Posted on February 24, 2014 by Brian Foster, agribusiness consultant
Farmer cooperatives, particularly in the dairy industry, form a very important and successful part of American agriculture. The model gives small farmers the benefits of professional storage facilities, processing equipment and reliable demand for their products that would be out of reach if they had to work on their own.
The cooperative model is a risky and challenging approach that requires a lot more effort than working with private enterprises. Members need to build trust and agree on roles, responsibilities, decision-making authority, and other difficult issues—but the results can be transformational for an entire community if it is done well.
MCC set out to make the same model work in El Salvador through the $71.8 million Productive Development Project, implemented from 2007 to 2012. The project worked with one new and two existing farmer co-ops in the dairy and horticulture fields as a way to contribute to rural economic development—but with mixed results.
The most challenging issue facing all three co-ops in El Salvador was obtaining loans to support ongoing operations as the end of the compact approached. Each co-op attempted to resolve the issue in a different way:
- The existing but failed dairy co-op owned a plant and equipment from a previous project, so its strategy was to approach commercial banks and attempt to secure financing using the equipment as collateral. The organization secured financing but ultimately failed for business reasons.
- The other existing dairy co-op had the advantage of being part of the Salvadoran government’s school milk program, guaranteeing a steady demand for fresh milk and timely payments. The risk, of course, was that a change in government or a significant reduction in the government’s support for the school milk program could put them out of business. Their main solution was to diversify their market for milk and look for a second large firm to buy fresh milk.
- The most perplexing challenge was with the start-up horticulture co-op, which had a lot going for it: It was well-managed, had firm supply deals with well-established retail supermarket chains and seemed to have loyal members dedicated to the “cooperative ideal.” The problem was that payment from the retailers was often delayed, causing severe cash flow problems. The co-op had very few assets to use as collateral, so bank financing was a challenge. Eventually, it managed to secure some loans, but at a high interest rate, and was attempting to raise funding internally from members.
The experiences with these three agricultural cooperatives in El Salvador presented an important lesson: The ability to access finance is paramount to sustainability and needed to be addressed at the start of the project. We must consider that once a co-op is organized (or resurrected) with a solid business model, good management, a competitive product mix, and plenty of capital at its creation, it will likely still need additional access to financing. In this project, access to working capital was the key stumbling block for steady growth among the three Salvadoran agricultural co-ops.
Have you had any experiences setting up agricultural co-ops as part of development projects? How have other projects addressed challenges around finance?
Posted on August 9, 2013 by Eliza Keller, Public Affairs Officer
In recent years, demographic changes and the rise of new technologies have positioned youth as drivers of economic and social progress across the world. Youth are key players in MCC’s mission to reduce poverty through economic growth; through engagement in the United States and in our partner countries, MCC works to empower youth with knowledge and economic freedom.
In the United States, MCC partners with universities across the country and includes students in today’s most pressing development issues through research projects, roundtable discussions and speaking engagements. And it’s not just university students getting involved—last week, MCC hosted a group of local high school students at our Washington headquarters. The students, all starting their freshman year, learned about our innovative model and the impact of our programs and engaged in a spirited discussion on emerging trends in development assistance with MCC experts.
Many MCC-funded programs overseas involve youth through investments in education, technical and vocational training and promoting entrepreneurship. In Namibia, for example, the MCC compact includes a program for young professionals to learn a variety of skills related to working in the tourism industry, like language training, communications skills and knowledge of local plant and animal life. With this expertise, young Namibians are better equipped to enter the professional market and lead Namibia’s growing tourism industry.
Youth in today’s global economy face unprecedented challenges—and opportunities. At MCC, we work to provide youth with access to these opportunities, enabling ownership and leadership for a more prosperous future.
Posted on August 3, 2012 by Preston Winter, Deputy Resident Country Director
The event was hosted by Santa Rosa Guachipilín, a small town situated on the newly-constructed Northern Transnational Highway, one of the key projects under the MCC-funded compact with El Salvador. The highway connects remote towns to the rest of the country and provides new economic opportunities for the residents of the Northern Zone. As part of this investment, more than 220 kilometers of road, three large bridges, and 20 smaller bridges have been rehabilitated or constructed in northern El Salvador to help improve connectivity with the rest of the country. Given the mountainous terrain, the highway also happens to be a great place for a downhill skateboarding event, drawing competitors from around Latin America and even the United States.
