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Universitt Hohenheim

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COMMUNITY-DRIVEN AGRICULTURAL DEVELOPMENT PROJECTS:

AN ANALYSIS OF THE EXPERIENCE IN LATIN AMERICA: AN
ANALYSIS FROM NICARAGUA
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M.Sc. Agricultural Economics

Module: Agricultural Economics Seminar (4904-410)

Supervisor: Prof. Dr. Regina Birner

Francisco A. Mendoza Tijerino

Matrikel Nr: 616944

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Abstract:
Since the return of agriculture as a promising instrument for delivering rural and agricultural
development a lot of emphasis has been made on the role of the private, public and third sector in
supporting this agenda. Especially, attention has been put on the challenges faced by the so called
Community Driven Development (CDD) approach in achieving objectives under the rural
development agenda. This paper examines two experiences of CDD projects in Nicaragua in the
aim to understand how the implementing process can take the form of a technical intervention or a
more political intervention. The paper takes into consideration that the choice of role can respond to
different comparative advantages of the implementing institutions in the objective of co-producing
development together with other actors. For the examination the Discriminating Alignment
Hypothesis is used to understand this issues.
The paper concludes that the theoretical framework explains fairly well why a project can play a
technical role while approaching to rural development from a CDD point of view, however more
research is required to explain why some projects play both a technical and a political role.

1 Introduction
In the current discussion on the development challenges the role of agriculture has been recognized
as one of the most promising instruments for reducing world poverty (World Bank, 2008). Even
though there is agreement on the critical role of local actors' empowerment as an attractive strategy
to deliver development (World Bank, 2002), the question of how to foster agricultural and rural
development is still under examination (Binswanger, 2006), and it implies a recognition on the
changing roles of the state, the private sector and the civil society (World Bank, 2008).

The aim of this paper is to examine two project's experiences in Nicaragua that are aligned with the
philosophy of Community Driven Development projects. First the project Promoting the Local
Participation for Socio-Economic Development is analyzed. It was funded by the Navarra
Government (ALBOAN) and implemented by the Research and Development Institution
Nitlapan1 of the Central America University between 2010-2013 in the municipality of Ro
Blanco, central region of Nicaragua.

The following project under consideration is the Second Agricultural Technology Project (Project
ID: P087046) from the World Bank and other co-funders 2, executed at the national level in the
framework of the Government of Nicaragua's agricultural program PRORURAL between 2006-
2014. The analysis of the both experiences becomes a highly valuable input for the recognition of
the challenges currently present in the Community-Driven agricultural development projects in
Nicaragua and also for the future project's implementations that will likely take place in the country.

The experiences are analyzed under the Discriminating Alinement's Hypothesis (Williamson, 1991)
theoretical framework in a way to understand the importance of the comparative advantage in the
process of delivering and co-producing agricultural development (Binswanger, 2006). While
examining the experiences in a comparative way, the paper seeks to investigate if the choice of roles
that the implementing actors assume can be understood under the theoretical framework. Focus is
made in underlying the implementation processes and roles of the implementing organizations, as
1 Institute of Research and Development Nitlapan, Managua, Nicaragua, http://www.nitlapan.org.ni/
2 Co-financiers: International Fund for Agriculture Development (IFAD) , Canada - Department of Foreign Affairs,
Trade and Development

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well as the outcomes in each case. This emphasis will give powerful insights in how the recognition
of comparative advantages could play a role to overcome obstacles arising in implementation
procedures.

2 Literature and theoretical considerations

On the first section an assessment is made of the current literature on the role, challenges and
perspectives of the civil society as a third sector. The second section introduces the theoretical
framework for analyzing the comparative advantage of the delivery of agricultural development,
which later will be useful to understand the project experience.

2.1 On community driven development

After the return of agriculture to the policy debate (Hazell, Haggblade, & Ehui, 2010) and the
recognition of the importance of governance as a core element to support an agriculture-for-
development agenda, the roles of the state, private sector and civil society have received a lot of
attention (World Bank, 2008). Particularly the one of the civil society as a third sector has been
pushed into the analysis given the need to make development as community driven; even when the
third sector shows many conceptions and shapes, a way to understand it is as comprising civil
society organizations including farmer based organizations and non governmental organizations
(Birner & Anderson, 2007).

The Community Driven Development (CDD) refers to development interventions in which

communities are assumed to have representation and control over key decisions (Mansuri & Rao,
2004a), as well as assuming a participatory framework in different stages between the projects
implementers and the local actors involved. In this view it is expected that the CDD builds strongly
on the functioning of the third sector, meaning that a well-functioning third sector might have
positive outcomes in driving and achieving development. As discussed by the International Fund for
Agricultural Development (IFAD), the CDD intends that rural communities take initiative for their
own development while enabling the community-level-organizations or local actors to take part in
the design and implementation of programs (IFAD, 2009).

The need for a sector approach (either state, private or third sector) in the analysis of agricultural
development has been argued extensively, especially in the area of agricultural extension services
(Birner & Anderson, 2007; Feder, Anderson, Birner, & Deininger, 2010; Feder, Birner, & Anderson,
2011), where, given the need for the delivery of a service, the state and the private sector usually
face limitations in providing it due to specific attributes of the service to be delivered or the context
in which it is delivered.

The limitations in supplying a service or a good arise as a result of lack or asymmetric information
in the context in which the good or service is supposed to be delivered, scale and complexity in the
process of its provision, public good characteristics, implying difficulty to limit the appropriation of
benefits to third parties after the good or service is delivered and elite capture, which can be seen as
goods or services being provided responding to the demands of well positioned groups.(Birner &
Anderson, 2007).

