Nine steps for income earning enterprises and groups, with case studies
1. Locate success cases
2. Assess success replicability (Profit and marketability)
3. Assess farmer willingness to become a trainer
4. Establish practical training programme
5. Carefully select trainees
6. Supervise training
7. Arrange follow-up support services for trainees
8. Achieve secondary multiplications after first level successes
9. Monitoring cost effectiveness of the methodology
THIS section elaborates in detail the nine steps given in Section One. It gives guidance on how to approach each step and contains case studies taken from actual experience. This section must be read carefully by all field workers before beginning SCR field trials. The case studies used in this section will enable field workers to visualize what is being explained so that they will be prepared to deal with the more common problems likely to be encountered while employing SCR methodology. Finally, this section can be used as a reference when problems arise.
1.1 Consult those who should know
1.2 Socially acceptable models
Case No. 2. Kerosene reading lamps
1.3 Extension worker age and status
Case No. 3. Farmer housewives organizations
1.4 Successful organizations
Case No. 4. Philippine member savings organizations
1.5 Duration of success cases
1.6 Variety of success cases
SUCCESS cases are relatively easy to locate in rural areas, as most people are keenly aware of how their neighbours are performing - especially if the neighbours are more successful than the average person in the community. Start by inquiring with the village head, but be sure to ask others - such as school teachers, village police officers and women’s leaders. Information may be had from roadside businesses, such as coffee shop owners and vegetable vendors who hear gossip as well as traders and commodity buyers. If such sources single out the same person as a success case, then you can be sure you are on the right track. Even if there are a number of successful persons identified by your sources, once the same name begins to be repeated over and over again, their consensus is usually reliable.
THOSE chosen as sources should be in an occupation or age group to enable familiarity with the targeted activity. When seeking success cases in rural Thailand, for example, older farmers all identified a group of older men who earned high returns from raising native chickens for sale to wild animal speciality restaurants. But young men and women in the same village were keenly aware of a new occupation which many of their peers were successfully taking up in neighbouring villages: imitation diamond cutting and polishing. Cash returns were quick and reliable, and the technology easy to learn. What interests one population may not interest another.
SUCCESS case trainers should be from the same social, religious or ethnic group as the target trainees. For example, attempts in one country to have a successful ethnic minority farmer train farmers from the lowland majority failed because the ethnic majority farmers were unwilling to receive training from an ethnic minority person. It is prudent to assure that such differences do not undermine what might otherwise be a potentially successful programme. A case study follows:
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An industrious village woman in Nepal was found to have a thriving and profitable business producing small kerosene reading lamps. The lamps were made in the form of a small round tin can with a cap on top. The cap held a wick, which soaked up the kerosene and when lit, gave a modest, smoky light. The entire family was engaged in making the lamps from morning to dusk each day. The women had established a reliable market for the product, which was sold directly by her, within her village, but also through wholesale buyers from nearby market towns. SCR training in kerosene lamp-making progressed well. Trainee families mastered the techniques of fabricating the lamps to a marketable standard. However, it was later reported that most trainees abandoned the enterprise soon after they began selling their product. Inquiries revealed that the enterprise was associated with a low caste in Nepal’s rural society. The caste distinction became apparent when the newly trained families began to sell their lamps and they abandoned the enterprise rather than be identified as belonging to a lower cast. |
SOMETIMES age, or youth, is a problem. For example, young university educated extension officers who never before worked on rubber plantations had difficulty convincing older, experienced rubber plantation owners to process high quality rubber sheet for group marketing, even though there was a 14 percent increase in profit through such sales. The officers had received sufficient practical training regarding production and marketing improved rubber sheet, but they did not know how to make their ideas acceptable to older plantation owners due to an age gap.
A solution was found when an innovative extension worker decided to use the leaders of his existing successful marketing groups to explain the approach to rubber producers in his new target villages. The extension worker found that the older group leaders and members were more successful in convincing other plantation owners to take up the new technology than he himself. At times both age and social status can have an adverse effect.
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In Northern Thailand, a team of Farm Household Economic Officers (extension staff, all women) from the Department of Agricultural Extension, were asked to establish village level Farmer Housewives Organizations (FHO) for women. It was difficult for young women from “the city” to convince older rural women leaders in the target villages that there was value in forming such a group. Many hours were spent on these efforts, without success. Farmer housewives organizations However, after SCR training, the extension team began to invite skeptical women to attend monthly meetings of successful FHO groups. Such visits changed the thinking of women in the target village. During these visits, personal ties were established between the old and new groups, which later facilitated a lengthy internship training. Using SCR, seven existing women’s groups with 234 members in 1996 were able to train 24 more groups with a total membership of 1 707 persons by late 1998. The findings of the SCR internship training follows: 1. After a one-year intensive internship, the women become capable of self-management and self-help. SCR use has greatly accelerated the FHO programme, effectively
removing the difficult age and social strata gaps which government officials
faced in trying to convince village women. |
IF the success to be replicated is of an organization such as the FHO described above or a government sponsored agricultural cooperative, then success must be assessed from the point of the whole organization. This point of view must take into account many facets of the organization, such as membership, access to credit sources, credit disbursement, loan recovery, bookkeeping, division of leadership and responsibility, participatory decision making, etc.
As with individuals, organizations are not all alike in personality and competence. Some organizations are strong in some areas of management and weak in others. It is good to ascertain which organizations are most successful, and in what aspect their success lies. Then, when establishing an SCR training programme, the co-ops which are weak in a specific aspect can be targeted for training by an appropriate success model co-op. In the Philippines, the Land Bank has done just that.
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When SCR training began in the Philippines, the government-owned Land Bank of the Philippines (LBP) faced a dilemma: it was compelled by law to provide credit to all official cooperatives, but it was unable to control their lending and recovery procedures. Many of the country’s more than 6 000 cooperatives had unsatisfactory repayment rates on the money they borrowed from the bank, forcing it to seek additional government funding. Accordingly, the bank established the Cooperative Development Assistance Group (CDAG) to develop a methodology to classify cooperatives according to a set of performance criteria and attempt to upgrade cooperatives having unsatisfactory performance records. They planned training modules to be conducted by bank staff. However, with the introduction of SCR methodology, the bank plan was revised to incorporate training by mentor co-ops which were highly successful in varied management areas. During the identification process, the LBP discovered the Catmon Community Co-op (CCC), which had an unusually successful member savings and loan programme. CCC had a 100 percent recovery rate when it loaned member savings deposits - well above the recovery rate for money it borrowed from LBP for onward lending to members. This system of member savings and loans became known as the Member Savings Organization (MSO). The SCR trial training programme generated an average of P 500 000 each in more than 500 co-ops adopting the technology during the two year life of the project. Based on this success, the bank followed up with a 6.98 million peso national training programme, sponsored partly by a grant from German Technical Cooperation (GTZ), to replicate the member savings concept to more than a thousand co-ops nationwide. The government bank reported that some more successful MSOs
have generated such large-scale savings that they no longer borrow from it. In
addition, the co-ops tend to deposit their own savings in commercial banks where
benefits are greater than those offered by LBP. CDAG has noted this trend and
predicted that the accelerating success of the MSO system might well put the
Land Bank itself out of business in the long run. Accordingly, to exploit the
savings potential, the LBP developed a package of benefits to attract co-op
savings away from commercial banks. As a result of the MSO success, the Land
Bank has begun training other government agencies and NGOs in the SCR
methodology of MSO replication. |
Caution is necessary at this point: some cooperatives are highly successful due mainly to a single dynamic person who monopolizes leadership and decision making. The chances of replication, in such an instance, will be lessened unless the dynamic person can find and train a like-minded person in the newly established co-op.
THE longevity of the success case must be evaluated, especially when replicating income earning activities in which excessive fluctuations in market prices can determine the success or failure of the enterprise. Success achieved for one season only, may fail in the following season when prices fall due to severe oversupply. For example, the production of chicken eggs faces large seasonal price variations due to considerable fluctuations in the price of chicken feed. Evaluating such a likelihood may challenge inexperienced field officers or NGO workers, but the enterprise owner will usually have a sense of the market and the chances that heavy competition will arise to erode his profit margin. In general, it is preferable to avoid highrisk enterprises or those which face high price fluctuations. For example, large onions proved to be very profitable in Sri Lanka, so the crop was widely promoted and flourished. However, within a few years there was a vast oversupply, leaving many farmers with spoiling crops.
Those who are most successful in such highly competitive enterprises are usually keenly aware of competition and are reluctant to teach others trade secrets for fear of reducing their own profit. Thus, if success models are reluctant to teach their skills to others, caution is to be recommended: the enterprise may be highly competitive, risky and perhaps not suitable for SCR.
Lastly, in promoting general income earning activities in a significant target population, the field worker should assemble a varied selection of possibly successful enterprises to consider replicating. There must be a demonstrated desire to participate by the target population. This is especially true when introducing income-earning activities to participatory groups of the rural poor. It is not likely that all persons in a mixed village group can do the same enterprise. There is usually a market supply limitation, such as the “onion” case study.
AT the same time, there is usually a larger pool of successes available in rural areas than one would initially expect. For example, in one subdistrict in Northeast Thailand, 14 successful occupations were identified in two days of field visits with the assistance of local government officials and villagers. The occupations included pickling cabbage, making cement blocks with a hand press, broom making, ground mat weaving, weaving cloth, making prefabricated bamboo walls, casting large capacity cement water storage jars, sewing the edges of nylon fish nets, fabricating roll out sun/rain awnings, mushroom culture in rice straw, blacksmithing knives from auto springs, crafting bamboo furniture for outdoor restaurants, doing simple motorcycle repair and imitation diamond (zircon) polishing.
Local government field workers tend to identify success cases in which they themselves have been involved. Understandably, they often look for successes only in their own programmes. Some of these successes may be useful, but - as most rural development workers know - there are many outright failures in development work. It helps to ask extension officers to include successes that existed in the locality before they arrived. Once a suitable number or variety of successful cases have been identified for possible SCR consideration, the second step of the methodology can proceed: assess the potential for replication.