It was a joy to see so many Salvadorans, both young and old, enjoying the event. More than 45 skateboarders flew down the course at up to 45 mph. The highway, smoothly paved and ideal for such an event, overlooks the green mountains of the Department of Santa Ana. In between heats, we also enjoyed a variety of pupusas, local versions of shaved ice and other food that local vendors offered.
The mayor was very pleased to have such a strong turnout. Before the construction, it would have been rare to have a gathering of Salvadorans from various parts of the country, including many who had never before seen the town. Now it is only a short drive from nearby towns and major highways, opening up opportunities for visitors to enjoy the natural beauty that this region has to offer and attend unique events like this one.
Posted on May 9, 2012 by Jonathan Brooks, Managing Director for Europe, Asia, Pacific, and Latin America
A community irrigation system created with the help of MCC’s compact with Honduras recently received international recognition—the latest example of how MCC’s investments provide a model for sustainable poverty growth in our partner countries.
The Cosechas de Agua rainwater harvesting project, developed through the compact’s Agricultural Public Goods Grant Facility and managed by CHF International, received the Latin American prize for innovative water management projects in the face of climate change at the World Water Forum in Marseille, France, on March 15.
Cosechas de Agua harvests rainwater for use in irrigation in the arid southern municipalities of Nacaome, Langue, Goascorán, and Aramecina. It captures rainwater and then uses a system of hydraulic works, dams and pipelines to store and distribute the water to fields. The project aims to introduce complementary irrigation systems for 188 agricultural producers over 98 hectares of land, intended to increase their income.
Access to irrigation and other support through the compact was intended to allow farmers to diversify their crops, increase their yields and expand their access to new customers nationally, regionally and internationally.
The $50,000 prize—sponsored by the Mexican national water authority Conagua, the FEMSA Foundation, the Inter-American Development Bank, and the Water Center for Latin America and the Caribbean—will be used to develop the project over the next three years. Cosechas de Agua officials will also be invited to present progress on the system's economic, social and environmental impacts at the next World Water Forum in March 2015.
The Agricultural Public Goods Grant Facility was part of the $68 million Rural Development Project, which sought to increase the productivity and business skills of farmers who operate small- and medium-size farms, as well as their employees. The project is expected to help more than 357,000 people over the next 20 years and raise their household incomes by $53 million.
Posted on October 14, 2011 by Tanya Young, Program Officer, El Salvador
Despite progress made in recent years, development in El Salvador’s northern zone has been hampered by gaps in education and training. The Education and Training Activity in the Compact between the Government of El Salvador and the Millennium Challenge Corporation (MCC) aims to address some of these limitations. However, increasing the quality and capacity of formal and non-formal vocational programs only partially addressed some of the impediments to poverty reduction in El Salvador. MCC and FOMILENIO, the entity the Government of El Salvador created to implement the Compact, recognized that it would also be necessary to link students to the workforce in order to promote economic growth.
Recently, MCC’s Deputy Resident Country Director, Kenneth Miller, and FOMILENIO’s Executive Director, José Angel Quirós, were joined by Minister of Labor, Humberto Centeno, and a large audience of mayors, government officials, teachers, and students at the launch of the Sustainable Entrepreneurship and Labor Insertion Plan Program (also known as “PILAS”). The PILAS Program is an innovative approach to improving the incomes and real employment opportunities for 9,000+ participants in FOMILENIO’s Education and Training Activity.
By the end of the Compact, MCC expects to have invested over $30 million to promote quality education in the northern zone of El Salvador. To date, the infrastructure of 20 schools has been rehabilitated, a new state-of-the-art technical & vocational facility, the Technological Institute in Chalatenango “ITCHA,” has been built, over $3 million in scholarships has been awarded to over 3,000 deserving students, 500+ instructors have been trained and schools have been equipped with learning tools such as computers and software. To complement these efforts, the PILAS Program aims to link students and trainees with employers and opportunities for entrepreneurship. The $2 million dedicated to supporting this job placement initiative is expected to help ensure the sustainability of the education and training activity. Working together with local employment service agencies and regional NGOs, FOMILENIO has begun to connect the large youth population of the region with employment opportunities across the country.
Posted on June 9, 2011 by Bruce Kay , MCC Director for Threshold Programs
The Millennium Challenge Corporation’s (MCC) second (Stage II) threshold program in Paraguay received international recognition last month at the Brussels meeting of the World Customs Organization (WCO). Specifically, Paraguay’s web-based system for imports (referred to by its Spanish acronym, VUI), which was implemented at the Paraguayan Customs Office with support from MCC’s Threshold Program, was recognized and praised in front of 200 country delegates.
