TALLYING UP THE SCORECARD A new tool from IFPRI helps prioritize value-chain projects
To help aid donors direct funding to the most poverty-reducing and economically sustainable projects, IFPRI has developed a “scorecard” system that is currently being applied to agricultural value-chain projects in a pilot program in Central America. Here, Manuel Hernandez, an IFPRI researcher, and Maximo Torero, director of IFPRI’s Markets, Trade, and Institu- tions Division, describe how it works.
Donors typically want their projects to be both effective (in this case, to reduce poverty) and economically sustainable (so the project won’t collapse when donor funding ends), but they often rely on qualitative or subjective criteria to decide whether poten- tial projects will meet these goals. Our scorecard applies a more objective, quantitative approach to both goals. First, we evaluate the project’s sustainability using the latest developments in sta- tistical modeling. Our data-driven method can more accurately model the risk of whether the project will succeed or not based on specific project characteristics and external factors, such as the education and experience of beneficiaries and the probability of crop failure. Then, the projects that meet the sustainability threshold are ranked in terms of their potential to reduce poverty
based on how well the projects reach geographic areas with high poverty and low market access and how many direct and indirect beneficiaries they serve.
With the help of two sponsors of the pilot program—the Office of the Multilateral Investment Fund of the Inter-American Development Bank and the Austrian Development Agency—we have so far assessed more than 50 projects using the score- card, and 9 have been selected for funding. The projects, located in El Salvador, Guatemala, Honduras, and Nicaragua, represent a total investment of about US$1.7 million and will have nearly 6,000 beneficiaries—half of whom are women— who live in high-poverty areas. The projects support a wide range of agricultural products and markets, including coffee, chocolate, tropical fruits, and vegetables.
Our task now is to evaluate the projects and assess how well the scorecard has identified activities that are likely to be poverty- reducing and sustainable. Looking ahead, we hope to extend the scorecard approach to other types of projects and other regions around the world to help donors ensure the effectiveness and sustainability of their investments.
has been estimated that there is one job along the dairy value chain for each of the 3 million improved cows.”
TechnoServe and similar NGOs can help get the process started by showing what kinds of farmer arrangements have worked elsewhere and identifying other problems that keep small farmers from participating in value chains. It could be, for example, that farmers have poor seeds or breeds of livestock, lack farming or storage equipment, use too little or too much fertilizer, or follow less than
optimal farming practices.
Cooperatives are not the only solu- tion, however, says Derek Baker of the International Livestock Research Institute. “With a cooperative, you need a lot of formal organizational structures. Tey commit people to various courses of action and ways of dividing benefits. Tere are other less formal approaches,” he says. For instance, informal groups of farmers may share a truck or funnel their products to a large local farmer who can get them to market.
Te International Potato Center (CIP) is working to help small-scale Andean farmers enter value chains for new potato products. Because not all value chains work to the benefit of small farmers, CIP is developing a “poverty filter” to determine which types of potatoes—such as small varieties that require harvesting by hand—will give small farmers a long- term competitive advantage.
Even poor, illiterate farmers are able to participate, with the right support. For example, IFPRI researchers are working
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© 2004 S.Sprague/Panos
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