FROM: FRANCESCO MELARA, ROMEO BALDEMOR, ZENEBE B. URAGUCHI – 25. NOVEMBER 2021
Traveling back to eight years ago...
On November 8, 2013, Typhoon Haiyan made landfall on the eastern part of the Philippines, causing severe damages and high death tolls of more than six thousand people. This catastrophic event affected more than 14 million people in Eastern Samar and Leyte. Before Typhoon Haiyan, Eastern Samar's economy was primarily based on coconut farming, with fewer value addition activities carried out locally. The destruction of coconut trees caused by the Typhoon resulted in the loss of livelihoods for thousands of vulnerable farmers, poor men and women.
Against this backdrop, Helvetas, People in Need and ACTED, with funds from Swiss Solidarity (SwS), commenced the Enhancing Sustainable Income in Philippines (ESIP) project (2014 -- 2019). The ESIP project, employing a market systems development approach, aimed to support the economic recovery of Eastern Samar by diversifying and increasing the farming income of 12,000 poor farmers. The core of the intervention was addressing the root causes of the underperformance of the agricultural system in Eastern Samar and enabling access to supporting mechanisms for farmers.
Now in 2021...
In August 2016, we documented our work in a blog post fittingly titled "Reality Check: Applying a Systemic Approach in a Fragile Context". We presented our initial experiences of the project, focusing on key challenges of working in a fragile context and corresponding measures taken. Six months later in January 2017, we also reported how the project was embracing and managing aid intensity through the diffusion of commercial services.
Fast forward to 2021: the project phased out by the end of 2019. Often development organizations have less appetite to go back and check if their roles have in fact contributed to sustainable and scalable results. We wanted to fill in this gap and hence went back to Eastern Samar to find out what has transpired since the end of the project.
Missing Market: Commercial Services for Farmers
So, right after the Typhon, we went to Eastern Samar and did a quick analysis. We found out that farming communities lacked access to basic extension services, quality inputs and consolidation services. We also realized that existing market actors, engaged in the agricultural system, had limited incentives and capacities to provide tailored embedded services to farmers.
We thought addressing this core constraint would require supporting a Local Service Provision System by selecting and training Local Service Providers (LSPs). Indeed, we didn't want to reinvent the wheel. We had a good experience in Bangladesh -- the Samriddhi project of Helvetas that was facilitating the LSP model.
The LSPs are entrepreneurial individuals with a background in agriculture and agribusiness. The LSPs, through the roll-out of agriculture commercial services, cover the majority of provinces in Eastern Samar. In addition to product consolidation and advisory assistance, LSPs provide integrated services such as the promotion of financial products, especially crops insurance.
Throughout the ESIP project, 48 LSPs provided a diverse range of services to farmers in Eastern Samar. A range of sub-sectors was targeted by the LSPs which included, among others, cassava, calamansi, pineapple, banana as well as cacao. The monitoring data shows that 13.276 farmers were reached through commercial services by the LSPs. Furthermore, LSPs are organized under an association (the LSPA), to coordinate more efficiently the provision of these commercial services.
Navigating and Embracing Complexity
The ESIP project faced some very diverse, yet interconnected and systemic, challenges and complexities.
Farmers in Eastern Samar were overly-reliant on monoculture, with coconut farming being the main livelihood activity for a large cohort of the population. The destruction of coconut trees exposed the deep-rooted vulnerabilities associated with monoculture. Furthermore, the agricultural market system (agro-businesses, infrastructure, know-how, supply chains) was only responsive to coconut farming. Even more challenging is the behavior change element.
Farmers in Eastern Samar were used to crops with minimal or no inputs and very little new technology. Other than coconuts, banana and root crops such as cassava, taro and sweet potato are commonly planted by farmers. In all these crops, no inputs/fertilizers are being used after planting and no new technology is applied. The practice is to plant then wait for the harvest.
Exposure to natural calamities builds up risk-aversion. Investments in farming from producers, processors and other market actors in the agri-system were sluggish. Inputs suppliers, for instance, had a very little incentive in expanding their operations to Eastern Samar. Similarly, investors in the food processing sector would rather consider investing in other areas of the Philippines.
The project was also operating in an extremely aid-intense environment, especially in the initial years of implementation. The Local Service Provision system, providing fee-based services and products, was being undermined by in-kind distribution and direct delivery of inputs and tools from NGOs and Local Government Departments.
In this fragile context, establishing successful market-based commercial services was extremely challenging!
So, what did we find out 2 Years Later?
The project ended in December 2019. In September 2021, we had the opportunity to interview and discuss with LSPs about their business activities and the changes in the agriculture market systems in Eastern Samar. Ten still active LSPs participated in the discussion. The results from the discussion show important signs of systemic change and sustainability.
The LSPs that were interviewed have long-term plans to continue providing commercial services to farmers. They have adapted their practices by investing in the pro-poor change adopted independently of ESIP's support.
Since 2015, the number of farmers that stepped into agriculture increased considerably. As reported by the LSPs, the increase in the number of farmers in the last two years is also associated with the pandemic as more people started backyard gardening. Thus, despite the COVID-19 pandemic being a crisis, it also offered opportunities and adaptation in livelihood strategies.
Eastern Samar was prevalently an area subjected to the import of agricultural products, especially coming from Mindanao. It was reported that the imports of agricultural production decreased for those products that can be grown locally.
LSPs reported increased competition from new market players that also started providing commercial services to farmers, especially in terms of consolidation of agricultural produce. Crowding in seemed to have worked, stimulating similar or competing players to copy the pro-poor change or add diversity by offering variants of it.
In specific provinces, the number of inputs suppliers increased as a result of more people engaging in agriculture. In other parts of Eastern Samar, there was an increase in processors stemming from government-led investments and additional support from other NGOs. This has been the result of responding by non-competing players (e.g. government agencies) to adjust their own practices in reaction to the presence of the pro-poor change (supporting functions and rules)
Where possible, the ESIP project aimed at building and leveraging existing structures to ensure greater sustainability and impact. Nevertheless, the ESIP project quickly came to realize that in Eastern Samar, the extent of market failures was so considerable that an intervention oriented towards creating an accessible and inclusive community-based commercial service provision system was necessary to address the root causes of underperformance in the agricultural market systems.
Conducting a thorough market systems analysis before mobilizing resources is necessary to avoid failure. The feasibility assessment which was conducted showed a high potential for rolling-out commercial services in Eastern Samar. The assumptions behind the LSPs' model were also being tested throughout implementation to ensure that these were still valid in a highly volatile environment.
Regarding working in a fragile and aid-intensive environment, our findings showed that it is essential, first, to understand the market distortions generated by donors and organizations, and second, to define suitable strategies with the participation of relevant stakeholders to overcome them.
Another success factor was the ability of the LSPs model to seize opportunities quickly and navigate through uncertainty. For instance, LSPs were able to become an underwriter for the Philippines Crop Insurance Corporation, which become an important entry-point to build their clients' base. During the government-led in-kind distribution of inputs (such as seeds and tools), some LSPs acted as an extension of the local government unit and supported the delivery of inputs. This enabled the LSPs to gain exposure among farmers and build relevant networks for their business activities.
The ESIP project did not only work on the establishment of local service provision systems but also strengthened the enabling environment around them. Thus, the project aimed at transforming the overall agricultural market systems through a bundle of systemic interventions. This included working around enabling greater financial inclusion by working with financial institutes on the development of demand-matching financial products for farmers. In addition, this included strengthening the productive capacities of local processors in such a way as to increase demand for raw products from farmers.