9. The Financing Challenge –
Key Issues Identified
4. Politicization of finance in extension
services
– Political favors within the extension
bureaucracy
– Corruption – “…unique fiduciary risk”
– Civil service rules and procedures
10. The Financing Challenge –
Key Issues Identified
5. Broken link between budgeting and
performance
– Often farmers and farmer groups have very
little input into extension programming
– Often hires and placements are made
centrally or by District level leaders
– Farmers report not seeing an extension agent
after the project has ended
– Little transparency on flow of funds
– Lack of link discourages active field staff
11. Definition –
The Pluralistic and Varied Nature of EAS
• Extension is human capital enhancing
education and training, usually delivered in
non-formal settings for adult learners
• Includes a wide variety of activities
– T&V, extending technologies and methods
– Advisory services to answer farmer questions
– Non-formal education such as FFS
– Facilitation extension – organizing groups and
then into associations and then businesses
12. Conceptual Framework –
Public Goods and Toll Goods
• Much of the economic discussion of extension appears
to ignore facilitation extension and domains like NRM
• Public goods
– Non-excludability – is it possible to keep non-payers
from benefitting from the service?
– Non-rivalness – does one person’s consumption
reduce another person’s consumption or chance to
consume?
• Difference between calculus and being taught calculus
• Toll goods – think toll road
– Economies from scale, network economies
– Regulated
– Excludability
13. Conceptual Framework –
The Economic Nature of Extension Services
• Different types of extension services display different economic
characteristics
– Pure information is a public good
• However, the act and process of teaching/extension is not a
public good
• Extension services as toll goods
– Farm specific information – soils, drainage advice
– Farmer group specific work
• Wide variety of extension services
– A continuum from broadcasting information and messages to
highly interactive, personalized, services delivered by a trusted
intermediary
• Extension services necessarily involve face-to-face or personal
communication with farmers, a high degree of discretion
– Challenges for ensuring performance and quality (Pritchett and
Woolcock, 2004)
14. Conceptual Framework –
Market Failures
• Lack of information
– Failure of many producers to have accurate
expectations about gains in production or
profits that can be realized
• Market power
– In input markets and output markets,
reinforces gains to farmers from organization
• Cotton Uganda, Sugar Nigeria
– Raises the case where farmers are efficient
technically but they do not realize significant
gains in profits due to market power
15. Conceptual Framework –
Merit Good Aspect of Extension
• In many countries extension has a
targeting dimension of a merit good
– Terms like “poverty reduction” and the “rural
poor”, “marginalized groups” all are evidence
of merit good type targeting
– Chile, an upper middle income country,
differential efforts to reach poorer farmers in a
contracting scheme
16. Conceptual Framework –
Value Perspective, Rates of Return
• Social investors (donors, governments) need to know
what sort of benefits relative to costs extension programs
could generate
• Birkhauser, Evenson, & Feder report a range of rates of
return, most between 13% to 80%
• Alston et al. estimate a median rate of return on
extension of 62.9%
– Focus: staple crops extension
• Econometric questions remain: causality,
counterfactuals, selection, omitted variables, etc.
• Need impact studies and research
– With stronger econometric and experimental designs
– On broader set of extension practices: NRM, Facilitation
extension, targeting strategies, ICT approaches, etc.
17. Conceptual Framework –
Value Perspective, Rates of Return
• If rates of return are as robust as 20% to 80%
then why the lack of support for extension
spending among policy makers and many
donors?
• Benefit/Cost analyses can incorporate
welfare of disadvantaged groups with
varying welfare weights to address
distributional concerns
• A severe need for quantitative and
rigorous evidence about the variety of
impacts of extension
18. Conceptual Framework –
Value Perspective, Rates of Return
• Long tail of success: when assessing the impacts of
facilitation extension that develops new farmer groups,
farmer business associations, cooperative marketing
associations, etc. examine the long tail of impact from
the successes
19. Conceptual Framework –
Willingness to Pay, Ability to Pay
• What would farmers be willing to pay for extension and
advisory services if they are not provided for free?
• Holloway and Ehui find that 65 of 168 farm households
studied would be willing to pay a fee equal to the cost
– A significant fraction would not be wtp the cost
• Keynan, Olin and Dinar studied farmer payments of
bonuses designed to increase quality and
responsiveness of extension
– All the 17 farmer groups paid the bonuses and
continued with the program the following year
• Access of poorer farmers to extension, coupons,
subsidies
20. Conceptual Framework –
Political Economy
• Recurrent cost problem
• Projectization of extension
• Derived nature of extension policy in
practice (Bates, political economy
framework)
– Important groups include: civil servants,
small-scale farmers, large scale and
commercial farmers, agro-industries, political
parties
21. Best Fit Approaches
• Public sector financed and delivered
– Important approach
• Decentralized -- funds going to local level
• Can introduce co-pays/user fees, bonuses, coupons,
prizes to strengthen farmer voice in programming
• Explore performance reporting, e-tracking, i-M&E
• Need to examine performance-contracting
approaches to decentralization
– Recent work on public health and primary care
relevant to ag extension
22. Best Fit Approaches
• Public sector financed and contractor delivered
• Common in projects
• Role for INGOs, local NGOs, private sector
contractors, independent extension agents
• Performance contracting
• Coupons
• Need to ensure access for poor farmers and
targeting
• Public sector needs capacity building to contract and
to serve coordinating role
23. Best Fit Approaches
• User-financed and private provider delivered
• Underway in East and Southern Africa
• Private farm advisor model
• Need to examine targeting and access for poor
farmers
• Can be combined with coupons
• Registration/certification role for national association
or public sector
24. Best Fit Approaches
• Marketing margins financed and private provider
delivered
• Common in export crops and outgrower schemes
• Often combined with inputs and financing
• Usually not offering advice on other crops and
livestock – very focused
• Impact on farm productivity and incomes needs
careful study
• Targeting and poverty impact?
• Importance of competitive policy and infrastructure
so farmers receive benefits
25. Research Needs
• Rigorous evaluations to provide evidence
concerning the impact and value of extension
– Randomized experiments, natural experiments,
benefit/cost analyses, cost-effectiveness analyses
– Systems, alternatives, slight modifications, financing
approaches, etc.
• Research on performance and quality
• Impact of NRM and farmer group formulation
extension
• Evaluations of private sector approaches including
poverty targeting and sustainability
26. Recommendations
• Focus on quality and performance
• Information and control and reporting systems to
match financial flows
• Evidence on value, return, impact, poverty reduction,
and agricultural productivity increasing outcomes
• Research and experimentation on alternative forms
of contracting, coupons, prizes
• Research on extension provided through agro/vets,
outgrower schemes, export marketers
27. This presentation was given by:
Dr. Paul E. McNamara
Associate Professor, Department of Agricultural & Consumer
Economics, University of Illinois at Urbana-Champaign; Project
Director, Modernizing Extension and Advisory Services Project
(MEAS); and, Extension Specialist, University of Illinois Extension.
on behalf of MEAS
at the Global Learning Exchange on Best Fit Approaches in
Extension and Advisory Services
Washington, D.C.
on June 6, 2012
29. Disclaimer:
This presentation was made possible by the generous support of
the American people through the United States Agency for
International Development, USAID. The contents are the
responsibility of the author(s) and do not necessarily reflect the
views of USAID or the United States Government.
www.meas-extension.org