2.1 Overcoming success person’s fear
2.2 Assessing market capacity
Case No. 5. Pickled cabbage
Case No. 6. Chinese steamed buns
Case No. 7. Puffed rice cakes: A market oversupply problem
Case No. 8. Linchee fruit orchards
Case No. 9. Wheat production
2.3 Assessing net income
Case No. 10. Economic evaluation of soya milk venture
2.4 Appropriate net income
2.5 Incorporating depreciation
Case No. 11. Motorcycle taxis: Eating the enterprise
2.6 Deductions for family labour
Case No. 12. Economic evaluation of betel leaf cultivation
Case No. 13. Economic evaluation of oversize brick making
2.7 Raw material supply
Case No. 14. Bamboo furniture: A raw material problem
Case No. 15. Bhutan onions: A seed supply problem
Case No. 16. Mushroom growing on rice straw
Case No. 17. Rubber tree fungicide
2.8 Evaluating production
Case No. 18. The puffed pig skin case
2.9 Review of evaluation process
Case No. 19. A local bakery in the Philippines
Case No. 20. ‘Diamond’ polishing in rural Thailand
Case No. 21. Coir rope making in Sri Lanka
THIS may be the most demanding part of the process. It involves delving deeply into issues either highly sensitive to those concerned, such as their profit, or technically complex, such as the calculation of net income. Field workers will be relieved to find that ways have been devised to obtain this sensitive information without alienating the success mentor and that the calculation of net income is not as complex as might be expected.
VILLAGERS in most societies are reluctant to discuss financial success with strangers. This is especially so when the outsiders seem to be associated with government, because entrepreneurs fear that government agents may impose a tax on profits. If the enterprise is not properly registered, the entrepreneur may see the stranger as a threat who will demand a bribe to remain quiet. Even if the interviewer is not perceived as a threat, the success person will usually be reluctant to discuss income earning activities due to fear that others will learn his closely-guarded secrets of success and compete in the local market.
To overcome such natural resistance, it is helpful for the field worker to inform the success case person at the beginning of the interview that he has been identified by neighbours and peers as a most successful individual in his chosen enterprise. This will often appeal to the person’s pride and arouse interest in what the interviewer has to say. At this point, the subject should be informed that highly successful persons are being sought to help train the poorest of their neighbours so that they can support themselves. This introduces the possibility that the success person will be elevated to the role of teacher in the community and also appeals to their sense of sympathy for those who are much poorer.
At this stage, the successful person should be informed that being recruited to train the poor will not happen if there is any possibility that such training would lead to too much competition in the market, which would cause falling profit margins. Now that the topic of marketing has been opened, this is the time to begin to assess if the local market can bear additional production.
MARKETING systems can be quite complex and subject to considerable seasonal fluctuation, both in terms of output prices and the supply of some inputs. Untrained government and NGO workers might well feel daunted when asked to evaluate the market potential of a new product. The best way to acquire the data is to rely on the successful entrepreneur as a source of market information. If the entrepreneur has been successful in the enterprise, several seasons of marketing experience usually enable reliable market evaluations to be made of the immediate market.
If the successful entrepreneur fears that market oversupply will result when SCR training is conducted for others, the field worker should not encourage such training. This could have a serious negative impact on the entrepreneur’s income and lead to failure of the new enterprises, which would also cause serious damage to the reputation of the field worker.
In rare cases, the field worker may encounter a successful person who is not aware of the threat that competition might pose to his/her own survival. In such a case, the success person might train others without realizing the possible damage to their own future. One such case follows:
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A widow supporting two daughters was trained to produce pickled cabbage by a Chinese family when she worked as their maid in Bangkok. On returning to her native Northeast Thailand, she found the local market lacking this product. She started this enterprise and prospered, as she was the only local producer. When a women’s group from a nearby poor village requested training to pickle cabbage, she agreed to do it. However, when it came time to market the product, she began to
realize that her own income might be threatened by the added competition and
that her two daughters’ might have to discontinue their university
education in Bangkok. Frightened by such prospects, the widow deliberately
failed to show up at the local fresh food market on the first day of sales to
assist the women’s group to establish their marketing operation. As a
result, the women’s group failed to obtain a market space and their
enterprise collapsed. |
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A field officer for the Bank for Agriculture and Agricultural Cooperatives (BAAC), a counterpart agency for the Thailand project, identified a borrower who had repaid the many BAAC loans he had taken to purchase fruit orchards. On investigation, the officer learned that the fruit orchards were never profitable but the borrower felt their value in the land market made them a good long run investment. It was further learned that the borrower and his wife derived their primary income from a sideline occupation, making and selling steamed Chinese buns, a puffy round white pastry filled with bean mash or ground pork, popular at breakfast. The enterprise was so profitable that the couple repaid all their bank loans and educated their two sons through university in Bangkok. Chinese steamed buns being made at home The couple were aware of their market position and refused to
train anyone from their own market area, but they would train persons who would
market well outside their area. Accordingly, the field officer established SCR
training for four other families from distant subdistricts. However, the
selection of trainees was not done on the basis of their felt needs and only one
couple was successful in the new venture. For them the business was a welcome
activity. The husband was a construction worker, receiving US$4.00 per day on
days when work was available. His wife was unemployed and they had two children
and a mother-in-law to feed. The buns earned them about US$6.75 net per day,
much more than the husband’s labour wage. It provided almost full-time
employment for the wife. The BAAC provided them with a B 10000 (US$271) loan to
buy the bun steaming equipment and a sidecart for their motorcycle to facilitate
the mobile sale of the buns. The loan was repaid ahead of schedule by this
enterprising couple. |
The most common marketing problem is training too many replicators, flooding the market with the product and causing prices to fall. The following case study demonstrates this problem.
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Thailand’s Bank for Agriculture and Agricultural Co-operatives (BAAC) participated in the SCR trial project from 1995 to 1998. One of its most successful field workers, Mr Prasopesuk, learned that the village level production of puffed rice cakes coated with sugar palm icing was very profitable. Production costs for one kg of the cakes was B3 (US$0.08) while they sold for B8 (US$0.22). The profit of B5 (US$0.14) per kg equalled 166 percent of production costs. Naturally, when other villagers heard of the spectacular profit margin, interest in replicating the enterprise was widespread. To avoid flooding the market with rice cakes, the BAAC field officer assessed probable demand in the community and limited the trainees to only five. The training was successful and prices remained as high as before the training despite the increased supply. However, relatives of the newly successful trainees envied the
profit margin being generated, and insisted that as family they had a
“right” to be trained as well. Subsequently, some 35 families learned
the process and flooded the local market. As the supply rose beyond demand,
prices fell, first gradually, then plummeted to B3 per kg, equal to the cost of
production. Creatively, the bank officer took the initiative to solve the
problem of oversupply by helping the producers organize to send their produce,
in bulk, to a larger market. As a result, the sale price climbed back to B8 per
kg and helped sustain the new enterprises. |
One of the worst mistakes is encouraging farmers to initiate an expensive enterprise that cannot compete in the local market. It is not uncommon. The following case describes one story.
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Ready access to markets is perhaps the most critical element
when attempting to introduce new income earning activities. In one case,
government found that linchee orchards yielded high profits consistently, year
after year for lowlanders in Northern Thailand. The crop grew quite well in the
highlands where opium crop-substitution projects were a high priority. Ethnic
minorities were encouraged to grow the crop, which took five to seven years to
bear fruit and also required a large government loan. After investing much money
and several years cultivating the crop to maturity, the planters learned, to
their dismay, that high transport costs from the mountains to the lowlands made
their crop unprofitable. |
The following case reports another sad example, in which the extension agency promoted a crop with no market:
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Wheat production trials at a highland experiment station in
North Thailand proved that yields were high and reliable. Accordingly, the crop
was introduced as a substitute crop for opium. At that time, however, Thailand
imported all its wheat, mainly as flour, and there were no flour mills in the
country. When the wheat crop was harvested, it could not be sold at any
price. |
For example, regarding rubber group marketing in Thailand, there was no such market constraint because group marketing did not increase the overall supply of rubber. Group marketing merely improved the quality of part of the existing supply and enabled group members to get a higher price for their portion of the overall supply through quality improvement and the bargaining power of bulk marketing. Hence, rubber was not subject to this marketing constraint.
In a similar situation, Sri Lankan women’s groups obtained control from the buyers over husk pits for coir fibre production. Their innovation placed them in control of the raw material supply, giving them a significantly higher profit due to lower input costs. Nonetheless, this innovation had no impact on the price of coir fibre yarn because the overall market is very large, island-wide, and the supply was not changed by the change in ownership of a small portion of the raw material.
However, it is safer to assume that there may be a market constraint. It is the responsibility of the catalyst and the success case individual to jointly estimate the market saturation point. The training programme that is then established should take the market saturation limit into account and limit training and production to a point that is well below this level.
Where market limitations seem obvious, the field worker has at least two options: to avoid SCR training due to potential oversupply, or to train only those outside the success case market area.
WHEN market oversupply does not appear to be a problem, or where the successful person reveals no fear of competition and shows a willingness to train others, the next step in the evaluation can begin. This step concerns the economic assessment of the enterprise. The field worker must determine just how profitable the enterprise is before he plans the training programme. Just how that can best be carried out is the subject of the next section.
Extension workers are not usually trained to do economic analyses of business operations, but it is necessary for them to determine which success cases can be replicated, and which cannot. It is not necessary to be an economist. Agricultural officers and other catalysts of change must be able to understand (1) raw material supply and cost, (2) the production process and associated costs, and (3) the marketing and sale price. For our purpose, we can use a very simple system, as demonstrated in the following case:
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To make soya bean milk: crush soya, strain mash, boil milk and
add sugar. The product is sold in plastic bags. In this hypothetical case (with
estimated data), determine the cost of making a fixed amount of soya milk in a
fixed period (depreciation not included) and the net profit gained when
sold: |
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Overall costs to make four litres of soya milk
daily |
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Cash costs |
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(US dollars) |
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Two kg soya at 0.50 per kg |
= |
1.00 |
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One cup sugar |
= |
0.05 |
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Charcoal to boil milk |
= |
0.25 |
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Plastic bags for packaging |
= |
0.10 |
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Labour to pound beans, strain solution, boil milk (two
hours) |
= |
0.75 |
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Total cash costs |
= |
2.15 |
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Gross income (cash received without deducting
production costs) |
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2 kg soya makes 4 litres (4 000 cc) milk sold in 400 cc
bags. |
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4 000 cc/400 cc = 10 bags each holding 400 cc selling
@ |
0.40 |
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Gross income = 10 bags x 0.40 = |
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4.00 |
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Net income: gross income less all production
costs for one day’s work (two hours labour) |
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Gross income |
= |
4.00 |
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Less total cost |
= |
2.15 |
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Net income |
= |
1.85 |
IS this a reasonable net income? Making soya milk is a profitable part-time enterprise. In Thailand in early 2000, US$1.85 earned daily is equivalent to a monthly net income of US$55 - more than half the US$105 income of a housemaid working 10 hours/day. The soya milk profit of B70 day ($1.85) for only a few hours of part-time labour is a step up from entry level employment and is an appropriate net return.