Especially in the rural areas, agricultural activities show important particularities that increase the
limitations faced by the state and the private sector in providing goods and services: e.g. high
dispersion of the activity, communication and transport costs, uncertainty, risk, seasonality, yield
covariance and imperfect or asymmetric information (Binswanger & Rosenzweig, 1986). All these

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characteristics are intrinsic in the context in which agriculture is exercised, and represent factors
that actors need to take into account in order to provide its services.

To overcome these limitations the third sector can play an important role. A development project
that builds on the capacities of the local actors can achieve efficiency, effectiveness and
sustainability, this by reducing information problems, creating accountability and strengthening
local capacities (Mansuri & Rao, 2004a). Critical is the importance of participation at the local level
in a way to ensure effective delivery of services for the poor (World Bank, 2002). Since it is
assumed that local communities are the most reliable source of information about their priorities,
the decisions made through participatory processes are expected to address their needs more closely
(Labonne & Chase, 2009). Equally important is to notice that this driven development looks
forward in the reversion of power relations while creating agency and voice for poor people
(Mansuri & Rao, 2004b).

Nevertheless, the enthusiasm for CDD has called for an evaluation of its effectiveness, specially
when dealing with the evidence indicating that elites tend to dominate local decision making,
including those envisioned to be participatory (Fritzen, 2007; Labonne & Chase, 2009). This bias in
decision making can mean the design of projects addressing only part of a community needs, in
which the missing part is not explicitly expressed by the less empowered groups. Likewise, CDD
must deal with other governance challenges; the collective action problem, entrenched-top down-
patronizing attitudes from governments dealing with small scale farmers, corruption and the need of
qualified local actors are just some examples (Feder et al., 2010).

2.2 Discriminating Alignment Hypothesis

Being aware of the different comparative advantages can be useful to overcome the bundles of
challenges faced by the different actors in the rural areas in the task of co-production and delivery
of agricultural development projects; this calls for a recognition of the most effective role that each
actor can to play. Under this view, the co-production of rural development has to take into
account actor's comparative advantages in functions and approaching to desired objectives in a
coordinated way with other groups of actors (Binswanger, 2006).

This recognition has already been taken into account in the literature. When comparing, for
example, the roles of the community, the market and the state, the community has comparative
advantage in providing local goods in comparison with the market in its provision of private goods
and the state with its supply of global public goods (Hayami, 2009).

In the same context, Community Based Extension (CBE) systems are seen as having comparative
advantage in facilitating extension activities such as natural resource management or pest
management; where collective action plays an important role (Feder et al., 2010).

From another perspective, development organizations can also be attributed different levels of
comparative advantages depending on their activities and roles, one example is the World Bank's
comparative advantage in perusing an empowerment agenda for poverty reduction, which is based
in its relationship with governments, its experience in providing analysis, evaluation and advice in
reform and growth topics (World Bank, 2002).

The Discriminating Alignment Hypothesis holds that transactions, which differ in their
attributes, are aligned with governance structures which differ in their costs and competences, in a
discriminating (mainly transaction-cost-economizing) way (Williamson, 1991, p. 277).

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Understanding institutions as bundles of social constructions or rules that organize economic, social
and political interactions between individuals (Espino, 1999; North, 1991) the governance
structures can be viewed as different institutional set ups, each of them defining some competences
and costs.

Typical governance structures are the markets; well suited for transactions with simple attributes
such as commodity sales. On the other hand await the fully integrated firms, where the attributes
suggest higher transaction complexity and coordination in transactions are important (Shelanski &
Klein, 1995; Williamson, 1991). Following Williamson (1991) reduced form expressions of
governance costs can be established as a function of assets specificities or attributes;
CGovS 1 =f (k ,) ; CGovS 2 =g (k , ) where CGovS refers to the costs of a governance structure and k
and refer to asset specificity or attributes and shift parameter respectively.

2.2.1 Identifying transactions, costs and attributes of two

governance structures: technical role and institutional role

The CDD's approach assumes that communities can play many roles (i.e. monitoring, design,
management, evaluation), and, in many cases, partnerships arrangements between the communities
and demand-responsive support organizations arise i.e. partnerships with local governments, service
providers or NGO's (Gillespie, 2004; IFAD, 2009).

These support organizations can be seen as structures of implementation and it is assumed that an
important part of the project's success might depend on the capacity of the these structures in
dealing with the intended delivery process.

Two examples of what is meant by these structures of implementation are presented. In India's
Agricultural Technology Management Agency Model project, agencies refereed as ATMA were
entailed to deal with extension services and were also allowed to work with public or private funds
in coherence with the direct participation of stakeholders -representatives of farmers, and other
actors- (Feder et al., 2010); it is assumed that the agencies responsible of dealing with the service
are prone to have expertise in delivering goods or services required by the project designers (which
potentially can be the communities themselves). This agencies dealing with the delivering of
extension services can be understood as structures of implementation.

In the project National Agricultural Advisory Services (2001) in Uganda the strategy for
improving agricultural extension system meant a contracting out strategy to the private sector and
NGO's (Birner, Cohen, & Ilukor, 2011). The service providers were contracted by the group of
farmers and were responsible of facilitating formation, plots demonstrations and inputs provision to
the group and later selected enterprises (Birner et al., 2011) Under this view, service providers act as
structures of implementation being responsive to the demands of the beneficiaries and delivering
technical services.

