Demand for Extension Services in Serbia and Macedonia: A Synthesis Case Study Ian Christoplos Prepared on behalf of Sida for the November 2004 meeting of the Neuchâtel Initiative August 30, 2004 Short Description of the Case This case study does not review a single country, organisation or project. Instead it summarises lessons emerging from Sida’s ongoing process of learning about how to best stimulate demand driven extension in Serbia and Macedonia. The observations presented here should be seen as preliminary, as Sida’s programmes are still relatively new. Specifically, this case study draws on lessons from four projects: Support to Farmers’ Associations in the Republic of Macedonia: First three year phase under completion, second phase to begin soon, national programme Topola Rural Development Program: First Phase began October 2002, second phase to run until February 2005, implemented in Topola Municipality in Central Serbia Reka Mleka Integrated Milk and Dairy Development Project: Three year first phase began in May 2003, implemented in four municipalities in Southern Serbia Macedonia Agricultural Advisory Support Programme: Planning completed, first three year phase of an eight year programme to start shortly, national programme Serbia and Macedonia are transitional economies, where past systems of state-led agricultural development are being gradually adapted to new market realities and where governments, service providers and farmers are readying themselves for the EU accession process. Demands for extension vary greatly depending on whether this process is seen as something positive, threatening, permanent or temporary. The international community sees many changes in agricultural markets and conditions as inevitable, and assumes that agriculture in the Western Balkans will have to either be integrated into the European market or enter an ever more rapid decline in the coming years. This view is, however, not universal in the region itself, and the nature of farmer demands on extension reflect this ambivalence toward the new challenges to Serbian and Macedonian agriculture. Demands from farmers include a mix of requests for social support, efforts to convince the government to return to former systems and requests for support in understanding and adapting to new markets. Initial indications show that many poor farmers exert little demand on extension for the simple reason that they do not intend to develop their farming, which is seen as a temporary survival strategy while awaiting a revival of alternative employment opportunities in urban areas. Some (usually those somewhat better off) are joining new farmer organisations (in Macedonia and Topola) as these are seen as a channel to access extension, markets and subsidies. Many are hoping that state services will be strengthened so as to serve them better, but have no apparent strategy for exerting their demands. The centralised systems of the past have left a widespread impression that exercising demand on either the state or on market actors is unlikely to yield returns. Demand is male dominated, but not entirely. Experience in Serbia shows that women are interested in far more comprehensive and integrated support to the dairy chain, whereas men are usually solely focused on production issues and accessing investment capital. In Macedonia many women are leaving the rural areas, preferring to search for employment in the towns. They are not demanding agricultural extension since they see the prospects for agriculture as poor. This contributes to a downward spiral in the rural areas as communities decline and many villages are abandoned. This trend is especially acute in isolated mountain areas. There are a significant number of highly skilled and dynamic female advisors in both countries, so human resources are not a major constraint. The challenge is perhaps rather to find strategies that identify and foster latent demand among women who might be ready to reinvest efforts in agriculture if the sector was seen as more viable. Sida is supporting greater rural youth engagement in Macedonian farmer organisations as a way of stimulating enhanced interest and innovation. While there is a significant youth involvement in these activities, here again many do not see farming as a viable livelihood, and participate partly as a way to gain access to advice and support for getting out of agriculture. In Topola involvement of youth in honey production has been popular as an income generation opportunity that can be combined with primarily non-agricultural livelihoods. In Macedonia, honey producers are among the farmers who are most active in placing demands on extension, presumably due to their ability to maintain a strong base in non-agricultural, urban livelihoods. They are paradoxically in a stronger position than farmers who live on their farms. Sida supported programmes in Serbia are in ethnically homogenous areas, so the particular demand of ethnic minorities are not a significant issue. In Macedonia, the programme will begin with a conflict impact assessment to analyse how extension can respond to the demands of different ethnic groups in light of their different social and farming traditions. Supply is overwhelmingly state (and aid) financed. Some programmes over the past decade have experimented with co-funding through farmer organisations, but sustainable mechanisms have yet to be found. Many farmers see these mechanisms as a way of accessing subsidies, rather than a way to create stable service relations. Addressing this issue is a major priority for Sida support in the future. The Demand Side The concept of demand-driven extension is new to many stakeholders, so there are no set steps yet established in formulating demand. Local discussions of extension reform tend to focus on enhanced supply, rather than demand. Some farmers have strong relations with individual advisors, or use farmer organisations to draw on extension. In Serbia, some extension is accessed as a secondary service along with veterinary services. There is a general view among many stakeholders that demand can best be formulated through strengthened brokerage institutions, especially farmer associations. A central assumption in Sida supported programmes is that the most important first step for creating a sustainable demand-driven extension system is to ensure that the need to respond to farmer demands becomes a central focus in discussions among local stakeholders. ‘Awareness raising’ and advocacy regarding the importance of a demand-driven orientation is a key first step. Institution/capacity building is seen to be needed in five areas: Progress is being made in farmer associations (primarily in Macedonia and Topola), and needs to be continued; Reform of the incentive structures of extension providers is needed to ensure that advisors are truly accountable to their clients; Understanding of methods for listening to and soliciting the views of farmers needs to be strengthened among advisors; Where farmers are already demanding support for adapting to new markets, advisors need to have their own capacities for market analysis and farm management strengthened so that they can respond; and Experimentation with alternative financing mechanisms must continue, with particular attention on developing ownership for the lessons learnt from this experience. In Macedonia, capacities for stimulating demand have in the past primarily been created through supply-side programming, i.e., through provision of financial incentives for creating farmer associations. Far more resources have been invested in material assistance and incentives than in building institutional capacities. One donor, for example, provides grants of €40,000 for processing facilities with limited support to institutional development or demands for local contribution. The result of these approaches has been the establishment of many farmers’ associations that are led by individuals with personal political and economic motives in accessing this patronage, and also a passivity among farmers as these ‘new modalities’ are seen to resemble the old socialist modalities of using cooperative structures as channels for state subsidies. When these supplies have been discontinued, disillusionment has set in. The experience in promoting farmers’ associations has in many ways revealed the limited trust and social capital in the Macedonian countryside, rather than pointing toward simple, straightforward models and solutions. In Southern Serbia, weaker donor interest has meant that there have been few opportunities for accessing subsidies. In many respects, discussions of extension policy and new forms of farmer organisation are at a far earlier stage. Local actors are aware that a shift to greater reliance on fee-based extension is probable in the future, but the mechanisms and implications of such a reform are still rather abstract. Sida support has been used within a process of informal group formation among farmers working with the project itself. As yet there is no major trend toward the creation of formal farmers’ associations as in Macedonia. Discussions are currently underway concerning how the lessons that have been learnt in initial group formation and establishment of activities directly by the project can be shifted to a more sustainable framework for both extension and formalisation of farmers’ associations through working with local organisations. The project is looking for ways to shift its role from providing direct investment to providing services for local organisations. The Topola Rural Development Program has components that focus on support to the establishment and/or strengthening of three specialised farmers’ associations in organic agriculture, honey production and cattle breeding. The latter is linked to a number of informal groups of dairy farmers and village level. Other small individual cooperatives and producer groups have also received technical support, including fruit growers and sheep and dog breeding associations. These efforts emerged out of much wider investment in support to the private sector and civil society in the municipality and have largely been targeted at groups that have expressed demand for support. Extension efforts are a naturally integrated aspect of these broader efforts, rather than an objective in itself. Results have varied, with strong ownership and interest in organic and honey production, but significant scepticism among dairy farmers about the ability of their organisation to press for their interests and work internally to address problems of quality and marketing. There is little common understanding among donors and the government for how to use financial incentives to stimulate demand. Therefore farmers and service providers receive very mixed signals about what is expected of them, what resources they can expect in the future, and what a ‘sustainable’ extension system might eventually consist of. Some genuine efforts have been made to develop co-financing structures. Other donor-financed projects effectively contract-in advisors to facilitate the provision of large and