Lessons Learned From 20 Years in Honduras
Beginning in 2000, Fintrac identified the need for a practical, market-led approach to production and value addition, and worked with suppliers, buyers, processors, and exporters to develop and refine a commercial approach to small-scale farming. In systemizing that approach across multiple value chains and repeated follow-on projects, we learned a number of lessons.
Our hope in sharing a few of these lessons is that other development practitioners, farmers, and entrepreneurs can adopt, adapt, or scale our approach in empowering subsistence level smallholder farmers move into sustainable, commercial production.
Field teams and specialists need to focus on “showing farmers the money”
Poverty levels do not restrict earning potential; any farmer — no matter how poor — can achieve income gain, and over time, commercial success. When farmers experience income gains on traditional staple crops such as maize and beans, they are willing to take risks to improve their farming practices and move into other crops. Fintrac field experts learned to pursue this outcome aggressively through farmer outreach, training, and technical assistance.
By adopting and transferring this mindset, field experts tailored their technical assistance to individual farmer clients, so their visits had a measurable effect on the net incomes of clients. For example, under ACCESS to Markets (2014-2019), households that attended between 30 and 90 technical assistance trainings per year more than doubled their income.
Even the poorest farmers, once able to meet their basic needs, invest in critical technologies such as irrigation. This uptake in technology adoption directly relates to income generation. Average annual household incomes for ACCESS to Markets clients with less than 10 technologies increased by 56 percent, compared to a 149 percent increase for farmers with more than 20 technologies.
Field teams and specialists need to focus on product diversification
Basic production practices and technologies improve farmer incomes across all crops, but diversifying into higher value crops is truly game-changing for smallholders. When we began linking farmers to markets in Honduras, those who had the most commercial success sold diversified products into differentiated markets. They decreased their reliance on basic grains and increased the proportion of their income derived from marketable crops such as coffee and small livestock. This diversification of products was necessary for farmers to effect change, boost long-term resilience, and achieve sustainable income gains.
As most smallholders are generally risk averse, they must see the money that results from diversification before committing fully; the best way to do this is first through improved basic practices on staple crops to build confidence and trust. Diversification is not without risk; coffee production, for example, faced a number of external challenges in 2014 due to disease and falling market prices. Many farmers were discouraged and wary to continue, but by applying basic practices such as integrated disease management and improved marketing strategies they were able to recover for the 2015 harvest season. With horticulture, there was also some initial reluctance from producers; but after they experienced improvements firsthand, they became less fearful. For Fintrac Honduras, this translated in going from 80–90 percent of first-time client farmers exclusively growing basic grains (maize, beans) to a current average of 60 percent of client farmers growing high-value fruit and vegetable crops.
There are no short cuts, including for building internal capacity
Any change takes time — especially when working with farmers operating on already thin margins. Generally, they have little extra income to invest in improved technologies. Change also takes more than one cropping cycle for farmers to realize sustained net income gains. Field experts, therefore, need to work with farmers in sustained ways over time. Motivating them with cutting edge skills on an ongoing basis translates to higher success with farmers.
In Honduras, we learned this lesson time and time again. For example, when we trained our crop field experts in drone technology, we knew that the majority of farmers wouldn’t be using the technology. Instead, the training inspired our agronomists and other field specialists about the future of agriculture, and in their abilities to learn and use the newest innovations to support development in Honduras. When we introduced cross-cutting training to include topics such as household nutrition, our technicians also deepened and expanded their knowledge. The added knowledge and skills set them apart in their expertise, encouraging them to keep learning and adding skills that supported smallholder farmers.
Opening farmer access to financing and encouraging investment are critical for long-term growth
In Honduras, access to external loans enabled households to increase incomes faster than those without. This was unmistakable to our teams in the early 2000s when we first began linking finance institutions and our farmer clients. Our most recent data bore this out: participating households with at least one loan increased their income by an average of 117 percent, while households that did not access loans increased their income by 73 percent over baseline. With this data in mind, we believe any farmer-focused program needs to include rigorous training in liaising with financial institutions. The field staff must also be able to educate financial institutions about smallholders as clients so that the needs of both client and lender are met. Of course, farming households must weigh the risks; and in our experience in Honduras, many households opted to self-finance their growth. This reinforces the lesson that the priority must always be to connect farmers to tailored resources they can use to leapfrog their unique enterprises, their earnings, and their food security.
Additionally, investments in fixed assets such as farm equipment, infrastructure, and land led to further income increases. Households with investments increased income at a faster rate and a higher magnitude than those without. Under ACCESS to Markets, households that invested in fixed assets obtained an annual income increase of 94 percent over baseline, versus a 57 percent increase for households who did not report investments. Note, many of the technologies implemented did not require investments in fixed assets and still helped families increase yields and incomes, but at lower levels.
This article is part of our ongoing digital campaign highlighting key results, successes, and lessons learned from 20 years of consecutive USAID programming in Honduras. Visit the campaign page at www.fintrac.com