The other day I was talking to a Bolivian banker, Pedro MĂ©ndez, the head of the largest bank in Cochabamba. Two years ago, his bank had begun to make micro-loans to smallholders. Bolivian society is becoming more inclusive, more farmer-friendly in many ways.
These are small loans: on average $3000, and some families borrow as little as $500. Over twenty agents are managing a portfolio of about $500,000 each, and in two years, no farmers have defaulted on the loans.
â€śWhy not?â€ť I asked.
For one reason, the loan officers in this case are really agronomists who get some training in finance. â€śItâ€™s easier to teach banking to agronomists than to teach agriculture to bankers,â€ť Mr. MĂ©ndez explained. (We have had a similar experience: it is easier to teach agronomists to make videos than to teach filmmakers about farming).
And second, new software makes this possible. The bank agronomists have a questionnaire on a tablet which they take to the field. As the farmer supplies the answers, the bank agent types them in, and they are analyzed immediately. The agent asks the farmers in seven different ways how much produce they sell. One would have to be a genius to invent answers consistently in each different format. A built-in GPS helps the agronomist quickly measure the field that is to be financed, which helps determine the amounts of inputs the farmer will need, and to estimate the harvest.
I appreciated how much work it could be to administer that questionnaire. I once spent all day on a Bolivian tomato farm, collecting what is called a â€śpartial budget,â€ť asking the smallholder farmer about each task his family did, how much it cost, how many days they labored at it, and then we tallied the boxes of tomatoes they harvested each week and estimated the prices. Smallholder farms are complex, and it takes a lot of work to get the data on their costs and earnings.
The bank agronomists spend a day getting to know the farmer, and can then disburse the loan. Each agent signs up two farmers a week, and each banker agronomist loans to several hundred farmers. When the agronomist-bankers have large enough portfolios, they stop making new loans, and spend their time following up with the farmers. It has been a successful program, and is expanding.
I was surprised. I had heard bankers in Benin complain about loaning money to smallholders, complaining that they often default on their loan.Â In a recent blog â€śLet me teach you how to take out a loanâ€ť, we saw that Guatemalan farmers liked getting loans, but the loans had to be subsidized by donors or the government.
I asked Mr. MĂ©ndez what happened when Bolivian farmers couldnâ€™t repay their loan, especially because of drought or other troubles with the weather. He said that the bank agents worked with the farmers, analyzed their situation, and gave them more time and advice.
Now, just because borrowers repay their loan does not mean that they necessarily made money. Some micro credit programs have recently come under fire for loaning to groups, not individuals, and then using peer pressure to get the money paid back, even if the borrower lost money (Brett 2006).
So I asked Mr. MĂ©ndez if they loaned to individuals or groups. â€śOnly to individuals,â€ť he said, adding that the agronomist banker helped the clients to design and follow through with a repayment schedule.
Interest on these loans is 12%, not dirt-cheap, but less than a credit card. And while the interest rate is certainly not usurious, it is a commercial loan.
Loans in the city are a bit different. The bank knows that four out of every five businesses fail their first year. So the bank does not loan to new businesses, large or small. Entrepreneurs are only eligible for loans after they have survived their first year, gaining experience and proving themselves to be capable managers.
A few days later the story got better, when I happened to meet JosĂ© Luis Pereira, a Bolivian agronomist who used to work for the bank, but has now gone on to work for the Swiss cooperation. Mr. Pereira was involved in the private credit scheme from the beginning. At first the bank was cautious, afraid that the smallholders would be risky borrowers, so Mr. Pereira got $120,000 in seed money from an international donor, and the bank put in $30,000. From this hesitant start, the smallholder credit program soon became large, and profitable.
I draw two lessons from this story. One, new technology can make it easier not just to communicate with farmers, but to understand them. In this case, the tablets and software help the bank to see that family farms are profitable, and credit-worthy.
Second, small farms are old businesses, tended for a lifetime and then passed on to the next generation. They are already successful businesses, ones that survive. Those who pretend to lecture to peasants about â€śfarming as a businessâ€ť should first sit in the pupilâ€™s seat, and learn what the family farmers are doing right.
For a video on counting costs (and benefits) on farm, see: â€śLetâ€™s talk moneyâ€ť.
Brett, John A. 2006 â€śâ€™We Sacrifice and Eat Lessâ€™: The Structural Complexities of Microfinance Participation.â€ť Human Organization 65(1):8-19.
School teachers across the world hold a special position in society. They are respected for the knowledge they share with new generations. But teachers in developing countries also have something else in common: they often find it hard to make ends meet. On a recent visit to Iran I was fortunate to meet Sadegh Mohammadi in Sohrevard city in Zanjan province. Like most Iranian school teachers, Sadegh has a second job, but his is innovative: he rears fish on a steep slope in the back of his garden.
