1. Subsidies in Agricultural Extension for Poverty Reduction
Results of a study by the Sub-Group on Agricultural Extension Services for the Poor
M4P Week 2006

2. Sub-Group on Agricultural Extension Services for the Poor
Agricultural Extension Subgroup was formed in 2003
AE subgroup wants to document and share lessons learned on pro-poor AE practises
AE subgroup wants to feed these lessons learned into the policy debate
3 studies so far:
Policy Review (2004)
Gender and Ethnic Minority Issues (2005)
Subsidies (2005/6)

3. Background to the Study
Ongoing debate amongst development actors on the impact of subsidies
What is the most effective way to use subsidies / development funds?
Are the poor truly benefiting from the subsidies in the way they are currently used in AE?

4. Hypothesis
Hypothesis 1: Poor men and women have an unequal access to subsidies over other segments in the community.
Hypothesis 2: Subsidies result in increased production, reduced workload and better quality output, but do not automatically lead to long term impacts on livelihoods improvements
Hypothesis 3: Subsidies limit the emergence of demand driven extension services and distort local/regional market mechanisms of demand and supply.

5. Methodology Stage 1: Analysis of forms of subsidies in use
Stage 2: Demarcation of the study field
Stage 3: Field work
Stage 4: Analysis and Documentation

6. Forms of Subsidies For this study purpose:
Trainings: allowance based access
Models: subsidised materials for implementation
Input supply: Price subsidies for seeds / fertilisers etc

7. Findings Access of the Poor to subsidies
Subsidies have contributed to poverty reduction
Access has not always been easy for the poor
Technologies offered are often outside the capacity of the poor
Extension Workers prefer to select better of households to be sure of success of the model
Most farmers (rich and poor) indicate that relevant content is preferred over allowances
Many different standards are applied at the local levels

8. Effects on production and livelihoods
Subsidies have contributed to overcome food shortages (at macro level)
Most models are technically feasible
Replication rates are mostly very low
New (advanced) technologies are too risky for the poor
In upland areas current model structure is seen as a waste of money by extension cadre

9. Input subsidies seem to benefit mainly the companies supplying them
Heavy subsidies create a dependency mentality
Input subsidies limit choice for farmers
Quality of free materials often low
Subsidised products often not market conform

10. Effect on demand driven extension services
Farmers prefer to have more influence over extension agenda
Market led production does not require subsidies
Farmers demand long lasting investments in knowledge
Subsidies often go hand in hand with top down planning and agenda setting
Subsidies limit emergence of local service initiatives
Subsidised messages include too much techniques focus and too little farm household business development assistance

11. Recommendations
1. Apply appropriate extension messages for improvement of the poor’s access to subsidies in extension.
Minimize subsidies by promoting the introduction of the low-investment, small-scale, low-risk models
Permit and spread the use of “experiment” and “trial” concept requiring fewer subsidies.
Facilitate better risk management through helping the poor prepare well their household’s business plans
Promote the application of group-based methodologies
Promote the “input-recovery” and “revolving fund” mechanism in public extension

12. 2. Work with different stakeholders to improve and unify the cost norms of extension activities.
Stipulate a clear division of tasks between central level (i.e. NAEC) and provincial/district levels.
Government authorities should elaborate binding subsidy policies, to take leadership and “force” involved projects, programs of donors, NGOs, etc. to apply the very same subsidy policy and related extension cost norms for the very same task at the very same location.

13. 3. Stipulate clear guidance on increasing financial contributions of extension service users in association with improving service quality.
Phase-out subsidies after a period of time
No subsidy should be provided for the scale of commercial commodity production.
Promote strongly the practice of charged services as stipulated in Decree 56
Adopt a policy for strong development of the Extension Fund

14. 4. Institutionalize the replication of participatory planning process at local levels for demand driven extension.
Stipulate regulations on the integration of the proven participatory planning processes into the normal budgeting process of the extension services and local authorities
Stipulate concrete regulations to enhance the roles of local authorities, mass organizations, grassroots extensionists and farmer groups in the communes and villages during the design and implementation of extension subsidy policies.

15. 5. Promote widely the market driven extension methodologies as a move away from traditional production-based methodologies
Reserve budget for market analysis and market scan
Invest more in capacity building to provide better market information to the farmers.
Focus the extension messages for the poor on improved farm management and cultivation system
Change structure of public extension towards facilitating the value chain of specific products, with more attention to effective participation of the poor.

16. Thank you for your attention
Paintings by Lo Quang