NETWORK PAPER 48

0952-2468 July 1994

THE ROLE OF THE PRIVATE SECTOR IN AGRICULTURAL EXTENSION: ECONOMIC ANALYSIS AND CASE STUDIES

Lisa A Schwartz

Lisa Schwartz can be contacted at: Department of Agricultural Economics Cornell University Ithaca NY 14853-5901, USA Fax: +1-607-255-9984

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CONTENTS

Page

Abstract Introduction Overview of the "Extension System" Concept Economic Analysis of Private Extension Public and Private Goods Externalities Case Study Analysis Private Extension Circumstances Private Extension and the Technical Complexity of Agriculture Private Extension as Part of Commercial Firm Activities Private Extension and Farmers' Associations Complementary Public and Private Extension Activities Assessing Extension Performance: Public Versus Private Extension Policy Issues and Future Research Policy Issues Future Research Bibliography Endnotes Appendix 1

1 2 3 5 5 8 9 9 9 10 15 19 26 27 27 30 34 39 42

Box 1:

The Complexity of Information Supply

THE ROLE OF THE PRIVATE SECTOR IN AGRICULTURAL EXTENSION: ECONOMIC ANALYSIS AND CASE STUDIES Lisa A Schwartz

ABSTRACT After tracing the origins of the concept of "extension", this paper reviews the main relevant economic concepts (public and private goods; rival/non-rival products; excludability; free riding; externalities; moral hazard) and their implications for the opportunities and constraints faced by private extension, whether profitoriented or non-profit. Appendix 1 presents detailed case studies from countries in which major change in extension practice has recently occurred (Ecuador, Guatemala, Thailand, Jamaica and the Netherlands). Drawing on these, its main conclusions are:  that extension by commercial companies has commonly been associated with input supply and with their ability to capture part of the benefits of extension through input or output markets. Whilst there are notable examples in which private companies (usually processors/marketers of single commodities) have worked extensively with smallholders, economic factors clearly orient them towards medium/large-scale farmers in areas of good infrastructure.  that, whilst farmers' associations (FAs) have been widely promoted in the North, their strengths in developing countries are usually associated with marketed commodities, though in some cases they service a range of crops on an area basis. Cases are noted in which FAs have acted as a "watch dog" on relations between commercial companies and farmers. Key issues are how FAs and government relate to each other; how far associations of large-scale farmers can also cater for smallholders, and how the emergence of FAs can be promoted.  "mixed" extension systems are becoming increasingly common, in which government and NGOs take on extension functions for client groups and geographical areas which have been disregarded by private commercial organisations. Given these differing circumstances, direct comparisons of efficiency between public and private extension are hazardous.

 in many countries, the adoption of more open policies towards input supply, processing and marketing would facilitate a stronger role by the private commercial sector in extension related to these areas. The paper concludes by sketching out a framework of questions that need to be asked in order to obtain a rapid assessment of the current status of extension and of relevant institutions and institutional linkages in any given country. It also sets out an agenda for future research, in which questions of cost sharing, cost recovery and decentralisation of government services feature strongly.

INTRODUCTION Agricultural extension in many countries has come to encompass a wide range of activities in both the public and private sectors, yet the exchange of information continues to be the primary focus of all extension activities. The traditional concept of public agricultural extension involves a professional body of agricultural experts (generally government employees) who teach improved methods of farming, demonstrate innovations, and organise farmer meetings and field days on a wide range of topics. Public extension is sometimes used as a channel to introduce and sometimes enforce agricultural policies. Extension also functions informally as farmers transfer their best practices to each other. In addition, extension activities are carried out by a wide range of organisations in the private business and non-profit sectors (Moris 1991, Hayward 1989, Lafourcade 1988). This paper focuses on private extension's role in agricultural development. Specifically, it examines: (a) the circumstances under which private extension is likely to succeed and in what form; and (b) the role of private extension in an agricultural development strategy (especially with regard to how public and private extension can be complementary). Extension services may be loosely defined as including all activities involved in the exchange of information relevant to agricultural and livestock production, processing and marketing. The word "extension" has been criticized as inherently emphasizing the "top-down" dissemination of information while ignoring other types of information flow between farmers, extension and research particularly activities that involve farmers as equal partners in the process. This paper uses the term "extension" while recognizing that extension functions are multi-faceted and go beyond "top-down" dissemination of new technologies. For example, the information flow through extension channels may include anything from advice from a consultant on refrigerated flower shipping to the feedback to researchers of results from farmer-managed varietal trials. This author takes the position that the existence of multiple (sometimes conflicting) information sources is an advantage for farmers in that they can best select the information mix most suited to their goals as producers and the most reliable information source. 2

Private firms provide services in accordance with their specialized incentives and farmers respond in terms of what they see as most beneficial to them. As each type of extension (public and private) has limitations, the objective for farmers, and agricultural development organisations of all types (local and international) is to attain the best mixture of public, private and NGO services. As Roth (1987) asserts, the public sector in general is over-burdened by numerous activities and moving some of them to the private sector might allow more effective implementation of essential services. While extension services cannot, and should not, be totally privatized, there is room for both some privatization of public extension activities and active promotion of private and NGO extension activities which complement rather than replace existing public extension services. The analysis in this paper draws on cases in which information exchange, feedback to research, and all other major extension functions form only one part of a larger agribusiness operation or agricultural project. The paper includes four sections: a brief review of the concept of an extension system; application of fundamental economic principles especially public goods theory to private extension; discussion of the case studies; and a summary of policy issues and suggestions for future research.

OVERVIEW OF THE "EXTENSION SYSTEM" CONCEPT The mixture of public and private extension activities which exists in most countries, and their relationships with surrounding communities, organisations and institutions, constitute an extension system. The distinction between extension types (public, private, not-for-profit) can often become unclear in practice. Public extension staff may be paid by farmers for special services or they may routinely exchange their services for food, money and other goods. Private sector extension services generally focus on cash crops, or on sale of inputs (seed, chemicals, fertilizer, and machinery). Extension specialists working for private agribusiness firms often serve multiple capacities (e.g. processor/exporter field staff provide production advice to outgrowers and enforce delivery of output, and input supply firm representatives combine education and marketing). In the private sector, extension activities are often part of a vertically integrated enterprise. In Francophone West Africa, a single organisation (the Compagnie Francaise pour le Developpement des Textiles CFDT) provides extension information on cotton together with supplies of inputs, and purchases, grades and markets the output.1 Because private extension is generally not a stand-alone activity, it is difficult to estimate overall expenditures on it or the returns to such investments. An exception would be the case of private consulting firms that only provide information services for a fee and are not an intermediate factor but rather a final good.

In order to generate benefits in accordance with a certain objective (e.g. increased production, increased sales, better use of the product, access to a specific type and quality of fruit for export) extension must be a channel through which appropriate technology flows. Individuals who undertake to disseminate information in the agriculture sector frequently combine this with a number of related activities.  Extension agents public or private often link farmers and researchers providing feedback to researchers on indigenous knowledge systems, producer reactions to new innovations, and so on, facilitating the adaptation of research results into appropriate technology for different areas. Extension agents may also participate in adaptive research activities with researchers and farmers.  Organisation and support of producers' groups or associations is often a function of public extension field staff or NGO field staff. Working with groups makes it easier to meet large numbers of farmers. Private firms, or parastatals, may have field staff who organise farmers into groups to ease supply of inputs and collection of output or as part of an outgrowers scheme.  Facilitating access to or distributing inputs is often undertaken by private extension agents; the risk that it may divert extensionists from their main task makes it a controversial function of public extension. However, actual distribution of inputs in addition to advice on how to get inputs, is often provided by both private and public agricultural field staff. Numerous other activities are often performed by public or private extension staff: provision of marketing information (prices, places of sale, grade requirements and so on); collection and purchase of output; advice concerning and/or administration of credit programmes; assistance to small-scale enterprises involved in activities such as food processing or manufacture of farm implements; and teaching at farmer training centres. The types of benefits anticipated from extension activity are clearly important in determining where that activity falls along the public-private extension continuum. The benefits generated by public extension services include both social welfare benefits (such as improvements in rural living standards and national food security) and bureaucratic benefits (such as a stock of civil service employment to provide to political supporters and opportunities for enhancing political control through an on-the-ground network of government agents). Public sector extension became an important employer in many developing countries after independence from colonial rule (Evenson, 1986: Judd, Boyce, and Evenson, 1986).2 This staff expansion has led to large budgets for field staff maintenance to the extent that after salaries are paid there is little money left over to cover essential operating costs transport etc., and is one reason why privatization of existing extension services has already occurred in some countries and is being proposed in others. A distinct second issue 4

arises from the fact that public sector extension agents are commonly generalists. Private extension activities often provide specialized information not available through public extension. Finally, a third motivation for private extension occurs when profit can be directly or indirectly generated through extension activities. The next section uses concepts from welfare economics to analyze how extension activities are distributed between public, private, and not-for-profit organisations. ECONOMIC ANALYSIS OF PRIVATE EXTENSION The demand for agricultural information is not uniform across producers. For example, the set of all rice farmers in a given country may include small, medium and large-scale farmers, subsistence and commercial farmers, farms operated by women heads of household, farms operated by members of an association, and farms growing rice for seed or for export. The varied circumstances of these diverse clients generate diverse needs for information. A range of appropriate extension services will be required to meet their needs; however, suppliers of information may not all be willing or able to undertake the activities necessary to meet those needs. Ideally, government involvement in extension should be limited to provision of extension as a public good, to minimize cost and inefficiency, leaving extension activities with private good characteristics to private firms, NGOs, and farmers' associations.

Public and private goods The agricultural information provided through extension services may fulfil the characteristics of a public good, a private good, or may fall in between. A public good is characterized as being both non-excludable (you cannot exclude anyone from consuming it) and non-rival (its consumption by one person does not diminish its availability to others).3 The consumption of a private good affects solely the person who is consuming it.4 A key distinction with regard to how closely information fits the public good characterization is how specialized it is. Basic information which is relevant to many farmers (such as improved husbandry methods for traditional crop varieties) is easy to diffuse and thus is non-excludable. Once the information has been disseminated by an extension agent (or over the radio or through a pamphlet), it can continue to spread from farmer to farmer. Clearly many types of agricultural information are not pure public nor private goods: information may be highly excludable (to all but a limited group who are, for example, members of an association) but at the same time non-rival within that group. What do these properties of information tell us about who is likely to undertake private extension and how? Most private organisations (private firms and NGOs) involved in agriculture provide information as a means to an end: private 5

agroprocessors or marketers do so to improve the quality and quantity of raw material supply for processing; input suppliers in order to sell more product; public sector services or NGOs to increase productivity of food crops, or to fulfil a humanitarian goal. Clearly, if the provision of information is an intermediate factor necessary for generating profit in an agribusiness operation, it will be provided by private firms even if it is non-excludable and non-rival.5 On the other hand, direct sellers of agricultural information (such as specialized consulting services) would tend to view non-rivalry and non-excludability of information as problems to be controlled. A firm selling information wants to avoid or at least minimize the "free rider" problem, i.e. they do not want information to "diffuse" to potential customers free-of-charge. If information on improved crop production is easily diffused and shareable but is not a factor in a profitable agribusiness, it may only be provided through public extension. Private firms which sell information directly only have an incentive to enter the market if that information they sell is unobtainable free elsewhere. However, the process of information supply can quickly become complex in practice (Box 1). Although information itself may be shareable and non-excludable, the benefits of acquiring the information can sometimes only be captured by those with access to the necessary complementary goods (chemicals, seeds, water, equipment, credit, access to storage and transport etc). Specialized consulting services and farmers' organisations typically bundle information with other goods and services. For example, pest control information may be combined with diagnostic services and supply of special inputs. At a high level of technical complexity or specialization, the relative benefits of information acquisition for farmers are higher, making them more willing to pay for information services as long as there is no opportunity for a free ride. Advanced commercial farmers are especially likely to be willing to pay for information even without attached services, possibly because of capital investments they have already made.

Box 1:The Complexity of Information Supply In specific cases, the problem of how information will be provided can become complex quite quickly. For example, if a tomato paste processing company decides to increase its use of bigger tomatoes, farmers will require "new" technical information to grow the bigger tomatoes. The company may choose to offer a higher price for bigger tomatoes than for traditional varieties. Farmers should respond by buying the information to be able to get the higher price (as long as their net benefit is positive). However, farmers will not buy information they can get for free by talking to, or observing, their neighbours. Thus, the non-rival and non-excludable characteristics of information may allow farmers to "free-ride" on others' information. However, in the very short-term, there will be farmers who invest in the new information to get a temporary increase in profits relative to other farmers. Eventually, the information will diffuse but it can be guarded temporarily. The existence of this temporary market may provide a tomato consulting firm with an incentive to provide the information. However, if the tomato paste company wants to change over quickly to the new variety, they have an incentive to provide the information themselves. Alternatively, there may be a tomato farmers' organization which continually provides new technical information to its members. Farmers often choose to use consulting services or form commodity specific organizations partly because public sector services are seen to be too general or not reliable enough to providing cutting-edge information quickly enough to keep up with rapid changes in market demand.

In summary, agricultural information supplied through extension services and other channels, can take on both public and private good characteristics. The public good attributes dominate in the early stages of agricultural development when there are few incentives for the private sector to provide extension services.6 Where few incentives exist for direct sellers of information, extension is provided as a public service by public sector and NGOs. It is also effectively exchanged through informal communication between farmers and farmers' organisations. Additionally, many private companies provide information (through extension type services) as a part of their business operations. As agriculture develops, agricultural information becomes more specialized, less easily shared, and not universally consumable, thus taking on some private good characteristics. Producers have an incentive to seek private consulting services when they require information that is 7

highly specialized and unavailable from other sources. The information they obtain is proprietary and protected as a private good for as long as possible. As information becomes more specialized and technically complex, public services have the option of introducing fee-for-service arrangements, the free-rider problem diminishes and public services begin to compete with consulting firms for clientele.

Externalities When one person's actions directly affect others' environments, it is said that those actions involve an externality (or a spillover effect) which may be negative or positive. As noted above, extension (public or private) has potential for generating positive externalities. For example, a technical package disseminated by a private agribusiness firm may include some techniques which farmers can apply in other situations or to other crops with positive results. The additional economic benefits and thus the social value of private extension are greater than anticipated by the firm. In such a case it may be appropriate for government to influence the firm by contracting it to strengthen its extension activities in a particular direction. Alternatively, government might want to invest more in supplying information itself (through the media, extension services, or other methods) to reinforce positive messages. Another area where public and private information sources differ is in terms of incentives to provide incomplete or mishandled information. Consumers of information provided by extension (public or private) are at a disadvantage if they are "unable to assess visibly and directly the quality of the good they are purchasing" (Umali, de Haan, and Feder, 1991). The information supplier knows the true nature of the goods being provided but may choose not to pass that information on and risk losing business. For example, a firm selling pesticides in a low income country lacking in institutions able to assess adequately the potential effects of its product on humans and the environment, might take the opportunity to sell products not allowed in more developed markets or not to inform consumers about negative effects. However it would soon become apparent if the promotional/extension messages were false, or if information on how to use products was inadequate and the business would lose credibility. Clearly firms with a long-term perspective have a greater stake in providing reliable information to build reputation. However, the logistics of supply in some developed countries may make it impossible for input suppliers to keep control over packaging of inputs and instructions on use in remote areas. In addition, less educated consumers might not be aware that information is lacking. This is an area where the public sector could to provide information (perhaps together with NGOs), or regulate private provision of it to compensate for the moral hazard.

CASE STUDY ANALYSIS This section draws on case studies to examine the two broad questions laid out in the introduction: Under what circumstances is private extension most likely to succeed and in what form?; and What is the role of private extension in an agricultural development strategy and how can it complement public sector extension activities? The discussion is organised around the following sub-topics:7 a) Private extension and the technical complexity of agriculture; b) Private extension as part of commercial firm activities; c) Private extension and farmers' associations; d) Complementarity between public and private extension; and e) Assessing the performance of private extension.

Private extension: circumstances Private extension and the technical complexity of agriculture As agriculture develops and becomes more highly commercialized, farmers require specialized information and are more able to pay for it. This is illustrated by the evolution of agricultural services in industrialized and relatively advanced low income countries. Early incidence of private extension may be limited to a few relatively sophisticated farmers and over time expand into activities which Private extension tends to be reach other farmers. For example, in Mexico in the more prevalent under mid-1980s, "private services focus[ed] mainly on circumstances of relatively advanced technology packages in plant production technically and commercially and marketing of perishable commodities. They advanced agriculture provide[d] support mainly to higher income farmers and groups of farmers and generally [did] not directly compete with the public sector for clients" (SAR, Mexico, 1987). Although there were some private extension activities with smaller farmers even in the mid 1980s, the range of private extension activities in Mexico have expanded since that time.8 Many industrialized nations have decentralized extension systems with a strong private element. Some countries have experienced a shift from primarily public extension to a mixed system accompanied by some amount of public sector extension cost recovery through fees for service (e.g. Ireland and the UK). However, extension has been completely privatized in some countries (e.g. New Zealand). Generally, industrialized countries have experienced faster growth in the number of private agricultural consultants than that of public sector staff. For example in the UK, "private sector advisors are more numerous than ADAS [public] advisers, and provide a great deal of the on-farm advice given to farmers" 9

(Arnon, 1989, p.631). In addition, public extension has an increasingly difficult time competing with specialized farm consultants. A lack of funding for public extension often exacerbates this problem. Several factors characterize an increasingly commercialized agricultural sector which affect the incidence of private extension: increased use and availability of purchased inputs (including machinery); increased opportunities for high-value agricultural production and processing. As private input suppliers expand operations, they naturally increase their involvement in extension as part of their marketing activities. On the production side, more high-value production (as well as limitations on direct government intervention in the production and marketing of cash crops) is often accompanied by private specialized extension as a part of vertically integrated contract farming schemes.