generous subsidies and loans to chosen clients. This resembles the role of extension in the past, and as a result farmers often still associate extension with accessing largesse from the government, albeit more rarely than before. They presumably adapt their demands to the subsidies that are assumed to be on offer. In Macedonia there is a widespread conception among both farmers and many bureaucrats that adaptation to market realities is only necessary for a ‘transitional period’, and that in a few years the subsidies that will accompany EU accession will enable everyone to return to the socialist modalities of a fondly remembered past. Sida and virtually all other donors focus on support to what are seen to be market production opportunities. The governments’ initiatives (with some notable exceptions) mirror this priority. This manifests itself in two approaches. Some efforts work to gradually instil an awareness among farmers and advisors of market forces and a capacity to judge potential markets. Other projects hope to jump-start the commercialisation process by ‘picking winners’ and helping/urging farmers to invest in niche products. The resulting methods and focus naturally rule out participation by farmers who do not share a market focus, fear the risks involved in entering untried niche markets, or who are so undercapitalised as to lack potential to compete in local and international markets. One exception to this is advice on improved grain varieties that can be expected to support a broader target group. Markets for wheat in Macedonia are currently protected, so the reduction of trade barriers in the near future will probably mean that even with new varieties, subsistence wheat production will rapidly diminish. There are many farmers who realise that production methods of the past will be insufficient to regain past markets and compete in new ones. It is difficult to ascertain how much the interest for new types of farming is demand or supply led. Demand for completely new technologies can be assumed to come from contacts with farmers in areas where significant international investment is occurring in Serbia and Macedonia, and through contacts and information from abroad. Study trips, internet access and other strategies are being employed in different projects to support this process. All of these four programmes have strong links with Swedish institutions. Environmental issues have a relatively low profile in extension in Macedonia and Serbia. This is perhaps due to forests and common grazing lands being the responsibility of other authorities, and also the fact that the overwhelming environmental issues in the region are related to industrial pollution. The Supply Side In general extension and other agricultural services with some extension functions (such as veterinary services) remain largely supply driven in the Western Balkans. Government priorities regarding regulatory functions, registration and provision of selected subsidies remain the main focus of service provision. In Southern Serbia there are several different institutions providing various forms of services, but this ‘choice’ is actually very limited due to the limited capacity of all service providers. Macedonia has a somewhat stronger public sector extension agency and also a network of private advisors. Service provision is, however, very patchy in Macedonia as well, and it could be questioned whether farmers really perceive that they have a genuine choice. In Macedonia, past projects have encouraged farmer associations to choose between private and public sector advisors when deciding how to invest project subsidies. The Sida supported programme will be looking closely at the field level dynamics of the ‘choice’ between public and private advisors when both structures are very weak. In Serbia the dairies have some limited involvement in extension. Their ‘vested interests’ can be seen as a positive driving force since improved milk quality is a major factor in the survival of the dairy industry as markets are opened to international competition and as quality standards are raised. Indeed, the major problem in the system is the weaknesses of the dairies in acting on their own economic interests due to difficulties in reorienting efforts after the collapse of the cooperative structures of the past. In Macedonia there are some other commodity/value chain initiatives underway that intend to create strong links with extension in the future. There is no indication of problems due to vested interests at present. Given the weak state of farmer demand, the attention has thus far primarily been on reforming the supply of advisory services to respond to the demands of the market, rather than enhancing direct response to farmers. Experiments with channelling resources through farmer associations may be creating pressures for adaptation in extension supply, but it is too early to say for certain. In Southern Serbia, Sida is supporting discussions that provide a platform for multi- stakeholder discussions of the future of extension for the dairy sector. Contact farmers are active in these discussions. A much wider approach to stakeholder extension discussions is planned for Macedonia, where Sida will probably be the main donor to extension in the near future. Transparency is stressed in both programmes, but it is too early to expect widespread farmer awareness of the terms for participation in stakeholder forums. In Macedonia there is a prevailing mistrust due to past donor attempts to promote extension reform that failed to establish local