May 2008 This publication was produced for review by the United States Agency for International Development. It was prepared by Weidemann Associates, Inc. FINAL EVALUATION OF USAID/PERU POVERTY REDUCTION AND ALLEVIATION (PRA) ACTIVITY FINAL EVALUATION OF USAID/PERU POVERTY REDUCTION AND ALLEVIATION (PRA) ACTIVITY FINAL REPORT Submitted by: Weidemann Associates, Inc. Submitted to: USAID/Peru Contract No.: Raise Plus IQC No. AEG-I-00-04-00010-00 Task Order No. 360 Period of Performance: February – May 2008 DISCLAIMER The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. ACKNOWLEDGEMENTS Weidemann Associates Inc. appreciates the extensive support and cooperation of all who participated and assisted in the conduct of this evaluation of the Peru Poverty Reduction and Alleviation (PRA) Project. Of particular note is the contribution of many companies, producers, communities and the Government of Peru who took the time to patiently explain their relationship with PRA and how it affected their lives and work, and in that process provided the team with an improved understanding of how the project functioned in the field. Many of these people traveled at their own expense to be able to meet with the evaluation team members. We thank them for their sacrifice. Our special thanks go also to the USAID/Peru staff for all their support in facilitating this study, for providing us with direction and assistance in obtaining the information needed to conduct the study, and in particular the contributions of Mr. Juan Robles, the Task Order CTO. We also thank the PRA project staff for their extra efforts to provide the contacts and introduction to the many community groups and clients that were interviewed by the evaluation team and to provide background information about the methodologies and activities of PRA. Our sincere appreciation to those who dedicated many extra hours to provide data that was requested by the evaluation team and many times to sort or filter the data in many different ways to illuminate operational aspects of PRA. In addition many thanks to Araly Muñoz of PRA and Ana Toledo for helping the team make the best use of their time. Arvin R. Bunker Robert C. Flick Jose Lazarte Farfan Alfredo P. Mendívil Luis Fernando Talavera Ballon Gladys Mónica Triveño Chan Jan List of Abbreviations and Acronyms AD Alternative Development (also referred by project name PDA) ADRA Adventista para el Desarrollo y Recursos Asistenciales CONFIEP Confederación Nacional de Instituciones Empresariales COP Chief of Party CTO Contracting Technical Officer ESC Economic Service Center FFS Farmer Field School GOP Government of Peru HCN Host Country National, i.e., a Peruvian IBRD World Bank IDB Inter American Development Bank IMF International Monetary Fund MEDA Mennonite Economic Development Agency MYPE Micro and Small Enterprise Development Project – USAID funded project to Competitiva strengthen the competitiveness of micro and small enterprise NGO Non-government organization PAT Poverty Assessment Tool PDA Programa de Desarrollo Alternativo (also referred to as AD) PRA Poverty Reduction and Alleviation RAISE Rural and Agricultural Incomes with a Sustainable Environment SOW Scope of Work T/TA Training/Technical Assistance UN United Nations and its agencies such as the FAO, UNDP, etc. USAID United States Agency for International Development Table of Contents Executive Summary........................................................................................................................ 1 Introduction..................................................................................................................................... 6 Background..................................................................................................................................... 6 PRA’s Strategy and Focus .............................................................................................................. 8 Principal Findings ......................................................................................................................... 10 PRAs Direct and Indirect Impacts ............................................................................................ 10 Economic Service Centers ........................................................................................................ 18 PRA and Alternative Development .......................................................................................... 23 Assistance to Agriculture vs. Other Sectors ............................................................................. 24 Operational Issues..................................................................................................................... 28 Conclusions................................................................................................................................... 38 Recommendations......................................................................................................................... 40 Lessons Learned............................................................................................................................ 41 Unresolved Issues ......................................................................................................................... 42 Annexes......................................................................................................................................... 44 Annex A: Contacts by the Evaluation Team............................................................................. 45 Annex B. Literature and References......................................................................................... 50 Annex C. Sales, Investments and Work Days Generated by Year by ESC.............................. 51 Annex D. PRA Active Clients 2008 ......................................................................................... 53 Annex E: PRAs 36 Largest Clients........................................................................................... 57 Annex F: Sector Analysis ......................................................................................................... 60 Annex G. Benefits Cost Ratio by Product ................................................................................ 75 Annex H: Examples of PRA and PDA Collaboration .............................................................. 76 Annex I: Evaluation SOW with Response to Questions........................................................... 79           Final Evaluation of USAID/Peru Poverty Reduction and Alleviation (PRA) Activity Executive Summary This report is an external evaluation of the Poverty Reduction Alleviation (PRA) Activity that was established under USAID/Peru Strategic Objective Number II, Increased Incomes of the Poor, as an outgrowth of the 1994 USAID/Peru Food Security Strategy. The Strategic Objective determined that food insecurity is principally a question of poverty, that poverty is concentrated in corridors where people have limited access to markets, and that low-labor productivity reflects inadequate investment in human and material capital as well as poorly developed public policies and institutions. Consequently, USAID/Peru adopted an approach to link poverty-stricken rural areas (economic corridors) to markets in cities in Peru and abroad. PRA began in September 1998 with an agreement between USAID and the Confederación Nacional de Instituciones Empresariales (CONFIEP), an institution representing private sector companies. CONFIEP was to apply a private business focus to optimize resource use in the economic corridors to reduce poverty through employment generation. The design expected that private businesses would implement creative market mechanisms to purchase inputs from the economic corridors. They would be supported by project established Economic Service Centers that were located in the economic corridors. It was expected that the business associates of CONFIEP would become the buyers. Implementation of PRA by Selection of chocolate beans in Ayacucho (VRAE): CAC CONFIEP did not meet VRA (Timoteo Vargas Aguilar, president; y Wilder expectations. In April 2002 Rocha, Manager) USAID asked Chemonics to become the full implementing institution. Chemonics was already providing technical advice, international consultants and monitoring and evaluation services to this project. This evaluation provides quantitative and qualitative analysis of the direct and indirect impact, cost effectiveness, and strengths and weaknesses of PRA-supported activities and operations. Five key areas were evaluated: 1) Direct and indirect impacts; 2) the role of Economic Service Centers (ESC); 3) the Weidemann Associates, Inc. Page 1           relationship between PRA and Alternative Development (AD, implemented by a project known as PDA); 4) the level of assistance to agriculture versus manufacturing and services sectors; and 5) operational issues. PRA Methodology PRA only provides assistance when a market-pull situation is identified. Market-pull means an identified buyer needs a specific product and has funds to pay for it. Typically, a company located in a city center, within or outside an economic corridor, requests PRA to assist in either sourcing products from the economic corridors, or finding buyers for products that are or can be produced in the corridors. When a request for assistance meets PRA feasibility standards, a business plan is prepared which both the company and PRA agree to implement. This plan outlines activities that PRA and the company will implement and the anticipated targets for sales, investments, and employment. Much of PRA work under these business Connecting Producers with a Buyer plans improves the supply of products, a Green Peas from Huancavelica supply-push activity. However, supply- In the case of green peas in Huancavelica, push is only engaged in after market-pull is PRA first identified what they considered a verified. All PRA services are related to the viable product. Then they identified an economic corridors and nearly all services interested buyer in the wholesale market in are delivered through ESCs that are located Lima and matched the buyer with the in the corridors and supported by PRAs’ producers. Next was work on the supply push central office in Lima. side persuading farmers to change varieties Fundamental to PRA’s approach is keeping and cultural practices (higher density planting, projects simple and focused on defined use of abundant organic material, integrated objectives, leaving aside areas that may pest management practices, etc.) which need improvement but do not directly and resulted in a better product that was immediately translate to increased sales or demanded by the buyer, higher yields, lower investments. Monetary incentives for PRA per unit costs and more profit for the and Chemonics associated personnel focus producers. on sales and investment.1 Methods used by the evaluation team to measure results included an analysis of PRA’s internal data, data gathered during field visits by the evaluation team, and secondary external data, feedback from participants, estimates of indirect income impacts using multipliers, identification of demonstration effect activities, estimates of crop production costs and revenue, and interviews with sector specialists. Key Findings and Conclusions PRA is an excellent economic development project that is achieving its objectives in the targeted economic corridors. Income for the poor has improved as evidenced by beneficiary statements and preliminary income impact estimates in this report. The estimated indirect income impact from PRA activities ranged from 0.2 percent of Gross Domestic Product in Ancash and Huánuco Departments, to 2.4 percent in Ayacucho Department and 1.9 percent of Gross 1 Incentives are also paid on employment generated. However, estimates of employment generated are derived from sales, hence for practical purposes only sales and investments determine the amount of incentives. Weidemann Associates, Inc. Page 2           Domestic Product in San Martin Department. Peru’s household income data that would enable more reliable statistical inferences is not available. Employment generated through 2007 totaled more than 14 million work days, most of that is provided by the poor from the economic corridors. Investments by PRA clients in the economic corridors totaled $US 16.2 million from 2000 to 2007. Since 2000 PRA has accepted 564 clients; by the end of 2007, 207 remained active. About 1,500 microenterprises and 37,500 individual producers have participated in PRA activities through 2007. Thirty seven percent of beneficiaries are women. Facilitating access to information and aggressively brokering deals are the primary focus of PRA services delivered through the ESCs. Improving the business environment, an objective of the project, received mid-course attention in the form of promoting road construction, but by project’s end was largely inactive. Incentives were not paid for policy work. Placing ESCs in the economic corridors has been an effective approach, providing local presence and decision-making ability and freeing PRA personnel to focus on making deals happen. NGOs performed well as ESC operators however, other types of institutions, such as consulting companies and universities, have also been good operators. Perhaps the most important service of PRA is to build confidence between buyers and sellers who are small producers. There is a vast difference between city center buyers and small rural producers, which prevents a satisfying business experience for either party. To address this challenge, PRA personnel bring specific product requests, accompanied by product standards and prices to the producers, and then help the producers respond to the request. While planting new crops or improving their production techniques for existing crops producers are preparing for a sale, motivating producers more effectively than just being trained. Compared to other rural development projects evaluated by team members, PRA supported producers were especially positive and Cages for trout production in Lake Titicaca near enthusiastic about income gains. For Puno. example, growers in Apurimac replaced corn (which generated revenue of Soles 4,800 per hectare per year) with artichokes (revenue of Soles 12,975 per hectare per year). Growers in Bajo Piura replaced cotton (Soles 175 per hectare in net income) with black eye peas (Soles 2,300 per hectare in net income). Producers in Bellavista replaced standard bananas (Soles 1,300 per hectare of net income) with organic bananas (Soles 4,600 of net income). Similarly consider that in 2004, when PRA began supporting black eye peas in Piura there was just one processor (buyer). In 2007 there were seven processors purchasing product from growers. One artichoke grower in another region said, “If there were only one company (buyer) the price would be less”. Thanks to competition the people plant.” Weidemann Associates, Inc. Page 3 Likewise, participating companies uniformly gave high marks to the technical assistance provided by PRA. The most common response of companies was that PRA assistance accelerated their entry into purchasing products from the economic corridors. Two large potential buyers stated that they would not have purchased from the zone without the support of PRA. The four coffee processors supported by PRA over the past four years received nearly 30 percent more for their coffee than the average Peruvian exporter. One client and investor in an economic corridor stated, “PRA offers much more than a price to the farmers. . . . In the sierra it is not a challenge of money, rather a challenge of environment.” PRA is changing attitudes and actions on how economic development projects are implemented in Peru. The evaluation identified 101 instances of other organizations implementing at least in part PRA’s methodology. Non-governmental organizations (NGO) and project implementers are the institutions that most frequently are adapting the PRA market-pull methodology (38 instances). Unexpected by the evaluation team, municipal and regional governments are also observing the increased “PRA offers much more sales and revenue flowing back to their communities than a price to the and allocating resources to support business growth (32 farmers. . . . In the instances). Private sector companies and producers sierra it is not a associations not assisted by PRA are also using the challenge of money, methodology (25 instances), most of these are producer associations. Frequently companies who consider rather a challenge of copying PRA methodologies become PRA clients. In environment.” addition, six other instances of organizations including chambers of commerce are using the PRA methodology. While PRA (with a market-pull orientation) and the Alternative Development Program (PDA) (with a supply-push orientation) have similar objectives for those areas in which they overlap, they use fundamentally different approaches that have not worked well together. In the field they have cooperated on a number of instances that are identified in the report. Most of these come from the period of 2002-2003 during which USAID mandated cooperation. Nevertheless, in some cases they can cooperate, each doing the part they do best, with positive results for each project and USAID. Clients, not PRA determine in which sectors they will work. In 2007, 56 percent of clients were in agriculture, and food and beverage processing, 24 percent were in manufacturing (except food and beverages), 17 percent were in commerce, and 3 percent in other sectors, mostly tourism. Initially PRA signed up many new clients, and lost many.2 For example, in the first full year of the project (2001), PRA accepted 108 clients, of which only 34 percent were still active one year later (December 31, 2002). Dropping clients prematurely wastes resources. The learning curve was slow, with retention rates above 50 percent achieved first in 2005 (65 percent in that year). The evaluation team suggests that a one-year retention rate should be above 50 percent, except when a donor wishes to be very aggressive in attracting new business. 2 A client is a company or other institution that has requested PRA assistance and for which PRA has prepared a business plan that is agreed to by PRA and the client. Weidemann Associates, Inc. Page 4           The most frequent reason for client departure was a change in client strategy and leadership issues, (67 percent of departures), followed by office closings related to the Alternative Development program (25 percent of departures), and reduced confidence between PRA and the client (9 percent of departures). A more rigorous client acceptance process would have reduced the number of premature departures and saved resources. Today, PRA considers the amount of investment by a client as the best indicator of client retention and is the best predictor of success in implementing its business plan. PRA now has a story that could interest participation and partial funding by governments and businesses. In 2007, every dollar in local ESC costs generated about 20 dollars in sales. Every dollar of PRA Peru (ESC plus Lima office) costs generated more than 15 dollars in sales. These numbers reflect seven years of business building and provide a basis for projecting reasonable performance standards. During a follow-up project performance targets to local communities and businesses could be offered in exchange for financial support. The evaluation team considers that ESCs will unlikely ever be fully self-sustaining, but partial cost recovery that may be feasible. Operating costs are higher in coca regions. For the period 2004 to 2007, each dollar of operating costs yielded 10.5 dollars in sales for those ESCs operating in coca producing areas. For ESCs operating in non-coca producing areas each dollar of costs yielded 15.3 dollars of sales. To date the participation of mining companies has positive results for PRA, including leveraging USAID and GOP resources and strengthening the private sector focus of the project. Potential undesirable interference by the mining companies has not occurred. Both mining companies are pleased with PRA results and anticipate providing continued funding. Working with producers and businesses, PRA could be a good source to identify needed changes in the business environment. The evaluation team does not however, consider PRA an effective institution to promote policy change. MYPE Competitiva is better positioned for that role. PRA’s monitoring and evaluation unit reliably measures key variables, such as sales, employment generated and investments without interference by USAID or PRA leadership. Weidemann Associates, Inc. Page 5           Final Evaluation of USAID/Peru Poverty Reduction and Alleviation (PRA) Activity May 2008 Introduction This report is an external evaluation of the Poverty Reduction Alleviation (PRA) Activity that was established under USAID/Peru Strategic Objective Number II, Increased Incomes of the Poor, as an outgrowth of the 1994 USAID/Peru Food Security strategy. The objective of this evaluation is to provide quantitative and qualitative analysis of the direct and indirect impact, cost effectiveness, strengths and weaknesses, and lessons learned of PRA-supported activities and operations. Background In 1994, USAID/Peru prepared a comprehensive Food Security Strategy for Peru that identified major obstacles to improving food security and defined promising programmatic responses for USAID/Peru. Its main conclusions were summarized as follows: • Peru's food insecurity is principally a question of poverty; • Poverty, especially extreme poverty, is