Private extension as part of commercial firm activities Input suppliers have an incentive to undertake extension activities as a part of marketing especially if the following three conditions hold: (1) farmers require purchased inputs to achieve desired production results (quantity and quality); (2) purchased inputs can be profitably used given relative prices of inputs and outputs; and (3) there is a fairly Different types of commercial high degree of competition between input suppliers for the same market share. firms engage in extension Extension by input suppliers typically provides information about both a firm's products as well as general information related to the product category (e.g. pest control, plant diseases, drought tolerance etc). Information channels used may include written information, posters, farmer meetings, radio, on-farm demonstrations, exhibits at farm shows etc. Salespeople have an incentive to maintain good business relations with farmers and farmers typically place high priority on information regarding access to and use of inputs.9 Thus a reliable sales representative who also conducts extension activities is likely to be valued by farmers. However, when input suppliers are involved in extension activities caution is needed due to the moral hazard problem discussed in the last section. Input suppliers will not invest in their own private extension activities if the benefits do not outweigh the costs. Shell Corporation in Zimbabwe does not maintain its own field representatives in the communal (smallholder) areas as they are able to use the distribution networks of local firms to promote their products. Agricura (a domestic input supplier in Zimbabwe) has developed a distribution network in the communal areas as a part of the firm's growth strategy. Along with selling their products (including some Shell items) they are educating farmers about pest management and safety. Certainly, their extension activities are biased 10
activities as a part of their business

towards encouraging use of chemical pesticides. However, with cooperation between public extension staff, Agricura representatives, and the safety committee of Zimbabwe's AgroChemical Industry Association (ACIA) farmers get more information and better access to inputs with the cost burden shared between the private and public sector. Marketer/processors, both domestic and exporters, often provide extension support and supply inputs to client farmers to ensure access to quality raw materials. Such firms want to minimize farmers' reliance on outside extension which may not be specialized enough to provide farmers with information needed to produce a certain kind of output. Extension along these lines is often undertaken through contract growing schemes where extension activities allow close and frequent contact with farmers. The necessary level of contact is typically not possible with public extension services. For example, when the Zaria/Cadbury tomato-paste operation was being established in Nigeria, managers found that the ratio of public extension agents to farmers in the local extension system was 1:2,500. At this rate, if an agent had access to transport and could visit ten farmers per day (a rather high expectation), he would be able to visit each client once a year. This was insufficient so the firm undertook its own extension activities for contracted tomato producers.10 Contract scheme extension ratios cover a wide range, but typically the number of farmers covered by an agent does not exceed 200 to 300 and may be as low as 15 to 20. Clearly, the type of coverage required depends on the specifics of an operation. More technically complex operations are likely to require higher ratios. In a highly competitive atmosphere where there is a temptation to "poach" output, it may be necessary to maintain fairly intensive coverage in part for policing output.11 However, when problems with poaching are limited, due to remoteness for example, it may not be necessary to maintain high ratios after farmers have reached a high level of quality. This is the case for both Kabazi canners in Kenya (1 agent for 3,000 farmers) and a Thai processor, Siam Agro Industry Co. Ltd. (SAICO) (10 extension agents for 3,500 farmers) whose staff inspect supply, estimate prices, and recruit farmers (Appendix 1). There are two issues here: (1) the possibility for increased access to extension offered by the firm; and (2) the differences in producer prices offered to sophisticated versus low income small farmers. In regard to the first issue, if a firm decides that relatively large-scale production is more efficient, What are the potential benefits to low income, small they may work with only a few large farmers. The farmers when a private cost of extension support provided by marketer or processor marketer/processors varies according to "the undertakes extension experience and skills of the farmers, the complexity of activities? the commodity production/harvesting process and the 11

agricultural package, the amount of training given to agents, and the location of the farmers..." (Watts et al., 1988, p.179). Working with numerous small units with limited access to resources and the need for intensive contact with extension has high transaction costs but also some advantages. Firstly, relatively inexperienced farmers will follow company procedures more readily. Secondly, using more smaller producers diversifies the source of supply, and thirdly, smaller farmers typically are willing to take a relatively low price for their output and yet still devote the extra labour required to produce high quality. For example, in Guatemala, highland farmers took a lower price for broccoli than large-scale farmers who complained that the price was too low due to the high labour input required. In regard to the second issue, the remote location of many processing plants pushes raw material prices down for nearby farmers who tend to have few cash crop options (Bolivian cocoa, Njoro Canners' French beans in Kenya). Also related to producer prices, new farmers may implicitly pay for extension in the form of lower prices for their crop as an investment in gaining the skills needed to produce a higher grade. As farmers become more expert at producing higher quality produce, requiring less training and supervision, they may receive a higher price. In this sort of multiple price scenario, farmers' associations may be able to promote farmers' interests, ensuring that prices are increased as quality improves and that product grade is judged accurately. It is important to note that small or medium-scale farmers are not optimal producers for some types of agribusiness. For example, in Jamaica, the government tried to keep smallholder banana production going for political reasons and was unable to compete with the quality of large-scale technically complex production. The industry deteriorated seriously even after large government investments had been made. No amount of private extension would have helped. In many African countries (e.g. Kenya, Zimbabwe, Malawi) hybrid maize seed is produced by a few large-scale farmers. The large growers are accomplished and able to deliver a large volume of consistent quality seed.12 The seed companies providing technical assistance to a few large-scale farmers have no incentive to undertake widespread private extension activities to teach smaller farmers how to grow hybrid maize seed. This is not to say small farmers cannot grow hybrid seed rather it is unlikely that a private initiative will lead the way. It is critical to recognize A key disincentive to the the limitations of the private sector role in promoting provision of extension new commodities and production practices services by the market or especially among small, low income farmers. by processors is the difficulty of recovering The provision of inputs to farmers is not in itself a the value of inputs profit-making endeavour but rather a way to ensure provided "up-front" that output is of the necessary quality. Fresh produce 12

exporters have a particularly strong incentive to undertake extension in order to achieve necessary quality and consistency. However, they often have problems with misuse of inputs and/or "poaching" of output; private field staff working for marketer/processors carry out relatively intensive monitoring and "policing" near harvest time to ensure the output comes to the intended buyer. This need for "policing" sometimes causes firms to keep on field staff even after farmers are technically expert, and is expensive for crops like string (French) beans and okra which are continuously harvested especially with experienced producers.13 An alternative to field "policing" is for marketer/processors to work through middlemen who act as collecting centres, purchase the produce from the farmers and then sell it to the exporter. The middleman takes responsibility for distributing inputs, ensuring quality and paying the farmers. In terms of extension, this limits the firm's direct involvement. Even where middlemen are used the firm may nevertheless send staff directly to the field to introduce new varieties or production techniques, or may provide a technical expert contracted to the intermediary to work with the farmers. For marketer/processors, there are a range of farmer/firm issues which can be improved through extension activities which help ensure the success of a commercial operation working directly with small farmers. As shown in the Alcosa case in Guatemala, a processor/exporter operation including extension activities, several key elements emerge: method of paying growers; how the product will be graded and how this affects incentives for farmers; how to select and manage field staff; and how to control the marketing process. If payment is made on a cumulative basis (using vouchers for example), farmers may be more likely to sell to poachers offering cash unless the farmers have an established relationship of trust with the firm.14 If grading is not well understood and accepted by farmers, the firm may end up with costly low grade material hidden deep inside bags or boxes. One reason for firms to undertake extension activities is to build a partnership with farmers rather than a adversarial relationship. Firms' policies may not always seem fair to farmers on the surface but extension work, versus "policing", may help firms overcome poaching, excess low quality product and loss of investment in inputs by building farmer understanding. Price incentives are important but so are firm/farmer relations. In the case of input suppliers farmer relations are built through customer satisfaction with a product rather than through extension which is more a promotional/educational function for input supply firms. An additional disincentive to private extension provision is that it is costly so relative benefits must be high to make it worthwhile. Private sector extension staff are generally relatively higher paid and often more experienced and/or bettereducated than public sector staff. This is not always the case, as some schemes Njoro's French beans in Kenya hire school leavers and focus on on-the-job training. However, private firms often skim off the cream of the public service 13

personnel (such as in Mexico) or hire the best students straight out of school (as shown in Turkey). In general, relatively small commercial firms may have a difficult time undertaking their own extension activities due to the expense of training field staff and/or supporting farmer training and supervision. Conversely, larger commercial schemes or firms often have formal training programmes. The availability of technically competent people for private hire may also be a constraint to smaller firms which cannot afford extensive training. In poorer and less politically stable developing countries in particular, there are relatively few trained freelance agronomist/extensionists. Clearly, firms in Zimbabwe and Mexico are more likely to find suitable technical staff than those in Chad or Cambodia. In a situation where farmers know the crop and there is an established market, new firms will have easy entry and limit the profit margins of individual small firms, which may not be able to afford to expand into areas that would require intensive extension and marketing sales efforts. Smaller firms may take various measures to reduce the cost of extension activities, for example by coordinating field activities with other organisations such as NGOs, government, or through joint ventures with other firms (local or foreign). In Zimbabwe, the use of local sales coordinators working on commission helped extend a sales network into less commercialized areas. This sort of activity combined with training and linked with NGO staff working at the grassroots level can supplement public extension, but clearly, this concept will only work in areas where there is something to sell which interests the private sector. As noted in the introduction, private and public sector information may conflict. It is up to the farmers to decide which pieces of information are the most useful. They are likely to combine information and come to their own conclusions through a process of experimentation and discussion with other farmers. Multi-national or trans-national corporations (TNCs) have different needs than smaller firms and thus a different outlook on undertaking extension activities. TNCs tend to work with fairly advanced farmers especially those with access to irrigation, agricultural machinery and financial resources. Small-scale farmers in general are not so attractive as contract growers because they may not have adequate land, water, machinery, or experience with use of inputs. However, TNCs can provide an incentive for smaller producers to modernize, sometimes directly but often indirectly by providing price incentives.15 In some areas, massive public sector investments have been made which allowed smaller farmers to modernize their farms. For example, many Mexican wheat farmers were converted to green revolution varieties at great public sector cost (including infrastructure, loan and technical advisory services, and subsidized prices). The result is that TNCs have a greater incentive to invest in wheat dependent agro-industries in Mexico.

14

Pay to convince people to use pesticides and they must buy yours to make the investment in extension worthwhile. Pay to teach them to grow a better bean and the beans must be delivered to your firm for you to benefit. However, commercial firms may choose to invest in extension activities even when they know their ability to appropriate the benefits will erode over time. Companies invest in For extension to be extension activities to ensure their share of profits in undertaken by private firms, the short to medium-term, but may continue extension they must have some way of activities long-term to maintain firm/farmer relations, recouping part of the benefits when technology is complex and changing or due to it generates connections with other services. For example, the Turkish broiler producer zhen provides information on husbandry through its animal production extension activities and combines this with access to clinical services. Private extension and Farmers' Associations Typically FAs take on a range of activities and crossfinance between them: such as processing, and bulk handling of inputs and outputs to generate funds for research, extension and training. Large-scale farmers' associations (FAs) are major suppliers of multi-crop extension services in a number of countries including:16

Numerous farmers' Associations (FAs) undertake a wide range of extension activities for their members

 Denmark (2 main farmers' union organisations with some state financial support);  France (a variety of unions and cooperatives coordinated by a national association co-managed by the state and farm industry and chaired by a farmers' representative);  Finland (services run by farm industry with 50% subsidy by the state); and  Sweden (services run by farmers make up two thirds of the services available to farmers with the other third provided by the state). FAs are also important providers of extension in low income countries usually associated with a particular commodity (such as grapes in India, sugar and coffee in Colombia, rice in the Philippines, and cotton and tobacco in Zimbabwe). Some farmers' associations have a more general rural development or political focus. Many FAs organised around a cash crop or export commodity provide services mainly to relatively commercialized farmers unless they are started as part of a development project. To take advantage of economies of scale, the public sector 15

or non-profit NGOs can jointly establish training centres, or field extension programmes with large-scale commercial farmers' associations to extend services to smaller-scale farmers. Once a centre or service exists, it can be adapted to serve smaller farmers if and when the incentives (political or economic) are right (as has been the case for the Cotton Training Centre in Zimbabwe). There may be a seasonal schedule of events at the centre which focuses on different problems and different audiences as is the case with FedeArroz (the rice growers' association) in Colombia. The association has a comprehensive programme on rice which brings together farmers, extension agents, researchers, and visitors from other national and international organisations with related work. It should be recognized that FA extension activities may only serve a limited group of farmers. Farmers' associations must have revenue to provide services to their members. For example, in Zimbabwe, the commodity specific associations provide a range of services to their members including research and extension. The funding of these services in Zimbabwe is provided by membership fees, levies on the commodities when marketed (usually 0.5 1.5% of gross value); contributions, and sponsorship from the private sector. In Argentina, there are a range of private sector extension activities conducted through FAs which farmers are willing to pay for because they perceive the benefits. Private firms participating include commercial seed companies, chemical and fertilizer suppliers, rural cooperatives and societies, and private advisory services. Argentina has a large-scale private advisory service the Argentine Association of Agricultural Experimentation Groups (AACREA) with 15 regional groups, 176 local groups with over 2,000 members.17 "The individual member's subscription costs about the price of one farm labourer per month (US$60), of which 80% covers the professional's fee and 20% goes to the regional and national tiers [of AACREA]" (Argentina Agricultural Sector Review, 1989, p.30-31).18 Farmers' associations may act as a "watch-dog" when partnerships are formed between farmers and private companies in the production and marketing of a crop, such as in contract farming. As noted above, in several cases processors often prefer to deal with small-farmers as contract growers. One danger of these arrangements for the farmers is that problems (e.g. aggregate excess production over plant capacity) are often blamed on them and contracts are broken (for example in the Guatemala Alcosa case described below). Processing firms can also use grading to lower a farmer's return (Bolivia, Thailand, Guatemala, Mexico, Kenya). Farmers' associations, perhaps in coordination with public sector agencies, could help farmers avoid or minimize these problems as was the case with Bolivian grape growers trained to grade grapes by their FA. In the Guatemala case, ALCOSA, a vegetable processor/exporter, provides extension services combined with credit, input supply, and output purchasing to small farmers in Guatemala's central highlands (on broccoli, cauliflower and 16

brussels sprouts). During the early stages of the operation, farmers were encouraged to make continuous plantings and almost all output was purchased with little grading. Over time the number of farmers expanded, quality requirements became stricter (a second class grade was developed), and payment methods less direct and less reliable. At one stage ALCOSA's rejection of a large amount of produce which the farmers were then unable to sell elsewhere led to a breakdown of trust between the firm and the farmers which was costly to re-build. The case illustrates the importance of communicating more than technical information to farmers. Jamaica's success with tobacco was partly due to forming farmers' committees and involving them in decision-making. The successful transfer of tobacco-growing technology led to rapidly increasing production of that crop while the rest of the agricultural sector stagnated. Government chose to open the door to tobacco The early encouragement of production in order to decrease foreign exchange farmers' associations or spending and increase exports of manufactured cigars committees can provide an and bulk tobacco. In Jamaica, contract farming for avenue though not a tobacco was started by both private companies and foolproof one for maintaining healthy firm/ parastatals. The Cigarette Company of Jamaica, an farmer relations affiliate of Carreras Rothman Limited, trains all contract farmers beginning with the fundamentals of tobacco production. Growers are selected from local farming and working communities. Prior to the tobacco initiative, few Jamaican farmers had any experience of growing tobacco, and those who did had not been exposed to modern methods. After the initiative, imports fell leading to foreign exchange savings of US$5 million in 1981; cigar exports rose by 89% from 1977 to 1982. The main reasons for success included: government commitment and support; economic incentives for farmers to adopt quickly a new, complex technology; the number of farmers and area covered was relatively small; and forming farmers' committees and involving them in decision-making led to high morale among farmers and a better understanding of the economics associated with the industry. The Jamaican experience contrasts with the experiences of contract vegetable growers for ALCOSA in Guatemala and poultry farmers in Thailand (see Appendix 1). In both the Thailand and Guatemala cases farmers were kept in the dark regarding economic forces facing the companies providing extension services. In Thailand, in poultry price-guarantee contract farming, "the farmers know practically nothing about the markets of both the inputs (feeds, chicks, and medicine) and the output (grown chickens) because the company wants them to concentrate only on production. Furthermore, the company does not like to see the farmers grouping themselves into farmers' organisations. Most farmers would not communicate among themselves for information about poultry raising because all 17

aspects of the market are already run by the company (some farmers asserted that chicken diseases could spread through visiting one another)" (Manarungsan et al., 1989, p.27). In this case the company provided farmers with only enough information to control quality and supply, and in part, prevented farmers from working together to set up competing enterprises. In addition, costs for the processors were reduced as farmers bore responsibility for all chicken deaths and associated losses even though the contracting companies sometimes provided farmers with unhealthy chicks. In this sort of situation a farmers' association, through extension activities, may be able to provide information and thus empower farmers to establish more equitable relations with contracting firms. In countries where farmers' associations want to be involved in extension activities a range of issues need to be addressed by policy makers and FA leaders and members:  How can FAs be encouraged to organise and provide extension services without too much direct government intervention? This is especially important in countries where extension and cooperatives have previously been used for government coercion of the rural populace.  Do FAs serving mainly large-scale commercial farmers have any incentive to extend their services to smaller farmers growing the same crops? If so, what are the options for bringing in smaller-scale farmers? If not, what should the public sector's role be regarding smaller farmers?  What kind of changes could be made in the curricula of the agricultural colleges and technical institutes that might help develop skills needed for farmers' association formation and management?