This web-based system was designed, developed and implemented in approximately six months, record time for a process that has taken some countries years to develop, and with less success. This state-of-the–art, innovative technology will increase coordination across government agencies and departments; while five institutions currently participate, the goal is to link all nineteen institutions involved in the importation process to the VUI system, thus providing a high degree of efficiency to the system. The short design and implementation phase, and the proactive approach with participating institutions, reflects the high degree of political commitment on the part of the Government of Paraguay, particularly the Customs Director, to this endeavor.
At the meeting in Brussels, representatives from Paraguay shared their practical experiences and lessons learned in securing and sustaining the political and administrative will that is required to implement the VUI. The VUI was developed as part of the Threshold Program’s customs component, which aims to strengthen the capacity of the customs office in order to reduce tax evasion and corruption. Since the government launched the VUI in July 2010, the cost and time required to process import permits from government institutions has been reduced, improving competiveness and transparency in customs operations.
Erich Kieck, the Director of the Capacity Building Directorate at the WCO said, “Paraguay stood out at the conference as an administration that took advantage of the assistance of the MCC. They followed through and implemented the international trade single window, despite many challenges. By overcoming these challenges, gaining political support and effectively using their resources, this administration demonstrated how important perseverance can be in reaching a goal. This achievement will result in gains for the Paraguayan government and economy and demonstrates how to move from ideas to actions.”
Paraguay’s Stage II Threshold Program began in 2009 and will complete all activities in April 2012. The United States Agency for International Development (USAID) is responsible for administering Paraguay’s Threshold Program on MCC’s behalf. Watch this video to see how MCC and the Government of Paraguay are fighting corruption.
Posted on February 8, 2011 by Jonathan Brooks, Resident Country Director for Honduras
The community at Colonia Milenio Pumas has been dear to MCC’s heart. Nestled on a hill about 30 km north of Comayagua along the CA-5 highway, it is the largest and among the earliest resettlement communities set up as part of the highway construction (nearly 30 families). We followed the community’s progress throughout the years as it slowly changed from a group of people linked only by one of the poorest stretches of the CA-5 highway, into neighbors who formed a true community.
January 25th was special. Overcoming some initial difficulties, MCA-Honduras, the Honduran entity which implemented the compact, established a water system to guarantee water access though both the dry and rainy spells of the year. We were invited to join in the inauguration of the water system as well as the naming of the community school. In a touching tribute to one of our colleagues who worked with dedication on the resettlement effort, the community named their new school, “Escuela Jonathan Nash.”
There was much clapping and giggling from the school children who joined in the naming of their new school, and there was even louder applause from the entire community when they witnessed the rush of water that flowed from a faucet in the school yard as part of the dedication. The water flowed into a clay jug which had been set aside for the occasion. As I saw the water line begin to fill the jug, I was reminded of what many Hondurans have pointed to as one of the legacies of the program: the belief that their lives can improve. As I stood and smiled with the community as the water flowed, I realized that they had come to see their own jug as half full.
Posted on August 12, 2010 by Valeria McFarren, Communication Implementation Officer
A four-hour drive through rugged terrain, beautiful mountains, and evergreen forest, brought me to San Sebastian, a small town in northwestern Honduras. I was there to attend the opening of 24.7 kilometers of newly improved rural roads from San Sebastian to Tomala, a town very close to the border with El Salvador. These roads were improved using funding from MCC’s compact with the Government of Honduras. Key government officials presided at the event, and over 200 people attended.
As I walked around talking to people, I met six elementary school girls who were eager to see the pictures I was taking. I explained that I was documenting stories and asked if they wanted to be my assistants and take pictures to show how the road would benefit their community.
View the slideshow from these girls’ perspectives, depicting the importance of roads, particularly in remote villages.
Posted on February 25, 2010 by Carol Horning, USAID Mission Director
In August 2007, MCC launched a $6.7 million Threshold Program with the Guyanese Government to support the country’s ambitious competitiveness strategy and reform plan focused on overcoming fiscal challenges, strengthening the procurement system, and creating an efficient business registration process. Together with interagency coordination, a focus on aid effectiveness, and Guyana’s commitment to positive reforms, the MCC Threshold Program is delivering lasting and encouraging results.
The MCC-funded Threshold Program, implemented on the ground by USAID, focused on strengthening the Guyana Revenue Authority, strengthening the IT infrastructure, and training key staff to implement reforms. In addition, the customs administration was reformed to conform to global standard operating procedures that strengthen Guyana’s competitiveness and trade opportunities.