concentrated in rural areas of the Sierra, as well as among the non-Spanish speaking population; • The poor and extremely poor suffer not only from low incomes, but also from limited access to markets and public services; • The root cause of poverty in Peru is low labor productivity which, in turn, reflects inadequate investment in human and material capital and poorly developed public policies and institutions. Consequently, USAID/Peru adopted an approach that links poverty-stricken rural areas to lower hierarchy cities and these, in turn, to higher hierarchy cities in an "economic corridors" strategy. From the USAID/Peru-funded GOP Poverty Map of Peru ten priority economic corridors were initially identified for attention by PRA. During the course of PRA implementation service to selected economic corridors was discontinued and service to others added. Today PRA provides service to 10 economic corridors, as follows: Ancash, Ayacucho, Cusco, Huancavelica, Huancayo, Huánuco, Jaen, Piura, Pucallpa, and Tarapoto (Figure 1). Weidemann Associates, Inc. Page 6           through a program of purchases of inputs from the economic corridors (with the support of the Figure 1. Areas Served by PRA PRA began in September 1998 with an agreement between USAID and the Confederación Nacional de Instituciones Empresariales (CONFIEP), with the objective to “improve the income of the poor.”3 CONFIEP, an institution representing private sector companies, was to “apply a private business focus to optimize the use of resources in the economic corridors . . . to improve the welfare (reduce poverty) through employment generation . . . and an increase in income.”4 The approach for this activity was to be that the “private business sector in its organized capacity to implement creative market mechanisms to support the fight against poverty Economic Service Centers), that will be provided in as much as possible by the private sector under the concept of open competition.”5 It was considered that “the associates of CONFIEP constitute the potential network of buyers.”6 The poor are mainly located in “rural zones and mostly in those zones that are most distant. It is also observed that the principal factor that limits the possibilities of sustainable development is the lack of connection to the markets.”7 The guideline to PRA was not only to bring investment to target economic corridors, but also included to “focus investments in those urban areas with connections with those companies, especially agricultural and rural companies, that can be strengthened.” Implementation of PRA by CONFIEP did not meet expectations. In April 2002, USAID asked Chemonics to become the full implementing institution. This request added to the work already 3 CONFIEP/USAID agreement, page 5, translated. 4 Ibid. 5 Ibid., p. 6. 6 Ibid., p. 13. 7 Ibid., p. 13. Weidemann Associates, Inc. Page 7           being provided by Chemonics since the project’s inception, which included providing technical advice, international consultants, and monitoring and evaluation. The market development tasks passed to Chemonics were unchanged from those that were given to CONFIEP.8 PRA’s Strategy and Focus PRA only agrees to provide assistance when a market-pull situation, an identified buyer that needs a specific product and has funds to pay for it, is identified. For about two thirds of the cases a company in a city center requests PRA to assist in sourcing products from the economic corridors. PRA verifies that the buyer has an identified market, is a reliable buyer, and that the products that are needed can be sourced from the economic corridors where PRA is working. If the company wants PRA to help develop a new market, or a new product, PRA assesses the potential for that product in the market, along with the ability of the company to provide the resources to develop that market. When these conditions exists, PRA prepares a business plan that the company and PRA agree to implement. This plan is a brief document outlining the activities of PRA and the company and the anticipated outcomes and targets for sales, investments and employment. Much of PRAs work improves the supply of products, a supply-push activity. Supply-push is only engaged in however, when the ready and willing buyer is identified and it is determined that the desired product needs to be improved, for example a variety change, or that producers improve post harvest handling, or reduce per-unit costs to be competitive in the target market. Economic Service Centers: The Economic Service Centers (ESCs) are PRA's cornerstone. They draw upon the experiences of both producers and buyers and provide services that improve their competitiveness. The ESC is the “go-between” for producers, who are wary of dealing with city center based companies that buy the products. The ESC builds confidence between the parties and facilitates the “deal.” Principal functions assigned to the ESCs include: 1. Facilitate access to information on markets (both domestic and foreign), technical and management assistance, financial services, legal protection, notary services, transport, insurance, etc., with the objective of lowering the costs of entry into markets and broadening the participation of local people in them. The Centers do not provide any physical or financial inputs, but facilitates the access of producers and investors to information and services. 2. Act as an aggressive broker of deals between foreign and domestic buyers and investors, as well as local producers. The Centers may provide specialized technical assistance and on-the-job training to resolve specific problems that challenge local businesses in getting started and expanding their services. 3. Identify the need for policy studies and dialogue: Each Center seeks to identify policy-based constraints that restrict economic opportunities and increase the transaction costs of micro, small, and medium farms and businesses. (This evaluation did not assess this component.) 4. Promote mechanisms for coordination and problem solving among key private and public sector entities in economic corridors at a regional level. Each Center identifies 8 A Qualitative Assessment of the Poverty Reduction and Alleviation Program Funded by the US Agency for International Development in Peru, Volume I, 2003, page 4. (Mid-term assessment) Weidemann Associates, Inc. Page 8           the key institutional players at the corridor level who influence decision- making, as well as the actions required to address constraints restricting economic opportunities. Each Center may facilitate the formation of task-oriented committees or advisory groups, and then act as a catalyst to bring together institutional representatives at the highest level possible. This process ensures that adequate leverage and decision￾making authority is required for effective implementation. By the end of the project item four received little attention by the ESCs and by PRA in general. The management of the ESCs is sub-contracted to a local NGO, company, university, etc. Personnel assigned by PRA to an ESC are on the payroll of the sub-contractor, which is responsible for accounting and financial management and running the office on a daily basis. This system of “outsourcing” ESCs’ management has been key to the success of PRA, primarily because it frees the business development specialists from management of a sub-office. The ESCs and their sub-contractors are supported by a PRA central office in Lima, which provides executive direction to the activity. This central office selects and supervises sub-contractors that operate the ESCs, oversees PRA personnel in the central office, provides technical supervision of ESC personnel working with PRA, initiates business opportunities, maintains relationships in Lima and other non-corridor cities, houses and provides oversight to the monitoring and evaluation unit, and maintains relationships with and prepares reports for USAID. Two elements of the poverty reduction track - - investment in productive infrastructure and investment in education - - are fundamental to increasing incomes and employment of the poor and extremely poor. These components are handled in a complementary manner with GOP and other USAID/Peru and donor funding. The Mission recognizes that the direct impact that PRA can make in these corridors is extremely limited, given all the widespread needs stemming from high levels of poverty, extreme poverty, and unemployment. The hypothesis and expectation is that the promotion of successful business ventures in some of the more remote areas of Peru will demonstrate the viability of working in these areas and encourage continued and further investment in the future. The primary measures for assessing progress for this activity model are: increases in sales of clients that are directly attributable to PRA assistance; increases in employment stemming from these sales; and increases in investment that PRA clients make in the corridors. An analysis of these primary measures is included in this assessment along with estimates of indirect impacts. Indicators include examples of crop replacement following PRA’s methodologies but outside PRA assistance, institutions and businesses copying in part PRA’s market-pull techniques, analysis of the support of PRA by economic sector, PRA’s client retention rates, reasons for client departure, analysis of PRA’s costs in Peru, by ESC, and by type, size, and stage of the client in the economic chain. Indirect impact assessments include examples of income gains by producers following PRAs suggestions on crop replacements, examples of income gains for clients supported by PRA, and estimates of the share of changes as a result of PRA activities in the Gross Domestic Product in the Departments of Peru where ESCs are located. Response by project beneficiaries provide corroborating evidence. Operators of PRAs regional offices were selected on a corridor-by-corridor basis. Factors considered included assessing the services demanded in each locale, the experience of the Weidemann Associates, Inc. Page 9           particular institution in increasing opportunities for sustainable employment and income opportunities, and their availability to work in the zone. It should be noted that, from the outset, the organizational and operational sustainability of the Centers themselves was not of particular interest. If at a future date the Centers were to be closed amidst a more vibrant local economy providing incomes and jobs for the poor within a Center's corridor, with other service providers fulfilling functions previously provided by the Centers, the Mission’s view was that the strategy would have proved successful. Principal Findings This report evaluates the PRA project in five key areas: 1) direct and indirect impacts; 2) the role of regional offices called Economic Service Centers (ESC); 3) relationship