As showed, support organizations come into play as a result of partnerships with communities
which are in the position, at least theoretically, of designing their development. These support
organizations deliver services, goods or give support aligned with rural or agricultural development
objectives previously defined in the partnership process. They might take the form of farmer based
organizations, non governmental organizations, farmers groups, NGO's or decentralize public
institutions.

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Equally important is the recognition that these structures of implementation deal with different
levels of competences which are associated with specific costs of transaction. The competences and
roles analyzed here are the (i) technical role; which correspond to objectives such as increases in
yields, improved farm management, markets access, and (ii) political role; corresponding to the
creation of deliberation and empowerment processes while aiming to influence in the already
formal and informal rules settled in the communities. Both of these roles represent the governance
structures under the Discriminating Alignment's Hypothesis framework.

For the ALBOAN project, the implementing and support organization Nitlapan played together the
role of technical assistance and the role of deliberation process, which can be seen as a political
role. The PTA-II project of the World Bank derived in the Nicaraguan Institute of Agricultural
Technology (INTA), the Nicaraguan Foundation for Agricultural and Forestry Technological
Development (FUNICA), the National Technological Institute (INATEC) and the Banco
Produzcamos (BP) as implementing organizations in the context of a national program to support
the agricultural sector.

Support organizations can play different roles while being responsive to the communities; they can
take a stronger technical role (extension/advisory activities) or a stronger political/institutional role.
The Discriminating Alignment Hypothesis serves as a well theoretical framework to understand the
choice of role that that the supporting organization will play in coherence with the rural
development objectives the community demand.

Additionally, the literature suggests steps to apply the theoretical framework, namely: identify
activities, identify costs of carrying these activities and identify attributes that might influence costs
under each different role (or governance structure) (Birner & Linacre, 2008)

The activities embedded in the technical and advisory role depend on the dimension: i.e. technology
transfer, human capital development, farmers training to manage common resources (Swanson,
2008), as well as the scope of action: i.e. post-harvest, like storage and selection process; pre-
harvest, like preparation of land and its management; marketing; market enrollment. With respect to
the political and institutional role the focus is made in the support of empowerment and creation of
deliberation platforms.
A set of relevant activities regarding both of the roles are deduced from empirical project
evaluations (IFAD, 2009; Mansuri & Rao, 2004b; NORC, 2012; Swanson, 2008) and theoretical
discussions.

TRANSACTIONS AND COSTS CORRESPONDING TO EACH GOVERNANCE/ROLE.

Activities technical role Costs
Diagnosis (assets, social dynamics, agro-economic
Cost of base line studies
assessment)
Development of updating mechanism (capacity to
Monitoring costs
adapt to community changes)
Cost of identification of farmers
Organization into producers groups
heterogeneity
Cost of negotiations and time to reach
Coordination meetings
agreements
Identification of market boundaries and
Cost of research and studies
opportunities
Development of management plans Cost of negotiations actors-supporting

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 agency
Development of production training As above
Development of business skills As above
Development of pre and post harvesting good Cost of negotiations actors-supporting
practices agency and monitoring
Downsizing production systems heterogeneity
(socioeconomic types, agro-ecological zones when Cost of definition of typologies
applies to farmers)
Test, evaluations and adjustment Documentation, impact evaluation costs
Activities political role Costs
Understanding of social, historical and political
Cost of permanency and long therm study
dynamics
Investment in human capital Costs of permanency
Investment in acceptance As above
Costs related to promote information
Promotion of information access
diffusion
Cost in promoting involvement of less
Promotion of participation
empowered groups
Promotion of accountability (development of
Cost of designing accountability schemes
accountability schemes)
Promotion of local organizational capacity Costs of taking part of negotiations
Illustration 1. Source: Author based on Swanson (2008); NORC (2012), Mansuri & Rao
(2004), IFAD (2009)

The co-production of agricultural and rural development can be understood in the context of two
governance structures which are the different roles (political/institutional role and
technical/advisory role), each showing different activities and the corresponding costs.

The choice of governance structure to co-produce rural and agricultural development is made in a
cost-effective way given a set of attributes related to the actions of each governance structure.
Attributes assessment implies recognizing factors affecting the probability of encounter one of the
governance structures under discussion after the intervention is made. Shelanski & Klein (1995)
show, based on the Transaction Cost Literature, that asset specificity, uncertainty and complexity
are the independent variables while choosing the governance structures for their application. The
following equation shows these relations in the case of choosing the governance structure in the
present context:

(Technical=1, Political=0)=f (Dispersion , Inequality , addressing informationflows)

When spatial dispersion plays an important role, the political organization can be relatively more
difficult for the implementing institutions as compared to the activities played in a technical role,
this might suggest that projects, in which the beneficiaries are expected to be highly dispersed, are
implemented under a technical approach.

Where inequality (social or economic) is important, the generation of deliberation processes can be
costly, this because of the low likeliness of better positioned groups to engage in these processes.
On the other hand, when a technical approach is applied, the risk of elite capture might be greater,
as Mansuri & Rao (2004) suggest: Project implementers, whose incentives are often poorly
aligned with the needs of the project, may choose to gloss over differences within target groups that

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underscore local power structures and to short-change the more difficult task of institution building
in favor of more easily deliverable and measurable outcomes. Paradoxically, for many
implementing institutions is inequality and power distortion the reason to adopt a political role.

