Jordan: Income Diversification Project

Objectives

The project objectives were to increase and stabilize household incomes for disadvantaged, resource-poor women and men in the project area by improving the productive potential of their livestock, land, water resources and labour.

Activities

The main project components were:

credit for on-lending to target groups, covering medium-term loans for livestock improvement, crop production, processing and farm services;
institutional development of breeding stations, smallholder production support and field-level financial services; and
beneficiary participation.

Outcome

Although the physical implementation of the project was satisfactory, targeting was poor. For rural credit, poor targeting was owed to the conflict of goals between the institutions responsible for project design and the implementation agency. Furthermore the targeting criteria were considered extremely complex to implement.

The project has contributed to raising the income of the rural poor, although not necessarily the poorest, while contributing to the genetic improvement of livestock and improving household nutrition. However the failure to expand markets for rural produce remains an important obstacle to rural development.

Organizations and people

Livestock support services in Jordan have a history of low staff retention rates because of strong competition from the private sector, which offers higher remuneration. Services offered have been biased towards veterinary services, with no systematic provision of animal-husbandry advice to farmers. The work of the support facilities has been severely restricted by lack of mobility.

Planned

Achieved

To provide technical assistance, with the aim of strengthening project support services.

To train extension staff and provide short courses and study tours for about 15 animal production officers and station technicians.

To recruit an animal breeding specialist to help select imported stock, assist in implementing programmes designed by stations and train local staff.

Ministry of Agriculture staff, particularly field extension staff, were found to be lacking in experience from which to advise farmers, especially in husbandry, management, feeding, breeding, health and reproduction.

A total of 340 man-days were spent on training of IDP staff in 25 different subjects related to the project activities.

At mid-term, the animal breeding specialist had not been recruited; there were consequently delays in proposing breeding programmes and reduced ability to address the problem of supplying Shami goats. Two local experts were eventually recruited to improve the genetic quality and the nutrition of small ruminants.

Access to inputs and infrastructure

The target beneficiaries are farmers with low, highly variable incomes and little or no liquidity to enable them to increase investment and generate higher productivity. Lack of access to credit for initial investment or diversification is a critical constraint. Formal credit sources have neither the resources nor the coverage to supply all credit requirements in rural areas.

Planned

Achieved

Provide short- and medium-term credit for livestock units, including:

Shami goat multiplication units, each with one male and ten females;

smallholder Shami goat production units;

smallholder upgraded Baladi goat units (crossbred with Shami);

smallholder Awassi sheep production units; and

landless lamb/sheep smallholders.

The strict lending conditions, such as the requirement for collateral in land or property and a guarantor with a salary, and the long loan processing procedure of the Agricultural Credit Corporation (ACC) restricted the number of beneficiaries and resulted in the exclusion of the poorest people from credit.

150 out of 900 originally planned Shami goats, were imported from Cyprus. Nevertheless, the project was able to distribute 324 of the female Shami goats and 528 of the male Shami goats. In addition about 483 Awassi males were distributed to the producers. These quantities were selected and produced in the breeding stations and the multiplication units.

Risk management

Planned

Achieved

Support milk processing and marketing by providing credit to:

1 800 women to undertake or improve home milk processing;
farmers’ groups, cooperatives and small family enterprises to set up, expand or rehabilitate small milk-processing units.

Finance a marketing study to examine:

milk collection, processing and marketing in the project area and nationally;

demand for and consumption of various types of dairy products, especially traditional products; and

the feasibility of establishing a milk-collection system incorporating cooperatives, farmers’ groups and women.

Provide credit for income-generating activities.

400 manhours of beneficiary training were spent on milk processing and an additional 60 manhours on milk processing for cooperatives.

No information is available on how many milk processing units were actually established, however, compared to project estimates of 10% return on investment for milk processing this activity had the most positive results achieving 25% return on average.

Interaction with beneficiaries at project completion revealed significant dissatisfaction with the marketing structure and the farmer’s share of the price for farm products.

Livestock feeding

Insufficient locally produced feed is an important constraint on livestock production in Jordan, resulting from limited grazing land and overgrazing because of increasing livestock numbers. At appraisal, feed production in Jordan met only 40% of requirements. As a result, Jordan depended almost entirely on imported livestock feed, which was sold to farmers at a subsidized rate. The feed subsidy:

suppressed the importance of forage crop production and development and the possibilities for integrating forage and livestock;
undermined the value of cereal residues and other by-products; and
increased uncontrolled movements of livestock from neighbouring countries to take advantage of the cheap feed.

Planned

Achieved

Provide seasonal loans to 1 200 producers of crossbred goats and Awassi sheep to grow vetch (Vicia spp.), either for indoor feeding of small ruminants or for direct grazing.