Now, at the conclusion of this two-year program, many of Guyana’s fiscal challenges have been tackled, with increased revenue generation and a more efficient business registration process. Guyana can now plan significantly for higher investments, resulting in sustainable development benefitting the country and its people. Meanwhile, strengthening the customs administration through the acquisition of new equipment is bolstering Guyana’s capacity to address smuggling and trafficking activities.
At Guyana’s Deeds Registry, company and business registrations have been converted from deteriorating paper documents into a state of the art electronic recording system. So far, over 5,000 company records and 90,000 business registrations have been computerized. The number of days to start a business in Guyana has also been reduced from 46 days to 30, all while anticipated legislation in Guyana is expected to reduce the start-up time even further, from 30 to 12 days. Simplifying and standardizing the registration process will improve the business climate for new investments. Even residents outside Guyana can now download business forms and register companies from anywhere in the world.
Though much of the program focused on training, IT infrastructure for various record systems as well as equipment for customs and policy reform have been critical for creating momentum to produce results. Increased tax revenue and compliance permit Guyana to now plan for greater investments in its own schools, clean water, and many other programs throughout the country that improve the standard of living for the Guyanese people. Working hand in glove, MCC and USAID are collaborating with Guyana to support not only the country’s development but also its future as a partner in eliminating global poverty.
Posted on February 16, 2010 by Stephen Marma, Resident Country Director, Nicaragua
As the Resident Country Director in Nicaragua, I have seen firsthand how the quality of life of the poor has improved because of MCC development assistance that emphasizes country-led and country-implemented solutions. This type of country ownership makes programs stronger, empowers partners, and ensures sustainable results. The Nicaraguan compact is an example of a homegrown program that helps to reduce poverty and generate economic growth.
MCC is investing to increase the incomes of rural farmers and entrepreneurs living in the departments of León and Chinandega. MCC investments in strategic projects are helping to reduce transportation costs, improve access to markets, strengthen property rights, increase business investments, and raise incomes for farms and rural businesses. Road rehabilitation works have been completed, and a road maintenance fund has been established by law to ensure that all roads in Nicaragua are maintained. In addition, farmers have received technical assistance, business development services, and grants to help develop higher-profit agriculture, agribusiness, and artisan enterprises. To ensure sustainability, farmers and cooperatives have increased and improved production and have better access to markets, including contracts to provide products to local and international companies.
Clear results can already be seen in Nicaragua as documented in two recent productions.
Check out the video produced by Millennium Challenge Account-Nicaragua, the local entity responsible for implementing Nicaraguas MCC compact:
Together, MCC and MCA-Nicaragua are paving a way to a better life for thousands of Nicaraguans.
Posted on April 17, 2009 by Liliana Ayalde, U.S. Ambassador to Paraguay
The commitment to transparency and the fight against corruption intensified this week in Paraguay. I was honored to witness a milestone moment as the U.S. Government, through the Millennium Challenge Corporation, and the Government of Paraguay signed a $30.3 million Stage II Threshold Program. This second program aims to institutionalize key reforms in public administration and supports anticorruption activities in the judiciary, law enforcement, customs, and healthcare. It builds upon the successes of Paraguay’s first ”“umbral”“ or threshold program.
This latest agreement is one more symbol of the friendship between Paraguay and the United States as we work toward the shared goals of prosperity and opportunity. It also reflects the constructive and active engagement that the U.S. Government has with the peoples of the Americas. It involves effective cooperation across a number of U.S. agencies, as USAID will be managing the implementation of this threshold program, with help from the U.S. Department of Justice and the U.S. Department of Treasury Office.
President Fernando Lugo, who participated in the ceremony, signaled strong political will to stamp out corruption by reaffirming his government’s commitment to anticorruption measures. ”[We] will not do business out of corruption and will not dialogue with the mob. But instead will actively promote the destruction of this cancer. So a new country will be born free of illicit dealings because that’s what the people chose on April 20,” referring to Paraguay’s 2008 election day.
It was a standing room only event, with top officials from the Government of Paraguay, representatives from the diplomatic corps, and members of the press in attendance. The people of Paraguay realize that promoting transparency and accountability are keys to fighting corruption and fundamental to job creation and economic growth. Now, through its MCC Stage II Threshold Program, Paraguay has another effective tool to strengthen its institutions against the risk of corruption and to pursue results-oriented programs to reduce poverty and stimulate sustainable economic growth for the good of all Paraguayans.