between PRA and Alternative Development; 4) level of assistance to agricultural versus manufacturing and services sectors; and 5) operational issues. Each area is discussed separately within this section. The report also includes conclusions, recommendations, lessons learned and unresolved issues. PRAs Direct and Indirect Impacts The initial project documentation focused primarily on defining success based on PRA’s direct impact on increasing sales, employment, and investment related to USAID’s selected economic corridors. For this evaluation, project success also included the extent to which other firms and institutions utilized PRA methodologies (demonstration affect), as well as the indirect income impact. It should be noted that PRA maintained records on the three direct success indicators (sales, employment and investments). Little information however, was gathered during the project on the indirect impacts, neither by PRA nor by USAID. As a result, evidence of indirect impacts was gathered within the evaluation’s time and resource parameters. Sales PRA assisted sales (“sales”) from 2000 to 2007 totaled $US 232.4 million, with sales Source: PDA in 2007 reaching $US 66.4 million (Figure 2). About 45 percent of sales were exported; the most important destinations were North America and Europe. Weidemann Associates, Inc. Page 10           PRA assisted sales are those sales by companies that have signed a business plan agreement with PRA. Products included in the sales numbers are directly related to the assistance provided by PRA. The monitoring and evaluation unit in Lima determines which sales numbers are reported. Company books are reviewed periodically to verify that reported sales data complies with the agreement to report. Employment Workdays from 2000 to 2007 totaled 14 million. In 2007, there were 2.6 million workdays generated through PRA activities (Figure 3). The number of workdays generated increased rapidly during the early years of the project, and increased at a slower rate after 2003. Increased work days generated in 2002 and 2003 were heavily influenced by the request for PRA’s to provide technical assistance to producers in the coca producing regions involved in the Alternative Development program. The services provided by PRA were transferred to the Alternative Development project in 2004, resulting in reduced rate of increase in number of workdays generated in that year. The slower increase in employment from 2004 – 2007, as explained by t PRA staff, is due to companies receiving increased training and becoming more efficient in utilization of their labor. Likewise, producers of agricultural products improve their productivity with time, and for some crops, as the plants mature. Work days generated is derived from sales data. New jobs are not actually counted. For each product for which sales data is reported, the monitoring and evaluation unit makes a determination of how much labor is required for each unit of production. With the sales data companies also report unit numbers of product sold. The number of units sold is multiplied by the hours of labor per unit resulting in work days generated. Employment data includes workers that are employed by the activities supported by PRA, and the work days required to produce the products that are purchased by the assisted companies, if PRA is providing assistance to those groups. Companies report their sales and investments monthly. Source: PRA Weidemann Associates, Inc. Page 11           Investments Source: PRA Investments by year show large variations. Since 2003 these figures have ranged from a low of $US 1.1 million to a high of $US 4.1 million (Figure 4). Investments from 2000 to 2007 totaled $US 16.2 million. Investments are reported by assisted companies to PRA. Investments also include those made by producer groups supplying products to the supported companies. The monitoring and evaluation unit reviews investments data to verify that they are related to the assistance provided by PRA. The 2007 PRA Annual Report reports that about 1,500 microenterprises and 37,500 individual producers have participated in PRA activities to date. About 37 percent of the beneficiaries are women. PRA has found that companies which make significant investments in the growing areas become the better, longer-lasting clients and there is less risk of future business decisions that result in farmers being left in the lurch with crops or livestock and no market. Furthermore, companies which actually grow or produce the crop on their own or rented land have a better understanding as to the costs of production and the problems experienced by producers. Sales, work days generated and investments by ESC by year are available in Annex C. Technical Assistance: Responses from Companies, Cooperatives, and Associations Participating companies, cooperatives, and associations uniformly gave high marks to the technical assistance provided by PRA. The most common response by companies and cooperatives was that PRA assistance accelerated their entry into purchasing products from the economic corridors or bringing new products to market. Two in the group of large potential buyers stated that they would not have purchased from the zone without the support of PRA. Bridging the barriers between the city center (mostly Lima) buyers and small rural producers in the corridors is a major contribution of PRA. Buyers and producers both distrust each other, both groups with many stories of losses because of default by the other party to a business transaction. Said one important business executive, “PRA offers much more than a price to the farmers. . . . In the Sierra it is not a challenge of money, rather a challenge of environment.” PRA helps each party to a transaction better understand the other party, and to work through misunderstandings. Figure 5 illustrates one reason for the positive feedback from companies and cooperatives. PRA supported coffee exporters over the last four years have received a 25 percent or greater price premium for exports than do all Peru coffee exporters. Weidemann Associates, Inc. Page 12           Response by Beneficiaries Beneficiaries mostly are individual small producers of agricultural, textile or other products that a buyer is ready to purchase. Nearly always these small producers work together in groups; often they form associations to make the group more formal, and to better deal with legal issues relating to the production and sale of their products. The groups may or may not be organized by PRA. Beneficiaries gave nearly unanimous praise for the technical assistance provided by PRA. The enthusiasm shown by small agricultural producers for their newly found markets and associated income was noticeably greater than feedback from producers of more traditional agricultural development projects. Said one beneficiary, “Before there was only one buyer (company A), it was a monopoly. Today (company B) quotes their price and the price does not go down, rather it goes up. If there were only one company, the price would be less. Thanks to competition, the people plant.”9 Table 1 gives estimated gross and net earnings by agricultural producers for products they were producing prior to participation with PRA, and the crops they are now producing. Note the net income in Tumbes is lower for the PRA supported crop, although black eye peas (frijol caupi) is preferred because their harvests and income is available every four months, compared to rice in Table 1. Gross and Net Income Compared for Agricultural Production, Before and With PRA Support Prior Production PRA Supported Production Location Product Gross Income Net Income Product Gross Income Net Income Bajo Piura Cotton 3,675 175 Black Eye Peas 3,800 2,300 Morropon None - - Black Eye Peas 3,800 2,000 La Union Corn 4,400 1,600 Pallar Bebe 5,100 3,100 Bellavista Banana 7,800 1,300 Banana organic 12,600 4,600 Salitral Corn 3,300 600 Frijol de Palo 4,000 2,000 Tumbes Rice 6,400 2,400 Black Eye Peas 3,600 2,000 Piura Cotton 6,300 2,300 Peppers 21,600 9,600 Apurimac Potatoes 3,253 NA Frejol Canario 4,875 NA Apurimac Corn 4,080 NA Artichokes 12,975 NA Corn 4.080 NA Kiwicha 7,920 NA Source: PRA technical specialists in the zones and agricultural focus groups by the evaluation t 9 Translated from Spanish. Company names withheld. Weidemann Associates, Inc. Page 13           which income is available every six months. In addition, the price variation in rice is much greater than that of black eye peas. These data examples, along with observations made by the evaluation team, confirm the positive response by PRA supported companies, institutions, and producers (both individual and groups) regarding the technical assistance provided by PRA. Demonstration Effect A request in the final evaluation was to identify demonstration effect actions. Demonstration effect is defined as another company, institution, or producer doing similar work as PRA but without the assistance of PRA, and in an area where they could have been reasonably expected to know of PRA activities and results. Surprisingly, PRA had not kept an ongoing inventory of demonstration effect activities, nor had they ever been asked for such a report.10 Several examples of demonstration effect activities were identified including increased area planted beyond what PRA is supporting, suggesting that buyers are coming to the region, and that producers are increasing planting for the increased market. For example, PRA began supporting artichoke production in the Junín region in 2002 (Figure 6). For two years the area supported by PRA increased rapidly, to about 450 hectares in 2004, after which the area supported by PRA leveled off. Other production in the region, however, from 2004 on increased rapidly, suggesting that local farmers seeing the Figure 6. Artichoke Production Area in Junín Region Source: PRA impressive returns from artichokes began planting on their own, and buyers arriving on their own account. Today there are five or six major buyers of artichokes working in the highlands, and PRA supported activities account for about half of the area of artichokes in Junín. 