Visiting northern Thailand last month I was interested to catch up on a local project that had been implemented under the Thaksin government’s poverty alleviation program. The project involved paying a group of “poor” villagers (though from my observations the poorest villagers did not participate – they were probably too busy chasing wage labour) 100 baht per day to cultivate a crop of peas. In addition to their daily payments to villagers would receive a share of the sale of the crop.
Fortunately, the village headman had taken some photos of the project. One photo showed the participants standing in front of a large sign advertising the initiative. I was, at first, a little taken aback to see that the sign made no mention of the “poverty alleviation” initiative. Instead the project was described as an initiative of the “Centre for Sufficiency Agriculture Education.” The operation of the project seemed to be the same as initially planned, but the name had been changed to reflect the new “sufficiency” orthodoxy.
And there were complaints. It seems that the officials in the “Centre for Sufficiency Agriculture Education” had demonstrated their commitment to farmer sufficiency by pocketing the proceeds from the sale of the crop. The villagers had been told that once expenses had been deducted there was nothing left to distribute. One of the cited expenses was a lunch (of fish) that the Centre had hosted for the participants. “Those fish must have cost about 500 baht each” one of the participants complained.
Of course, these sorts of problems with local development projects are common – whether or not they are dressed in the sufficiency garb. But it does make you wonder if the implementation of “sufficiency” at a local level is really going to involve any serious attempt to reform local development in a way that helps ensure that they target those most in need.
Yesterday, the Bangkok Post reported on another example of the “sufficiency makeover” this time in relation to the so-called SML (small-medium-large) scheme:
The cabinet yesterday agreed to modify the small, medium and large (SML) community loan project launched by the previous government and make it more in line with the sufficiency economy. Deputy Prime Minister Kosit Panpiemras said the cabinet decided to set up a revised version of the SML project, to be known as a village and community development project, which will apply sufficiency economy principles to the management of the system.
The SML project was part of the previous government’s efforts to eradicate poverty among grassroots people. Under the SML scheme, community members were given full authority to decide on wide-ranging issues such as budget management and approval of projects. However, Mr Kosit said their management practices are still not up to par. They had no direction and worked without a clear goal and a definite timeframe. The cabinet also approved the setting up of a new agency overseeing the village and community development based on the sufficiency economy. The approved agency will operate under the umbrella of the Prime Minister’s Office with Mr Kosit appointed as chairman of the agency’s committee. Mr Kosit said the Budget Bureau had earlier earmarked about 19 billion baht from the central budget for previous community and village development projects. There is now 9.7 billion baht left for the new village and community projects.
Mr Kosit said some work procedures of the SML project will remain largely unchanged. Only the name will be altered to comply with government policy. However, the previous criteria for allocating budget based on population will be re-evaluated, Mr Kosit said.
8 responses so far ↓
1 Jon Fernquest // Feb 15, 2007 at 2:14 pm
“Under the SML scheme, community members were given full authority to decide on wide-ranging issues such as budget management and approval of projects. However, Mr Kosit said their management practices are still not up to par. They had no direction and ***worked without a clear goal and a definite timeframe***.”
Farmers no doubt have their own time tested ways of setting goals (planting crops) and achieving results (harvesting and selling them).
I’ve seen this sort of thing before at the university. A bunch of rich kids get sent overseas by their rich parents, get a masters degree in management let’s say, return home and subsized by their parents (with a car and rent) work at the local university for a ridiculously low salary, then the university gets some money, and…walla…these students…are out **lecturing** farmers (no round table interactive discussion style stuff either), telling them what to do, farmers who have survival skills firmly embedded in their very being (liang chiwid) on how to do business and survive. Truly ridiculous. Of course, I could be wrong, but this is what it sounds like. I’ve proofread and corrected reports like this.
It’s actually the bureaucrats or ajaans who should be listening carefully to the farmer and then after learning from him, adapting their book knowledge to **his** situation.
2 Srithanonchai // Feb 15, 2007 at 2:48 pm
Also in the Bangkok Post (February 15, outlook): the luxury sufficiency renovation of the Ladawan Palace by the Crown Property Bureau (as said in a previous post, following Somkid, rich people have a higher level of sufficiency than middle-income or poor people). They were moderate enough to buy marble directly at the factory, and even traveled abroad to buy certain items in order to save money. Most appropriately, the building now also houses a library on “His Majesty the King’s ideas on sustainable development and sufficiency economy (www.libsusdev.org).
3 hpboothe // Feb 15, 2007 at 8:43 pm
Mr. Fernquest – To be sure, top-down directives that ignore on-the-ground realities are unlikely to be of much use, but let’s not paint an overly romantic image of the “poor wise farmer” either. There was an interesting piece in the IHT yesterday on microlending; a few select pieces (edited for space):
“…Grameen’s success has less to do with the amount of credit extended than with the accompanying behavioral changes that the bank demands of its borrowers. That is why some attempts at replicating this wonderful idea elsewhere have been less than successful.
Malaysia, for example, has a similar program, run by the government, but… it has bred a pile of dud loans…. the program quickly acquired a bloated bureaucracy… with priority for some loans going to the politically connected. The recent conviction of its top executive for corruption reflects the rot….
…A key stipulation of [Grameen] is that its loans must be for income-producing activities, not consumption… Grameen’s borrowers also must commit to the program’s “16 decisions,” which include family planning, educating their children, not accepting or giving dowries, and embracing “discipline, unity, courage and hard work” in all walks of life…
…The Malaysian initiative could be enhanced by not linking the program to the political establishment…Lenders could also have taught their borrowers the fundamentals of running a small enterprise and used their clout to negotiate discounts on behalf of their borrowers….
….The operational details of Grameen are equally noteworthy. By requiring weekly payments, borrowers are constantly reminded of their obligations. The close relationship between borrowers and lenders means that they know… fellow villagers — will be deprived of their opportunities. Grameen’s emphasis on behavioral changes alone may indeed be more of a help in easing people out of poverty than the money itself….”
[Full article at htttp://www.iht.com/articles/2007/02/13/opinion/edmusa.php]
Proper planning and management is actually quite useful to any enterprise, and it is a skill that is sorely lacking in rural areas. Of course, I would hardly point to the Thai government (past or present), military, NGOs, or even businesses as paragons of management excellence themselves, but let’s not suppose that the only thing standing between farmers and sustainable prosperity is a cash injection.
Best regards,
HP Booth
4 Bangkok Pundit // Feb 16, 2007 at 2:36 am
HP: Have you seen Tyler Cowen’s article in the NYT on the Grameen Bank. Money quote:
“But microlending does not always feed into a new business. No matter how the loan is described on paper, many families use the money to finance the purchase of a new motorbike or pay the family doctor.
These loans will increase as more Indians come within reach of modern consumer society; Spandana realizes that such uses are no less important than creating businesses.
In some cases, microfinance allows people to refinance loans with private moneylenders and thus go deeper into debt. But more often I heard stories of how Spandana let Indian families break free from the expensive private lenders.”
5 Bangkok Pundit // Feb 16, 2007 at 2:42 am
The above comment should read “have you seen Tyler Cowen’s article in the NYT on microfinance/microlending”.
6 jeplang // Feb 16, 2007 at 2:50 am
If it is as JF describes,what ever happened to “Putting the Farmer First “movement?
7 fall // Feb 16, 2007 at 1:00 pm
The problem is not the system, it’s usually the people.
I had worked for similary kind of project, using “university” knowledge to “apply/lecture” to business owner.
But the problem is, I am too lazy to dig deep into each owner’s problem. Which end up giving business owner knowledge they either do not care, or too indirect to apply to each of their problem.
However, as far as I know, in shrimp farming. CP willing to supply scientist/academic to farmer who purchase shrimp larvae from them. And these guy are good, meaning significant effect on result good. I do not know about their policy on plant though.
8 hpboothe // Feb 17, 2007 at 10:03 pm
Mr Pundit (#4): Thanks for the article, though I’m not sure why you’re so enamored of that particular comment.
A lending busines, whether micro or macro, is all about risk management. To make the business model work, your revenues must cover your operating expenses and capital costs; and your revenues are in turn a function of the amount you lend, your default rate, and the interest rate that the payers pay.
Banks try to lend large amounts of money to a few borrowers they consider safe because that lowers their operating costs (large borrowers means fewer of them to deal with) and limits your default rate; however the cost is in a low interest rate.
Loan sharks on the other hand compensate the other way – to finance their high operating costs, they charge very high interest rates and ensure repayment through unsavory means that keep them from being legitimate.
Microlenders (and increasingly they call themselves micro-financiers, indicating expansion into insurance, deposits, and other financial services), challenge both business models by creating new systems and processes (like group lending) to simultaneously lower operating costs and defaults. How they do this varies widely, as does the performance of various microcredit institutions. Some are destined forever to stay charities, some are attracting hedge fund backers, some are being acquired by tradiional banks.
My issue with SML and other Thaksin era programs is that I’ve been unable to find much operational details or outcome data about them despite having asked people working in those programs. That in itself I find problematic, though I doubt this new cast of clowns will make things any more transparent.
Best regards,
HP Boothe
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