Lessons learnt from AFD support to smallholder rubber plantations

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Lessons learnt from AFD support to smallholder
rubber plantations
Panel 2 Different types of support programs for
smallholder rubber plantations
J. DELARUE N. NOEL AFD
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Smallholder rubber plantation projects

• What were the projects outcomes and how were
  they achieved?
• Whats next?
• How can good quality plantations be achieved in
  the long term?
• Should we support a greater number of
  smallholders in the future?
• Who and how?
• Are rubber plantations a good way to alleviate
  poverty?

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AFD support to rubber sector1993 - 2009
AFD Project name Country Granting date Financial commitment AFD share
CGH1018 Petits planteurs d'hévéas GHANA 1993 1 168 979 nd
CKH1010 Restructuration hévéa phase intérimaire CAMBODGE 1994 1 466 560 nd
PCI1049 SAIBE (Investissement usine caoutchouc) C.D'IVOIRE 1995 533 572 nd
PCM1067 HEVECAM (Financement partiel investissement) CAMEROUN 1997 2 286 735 nd
CVN1024 Plantations villageoises d'hévéas plateaux centre-sud VIETNAM 1998 15 244 902 20.09
CGH1050 Petits planteurs d'hévéas GHANA 1998 5 945 512 80.41
CKH1044 Hévéaculture villageoise CAMBODGE 1999 1 929 242 92.00
PLR1001 LAC Hévéaculture LIBERIA 1999 2 657 555 nd
CVN1045 Hévéa industriel hauts plateaux VIETNAM 1999 27 471 002 42.91
CKH1068 Projet intérimaire de développement de l'hévéaculture Familiale CAMBODGE 2003 3 500 000 81.98
CKH3000 PRCC Caoutchouc naturel CAMBODGE 2003 800 000 9100
CGH6008 Projet cultures pérennes (dont hévéa) GHANA 2005 8 620 000 43.31
CKH6006 Projet de transition d'appui à l'hévéaculture familiale CAMBODGE 2007 840 000 72.00
TOT AFDPROPARCO TOT AFDPROPARCO     72 464 058  
13 interventions including 3 loans to private
sector (PROPARCO)
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Pilot phases followed by a rapid development

• Pilot phase
• Context Activities
• New areas Prove the feasibility of SRP
• Low rubber prices Build capacities
• Absence of extension services Create first
  quality plantations
• Absence of LT resources for banks Deliver
  services

Development phase Context Activities Better
rubber prices Build capacities Extension
services need money Create more quality
plantations Absence of LT resources for banks
Deliver services Reach smaller
farmers Prepare a national policy
Outcomes
Country Beneficiaries Surface Area Total project costs
Cambodia 1 000 3 800 ha 9 841 000
Vietnam 27 500 41 000 ha 106 447 500
Ghana 2 100 7 000 ha 45 715 169
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Implementation
Guarantee for bank Mitigation of risk for farmer
Coordination with national programs
LAND
Core aspect of projects (50 65) Long term
with grace period Covers all plantation monetary
costs
RURAL ROADS
CREDIT
FARMER
EXTENSION
INPUTS
Advice to farmers, nurseries, banks Plantation,
immature period, tapping period Research/Developme
nt
Costs covered by credit Planting material Inputs
delivery on field
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High yields and profitability
Cambodia Vietnam Ghana
Total costs for farmer /ha 1 116 1 016 2 180
Total costs for project /ha 1 363 257 943
Number of hectares 3 800 41 000 7000
Expected yields 1 800 1 400 1 800
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High yields and profitability

• Cambodia
• 4 ha farm
• real rubber prices until 2008, average price of
  0.77 /kg DRC after 2008
• 2007 prices for other products

Characteristics Rubber (project) Rubber Staple products Seedlings Staple products Staple products Cashew Banana
             
surf. rubber 100 60 50 0 0 0
Credit yes no no no no no
Income/year/ha () 954 830 408 469 485 639
Income/man.day () 12.6 7.8 3.5 6.6 10.0 86
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Assessment of the situation

• SRP technically feasible
• Sustainable loans repayments and profitability
• Price forecast not so pessimistic in the long run
• Many spontaneous plantations
• But
• Beneficiaries still need credit and technical
  advice
• Many non beneficiaries also have needs (quality
  planting material, technical advice, credit)
• Risks on the plantations
• Difficulties to get banks involved on a long-term
  basis
• ? Dependence on donors financing and immature
  period not fully covered
• Operational constraints
• ? Short-term projects dont fully fit long-term
  needs

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Whats next?