Complementary public and private extension activities For private extension activities to play a role in agricultural development overall, it is necessary to consider how they can complement and improve existing efforts in the area of extension. In addition, it is fundamental to recognize that the objectives of commercial firms' extension activities are not the same as those of Public extension cannot government service or donor-supported extension. realistically be replaced However, as stated by FAO's Dr. Maalouf at the 1991 entirely by private extension Global Consultation on Extension, "The possibility services needs to be explored of complementing governmentfunded extension by involvement of cooperatives, farmers' and other community-based organisations, non-governmental voluntary organisations and private/commercial firms in doing extension work". 18

Complementarity between private and public extension is already taking place in numerous industrialized countries. In the US public sector extension in the traditional crop and livestock production area is increasingly combined with information provided by input and equipment dealers and processing firms. Public and private organisations provide different types of information. For example, a farmer in the US may want to try out new low input methods on a small area of his/her farm and continue with traditional methods on the rest. The public extension service can provide expertise on low input sustainable agriculture methods, and the chemical sales representative will provide information on the use of chemicals. Or perhaps a public extension agent and a chemical salesman both provide advice, for example on integrated pest management (IPM), but from different perspectives. The farmer brings all the information into his/her overall farm management process, and the private information is only one input into the farmer's decision-making process. As the private sector role grows, the public sector role changes. In many developed countries, government agricultural services focus on regulation, the environment, and continued provision of advisory services in collaboration with

19

the private sector and to groups left out by private services. Several key elements underlie the relationship between private and public extension services:  the characteristics of the commodity and associated processing industry;  the policies, infrastructure and political relations in a given country;  the degree to which the information required by farmers can be characterized as a public good.19 Public sector extension programmes in countries with large subsistence-farming sectors may need to focus on alternatives for resource-poor farmers. In areas where there is no technological package available, public extension and NGOs can perhaps generate the most benefits by focusing on needs assessment and diagnostic activities, to identify appropriate technologies and programmes (not necessarily including traditional extension) for helping resource-poor populations. In many developing countries there is no suitable agricultural technology package for marginal areas, for example, in some semi-arid regions of Africa such as parts of the Sahel. It may be unreasonable to expect this type of needs assessment of public extension when it is constrained by the elements mentioned earlier: lack of funds, bureaucratic inefficiency, inappropriate strategy, and the lack of a meaningful relationship between extension implementors and clientele i.e. accountability. However, in general, the public sector should concern itself with those extension activities that the private sector undersupplies because there are no appropriable benefits. It is important to recognize that resource-poor farmers, traditionally risk averse, can be eager to innovate when a clearly profitable opportunity presents itself. For example, low income Malawian farmers have been highly responsive to opportunities to grow chillies on small patches of land for export and processing. However, a drawback of private extension for small-scale contract farmers is that it tends to focus on giving instructions rather than on education, and the information disseminated is typically specialized and part of a package. The public sector, NGOs, and farmers' associations can provide additional information to compensate for this. One area where complementary public/private extension efforts may be helpful is in encouraging "spillover" of technologies applied to high-value commodities, onto production of lower value commodities (Watts et al., 1988). For example, when private extension activities reach farmers who produce certain items on contract, the new techniques may "spillover" from the contracted cash crops to food crops. The best possibilities for "spillover" occur when:  there is similarity between the contract crops and those planted in the existing local farming systems; 20

 the contract farmer carries out most of the actual cultivation and post-harvest techniques him/herself;  the techniques are not highly specialized for a single crop. Examples of "spillover" are the use of fertilizer in Kenyan french bean production (applied to local maize and other vegetable crops); the increased use of fertilizers and insecticides on food crops by highland broccoli farmers in Guatemala; and the use of animal traction which spread from contract cotton and groundnut farming in various African countries to a variety of other uses. There is little or no "spillover" are tobacco curing and sugarcane production, and any similar operation where contract farmers do little more than weed the crop. "Spillover" may be reinforced through radio, joint farm demonstrations by private and public sector staff and so on. Technology and new crops may also spread from the contract farmers to other farmers if they can bear the associated costs. If new technologies and crops require expensive inputs to make the yields worthwhile, a reliable supply of the input must be available or the technology or crop will not spread. Benefits to private extension may "spillover" beyond those directly appropriable by the private firm undertaking the extension activity in other words benefits which are positive externalities of private extension. In the 1970s Argentina's dairy processing industry had problems of low productivity, seasonal production, and poor milk quality which led them to provide technical assistance services to The need for a sure supply of producers. When a recession in 1976 caused many quality raw materials on the farmers to move out of the dairy industry, the two part of private companies led largest dairy plants took action. The dairy cooperative, to an overall economic boost SANCOR, started a programme to provide technical for dairy producers in Argentina assistance and help finance the purchase of inputs. A private dairy processor, La Serenissima, focused on helping individual medium and large-scale farmers. Both types of services were paid for by the producers. The technical package disseminated by both organisations focused on greater use of artificial insemination, more efficient use of concentrate feeding and increased forage conservation to generate increased milk output during the traditionally low winter months. The result was that between 1976-85, SANCOR producers increased annual milk yields per cow by 13%; and butterfat yields per hectare of pasture increased by 50%. At La Serenissima annual milk yields per cow increased 65% and butterfat per hectare 111%. Note that there are multiple contributors to the benefits ultimately generated by private extension in particular research no doubt played a critical role. As discussed below, it is difficult to separate the benefits of extension from those of research and other related factors.

21

Farmers' association extension activities may spillover to non-members, as illustrated by the El Ceibo cooperative's cocoa processing plant. The plant was started by the cooperative in the Alto Beni region of Bolivia to help all producers in the area by providing a nearby processing plant. After establishment of the plant, growers continued to ferment and dry cocoa at home although this is a In assessing possibilities for collaboration between FAs laborious, uncompensated task usually done by and the public sector it is women and children but the plant could not run important to consider past without unprocessed wet cocoa. It turned out that the experiences as well as issues cocoa was being processed at home to disguise the of relative power incidence of blackpod disease which had infected almost all of the Alto Beni's cocoa plantings. The cooperative operates a price penalty for diseased wet cocoa. Because of the need to encourage farmers to sell their cocoa wet, El Ceibo decided to provide a price premium for wet beans to farmers who could successfully combat blackpod disease. Techniques for combating cacao disease were new at the time, and El Ceibo worked in conjunction with the local experimental stations on a small programme to conduct demonstrations. (Tendler, 1983). The Alto Beni's cacao producers were initially reluctant to adopt the new package of disease- combating techniques, partly in reaction to bad experiences with Ministry of Agriculture operations in the area, and partly due to the lack of incentive to adopt the relatively costly remedies. El Ceibo carried out extension activities for all cacao farmers in the area that were more appropriate than those previously carried out by the MOA. They selected two association members and sent them for a week of training in Colombia on the new techniques. Afterwards, El Ceibo extensionists worked together with researchers from the state extension and research agency (IBTA). In response to the combination of the El Ceibo plant, the price premium programme, and the extension activities, farmers devoted resources to combatting cacao diseases. The Bolivia case illustrates the potential problems for cooperation between farmers' associations and public sector organisations caused by producers' groups distrust of public sector agencies. This is based on their experience that many public sector organisations are:  corrupt and take advantage of producers;  inefficient, and that to get anything from them costs a lot of time, money and self-respect;  that once goods and services are obtained from public agencies it may make producers' groups "vulnerable to political meddling and undermine their autonomy" (Tendler, 1983). 22

This last point is illustrated by the fact that even after the successful collaboration of Ceibo and IBTA, the Ceibo leadership was unhappy and wanted to take over the cacao research programme themselves with donor financing. An innovative approach to complementary public/private extension activities is provided by an adapted version of sharecropping in Ecuador (see Appendix 1). Land and input for labour exchange has a long history in Ecuador. The advantages are: (a) increased credibility due to shared risk; (b) field staff learn from farmers; (c) farmers have increased access to inputs and information from the field agent. Under typical public extension systems (b) and (c) should already be occurring. Access to inputs is extra under (b) and this is an additional incentive to farmers. The key however, is shared risk point (a). Because of this ad hoc arrangement in Ecuador, agents and farmers spend more time together working on the farm and others nearby get to know the agents as well. The key question is, how can this approach be institutionalized to extend the positive benefits to a wider group of farmers? In addition, is a regulatory framework needed to minimize likelihood of either side taking advantage of the arrangement? While the type of technical assistance given to contract growers by processing companies or by input supply firms may be adjusted to fit their circumstances, it does not generally include broader education aimed at improving farm level diagnosis of problems or more efficient allocation of resources. In the case of contract schemes, firms may not view helping farmers to become better overall In addition to doing decision makers as generating appropriable benefits. diagnostic work itself, public Because such information is non-rival, there is very sector extension may focus on little private sector involvement in the supply of training farmers and information on general farm management in learning from farmers in the area of general diagnosis developing countries. In developed countries, where of problems and farm farm management has become a computer-related management skills activity there are software salespeople and computer programmeming consultants who provide private extension in this area. One focus of public extension in developing countries should therefore be improving farmer diagnostic skills, and empowering farmers to be better managers in a range of areas including: accounting, production techniques, marketing, planning investments in equipment, diversification into value-added activities and so on.20 This can be done in cooperation with the private sector. For example, seminars arranged for farmers by public extension staff on marketing can be co-presented by members of the private sector marketing community.21 Private companies might be interested in co-sponsoring information on the use of equipment, chemical inputs and so on, through courses or at agricultural fairs, local field days, or on radio. The private companies benefit from the exposure and the public sector benefits from sharing the costs of providing education to farmers. 23

Providing information on safe use of pesticides is an important part of public sector agricultural services in many developed countries and should be a focus in developing countries, where excess chemical use is an especially serious problem.22 For example, in the case of cotton, IPM technology transfer is needed and should be emphasized by the public sector and farmers' associations who do not have the private companies' vested interest in chemical sales. Pilot projects could be contracted out to NGOs to do intensive studies and extension on certain new techniques in areas suffering from excess chemical or fertilizer use. As argued by de Janvry et al., (1987), "[a] serious effort to apply and improve integrated pest management techniques for cotton developed in the US, would make cotton production in Latin America more sustainable, less hazardous, and would contribute significantly to the balance of payments in most countries [in terms of decreased chemical imports]". The Netherlands provides a good example of leadership in this area (Appendix 1). A direct role open to the public sector is to "jump start" private sector extension activities. In the early stages of development when there is a lack of private capital and little private business activity in agriculture, the state may intervene as an entrepreneur e.g. to set up agricultural production and processing parastatals to promote regulated economic growth. This "infant industry" argument can also be applied to farmers' associations, processing firms and other viable sources of private extension. For example, governments may identify an area of potential commercialization in the agriculture sector and make initial investments (especially in training and infrastructure) and policy changes to prepare the environment for private investment. Particularly, in the case of private processors, marketers and/or input supply companies, government may need to identify and change policies that are disincentives to private investment. In some cases the quality of commodity required in developed markets makes it necessary for large commercial firms to develop technology which is a barrier to entry for most individual farmers.23 This is the case with United Fruit bananas and Dole pineapples. When high tech commercial production is required for an industry to remain competitive, governments may prefer to avoid large investments in extension for small to medium-scale farmers and instead try to attract private business into the sector. In such a case, the key role for public extension may be to provide transitional education for farmers pushed out of producing a commodity being developed for export. A credibility gap can exist between public and private sector staff. The extension personnel of private agribusiness firms are often considered by farmers to be a more credible source of information than government extension staff. The extent of this problem depends to a great degree on the training of 24

There are several obstacles to public/private collaboration in the extension system

extension staff, the complexity of the technology being delivered, and the institutional evolution of the country. In post-Green Revolution Asia "deficiencies in the formal information system have sometimes led to a credibility problem among farmers and probably discouraged them from seeking information through the formal system. Not uncommonly farmers are ahead of the research and extension system in technology adaptation although this `informal' system is not adequate to keep pace with the complexity and dynamics of post-Green Revolution agriculture" (Byerlee, 1987). The relative credibility of private and public sector extension is illustrated by the opinions of silk farmers in Thailand. The farmers expressed the opinion that the private sector extension (technical field staff) from the silk processing firms were the only ones with information worth listening to (Purcell, personal communication). A second problem is that public-sector staff often feel inadequate compared to better-supported, private-sector staff and so avoid contact with them, hampering cooperation in extension activities between private and public-sector organisations. In situations where public sector staff have a relatively high level of education but low pay and an unmotivating work environment (poor management etc), it may be difficult to interest them in working with the private sector unless their work situation is somehow improved by the interaction. Public/private collaboration on extension must also take into account the need to safeguard proprietary information. Highly technical and specialised information is often viewed as proprietary by private organisations and thus protected against dissemination. For example, some kibbutzim in Israel do not allow anyone (including extension staff) to enter their farms in specific areas in order to protect technological secrets. In general, successful exporters of high value horticultural produce are unlikely to share their techniques with competitors or to collaborate with public sector extension. An important issue in the privatization of public extension is that of cost-recovery through fee-for-service schemes, or farmer contribution to the cost of extension. Such arrangements assume farmer willingness to pay for extension services. All farmers value information, but they will pay for it only if the information is unobtainable for free and the benefit to them is greater than the cost. Relatively successful commercial farmers (including small-scale commercial) are more likely to meet these criteria. In Bolivia, the USAID mission started a Private Agricultural Producer Organisation project in the mid-1980s. The project emphasized `private-sector services' without considering farmer willingness to pay for the specific information offered. Only one private agricultural producers' organisation is successfully supporting private research and extension but it is reaching only an elite group of farmers (Byrne, 1991). If markets or government price-setting policies cause relatively low returns to investments in improved practices, farmers are unlikely to be willing to pay for extension. The Netherlands provides a good 25

example of a system shifting toward government sharing costs with farmers (Appendix 1). A clear lesson from the Netherlands for developing countries is the degree of government intervention. "The government stimulates the role of farmers' organisations in extension, and where trade and industry take [over] tasks, the government withdraws" (Netherlands Ministry of Agriculture, 1988, p.14). In some cases, the government intervenes strongly. For example, the difficult decision has been made to accelerate the reduction in the active farming population, while simultaneously working to reorient rural people towards other activities in rural areas (OECD, 1989). "The Netherlands example has shown how useful it can be when government and farmers' organisations allow each other room to play their particular roles, and agree on the rules of the game according to which commercial companies can [carry out] their activities."

Assessing extension performance: public versus private extension As noted at the outset there is a need for a mix of organisations in the overall extension system. However, it is difficult to quantitatively assess the relative performance of different organisational types, because of the difficulty of isolating the effect of extension activities from other closely-related variables such as quality of research, availability of inputs, prices, weather, and so on.24 An additional obstacle to comparing public and private sector organisations is that they typically have different incentives for being involved in extension and thus different objectives.25 Finally, within any country private extension is relatively heterogeneous compared to public extension. It is difficult to compare the aggregate performance of one with the other. It must be looked at on a case by case basis. A direct assessment of extension performance would require the comparison of private and public extension services with roughly the same education level of staff, same salary, working with the same crops, type of clientele and agroclimatic zone. The private sector tends to have higher salaries, more competition for jobs, greater willingness to spend money on programme support (such as adaptive research and training), better transport, easier access to inputs, and greater intensity of coverage. All of these elements reflect the different objectives and incentives of the public and private sectors. The public sector wants to have a large number of people in rural areas for purposes of political control. The private sector must have economic results: processors and marketers want their extension efforts to result in higher productivity of contract farmers, quality of product, timeliness of harvest and so on. Input suppliers want extension efforts to lead to repeat customers due to proper use of their products. 26

It is unreasonable to compare the performance of highly-trained and well-paid private extension agents such as those of the Ugandan McCormick vanilla outgrower scheme in terms of yield, quality of product, and income effect on farmers with that of Uganda's poorly-trained, poorly-paid public sector extension staff working primarily with food crops. If extension has a higher rate of return when the agents are better paid and motivated, there is a strong market for the crop, and inputs are readily available, it is not possible to extrapolate from this and say that private extension will have a high rate of return on food crops for home consumption. Conversely, public extension may have a relatively high rate of return in a situation where a technology is disseminated which alleviates droughtinduced famine because of the value of the food that is produced for home consumption. However, that does not mean that more should be invested in public sector extension for all commodities. Even in the case of a parastatal and a private company working on the same commodity in the same area, the comparison would not be of extension activities so much as private versus public management of a commodity production and marketing organisation.

POLICY ISSUES AND FUTURE RESEARCH The two previous sections have in turn discussed private extension from the perspective of theory and analysis of cases. This section completes the discussion of the role of private extension in agricultural development by drawing out conclusions for policy, and identifying areas for future research. The recommendations are intended as practical ideas for both government extension planners and staff in development organisations. Policy Issues There are policy issues involved in the process of developing a greater role for private extension in agricultural development. Market, infrastructural and/or financial constraints may prevent private organisations from starting or expanding activities involving extension. To encourage extension through commercial firms, governments may need to offer policies such as tax breaks, special financing terms, easier licensing procedures etc., to foster private sector development overall. The formation of autonomous farmers' associations requires a support for, and tolerance of, such groups which may be lacking in some political systems. Two areas where policy issues may arise related to the earlier discussion of input suppliers and processor/marketers are:  Liberalisation of input-supply markets to increase extension through private channels as input suppliers respond to demand for their products. However, along with liberalization, policies are needed on which products a country will allow and on safe-use of agro-chemical products. International groups have 27

already developed training materials on the issue of safe-use for both private and public-sector staff.26  Creation of a positive environment for investment in processing and marketing of agricultural products. Detailed discussion of this is beyond the scope of this paper but clearly involves the need for adequate infrastructure (especially transportation and communications), as well as financial and political stability. In developing countries, joint ventures are a good route to take for bringing in both technical and managerial expertise as well as sufficient finance to undertake extension activities. A policy of some importance in the high-value export sector is to avoid involvement of government parastatals. The export of flowers or fresh fruits and vegetables is best left to entrepreneurs with technical know-how, market connections, investment capital and secure sources of finance. Government can, however, encourage exporters to source materials from small- or medium-scale farmers (instead of using only plantation grown material) by offering tax breaks or other incentives. It would not be reasonable to force exporters to use small farmers as there can be costly problems associated with managing such an operation. Policy decisions are also needed on how much government support should be given to extension in areas where incentives for private involvement exist. In developing countries with limited resources, it may be more cost-effective to shift resources for extension services on cash crops towards rural development programmes for resource-poor areas. In addition, or as an alternative, public extension organisations may introduce fees-for-service where appropriate. Where well-organised farmers' associations exist for a particular commodity (cotton or coffee for example), extension on that commodity could be handed over to the association. It is preferable, where possible, for governments to contract-out activities such as production of audio-visual or written materials, rather than to maintain high cost equipment and staff on the public payroll. However, in some developing countries the necessary private services do not exist or are extremely expensive due to lack of competition. Finally, to enhance incentives for private involvement in developing countries, it is important to invest in improving human capital. This may mean strengthening domestic educational institutions and training programmes in the country or sending students abroad. Private companies seek the most highly trained and competent people available for all things including their extension activities. For example, in Turkey, agribusiness companies generally will not hire staff with long experience in the public sector; in India ProAgro hires only BSc and MSc for its sales/extension staff); in Uganda private vanilla contract farming extension staff are specially recruited and are not from the public sector; and in Mexico the best public sector staff go to the private sector. This clearly has long-term implications 28

far beyond the field of private extension but it is an important part of building overall national competitive advantage. A key first step for increased coordination of public and private sector extension activities is for project designers and implementors to stop perceiving extension as purely the domain of the public sector. World Bank and other development organisations are just now beginning to recognize the existence of on-going research and extension activities carried out by private companies and to look at the potential for their greater involvement. In many countries private sector extension activities still reach only a small number of farmers compared to public extension services. Bringing private extension into the planning process of agricultural development programmes will take time as private extension is an unknown quantity for many extension development experts and it is not always clear how it fits in. Finally, there may be resistance on the part of public sector extension decision-makers to collaborate with, or farm-out extension tasks to, private organisations. A practical way to begin to change attitudes of extension planners (in government or development organisations) is to conduct informal surveys of all extension activities of the private and non-profit sectors as a part of background work for activities such as project preparation or government planning. A useful approach is to conduct a wide-sweeping set of interviews with managers from as many commercial firms, farmers' associations and NGOs involved in agriculture as possible. Discussion of one approach is presented in the further research section. A way to get commercial firms involved in extension activities with or without the public sector is to organise private sponsorship for farmer service centres and agricultural shows. Private farmer-service centres, perhaps managed by farmers' associations, would be useful in areas where access to agricultural inputs is limited. In areas where private organisations are involved in extension activities with a substantial group of farmers, government may choose a maximum support/minimum staff (MAX/MIN) strategy. This entails reducing public-sector extension staff numbers but providing remaining staff with adequate training and support (especially transport) to enable them to play a complementary role. Key aspects of such a public sector complementary role are to: (a) work with farmers to improve their overall farm management; (b) to act as a resource person to help farmers find solutions to problems not addressed by the private extension activities; and (c) to provide an additional perspective on technical questions which are addressed by the private organisation. Governments and NGOs may also be able to help existing FAs to start or expand their own training and extension activities for members. A possible precursor to FAs carrying out their own extension is to help bring relatively small farmers' groups together into an association. This can be difficult and requires careful 29

coordination between group leaders and facilitators. A valuable activity for FAs already underway would be to conduct study exchanges between farmers' association members from countries where FA extension is not yet working. The participants should include both farmers' association members (leaders and rank and file) and relevant government officials. It is not always in the interest of government or the private commercial sector for farmers to be organised, and non-political NGOs need to be especially cautious in undertaking farmers' association strengthening activities.