10 Demonstration effect examples were not a requested item in the mid-term evaluation. Weidemann Associates, Inc. Page 14           A second example is black eye pea production in Piura. PRA supported production increased from 0 to 1,870 hectares in three years (Figure 7). During those same three years the total hectares of pea production increased by 2,270 hectares (from 800 to 3,070). In other words, an additional 400 hectares of black eye peas were planted without PRA support. More important to the longer-term sustainability for the market for black eye peas is that seven processors now purchase product in the zone, whereas when PRA began there was only one processor purchasing peas (Table 2). Likewise, kiwicha (amaranth) production area under PRA supervision in Andahuayles has increased rapidly, but not as rapidly as the total production area. Today about 80 hectares of kiwicha is cultivated in Andahuayles without PRA support (Table 3). Another indication of the demonstration effect is the number of nearby institutions that are copying the market-pull methodology of PRA. The evaluation team asked PRAs local business development specialists to identify those institutions in their area that they knew were applying (at least in part) the PRA methodology. Table 4 presents a summary of the number of identified “copy cat” institutions. A total of 101 instances of institutions located near the ten ESCs were Table 2. Black Eye Pea Processors in Table 3. Kiwicha Production in Piura Andahuayles Source: PRA for hectares by PRA. Regional specialists for Black Eye Pea production in the region No. PRA No. Hectares Hectares Year Clients Processors Year With PRA in the 2008 260 340 Source: PRA 2004 0 1 2005 1 1 2006 3 4 2007 4 6 2008 4 7 Source: PRA Zone 2003 30 0 2004 60 80 2005 90 135 2006 150 200 2007 190 255 Weidemann Associates, Inc. Page 15           reported as “copying” at least in part, the methodology of PRA without direct PRA support.11 The most common type of institution applying the PRA methodology is other development projects, usually implemented by NGOs. The second most common group is government agencies; most of those are municipal or regional governments. Twenty five cases of commercial companies or associations of producers were applying the PRA methodology. Most of these are producer associations. Other cases included several chambers of commerce. Estimates of Indirect Income Table 4. Number of “Copy Cats” by Type of Organization No. No. Impact Projects / Gov't. Companies No. In 2005, the Market ESC NGOs Agencies / Assns. Others Total Access and Poverty Alleviation (MAPA) project in Bolivia Ancash 5 6 1 0 12 Ayacucho 5 0 4 0 9 Cusco 7 4 6 2 19 estimated a multiplier Huánuco 0 5 6 1 12 Huancavelica 10 7 2 1 20 household annual Source: PRA business development specialists Product (GDP) of a region.12 Participating households were producers of oregano, onions, grapes, and berries located in the Departments of Cochabamba, Chuquisaca, Santa Cruz, Oruro, and Tarija. The evaluation team holds that the terrain, production, market, and income conditions in those departments in Bolivia are similar to those producers with which PRA is working in the targeted economic corridors. Table 5 displays the average income and the estimated total income multiplier for the four crops. The oregano producers were smaller than most of the PRA supported producers, so the corresponding multiplier was eliminated, Table 5. Estimated Multipliers from and the remaining three multipliers were Bolivia MAPA Project averaged, resulting in an value of 2.38. Annual Estimated Crop Income Multiplier Table 6 lists the ten ESCs and the corresponding department in which they are Oregano 491 5,69 ($US) located. PRA estimates the number of work days by ESC, which was multiplied by 16 Onion 2,675 2.44 Grape 2,541 1.83 Soles per work day, resulting in an estimated Berry 2,982 2.87 Source: Reference 8 in Annex B 11 In this table the same institution may be counted twice if it implemented the PRA methodology in two distinct projects. The evaluation team did confirm “copy cat” activities of several project implementers / NGOs, government agencies and other institutions. Time constraints did not allow independent verification of activities of “copy cat” companies and associations. 12 From MAPA (Bolivia) project, Scarborough, Andrew, “Calculating the Multiplier effect of Targeted Households Annual Increase In Income on Bolivia GDP,” 2005. to be applied to Huancayo 9 4 0 0 13 increase in income to estimate the total impact of project generated income on the Gross Domestic Jaen 1 2 2 1 6 Piura 1 2 0 0 3 Pucallpa 0 1 2 0 3 Tarapoto 0 1 2 1 4 Total 38 32 25 6 101 Weidemann Associates, Inc. Page 16           Value of PRA Labor, or labor that was generated by PRA activities.13 The Value of Labor was multiplied by the average multiplier from the Bolivia experience to yield an Estimated Income Impact related to PRAs activities for each Department. The Estimated Income Impact was divided by the Gross Domestic Product (GDP) for Agricultural and Total GDP by Department, as published by Proinversion14 . The result is a percent value of the total direct and indirect income impact by Department for PRA activities. Table 6. Estimated Indirect Income Impacts of PRA Activities for Calendar Year 2006 * * * GDP % of % of Department (ESCs) Value of PRA Estimated Income Agri￾culture GDP Agri­ * GDP Total Total GDP Labor Impact culture Ancash (Ancash) 4 9 413 2.13% 5,280 0.17% Ayacucho (Ayacucho) 13 31 381 8.26% 1,337 2.35% Cajamarca (Cajamarca, Jaen) 15 36 783 4.58% 4,461 0.80% Cusco (Cusco) 10 25 601 4.11% 4,072 0.61% Huancavelica (Huancavelica) 3 7 212 3.26% 925 0.75% Huánuco (Huánuco) 2 5 551 0.84% 2,497 0.18% Junin (Huancayo) 11 27 1,119 2.41% 6,122 0.44% Piura (Piura) 11 27 764 3.55% 5,292 0.51% Ucayali (Pucallpa) 13 31 359 8.74% 1,899 1.65% San Martin (Tarapoto) 19 45 703 6.44% 2,378 1.90% The Value of Labor, Estimated Income Impact, and the GDP Agriculture and GDP Total are in millions of Soles. * Source: Proinversión, Peru en Números 2007, Instituto Cuánto. The estimates of percent share of Agricultural GDP ranged from a low of 0.84 percent for Huánuco, and a high of 8.74 percent for Ucayali (Pucallpa ESC). The percentages for a share of Total GDP ranged from a low of 0.17 percent for Ancash and 0.18 percent for Huánuco to a high of 2.35 percent for Ayacucho. The contribution of PRA supported activities to Agriculture GDP is likely overstated because only about two thirds of PRA support is directed to agricultural and food and beverage products, and just over a fourth to agriculture, livestock farm raised fish production.15 The PRA staff pointed out that the estimates for the share of agricultural GDP for 13 As a reference, the Ministry of Agriculture minimum work day rate for 2006 was 19.52 Soles. This figure exceeded the feedback to the evaluation team from focus group interviews regarding typical agricultural work day rates for 2006. 14 Proinversión, Perú en Números 2007, Instituto Cuánto. 15 See Table 8 for agriculture’s share of PRA activities. Weidemann Associates, Inc. Page 17           Cajamarca are probably overstated as significant sales of jewelry proceed from PRA support in that ESC. The share of estimated income impact from PRA activities of the Total GDP is more realistic, in the judgment of the evaluation team. Economic Service Centers The ESCs are integral components for implementation of the PRA technology, providing four key functions, which are: 1. Serve as the central unit for in field implementation of the PRA technology, providing the most frequent contact with clients and potential clients, 2. Support reduction of production and transaction costs for companies and producers, 3. Initiate and maintain public-private dialogs and partnerships, and help local governments understand business development, and 4. Support development of clusters that enhance regional business. ESCs are Central to the PRA Methodology The ESCs are functioning well as an instrument allowing PRA to: • Deliver economic and technical services to producers that help them to satisfy a previously identified demand, • Identify opportunities to develop new products and markets, • Identify and cultivate potential clients, and • Build support with local political entities. The ESC operators are a Table 7. ESCs and their Operators mix of for-profit and not- ESC Operator for-profit institutions. Five Centers (Ayacucho, Cusco/Puno, Huancayo, Huánuco and Jaen) are operated by not-for-profit institutions (Table 7). Two centers (Pucallpa and Tarapoto) are operated by MEDA, Piura Consorcio CEDEPAS – Cámara del Comercio Y Producción de Piura organized as a for-profit institution in Peru but part Pucallpa MEDA Consulting Group Peru SAC Tarapoto MEDA Consulting Group Peru SAC of a multi-country group Source: PRA mostly considered not￾for-profit. Two Centers (Huancavelica and Piura) are operated by a consortium of for-profit and not-for-profit institutions, and one center (Ancash) is operated by a for-profit company. This evaluation did not detect a difference in performance as related to the type of ESC operator (e.g., for-profit, not-for￾profit, or mixed orientation ). With the exception of the Ancash, all ESC operators had a local presence and an interest in development activities in the area. All operators described their in-process or planned Ancash Recursos SAC Ayacucho ADRA del Peru Cusco/Puno CARE Peru Huancayo CEAR Huancavelica Consorcio Universidad del Pacifico￾Asociación Civil San Javier Del Perú Huánuco IDESI Jaen CIPCA Weidemann Associates, Inc. Page 18           incorporation of PRA’s concept of market-pull into their other economic development activities where it could apply. As observed in the previous listing of “copy-cats,” PRA technology is reaching beyond commercial sales and beginning to influence other economic development operations. Using local operators has reduced the administrative load of the local PRA business agents, allowing more time to focus on new business generation or technical assistance tasks. The most successful experiences have been with those entities that have a long-term local presence. While agencies such as CARE and ADRA historically have not always shared PRA’s vision for intervention, their long-time presence in the zone has facilitated their ability to fill the demand for more and/or improved products. The one Center without local presence (Ancash) has had administrative problems related to reporting and handling of payments. This operator is relatively new to working with development agencies and has expressed a willingness to resolve the issues. Buyer-Supplier Relationships A benefit of PRA that buyers and sellers/producers mentioned frequently and early in the conversations was trust; producers learning to work with businesses, and businesses learning how to interact effectively with producers. Both parties view the PRA technical specialist as a person of trust – a disinterested party without any vested interest or ulterior motive. From the producer’s point of view, a continuing challenge to sustainability of the buyer-supplier relationship is to improve the information that producer groups have on markets, so that they can effectively negotiate with city-center buyers. From the buyer’s perspective, the challenge is to assure product availability and quality, and to identify a reliable source for current information on when a crop will be harvested, its potential quality, and amounts to be harvested. In some cases PRA personnel help producer groups become more formalized, working with leaders to help them negotiate