• How can good quality plantations be achieved in
  the long term?
• Should we support a greater number of
  smallholders in the future?
• Who and how?
• Are rubber plantations a good way to alleviate
  poverty?

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How can good quality plantations be achieved in
the long term?
Engaging perennial stakeholders in a contractual
scheme is promising
Delivers rubber to the company at a fixed price
Needs rubber supply Co-finances
extension Support nurseries Tapping
training Sanitary control

• Risks
• land ownership
• environnemental impact
• negociation capacity

Attracted by the companys involvement, takes
commercial risk, pre-finances
Possible options Favouring the contract farming
scheme in various countries Increased support to
producers organizations
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How can we support a greater number of
smallholders in the future?

• (1) Absolute priority quality planting material
  
• Adapted clones available
• Large demand for planting material
• (2) Large-scale extension necessarily through
  national extension services (Vietnam) or
  producers organizations
• (3) Financing needs
• Possible options (1) and (2)
• Support nurseries development and certification
  system
• Support producers organizations
• Funding attract bigger donors? Levy on rubber
  exports (?)

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How can we support a greater number of
smallholders in the future?
(3) Financing needs

• Current situation
• Plantation costs are mainly covered
• The loan is reimbursed by rubber production and
  profitability remains high
• Difficulties to get banks involved in the first
  place (Cambodia) or on a long-term basis
  (Vietnam) (subsidized rates)
• The financial scheme depends on donors provision
  of long-term resources (limits number of
  beneficiaries) and the immature period is not
  fully covered

• Possible options (3)
• For 60 to 75 of the farmers, we could probably
  adapt the credit Financing needs
• - Basing it on existing credit offer
• Reducing the total amount of credit through
  targeted plantation cost reduction
• posscredit

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Are rubber plantations a good way to alleviate
poverty?

• Current situation
• Projects have served about 20 poor SEprofiles
• Land scarcity is the main problem
• Rubber has long immature period
• Rubber has high plantation costs / access to
  credit Poorcst

But rubber is highly profitable!
Possible options Political decisions Land
distribution could be done as in Vietnam,
Thailand High plantation costs targeted
subsidies for planting material Within
small-scale projects Study pro-poor crop
associations Propose low-cost plantation
techniques Direct scarce long-term credit
resources to the poor
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Conclusions

• Technical success was achieved thanks to
  intensive project support
• Short-term projects do not fit long-term needs
• Contract farming is a promising way of engaging
  stakeholders in the long term
• To serve more smallholders, credit product
  offerings for plantations should be adapted to
  integrate the constraints of the banks
• National policies are necessary to develop
  smallholders plantations on a larger scale or to
  target the poor

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Financing needs
  Cambodia Vietnam (Kontum) Vietnam (TTHué) Ghana
credit is the main constraint 75 74 96 -
credit is not necessary 25 26 4 -
Cambodia Vietnam (Kontum) Vietnam (TTHué) Ghana
Other bank - 22 39 -
Family - 14 32 -
Own resources 45 10 4 -
Asset sold - 8 0 -
Wouldnt have planted 25 38 25 -
Other 30 8 0 -
Total 100 100 100 -
Moreover, rubber smallholders usually reimburse
in advance
Retour
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Socio-economic profiles of beneficiaries
  Cambodia Vietnam Ghana
Average rubber surf 3,6 2,3 4,44 (3,3 fin 2007)
Standard deviation 3,6 de 0,1 à 11,9 2,47
Surface      
0 à 1,99 34 - 5
2 à 3,99 29 -
4 à 5,99 17 -
6 and more 20 - 23
Total 100 - 100
72
  Cambodia Vietnam Ghana
poor 29 18 16
middle 13 77 59
well-off 58 5 25
Retour
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Poor people face strong constraints
Land constraint
  Cambodia Vietnam (TTHué) Vietnam (Kontum) Ghana
Replace annual crop env. 30 5 65 5
Replace perennial crop env. 70 0 5 11
Replace fallow 0 0 0 84
New allocated land 0 80 11 0
Others 0 15 19 0
Credit selection
  Cambodia Vietnam Ghana
Credit obtained 57 - 99
Withdrawal 39 - 0
Rejection 4 - 1
Retour
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What credit was proposed for the next phase in
Cambodia?
Credit over 8 years / Interest rate 19/year
Year Outstanding debt AnnualInterest Capital reimb. Annual repayement
1 600 108 108
2 600 108 108
3 600 108 108
4 600 108 108
5 600 108 108
6 600 108 200 308
7 400 72 200 272
8 200 36 200 236
Total () 756 600 1 356
Retour