A more complex and accurate economic analysis requires including depreciation costs in net income calculations. What is depreciation? All tools used to produce the product eventually wear out and will need replacing. Divide the purchase price of the tool by the number of days, months or years it can be used to determine how much must be saved each day, month, or year to replace the tool at the end of its useful life. This is called the depreciation cost.
To calculate depreciation costs for this venture:
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Depreciation: mortar and pestle |
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(US$) |
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Replacement cost |
= |
2.00 |
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Useful life |
= |
200 days |
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$2.00/200 days |
= |
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daily depreciation |
= |
0.01 |
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Depreciation: charcoal stove |
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Replacement cost |
= |
4.00 |
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Useful life: 2 years (200 days/year) |
= |
400 days |
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4.00/400 days |
= |
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daily depreciation |
= |
0.01 |
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Total depreciation (one day) |
= |
0.02 |
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Net income less depreciation |
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Net income (from 1.3 above) |
= |
1.85 |
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Less total depreciation costs: |
= |
0.02 |
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Real net income after depreciation |
= |
US$1.83 |
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Delivering people home from main roads by motorcycle taxi is a common enterprise in Thailand. It can provide a net daily income of US$8 per day after paying for fuel, or a monthly income of some US$240, double that of a construction worker. The motorcycle costs about US$865 in a one-time cash payment.
However, most owners are poor and purchase the motorcycle on hire purchase at 15
percent interest per annum, or an overall price of US$1 300 with payments of
US$54 each month for 24 months. When monthly payments are deducted, the owner
realizes a net income of US$186, a good wage in comparison to common labour.
Most owners do not set aside a daily deduction (savings) to pay for the cost of
depreciation. A well-maintained motorcycle will last about five years (60
months). With a projected replacement cost of US$1 355 five years in the future,
monthly savings to replace the motorcycle is about US$22.50 (US$1 355 divided by
60 months). Drivers who do not save can find themselves out of business at the
end of the five years - when their motorcycle no longer functions. More likely,
they are forced to finance a replacement motorcycle on hire purchase at a high
rate of interest. The driver who did not save may end up working several days a
month just to pay the interest on his hire purchase or to pay the local
moneylender. |
MOST rural poor do not deduct their own labour spent on secondary income earning activities. Generally they feel they are using their free time for subsidiary enterprises. From a purely economic viewpoint, this is incorrect, because they could have sold their labour during that same period to another person and earned added income. However, from the point of view of the poor, the opposite seems obvious.
Subsistence workers receive money in hand when selling a product. The worker then purchases food and other goods - perhaps exactly equal to the cash in hand. Explain that cash costs for production should be deducted from gross income in hand, and the worker easily understands the reasoning for the deduction - and readily agrees to deduct labour costs for which cash wages were paid.
However, to convince such a worker that there should also be a further, imaginary deduction for his own labour, because of the opportunity cost, may prove difficult. Simply subtract all cash costs for the enterprise and ignore the opportunity cost for labour, which is not paid in cash.
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Production and sale of betel leaf is a typical farm enterprise
in Sri Lanka. The leaf is chewed with betel nut, a mild narcotic. Growers
usually tend a 150 sq ft plot. In this example, calculations are for six months.
Determine all costs of producing a fixed amount of leaf during a fixed period.
Calculation includes depreciation and labour costs. Overall costs to produce 18
000 betel leaves in six months. (SL Rs 70.95 = $1) |
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Materials (all locally available) |
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(Sri Lanka rupees) |
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Planting materials |
= |
430 |
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Fertilizer |
= |
25 |
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Labour (six days during six months) |
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6 days x 150 per day |
= |
900 |
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Capital: Water pump and tools (5 000) |
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Depreciate 10 year lifespan (500/yr) |
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Equals SL Rs 250 for 6 months |
= |
250 |
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Marketing costs: |
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Transportation and related costs |
= |
300 |
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Training costs |
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SCR training |
= |
60 |
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Total costs (six months) |
= |
1 965 |
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Gross (market) income |
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Six month yield 18 000 leaves @ 0.15 |
= |
2 700 |
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Net income |
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Gross market income |
= |
2 700 |
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Less total costs |
= |
-1 965 |
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Net income (over six month period) |
= |
735 |
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To determine if this enterprise yields an appropriate income,
divide net income of SL Rs 735 (US$10.36) by the days of labour, or six days
during the six month harvest period. Dividing Rs 735 by six days yields Rs.
122.50 per day. In rural Sri Lanka at this time, the rural labour wage was Rs.
100 per day, indicating that this is an appropriate return. |
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Analysis of Mrs S.G. Priyani’s brick making venture in Sri Lanka, including digging and shaping clay into bricks, air drying and firing them for about a day. Determine all costs associated with producing a fixed amount of product during a fixed period. Simple calculation to produce 6 000 bricks in one month Overall costs in Sri Lankan Rupees (SL Rs 70.95 =
US$1) |
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Materials (all locally available) |
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Clay for 6 000 bricks delivered to site |
= |
1 500 |
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Patterns, etc. |
= |
200 |
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Ten yards of firewood at 200 per yard |
= |
2 000 |
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Labour |
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Hauling water: 4 days x 100 per day. |
= |
400 |
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Brick cutting: 9 days x 100 per day |
= |
900 |
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Brick drying/cleaning: 6 days x 100 per day |
= |
600 |
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Brick chamber work: 6 days x 150 per day |
= |
900 |
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Subtotal: material and labour costs |
= |
6 500 |
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Gross market income |
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6 000 bricks at 2.00 at site |
= |
12 000 |
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Net income |
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Gross market income |
= |
12 000 |
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Less total costs |
= |
- 6 500 |
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|
Net income (one month) |
= |
5,500 |
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|
|
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To determine if the venture yields an appropriate income,
divide net income of SL Rs 5 500 by the number of days per month spent making
bricks. There are 25 27 such days, on average, yielding a daily labour wage of
Rs 5 500 divided by 25 days = Rs 220, an appropriate wage. The trainer’s
income was twice the net earnings of most families in her area. |
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THE above economic evaluation does not eliminate the possibility of a raw material supply problem, which may occur seasonally or require that materials be purchased from a distant market. Consider the following:
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An example which illustrates this concern is bamboo furniture.
Bamboo chairs, benches and tables are easily built with only a few tools, and
are inexpensive enough to be used outdoors in local restaurants in Thailand. The
government established a training programme to teach villagers how to produce
such furniture. When the training was conducted in a village in Thailand’s
Northeast, the instructor was technically highly qualified, and the construction
techniques were easily mastered by the trainees. However, the appropriate type
of bamboo was not available locally and had to be brought in by truck. Transport
costs made the furniture too costly. The primary input was not available at an
economically competitive cost. In addition, the training did not include
marketing. The trainees were unable to find a market for their finished
furniture and, as a last resort, the District Officer bought it to prevent the
trainees from going into debt due to the cost of the training
materials. |
|
Gup Amber Dorji, a former village head in the Paro Valley of Bhutan, was the first farmer in his vicinity to take up the cultivation of large onions. The crop grew well and Mr Dorji received a favourable price for the new commodity in the local market. Mr Dorji functions easily as an extension worker who delights in teaching others. He soon had trained 13 neighbours to grow large onions. Unfortunately, the nearby government seed multiplication station could not supply seedlings and training was wasted that year. To solve the seedling problem, Mr Dorji and his friends began growing seedlings to supply themselves for the next season. |
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Raw materials may be available only during certain seasons. A simple example of complications arising from such a case concerns a successful grower who had made a handsome income from mushrooms grown on rice straw for nearly 10 years. The target villagers, all rice growers, showed strong interest in SCR training conducted by the successful farmer. However, when training began, the rice harvest had been completed several months earlier, and instead of fresh straw, only previously stored straw was available for the practice mushroom demonstration. The preparation, seeding and early growth went well and the
trainees were pleased to see the fine batch of mushrooms that they had grown.