Support the integration of crops and livestock.

At project completion the number of loans disbursed for crop production were 45% of the target.

Integration of crops and livestock was established on a very limited scale. The project cultivated vetch for beneficiaries of the Shami goat multiplication units. The failure of crop-livestock integration has been attributed to the rigidity of ACC lending policies, which did not allow more than one loan at a time.

In August 1996, the Government removed subsidies on livestock feeds, with negative impacts on all aspects of livestock production in the project. In the multiplication units, most animals were fed unbalanced and inadequate rations providing 50-60% of daily requirements, so milk yields decreased. It was calculated that activities such as lamb fattening were no longer financially viable because of high feed costs.

Animal husbandry

Traditional farming systems evolved in Jordan to cope with limited natural resources by using low-input technologies to raise local livestock breeds. At appraisal, the livestock breeding stations were practising poor flock management and breeding techniques. It was therefore necessary to develop a livestock improvement strategy that would gradually increase genetic potential in the context of prevailing feeding practices, increase farmer incomes and provide incentives for increasing forage production while decreasing the pressure on natural resources.
Planned		Achieved
Rehabilitate and expand the central Shami goat breeding station at Wadi-Wala to house 400 head of imported Shami goats; and rehabilitate the central sheep breeding station at Khanassri, expanding its capacity from 400 to 625 head of imported breeding stock.		The breeding stations at Wadi Wala and Fejiji, which replaced Khanassri, were adequately staffed, expanded, rehabilitated and equipped. Livestock market prices were lower than those at the breeding stations, however, so farmers preferred to buy animals from other sources. The substitution of Fejiji station in the south for Khanassri in the north increased the risk of animals dying during transportation and decreased project coverage in the north.

Lessons learned

The project relied heavily on Cyprus as a source for Shami goats to be used for livestock genetic improvement. Problems with the supplier, and subsequent quarantine measures applied to the small batch of animals actually imported minimised the impact of this sub-component. Alternatives were only considered late during the implementation. More attention should be paid to finding alternative sources of project inputs at project design.
Targeting criteria were too complex to implement and baseline data were insufficient to monitor targeting from the project’s start. Exclusive targeting is difficult to apply in rural areas given the scarcity and lack of reliability of information on household profiles. A monitoring system should be set up at the early stages of the projects and take into account targeting criteria and baseline data.
The institution responsible for providing rural credit had its own corporate objectives that ran contrary to the project’s objectives of targeting the rural poorest. Thus the tight restrictions that it imposed for the supply of credit which excluded the poorest households. The project should examine at the design stage the compatibility of IFAD’s strategic objectives with policies and practises of the implementing institutions.
The removal of feed subsidies was supported by the project, while a lamb fattening component was included to target landless groups. Although it was envisaged that the removal of the subsidies would encourage the growing of forage and the widespread adoption of mixed farming systems, it would almost certainly have a very negative impact for landless groups who may wish to take up fattening activities. Furthermore, the removal of subsidies had deleterious effects on animal nutrition throughout the project. Trade-offs between short-term costs and long term benefits should be considered in project design, and possibly provide feedback to policy formulation.
Stringent loan conditions demanded repayment of loans without a grace period. The farming and livestock production cycle should be taken into account in the provision of rural credit. In order to minimise the exposure to risk of the rural poor, loan repayment should not start before income is generated as a result of a productive activity accruing from the loan.
High loan recovery rates do not necessarily imply success of the rural credit component. The rigid repayment conditions in this project, especially the salary reduction and guarantor schemes, helped to achieve recovery rates of 95%. However, these schemes could potentially mask inefficiencies in loan appraisal, monitoring and collection, while transferring the entirety of the risk to the loan recipient and at the same time excluding the very poor. Methodologies that could address the need to target rural poor include: creation of credit risk funds, group lending, and savings mobilisation.
Income diversification might be better achieved by creating or expanding opportunities in different sectors of the economy.

Best practise

Good record keeping and ear-tagging of all animals in the breeding stations enabled the project to identify superior stock for selection. Records were used to select animals on the basis of: a)Pedigree selection, (performance of parents and grandparents) b) Performance testing (performance of individual) c)Progeny testing (performance of offspring) d)Collateral selection (performance of close relatives).

Project information

Total cost: USD 19.7 million Livestock cost (as percentage of total): 67%

Duration: The project began in June 1994 and ended in December 2001

Area: The project area consists of agricultural land above the 200 mm isohyet, except for 31 000 ha of irrigated land in the uplands, and lies in seven governorates: Irbid, Amman, Balqa, Mafraq, Karak, Tafilah, Ma’an and part of Zarqa.

Beneficiaries: The target group consists of 18 000 resource-poor households below the poverty line characterized by: