That venerable “newspaper,� The Economist, recently lampooned the idea that peasant farmers can profit from new techniques (“Poor and benighted� Apr 26—May 2, page 75). “Let me teach you how to plant a tree,� read the mocking caption. This stance is especially odd for The Economist, which usually cheers new technology (but only as long as it is high-tech apparently).

After four years of a project, in Guatemala, the staff decided that they would do an adoption study, reasoning that if farmers appreciated a new idea enough to use it, then the technique must have some merit. The farmers knew a good idea when they saw one.

One of the most successful of the ideas was to plant a short variety of maize with a small bit of fertilizer (see earlier story on Guatemala Take a stab), and to make the rows and the planting hills closer together, and to use just two seeds per hill, not four or more. In the words of one of the campesinos who had adopted the innovation, “Before we planted as far apart as the deer could jump, using as much seed as a turkey can hold in its gullet.� (Sembrábamos a brinco de venado y a buche de chompipe). With the new technology yields of maize more than doubled, from 30 quintals per manzana to 70 or more. (From 1.9 tons per hectare to 3.8).

But there is another problem, and a more delicate one, that The Economist may have been trying to get at. Sometimes new ideas need money. And there is rarely enough of it on a farm, especially a small one in Guatemala. So the project loaned money to the farmers to buy the seeds and fertilizer. This was more complicated than it sounds. The money came from the rural development bank, from government projects, from private farm supply companies and from associations of organized farmers. Extensionists helped farmers with the contacts and negotiations.

In good years the Guatemalan farm families paid back their loans. In bad years, if the harvest was lost, they might not be able to. But good year or bad, the farmers wanted fresh loans the following year.

In meetings with the farmers it began to dawn on me that the farmers were not saving any money and were becoming dependent on outside loans. It seemed strange because of my experience in Bolivia, where indigenous farmers, some who speak little Spanish, sell potatoes every year and then invest the proceeds in agriculture, or else fold up the cash and put it in their pockets so they can buy seed, chicken manure and fertilizer for the next year’s potato crop. If marginalized farmers in Bolivia can finance themselves, then marginalized farmers in Guatemala should be able to do so as well. The difference must be in the crop. Perhaps Bolivian potatoes are more profitable than Guatemalan maize.

I teach my students not to ask leading questions, but open-ended ones, that invite wide-ranging answers. As I got more perplexed in Guatemala, I began to break my own rule and to suggest to farmers that they could save money at harvest time, to buy their inputs for the next planting seasons.

They rejected the idea out of hand each time. No, they would not, could not save money. There was not enough money to save. One woman seemed hurt by the very suggestion. Near tears, she explained that “We have been poor for so long, and have so many needs, we can’t save the money.� In the new system, farmers were applying up to nine bags of fertilizer per manzana (645 kg per ha). They said that without credit, they might apply just two bags.

Modern maize technology could double maize production in Guatemala, but there was still something mysterious about the economics of the technique. The extensionists kept crowing about how they had used economic analyses to “prove� to the farm families that traditional maize was not profitable. This slight of hand is based on setting a relatively high value for unpaid household labor, assuming that family labor has an opportunity cost. In reality, often rural families cannot sell their labor, so the opportunity cost of unpaid work on one’s own farm is fairly low. Of course such a neo-classical analysis would show that modern maize was more profitable.

So I did my own quick analysis, using the Mazoyer method, which is closer to the logic of peasant agriculture. The method basically takes the value of the harvest, subtracts only the cash expenses, and then divides the remainder of the harvest value by how many days household members worked. This is essentially the wage that the family generated for themselves. Using numbers the farmers gave me in a working group, I found that in a reasonably good year one could double the yield with fertilizer and other inputs, but would have to pay more for the inputs, leaving only a little more at the end of the season than with the old system, but probably not enough to compensate for additional transaction costs (like going to town to buy fertilizer).

The new technology also ignores risks. In a bad year, one looses the harvest, and the value of the store-bought inputs. When maize is scarce, prices should rise, which would compensate farmers in part for their slim harvest. Instead, governments intervene to dampen prices, to avoid political instability, but impoverishing the farmers, who are left with the risks while they are stripped of potential rewards.

The Guatemalan work was conducted under P4P (Purchase for Progress), by IICA (Instituto Interamericano de Cooperación para la Agricultura) and WFP (World Food Program). Any blunders in this story are mine, not theirs.