Unfortunately, soon before full growth was achieved, an army of termites in the
old straw began to devour the mushrooms To the trainees’ disappointment,
the trainer explained that pesticides could not be used because the mushrooms
would absorb the chemicals and become toxic. The entire crop was lost. The
following year, when the rice harvest was finished, neither the extension worker
catalyst nor the mushroom success case grower were available to conduct
training. |
|
Government extension workers demonstrated use of a new fungicide for treating an especially virulent rubber tree root disease. It was effective and was the first such chemical to be marketed. Prior to its introduction, rubber holders could only uproot and burn the entire tree when disease struck their plantations. The instruction was well conducted and well received. There were practical demonstrations and plantation owners themselves participated in identifying infected trees, excavating the infected roots and applying the fungicide. When the training was completed, villagers wanted to purchase the chemical. Unfortunately, the extension workers had received the demonstration chemical from the extension department in the capital and knew neither the price nor where the chemical could be purchased. Further queries revealed that the fungicide was too expensive
and the supplier had not yet established sales outlets in the rubber growing
districts. The villagers were displeased and the extension agents lost
credibility, despite having made a genuine effort to assist the rubber
smallholders. |
IN the course of an evaluation, the field worker will need to be aware that problems can occur during the production process which will lead to an inferior product that is not marketable. One such case occurred in Northern Thailand in producing puffed pig skin:
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An NGO named Thailand Development of Human Resources in Rural Areas participated in the SCR project from 1995 to 1998. One of its more successful training programmes focused on production of pig crackling or puffed pig skin, a common Thai snack. A successful young couple conducted the training and due to fierce market competition, trainee families were all chosen from communities well outside the success case trainers’ market area. One trainee family produced five kg of crackling in their trial boiling at home. It was immediately offered for sale in their village. Sales were brisk, as there was no local competition. However, it was soon reported that the product was sticking like glue to buyers’ teeth. Word travelled quickly; sales stopped. The family faced disaster. The field worker had prepared for such problems and arranged for the new entrepreneurs to meet with the success trainers who had conducted the training. Tasting the gluey product, the trainers explained that the skin had not been boiled long enough in low temperature oil before being puffed in the high temperature oil. They then demonstrated how to judge the time needed in the low fire boiling to prevent “glue” from forming. With the problem solved, the trainees produced their second
batch of pig crackling the same day. They distributed complimentary samples of
the improved product to villagers who had purchased the failed gluey product the
day before. By this tactic, they established their credibility in the local
market. |
KEEPING in mind the special problems in the cases given above, it will be of use to lead field workers though complete evaluations of several successful replications:
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Colita and Nelson Tolentino were among the poorest peasants in the communities surrounding San Pedro, but both had formerly worked in bakeries. Colita joined a women’s participatory group formed by the Center for Agriculture and Rural Development (CARD), an NGO. Using a CARD loan, the couple began a bakery in their one-room thatched hut. Through perseverance, long hours of work and a good product, their bakery was a success. By late 1994, they were making an average profit of P 7 000 a week (US$184). Their success was evaluated 30 for replication. This is how it was done: Nelson shows how to improve the oven The entrepreneurs were interviewed at their home and bakery to review their daily operations. Start-up costs (including raw materials, such as flour, sugar and baking soda), production steps, morning and afternoon cake production, labour costs and gross returns were reviewed. Bicycles purchased for distributing baked goods to commercial clients such as coffee shops were included as a business cost. Net profit was determined by subtracting all costs from gross income. The discussions revealed a number of observations, including: 1. Two 55-gallon cement-encased oil drums made the oven, designed and built by the entrepreneur. Fuel was readily available coconut husks fed into the back of the oven so heat and smoke could not enter the ovens at the front.Asked if they could train other villagers to replicate the bakery, the Tolentinos said that they had already done so. Mrs Tolentino trained a friend and her husband from a nearby village and they also succeeded. The husband was then employed in Saudi Arabia and established a similar bakery there to serve other Filipino workers. He reported having a successful business. Had Mrs Tolentino asked for payment to do the training? She said she had done it without thought of reward. She vividly remembered how difficult life had been when her family was poor, and now that she was successful, she offered to train other poor people, at no charge, so that they too could make a decent living. The Tolentinos successfully initiated and replicated their bakery, and it was successfully transferred to a foreign country. Mrs Tolentino said she did not wish to train others who would compete in her market, but she remained ready to train the poor from distant villages. The SCR project was reasonably sure others could replicate the bakery without too great a risk provided that they were well trained by the Tolentinos and that their village market did not already have reliably supplied baked goods. How to fabricate a oven from a steel drum Using SCR, the bakery was successfully replicated on a nearby Island in Balokawe village, well outside the Tolentino family market area. Colita Tolentino trained Davina and Ramon Magracia in baking; Nelson advised them regarding construction of a superior baking oven. Within a few months, the Magracias were earning a net weekly
profit of P5 429. Allowing for depreciation on the oven, baking utensils and
other costs, the net profit per week still exceeded P5 000. The net income
analysis for this enterprise follows as an example for field staff: |
|
|
|
|
|
Net costs of production per week (38.3 Pesos =
US$1): |
|
|
1. Ten sacks flour (P290 x 10) |
2 900.00 |
|
2. Sugar (9 kg x 7 days x P20) |
1 260.00 |
|
3. Vegetable oil (P27.38 x 21 bottles) |
574.98 |
|
4. Margarine |
112.50 |
|
5. Baking Powder |
21.00 |
|
6. Yeast |
18.75 |
|
7. Salt |
14.00 |
|
8. Ramon’s labour (8 hrs/day x P4.82 x 7 days) |
269.92 |
|
9. Davina’s labour (4 hrs/day x P4.82 x 7 days) |
134.96 |
|
10. Transportation |
120.00 |
|
11. Depreciation cost of push cycle |
8.00 |
|
12. Loan instalment (P7 000 at 20% interest) |
161.54 |
|
Total costs for one week |
P5 595.65 |
|
|
|
|
Gross income from weekly sales: |
|
|
1. 400 Kababayans at P0.50 each x 7 days |
1 400.00 |
|
2. 850 Morning Bread at P0.50 each x 7 days |
2 975.00 |
|
3. 450 Spanish Bread at P1.00 each x 7 days |
3,150.00 |
|
4. 100 Cookies at P0.50 each x 7 days |
350.00 |
|
5. 50 Tasty Bread at P 9.00 each x 7 days |
3 150.00 |
|
Total gross income for one week |
P11 025.00 |
|
Net profit for one week’s sales: |
|
|
Gross income P11 025.00 less costs P5 595.65
= |
P5 429.35 |
|
|
|
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Given that many poor families in the area live on P1 000 per
week, the Magracia family is now considered to be wealthy. In addition, they
experienced minimal competition because they had been given particularly tasty
recipes. |
|
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Northeast Thailand has the country’s most-depressed economy and provides low wage manual labour for other regions. In the early 1970s, a young man named Sanguan from the hinterland of Khon Kaen city in the region migrated to Bangkok to make a living. There he learned the imitation diamond (cubic zirconia) trade, including purchase of the raw stone, polishing the gemstones and marketing the finished product. Cubic zircon cutting and polishing Sanguan missed his family - especially his aging mother, who was in poor health. When electricity reached his village, he moved his zirconia trade back to his village. Gradually, during 10 years, he trained many villagers, and by the mid-1980s there were some 3 000 villagers polishing “diamonds” in the Northeast. He was successful but did not attempt to monopolize the trade. He became a well-known figure in the vicinity of his village. In 1986 the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) sponsored an income promotion project in conjunction with the Royal Thai Government Departments of Rural Development and Agricultural Extension. One selected village, very poor and near Khon Kaen, saw the migration of entire families to work in sugarcane fields in central Thailand in the dry season. Wages were low and children did not attend school during harvest. Villagers needed income to allow them to remain at home, but irrigation to support summer crops was not available. During the search for successful income earning projects near Khon Kaen, one promising occupation was the imitation diamond or cubic zirconia trade. It could be carried out in villages on locally built polishing wheels costing less than US$80. Village youth were easily able to earn from US$2 to US$4.80 daily once they had been trained. This wage compared favourably with the US$1.60-2.70 a day that could be earned in Bangkok, where rent and food consumed most wages and where young villagers were lonely, and in some cases, quite unsafe in rented housing that had to be shared, usually with non-relatives. SCR Project queries identified one person, Mr Sanguan, as an
outstanding entrepreneur. He agreed to explain his trade to poor villagers and
to help train them if interest was sufficient. Interest was high among the
villagers and soon a successful cubic zirconia polishing business employed 17
young people, including five whom had returned from Bangkok to learn the trade.
Evaluating this success case for potential replication proved relatively easy
because many nearby villages already had such enterprises and there were no
reported failures of the business. Most youth found the technical aspects easy
to master although a few could not - even with extended training. Market prices
had remained stable for several years. Buyers in Bangkok reported a gradual
decline in the value of the cut stones over several decades; they said the trend
would continue due to unlimited supplies of the raw material. However, they
said, the trend was offset by switching to polishing higher value stones, which
had already begun in Thailand. |
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Several village women’s participatory groups were formed in Hambintota District of Sri Lanka’s Galle province in 1987. The women traditionally made coir yarn from coconut husk fibre as a part-time income producing activity. Earnings were low. The husk pits in which husks were soaked in brackish water for four to six months before “spinning” the fibre for coir yarn were controlled by locally powerful persons and moneylenders. They supplied raw material on credit at relatively high prices and paid relatively low prices for the finished product. Husks soaking for coir yarn production Through the judicious use of their own savings, one group leased an abandoned husk pit. The women took turns guarding it at night to prevent the influential owners from stealing the husks or otherwise sabotaging the operation. After six months, and a plentiful supply of husks, employment from coir yarn production increased six-fold. The reduced price for raw materials and the combined sales of the finished product directly to large buyers, bypassing the local middlemen, increased their monthly returns from SL Rs 200 to 300 per month. In addition, the group later joined other women’s groups to undertake large-scale direct sales to higher level buyers adding to their already high profits. The evaluation of this success case for potential replication
is very simple. Since the first successful group was made up of, more or less,
typical rural women, similar groups would be likely to be successful, especially
if they benefited from the experience and advice of the women in the first
group. In fact, these women had already introduced this system to other newly
formed women’s groups and had then conducted joint marketing with these
groups to enhance their volume and bargaining power which had generated
additional income gains. |
To reiterate the steps in evaluating the potential for successful replication, the catalyst should look closely at the following factors and discuss them in depth with the success person:
Raw materials: Are they readily available through the production season at the site where replication is planned? Are prices similar to those of the success case? Is the quality at least equal to that of the materials used by the success case entrepreneur? Is there a monopoly control over raw materials by any one business or organization?By the time these questions have been considered and answered, it will be apparent whether or not the success case under study is replicable. Experience has shown that the skill of the catalysts in evaluating enterprises improves rapidly as they gain experience with the methodology.Processing: Is the production process simple enough so that others with similar education and skill levels could easily learn provided the training is sufficient? In the case of Colita and Nelson Tolentino, they were the best judges of this aspect and were confident they could train other villagers in bakery skills. Diamond polishing required the most demanding skill training, being quite technical, with two months training and one month of twice-weekly supervision so that all trainees could achieve an acceptable quality standard. Even then, two persons failed.
Marketing: The best measure for this factor is the past marketing success of the success case operator. Is the market readily accessible? Is the profit margin satisfactory from the point of view of the entrepreneur or success case operator? Has the operation been going on for an appropriate length of time or an appropriate number of seasons? Is the price stable over time? Is there competition in the market and will there likely be in the near future? The success person can help answer these questions, but their assessments should be compared with independent observation.