with buyers and initiate production and post harvest product handling and processing. Some buyers have placed field agents to improve relationships with producer groups. Several of these field agents have been hired away from PRA. Romero Trading and the Committee for Cocoa, a producer group, have developed a relationship in which the leader of the committee is recognized as a representative speaker for the entire community of producers. For its part, the buyers are providing fermentation and drying equipment for producers to do first-stage post harvest handling, which lowers costs and improves product quality. A key benefit for producers is that multiple reliable buyers are now working in several areas, largely because of PRA efforts. Multiple buyers generate more sources of market information and greater confidence for producers. Reducing Production and Transaction Costs The improved trust and communications between buyers and suppliers as a result of PRA activities has helped to lower both production and transaction costs. As the number of sales transactions between a buyer and supplier grows each side learns how to best communicate and how to organize their activities to reduce costs and to maximize value added to the transaction. New technology has been introduced in some cases, more effective use of existing resources has occurred in other cases. Agricultural production yields are increased and costs are lowered by Weidemann Associates, Inc. Page 19           using improved seeds that are often supplied by the buyer, judicious use of chemical and organic fertilizer, improved cultural practices, and improved harvesting and post harvest methods that result in a higher percentage of the crop that is sold. In a few cases tractors are increasingly used for tillage operations. Finally better trained workers and improved organization of production and marketing tasks reduce costs. In many cases the “new technology” introduced is a different crop with better sales opportunities than the crop currently being produced. These technologies may be new to the area, or to the producer groups, but they are not new to the industry, and not necessarily to Peru. Estimating Workdays: For every client the monitoring and evaluation unit audits the activities of the client and estimates the amount of labor that is required to produce one unit of the product. Once a determination is made of the labor required to produce a specific product is determined, it is seldom revised. Based on interviews of PRA business agents and personnel of monitoring and evaluation unit, the evaluation team believes that there is no systematic under or over valuation of the amount of labor required for a specific product. Complaints of sub-valuation were offered by business agents, and these complaints were acknowledged by monitoring and evaluation personnel, who stated that they consider the complaints but believe they always make the final decision. No reports surfaced that a decision by the monitoring and evaluation unit on how to value sales, labor or investment was overturned by project administration. Resources did not permit a detailed audit by the evaluation team to verify the level of effort to produce a specific product. Motivating Public-Private Dialog and Partnerships In the last two years, PRA has faced a new situation - - Sierra Exportadora, a GOP program to facilitate the participation of the Sierra region in the export boom. The four cases, in which PRA and Sierra Exportadora have joined forces, resulted more from the interest of Sierra Exportadora than that of PRA. Nevertheless, both parties now recognize the benefits of working together and are in the process of evaluating 12 new joint projects. The dialog with Sierra Exportadora has resulted in offers of financial support of more than $US 200,000 to improve the supply of corn, oats, trout, and chocolate. More joint projects are in the evaluation phase, and they will follow the PRA methodology. According to Sierra Exportadora leadership, their own projects also will follow the PRA methodology. If that occurs, it will be a significant change in operations, as Sierra Exportadora field agents are currently promoting production of products that have a market according to studies, but not necessarily a ready and willing buyer. USAID, the GOP, and PRA are now cooperating with two mining companies to promote business growth in selected regions.16 The ESCs in Huancavelica and Ancash are both partially funded by a mining company. PRA successes in the field have come to the attention of several municipal and regional governments, and motivated them to consider supporting business development from public funds. Often local governments provide resources for production. The most common contribution is land that is jointly worked by community members. Other communities have added business development personnel, some of which assist the production groups working 16 The mining companies are required to allocate 3.75 percent of their before tax earnings to a “Fondo Concursables” that are to be used to promote development in the regions of their mining. Weidemann Associates, Inc. Page 20           with PRA. One community the evaluation team visited had allocated Soles 50,000 to promote business development; a relatively recent decision so that to which activity the funds would be allocated was not known. With the decentralization process taking place in Peru, it is anticipated that more communities will have interest in supporting business development and may be able and willing to allocate resources for that purpose. At present, however, uncertainty for what purpose public funds can be used and how decisions should be made for their use may limit their use for PRA related activities. Other communities have followed the more traditional approach, such as investment in productive projects that will be operated by the local government. Some have offered public sector financing, in at least one case to a PRA assisted client. Going forward, PRA will need to develop guidelines on how ESCs should interact with local governments that wish to promote business development in their community. Support Clusters that Facilitate Regional Business Most of PRA activities involve value chains, linking buyers and processors with suppliers. A number of the interventions have created clusters of suppliers. The most notable example is with trout. The company Pisifactoria de los Andes has supported the production of trout from Puno, Junín, Huancavelica, and Ancash. This geographical concentration of producers dedicated to the same activity, with a national and international market, has established a network of suppliers of inputs and services that should strengthen the entire sector. A similar situation is happening with artichokes in the Sierra, especially in the central section of Peru where there now exists a concentration of businesses dedicated to this activity. Today, there are six major buyers of product, a processing plant in the region, and multiple providers of inputs and services that improve the sector’s productivity and efficiency, motivating both learning and participation by other producers and suppliers. Other examples of cluster development include the production of cacao and rough cotton in the Selva, products also supported by the Alternative Development program. For each product there have emerged multiple suppliers for inputs and services. Private Sector Support for ESCs In recent agreements with the GOP companies mining in Peru allocate 3.75 percent of their pre￾tax income for development in the local areas where they extract minerals. . Two companies, Cia. De Minas Buenaventura S.S.A. and Compañía Minera Altamina S.A. currently support ESCs in Huancavelica and Ancash respectively. In Huancavelica Buenaventura provides 40 percent of the cost of the ESC, USAID 30 percent and the GOP 30 percent. In Ancash, Altamina provides 80 percent of the cost of the Ancash ESC while USAID and the GPO (through Sierra Exportadora) provide 10 percent each. Both companies are pleased with the results of the ESCs, stating that the results are significant for a modest cost and that the PRA personnel are effective and attentive to the companies needs. Both plan to continue supporting the ESCs. Altimina requested that additional results data be collected including family income of beneficiaries, the number of jobs created measured directly rather than derived from sales data, and the number of new businesses created. The mining company recently approved an increase Weidemann Associates, Inc. Page 21           in the budget for the ESC to replace the reduced level of funding in Soles due to the declining exchange rate for the U.S. dollar, and to support reporting costs for the additional data. Along with praise for the program, Altamina had two complaints. One was payment processing difficulties with the ESC operator, who pledged to make any needed adjustments to resolve this issue. Neither PRA nor USAID were aware of this complaint. Complaint two was the potential interruption of the PRA program between the current and follow-on project. Private sector funding leverages USAID and GOP resources and may help PRA maintain a business focus to a public sector activity; both positive outcomes. Potential negative outcomes include the private sector company pushing the ESC in a direction favored by the company but not by PRA, and the potential for PRA and USAID to be drawn into a conflict between the mining company and the communities. To date neither of the potential negative outcomes has occurred with PRA operations. MYPE Competitive MYPE Competitiva is a USAID funded regional (Bolivia, Peru, Ecuador and Colombia) and country specific project that strengthens the commercial capacities and competitiveness of the micro and small businesses, helping incorporate them in the export value chain. It is being implemented by Nathan Associates, together with APOYO Consltoría S.A.C., Málaga-Webb y Asociados S.R.L., and J.E. Austin. Nathan Associates and J.E. Austin are U.S.-based consulting firms. In Peru, the objective of MYPE Competitiva is to create a favorable business environment for the legal formation and growth of the micro and small businesses, as well as to provide tools that build their capacity and improve their competitiveness. The project has been operational since October 2006. To date, MYPE Competitiva leadership has had only limited relations with PRA leadership. Consultations between personnel of the two projects were reported by PRA field personnel but no instances joint operations or coordination of activities was identified by the evaluation team. MYPE Competitiva leadership suggests there may be areas where the two projects could collaborate: strengthening associations and cooperatives, developing technical norms, addressing certain policy issues identified by PRA (local, regional and national) and assisting with certifications (ISO and other quality/traceability certifications). Reportedly, MYPE Competitiva has just received the go ahead to begin working in agricultural-related enterprises where there could be more synergies with PRA in the future. Functions of PRA to Continue in a Follow-on Project The statement of work identifies four PRA functions and asks which, if any, should be continued in a follow-on project. These functions are: 1. To access market information needed to make business investment and management decisions? 