Finally, when the management of information flows is important, the costs of building and investing
in a efficient dissemination framework can be costly for an approach in which deliberation and
empowerment is the objective.

3 Community Driven Development in practice

The following section focuses on two project, each presenting different scales interventions and
roles of the implementing institutions; the difference in roles and the challenges of the
implementing institutions are an important aspect to be analyzed since they provide a blueprint of
potential obstacles usually found in projects implementation processes.

The first one is a project from ALBOAN, carried out by the Research and Development Institution
Nitlapan of the Central American University in the municipality of Ro Blanco (central region of
Nicaragua). The experience becomes highly valuable for analyzing the incidence of different roles
attained by the implementing institution.

The second project is the Second Agricultural Technology Project financed by World Bank, IFAD
and the Department of Foreign Affairs, Trade and Development of Canada. The project took place
nationally between 2006-2014 while facing a country's governmental change in 2007. This project
differs strongly on the scale of implementation faced by the ALBOAN project, and it represents a
good example for comparison purposes on the roles taken by the implementing agencies when
dealing with heterogeneous groups of farmers since it takes a technical approach instead of a mixed
role.

3.1 ALBOAN's project of Promoting the Local Participation for Socio-

Economic Development

The project (01.10.2010-31.12.2012) consisted in promoting the participation of peasant families in

local deliberation spaces at the community level in order to improve their economic opportunities
within the important value chains being developed (ALBOAN, 2015). It also implied a bottom
top approach in three zones of Ro Blanco (Bastiaensen, Merlet, Flores, & (eds.), 2015), and works
aligned in the belief of a reciprocal relationship between individual assets-capabilities and the
capability to act collectively (World Bank, 2002) (See annex 1)

Nitlapan, as the implementing institution, had already advantages in the municipality before
assuming the project, this showed by a solid working experience as a technical actor in the areas of
technical assistance addressing management of agricultural production systems (APS)/small
enterprises (Ruiz, 2013), support initiatives in cattle fattening investment and also strengthening
capabilities with the learning program Territory, actors and development strategies (ALBOAN,
2010). The project was designed consisting in three different levels detailed in the Annexes (See
annex 2).

As a community driven agricultural development project, the intervention allowed for different
participation stages of the beneficiaries. Communities were directly involved through the diagnosis
procedure, addressing the socioeconomic dynamics in three different zones of the municipality of
Ro Blanco, each of those with different communities (Bastiaensen et al., 2015); this also suggested

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the identification of opportunities and obstacles faced by the different actors in the communities
(ALBOAN, 2010).

The focus of the present analysis is made on the so called Agreements (Convenios) in the cocoa
value chain that took place in the community of Cuatro Esquinas belonging to the third zone of
Ro Blanco and characterized by a diversified production (beans, corn, coffee) with strong income
influence of cacao. This represents an analysis of the second level of intervention for Nitlapan.

The formulation and proposals of the agreements to be taken were derived from collective
discussion processes between the different actors of the value chain: the gatherer of cocoa in the
community (the collector), farmers (members and no members of the cooperative) and the
farmers cooperative La Campesina. The bottle necks that were identified that were perceived as
limiting appropriation of the cocoa value chain's benefits are expressed in the Annexes (See Annex
3).

In the design stage and implementation, the collector, farmers, cooperative and Nitlapan took
agreements to manage the information and financial flows in the value chain, this agreements were
promoted in a way to foster all the actors involved, and specially empower poorer farmers. This
empowerment was expected to be a result of improved productivity from cocoa production
(supported by technical assistance from the implementing institution) as well as better organization
and deliberation capacity, which was assumed to be developed as a result of the promotion of new
agreements and rules in the community.

Through this experience, the implementing institution played different roles in delivering
community agricultural and rural development; it played the technical role (providing resources to
be managed locally), role in which they have already plenty of experience (programs of Farm
Schools, Micro-leasing, cow fattening, land legalization (Nitlapan, 2013)).

From other side, it played a role addressing directly a collective action process (organization,
partnership and deliberation promoter): a more political role (Ruiz, 2013). In the below illustration
it is possible to see in deeper detail the agreements taken by the actors. Each of the actors knew the
other parties conditions.

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AGREEMENTS OF THE ACTORS IN THE COCOA VALUE CHAIN IN THE
COMMUNITY OF CUATRO ESQUINAS, NICARAGUA.

Illustration 2. Source: Author based on Torres (2013)

3.2 World Bank's Second Agricultural Technology Project

3.2.1 The project
The aim of the Second Agricultural Technology (PTA-II) project (2006-2014) was to increase
agricultural productivity by providing rural households and communities with broader access to
sustainable agriculture, forestry and natural resource management service, technology and
innovations, in line with the Recipients PRORURAL program (World Bank, 2014).

The PRORURAL (later on called PRORURAL Incluyente 3 ) was a program derived from the
National Development Strategy (2005-2009) (PND4) during the liberal government in Nicaragua
and looked forward in promoting agricultural development and access to technology during the
validity period of the PND. The analysis made of the project is based strongly in the
Implementation Completion and Results Report of the World Bank, as well as additional
independent evaluations in the country.

The idea of the PTA-II was to finance many of the activities defined in the PRORURAL. At the
time of preparation of the PTA-II its objectives were aligned with the components of the PND and
therefore with the PRORURAL as a specific program, promoting an engagement attitude from the
World Bank.