3.1 Three types of success case persons
Case No. 22. ‘Diamonds’ revisited
Case No. 23. Pickled cabbage - Change of heart
3.2 Compensation of trainers
HUMAN nature is complex, making it difficult to assess the willingness of the success case individual to train others. Many societies give public recognition, at least verbally, to those who help the poor. In addition, they are usually aware of the process of public attention and that they will be elevated to the status of a teacher of their peers when training is begun. This encourages entrepreneurs to claim they will teach others their trade even if it is not so, or even if they secretly fear empowering a competitor.
EXPERIENCE has shown that the most successful people fall into three categories on this issue. The first category readily admit that they are in a competitive business and have no intention of teaching anyone else their secrets of success. In this case no training will be conducted.
In the second category, successful entrepreneurs are generous about training others on condition that the new generation of entrepreneurs will sell their product on another market. The catalyst (extension officer) should assure that the trainees will not compete with the success mentor. If this is kept in mind, there will be no problem with SCR training.
It is the third category of success cases, those who want to appear community-spirited and generous but who are really quite self-concerned, who are difficult to judge, and who can create serious problems for both the catalyst and the trainees. A few examples will be instructive:
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During the establishment of the imitation diamond polishing venture described earlier, the village head offered land for a factory. Other villagers contributed support posts, the cement floor and roofing, and a government loan financed the purchase of the gem polishing equipment. At first the venture was profitable and the loans were quickly repaid. When the venture was established, the village head volunteered to purchase and transport the raw materials for the factory and market the finished product. During an extended absence of the catalyst or field worker, the village head stopped supplying raw zirconia to the factory and informed the workers that there was a shortage throughout the country. As the workers could not remain without income, they moved to other employment. The village head then told the catalyst that the venture had
failed and offered to take over the factory. Doing so, he inherited the
equipment (at no cost, as the workers had repaid the government loan). As owner,
he employed relatives in this new business, which succeeded. Later
investigations revealed that the raw material had been in constant supply but
that the workers did not know where to buy it and that none dared question the
powerful village head concerning the shortage. |
It might have helped to establish the village head as official middleman, receiving profit from the beginning, so that he would have a vested interest in its long-term survival. However, this may not have been possible, because he had strongly declined, in public, the offer of rent for his land at the outset of the venture. Perhaps it would have helped had trainees been taught to buy raw gemstones and market the finished product, but the village head offered to do this at no cost, and it was difficult to rearrange without offense.
Lesson: When much money is involved, many people become interested. Frequent checks on new operations during early stages can sometimes prevent or avert such endings.
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Recall the earlier example in which a locally successful
entrepreneur began her venture by pickling leftover cabbage in the fresh food
market. As the only producer of pickled cabbage in her town, she profitably sold
whatever she produced. She agreed to train members of a local women’s
group, who successfully produced a high quality product. When it came time for
her to help with marketing, she failed to meet the commitment, leading to
eventual failure. |
The catalyst might have avoided this difficulty by more effectively judging both local competition and the success mentor’s personal bias. Had the catalyst recognized the entrepreneur’s situation, training could then have been arranged for a more distant market town.
It may be concluded that assessing the willingness of the chosen success model to share inside information about the trade (especially marketing techniques) to those to be trained is a complicated task requiring considerable perceptive judgment by the catalyst. Over time, and as circumstances change, the motivation shown at the outset may change. The field worker should not let this be a discouragement; because judgment can improve with experience.
HOW and when to compensate the successful person for his training services? There are several perspectives on the issue of compensation.
Many successful persons who have broken the poverty cycle (such as the Tolentinos) have not forgotten their roots and the suffering of their compatriots. Such people are often generous with sharing their new skills with less fortunate families without thought of reward. This volunteer spirit should be encouraged and their free assistance in training others readily accepted. Such persons accrue good will and receive recognition and status in their community when they help their peers.
On the other hand, the catalyst will find success case individuals who have worked very hard to achieve their high income and would not consider training others without compensation. Many expect payment at least for the time and money lost due to training others. Such persons still make excellent trainers and prove valuable to others. When the burden of helping others make money - without receiving anything in return - becomes unacceptable to the volunteer, compensation can be arranged or secondary success case persons may be used for training.
Mrs Nilmini, the Sri Lankan success case mushroom grower, led training sessions for several months without charge. However, as demand for her services grew, she began to charge SL Rs 250 (US$3.50) per threeday training session. The trainees accepted this as appropriate because they knew that growing mushrooms would be highly remunerative. The training fee helped keep the trainer active in the programme. She planned to train 300 families by the end of the year 2000. In fact, she admits to - at one stage - earning more money from training than from her own mushroom farm.
The Thailand cubic zirconia project trainer, Mr Sanguan, was losing a month of income by travelling 30 km to the training site each day, so he requested US$12 daily compensation for his time, skills and travel expenses. This was deemed appropriate compensation as the prevailing daily wage for ordinary skilled labour, such as carpenters, household electricians and painters, ranged from US$4.75 to US$6.50. In addition, the entrepreneur could easily earn more than US$25 per day by tending his own gem polishing business because he had some 200 workers in his own village.
Nonetheless, the government officials involved with the project were unhappy when the project agreed to pay this fee. They disapproved of the comparatively high level of compensation because, they said, it was more than their own salaries (about US$5.00 a day). In addition, they said that the success mentor was an ordinary villager, essentially uneducated, who could not read and write skilfully. Officers making the argument ignored his skills in gem polishing and marketing and his high income.
To counter this negative attitude, Cost/Benefit analysis was used to measure the increased income that Mr Sanguan would generate by training others. It was estimated that 15 trainees would become successful polishers. They would be expected to work with gems only 180 days per year because of family farm obligations such as rice planting and harvesting. Their daily wage would be estimated, conservatively, at B50 (US$1.30) per day, even though the average wage of ordinary youth in similar operations run by Mr Sanguan ranged from B70 to 120 per day (US$1.80-$3.10). Accordingly, 15 workers multiplied by 180 annual workdays at B50 per day, would yield an overall increase in income of B135 000 (US$3 515) for the participating trainees in the first year alone.
Compared with the B9 000 (US$235) cost of Mr Sanguan’s services, the benefits clearly merited the investment. The exercise helped reduce the jealous reaction of some government officials and exposed them to the idea of supporting program personnel regardless of class and social position.
As in the case above, it is prudent for the catalyst to obtain profit estimates for any new income earning activity. Then, using conservative estimates of the time worked, volume produced, production and marketing costs and the prices received, net earnings can be projected, once training is complete. This can then be compared with the cost of the training, including the compensation paid to the success case trainer, to determine if the benefits justify the costs.
In conclusion, the catalyst should encourage those who are willing to train others free of financial reward, but should not take undue advantage of volunteers over a long period. At the same time, paying some trainers for their services may well be justified, especially if Cost/Benefit analysis shows that the income generated will more than offset the training costs.
Case No. 24. Spoiled milk
Case No. 25. A sustainable organic rice system
Case No. 26. Poor quality rubber reduces bulk price
4.1 Training schedules
Case No. 27. Strawberry cultivation in Thailand
LIKE much of the methodology, training should be tailored to suit the enterprise or activity to be replicated. Fortunately, the success case person can usually judge what manner and duration of training is required.
Regarding cubic zirconia polishing, Mr Sanguan estimated that three months daily training would enable each trainee to produce fine quality gems to market standard - and assure an appropriate personal income for each worker and a good profit for the business as a whole.
On occasion, the field worker may be able to use a simple one-step training session to correct a problem, such as in the case of the spoiled milk:
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The Livestock Department in Thailand’s Ministry of Agriculture introduced dairy cows to a resettlement village of 12 families. There being no commercial dairy, one officer in the animal husbandry department of a local university collected village milk for processing at the university. However, he reported that much of the milk spoiled before being processed. Accordingly, many families were earning little from the dairy operation. Informal discussion with the farmers revealed that many believed the university officer who claimed to be helping them was really cheating them by keeping the income from selling their milk elsewhere, while reporting to them that it had spoiled. Furthermore, as one family always received full payment for all its milk production, several other farmers suspected that this family had cultivated a special relationship with the university officer. The successful farm family milked their own cows. When asked by the extension worker why their output did not spoil, they said they did not know, but agreed to have their peers observe the milking process. At each stage, alcohol was used to clean the containers and instruments that came in contact with the fresh milk. Up to the stage when the milk was stored in a sealed container, the peers noted that their milking procedure was identical to that of the prosperous family. However, after the milk was stored, a small portion was poured
into a narrow cylinder and a metrolac (floating glass bulb) was used to measure
the milk fat content to determine the final price of the product. At this point,
the successful farmer thoroughly cleaned (with alcohol) both the metrolac
and the cylinder, before pouring in the fresh milk. With gasps of
recognition, the observing farmers realized that they had not cleaned both items
with alcohol before doing this step. As a result, contaminated milk was being
added to the stored milk, causing the whole batch to spoil. The source of the
milk contamination had been found. |
When designing the training programme, it is advisable to keep in mind that most agricultural activities require training at various points in the production process, perhaps with long periods in between, when only weeding and occasional watering are needed. A typical example, concerning the introduction of an organic rice variety in the Philippines, follows:
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In the 1970s, an NGO, Philippine Development of Human Resources in Rural Areas (PhilDHRRA) joined a three-way programme with government and farmers resettled on land reform farms to promote development in such areas. Problem solving sessions held in the mid-1980s identified declining profit margins for high yielding rice varieties (HYV) as a major cause of indebtedness among poor farmers. Despite higher yields, farmers often fell further in debt, primarily because of the high cost of pesticides and chemical fertilizers. Organic rice boosts farmer income A search was begun for a rice variety that would give acceptable yields without the need to rely heavily on chemicals. Eventually an organic variety named Masipag was developed and performed well, even in years of adverse weather. Field trials confirmed that the new rice had a lower average yield than HYV, but the net profit per acre was P3 316, higher than HYV, due to reduced pesticide and chemical fertilizer costs. Subsequently, Father Francis Lucas of Infanta, Quezon, established a Masipag training farm, which in a 16-week training period could upgrade many farmers. However, with thousands of land resettlement farmers to train, the school had insufficient capacity and PhilDHRRA did not have funding for the large extension staff that such a programme required. At about this time, PhilDHRRA joined the joint ESCAP/FAO Success Case Replication project. Those attending Father Lucas’ training farm were taught to use SCR to train their neighbours by using their own Masipag rice fields, and then to encourage the most successful replicators to train multiple generations of replicators. Genre Bicaldo, the first successful Masipag organic rice cultivator in his community, trained 10 key replicators, who in turn trained another 167 villagers in the next two rice cycles. The Cost/Benefit analysis of this SCR came out at a modest 1:7. However, because subsequent generations of trainees will be trained at no charge on their neighbour’s farms, the ratio will improve. For PhilDHRRA, the extension dilemma was solved. Predictably,
they have expanded the SCR operation to include all land resettlement
areas. |
Another example of a multiple-step agricultural training programme is the mushroom project reviewed above. Intensive instruction was required at the beginning stages when beds of rice straw were being prepared and the spore was seeded onto the beds. Once growing commenced, the process of maintaining dampness and temperature was simple, requiring only a brief instruction session and occasional inspections by the success case individual to observe the growth process.