Future Research There is need for further study of the private extension experiences of different countries and presented below are some possible approaches. In addition, there are ideas for "things to try" and cases to follow-up on. Hopefully, this section and the paper overall will provide some grist for creative thinking on extension options in agricultural development. Field work is needed to attain an overall picture of extension systems in developing countries including private extension and interactions between public and private sectors. However, it is possible to use this framework for a short-term study as part of project preparation or the assessment of a specific sub-sector. In addition to collecting the information necessary to complete the dummy tables shown below, field work should address the following questions:  What is the type of organisation and what are its incentives for undertaking extension (to sell a product, assist association members, etc.)?  What are the objectives of their extension activities? How successful are private sector extension efforts in terms of yield increases, quality improvement or other relevant measures?  What are the specific methods used? What level of expenditures are devoted to extension?  What is the content of the extension activities (technical messages, feedback, assistance with input supply or marketing etc.)?  Who is the target audience? What groups are actually reached, how many people, how often?  What is the relationship between the public/private mix and other elements like macro-economic policy, political system, commodities produced in the country? 30

DUMMY TABLE 1.
Basic Information on Private Extension Activities Universities Public Contract Farming Schemes Input Supply Companies NGOs

Expenditures on extension as % of total budget* Average no. of extension field staff Average no. of managerial staff Average salaries of field staff Average salaries of management Average ratio of producers to field staff Methods used * As a percentage of AGGDP for the public sector.

DUMMY TABLE 2.
List of Private Commercial Extension Activities in Country X with Short Description Contract schemes which provide some extension services in the country Private input supply companies

Questions should also be included on the incidence of "spillover", collaboration with other organisations (public or private), key problems of the organisation directly or indirectly related to extension, and costs of the extension activities. Depending on the country, this sort of informal survey can be done fairly quickly (e.g. 2 3 weeks). It will yield an overview of the extension system in the country, possibilities for improved collaboration, new ideas on extension methods and a 31

good basis for planning in a more realistic context. A question for planners after the survey is how the extension methods of other organisations could be imitated and/or adapted for other purposes. Some general areas for where further research is needed are:  the many options, and their effectiveness, for extension financing including: charges attached to input or output prices by commercial firms; fees-for-service under a semi-public system or private consulting firm, subsidies to farmers' associations perhaps in combination with regular membership fees; cross-subsidization using profits from other activities in a rural cooperative, and so on. In addition creative experimentation is needed on the part of project planners, especially focused on applying successful lessons across countries.  ways to encourage partnership between farmers and extension agents where both take a stake in a new activity and split the profits. Ideas are needed on how to avoid potential equity problems.  how the privatization of services related to agricultural and livestock production may lead to private extension activities, especially in the area of how existing parastatal services are replaced by private services and what the implications are for smaller farmers.27  the displacement of traditional crops by new cash crops in areas where farmers are growing under contract. What are the major factors affecting crop mix and farming practices/input use after the new crops are incorporated? Farm budgets comparing old and new systems would be interesting in terms of farmer decision-making on increased investment in inputs and equipment. This sort of study would be most fruitful in a country with both long-standing and recent contract schemes. Possible sources of secondary data would be countries such as Guatemala, where groups of subsistence farmers became cash crop growers over a short period of time.  how the role of the public sector is evolving in countries where the private sector has a strong involvement in extension. Some specifics for such a study, for example of the AACREA farmers' association in Argentina, include: the relationship between private consultants and the CREA advisors; whether or not CREA members get private technical assistance from other sources such as private input suppliers etc.; and how the SANCOR and La Serenissima cases have evolved.  the role of private extension in countries in transition from "developing" to "developed", such as Mexico, where some research on private extension has already been done. Is there any evidence of private extension for ejido 32

(common land) farmers? If so, how does it work in relation to public sector activities with the same group? What has been the result, if any, of raising some funds for extension through an irrigation charge?  decentralization of control of extension to regional or district centres (maintaining the national office for setting generic standards of performance, training, and some special programmes). Where has this been most successful? Has it made the system more responsive to the needs of farmers' groups? Is it more accountable? What is the effect on resource-poor farmers?  fee-for-service extension schemes, especially in term of how they can apply to developing countries. What is the experience of this system in the UK, Ireland and other countries? How can it be improved and used as a way to recover costs in countries where funds for extension are limited?

33

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Producation in the 1980s, Proceedings of the 2nd Annual Agricultural Sector Symposia. 76-103. Washington D.C.: World Bank. Maalouf, W.D.; Contado, T.E. and Adhikarya, R. (1991) "Extension Coverage and Resource Problems: The Need for Public-Private Cooperation," In: Rivera, W.M. and Gustafson, D.J. (eds) Agricultural Extension: Worldwide Institutional Evolution and Forces for Change. London: Elsevier. pp.59-70. Mascarenhas, R.C. (1988) A Strategy for Rural Development: Dairy Cooperatives in India. London: Sage. Moris, J. (1991) Extension Alternatives in Tropical Africa. UK: Overseas Development Institute. Narayanan, A. (1991) "Enhancing Farmers' Income through Extension for Agricultural Marketing" In: Rivera, W.M. and Gustafson, D.J. (eds) Agricultural Extension: Worldwide Institutional Evolution and Forces for Change. London: Elsevier. pp.151-162. Nayman, O.B. "Seekers of Light" or "Information-Seeking Habits of Farmers: An Explanatory Survey." Punjab-Pakistan. Netherlands Ministry of Agriculture and Fisheries. (1988) "The Agricultural Extension System in the Netherlands." The Hague: MOAF. Netherlands Ministry of Agriculture, Nature Management and Fisheries. (n.d.) "Agricultural Structure Memorandum" Abridged version. Netter, L. (1989) "Agriculture Videotex developments in France." Paper presented at the European Seminar on Knowledge Management and Information Technology, November 23-24, 1989, Wageningen, The Netherlands. 22 p. OECD. (1989) "Survey on Effects and Consequences of Different Forms of Funding Agricultural Advisory Services." presented at the Preparatory Meeting for the Tenth Working Conference of Directors of Agricultural Advisory Services. Paris. Ohlmer, B. (1985) "Computer Assisted Farm Management, Swedish Experiences of On-farm Computer Systems." Swedish University of Agricultural Sciences, Uppsala. 8p. Orivel, F. (1983) "The Impact of Agricultural Extension Services: A Review of the Literature." In Perraton, H.; Jamison, D.T.; Jenkins, J.; Orivel, F. and Wolff, L. (1983) "Basic Education and Agricultural Extension - Costs, Effects, Alternatives". World Bank staff working paper No.564. Washington D.C.: World Bank. Pineiro, M. (1985) "Agricultural Research in the Private Sector: Issues on Analytical Perspectives." Proagro Paper No.1. Netherlands: ISNAR. Prawl, W.; Medlin, R. and Gross, J. (1984) Adult and Continuing Education through the Cooperative Extension Service. Columbia, MO: University of Missouri, Extension Division. Rama, R. (1985) "Do Transnational Agribusiness Firms Encourage the Agriculture of Developing Countries? The Mexican Experience." Food Systems, 37(3): 331-343. Repo, A.J. (1987) "Economics of Information." In: Williams, M.E. (ed.) Annual Review of Information Science and Technology, Vol.22. pp.3-35. New York: Elsevier Science Publishers. Rice, E.B. (1971) "Extension in the Andes: An Evaluation of the Official US Assistance To Agricultural Extension Services in Central and South America." (Condensed version), AID Evaluation Paper 3. Rivera, W.M. (1991) "Agricultural Extension Worldwide: A Critical Turning Point," In: Rivera, W.M. and Gustafson, D.J. (eds) Agricultural Extension: Worldwide Institutional Evolution and Forces for Change. London: Elsevier. pp.3-11. Rogers, W.L. (1987) "The Private Sector: Its Extension Systems and Public/ Private Coordination." In: Rivera, W. and Schram, S. (eds) Agricultural Extension Worldwide: Issues, Practices and Emerging Priorities. New York: Croom Helm. pp.13-21.

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Roth, G. (1987) The Private Provision of Public Services. Washington D.C.: Oxford University Press for the World Bank. Sankar, T.L. and Reddy, Y.V. (1989) Privatisation: Diversification of Ownership of Public Enterprises. Hyderabad: Booklinks Corporation. Scally, Q. (1989) "Effective Integration of Knowledge and Information, Information Clinics for Agricultural Development in Ireland." Paper presented at the European Seminar on Knowledge Management and Information Technology, November 23-24, 1989, Wageningen, The Netherlands. 10 p. Schwartz, L.A. and Kampen, J. (1992) "Agricultural Extension In East Africa." World Bank Technical Paper No.164. Washington D.C.: World Bank. Stavis, B. (1974) "Rural Local Governance and Agricultural Development in Taiwan." Special Series on Rural Local Government. Ithaca: Cornell University. Stiglitz, J.E. (1989) "Incentives Information and Organisational Design." National Bureau of Economic Research Working Paper No.2979. Cambridge: NBER. Straub, G.A. (1978) "The Use of Radio in Basic Village Education." unpublished report prepared for USAID. Swanson, B.; Farner, B.J. and Bahal, R. (1990) "The Current Status of Agricultural Extension Worldwide." In: FAO, Report of the Global Consultation on Agricultural Extension. Rome: FAO. pp.43-76. Tendler, J. (1983) What to Think About Cooperatives: A Guide from Bolivia. Rosslyn: The Inter-American Foundation. Toulmin, C. (1985) "The Allocation of Reseources to Livestock Research in Africa." African Livestock Policy Analysis Network Paper No.4, International Livestock Centre for Africa (ILCA), Addis Ababa. Umali, D.; Feder, G. and de Haan, C. (1991) "The Balances Between the Public and Private Sectors in the Provision of Livestock Services." Working Paper. Agricultural and Rural Development Department, Agricultural Policies Division: Washington D.C.: World Bank. USAID. (1988) "Dominican Republic: The Superior Institute of Agriculture - Development of a Private Institution of Higher Agricultural Education." AID Project Impact Evaluation Report No.67. Washington D.C.: USAID. USAID. (1985) "Stimulating Private Sector Extension." Draft Working Paper. Washington D.C. Van Crowder, L. (1991) "Extension for Profit." Human Organisation. 50(1): 39-42. Watts, M.; Little, P.D.; Mock, C.; Billings, M. and Jaffee, S. (1988) "Contract Farming in Africa." Vol.1 Comparative Analysis. New York: Institute for Development Anthropology. Westermarck, H. (1991) "Computers, Videos, and Teletechnology: Can They Help Farmers and Agricultural Advisory Services." Journal of Extension Systems, Vol.7, No.1: 47-66. Wete, F.N. (1991) "New Technology for Transferring Agricultural Extension," In: Rivera, W.M. and Gustafson, D.J. (eds) Agricultural Extension: Worldwide Institutional Evolution and Forces for Change. London: Elsevier. pp.163-174. Wilson, M. (1991) "Reducing the Costs of Public Extension Services: Initiatives in Latin America," In: Rivera, W.M. and Gustafson, D.J. (eds) Agricultural Extension: Worldwide Institutional Evolution and Forces for Change. London: Elsevier. pp.13-21. World Bank. (1990). "Agricultural Extension: The Next Step." Policy and Research Series No.13. Washington D.C.: World Bank. World Bank. (1990). "Small Farmers, Agricultural Labour and Rural Poverty" in "Sustaining Growth: An Agricultural Sector Review." Vol. II, Technical Annexes. Washington, D.C.: World Bank. pp.18-61. World Bank Internal Documents

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Agricultural Sector Review, Argentina, Volume I: Main Report, June 30, (1989) report No.7733 - AR. Operations Evaluation Department, "Pakistan: The Aga Khan Rural Support Programme Second Interim Evaluation," March 1, (1990) report No.8448-PAK. SAR, Argentina Agricultural Services and Institutional Development Project, January 29, (1991) report No.9138 - AR. SAR, Bolivia Agricultural Technology Development Project, February 15, (1991) report No.8979 - BO. SAR, Mexico Agricultural Extension Project (PROCATI). (1987) Report No.6620-ME. Sub-sector review, Venezeula Agricultural Research, Extension and Education, May 31, (1991) report No.9631-VE. Sub-sector report, Mexico Agricultural Extension Services, (1984) report No.5255-ME. Memorandum, John R. Peberdy, Agricultural Adviser (AFT), February 18, (1991) Memorandum, Solomon Bekure, AF4AG, February 12, (1991) Additional Related References Boyce, J.K. and Evenson, R.E. (1975) National and International Agricultural Research and Extension Programmes. New York: Agricultural Development Council. Donahue, J.D. (1989) The Privatization Decision: Public Ends, Private Means. New York: Basic Books Inc. Publishers. Thirtle, C.G. and Ruttan, V.W. (1987) The Role of Demand and Supply in the Generation and Diffusion of Technical Change. New York: Harwood Academic Publishers. Van Den Ban, A.W. and Hawkins, H.S. (1988) Agricultural Extension. UK: Longman Scientific and Technical. (in the US by John Wiley and Sons). Voll, S.P. (1980) A Plough in Field Arable: Western Agribusiness in Third World Agriculture. New Hampshire: University Press of New England. Widstrand, C. (ed.) (1975) Multi-National Firms in Africa. Uppsala: Scandinavian Institute of African Studies.

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ENDNOTES
1. 2. CFDT now has some joint ventures with local companies such as CMDT in Mali. Extension is carried out by the local partner. Major increases in the ranks of public extension staff in many developing countries came about during the large-scale projects of the rural community development era of the late 1950s and early 60s. In addition, as former colonies gained independence the agricultural services were built up to replace colonial services. This provided a political opportunity to give out civil service jobs to supporters and to put in place a far-flung network of government employees (Schwartz and Kampen, 1992). Standard examples of public goods are street lights and national defence. Standard examples of private goods range from apples to personal computers. Note that when information is an intermediate factor, it is not necessarily free for farmers. Costs are likely to be recovered through lower prices paid to outgrowers or higher prices for inputs. Public extension is especially important in any case where society is better off with the services than without and yet no one individual is willing to pay for them because it is too easy to free-ride or due to binding budget constraints. For example, subsistence farmers selling only a small portion of their crop and animal products do value agricultural information but allocate relatively fewer resources to it due to its low importance versus other essentials (food, clothing, school fees and so on). Farmers invest in information acquisition according to their perception of relative costs and benefits, tastes and preferences and resource allocation. The argument for providing them with free extension services is that positive externalities will be generated in the form of increased economic or social welfare. People with improved access to more and better food have better nutrition, and are better able to contribute to the nation's productivity. In most cases, one farmer's experimentation with a new technology will generate benefits to other farmers through discussion and observation. The full set of case studies is available from the author. Selected cases are presented in the appendix to this paper. As part of World Bank supported general agricultural sector research in Mexico, an indepth district level study of private extension was carried out in 1990. For example, the results of a survey of 240 Pakistani farmers on the kind of information they want to receive indicated that 53% want information on pesticides and herbicides, 29% on use of inputs (such as seeds and fertilizers), 9% on cultivation practices (sowing methods, crop rotation), 5% on soil reclamation, and 4% on other topics (Nayman, 1988, p.88).

3. 4. 5.

6.

7. 8. 9.