Creating rural employment is as important as ever before, in Iran and elsewhere. Over 15 years the people employed in fisheries in Iran doubled to 181,000 (FAO, 2014). The fish tanks that Sadegh installed in his backyard give direct work to three families and indirectly (supply of fish feed, rearing and selling of fingerlings, marketing) to another 7 families. â€śEven in the worst situation, the fish gives much more income than a teacherâ€™s salary of 500 US dollars a month,â€ť Sadegh says.
Sadegh learned about aquaculture from the extension service, which also loaned him money to set up his concrete fish tanks. Trout likes cool climates and fresh, fast-moving water. Hence Sadegh pumps up water from the lake in the valley bottom to the upper tank and then lets the water flow by gravity through the various fish tanks. From experience Sadegh learned that if the fish all gather at the entrance of the tank, they lack oxygen, after which he switches on a small fountain to pump extra air in the water. The many mature walnut trees in his garden provide a pleasant shade from the summer sun, which keeps the fish happy, and provides picnic spots for the many local tourists who come to the village on weekends.
In southern Vietnam, in the late 1990s I saw how creative entrepreneurs built fish ponds in the middle of fruit orchards to attract local tourists. People could fish for a fee, and food was served. Agro-tourism comes in many ways, building on local dynamics and cultures. Bringing the culture back into agriculture is a great way to create rural employment and for urban folks to learn about farming (and sometimes about fishing too).
Reference: FAO. 2014. Iran National Aquaculture Sector Overview. http://www.fao.org/fishery/countrysector/naso_iran/en
To watch or download a training video, see: Food for fish
Honduras has the highest murder rate in the world. It is easier to get killed there than in Afghanistan. For the seven years I lived in Honduras I knew four people personally who were murdered, and twice people told me that they had given some thought to shooting me (once for almost hitting someone on my bicycle in the dark and once for yelling).
A couple of years ago I found myself back in Honduras, travelling with an agronomist named Carlos, who had an old pickup truck, cowboy boots and every one of his white hairs slicked into perfect place.
We ate lunch at his sisterâ€™s restaurant in a small town in western Honduras one day, and as we left, Carlos said off-handedly â€śRoll up the windows. There are some guys here who want to kill me.â€ť
â€śWhy do they want to kill you?â€ť I asked.
The story went like this: Carlos and his siblings inherited a little coffee farm. Some other relatives said that they had a share in the land. Carlos ignored them, sold the farm and split the proceedings with his brothers and sisters. The cousins didnâ€™t get a share, so they killed the people who bought the property.
â€śThey killed them right there,â€ť Carlos said as the pickup rattled around a curve. â€śThe whole family was leaving the farm, and as they stopped the car to open the gate, the guys killed all three of them: the man, the woman and their kid.â€ť
Rural property can be valuable, and people will fight over it. If the police and court system is dysfunctional, the fighting can be lethal.
One of my first extension experiences in Honduras, years ago, was in Olancho, the rural center of the country.
As we drove to the field, one of the agronomists explained that things might be a little tense, because our farmer contact had shot a couple of guys a few days earlier. We met the contact farmer, a man in late middle age who looked more like a respectable elder than a killer, and he took us to a corral, where we could give our talk, which was on how to make poison bait to control bean slugs. I was in the middle of the extensionists. Our contact farmer was on one side of the corral with about seven people, and about 20 men were on the other side. We were unwittingly aligned with the outgunned faction. Except for me and the extensionists, all of the men had long pistols in leather holsters, cowboy hats on their heads and anger in their eyes.
Development people like to talk about â€śempowerment,â€ť which is usually a good thing, but at the time I wished that these guys had had a little less fire power. Nevertheless, the mollusks were ravaging their bean fields, so they tolerated each otherâ€™s presence to listen to us and watch us make slug poison. We wrapped up our talk, shook hands with both groups and left them to simmer in their differences.
Development schemes are often built on the unstated assumption that â€ślittle communitiesâ€ť (to use Robert Redfieldâ€™s happy term) are harmonious. Farmer cooperatives, community warehouses and farmer field schools (FFS) implicitly assume a united village, places where anthropologists have noticed factions, witchcraft, and malignant gossip.
When you start any project in a village, how do you know if the village is factionalized? You donâ€™t always. How do you know that the dominant group in the village doesnâ€™t channel the project to suit their interests? You donâ€™t, unless you know the village well and are gifted at social engineering.
I like mass media because you can share it with everyone. People can be excluded from a group, but it is possible to make videos that everyone in the village sees.
The Other World. I still recall my amazement when visiting a castle in the English countryside with my family some ten years ago. One of the 16th century Flemish tapestries hanging on the wall showed a workhorse with a two-meter long neck. It must have been hard for weavers in the 1500s to visualise new creatures, such as a giraffe, just based on other peopleâ€™s descriptions.