The attack by termites came during the growing season, and the crop was lost because chemical sprays could not be employed without contaminating the crop. Had the crop survived to maturity, additional training would have been necessary during harvest and marketing stages. Hence, the mushroom specialist necessarily lived near the target group to be available for each stage of growth.
Training in the Sri Lanka coir yarn project was segmented. Four to six months wait was needed for the coconut husks to soak sufficiently to separate into weavable fibre, followed by training in weaving techniques.
In planning training schedules, it is important that the success trainer agree that all trade and marketing practices are to be fully shared and discussed with the trainees. In many cases, such perspectives on earning a living can mean the difference between fair and appropriate profit or significant losses.
Rely on the success case individual who will actually do the training to plan the training schedule. If one-on-one or apprenticeship training is foreseen, the extension worker might schedule flexibility in training so that more time may be dedicated to problem areas.
When the Tolentino’s trained new bakers, they projected two weeks of on-the-job training as necessary for persons unfamiliar with baking. Their first trainees, both husband and wife, had previous bakery experience and did not need the full two weeks to master the process. But they did need more instruction and practice in marketing, a skill they particularly lacked.
The question of skill level arises when a complex process is introduced by a success person. The SCR project found that success case persons often significantly underestimated their personal skills. Perhaps this is because their skills have been developed and perfected unconsciously over time, sometimes through much of their adult life. Success persons therefore tend to assume that trainees will learn new skills more rapidly than is realistic. For this reason, it is wise to assure that the trainer is available for additional or prolonged skill training for trainees whose product quality does not meet the standard at the end of the planned training.
In training to make Chinese steamed buns, an older person had insufficient dexterity to properly form the buns to be stuffed with filling and pinched closed at the top. The trainee simply could not master this skill (perhaps due to arthritis). A creative solution was found: a young neighbour joined the training, and learned the skills as well, to help the older person make buns each morning before going on to school.
In the imitation diamond polishing project, two young trainees were unable to learn to cut correct facets during the three-month course. One youth dropped out of the programme, while the second received additional training before her skills were brought up to standard.
A third case concerns the marketing of rubber in a group marketing training programme:
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Rubber Group Marketing Organizations were established in Southern Thailand in the 1970s using existing successful groups to form and train new groups. One new group was formed near an existing success group. As is customary, members of the successful group gave direct instruction to members of the new group to raise the quality of their rubber sheet to the grade one level required for the highest market price. Since the two groups were in close proximity, the success group invited the new group to combine their rubber sheet with the bulk of the mentor group to increase the bargaining power of both in the market place. However, some rubber sheets of the new group were clearly below grade in quality, and the buyer used the inferior sheets to bargain down the price of the entire bulk lot. This caused much dissatisfaction among the success group members, who resented members of the new group for causing them financial loss. Immediately after the bulk sale, when individual payments were made to each member for their share of the bulk, members of the old group severely criticized the members of the new group for causing the reduced price. Members of both groups agreed that the new group’s
production would be inspected by the success groups’ grading officers
before being combined in the overall bulk, so that inferior rubber could be
removed before sale. This method had the advantage of forcing producers of poor
quality sheet to improve their processing techniques or lose the higher price
gained by the group sale. At the same time, additional instruction was arranged
in quality production for those whose rubber was inferior. |
THE preceding examples have focused on potential difficulties. Now we will focus on how a successful training programme schedule was developed. The Tolentino bakery training schedule is our example.
First, when their bakery was identified, confirmed a financial success, and the Tolentinos agreed to train others, they helped design the training course. It was decided that trainee candidates wanting to manage a bakery must first visit the Tolentinos to see their entire operation - from buying supplies to selling baked goods. Only by observing the entire process could the trainees understand the requirements in terms of skill, time, effort and financial commitment. Then, should the new trainees agree to the terms of training, a full course of study could be planned.
The Tolentinos first visit potential trainees to determine if their community can support a bakery - in terms of potential market (customers) and existing competition. Only if the new trainee’s community passes both tests will the Tolentinos do the training. If both tests are passed, two weeks practical training follows, living at the Tolentino bakery for practical training. After the trainees master each stage, and produce and sell baked goods they have made in training, they return to build their own oven. Nelson Tolentino visits for one week to help build the oven. When the trainees begin marketing, Colita Tolentino does a quality control visit, reviews marketing and assesses accounting procedures. The Tolentinos are available for emergency help, or counsel if the venture is unprofitable. This exemplifies a short course that can be established for simple enterprises.
Different enterprises require different training schedules. Polishing diamonds, however, requires that the success trainer visit the new site daily for the first month to coach each trainee. In subsequent months, training is reduced to three days a week, and then once a week. Nine weeks training was used for this enterprise.
For another example of training schedules, let us take the case of a successful strawberry farmer helping his neighbours.
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Thailand’s Department of Agricultural Extension assigns officers in the highlands to work with ethnic minorities. Due to the temperate climate, strawberries can be grown there, and are a lucrative crop. Demand is high and the profit margin large. In one valley, an extension officer profiled 26 families growing strawberries on adjacent plots. While most growers obtained a net profit of $190 to $245 per rai (one acre = 2.5 rai), one grower consistently achieved a net profit of $542 per rai, more than double the average net return. The successful farmer did not know why his yield and quality was superior to that of his neighbours. Strawberry producers reach a niche market Market potential is excellent. The demand for strawberries greatly exceeded what could be produced. Attractive berries were sold at premium prices to the national airline flight kitchen, while lower quality berries were sold to an agribusiness to make strawberry jam. In view of the market demand, it was not surprising that the success case farmer readily agreed to train his neighbours. Training was offered at no charge, on condition that the neighbours contribute labour at each step of the process. The successful farmer scheduled one trainee from each of the 25 neighbouring family farms. Following each step of hands-on training on the success case farm, trainees returned to their own farms to apply what they had learned. Not surprisingly, most trainees doubled their income that
year. In addition, because of the enhanced cooperation, the families decided to
join together to sell their produce in a group, furthering their bargaining
power. Finally, the successful farmer obtained free labour for an entire
strawberry season. |
In review, the field worker should design a training programme that is practical, participatory and covers:
During training, it is important that every trainee understand and carry out each step in the three stages themselves, under the success trainer’s supervision. Explaining that the raw material is located at such a town, at such a price, is insufficient. The trainees must be led through the entire process, carrying out each activity individually. In the end, each trainee must undertake the new enterprise on his own. Therefore, it is appropriate to apply training time to assure that the processes are understood, and that trainees understand possible problems and corrective measures. It is better to invest time in problem solving during training, than to require bringing back the success case trainer to correct problems after training is finished.
Case No. 28. Bhutan mushroom culture: A credit problem
Case No. 29. Mat weaving in Nepal
IF training follows the guidelines given above, the field worker is assured that most trainees will succeed in their new enterprises. However, trainee selection also plays a critical role in SCR’s own success rate.
This is perhaps the simplest and most critical task facing the SCR field worker. Mistakes at this stage are obvious. For example, a group of farmers at an introductory meeting were exposed to various successful farm enterprises, including fruit growing, as alternatives. As they listened to success persons telling their stories, interest was uniformly high among the target farmers. As each successful income-producing opportunity was presented, the farmers eagerly asked questions. When a fruit grower told his story, however, the farmers lost interest. Inquiries revealed that fruit growing had previously been tested in the area and had been a costly failure to all those involved.
To avoid such embarrassing mistakes, it is sound practice to ask the target group which of the success case possibilities being presented are of particular interest to them. They will draw on past experience to decide what is appropriate. If there is uncertainty, the target group or its representatives may visit the success cases. During visits, they will be able to determine if the chosen cases are relevant to their village. This has been found to be true even where the enterprise is entirely new to the target group. They have their own sense for accepting or rejecting new ventures. It might be wondered how they can reject an enterprise without knowing more, but the field worker must be advised not to try to force a new technology, no matter how appropriate and profitable it may appear, on a group or person who is clearly unconvinced of its potential. In SCR project experience, this usually leads to a high failure rate.
Trainees should now be selected. To achieve a high success rate in the training it is essential to identify trainees who are strongly motivated to persevere until their new enterprise succeeds. They must contend with any problems that arise or be ready to ask the trainer for further advice. If they are not strongly motivated at the outset, the failure rate will rise as soon as they meet difficulty. Sensing such commitment on the part of the target group is usually not difficult, as trainees tend to show their scepticism or enthusiasm honestly once they come to know the field worker.
At this stage, it is usually suitable that the target trainees visit the chosen success case, to have the success case person describe the success at a prearranged meeting. It is during such introductory sessions that the sincerity and interest level of the target group can be judged.
If motivation is sufficiently present, proceed with the training. If it is lacking, don’t try to “sell” a new enterprise to unreceptive recipients. In the end, much valuable time will be spent in fruitless attempts to save dying enterprises.