ownership. It should be stressed that there is far less understanding of the structures of aid financed programmes in the Western Balkans than in many countries in the South that have been dealing with the aid community for far longer. This is true both for farmers and for extensionists. Quality management is currently weak in both Macedonia and Southern Serbia. In Macedonia plans are underway to develop a system to certify public and private advisors in farm management. If successful, certification will be extended to other fields of specialisation. Policy Framework National extension policy in Serbia is currently under discussion. There has as yet not been a clear alternative formulated to the policies of the past. By contrast, Macedonia established a policy in the years after independence with close support from the World Bank. This policy emphasised a rapid shift to fee-based extension. National ownership of this policy was weak from the beginning, and alternatives are being actively sought since fee-based extension has not taken hold. One of the main objectives of Sida support is to ensure that Macedonian actors are able to critically reflect on practical experience with alternative extension modalities when developing new policies. Sida efforts will stress a strong and transparent link between extension reform and broader agricultural policy reform through ownership in the Ministry and dialogue with a wide spectrum of stakeholders. Policies (and the lack thereof) provide some modest opportunities to stimulate private service actors and farmer organisations as they are both active in filling gaps in public service provision. There are no indications, as yet, that this is creating a basis for widespread and sustainable service structures. Discussions are underway in Macedonia regarding legislative reform to enable farmers’ associations to better develop their potential. Otherwise, policy at this stage generally constitutes neither a hinder nor an ‘enabling environment’ for extension reform. Political commitment to supporting extension remains fairly stable in Macedonia, but competing priorities combined with pressures to reduce public expenditure result in much unease and uncertainty about the future among extension actors. There is also some danger that the search for an agency to implement other agricultural policy priorities (e.g., registration of farmers or collection of data) may create pressures to use the extension service for non-extension tasks. In Southern Serbia, local politicians have shown a strong interest in supporting extension and have committed funds raised through the sale of state owned enterprises. At national level Serbian commitments to extension are currently unclear. Linkages to research in Macedonia exist and are collegial, but are poorly resourced and are thus weak in practice. The small size of the country has meant that linkages function to a certain extent, but there is certainly room for improvement. There may be indirect linkages to research in Southern Serbia and Macedonia via, e.g., dairies looking for ways to improve quality, but this is difficult to judge at this time. Production priorities in Southern Serbia emphasise dairy (at least those aspects of the system in which Sida is involved). Macedonia produces a variety of cash crops (dairy, vegetables, tobacco, wine, etc.) and commitments are made to support those commodities that are judged to have competitive potential in different areas of the country. This appears to be largely congruent with the desires of those farmers who are actively pursuing market oriented strategies. Trends seem to show a strong shift to horticulture. Much of the government in Serbia and Macedonia is not, by tradition, accustomed to listening to farmers. There are farmer representatives on the national board of the Macedonian extension agency, but this board is generally viewed as being ineffective. The Macedonian government is aware of the potential political force of the farmers’ associations, and seem ready to engage with these organisations. Questions exist, however, regarding how well the apex Federation of Macedonian Farmers and many individual farmers’ associations actually represents the interests of their erstwhile members. Governance and democracy in these organisations is very weak. There is a major difference between listening to farmers’ associations and listening to farmers. As mentioned above, the de facto policies of aid actors have often been to use simply extension to implement various agricultural development activities. Extension is seen as a means of stimulating the economy and introducing new production methods. Since extension reform is not an objective per se, these approaches can be seen to run counter to the professed goals of donor agencies, as it is expedient to use extension as it had been used by government in the past, i.e., as a channel for distributing subsidies to chosen beneficiaries. Donors are aware that farmers need to become clients of services, but the desire to use extension to channel projects to beneficiaries sometimes overrides their own stated principles. There is a danger that short-term expediency may conflict with longer-term extension reform. Donor concerns that Serbia may fall back into being a ‘pariah state’ if extreme nationalists take power has meant that long-term commitments have been limited. Both countries suffer from difficulties in articulating the links between post-conflict rehabilitation support and long-term policy reform.
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