3 Incluyente stands for inclusive

4 PND stands for National Development Strategy (Plan Nacional de Desarrollo in Spanish)

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The task of implementation of PRORURAL was left to autonomous public and private agencies and
institutes in Nicaragua with specific characteristics and mandates to deliver extension services and
technology training: the Ministry of Agriculture and Livestock (MAG5) as the major implementing
and coordinating institution and Nicaraguan Institute of Agricultural Technology (INTA), National
Forestry Institute (INAFOR), Nicaraguan Foundation for Agricultural and Forestry Technological
Development (FUNICA), National Technological Institute (INATEC) and the Banco
Produzcamos6 (BP) as supporting institutions. The project contemplated different components
described in Annexes, three of them were developed under an Additional Financing (AF)
requested by the Government of Nicaragua in 2007/2008 (See Annex 4)

The design of the project drew heavily on the past lessons derived from the first World Bank's
Agricultural Technology Project in Nicaragua (World Bank, 2014), project that, concerned by the
increasing difficulties faced by the agricultural sector in Nicaragua after the beginning of
liberalization process in 1990, looked forward in promoting an demand-driven agricultural
technology, knowledge and innovation system in the country (World Bank, 2007).

It also included a consultation process with the aim to incorporate the voice of the stake holders in
the formulation of the strategies across regions (Institute for Global Food Security McGill
University, 2013). This implied the inclusion of woman and indigenous actors in decision making
processes and binding this approach to specific indicators (to be presented in the next section).

Emphasis was made in the difficulties to access financial resources. Given the limitation for
accessing to credit and effectively connecting to markets, farmers organizations already engaged in
seed production faced financial constraints in their activities. These needs were aimed to be fulfilled
through a line of credit and certified seed production training, designed and derived from the AF of
the PTA-II (World Bank, 2014).

The idea was that seed farmer's organizations were going to manage their received credit and new
managerial skills in order to overcome the challenges. The subcomponents under the Additional
Financing (AF) in the PTA-II (refer to Annex 4) represent an interesting point of analysis for the
examination of implementation challenges since it deals with technical approaches, therefore the
focus is made in these.

The AF was granted after program reform of PRORURAL by the new government taking charge in
2007. This reform changed the PRORURAL into PRORURAL Incluyente (inclusive), and it was
made under uncertainty regarding the continuity of the program (Cceres, 2014). The change
implied the inclusion of a newly created Ministry (Ministry of Familiar, Communitarian,
Cooperative and Associative Economy (MEFCCA)) as coordinating public institution together with
MAG, and stated an explicit direct participation of the beneficiaries in the formulation of the
programs (MAGFOR, 2009)

With the 2007 governmental change in the country, FUNICA, the original institution in charge of
implementing a sub-component of AF I, was substituted by INATEC as an implementing agency;
this lead to significant impacts in the implementation process as well as some concerns regarding
the capacity of the requesting cooperatives to manage the resources acquired (See annex 5)

5 Previously called Ministry for agriculture, livestock and forestry (MAGFOR)

6 Banco Produzcamos is an financial institution specialized in providing credit to the rural sector.

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 4 Lessons learned
4.1 ALBOAN
The results of the interventions in the second level of implementation were perceived as mixed,
(Bastiaensen et al., 2015). Specifically in the case of Cuatro Esquinas not all the agreements were
effectively exercised, even though the ones exercised did play an important role in solving liquidity
problems in the community (See illustration bellow).

With the project intervention, the collector increased its cacao gathering approximately in 47%
compared to the previous year (Ruiz, 2013), this can be attributed to the increased attractiveness to
use the commercialization path of the cooperative (represented by the collector) in comparison with
the one of low value added of the local market, all this due to improved payments.

AGREEMENTS FULFILLED IN ALBOAN'S PROJECT

Collector Farmers Nitlapan Cooperative
Controversy: 2 C$
payment above the Payment of 0.5 C$
Continuous
market price. Gatherer was fulfilled,
Provision of information about
Agreements states fulfillment of however it was
Technical price changes,
not fulfilled agreement, other actors stopped due to lack
assistance strategy to increase
disagree. Controversy 2:of technical
members number
Publication of assistance
information
Automatic payment to Weak
Weak enforcement
every farmer delivering improvement in
Agreements Liquidity provision to collector in order
cacao. The collector diversification of
fulfilled to collector to publish prices of
used the check as production and
cacao
financial instrument new investments
Illustration 3. Source: Author based on Ruiz (2013) and Torres (2013)

From these outcomes one of the challenges of the implementing institution is to create mechanisms
that promote the fulfillment and effective exercise of the agreements; this correspond to one of the
challenges in playing a political role and adds to the relative costs of the implementing process.

The controversy around the payment of the higher price from collector to farmers suggests
information flows that were not managed as expected in the community. It also implies that the
collector had a different position with respect to farmers -and even with respect the implementing
institution- regarding these information. A lesson is that agreements can have very different
interpretations according the different positions that the actors have in the community (Ruiz, 2013).
While playing a political role, the support organization would need to address how and why these
different interpretations arise, given a better knowledge of what are the relative positions of the
actors and what are ultimately their interest in the community.

Likewise, the experience calls up on the development and rethinking of new strategies for being
increasingly accepted as one more actor within the community. Since the objective of the
development intervention looked forward in establishing political deliberation schemes between the
actors involved (Nitlapan, collector, farmers and cooperative), recognizing the others as legitimate

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players on the new set of institutions is relevant; even more critical when one of the strategies is
create empowerment through partnership with the most disadvantaged farmers groups. This call for
long therm relation with the actors in the community, since the empowerment was expected to be
derived from the partnership between farmers and implementing institution.