Of course, in addition to strong motivation to replicate the success case, trainees need other prerequisites to successfully conduct the enterprise. For example, sufficient land, access to sufficient water, or tools and equipment to begin the activity. Funds for these may, or may not, be available, as in the case which follows:
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Growing mushrooms on oak logs has proven to be a lucrative sideline enterprise in Bhutan. Farmer K. Wangdi of Paro Valley was a most successful trainee in the government sponsored extension programme. Mr Wangdi trained 19 neighbours in the new enterprise. It went well and the trainees sought start-up loans from the Bhutan Development Finance Corporation, the government’s rural development bank. However, established bank policy was that any subdistrict
having overdue loans above a certain limit would no longer qualify for loans
until the defaults had fallen below the ceiling. The subdistrict in which Mr
Wangdi conducted the training exceeded that limit, so no trainees could obtain
loans from the bank. Hence, the SCR training proved frustrating for all
concerned by raising levels of expectation which could not be
satisfied. |
In the following cases, we demonstrate how trainee selection can improve over time:
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In Nepal’s Terai lowlands adjacent to India, villagers traditionally crafted a woven mat from a soft, flexible reed which grows in marshes. Called a patiya, the mat was traditionally a standard household item, used for sitting. Although it was popular in the past, in Sikron village only one person, an aging man named Bindi Kapar, retained the knowledge of how to weave it. Concerned that the tradition might be lost, a field worker from the Centre for Self-Help Development (SCR project counterpart agency in Nepal) chose this enterprise as its first training programme. The extension worker selected five trainees, of whom only two were successful. Training costs were NRs 1 820 (US$27) and net income in the first year NRs 44 100 (US$644), yielding a Cost/Benefit ratio of 1:24, a good performance. The income was high for those who succeeded, but the overall trainee success rate was low. Other villagers heard of the success. In a second round of mat weaving training, the 10 trainees selected by the field worker were all successful. The catalyst’s ability to select trainees improved with practical experience. The weavers produced a high quality product and as production increased, buyers from nearby India purchased the mats in volume at a good price. Subsequently, the 12 originally successful trainees trained a further 121 families through a series of multiple replications. Eventually, every shaded public area in Sikron village was occupied by mat weaving frames. Sales to the Indian market are now transported by six-wheel trucks. Meanwhile the sales price has remained higher than that received for individual mat sales in other villages. Patiya mat weaving was not the only SCR training undertaken by
the Centre for Self-Help Development. Other enterprises were replicated
successfully and some showed similar trainee success rates: |
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Round 1 SCR rate |
Round 2 SCR rate |
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Vegetable cultivation: |
2 of 5 |
4 of 4 |
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Mooda stool making |
1 of 5 |
5 of 10 |
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Tika facial cosmetics: |
2 of 2 |
3 of 3 |
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Nunglo rice winnowing trays: |
5 of 5 |
3 of 3 |
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When workers were trained to produce nunglo rice winnowing trays, the first eight successful trainees trained 27 more families in Malhaniya village, which has become a bulk export buying point for Indian traders. Only one first-round trainee successfully crafted the more
complicated mooda stool, but she was subsequently hired by ten relatives
in nearby Sikhim to train them in this art. She was paid NRs200 by each trainee,
and they sponsored travel, lodging and meal costs. Five trainees succeeded in
their new enterprise. |
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Because the SCR project targeted the very poor, there was an inclination not to ask trainees to pay for training. There is a history of rural employment training, conducted free-of-charge, including older persons, children and others with no intention to follow through once training was completed. Many trainees attended for meals and lodging, or from curiosity. Understandably, the success rate for such training programmes was very low. In one instance, a Nepalese counterpart informed the SCR project of being hired by an international agency to evaluate an employment training programme in sewing. The training had been conducted on a large scale during five years, with more than 2 000 women attending. The evaluation revealed that less than 2 percent actually took up sewing as an occupation after training. Such training is clearly wasteful.
In contrast, the SCR programme demonstrates that when clients pay for the training course, and food and lodging are not free, those who agree to train have a strong commitment to replicating the enterprise. Hence, when the success person requests compensation for teaching, SCR generally accepts. Training costs are usually modest, as with Mrs Nilmini in Sri Lanka who charged SL Rs 200 (US$2.86) for three days training in mushroom culture. Most trainees considered the amount modest and affordable.
Nonetheless, some potential trainees, despite having a strong interest, cannot afford the training fee. In such cases, two solutions have been found. The first is to arrange a loan package from a rural bank to include the training fee and an enterprise start-up loan. The trainee then repays the training fee as well as the loan to the bank.
A second solution is to convince the trainer to allow the poorest participants to attend without paying in advance. At the training, such persons contract with the trainer to pay the fee once their new enterprise begins earning a profit. This solution seems to work where rural banks are unable or unwilling to help with the fee. The SCR project found that trainees who become successful in their new enterprises usually feel indebted to the success trainer and are quite willing to repay training costs once they have adequate income. Those whose enterprise fails are not asked to pay.
In summary, selecting trainees is an important step in the SCR process. There is a strong element of cultural judgment in the selection process. The field worker will have to hone special skills in judging the sincerity of those wishing to attend. Setting a fee for training is a good way to eliminate those who are not serious and do not intend to begin a new enterprise. For those too poor to pay a training fee in advance, credit may be arranged, or the success mentor may be willing to receive the fee once the trainee has income from the new enterprise.
Case No. 30. Price fixing by rubber buyers
THIS is perhaps the least demanding step in the SCR system. The main purpose in attending training is to assure that all the trainees receive all the information that is necessary to succeed at their new enterprise. This includes the three key elements of any enterprise:
The field worker is advised to remind the success person, throughout training, that trade secrets not shared with trainees may lead to the trainer having to return to deal with problems which might have been avoided. The field worker and the success trainer should thoroughly review problems encountered during early development of the model enterprise and the field worker may remind the trainer to include potential problems and solutions during training.
A case in point concerns the marketing of rubber sheets, in which a group of rubber buyers colluded to fix a very low price:
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When a successful village rubber marketing organization helped train a new group in a nearby village, its member warned the new group that during their early efforts at group marketing, all the local rubber buyers colluded to set a very low price. They recounted the struggle to decide what to do. In the end they decided to delay the sale while financially solvent members loaned money to those in desperate need of funds. The group then arranged transport to move the rubber to the district market, where they received a higher price, but lost money due to transport costs. The action was a lesson to local buyers who understood that they lost business when the rubber was sold elsewhere. At the next sale, the producers had transport standing by but it was not used, because the buyers offered a fair price. The new group encountered a similar problem at their second
sale, but having been forewarned by their SCR trainers, they were prepared to
transport the rubber themselves. Before they loaded the rubber for shipping, a
local buyer relented and offered a higher price. Thanks to problem oriented
training, the trainees were prepared for this eventuality and benefited
immediately. |
FOLLOW-UP assistance helps the field worker understand some of the many things that can go wrong when trainees begin new enterprises. Few enterprises are free of problems in the early stages of evolution toward success. The difference between ventures that succeed and those that fail is often found in the problem solving skills and perseverance of the success case person. In fact, it is this experience with the competitive market situation that makes the success person an expert.
Since it can be predicted that most all enterprises will encounter start-up difficulties, it is necessary to establish a follow-up system whereby the success trainer will be available to help trainees when they encounter difficulties. Recalling the case of the glue-like pig skin, it is likely that the new enterprise would have failed had not the trainers been available to correct processing errors.
When timely follow-up does not occur, it can lead to the failure of what otherwise might have been a successful rural employment project. When the village head blocked the raw material flow to the cubic zirconia polishing project and drove out the trainees, only to replace them with relatives, a timely visit by either the field worker or trainer would have revealed the presence of problems, before the young workers abandoned the enterprise.
Effective follow-up instruction is demonstrated by the Filipino husband and wife trainee team after SCR training by the successful Tolintino family. On returning home, trainee Mang Raman Magricia built an oven from an old refrigerator. The fire door was located in the front of the oven, beneath the baking chamber door. This location made for a very hot workplace and allowed smoke to leak into the oven, spoiling the flavour of the baked goods.
When success case trainer Nelson Tolentino inspected the new bakery he saw the defective fire door design and advised building a better oven. Because of their new income from their enterprise, the Magricia family soon built the improved oven. It not only reduced the workload and enhanced product flavour, but also allowed for higher production. In this case, timely follow-up advice from the trainer improved the trainee’s bakery.
Should trainees make a genuine effort to get a new enterprise started, but encounter problems early on, they must be able to receive emergency help from the catalyst or the success trainer. Often, if the problem concerns the procurement of raw materials or product sales, the problem may be urgent. The lack of raw materials can bring the entire process to a halt. Even worse, problems in marketing can cause a crop or product to spoil before it is sold. This can spell disaster, as the loss in financial terms can be large.
In many rural areas, communication is poor. Trainees must be able to consult with the success trainer quickly when the need arises. If the success person is not accessible by telephone, the trainee may have to travel for a face-to-face meeting. By whatever method, it is important that help be available to trainees after the programme. Otherwise a programme can fail.
When communication systems are unreliable or nonexistent, it is good to have the success case trainer present at the initial sales of the finished product. This is when problems may arise, as buyers are often ready to take advantage of newcomers unfamiliar with the many tricks the buyer can muster. These can range from having weighing scales adjusted to give false weights, insisting on delayed payment, or making special deductions for unfamiliar items, e.g. excessive water in rubber sheet or dirt on the product.
Other times when follow-up assistance may be required include:
In conclusion, most new enterprises will encounter difficulties, which threaten success. Although some problems can be foreseen by the success mentor (based on personal experience), and trainees can receive warnings during the formal training period, there is no substitute for personal help from the success mentor when and where the problems arise.
This assistance, or its lack, can make the difference between success of the new operation, or its failure. Therefore, the field worker must lay the groundwork for assistance before formal training is completed. If necessary, the new operation most be monitored at critical stages so that trainees are able to consult with the success case mentor when problems first arise, before they overwhelm the new operation.
