Economic evaluation of the Farmer Field Schools (FFSs) in the Cajamarca Department (Peru) was undertaken to help determine whether agricultural extension via FFSs can contribute to poverty alleviation. Farmer Field Schools involving a number of important crops have already been evaluated at other sites around the world. These studies reported benefits associated with Integrated Crop/Pest Management (ICM/IPM), such as the reduced use of insecticides, for example. However, the use of ICM/IPM) to control potato late blight (the purpose of the Cajamarca FFSs) is quite a complex subject.

In Cajamarca, it was found that only a few components of ICM/IPM have been adopted, despite the education received by the project participants. However, any assessment of the project must also take into account the existence of subtle changes in the cropping techniques used which could not be measured by our surveys, but which are known to have occurred because of positive economic effects observed to have benefited the farmers involved in the FFSs studied. An analysis of consecutive survey data covering up to four years allowed us to identify additional benefits at the farm level through increased yields. Despite these benefits, however, it was noted that the economic returns obtained per household at the sites studied are relatively low, due to the limited average area (0.2 hectare per farm) cropped with potato each year.

The study was unable to confirm the following benefits, which were originally expected to result from these FFSs:

·               Reduction in the use of pesticides – Only in one of the four years considered could a statistically significant reduction in the application of pesticides by the participants by proved to have occurred. Differences in spraying frequency seem to be highly dependent on the climatic conditions of the year. The reduction of 0.8 applications, which was found to occur in that one year, did not represent a significant reduction in cost. With applications costs of US$20 per hectare, the average benefit for the participants (with an average potato area of some 0.2 ha each) in the specific year identified was only around US$3.

·              Reduced applications of very toxic pesticides – With the exception of the banned, very toxic insecticide Aldrin, no significant changes were found to have occurred with regard to the use of toxic pesticides. The percentage use of those products that fell within specific toxicity classes was the same among project participants and non-participants, i.e. the two groups used almost the same percentages of very moderately and mildly toxic products. However, it was found that project participants no longer use Ridomil (metalaxyl). This indicates that they have taken note of, and acted upon, what they learned about the issues of disease resistance in the training.

The only benefit resulting from Farmer Field Schools that was found to be statistically significant was an increase in yield. This increase resulted both from the introduction of a new variety (‘Amarilis’) and from an increase in farmers’ knowledge as result of the education they received in FFSs. As the yield increases were not due to any change in costs or managerial changes, the reported yield increase equals the net benefit obtained.

 ·                Benefits of a new variety: The difference in yields generated by replacing one of the other main varieties (‘Liberteña’, ‘Canchan’, ‘Yungay’) with ‘Amarilis’ is 4 tonnes per hectare per year on average, which means an additional benefit of US$350/ha. Even though the adoption rates among non-participants in neighboring sites were not very much lower than those among participants, this benefit can be, at least partially, attributed to the FFSs, as seed flow was definitely initiated through the FFS project. In villages further away from those taking part in the FFSs, the variety ’Amarilis’ is unknown. This effect may become stronger in the future, when some of the clones introduced are also disseminated.

  ·               Benefits of education: The additional independent yield effect associated with participation in the FFS, but not due to the variety ‘Amarilis’ is the result of the knowledge gained by the farmers, and was calculated to be almost 2.7 tonnes/ha on average (p<0.05), an additional benefit of about US$236/ha.

In terms of our economic evaluation of the project, when all benefits are considered (including the effects of education effects and the yield effects resulting from the use of ‘Amarilis’, in the fields of participants and non-participants) the net present value (NPV) for the CIP/CARE Pilot project reaches US$84,190. The internal rate of return (IRR) is 31%, which is a very health basis for investment.

However, concerns exist as to whether the benefits of the introduced variety (‘Amarilis’) can be attributed to the FFS. If they can, then the question of how much credit is due to the breeders, and how much to the extension system, remains a point of debate. And if yes, what is the merit of the breeders and how much is the merit of the extension system?

On a more positive note, there also exist good reasons to assume that project costs would be lower for future schools, as the conceptual costs and the costs of developing a manual would not be incurred when replicating the project. Therefore only operational costs and monitoring costs are of importance when comparing this project with other projects or when considering the cost of future, similar, projects. In such a case, the project may be judged cost-effective even when the benefits arising from the introduction of a new variety (‘Amarilis’) are not considered, with only the increase in yields arising from education in FFSs being attributed to the project. Using these assumptions the project achieved an NPV of US$40,270 and an IRR of 28%.

Of course, as the benefits are based on the increase in yield per unit area, it can be concluded that the larger the average potato area of the participating farmers, the more profitable the FFS project will be. In areas where potatoes are grown more commercially, and/or where slightly higher prices are received by the farmers, the additional benefits will be much higher. Therefore, such projects would provide a greater ‘pay back’ than the project which is the subject of this study.

One factor that may limit these theoretically promising results is the low and volatile market price available for potato in Peru. Because of this, farmers in remote areas (such as the San Miguel sites in Cajamarca) use potato as a subsistence crop, continually reducing their potato area and increasing dairy production when possible. It should therefore be noted that, if the FFS projects were successfully and extensively scaled up, potato prices might decrease as the supply available to an already-saturated market increased. As a result, farmers would have less incentive to produce and sell potatoes.

In the middle and long term, therefore, the benefits farmers receive from such projects in terms of “empowerment” and an increase in their decision-making capacities should be considered to be at least as important as the additional yields they benefit from. Many farmers seem to use what they learnt in the FFS for other purposes in their daily life. This apparent increase in social capital as a result of participatory teaching and capacity building therefore needs to be measured, and is the subject of ongoing work.

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1 Executive Summary from: Züger, Regula. 2004. Impact Assessment of Farmer Field Schools in Cajamarca, Peru: An economic evaluation. Social Sciences Working Paper No. 2004-1. International Potato Center, Lima, Peru. ISSN 0256-8748