A weak presence with the poorer farmers could be interpreted, from the point of view of the other
actors, as low level of partnership and weak alliance in the community. The implementing
institution had already built presence in the municipality and with key actors of different
communities (the collector was one of those key actors with whom contact had already been made);
however it was still perceived as an external actor even by different farmers in the community.

The experience shows that attention should be put on the incentives structures of the actors in taking
agreements. Since the agreements stated an automatic payment of cacao to every farmer delivering
cacao to the collector, farmers inside and outside the project benefited from the action. This implies
that some farmers might not have incentives in assuming costs (responsibilities) given that benefits
(quickly payment and liquidity) are shared.

Under the theoretical framework adopted, Nitlapan can be seen as contributing to the co-production
of rural development while playing simultaneously both of the discussed roles. The creation of
deliberation spaces and empowerment calls for a creative approach to make effective use of the new
rules created in the community. This suggest an investment process on the formulation of strategies
to promote respect on the agreements. This respect in agreements is difficult in cases where
presence is not constant and the implementing institution is not still seen as part of the community7.

4.2 World Bank

The different components specified under the Additional Financing derived in different
subcomponents, each with specific methodologies to be followed and with different results. In the
case of the certified seed production capacity is important to notice the role of the Farmer Field
Schools; this methodology was viewed and applied by the implementing agency (INTA) as being
able to feed from local appropriation and participation during the applied technological projects
(INTA, 2011) (See Annex 6).

The outcomes from the actions concerning the AF are detailed in the Annexes. It can be seen that
some of the indicators were successfully achieved as planned by the target previously defined, i.e.
action 1,2,4. On the other hand actions 3,4,6 were not successfully completed (See annex 7)

The mixed results showed by the outcomes in the AF leave important lessons. The only access to
financial resources from the beneficiaries in order to improve their seed production is not a panacea
to agricultural and rural development; financial inclusion, even when is aimed to be managed and
driven by the beneficiaries themselves is not a silver bullet to overcome value chain challenges.
This implies a broader approach from the implementing agency, paying attention simultaneously to
both: access and stability of markets. The recognition of spatial dispersion and production
differences (inequality issues) are important factors to be taken into account, since they determine
the degree in which some farmers can actually take part of already created markets, specially when
the dynamics of these markets are different from region to region.

The AF was designed strongly aligned with what is understood in the economic literature as the
7 Author personal interview (December 2013). Farmer: they usually do not stay here with us, normally they come
with their big cellphones in their cars and they stay in [the city of] Ro Blanco in the hotel

13
Say's Law (for situations in which supply creates its own demand (Taylor, 2004)) because the
proposal of the AF assumed a production of seed effectively sold in a market, in this case the
market of Venezuela (World Bank, 2014). In this regard, the only access to market is not sufficient
for the allowance of a sustainable impact in the interventions, the stability of these markets must
also be addressed in for guaranteeing positive benefits. As indicated by the World Bank (2014)
linking the increased production of certified seeds to secured markets is vital in ensuring the
intended benefits of the projects.

Under the component I of AF the implementing institution INTA was in charge of Fostering
certified seed production capacity in coherence with the other components under the same AF
(credit line in component II and strengthening of Public-sector services under component III).
However some challenges were evident in the implementation process that limited the institutional
effectiveness of the institutions. According to World Bank (2014) some of these obstacles were: i)
Failure in the organizational structure to ensure the technical quality of the services provided by the
institution, ii) Technicians frequently do not keep agreements made (technical visits and training
events previously established dates), with producers and producers at the field level.

This obstacle adds to the coordination and complexity challenges expressed by INTA in workshops
after the project implementation and closure. The institution manifested challenges in downsizing
the available technologies to really asses which ones are possible to be implemented by farmers
(World Bank, 2014). This suggest that even when methodologies such as Farmer to Farmer and
Farm Field Schools are applied, the scale and complexity of the projects are an important issue to
be addressed by the implementing agencies.

For INATEC, the learning process to promote managerial skills to access new markets implied a
constant monitoring on the cooperatives (World Bank, 2014). This adds to the costs of transaction,
specially when the agro-ecological zones are very heterogeneous in the country; i.e. only in the
Central Region of the Country for 2001 there were 9 agro-ecological zones identified together with
5 socioeconomic zones (Marn & Stefaan, 2001).

Two of the documented cooperatives' contributions in the retribution workshop of the PTA II FA
coincided that soil analysis would have been appropriate to be taken into account in the project, this
would have allowed the farmers to know in first hand the nutrients requirements in their farms
(World Bank, 2014). The call upon soil analysis leaves doubts regarding up to what extent the
cooperatives needs were properly included in the design and formulation stages of the project.
Nevertheless, a mid therm evaluation of the program indicated that the rural promotion strategy of
INTA embedded in the Farm Field Schools has contributed in the generation of capacities with a
strongly participation of beneficiaries.

For future research it would be interesting to analyze deeper what are the limitations of
implementing institutions in providing a political role in the beneficiaries. A lot of insights can be
gained in understanding the logics that depart from a purely cost effective way of reasoning. In the
present paper we assumed that the choice of role was made in this cost effective way, however
when it comes to political roles, maybe this reasoning plays no role, as it can be partially deduced
from the example of ALBOAN's project.

5 Discussion and conclusions

The use of the Discriminating Alignment Hypothesis contributes up to an extent in understanding

the factors that matter in the choice of a political/institutional or technical/advisory CDD role. Even

14
when the theoretical framework explains fairly well the choice for a technical role in the
implementation procedure, the role taken by the ALBOAN implementing organization is not
completely understood, and opens the door to more research in order to examine developing
interventions when the implementing agencies perform a twofold role.

In the case of dispersion as an attribute determining a governance structure choice, the idea that
communication, organizational and transport costs increase when dispersion increase suggests that
the CDD project will favor the choice of a technical role for the implementing organization in
contrast to a more political and institutional role, since the latter implies higher complexity in
establishing deliberation and empowerment processes.

Since CDD relies strongly on the use of social capital to enhance actors to participate in collective
processes (Mansuri & Rao, 2004b)dispersion can be one of the many factors that affect the extent to
which actors interact, engage in similar social activities or build trust, therefore limiting the capacity
to self organize and establish partnership relationships with supporting agencies.

The AF PTA-II took part in the context of a national program that focused on putting
responsibilities on support organizations with particular technical mandates (INTA, INATEC, BP,
FUNICA). This is coherent with the fact that the implementation took place in very different agro-
economic regions and the relative cost of a technical role over a political role can be lower;
therefore approaching to the co-production of development from a technical side.

The experience of ALBOAN project shows that implementation was focused in one community in
which not strong spatial dispersion of the actors facilitated a political role, however with the
theoretical framework is difficult to address if this factor influenced the choice of a dual role, since
a strong incentive for the implementing institution to deal with political and deliberation issues
came from a predefined institutional internal objective of inclusion and empowerment.

The influence and analysis of the inequality attribute needs to be deeper addressed; this calls for
future research to understand until what extent is the social or economic inequality determinant in
explaining a political or technical role of implementing organizations. From one point of view a
higher social inequality or economic inequality might lead to an adoption of a technical approach
from the implementing organization, since the reshaping of power differences and the establishment
of deliberation platforms is difficult and requires important costs of permanency and investment in
long therm relationships. Under this view, however, the challenge of adopting a technical point of
view is dealing with the risk of elite capture.

On the other hand is precisely the power distortions and lack of empowerment on vulnerable groups
that commonly leads to the adoption of a political role. In the case of ALBOAN project, the
empowerment of the poorer farmers was the objective that led an implementing organization with
high experience in technical approaches to play a political role. This implies that the theoretical
framework does not completely explains this choice of role.

The experience calls for the search of re-thinking of how to adopt roles when the implementing
organizations begin with a re-adaptation. In the experience, different levels in the cacao production
were distinguished; in November (month of strong cacao production) the Gini coefficient on the
production of cacao was 0.51 (Mendoza, 2013). Some of the biggest cacao producers did not fulfill
the agreements to deliver all the cacao to the collector, even tough they signed the agreements. The
biggest challenge for the implementing organization was therefore to learn how to manage this
inequality in an effective way if the aim is to influence the institutional set ups in the communities.

15
 6 Acknowledgements
The author thank the support of the Deutsche Akademische Austausch Dienst (DAAD) for making
the learning opportunity effective. The author thanks the Prof. Dr. Regina Birner of the University
of Hohenheim for the valuable comments and guidance that took place during the writing process.
The author is thankful for the discussions and critics of M.Sc. Clement Crucifix from the
Asociacin Mexicana de Uniones de Crdito del Sector Social (AMUCSS) and Lic. Carlos
Mungua Gutirrez from Instituto de Investigacin y Desarrollo Nitlapan -UCA. Also the author is
thankful for the permission of use of internal documents and evaluations of Instituto de
Investigacin y Desarrollo Nitlapan-UCA.

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 8 Annexes
Approach to define the project implementation in ALBOAN.

Annex 1. Source: Based on Bastiaensen et al. (2015)

Levels of implementation and specific actions to be taken in ALBOAN project

Level 1 Level 2 Level 3
Target Peasant families Community (Cuatro Esquinas) Municipality
To promote participation,
empowerment and negotiation
Emphasis was in agriculturalcapacity at the community level,
production support, based goal of self driven deliberation
To enhance training
on technical assistance, processes. This stage accounted for
and research spaces
financial support and four elements of empowerment that
Description concerning
incentives in order to underlie institutional reform,
problematics of
promote land use changes namely: access to information,
territory
adapted to the own families inclusion/participation,
strategies accountability and local
organizational capacity (World
Bank, 2002)
Actions i)Formulation of farm i)Creation of learning program
planning (Family with help Territory, actors and development
of implementing institution) strategies , ii) Action of
and ex post payment for infrastructure improvement, iii)
accomplishment of Action of church improvement in
socioeconomic and first zone of municipality, iv)
environmental achievements Action of proposal for sustainable
due production system natural resource use in first zone of

19
 changes, ii)Proposal of municipality, v) Land acquisition
Environmental Index, for landless farmers in first and
Economic Index and Food second zone, v) Action of value
Security Index for chain Agreements (convenios) in
evaluation of second and third zones of
accomplishment municipality .
Annex 2. Source: Source: Author based on Bastiaensen et. Al (2015)

Identification of weakness, potentials and possible solutions to bottle necks in the cocoa value
chain in community of Cuatro Esquinas
Level 1 Level 2 Level 3
Target Peasant families Community (Cuatro Esquinas) Municipality
To promote participation,
empowerment and negotiation
Emphasis was in agriculturalcapacity at the community level,
production support, based goal of self driven deliberation
To enhance training
on technical assistance, processes. This stage accounted for
and research spaces
financial support and four elements of empowerment that
Description concerning
incentives in order to underlie institutional reform,
problematics of
promote land use changes namely: access to information,
territory
adapted to the own families inclusion/participation,
strategies accountability and local
organizational capacity (World
Bank, 2002)
i)Formulation of farm i)Creation of learning program
planning (Family with help Territory, actors and development
of implementing institution) strategies , ii) Action of
and ex post payment for infrastructure improvement, iii)
accomplishment of Action of church improvement in
socioeconomic and first zone of municipality, iv)
environmental achievements Action of proposal for sustainable
Actions
due production system natural resource use in first zone of
changes, ii)Proposal of municipality, v) Land acquisition
Environmental Index, for landless farmers in first and
Economic Index and Food second zone, v) Action of value
Security Index for chain Agreements (convenios) in
evaluation of second and third zones of
accomplishment municipality .
Annex 3. Source: Author, based on Ruiz (2013) and field visits between June 2013-August
2013

Project's original and revised components, revised components correspond to an "Additional

Financing" (AF) requested by the Government of Nicaragua in 2007/2008

20
 Implementing
Project Components Objective Cost
agency
To accelerate generation and
Innovation and adoption of transfer of technology, with
INTA, INAFOR,
agricultural and forestry focus on marketing, US$25 M
FUNICA
technology competitiveness, sustainability
and resource management
To finance improvement of the
GoN's capacity to formulate
Institutional modernization sector policies and carry out
US$3.9 M
and strengthening administrative and financial
coordination needed to
implement PRORURAL
i) Fostering seed production
Component AF1: Capacity
capacity and ii) strengthening
development for the
the organizational, managerial
production, organization INTA, INATEC US$1.73 M,
and marketing skills of seed
and management of
cooperatives and farmer's
certified seed enterprises
organizations
Component AF-2:
Organization and
Banco
establishment of a line of To pioneer rural financing for
Produzcamos US$3.51 M
credit for the production, seed production
(BP)
processing and marketing
of certified seed
Component AF-3: To directly strength INTA and
Strengthening of public the public sector Seed
US$4.01 M
sector services within the Certification Agency, DGPSA
National Seed System (renamed IPSA)
Annex 4. Source: World Bank (2014)

Challenges in implementation of AF I components.

Target Actions Challenges
Methodology for the selection of
Design of beneficiary seed producer
Promote credit
Accessing to financial product cooperative: weak administrative,
provision to seed
Credit and provided by legal and technical conditions in the
cooperatives
BP cooperatives rises the risk of
providing credit
i)FUNICA is replaced by INATEC as
Promote
implementing agency for the
Accessing managerial skills to
INATEC provision of capacity building on
Markets access new
seed cooperatives, ii) INATEC lack of
potential markets
experience in the field
Annex 5. Source: Author based on World Bank(2014)

Specific subcomponent and methodology of work.

21
 Component Subcomponent Methodology
Farmer Field Schools and
AF I Fostering Certified Seed Production Capacity
Farmer to Farmer
AF I Strengthening Seed Cooperatives Technical assistance
Organization and establishment of a line of credit
Creation of line of credit,
AF II for the production, processing
loans to seed cooperatives
and marketing of certified seed
Strengthening INTAs National Center for
Agricultural
Research and Bio-technology (CNIAB), Seed
AF III Certification Agency, the General Directorate of
Plant Safety and Seeds (DGPSA,
now IPSA) to increase its seed inspection
capacity
Annex 6. Source: Author based on World Bank (2014)

Achievement of Indicators concerning AF I of the PTA-II.

N Indicator Target Achieved
1200 producers specialized in Certified Seed
1 production (10% indigenous population and 1200 1435
20% woman)
31 organizations implement Cooperative
2 31 39
Development Plans
$4,443,842.00 placed and $3,984,149.00
3 returned for the production and US$ 4,443,842 US$ 31 million
processing of certified seed
National Genetic Seed Center operating and
with a storage capacity for
4 1806 MT 1806 MT
foundation, genetic, and registered seed of at
least 1806 MT
Cumulative incremental production of genetic,
foundation and registered basic-
5 1166 MT 829
grains seed reaches 1,166 MT by end-project in
AF areas.
Cumulative incremental production of certified
basic grains seed reaches 4,852: MT by end-
4852 MT 4728 MT
6 project in AF areas (Maize 2,364 MT, Rice 864
overall overall
MT and Beans 1,625
MT)
Annex 7. Source: Author based on World Bank (2014)

22
CONTENT

Section Page
Introduction
2
Literature and theoretical considerations
3
Community Driven Development in practice
8
Lessons learned
12
Discussion and conclusions
14
Acknowledgements
16
References
16
Annexes
19
ACRONYMS

Agricultural Production Systems

APS
Banco Produzcamos
BP
Community Based Extension
CBE
Community Driven Development
CDD
Nicaraguan Foundation for Agricultural and Forestry Technological Development
FUNICA
International Fund for Agriculture Development
IFAD
National Technological Institute
INATEC
Nicaraguan Institute of Agricultural Technology
INTA
Ministry for Agriculture, Livestock and Forestry
MAGFOR
Ministry of Familiar, Communitarian, Cooperative and Associative Economy
MEFCCA
Non Governmental Organization
NGO
Second Agricultural Technology Project
PTA-II

World Bank
WB

23