Case No. 31. Mrs Nilmini’s mushroom replication project
Case No. 32. Women’s credit in Mongolia
ACHIEVING one success in replicating an existing success case is commendable. But if only one new success is created, the true potential or power of the methodology will not be realized. This potential resides in the process of having newly successful persons agree to replicate the success, again, with another set of persons, or in another location or for another target group. The multiple replications of the mushroom project in Sri Lanka provides a good example:
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Nilmini Gamage was a poor villager living in Galle province in southwest Sri Lanka when the SCR project started in 1995. She had been trained in mushroom production by FAO a few years earlier and had achieved a modest income from this enterprise, which she located in a back room of her mud hut. As a part-time field worker for the Rural Development Training and Research Center, a counterpart agency of the SCR project, she received a modest monthly incentive for assisting local participatory groups. In this capacity she was selected to attend the SCR Training Seminar in 1995. Following training, she chose to replicate her mushroom operation. She initially trained 10 families in her own community. Of the 10 first generation trainees, six persons in turn trained another 21 replicators. Of them, five trained another 30, who comprise the third trainee generation. Within three and one-half years, 13 generations of replicators were trained by Mrs Nilmini and her students. Some 164 families in 27 villages have succeeded in the mushroom enterprise. Her records indicated total costs for training of US$718.82, which generated an annual net profit for the trainees of US$61 074. When costs are compared to net benefits, the ratio works out at 1:85, the highest Cost/Benefit ratio achieved in the entire SCR project. In the course of her SCR effort, Mrs Nilmini was transformed from a reserved rural woman to an effective trainer, competent entrepreneur, innovative marketer and responsible project manager. How did this happen? First, early in the training, she charged the trainees SL Rs 250 (US$3.52) for each three-day mushroom training session. Second, she travelled more often to distant Colombo to buy chemicals and spore, which she sold to trainees at a 15 percent profit. Third, mushrooms were previously unknown in the local diet. To enhance demand, she taught neighbours how to use mushrooms in existing local dishes. At the same time, she contacted hotels and established herself
as their sole source of mushrooms, which enabled her to buy mushrooms at a high
base price from her trainees and still show a good profit. Finally, she was so
successful that the Canadian Government provided a grant of SL Rs 200 000 (US$28
476) to establish her in a local office for SCR mushroom training. |
As long as market constraints do not inhibit the spread of a successful enterprise, it can be expanded through multiple generations of replications. In fact, in the case of the bakery project wherein Colita and Nelson Tolentino conducted the training, they were willing to train anyone outside their market area as long as intense bakery competition did not already exist in the new area. They felt that all villages beyond the delivery range of city bakeries could support at least one local bakery.
On a larger scale, multiple replications can transfer new technology from one province to another and, eventually, throughout an entire country. Such replication has been achieved in Mongolia in a women’s credit operation:
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The Mongolian Women’s Federation, working closely with the national Poverty Alleviation Programme Office, was chosen as an SCR counterpart agency because it commands a management structure which reaches into the subdistrict level. Under the SCR project, the Women’s Federation began a modest lending scheme at the subdistrict level through which individual women could borrow US$25 for 30 days at an interest rate of 8 percent per month. The high interest rate, 96 percent per year, was necessitated by a high inflation rate, while the fast turnover period of one-month was designed to enable many women to receive loans from minimal loan funds. Mongolian women are entrepreneurs The project reported 35 SCR training sessions in ten enterprises with 139 trainees. Training yielded a 92 percent success rate with average income gains of roughly US$60. Delivery costs totalled US$736 while net income gains totalled US$8 433, yielding an appropriate C/B ratio of 1:12. Some 234 loans were made during the trial period with 202 leading to full-time occupations. Despite a few enterprise failures, 100 percent loan recovery was achieved. With the poverty line established at US$22.61 per month, the increased incomes from the loans - ranging from US$26.09 to US$65.22 - were greatly appreciated. Many women used such loans to start small household necessity stores. They were profitable for two reasons: first, the virtual absence of such shops due to the collapse of the commune system and second, the proximity of China, where animal skins bought in rural Mongolia could be marketed at a high profit. Profits were used to buy cheap goods in China for sale in Mongolia. Profits of 100 percent were often achieved within the one-month loan period on the US$25 loans. Other enterprises replicated under the SCR programme included the production of herders boots, camel hair rope, cold weather clothing, fuel briquettes made from animal dung mixed with charcoal, baked goods, herding tools, cook pots, school sports wear, and wooden doors and roof vents for herders tents. Many multiple replications were achieved in the immediate
vicinity of the first successful subdistrict. It was further planned to conduct
systematic replication to neighbouring provinces. To achieve this
inter-provincial transfer of technology, the most successful subdistrict in
Dorni Gobi province, Saikhandulan, became a training base for selected
subdistricts of the three neighbouring provinces. Once the subdistricts succeed,
they will train more widely within their own provinces in a radiating pattern.
If this system proves effective, it will eventually be used in all
Mongolia. |
In this case, it is seen that the SCR system can be used on a larger scale that enables the success case to be systematically replicated across provincial borders. Once successful replications are established in a new province, then a radiating system of SCR training can begin to replicate the success to other districts within the new province. Widespread coverage can be achieved at low cost via the system. A similar multiplication system was used in Southern Thailand to replicate the Rubber Group Marketing concept. In 1973 only 64 successful groups were operating in the three provinces closest to the centre. By systematically using the most successful groups in the three provinces to train new groups from neighbouring provinces, more than 500 new groups were established by 1978. They covered Thailand’s 13 rubber-cultivating provinces.
In summary, both the field worker and the success person should contract with all trainees that, should they become successful, they in turn will train an appropriate number of new people from outside their market area or below the market saturation point. This is the only way to achieve replication with a geometric rate of expansion.
AS mentioned above, few agricultural extension, rural development or employment promotion projects conduct even basic Cost/Benefit analysis of increased income generated for the rural poor, even when this is the avowed output of the project. In many cases, this may be due to the difficulty of obtaining meaningful data at family level when illiteracy prevails and the time span covers many months or even years.
In the absence of such data, it is impossible to conduct even a rudimentary evaluation. Therefore, gathering Cost/Benefit data should be made the responsibility of field workers from the outset of any SCR trial project. This data is relatively easy to gather. It requires only three steps:
Once all the above data is complete, simply total the net income data from the successful trainees, and divide this figure by all the cost data, including the cost of the field worker and the training costs. The ratio of these two figures is the Cost/Benefit ratio.
For example, let us assume that the following figures were obtained for all the time spent by the field worker on one SCR training session:
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(1) finding success case: |
half day |
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(2) evaluating success case: |
half day |
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(3) designing training course: |
full day |
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(4) selecting trainees: |
two days |
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(5) supervising training: |
three days |
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(6) following-up training: |
two days |
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(7) recording net income: |
two days |
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Total time spent on this SCR: |
11 days |
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Daily wage of field worker is |
US$2.50 |
Let us assume that the costs for training, in this sample case, are:
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(1) payment for trainer: |
US$4.00 |
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(2) payment for training chemicals: |
US$2.00 |
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(3) payment for travel of trainer: |
US$0.50 |
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(4) payment for equipment: |
US$1.00 |
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(5) payment for use of training site: |
US$2.00 |
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Total training costs: |
US$9.50 |
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(1) |
Mr A |
Failure case |
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(2) |
Ms B |
US$271.00 |
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(3) |
Mr C |
US$185.00 |
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(4) |
Ms D |
US$315.00 |
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(5) |
Ms E |
Failure case |
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(6) |
Ms F |
US$211.00 |
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(7) |
Ms G |
US$97.00 |
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Total net earnings for first year: |
US$1 079.00 |
The field worker can now calculate the Cost/Benefit ratio by placing total costs totalling US$37.00 over net earnings from this SCR = US$1 079.
Total costs: US$ 37In other words, for each dollar spent for this SCR training, the successful trainees gained a total of US$29.20 of net income.
Net earnings: US$1 079 = ratio of 1 to 29.2
This Cost/Benefit ratio is almost identical to the ratio achieved in Viet Nam by the Ministry of Labour, Invalids, and Social Affairs during its first set of SCR field trials from 1994 to 1996.
It is relatively easy to obtain the data for this calculation because the field workers know how much time is spent on each training programme. They are usually responsible for payment of direct training costs and are therefore in a good position to calculate the total costs for each SCR.
However, regarding benefits, field staff may find it more difficult to obtain the net income received from the new enterprise for each successful family during the first year of marketing. There are several reasons for this:
Guitar crafting venture in Viet Nam
First, many rural poor do not keep any form of permanent record of enterprise costs and net returns. However, they may well know the real costs and net returns for each batch or other units of production, and thereby know that their enterprise is profitable on a day-to-day basis.
Second, the rural poor are not used to deducting depreciation on equipment or for personal labour, although they are always willing to deduct labour for which they pay cash wages. Hence, their crude net return calculations usually show the earnings for their own labour as part of net profit and they do not usually include deductions for depreciation of equipment.
Third, marketing may be seasonal, producing income only during part of the year.
Given this reality, the field worker may need to compensate for these deficiencies as follows:
(1) project daily, weekly, or monthly net earnings over the full year for annual net incomeIf the above allowances and adjustments are made carefully, in consultation with the successful families, then net income data will probably be sufficient to allow a basic estimate for C/B analysis.(2) allow for seasonal fluctuations in projecting income over the full year.
(3) further deduct, from net profit, depreciation on both equipment and family labour contributions.
To achieve an overall project C/B analysis, simply take all net income achieved by all the SCR training programmes and divide them by all the costs incurred for these training programmes. For example, Viet Nam’s SCR field trials from March 1995 to November 1996 ended as follows:
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(1) MOLISA trained 656 households in 16 enterprises |
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(2) field worker costs and training costs totalled US$4
272 |
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(3) annual net profit for all trainees came to US$114
551 |
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Therefore, the Cost/Benefit ratio equals: |
US$ 4 272 = |
1 to 27 |
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US$114 551 |
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Average annual income gain was US$264, doubling income of most families. Total income gain was US$600 201 against a cost of US$34 167, yielding a benefit/cost ratio of 18 to 1. This expansion phase in Viet Nam may indicate that SCR can still achieve an appropriate Cost/Benefit ratio even when expanded on a large scale.
Assessing the Cost/Benefit data was well rewarded because the data clearly proved that SCR methodology is cost-effective. These figures can be used to substantiate the overall benefits of the programme and convince donors to fund further activities. Experience shows that most donors are pleased to be associated with successful programmes that enhance the incomes of the rural and urban poor.
The development of SCR methodology continues. It may take new forms in each country. It is hoped that this manual can be of multi-level use in many societies. It is our hope that you will find the same satisfaction that we have found in helping the poor learn new occupations, and through their own efforts, free themselves from the oppressive cycle of poverty.