10. Similarly, in Tanzania, the national extension ratio was 1:1,500, leading the British American Tobacco company (BAT) to undertake extension activities for its growers. 11. Poaching in this context refers to "renegade buyers" coming into contract farming areas and buying output contracted to a specific firm usually for a slightly higher price or

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just cash in hand. Many contract farming schemes pay growers at the end of a season for several shipments of output. 12. Quality requirements are very strict and seed companies usually provide technical assistance. The dominance of large growers is due, in part, to patterns established preindependence. However, the characteristics of the commodity (harvested in large volume at one time, non-perishable and easily stored, strong local and export demand for the product) make it more cost-effective to produce on a large scale. 13. Two Thai canneries provide examples of private field officers focusing on monitoring functions even after farmers are expert in production. The Southern Thai cannery, Thailand Pineapple Company Ltd. (TIPCO) uses a contract market method wehre 300 member farmers produce fruit for the factory and receive guarantees on price, quantity and priority over other farmers at delivery time. TIPCO field officers (ration of 1:60) visit members and check output, discourage sales to other buyers and gather information for price setting they do not generally provide information on production. Siam Food Products Company (SIFCO) has five extension staff who visit contract farmers every one to two months (300-400 small farmers). The company has ceased holding meetings to discuss new production techniques as farmers know how to produce quality pineapples. The extension staff focus on gathering data for use in setting prices. 14. Regular cash payments to farmers is often not efficient for accounting. Nor is it safe in countries where robbery is a high risk. 15. Transitional means farmers whose status is somewhere between well-to-do peasants and North American style farmers. 16. This list is developed from OECD (1989) and other sources. 17. "Approximately 30 commercial seed companies engage in technology generation (breeding new varieties), validation and diffusion (extension). The cooperatives emply about 500 professional extension advisers to service their members and about 1,000 private consultants give specialized services to medium- and large-scale farmers" (Argentina Agricultural Sector Review, 1989, p.30-31). 18. Another example of a farmers' association with a multi-product focus is CETA in Uruguay. 19. List adapted from de Janvry (1987) with number (3) added by the author. 20. This view is validated by the overwhelming consensus of Bank Agricultural Services Initiative field staff working in Africa as expressed during the ASI conference held in Malawi, February 1991 (see the Proceedings, edited by Venkatesan and Schwarts, 1992. 21. Some specific technical skills might include: "diagnostic skills on factors reducing yields, technical knowledge of chemical inputs such as residual effects or downside risks from untimely application, as well as specific technical skills such as calibration of a knapsack sprayer or computation of nutrient doses for compound fertilizers" (Byerlee, 1987, p.31).

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22. Information alone is not sufficient, the role of the public sector should extend to considering the negative effects of subsidies to chemical use. 23. For example, in Colombia, Nestl's has worked with large producers and introduced "better breeds, sanitation, new equipment, and feeds in trying to develop a higher quality supply base" (de Janvry et al. 1987, p.52). 24. There are many ways to show performance such as adoption rates, yield increases, area expansion, changes in demand (e.g. people demand more of a product that can be produced locally due to improvement in quality), change in the profit of private firms selling information (alone or in a package), diversification of cropping patterns, health of animals, weight of animals, mortality rates and incidence of certain diseases. 25. The common method of assessing returns to extension is to compare the case after extension to that of before (or with versus without). Extension activities are measured in terms of their success in attaining a given objective or set of objectives. 26. GIFAP, a French acronym for the International Association of Agro-Chemical Manufacturers, has been working on safe-use training throughout the world. In addition, the commercial firm Ciba-Geigy has been involved in research and training on safe-use. 27. Details of a case study of private veterinary services in Mali are available from the author.

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APPENDIX
Argentina Private sector institutions play a dominant role in Argentine agriculture. Farmers' associations of various kinds are widespread and carry out important functions, from technical assistance and input supply, to marketing to acting as government lobbies. There is also an advanced network of agro-processing firms of various sizes which carry out grading, packing, storage and marketing. "Technical change proceeded slowly in Argentine agriculture until the 1940's, primarily due to the natural richness of the land that produced high yields without improved technology" (Argentina Ag. Sector Review. 1989). In 1944 the government set up a public organization consisting of 220 local chapters to advise farmers on production. The current main public sector extension supplier (INTA -- the National Institute for Agricultural Technology) has 242 extension officers with 455 professional staff. The organization is funded by a 1.5% levy on primary agricultural exports from the Pampas and wool. Inconsistency in funding has been a problem. In addition to INTA, the provincial Ministries of Agriculture and/or Rural Affairs and non-profit organizations also operate small extension services. The private sector provides the greatest range of technical services. "Participants include commercial seed companies, chemical and fertilizer suppliers, rural cooperatives and societies, and private advisory services. Approximately 30 commercial seed companies engage in technology generation (breeding new varieties), validation and diffusion (extension). The cooperatives employ about 500 professional extension advisers to service their members and about 1,000 private consultants give specialized services to medium- and large- scale farmers" (Argentina Ag. Sector Review. 1989, p.30). Argentina has a large scale private advisory service based on a French model. The organization called the Argentine Association of Agricultural Experimentation Groups (AACREA) has 15 regional groups, 176 local groups with over 2,000 members. Each local group of 8 - 12 farmers is led by a professional agronomist who works for the group 8 - 12 days per month visiting each of the farmers once a month. The farmers also visit a different members farm each month as a groups to discuss his/her specific operation. "The individual member's subscription costs about the price of one farm labourer per month (US$60), of which 80% covers the professional's fee and 20% goes to the regional and national tiers" (Ag Sector Review, 1989, p.31). Argentina's dairy sector has also benefitted from private technical services provided by the milk processing industry. This is another example where excess processing capacity led to private companies instituting programs of technical assistance as a part of their overall efforts to ensure adequate supply for running the processing operation. The dairy processing industry suffered due to problems of low productivity, seasonal production, and poor milk quality. When a 1976 recession caused many farmers to move out of the dairy industry, the two largest dairy plants took action. The dairy cooperative (SANCOR) started a program similar to the CREA groups. The SANCOR technicians provide technical assistance and help finance the purchase of inputs. A private dairy processor, La Serenisima, focuses on helping individual medium and large scale farmers. Both types of services are paid for by the producers. The technical package disseminated by both organizations focused on greater use of artificial insemination, more efficient use of concentrate feeding and increased forage conservation to generate increased milk output during the traditionally low winter months. The result was that between 1976 - 85, SANCOR producers increased annual milk yields per cow by 13%; and

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butterfat yields per hectare of pasture increased by 50%. At La Serenisima annual milk yields per cow increased 65% and butterfat per hectare 111%. An example where private extension services could be expanded is given by the Argentinean horticulture market. The horticulture sub-sector is currently producing US$1 billion worth of product of which 40% is exported in fresh or processed form. The processing sector includes over 60 firms. The country has a strong comparative advantage with increasing world market demand for year round fresh fruit and vegetables. Technical development is needed in the areas of genetic engineering, basic germplasm development, and integrated pest management all of which will require extension activities to transmit new innovations to farmers. An area where both public and private sectors have an incentive to provide services is quality control -especially provision of phytosanitary and residue analysis services - to ensure that export market standards are met. These services are being strengthened by the public sector under the Argentina Agricultural Services and Institutional Development Project. Attention should also be given to what role the private sector is playing and how it complements public sector efforts and visa versa. Bolivia In Bolivia agriculture was not seen as an important sector by the government until the 1970's. Although the Bolivian Institute of Agricultural Technology created in 1975 had extension as a part of its mandate almost all extension activities in the country were carried out by NGOs. In fact technology adaptation and transfer is the strongest aspect of many NGO programs. (SAR, Bolivia Agricultural Technology Development Project, 1991) The SAR indicates that there are often multiple NGOs and other agencies in poor coordination causing farmers to often receive conflicting recommendations and advice from different sources. It may be that it is an advantage for farmers to have a variety of information sources from which they will decide which is the most reliable. Private firms provide services in accordance with their specialized incentives and farmers respond in terms of what they see as most beneficial to them. One of the resource-poor areas of Bolivia is the highlands. There is little available technology to extend to this area. Improved varieties which are available tend to sell themselves over time. Research is needed before extension can disseminate anything. Then the importance of extension (focused purely on technology transfer) would be to rapidly get new research results to farmers ensuring the pay-off to investments in research. An example of a Farmers' association providing a valuable technical information service to its members is that of the COINCA (Cooperativa Integral Campesina) services to its members that produce grapes. COINCA has started its own winery but found they could not absorb more than 40% of the output of its 130 grape- producing members. Members sold the rest of their grapes to one of the large distilleries in the area (Tarija Valley) either directly or through COINCA as an intermediary. When members sold their grapes to the distillery directly they were often being shortchanged in regard to sugar content. COINCA began carrying out monitoring of sugar content at the distillery for small producers and teaching them how to defend the quality of their product on their own. This led to the establishment of a premium for higher quality grapes. The premium had "significant productivity implications, since the absence of grading systems for agricultural produce often act as a disincentive to growers to improve the quality of their product. The start up of a winery project led to the dissemination of information to producers on how to judge sugar content and how to market their crop more successfully. The COINCA grape activities benefitted only a small group of producers. "Only five out of COINCA's 28 member coops produce grapes, these producers accounting for only 20% of total membership (130 out of 540)." Grapes can only be produced in selected areas and are relatively capital intensive to produce (Tendler, 1983, pp.86 - 89).

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There are however, examples of spillover of benefits of FA information services to non-members such as the case of the El Ceibo cooperative's cocoa processing plant it. The plant was started by the cooperative (in the Alto Beni region) to help all producers in the area by doing away with the need for travel to the processing plant at La Paz 8 hours away, or sales to middle people for very low prices, and finally the need to process cocoa at home. However, after establishment of the plant many problems arose. Growers continued to ferment and dry cocoa at home even though it is laborious and has no monetary compensation. The plant required unprocessed cocoa and could not run at capacity if growers insisted on drying cocoa at home. It turned out that the cocoa was being processed at home because it disguised the incidence of blackpod disease which had infected almost all of the Alto Beni's cocoa plantings. There is a price penalty for diseased wet cocoa - both at La Paz and the local El Ceibo plants - and drying helps the grower escape this penalty. Because of the need to encourage farmers to sell their cocoa wet, El Ceibo decided to provide a price premium for wet beans to farmers that could successfully combat blackpod disease. "Effective methods of combating cacao disease have become available only recently, and El Ceibo is working in conjunction with the local experiment stations on a small program to demonstrate these new methods." (Tendler, 1983, p.75). The Alto Beni's cacao producers were initially reluctant to adopt the new package of disease-combating techniques. This was in part due to bad experiences with Ministry of Agriculture operations in the area - one on coffee and one on cacao - which disappointed and angered producers and in part due to the lack of incentive to adopt relatively costly remedies. The El Ceibo plant and price premium program provided the incentive to devote resources to combatting cacao diseases rather than to processing at home to disguise them. Ceibo also carried out extension activities for all cacao farmers in the area that were more appropriate than those previously carried out by the MOA. First they selected two members and sent them for a week of training in Colombia on the new techniques of eradication. Upon their return the Ceibo extensionists worked together with researchers from the IBTA (the state extension and research agency) station in the Alto Beni working on eradication research and set up demonstrations in their communities with considerable success. A problem for cooperation between farmers' associations and public sector organizations brought out by the Bolivia case is the general contempt that the producers groups had for the public sector agencies. This was based on their experiences that many public sector organizations are: (1) corrupt and take advantage of producers; (2) inefficient and to get anything from them requires long time, cost, and humiliation; and (3) once goods and services are obtained from public agencies it may make producers groups "vulnerable to political meddling and undermine their autonomy". Even after the successful collaboration of Ceibo and IBTA the Ceibo leadership was unhappy and wanted to take over the cacao research program themselves with donor financing (Tendler, 1983, p.175- 77). If collaboration between farmers' associations and public sector organizations is to work, it is important to replace the bad experiences of the past with good ones. One element which could be helpful is to deliberately change the rules of the game so that farmers' associations have more control over their relationships with public institutions. Ecuador In Ecuador many public sector extension agents have a partnership with semi- commercial small farmers -- providing inputs and technical assistance and taking in return a share of the crop. An

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example of this activity has been studied in Imbabura Province, a culturally diverse region with a high concentration of land holdings owned by a small percentage of the population. Farms with an average size of 868 hectares occupy 47.2% of agricultural land. Farms with an average size of .04 hectare make up 41.8% of farms but occupy only 1.8% of agricultural land. The majority of small-holders are Indians and blacks whereas the large- scale farmers are mestizos or whites. "Imbabura typifies the classic minifundo/hacienda land tenure situation common in the Andes" (Van Crowder, 1991, p.40). In order for smallholders to survive they exchange labour with other farmers, send some of the family off-farm to work, and sharecrop. Public extension in Ecuador has a classic top-down structure and emphasizes increased productivity of certain commodities. The primary public sector organization providing extension services is a part of the Ministry of Agriculture and Livestock and is called the Programa de Desarrollo Technologico Agropecuario (PDTA). The PDTA is involved in research, extension, seed production and training. In theory it focuses on subsistence farmers (FAO, 1991, p.145). In Imbabura Province there are 47 public sector agents (all male), of which 60% work in the provincial capital (at HQ). The majority of agents (ingeniero agronomos [IA]) (83%) are from urban areas. There are limited jobs for IAs outside of the Ministry of Agriculture and most work towards buying their own farm. Average IA salaries are low, they have poor support, little prospect for career advancement, and inadequate operating funds. "The perception of low salaries and lack of performance incentives justified to many agents the reorientation of extension resources for their own benefit" (Van Crowder, 1991, p.40). A 1976-87 survey found that 27 agents had their own farms, and 12 sharecropped (typically 2 - 3 ha). Of the latter 12, 8 sharecropped someone else's land and 4 had tenants on their own land. The supply of land, and inputs (including information) in exchange for labour have a long history in Ecuador. In addition they provide a method to "maximize labour input, land productivity and surplus" in areas where land is limited and there are large numbers of peasants with little or no farm land of their own (Ibid, p.41). In cases where technical information was an important factor the sharecropping activity is a business partnership. The IAs link up with small- scale farmers growing short-cycle commercial crops who need inputs and technical knowledge. The farmer provides land and/or labour and profits are split between the two after harvest. The profits from sharecropping can significantly increase an IAs income. The sharecropped plots are seen by some IAs as demonstration plots. Sharecropping with farmers increased agent credibility because the agents shared the risk of the operation with farmers. IA's with urban backgrounds gained practical farming experience and learned from the farmers. The arrangement was attractive to many small farmers because they get improved access to inputs (due to the IAs position), and technical knowledge (due to the IAs access to information from agribusiness dealers and public sources such the MOA). The shared risks and profits may be an incentive for extension agents to test out new technologies in their area. For example, in one case an IA and farmer decided to try integrated pest management on a field of beans to reduce pesticide applications. The continued presence of the IA on the farmers fields led to information exchange on crops other than those being share-cropped. On the negative side the IAs often used resources allocated for extension work (vehicles, fuel and so on) for their own farming activities. However, in few cases did IAs use seeds, inputs or other items for their own farms due to the risk of job loss if caught. The partnership of IAs and farmers in Ecuador leads to the exchange of extension services for labour and shared risk in farming operations. However, "[u]nder these conditions, extension

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services become private goods that served the interests of agents and a few favoured farmers as opposed to a multitude of farmers" (Van Crowder, 1991, p.42). In Ecuador the beneficiaries were small- scale semi-commercial mestizo farmers -- members of the relatively well-to-do (or middle class). The subsistence black and Indian farmers were "ignored by `sharecropping' extension as they were by the formal extension organization" (Ibid., p.42). Crowder argues that the result of the sharecropping arrangement could be that the gap between subsistence and semi-commercial farmers will be widened as those who sharecrop adopt new techniques. The result being "increased social and economic stratification". Up to now, the sharecropping approach has been mainly an advantage for semi-commercial farmers. How can this approach be expanded to help subsistence farmers? It might be possible to adapt the sharecropping system to serve larger numbers of farmers by having the IAs work on joint-ventures with groups of farmers and share in the profits. This would combine a public sector effort to reach resource- poor groups with an element of private enterprise. In some parts of Ecuador small-farmers use communal land and shared labour for cooperative farming enterprises. Work with such groups could extend the improved access to credit and inputs. However, mechanisms would have to be put into place to ensure that farmers involved in such activities included the relatively resource-poor and not just a larger number of the mestizo advantaged farmers. Problems might arise in expanding the sharecropping approach. First, there are relatively few innovations which would be economically and technically viable for resource-poor farming systems. It may be less likely that profits could be generated by joint ventures. To address this, public research would be needed on appropriate innovations for resource-poor farmers that would be profitable in a joint venture. Second, due to issues of class and race, IAs may not want to work with Indian and black farmers. It may be that even if there was something that the subsistence farmers could do for a profit, the IAs would not want to work with them because they may view them as less intelligent, lacking aptitude for commercial activities and so on. In the case of the mestizos, the IAs are starting out with a farmer who is already familiar with commercial farming and in addition to offering the farmer information, the farmer also has knowledge that benefits the IA. Subsistence farmers also have valuable information but they are not accustomed to commercial farming nor the business relationships associated with the sharecropping approach. In order to reach the resource poor in this case, some public sector involvement is needed, both in the provision of information and other services. As an alternative to expanding the sharecropping approach, perhaps the public sector could focus its energies on helping the resource-poor farmers and let some IAs go completely from the public sector into the private. Perhaps instead of focusing the formal education of IAs on careers in the civil service they could be trained in business skills allowing them to develop as entrepreneurs. Another possibility is to offer IAs who do good work with the least advantaged farmers an extra allowance to compensate them for giving up the opportunity to earn extra income by sharecropping.

Guatemala ALCOSA is a vegetable processor in Guatemala that operates a contract farming program which includes the provision of extension services -- for information dissemination and other tasks. ALCOSA began operations in Guatemala in 1971 with support from the Latin American

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Agribusiness Development Corporation S.A. (LAAD). ALCOSA started out as a very small-scale business specializing in freezing fruits and vegetables. The ALCOSA operation was expanded with support from Hanover Brands Inc. (an American fruit and vegetable processor and distributor) and LAAD and began to focus on processing a few labour intensive vegetables for the North American market; primarily okra, broccoli, cauliflower and brussels sprouts. The latter three crops are grown by small farmers in Guatemala's central highlands. The activities of ALCOSA contributed to a shift in the cropping pattern of farmers in the highlands as well as major changes in their farming methods and farm management. Farmers have begun to concentrate on growing cauliflower and broccoli which have to some extent displaced corn, beans, and cabbage. The average investment in equipment (horses, sprayers and containers) has increased 200 to 400 percent. "Investment of both inputs and labour per acre of vegetable has also increased". Through their relationship with ALCOSA, participating farmers have acquired information concerning: new crops, and new varieties of established crops; use of fertilizers, insecticides and other chemicals; quality requirements for processing; and the contractual, legal and economic relationships between processor and growers. The information dissemination activities of ALCOSA staff are combined with other services such as credit, input supply, and output purchasing. Field staff are also charged with the job of recruiting new farmers to grow for ALCOSA. During the early operations of ALCOSA there were very few field staff, only too buying stations and quality standards were not very strict. For example, in 1977 an ALCOSA para-agronomist visited the village of Chimachoy twice a week and spent most of the day with 30 or so contract farmers. "He would discuss the progress of their present plantings encourage them to keep making new plantings weigh and accept all of their products. He would bring with him the cash to pay for their cauliflower he purchased in his last visit, and happily bought everything not infested with worms at the high fixed price of 6.5 cents per pound." Over time more field workers were hired, the number of farmers expanded, quality requirements became more strict (a second class grade was developed), and payment methods less direct and less reliable. By 1980 ALCOSA employed a staff of 18, 1 director of crop operations, 1 chief agronomist, 2 agronomists assistants, and up to 14 local assistants. The staff are responsible for operating the buying stations, coordinating plantings and purchases. The total cost of maintaining the field staff and related costs of field management is 3 cents per pound of purchased product compared to the producer price of 5 - 6 cents per pound. As the firm has grown and operations have become more complex various problems have occurred in the relationship between growers and ALCOSA staff. The ALCOSA story is a complex example of agribusiness and social welfare effects, however, several specific lessons can be extracted which relate to private sector extension. The first lesson is that when new technology was combined with credit, inputs and a guaranteed market it swept through an area where the crops were previously unheard of. Production of broccoli and cauliflower by small farmers increased very rapidly. The first pilot scheme was done with highland farmers in 1976 and by 1980 95% of ALCOSAs broccoli, cauliflower and brussel sprouts were grown by small highland farmers and production exceeded plant capacity. Middle size commercial farmers, the initial suppliers, were not considered suitable for several reasons: they are absentee farmers and the crops require close attention to meet quality standards, the commercial farmers were unsatisfied with the price ALCOSA paid, and often argued over quality requirements. Small farmers considered the ALCOSA offer highly desirable.