2. To link with buyers and make business deals? 3. To access technical and management assistance, especially to 1) ensure that product characteristics meet product specifications demanded by the market (including export Weidemann Associates, Inc. Page 22           markets); and 2) increase productivity to help ensure enterprise profitability for producers? 4. To attract investment to the Economic Corridors that will help develop, expand, and enhance the sustainability of business enterprises? As originally designed all of these functions are critical for success of the PRA approach and all four need to be continued in a follow-on project. As discussed in other sections of this report, some of these functions are finding their way into operations of other institutions, such as development project implementers, government programs, producer associations, and private sector companies. PRA often contracts with local consultants for these services, and capable local providers exist in some communities. However, the evaluation team did not identify any institution in Peru capable of providing one or more of these services on demand in all of the areas serviced by the ESCs. Rather than a private market developing for business services, a more common outcome is that PRA clients find that PRA services add value to the market chain and are putting their own personnel on the ground. Several PRA personnel have been lured away by client companies. PRA and Alternative Development The objectives of PRA and Alternative Development (PDA) are focused on opposite ends of the value chains; PRA first looks to find a specific buyer, PDA first looks to get a product produced/made ready to offer to a potential buyer17 . While each takes into account the needs throughout the entire value chain in determining activities their projects will support, in the end PDA will never excel in market-pull activities while PRAs resources will be more effectively utilized if it does less supply-push work in the PDA supported areas. Project administration for PDA focuses on supply-push, and project administration for PRA focuses on market-pull. If each focuses on what they do best, the two projects should be natural allies with close coordination of activities in the areas that they overlap. At present, however, they have infrequent communication and limited coordination of activities at the project administration level, and limited to moderate coordination of activities in the ESCs that are located in coca producing areas. Leadership of both projects say they communicate as needed. For example, PRA was unaware that PDA was in the process of hiring eight specialists to support business development. These specialists will be located in the field working with producer associations, so their market development activities and potential conflicts with PRA activities may be limited. During the “turbulent years” PRA was required to start operating almost exclusively to support the coca eradication activities of USAID. 18 During this period there was frequent communication between programs and PRA struggled to provide the services demanded by the PDA project. This diversion from PRA’s modus operandi caused turmoil within the program. 17 Given that PDA activities are mostly carried-out in the humid tropics, sometimes extensive trials need to be undertaken to determine what may or may not be grown and what are the production economics of the selected product. Once it has been determined that “x” crop can be produced economically in a given region, PDA sets about to produce interesting quantities so as to attract a possible buyer. 18 “Turbulent years” are the words used by PRA administration to refer to the two years from 2003-2004. Weidemann Associates, Inc. Page 23           This period of forced collaboration was required by the Mission and apparently found resistance from both projects. Just as suddenly appeared the decision to coordinate, likewise was the decision to return to voluntary coordination, which has prevailed from that time. Seven of the PRA ESCs are located in the highlands, for which there is seldom a need to coordinate. While personnel from Lima-based project offices seemingly has limited contact, in the field there is coordination in several instances, a few of which are described in Annex H. Coordinating activities between the two projects is not simple. One of PRA’s strengths is to build confidence between buyer and seller. During the getting acquainted and initial sales period, the PRA technical assistance person is a critical component for building trust and executing successful transactions. A potential buyer will quickly lose trust if communications between PRA and PDA are delayed, infrequent or confusing. PRA has helped to market products from the PDA areas, and can and should continue to do so. The two institutions and USAID will need to consider how incentives would be structured to reward high performance. How to collaborate will need to be incorporated into the Statements of Work for each project. The evaluation team’s work confirms that incentives make a difference for PRA. For example, PRA personnel frequently work with associations of producers to facilitate transactions. The PRA technician often supports the operations of the association, but only to the extent that it can result in a successful sale. PDA, on the other hand, is hiring eight business development specialists, whose principal task (as described to the evaluation team) is to work with up to five associations to help them become effective market intermediaries. The amount and kind of support for “association building” appears to be very different between the two projects. Getting a consistent message to buyers when working in the Alternative Development zone will require effort and practice. Unless USAID funding processes are restrictive, Alternative Development could wholly or partially fund one or more of the ESCs in the Alternative Development areas, much like the mining companies share the funding for ESCs in their areas of interest. The evaluation team suggests that the business agents in these centers be PRA employees, or employees of the ESC operator. PDA personnel could provide technical assistance to groups of producers for the products PRA is seeking, when the coordination described above is effective. The issue of the comparison of the benefits costs of working in coca production areas as compared to working in non-coca production areas is discussed in the section Operational Issues below. Assistance to Agriculture vs. Other Sectors According to Peru’s CIIU-CLANAE system of trade classification, 56 percent (as measured by number of clients) of PRAs active and graduated clients are involved in agriculture, food and beverage processing, 24 percent in manufacturing (excluding food and beverages), 17 percent in commerce and three percent in other sectors. (Table 8). When measured by sales two thirds of PRA clients are involved in agriculture, food and beverage processing. Weidemann Associates, Inc. Page 24           Several evaluation team members confirm from their past experience that to have about two thirds of PRA supported businesses in the economic corridors working in agricultural related industries is a reasonable level of support for the sector. No evidence surfaced that PRA leadership was directing personnel to focus their attention toward one sector or another. Weidemann Associates, Inc. Page 25           Table 8. PRA Clients by Economic Activity, 2007 Economic Activity Sub Economic Activity No. de clients Sales US$ Percent of Total Sales Manufacturing Industry * Food and Beverages 39 73,006,178 39% Manufacturing of other mineral products non metallic 1 6,944,138 4% Production of wood and manufacturing of wood products and CORCHO, except furniture 6 6,627,741 4% Manufacturing of textile products 11 5,953,870 3% Manufacturing of chemical substances and products 5 5,658,045 3% Other Industries 14 5,121,606 3% Textiles for sewing and clothing 11 3,243,527 2% Manufacturing of pharmaceutical products 1 139,783 0% Total 88 106,694,889 57% Agriculture, livestock, game and forestry * Agriculture 68 40,880,292 22% * Livestock 7 11,055,670 6% Forestry and extraction of wood 1 965,631 1% Total 76 52,901,593 28% Commerce Commerce, wholesale and commission, except automotive vehicles and bicycles 36 23,813,617 13% Total commerce 36 23,813,617 13% Arts, entertainment and recreation Sports and diversion activities 3 1,820,542 1% Total 3 1,820,542 1% Fishing and aquaculture Marine fishing 2 1,125,663 1% * Farm raised fish 1 246,091 0% Total 3 1,371,754 1% Hotels and food services Hotels 1 432,890 0% Total hotels and food services 1 432,890 0% Total general 207 187,035,286 100% Total agricultural related * Includes items marked with asterisk 115 125,188,232 Shares by Sector By No. By Sales Agriculture, food and beverage processing 56% 67% 24% 18% 17% 13% Manufacturing excluding food and beverage Commerce Other sectors 3% 2% Classification of CIIU-CLANAE, Peru Source: PRA Active Clients (Current and Graduated) Weidemann Associates, Inc. Page 26           Interviews with PRA personnel and clients suggest several factors contributing to the portion of activities directed at the agricultural production and subsequent processing and manufacturing of agricultural products. First, PRA goes where clients request assistance. Many clients specifically requested help from PRA to acquire agricultural products from rural areas, where they were less experienced. Second, the poor live in rural areas, and PRA is about reducing poverty. “It’s in our name,” said several PRA field personnel. They felt they best met the objectives of PRA when they could bring business to rural residents, primarily small agricultural producers. Third, 53 percent of PRA personnel have an at least one university degree in an agricultural science area. They are comfortable working in that sector and often know the participating companies, and can speak well to businesses that operate in that sector and with small producers. Fourth, getting agricultural products to market and creating sales is a known way to generate sales relatively quickly, and meet project targets. Helping a manufacturer in the economic corridors develop a product to be sold in Lima or other major cities takes