The early European travellers lacked words to describe all the new things they were seeing. With few people travelling to far off countries, early travel writers had no peer reviewers. Many read what others had written before them, and then added more fantasies (like blue people, or folks with faces on their bellies) and exaggerations (ants as big as dogs) or hybridisation (wild animals with ears of a donkey, wool of a sheep and feet of a bird) For more examples of weird creatures â€śinventedâ€ť since medieval time, visit Strange Science. As historian Mary Campbell puts it, for travel writers, the â€śOther Worldâ€ť was a tapestry or a blank page where they could let their imaginations run wild.
The audience is King (and Queen). During his first voyage Christopher Columbus (1451-1506) landed on Hispaniola and later cruised the coast of Cuba, where the Admiral obliged his men to sign a statement saying that they had travelled to Asia, although at least some of them must have suspected that they were not in China. Christopher was on a mission for the Spanish Crown (Isabel of Castile and Ferdinand II of Aragon) at a time when colonial rivalry with Portugal was at its highest. Within weeks of Columbus’ return to Spain in March 1493 copies of his letter were picked up by publishers, translated and printed throughout Europe. The recent invention of the printing press revolutionised the way the word spread, like social media does nowadays. But Columbusâ€™ writing was rather dull and did not appeal to a wide public, mainly because it lacked human interest. When Columbus wrote his letter, his audience was the Queen and the King, whom he tried to please as much as possible (â€śthe fields are very suitable for planting and cultivating, for raising all sorts of livestock herds and erecting towns and farms”).
Knowledge is power. But Columbus also wrote a travel diary (the so-called Journal), which remained unpublished until a reworked version of it was printed in the 19th century. The original was never found, in part because the royal couple had decreed the death penalty for anyone who sent a map or part of the Journal abroad.
Blogging for development. Fortunately, protectionism in todayâ€™s publishing world has changed. But development literature still has fairly few readers, partly because papers and reports are written for academics, donors and policy-makers. The norms of scientific writing still promote a dry style where narrative and human interest are seen as distractions. Farmers are too often depicted as beneficiaries of interventions, not as people with own ideas, inventions, fears and aspirations. A more human style of writing will hopefully one day unleash a more people-centred development, where creativity, discovering human potential and even a sense of wonder are as important as planning and crunching numbers.
For further reading:
Campbell, Mary B. 1988. The Witness and the Other World. Exotic European Travel Writing, 400-1600. Ithaca: Cornell University Press. 285 pp.
The ancient Inca ruled the largest native empire ever assembled in the Americas. Its agricultural economy was based not on trade or exchange, but on tribute. The fruits of harvests from Ecuador, Bolivia and Peru flowed to the capital city of Cusco (â€śJuskâ€™uâ€ť meaning â€śholeâ€ť i.e. navel, center of the universe).
The Bolivian valley of Cochabamba is unparalleled in the Andes, and it was a key part of the empire. In this largely vertical landscape of mountain cliffs and canyons, Cochabamba is an immense, flat, fertile valley, gently curving in a boomerang shape 60 km long. The valley is an ideal habitat for humans and crops. The tricky part is getting things in and out over the mountains.
Years ago in a mountain village I sat in a tiny home made of stone and straw while a woman toasted maize grains on the fire and an old man explained how he used to herd his llamas loaded with goods down to the valley bottom. He and the other llameros would camp by a shallow lake outside of the city of Cochabamba. But that world is gone now. The lake has been drained and the municipal stadium has been built on the site where llamas once camped.
An agricultural tribute economy has to have a way to store some of the harvest, hence the massive stone granaries around Cusco. The ancient ones knew that food could be a weapon, that stored maize could feed a marching army, or resupply a restless province after a crop failure.
Near Cochabamba there is an Incan site called Inka Raqay (or Incaracay). â€śRaqayâ€ť means â€śto storeâ€ť in Quechua. The Cochabambinos had told me that the place was an Incan granary site and I had no reason to doubt them.
Then this week we went to see it. The site is a long way up the side of the mountain. Ana and I had tried to find it years before, with archaeologist Wayne Howell, when we were all younger and fitter. Back then we had hiked all day without finding the site. But now there is a cobblestone road leading to the site and beyond. So this time we cheated. We took a taxi from the small town of Sipe Sipe.
A shiny new chain-link fence has just been built around the site, and the gate was locked. We climbed around the fence on the cliff side, and walked down to the site.
I was filled with wonder, because I could see immediately that the site was not designed for storing grain. There was not a granary in sight. Instead, it was a typical imperial Inca city, only in miniature. There was a little cluster of buildings made of stone, not cut stone like in Cusco, because after all, these were the provinces, but the walls were lined with the mysterious niches, typical Incan. The center of the site was a large, irregularly shaped plaza, just like in old Cusco or Machu Picchu or any other Incan town.