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The second lesson is that once an operation becomes extended over many growers it becomes difficult to control all field staff. This is of course also a problem with public sector extension. In the ALCOSA case, two members of the field staff responsible for receiving, weighing and recording produce delivered were skimming off a percentage of cauliflower deliveries. These two men were farmers from the area who had been hired as field assistants. When farmers raised a unified protest the men were dismissed. Other activities contributing to the development of non-traditional exports in Guatemala have been carried out by the Altiplano Development Program (Government of Guatemala and USAID) as well as the export promotions, trade modernization efforts and research supported by Gremial de Exportades No- Tradicionales. The Altiplano program supported the development of small scale diversified farming based on production of high value, non-traditional export crops. These efforts continue to be supported by research and investments, particularly the development of small-scale irrigation schemes. The program manages research activities financed largely by producers (including seven commodities -- as of July 1992). The benefits of the producer- supported research carried out through the Altiplano program, as well as research carried out by other producers' associations, tend to be confined to members of the association. The exception is the research carried out by the coffee growers associations.

Thailand To encourage agricultural growth in the late 1980's the Thai government has pursued a program of crop diversification. The government has instituted the Four-Sector Cooperation Plan which applies to: private agroindustries, farmers, financial institutions (especially agricultural banks), and various ministries. This section will discuss the extension aspects of a number of private initiatives around the country. Broilers The major types of broiler production are price guarantee schemes, wage contract farming, companies own farm, cooperatives of small farmers, and associations of large farmers. Most private poultry operations are run in central Thailand and the farmers are relatively large and well-off compared to the North and Northeast. Some are price guarantee schemes where farmers buy all inputs (chicks, feed, etc) through a vertically organized system including advice on farming techniques and management. After the term of the contract, the firm buys back the birds. Farmers are responsible for all expenses. Both technical and managerial advice on broiler production is given through private extension. The cost of advisory services is attached to the charges for feed, medicines, housing, labour etc. The benefits to the companies from contract arrangements include: * * * Sales of chicks and feed to contract farmers; Sales of grown broilers for export; Relative stability due to minimized risks from price and quality fluctuations; and * Company control of quality without the fixed costs.

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It is noticeable that in the price-guarantee contract farming, the farmers know practically nothing about the markets of both the inputs (feeds, chicks, and medicine) and the output (grown chickens) because the company wants them to concentrate only on their farming. Furthermore, the company does not like to see the farmers grouping themselves in the form of farmers' organizations). Most farmers would not communicate among themselves for information about poultry raising because all aspects of the market are already run by the company (some farmers asserted that chicken diseases could also spread through visiting one another (Manarungsan et al., 1989, p.27). This type of contract farming illustrates that private companies may have an incentive to provide farmers with only enough information to control quality and supply but not enough to make them entrepreneurs. Additionally, the risk is not spread equally between farmer and company. Farmers are responsible for all chicken deaths and bear the costs of losses even though the contracting companies sometimes provide farmers with unhealthy chicks. These are areas where farmers' associations and/or government services may want to provide information goods that will allow for a more equitable relationship between farmers and companies. The Thai government does regulate the poultry industry. However, up to the present time, the government has little or no role in the relationship between farmers and the company or company agents. The Manarungsan study reports that government should require the contract to include a shared risk clause for losses, and government should regulate quality of chicks and feed being supplied to farmers, finally rules and regulations regarding wages should be established. They make no mention of the need for supplementary education for farmers to empower them and make them better chicken farmers. A variation on the "straight" contract farming arrangement, is the wage- contract-farming arrangement. A company supplies chicks and all other inputs including technical assistance and farmers handle only housing, labour and other basics. Farmers are compensated for the time they work on chicken production. Additionally, cooperatives of small farmers have been tried but been unsuccessful. The major companies favoured their own contract farmers and did not supply either advice on husbandry or veterinary services to the cooperative members and applied extra strict grading criteria to cooperative chickens. Finally, MNCs are not directly involved in broiler raising but they sell their expertise and improved stock to various companies in Thailand. Associations of large-scale farmers provide some competition to the large chicken producing companies. There are 20 independent farmers who have grouped themselves into the "Eastern Poultry Raisers Group". They meet every month to exchange information and solve poultry problems (both technical and price related). In addition, there are a few large independent farmers producing through a network of smaller farmers working under a wage scheme. However, the industry is becoming increasingly dominated by large-scale integrated firms.

Pineapple Pineapple is another crop for which there is significant involvement of private extension. Most pineapple production is for supplying canneries (80%). There are both large plantations and small-scale growers producing pineapples. Canneries provide information on cultivation and try to encourage double-row planting because the fruit produced is smaller and less sugary. Small farmers prefer single-row planting because the investment is lower, labour is less, and risk is lower. Most pineapple is rainfed and if rains fail, double row planting results in fruit too small to sell to the canneries. If fruit is too large it can be sold on the fresh market at higher prices (20 - 30% higher than the canneries). However, due to decreasing land availability the double-row

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method is gaining popularity. This illustrates the importance of other factors in technology adoption aside from access to information. A key information need of small pineapple farmers is farm management. Because they lack transport and produce relatively small volume they are forced to deal with middle-men who give them low prices. Additionally, they must diversify their crops to spread risk (and produce food) which exacerbates the low volume problem. At good times the smaller farmers get better prices and, if they have transport, sell to the factories. Their main need for information is in the area of farm finance and farm management to allow help them to invest wisely and build up to medium-scale size operations with their own trucks. There are also cooperatives which collect produce from members and market it in relatively distant areas. Dole has a processing plant in Thailand but they use complex, expensive technology which Thai farmers cannot afford to adopt. Dole also views its technology as proprietary and does not allow visitors to its plantation. No other canneries besides Dole have plantations because the high production cost. Other producers have an incentive to provide extension to farmers to ensure quality and quantity. Supply has become more steady as farmers have learned to use chemicals and canneries have begun to assign buying quotas to the most reliable farmers. * One cannery in the South, Thailand Pineapple Company Ltd. (TIPCO), uses a contract market method where 300 member farmers produce fruit for the factory with guarantees on price, quantity, and priority over other farmers at delivery time. TIPCO sends field officers (ratio of 1:60) to visit members and check output, discourage sales to other buyers, and gather information for price setting -- they do not generally provide information on production. This is also the case with another processor Siam Agro Industry Co. Ltd. (SAICO) that has 10 extension agents for 3,500 farmers and uses them to inspect supply, estimate prices, and recruit more farmers. Siam Food Products Company (SIFCO) is another cannery that has extension staff. It has five extension staff who visit contract farmers every one to two months (the number of small farmers is 300 - 400). The company has ceased holding meetings to discuss new production techniques as farmers know how to produce quality pineapples. The extension staff focus on gathering data for use in setting prices.

* TIPCO had a problem during the 1988 season of not being able to uphold the promised producer price nor was it able to absorb the total output of its members and lost about 100 members. TIPCO did not provide any credit or technical assistance to farmers, therefore "they did not play a significant role in improving the farmers' production techniques. Pineapple farmers in general do not receive technical assistance from either canneries or government agencies" (Manarungsan et al., 1989, p.53). The study reports that farmers complained of problems with a stunting disease. They also said that they "could not rely on any party, even government agencies concerned, such as the Department of Agricultural Extension" (Ibid., p.53). Technical information comes mainly from companies selling agricultural inputs. Input suppliers combine promotion and information supply.

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Other Schemes with Relatively Small Farmers As a result of the government mandate to increase the involvement of the private sector in agriculture, there were many schemes carried out in less developed parts of the country with relatively small farmers. For example, in the land reform areas of the north many contract farming projects were started during the mid-to late 1980's: hybrid watermelon seed multiplication, passion fruit for juice, cucumbers for urban markets and export, mangoes, cashew nuts, and so on. Schemes usually included 20 - 50 farmers and 50 rai (20 acres). The main characteristics of all these efforts was that company representatives would come into the provincial land reform office and present a proposal for a project. The staff were very enthusiastic about these projects as they were trying to comply with Bangkok's Four-Sector Cooperation Plan. Often there was very little time to prepare the projects adequately before the growing season began. The land reform office staff (which has its own extension officers) would go to the villages with company representatives and describe the project to the farmers. The staff from the Land Reform office organized meetings with farmers and helped company representatives go out and promote the project. In the opening presentation to villagers, the company representatives would typically compare the proposed crop for contract to rice production. A whole package was presented: the production process, prices, and grading standards. The production process was made to sound very easy and yield and profits quoted were based on an optimal production scenario. In many cases these schemes required relatively labour intensive production compared to the traditional agriculture of the area. The companies provided extension agents but generally they only visited farms when the inputs came and during harvest to supervise grade and weight, and make sure company products were not sold to middlemen. Several basic problems were common to these types of schemes: (1) the schemes were implemented very quickly (often after only one to two weeks notice to farmers); (2) farmers were often docked (given lower prices) for failing to meet grade requirements; (3) grading requirements were often changed half way through the season -- adding to price docking; (4) contracts were not carefully explained to farmers and often not enforced; (5) when farmers came to the Land Reform office with complaints and/or questions, the officers did not have adequate information to answer and the business representatives were not available; (6) in the early stages of projects, everything was new to farmers and project implementers and thus fairly disorganized; and (7) farmers weren't accustomed to following specific guidelines. Although the schemes ran into many problems early on, they have much potential for success. There are a wide variety of farming activities being contracted. There are shrimp farms in the South, for exporting giant prawns. Most of the farmers contracted were already involved in aquaculture in some way but the schemes were totally new. One Taiwanese company decided to try to produce hybrid watermelon seeds. The production process was very complicated. The farmers had to hand pollinate the watermelon to get seed. They had to wear special gloves and avoid touching the anthers. Then they took the seed back to the processing plant and check the seeds. If they were not bred correctly they did not get paid. Several entrepreneurs contracted with farmers to grow passion fruit for juice. The fruit had a to be a certain size. If it wasn't they would get docked. Or the truck wouldn't show up on time and things would spoil (this happened a couple times) and the farmers would absorb the loss. Throughout the examples in the case it is clear that there is a need for complementary training for farmers in farm finance and management skills as well as facilitation of farmers' organizations. This is an area where creative public sector extension could complement the extension activities of the private sector. !Taiwan

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Farmers' Associations (FAs) in Taiwan originated in the Japanese colonial period, with the primary purpose of implementing new policies and practices with the intent of increasing agricultural production to feed Japan's industrial growth. Later, the Chinese-American Joint Commission for Rural Reconstruction (JCRR), using the US cooperative Extension Service as a model, developed a system of FAs under government supervision. These new methods led to the organization of 4H clubs, vocational agriculture schools and home economics channels. FAs, operated by farmers, are sponsored by and linked to the government. FAs provide both extension education and support services (credit, inputs, marketing, and insurance). Though FAs provide no dividends to members, "at least 60 percent of the FA's net profits must be devoted to extension-related activities to benefit farmers and their families." (Johnson, et al., 1987) More than 50 percent of direct-to-farmer level extension services are financed by township FAs. FAs are organized at three levels. At the national government level, the Council of agriculture (COA) provides funding and technical support. At the provincial level, the Provincial Department of Agriculture and Forestry (PDAF) provides supervision and funding, and at the county, city, and township levels, county and city agriculture bureaus coordinate supervision. Township agriculture sectors provide technical assistance and monitor performance of township FAs. Provincial FAs are umbrella organizations for county, city and township FAs, providing feed and farm chemicals. County/city FAs provide linkages with government and technical support to township FAs. Township FAs have farmer- elected boards of directors and general managers, and provide agricultural extension in addition to other services. Extension services include Agricultural education, home economics, and rural youth programs. District Agricultural Improvement Stations are organized at the provincial level and serve several functions. These functions include: basic research, adaptive research, linkages between researchers and extension services, and training centres for FA personnel and farmers. The FAs are in legal theory, controlled by their members. Regular membership consists of farmers and non-farmers can join as associate (non-voting) members. Members purchase shares and pay dues. The regular members have stronger legal roles in that they can be elected representatives or board of directors members, while associate members can only serve on the board of supervisors. FAs undertake several activities for the farmers/members. These include: distribution of fertilizer (based on how much land farmers have and what crops they grow); distribution of credit; agricultural extension and education; home economics education; 4H activities; setting up and supporting nursery schools; sponsoring scholarships for post-primary education; and livestock insurance and protection. In addition, some FAs also provide special services such as: interest free loans for farm and home development, low income farmers' approach program, and specialized district cooperative programs. In extension, more specifically, the township FA plays a key role. These departments arrange discussion groups with farmers in their villages. The department extension agents (EAs) provide a link between farmers and the Provincial Department of Agriculture and Forestry (PDAF), who operate experimental crop improvement farms. In addition to face-to-face contact with farmers, and discussion groups, several modes of mass media communication are also used. A variety of media types are used including newspapers, magazines and television shows arranged by the Provincial Farmers' Association in cooperation with various government bodies. The extension departments provide technical advice for farmers, distribute seed, and regularly set up demonstration plots. The extension departments also are responsible for home economics education and 4H activities. The local FA extension departments also administer a national

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program called the Low Income Farmers' Approach Program, where successful farmers in the community work with low income farmers to help them increase their income. (Stavis, 1974). At the township level, all FA activities are supported by funds the FA earns. The FA generates income in several ways, including: fees from the government for collecting taxes (in rice), processing the rice collected, purchasing certain grains from the government, and storing the grain; fertilizer sales; feed and grain sales; packaging and shipping fees for collective marketing; credit activities; equipment rental; demonstration farms; fees for special services (e.g., veterinary services); members' dues; government funds and subsidies for special experimental programs. The proportion of the extension budget funded by the township level FAs has (with some fluctuation) generally increased according to figures available from 1974 to 1985. The staffing and personnel system is regulated by the Provincial FA. These regulations apply to staff size, qualifications (age, education,...) and salary scale, and are fairly strict. Pay in FAs is lower than private sector, where agriculture professionals earn about 84% of private sector pay, and non- agriculture professionals earn about 77% as much as they could in the private sector. The board of directors of the FA has the discretion to award the general manager a bonus based on performance, and also has the option to hire less than the maximum number of staff and distribute the money saved to the staff as fringe benefits. In a survey done by Lionberger (1970), results indicate that EAs sense that farmers had more power in terms of reporting them for poor performance than for rewarding them for good performance. Though Taiwan has access to external sources of support for agricultural development, there is little reliance on outside development and inputs. One example of farmer support for extension in Taiwan is providing for extension workers to go to the Asian Vegetable Research and Development Centre (AVRDC). Up to 800 extension workers at one time and 8,000 a year have been sponsored. The PFA also provides in-service training for FA personnel, including two weeks a year for EAs. Despite regulation at the provincial level, the township FAs do have some degree of discretion. The township FA's board of directors selects the FA general manager, who then appoints staff with the approval of the board. The FA has the discretion to select which farmers can enter highly profitable markets such as mushrooms and asparagus. The FA is fairly free to form marketing groups to get the farmers higher prices for their produce, and to make investments (in equipment, processing factories,...) to help lower the cost of inputs for members. The FA has complete discretion over how to spend its profits. Common FA expenditures go to public works programs such as road and school construction. An important incentive is provided to university professors to contribute to extension. The Ministry of Education provides the funds for professors to cut their teaching loads by up to 50 percent in order to provide specialist services to extension programs. In addition, COA provides funds for travel and support services. FAs also provide "incentives" in terms of their role in politics. The FAs can lend support to political candidates or specific programs. The political base of the FAs is large, extending to every village, and can be useful in mobilizing support or opposition to political decisions. Though the impact of FAs is strongest in local politics, they serve to relay farmers views and

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feelings on important issues all the way to high government councils in Taipei. Few other organizations have such widespread grassroots contacts. Questions of sustainability of the Taiwan Farmers' Associations and the services they provide are perhaps best answered by their longevity, from their inception in 1900 (Stavis), to the present. An important reason for this longevity, as well as a factor to be considered in attempting to replicate this experience elsewhere, is the political support for FAs. At the national level this support began with the reorganization of the FA system in 1953, which explicitly sought to organize farmers to prevent the concentration of agricultural services to wealthy farmers. This organization, down to the village level, has successfully organized the farmers to be more aware of their choices and effectively communicate their demands.

Kenya Private sector involvement in technology transfer in Kenya takes place mainly in the marketing, processing and export sector. In the horticulture sector there are numerous private firms involved in technology transfer. Small-scale horticultural production through contract growers for export is widespread in Kenya. In the flower sector, there are three tiers of production all with different information sources. In the traditional plantation crops (coffee, tea, pyrethrum, and tobacco) technology transfer is provided to small and large scale growers through either vertically integrated parastatals (such as the Pyrethrum Board, or Kenya Tea Development Authority) or private firms (such as the British American Tobacco company [BAT]). There are some input supply firms are involved in extension in Kenya but on a very small scale relative to Zimbabwe. Finally, as of the early 1990's, there are no major research and technology transfer programs being run by farmers' associations. The Kenya National Farmers Union (KNFU) is more of a lobbying body and does not provide technical services to its members. There are some cases of private advisors working for a group of farmers such as those hired by coffee societies. Private processors and marketers/exporters of commodities are the most involved in extension type activities. They range from the firms exporting fresh or canned fruits and vegetables to the large vertically integrated operations like BAT and KTDA. Marketers and processors of horticultural products have an incentive to provide farmers with extension type-services usually combined with input supply, due to the strict quality, quantity and timeliness requirements of their business. However, the provision of such services is expensive and the likelihood of capturing the returns are uncertain. Of the 199 firms licensed to export fresh fruits and vegetables from Kenya in 1991 only a few can afford to provide what could be considered extension services to growers. This in part relates to how firms acquire the produce they sell. Some fresh produce exporters have their own farms and also buy through contract farmers, others only buy on contract, and some buy with cash and do not use contracts. All of the top companies in Kenya (Indufarm, Sunripe, KHE, and Homegrown) have their own farms, buy from farmers, or through middlemen, on contract. They provide some extension services and inputs to contract farmers. Most technology transfer activities are closely related to the appropriate types of inputs required, how to use them, preventing disease and pest damage, harvesting and post-harvest handling. There are only about 20 of the 199 firms licensed to export that actively seek, develop, adapt and/or transfer technology related to these issues. The key technological issues are quality of seed, pest and disease control, harvest and post-harvest handling. In the case of vegetables that discolor or

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bruise easily, the limitation of physical damage is key; from protection in the field, to picking, to transport, storage and shipping. The Sunripe case provides an example of a fresh vegetable export marketer. As technology transfer and input supply are necessary to a certain extent but too expensive to invest in heavily, the firm has evolved a system of buying from middlemen. These agents who are responsible for providing a certain level of quality. They have the incentive to ensure that the farmers are producing the required grade. The company does carry out adaptive research on its own farm using new varieties, which it then distributes to its more reliable and loyal growers. They also have some technical people on their staff -- based on their farm -- who also do some outreach work with growers who regularly supply the firm. As they expand into new areas outside of Kenya, they design systems for working with small farmers based on the prevailing condition in the individual country. If there are relatively few competitors in an area, it is worthwhile to develop a system of small-farmer extension and input supply as the risks of poaching are fairly low. In addition, the benefits of building up farmer quality, and consistency as well as good relations with farmers are in the firm's best interest. A key problems for exporters of fresh produce (and processors) is recovering the value of inputs provided on credit. Investments in extension and input supply are risky as the end product may be "poached" by competitors who offer farmers a slightly higher price. Sunripe estimates that they lose 20 - 25% of the value of inputs distributed due to "briefcase" cash buyers who "poach" vegetables from their growers. Another issue is ensuring the quality of the product delivered (e.g. poor quality hidden at the bottom of the box). Finally, devising an efficient and safe method of frequently paying for small amounts of product. Three possible options for overcoming these problems are: (a) providing farmers with inputs for cash at no mark up. This is not a money- making enterprise but may help in terms of getting farmers to use good quality inputs. Of course, it is impossible to know what farmers do with the inputs once purchased. An alternative is carrying out relatively intensive monitoring at the field level (policing) near harvest time. This is very expensive for crops like green beans and okra which are continuously harvested -- especially since experienced farmers require little technical assistance. A third option for overcoming all three problems is to work through middlemen. A firm can establish relationships with middlemen who act as collecting centres, purchase the produce from the farmers and then sell it to the exporter. The middleman takes responsibility for distributing inputs, ensuring quality and paying the farmers. In terms of technology transfer, this limits the firms direct involvement -- except in the case of introducing new inputs, or providing a technical man to work with the farmers contracted to an intermediary. In the area of processed fruits and vegetables, there is a range of involvement in private extension. The two major canneries in Kenya are: Kabazi (in Subukia in the Highlands near Nakuru) which has almost no extension program and Njoro canners whose sister supplier company (Hortequip) has perhaps the most intensive purely private extension program in Kenya. Kabazi is supplied with a wide variety of vegetables (including French beans) by approximately 3,000 farmers in the Subukia area of Nakuru. The company employs only 1 extension agent for the whole area which is adequate. The farmers in the area know how to produce the quality desired, due to long experience both growing for the European population before independence and for the cannery. The cannery has been processing vegetables in the area since shortly after independence. In the opposite extreme there is Njoro Canners which is supplied by its own company Hortequip. These two firms are owned by a Kenyan businessman and they supply the French buyer Bonduelle. In late 1991, Hortequip was managing 30,000 growers in Vihiga area (10 x 17 meter

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plots). There are 250 field staff including field agents (directly visiting farmers) and area supervisors. Field staff are responsible for the recruitment and registration of farmers, the allocation of seed and fertilizer, the supervision of chemical spraying, and the supervision of crop production and collection. The ratio of field agents to farmers is aproximately 150:1. Field agents have no major educational qualifications, they are local people (often primary or secondary school leavers) who are trained by the company. In 1989, Bonduelle sent out a French consultant team to improve efficiency of the entire operation from production to shipping to processing. The original Hortequip extension system -- set up in the early 1980's Hortequip had not changed much but was functioning poorly due to inadequate management at the top in Hortequip HQ in Vihiga. Hortequip was losing 40% of the value of their inputs (due to inability to collect beans) before the French team was sent out. The new manager at Vihiga, has brought the leakage down to 17%. They have introduced a number of new training techniques, and started organizing Vihiga bean farmers clubs. The company is also running competitions for the best bean farmers and give prizes etc. They are convinced that this approach helps the farmers to be better at growing beans an more dedicated to the company. Farmers receive inputs on credit and then over the season (two plantings per year) they record their production. Farmers receive a voucher for every amount of beans they bring to the collection centre. At the end they are paid and the value of the inputs is subtracted. In terms of extension, the farmers are visited almost every day during the high points of the season. Additional staff are added at these times. The company has a team of four people whose only job is to monitor quality. They are separate from the staff instructing and monitoring farmers activities. The training for field staff now includes more work on educating field staff as to why they are instructing farmers in a certain way (in terms of agricultural practices) versus just training the field staff what to do with no explanation. The management is also much more severe in their policy of firing staff who do not keep up good work. An important technology transfer point related to the Hortequip case is the limited amount of spillover of the new techniques used on beans to other crops. The farmers did mention that they have increased their use of fertilizers and planting in rows, but they did not overall seem to be applying many techniques to other crops to starting to grow other vegetables. This may be because they are not really educated in the technology they are using but rather instructed in terms of how to grow beans. It is reasonable that the company behave in this manner but this may be an area for contracting by the government to the firm to do more comprehensive training. Another possibility is that after the farmers clubs get organized, the company may sponsor certain farmers to attend FTC courses in general horticulture. Another option is that MOA extension staff coordinate with the bean extension people to do general horticultural seminars or field days. An additional lesson from the Hortequip story is that their extension system has undergone some of the same motivation and control problems over time as public sector extension systems do. They had initial success in organizing field activities, they expanded beyond a reasonable size at the same time as management quality slipped, and corruption grew in the ranks. They got the system back under control with a strong infusion of new and intensive management, improved training and supervision of field staff, and increased interaction with farmers. The Hortequip french bean case in Kenya also illustrates the problem of finding the appropriate technical package. Public sector extension services often take research results and disseminate them to a wide range of farm types without adjustment. Private firms have an incentive to avoid

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using such rigid formulae. They must have the correct technology in order to generate benefits to their extension investments. The Hortequip french bean case is an example. In the technology transfer efforts made by the French processor the recommendations were taken straight from Morocco and promptly failed to generate the desired results. Adaptive research was undertaken by the company to correct the growing strategy until the right package of recommendations was devised for the area. In the case of a large scale processor/marketer, The British American Tobacco Company (BAT) has run its own private extension service since the 1970s. In 1985 the agent to farmer ratio was 1:50. Agents visit farms every fortnight and record observations in a notebook. They provide continuous production estimates for each contract farm. They try to discourage sales to local merchants and try to enforce delivery of output to BAT. (Watts et al, 1988, p.186) The British American Tobacco (BAT) extension system advises farmers on tobacco production and the initial stages of curing. They also support the establishment of fuelwood lots, provide seedlings from their own nurseries and also have undertaken substantial research in barn design to decrease the amount of fuelwood required in curing operations. BAT has 215 people on their extension staff (1991) and they maintain an agent to farmers ratio of 1:50. The BAT model is well known and clearly effective in terms of technology transfer. It is effective due to its narrow focus, the limited number of growers, and the high quality requirements for tobacco in the export markets. An interesting aspect of the BAT story currently is the entrance of a new tobacco company (Mastermind) which is "poaching" tobacco from the BAT growers. The company was established by an ex-BAT employee and is now trying to take advantage of BATs long-term investment in technology development and transfer. The response of BAT has been to try to get legal zones established which would make it illegal for anyone else to buy tobacco in that area. This illustrates the point that there is risk involved in trying to capture the benefits of investments in technology transfer. Input supply activities involve a larger government presence in Kenya than in Zimbabwe. The largest government bodies involved are two parastatals: the Kenya Seed Company (and its SimLaw subsidiary) which is the primary producer and supplier of hybrid and non-hybrid seeds for all crops and the Kenya Grain Growers Cooperative Union (KGGCU) which is the largest distributor of agrochemicals and fertilizers. KGGCU's extension type activities involve some field days, a radio program, written material and posters all of which they coordinate with MOA extension activities. Expenditures on extension activities are less than 1% of the overall budget. KGGCU has a very large network of distributors but is suffering typical parastatal management problems. They are having trouble remaining competitive in a newly liberalized market with increasing numbers of suppliers moving in where they previously held a monopoly. The deregulation of agro-chemical and fertilizer markets (including the removal of subsidies) combined with the weak Kenyan shilling has led to prices for agrochemicals and fertilizers beyond the reach of most farmers. This has resulted in lower yields and quality -- especially noticeable in horticultural crops for export. At the present time there is little actual technology transfer work being done in the field by private sales representatives. However, there are plans for dissolving many of the parastatals in Kenya, and as this occurs it is likely that competition between supply firms will increase and they will take a more active role in technology transfer as a part of the process of product stewardship. There are numerous private commercial firms involved in distribution of agrochemicals and fertilizers in Kenya. Most of them have headquarters in Nairobi or Nakuru. These include

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Twiga (company director Jackson Mbatha is also the head of the Agro Chemical Industry Association), Chemagro (the company director Henry Ogala is also head of the Fertilizer Distributors Association), Mea Ltd. (HQ in Nakuru, second largest fertilizer dealer and the only firm that does its own blends), Agrico, Farmers Partner, F.A.G.S. stores, (all with stores around the country and headquarters in Nakuru), Alka, Safina (both in Kisumu), Vershi Devshi (Thika), and others. These firms distribute their products through a network of small stockists who sell a wide range of consumer goods in rural areas. The multi-national agrochemical imports such as Hoecsht, Shell, Ciba-Giegy and so on work through the local distributors who are the link with the stockists. There is very little on the ground commercial firm technology transfer activity as is going on in Zimbabwe. This is likely to change as the input supply sector becomes more competitive with a reduced role for KGGCU. As competition between supply firms increases, prices may fall, leading firms to be willing to take a more active role in technology transfer as a part of the process of product stewardship. Currently, most of the major commercial distributors only use sales representatives to carry out demonstrations or other technology transfer activities in the field when there is a new product to introduce. In this case there is usually a collaborative effort with MOA extension staff who help to organize meetings. Some of the small companies, such as Farmers Partner, are interested in carrying out field activities but lack the resources to expand their network of sales representatives. They are generally working through stockists, but do participate in local fairs. Mr. Isaac Njogu, director of Farmers Partner Ltd. is an example of a business person with government experience (he worked in extension and at KGGCU) who decided move to the private sector and is now pursuing public service activities through business. He works on organizing local fairs and would like to see more cooperation between the private and public sector in technology transfer for example by sponsoring field days, or producing radio programs. Agricultural shows are very important in Kenya and they are held at several levels with involvement of government, the private sector and the local community. There is a regular schedule of provincial level farm shows organized by the Agricultural Society of Kenya. There are also District level shows organized by the District Development Officer, and the District Livestock and Agricultural Officers, as well as the District Commissioner. Companies are invited to come and show their products, and they bring with them materials promoting their products and describing their use. In general, orders are not taken at shows but there is a strong incentive for distributors to participate to get exposure to potential customers. Kenyan agrochemical companies are currently involved in the Africa Working Group of a GIFAP organized project to improve safe use of chemicals. The project will involve establishment of uniform guidelines on safety and also include a training program for the technical personnel of Kenyan agricultural chemical companies. The technical personnel will in turn work on transferring the information to farmers through the network of stockists and through other means, such as field days and radio. The specific details of implementation of the program are currently being worked out through initial meetings of the companies, and distributors involved. The Kenya Seed Company, started by a group of farmers in 1955, dominates the seed market (along with its horticultural seed marketing subsidiary Simlaw). They do have some sales representatives who deal mainly with KGGCU and other farm stores as well as smaller stockists. The director of Simlaw noted that some innovative farmers test new varieties by running their own trials - especially in horticulture. Simlaw does prepare educational materials indicating the production practices for all the varieties they sell. Kenya Seed Co. and Simlaw distribute through a large network of stockists as the chemical and fertilizer distributors do. There are also some private producers of horticultural seed. Most notable is Mr. Schubach of Hortitech near Naivasha who produces a number of different

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horticultural seeds under different arrangements. Starting in the early 1980's Schubach introduced the techniques of seed production to a few farmers and worked with the best ones to make them his contract farmers and to also carry out extension with other farmers growing seed for him. Advice is given on techniques of seed harvesting, seed drying, and the use of the deseeded vegetables. The company does its own cleaning, germination testing and packaging. There is very little in the way of technology transfer being carried out by autonomous farmers' organizations as discussed in regard to Zimbabwe. The Kenya National Farmers Union (KNFU) is primarily a lobbying organization and does not really provide much in the way of technology transfer type services. KGGCU was originally the Kenya Farmers' association (KFA) until it was taken over by the government and made into KGGCU. Democracy has just been reintroduced into the KGGCU organization and it may return to being more representative of farmers and increase its involvement in provision of many services - including technology transfer. In Kenya there are numerous organizations that are largely controlled by government but structured as autonomous companies (paratatals) which are involved in technology transfer activities. The most well-known among these is the Kenya Tea Development Authority which has been providing extension on tea for over 20 years. Among the partially government controlled organizations which provide extension are the Horticultural Crop Development Authority (HCDA), Kenya Breweries Limited (KBL), the Pyrethrum Board, KTDA, the Kenya Planters Cooperative Union (KPCU). There are also large scale sugar plantations at Mumias and Nzoia that have some technology transfer activities under a plantation style system. KBL and the Pyrethrum Board are two examples of efficient parastatal commodity- focused technology transfer. KBL has done such a good job in technology development and transfer for malting barley that this year, they produced almost twice as much barley as required for the breweries. In response they want to limit the number of barley growers to those with 30 hectares or more planted to barley. The current minimum is ten. They have a very intensive technology transfer system with the extension staff covering only barley. The staff are out in the field 4 days a week and three nights and spend only one day in the office. In both cases the field staff are well trained and well paid. Field staff are often recruited from the best of the regular MOA extension service. The activities of both organizations are paid for through the revenues generated by the companies. Both KBL and Pyrethrum Board, have a very specific task and limit their activities to one crop. Their staff are better paid than MOA extension staff, they have better transport, training and a very focused work agenda with consistent management. Both managers interviewed indicated that their staff would be willing to work in closer coordination with government staff but that there is resistance on the part of the MOA extension staff due to a feeling of inadequacy in terms of their relative ability to move around the country, the extent of their technical knowledge in certain areas, their status due to salary and so on. KPCU is essentially an autonomous organization with little government intervention. It has a system for technology transfer for both estates and small- scale growers. Overall there are some 650,000 coffee growers in Kenya and 1,000 estates from 5 hectares and up. KPCU has a team of 7 coffee experts that advise the estate farmers. The small-scale coffee growers are organized into primary societies under the umbrella of the Cooperative Union. The societies are then organized around the factories, each of which serves about 30 grower families. In general, the societies rely on the MOA coffee officers for technological advise. However, and the stronger societies have been hiring private technical advisers to work specifically for them. Estate farmers and coffee societies can also seek assistance from the Coffee Research Board, or the

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KPCU team. KPCU also cooperates with MOA in the training of coffee officers. The cost of the technology transfer service is paid out of the coffee levy. Another example of a commodity-focused extension service is the East Africa Industries oil crop development scheme (OCS). The project was co-financed by East Africa Industries (45%), Commonwealth Development Corporation (35%) and the International Finance Corporation (20%). The project started in 1982, includes contract farming with smallholders for the production of sunflower. The scheme does involve provision of extension services to contract growers focused on oilseeds following the typical commodity-specific model. However, the key problem of the scheme has not been technology transfer but an inability to appropriate the benefits. It has been relatively easy for "poachers" to come in and buy the sunflower seed produced under the scheme. This illustrates the importance of the characteristics of the commodity in terms of the riskiness of providing technology transfer services through a contract farming arrangement. In this case, the commodity, sunflower seeds, is easy to collect, transport and store. Therefore, it has been very difficult for East Africa Industries to recover the large investments in input distribution and technology transfer made under the OCS which has limited the viability of the scheme.

Jamaica Jamaica has had success transferring tobacco growing technology and rapidly increasing production of that crop while the rest of the agricultural sector stagnated. This is a clear example of contract farming working due to a combination of government commitment and the availability of appropriate technology which if adopted could make a huge difference in production levels. After government made the decision to try to increase tobacco production to reduce foreign exchange burden for tobacco imports and to increase exports of both manufactured cigars and bulk tobacco. Prior to the start of the tobacco initiative, few Jamaican farmers had any experience growing tobacco, those who did had not been exposed to modern methods. In Jamaica contract farming for tobacco was started by both private companies and parastatals. The Cigarette Company of Jamaica is an affiliate of Carreras Rothman Limited. The company trains all contract farmers beginning with the fundamentals of tobacco production. Growers are selected from local farming and working communities. Incentives are good for farmers. For a 17 week crop farmers earn about $US1,410 per hectare and most farmers have about 8/10 of a hectare. All facilities required for growing, curing etc, are provided by the company. Growers may use their own land or lease some from the company. Technicians and supervisors from the Cigarette Company make frequent farm visits. Farmer group formation is encouraged by the company and group methods are used for training, consultations on technical and operating problems and so on. Growers groups also participate in decisions affecting management, training, operations, and pricing of products. During the off-season growers are restricted from planting specific crops which might transmit or incubate insect or disease infestations to which tobacco is vulnerable. On leased land other off-season crops can be grown for market or home consumption for a small fee for use of leased land. Cigar tobaccos are also grown under a contract system. The conditions which made the success of tobacco contract farming in Jamaica were a contractor with "ample financial and organizational resources, highly trained technical personnel, and support from the government in permitting foreign exchange to be used to import essential materials, equipment, and consulting services.(Agribusiness Worldwide)" Additionally margins in the domestic market were large. Domestic demand was very strong combined with potential

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for exports. This combination of factors has led to economic benefits: in 1981 imports of U.S tobacco were 373,000 kilos down from 720,000 (1974 -78 annual avg); US made cigarette imports also fell drastically the result was foreign exchange savings of US$ 5 million in 1981; cigar exports in 1982 were up 89% from 1977. However, the number of Jamaican farmers affected are very few. In 1982 the contract system involved approximately 1,000 growers and land area under tobacco is less than 1% of the countries good cropland. These effects should be kept in perspective in terms of farmers benefits, and the scale of extension activities undertaken. The contract system involved few farmers and small land area -- approximately 1,000 growers and land area under tobacco less than 1% of the countries good cropland. The success of the extension effort was due to several factors. First, the government had strong incentives to get this type of contract operation going. Therefore they allocated resources to the effort and maintained a positive business relationship with Carreras Rothman Limited. Second, farmers quickly adopted a new complex technology because the economic incentives were right and the supports behind the technical package reduced risks. Even farmers without land took the chance of leasing land to earn the benefits. Third, the number of farmers and area covered was relatively small which made it relatively easy to manage the contract farming system -- including the extension aspect. Finally, forming farmers committees and involving them in decision making led to high morale among farmers and a better understanding of the economics associated with the industry. A problem in Jamaica that illustrates the importance of agricultural policy and the type of technology transferred is that of the banana industry. The modern banana industry has changed rapidly over the past twenty years. "Due to the competition from other areas of the world, huge investments of US$12,000 or more per hectare have to be made in order to produce bananas that are technically superior and can compete with the unblemished bananas that are preferred by consumers. Banana production today is capital intensive rather than labour intensive, and the world's best producers, such as United Brands, grow their bananas under almost hydroponic conditions with all the variables controlled. Modern banana plantations have extensive drainage systems and overhead sprinklers which eliminate any problems with swamp spots, tiny black dots which do not affect quality in any way, but damage cosmetic appearance" (Agribusiness Worldwide, June 1982, p.19 - 26). The Jamaican banana farms have no modern drainage systems, excessive human handling of the fruit leading to bruising, little integration between shipping, handling and growing leading to waits at the docks and decreased quality. The banana story illustrates that information delivery is only part of improving agricultural production. In this case the Jamaican government decided to try to keep the relatively small-scale grower in business and therefore spent US$6 million per year to provide crop spraying for small growers whose bananas were then rejected for export. This led to huge deficits for the Banana Board and eventually the Banana Insurance Fund ran down. Hurricane Allen laid the final blow to the industry (in 1980) with little insurance to cover the growers losses. Due to the disaster and the overall bureaucratic inefficiencies of the Banana Board the government wants to privatize the banana industry. If the industry is privatized most of the growers will be large scale farmers. Alternative roles for Government's might have been: (i) to help farmers make a transition from small- scale banana growers to other commodities or activities; and/or (ii) to invest in joint research with the private sector to produce high quality bananas on a smaller scale.

Turkey

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In 1980 a new stabilization plan was put into place that put special emphasis on the agriculture sector which was opened for the first time to foreign investment. Overall there has been a break from the pre-1980 focus on central control and import substitution. Increased reliance was placed on market forces and the private sector. In particular, the private sector has been encouraged to take a larger role in input distribution and product marketing. The GOT has also sought to strengthen public sector research and extension services, expand the area under irrigation, and encourage the use of improved seeds and agricultural inputs. Turkey's most important cash crops are wheat and barley, other cash crops include tobacco, sugar beets, cotton, fruits, nuts and 31 kinds of vegetables. The livestock sector also plays a big role. Government has targeted four agricultural industries as high priority livestock, poultry, seed, and fruit and vegetables. In terms of extension issues, there are technologies to be extended to these high priority areas. For example, vegetable farmers save their own seed and do not use hybrids although there is a hybrid for every vegetable grown in Turkey. Adoption of new varieties could raise yields of some crops by 25 - 50%. In order for Turkey to take advantage of growing markets in which it has a comparative advantage the necessary support services must be in place (Agribusiness Worldwide, Jan/Feb 1983, p.1 - 2).

Agriculture in Turkey generates 17% of GDP, 20% of export earning, and 50% of civilian employment. The rate of growth of agricultural production is below that of the rest of the economy although it continues to be important "in meeting domestic food and industrial raw materials requirements, and in providing foreign exchange earnings and employment" (SAR, 1990, p. 1). The development objectives of the GOT are to: (1) modernize production techniques to raise productivity, yield and farmer income; (2) maintain food requirements of a growing population; and (3) promote agricultural exports. Private and/or public sector extension will clearly play a role in achieving these goals. The key public sector tasks for extension are: * To ensure that farmers make proper use of new irrigation infrastructure. Turkey has expanded irrigated area by 240,000 hectares over the past five years and is planning to add 675,000 more over the next 5 - 8 years. Preventing further degradation of the natural resource base. Cropping of steep and fragile slopes, excessive grazing of natural pastures, and overcutting of forested areas have greatly damaged soil resources and led to massive erosion. Fertilizers and pesticides have polluted streams, lakes, groundwater and contaminated food production. Extension and research will be very important in terms of formulating and implementing sustainable solutions, particularly in watershed and rangeland rehabilitation, and introducing integrated pest management practices.

Private information services in Turkey serve a relatively narrow, more specialized clientele at a higher level of intensity than public sector services. In theory the public sector serves all potential clientele. However, in practice both the public and private sector do target specific clientele. The public sector chooses contact farmers who are relatively well off in terms of size of farming operation and innovative farm managers. The private sector targets on the basis of commodities. For example, the poultry association provides extension services

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to chicken producers only. The Turkish Development Authority (TKV: an NGO), assisted the Koj Tur (the chicken association) to work with around 3,000 small scale chicken producers. The mode of interaction with farmers between the public and private sector differs. The public sector is using a T&V type system for the management of its field staff. In the private sector the method of extension depends on the particular company. For example, the Monsanto company in Turkey operates outlets (shops) where farmers often get information from salespeople through informal discussions even when they are not buying. The salespeople (typically MSc. and B.Sc. level agronomists) working for companies such as Monsanto are both a source of inputs and information. Private and public sector extension in Turkey basically use the same channels to promote new techniques. Both have access to radio and T.V. but due to different objectives have different focus. Public extension puts out materials (brochures for example) of a general nature. The private sector is focused on sales, ensuring quality and timeliness of supply of raw materials. Key differences between the public and private sectors are access to transport, incentives to do work effectively, and staff level of education. In terms of incentives, for example, extension staff for the feed companies receive some bonus pay for making a certain number of farm visits. Regarding education, the private sector staff are often recruited straight out of college. In fact some companies will not hire people who have worked more than 8 - 10 years for the public sector because they are assumed to be poor quality employees. Turkey's public sector research and extension have problems common to many countries: staff are located far from farmers, they are not mobile, they lack information both on farmers needs and research results that might be appropriate for their clientele, and research results have not been adapted to suit diverse agroclimates. Two World Bank-supported projects aim to make better use of existing resources and to make research and extension more responsive to farmers' needs by: a) getting extension staff closer to the farmers by building houses in the villages and providing staff with transport; and (b) doing joint farmer-research-extension diagnostic surveys to identify farmers problems and opportunities that form the basis for research and extension priorities. However, the private and public sector do work together, for example, sometimes public and private sector extension staff will coordinate to set up demonstrations of different brands of seeds, chemicals, and machinery. In addition to having more formal education, the private sector staff also have better on-the-job training. Input companies have vested interest in keeping their staff up-to-date with the latest and best inputs available. They also want their field staff to impress farmers with their knowledge of on-the-farm problems to ensure their credibility and thus increase sales. For example, a herbicide company wants its sales staff to immediately identify weed problems in farmer/client fields explain it to him/her and prescribe the correct chemical then sell it or convince the farmer to visit a demonstration plot or attempt one on the farm. An additional difference between the two sectors is the level of involvement in research activities. For example, private extension is involved in adaptive research in Turkey but the public sector is not.

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There are three main types of private sector involvement in extension in Turkey: commercial processing companies, commercial input sales, and activities of foundations and farmers' associations. The first is illustrated both by producers of tomato paste and of Tuborg beer. In the case of tomato paste, farmers who produce tomatoes for the factory receive extension advice. Tuborg beer carries out contract farming with a guaranteed price, extension, provision of inputs and so on. Among the private firms that provide information to farmers are the milk cooperatives (which focus on collection of milk, processing and sales), growers' associations for flowers and vegetables, the beer brewery, and sugar refinery. The main objective of providing this information is to ensure that producers maintain quality standards. In the private sector the importance of this information is reinforced by the fact that the producer's output is rejected if sub- standard. For example, if sub-standard products are brought in producers will be instructed as to what the quality requirements are and how they can improve their product. In the case of commercial input suppliers, fertilizer and seeds companies have extension activities which both teach farmers to use their products and promote them at the same time. A private company that sells inputs and also contracts with farmer is !zhen feeds. The company was started in 1988 as a joint venture between the Turkish company Ozkasikci and the Dutch company Hendrix Feed (a subsidiary of BP Nutrition group and a sister company of Purina Mills). The company has two separate profit making activities: animal feed (60,000 tons/year) and broiler production (3 million/year). Information is provided to 100 broiler producers and 350 producers of various animal feeds. The feed operation has 4 extension staff and the meat operation has 2. Both represent 20% of total staff in each operation. All are university trained veterinarians. The activities of sales and extension are strictly separated in both operations. The expenditures per year on extension for feed are 8% of total (400 mil TL) and for broilers 7% (250 mil TL). The methods used by Ozhen are very intensive guidance through personal visits every 2 - 3 weeks of regular staff, and visits from technical specialists from the Dutch partner company. Ozhen customers also visit the Dutch partner in Holland for courses. The key benefits of Ozhen's extension program are: increased profits - 25% more feed sales; improved feed quality; and positive image of the company. Essentially, their extension activities have helped them to establish themselves in the Turkish market where they are relatively new. In Turkey there are numerous forms of farmers or community organizations -- formal and informal. The chicken farmers' association is a private association started by an NGO (The Turkish Development Foundation (TDF)) as a project with an endowment from a Dutch church group. The TDF has invested some of the funds in commercial companies to market the goods produced by farmers in rural development activities. The poultry association is slowly taking over the poultry processing factories from the Foundation by buying up shares. Most farmers' association members do not pay for specific services but either pay lump sum fees or the cost of services is subtracted from the producer price or added to the price of inputs. For example, dairy farmers in Turkey pay a slightly higher price for feed because they also get information services on animal husbandry. On a per service basis farmers do pay for vaccinations and soil testing for both the public and private sectors. Politics can sometimes interfere with the activities of farmers' associations. For example, an attempt to start a sort of Master Farmers Scheme was unsuccessful. The young farmers involved in the scheme tried to unionize and got into trouble with the government. However, prior to its political problems, members of the group did extension work and received on-the-job training through the scheme. In Turkey marketing information systems are quite limited. In part this is due to the limited information needs of traditional farm households which tend to have short planning horizons. They can find out what they need to know without too much effort. However, many public sector extension staff don't know the prices of many commodities. They do not consider

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providing information on prices to be part of their job. The private sector advertises its prices for products very clearly. Additionally, private sector staff help farmers to estimate farm management budgets and thus must know prices of both outputs and inputs well. Some flower growers, associations are getting price/quality information from abroad.

Overall Turkey provides a good example of a country in the intermediate stages of agricultural development. Because of its relatively large number of traditional small-scale farmers existing side-by-side with a growing private sector it offers some useful insights into extension alternatives to countries not yet as far along in their agricultural development.

Netherlands In the Netherlands, Agricultural productivity has increased rapidly over the last 25 years. Fifty six percent of agricultural holdings have disappeared, leading to shifts in employment to other sectors. The extension system has responded to changes in the agricultural sector by becoming increasingly privatized and farmer responsive -- combining public and private services. Agricultural information is supplied by three types of service: the government, the farmers and the commercial sector. "Both the government extension service and the private extension service have their own tasks, priorities and goals, but nevertheless they supplement each other very well" (Netherlands, MOA, 1988, p.27). The government extension services focus on the whole farm whereas private extension emphasizes information that applies only to certain parts of the farm. In addition government services focus on teaching farmers to help themselves. "It is necessary to have excellent cooperation between the extension services of trade and industry and those od the government and agricultural organizations, because the problems of a technical and economic as well as of a social nature are often extensive" (Ibid., p.29). Government extension was fully subsidized until 1990, providing both technical advice and explanation of government policies. Beginning in 1993, the system begins a process whereby farmers will gradually take on a greater proportion of the cost. Initially, the system will be 95% government subsidized but the farmer contribution will grow from 5%, in 1993, by an additional 5% per year until the shares are equalized. The government maintains 11 regional offices (10-12 specialists each) and 160 staff in Information and Knowledge Centres (IKCs). The IKCs are open to all and train privatized extension staff and provide a link between extension and research. Budgetary pressure has led government to reduce administrative responsibilities. Thus, the daily work of public sector extension is no longer controlled by civil servants but by farmers' associations. The government's involvement is through the provision of subsidies. In the late 1980's, 550 government extension officers were incorporated in new regional extension offices controlled at the regional level by farmers' associations and funded jointly by government subsidies and farmers. A sliding scale of payment has been set up which will by the year 2,000 result in farmers paying for 50% of the total cost of extension services. The government has maintained national research extension liaison offices in order to be able to continue providing various extension agencies with new research results (Netherlands Ministry of Agriculture, 1988, p. 13).The farmers through their own organizations, employ about 200 extension staff, whose main task is socio-economic extension. They assist farmers in such tasks as estate planning, alternative employment or legal matters. This service is subsidized 50% by government, while 50% comes from farmers membership fees of their organizations.

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In addition to changes in the organization of government financed extension services there is also a change in the focus of the advice of government extension agents (now working through the farmers' associations). Semi-public extension staff, approximately 800, continue to provide advice to farmers and increasingly help farmers put advice from different commercial operators into perspective. Emphasis is placed on farm management as a whole. For example, the semi-public sector extension agent can provide a dairy farmer with objective information to complement a construction firm's advice on the profitability of a new cow shed. Another key job of semi-public sector agents is to inform farmers about changes in government regulations relating to his/her operations. This has become an increasingly important task after the Agricultural Structure Memorandum was put into place in the 1990s which involves a plethora of new guidelines and regulations on pesticide, fertilizer and herbicide use, soil and water management, sustainable production systems, the role of organic farming, new crop rotation systems, and winding up arable farming operations with poor prospects. The production of some commodities involves very complex technology and continual advances in quality are required to remain competitive. This is for example the case with greenhouse floriculture and vegetable production. "Suppliers from other countries compete for sales on the same market. Operators must increasingly work to improve the quality of products and, in particular, the quality of the production process" (Ag Structure Memo, no date, p.35 - 38). In addition to the pressures of competition there are consumer pressures to limit chemical residue on vegetable products. "The implementation of the above arrangements will depend on technical developments, economic viability, standard of knowledge and an awareness on the part of producers that measures are necessary on environmental grounds, even though they may give rise to initial losses. A clean production process can however give an extra mark of quality to products and can even strengthen the producers competitive position. Research, extension and education will assist the development and introduction of the necessary arrangements" (Ag Structure Memo, no date, p.35 - 38). Private extension is active in work on these issues. There are private consultants working on designing greenhouses and also those who design computer programs for greenhouse climate control, water mixing and so on. The skills and information required in such systems are very specialized and are also an essential part of the production process. Farmers have a strong incentive to pay for the information. The commercial sector employs 2500 extension staff, whose main task is to provide highly specialized, technical advice. "Increasing specialization makes it increasingly difficult for extension officers to keep up with all details, while the demands of farmers are continually increasing. Officers from the commercial sector can visit the farm more often, and farmers are prepared to pay for this kind of highly specialized service" (Netherlands MOA, 1988, p.12). Information is provided by suppliers of seeds, plants, pesticides, herbicides, artificial fertilizers, animal feeds, fuels, machinery, implements, buildings and so on. Half of the Dutch input supply is handled by CEBECO, one of the world largest cooperatives, which provides information to its members. The other half of inputs are provided by private companies which may also provide information. There is also much information disseminated through contracted operations such as pig and calf fattening, production of poultry, grass seed, vegetables etc. There are also extension officers working in the agricultural credit banks, milk production extension officers from the dairy factories, and stable and cattle feed inspectors. Information provided through private extension may consist of advice on a single product or total farm management. Private extension staff provide information on: the use of equipment and inputs and their adaptation to specific farm operations; on the production-process itself; and on marketing. Farmers pay for advice from commercial extension staff, either directly (for veterinary or accounting services for example)

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or in the price of the product (feedstuffs, chemical etc.).Farmers are willing to pay a relatively higher prices for a product, for example livestock feed, that comes with technical advice. As the roles of the public and private sector evolve and the public sector takes less and less responsibility for delivering technical information and more for explaining policy, Explaining policy is not a popular task for extension agents. As surpluses and environmental problems have increased, government is forced to take measures which are unpopular with farmers. It remains to be seen how this issue will be resolved under the new system where farmers' associations manage the subsidized extension staff. A clear lesson from the Netherlands for developing countries is the degree of government intervention. "The government stimulates the role of farmers' organizations in extension, and where trade and industry take [over] tasks, the government withdraws" (Netherlands Ministry of Agriculture, 1988, p.14). In some cases, the government intervenes strongly. For example, the difficult government decision has been made to accelerate the reduction in the active farming population, while simultaneously working to reorient rural people toward different activities in rural areas (OECD, 1989). "The Netherlands example has shown how useful it can be when government and farmers' organizations allow each other room to play their particular roles, and agree on the rules of the game according to which commercial companies can [carry out] their activities." !

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