longer to generate significant sales. Early in the project, PRA leadership considered and studied the potential to support small manufacturing companies, in one case those in Juliaca. The environment of that community and the presence of much contraband and informal business practices poorly matched the PRA methodology. A decision was made to not look for clients in that urban area. The evaluation team did uncover instances of potential non-agricultural clients that PRA agents had not visited, for example sawmills and building materials construction. The evaluation team cannot determine if the companies observed could have eventually become a PRA client. However, the point is that the PRA business specialist had not approached those businesses asking if they needed help. PRA personnel in the ESCs have an average of 18.4 years of work experience, including their time in PRA (Table 9). Working for not-for-profit institutions accounted for the highest level of past experience, an average of 6.6 years. The combination of private company and own business experience totaled 5.3 years. Table 9. Years of Experience of PRA Personnel in the ESCs Sector Average Years of Experience There is not a compelling reason for USAID to direct PRA personnel focus more on urban versus rural areas; let that decision reflect the Source: PRA needs of PRA clients. It is not apparent to the evaluation team that greater sales and employment would result if PRA focused more on companies in urban areas of the economic corridors. Reducing the number of PRA assisted companies requesting help with sourcing agricultural raw material from rural areas and replacing them with manufacturing companies in the economic corridors building products for sale in Lima and other major cities in Peru or for export, may result in increased investment in the region but likely result would be fewer total work days in the region and fewer sales, at least in the intermediate term. While PRA promotes sales and investments well, their policy work was limited in the targeted corridors. PRA can help identify needed policy changes for a more friendly business Public Institutions 1.2 Not for Profit Institutions 6.6 Private Companies 5.2 Own Business 0.1 PRA Project 5.3 Total 18.4 Weidemann Associates, Inc. Page 27           environment. The evaluation team suggests however, another entity to engage in improving the business climate. Operational Issues Since 2000 PRA has taken on 564 clients; by the end of 2007, 207 remained active. A client is a company or other institution that has requested PRA assistance and that PRA has prepared a business plan that is agreed by both PRA and the client. This business plan describes the actions of PRA and the client, as well as the expected results. Active clients are those working through business plans or those who have completed their existing plans and continue reporting results to PRA. Figure 8 displays the number of PRA clients incoming, departing, and active by year. The year 2001 (the first full year of operations) PRA accepted 108 clients. Client departures were also high during the first three years. Source: PRA The years 2003-04 are described by PRA as turbulent years. When the Alternative Development project (PDA) began in 2003, PRA was asked to provide technical support to all the business related needs arising out of the PDA project. New offices were opened, more staff hired, and the level of effort increased rapidly. During this time PRA staff accompanied PDA personnel to the communities that were removing their coca, advising them about potential markets for potential PDA projects. PRA was spending beyond its planned budget. Weidemann Associates, Inc. Page 28           In 2004, USAID made a decision to have PDA provide most of the technical assistance related to communities reducing coca, and informed PRA that its budget would be reduced. The increase in departing clients during that year is a result of clients leaving the program because of PRA’s office closings due to budget constraints. The lower number of incoming and departing clients in 2006 and 2007 are mostly the result of uncertainty created by the anticipated project closing.19 PRA has learned that it takes two or more years to generate significant levels of sales with a new client, so for the last two years, PRA has focused more on increasing sales with existing clients and less on bringing in new clients. Table 10 displays the one-year client Table 10. Client Retention Rates retention rate by year for PRA. The No. No. Active 1-Year year 2001 was the worst, with PRA Year Clients End of Retention retaining only about one-third of the Accepted Next Year Rate * incoming customers one year later. The retention rate remained near 50 percent through 2004 when it began to climb again. The retention rate of 91% would normally suggest PRA was not sufficiently aggressive in seeking new business, except this high rate probably has more to do with the * 1-year Retention Rate: In 2000, 56 companies were anticipated end of the project in 2007, accepted by PRA. By December 2001, 26 (46%) of these which was later extended to 2008. companies remained active. Why did it take so long for PRA to Source: PRA achieve a more reasonable retention rate? Three factors partially explain the apparently slow learning curve. First, the analysis of companies’ performance takes a few years, which is how long most clients need to work through their first business plan agreement with PRA and achieve significant results. Second, the large influx of clients in the first two years means many decisions to accept clients were made with little experience behind the PRA business specialists. An analogy could be made with loan agents, who often work for months or even years in loan processing or collections, before they are authorized to approve loans, so that they have first experienced what can go wrong in business. Here, the PRA business agents apparently were learning “on the job.” Third, the relationship with PDA in 2003-04 interrupted the learning and control processes for PRA. Still, these three factors do not fully satisfy the question of why this learning came so late in the project. Is it possible that the initial project leadership team did not have enough experience in discriminating among potential clients and selecting those that would be able to follow through on their commitments, or might there have been intense pressure to sign up many clients quickly? The one-year client retention rate measures the ability of PRA to make wise decisions on which clients to accept. Accepting clients that do not follow-through on the commitments they make in a business plan wastes resources and should be avoided. Still, most donors would want the implementing partner to aggressively search for new opportunities to create business and 19 PRA was originally scheduled to end in 2007. 2000-01 56 26 46% 2001-02 108 37 34% 2002-03 102 47 46% 2003-04 88 41 47% 2004-05 64 27 42% 2005-06 72 47 65% 2006-07 44 40 91% Weidemann Associates, Inc. Page 29           income. How aggressively the donor wants to chase potential business will influence the one￾year retention rate. Donors with more urgent needs, or many resources, may be willing to accept many failures by companies who do not follow through on their commitments to get business going. For the environment that PRA presently faces in Peru a one-year retention rate above 50 percent should be achievable and acceptable. Few donors would desire to push the retention above 75 to 80 percent. Longer term retention rates are likewise desirable because: 1) Start-up costs, which typically are high, are spread over several years, 2) permanent change takes time, the longer a client is in the program the better chance changes will be institutionalized within the client, 3) confidence building takes time; after confidence has been established and success in a product/region has been achieved, there is better possibility of embarking on new activities or the same activities but in different areas, 4) to do justice to a client, the relationship should pass through a complete business cycle, usually thought to be five years, and 5) trust is built slowly and takes time. Figure 9 summarizes the reasons for departure of PRA clients, as reported by PRA personnel. Three hundred and fifty seven departed companies are included in the analysis. The percentage for each departure reason is based on the share of sales by those clients. The total sales of these 357 clients as of their departure date were $US 39.0 million. Source: PRA Business Specialists Weidemann Associates, Inc. Page 30           The two most frequent reasons for departure was a change in company strategy (29%) and issues relating to company or association leadership (28%), such as changes in leadership, breakup of the association, anticipated resources not becoming available and others.20 While PRA could not control these reasons for leaving, undoubtedly better analysis before selection would have improved the 1-year retention rate. Two of the reasons for departure relate to the interaction with the PDA project. The adjustments in budgets and closing of offices and accounted for 25 percent of departures. PRA had no control over this process. Reduced confidence between PRA and the client accounted for 9 percent of departures. Costs and Benefits During the last four years of the project, PRA expenses in Peru were about $US 4.1 million per year, of which 31 % represented Lima office and administration including monitoring group, and 69 % the operations of the ESCs (Table 11). Table 11. Summary of PRA Expenses 2004-2007 (CY) Category 2004 (*) 2005 2006 2007 Totals Percent Monitoring $220 $212 $164 $183 $779 4.7% Leadership-Lima $417 $477 $272 $251 $1,417 8.6% Administrative Support $93 $54 $52 $57 $256 1.5% Administration & Technical Support $179 $194 $201 $210 $784 4.7% Short Term TA (by HQ & Lima) $36 $13 $15 $15 $79 0.5% Publications $6 $7 $15 $19 $47 0.3% Administrative Expenses $596 $354 $389 $377 $1,716 10.4% Total Lima Expenses $1,547 $1,311 $1,108 $1,112 $5,078 30.7% Subcontracts (ESC's) $3,188 $2,420 $2,789 $3,056 $11,453 69.3% Total PRA Peru $4,735 $3,731 $3,897 $4,168 $16,531 100.0% Average Exchange Rate US$ 3.43 3.27 3.28 3.14 Notes: Source: PRA - Expenses in thousands of dollars - Does not include forestry expenses - Does not include Ancash as the ESC only opened in May 2007 - Subcontract costs include all expenses of ESCs, from all sources, including ST and/or LTTA contracted by subcontractor. Short-term TA contracted by PRA Lima office is not included. The large increase in expenditures for years 2003 and 2004 was in response to the PRA requirement to provide technical assistance to the PDA activities (as shown in Figure 10). The 2005 budget dropped spending by PRA to a rate similar to 2002. 20 PRA seldom works with start-up companies. On occasion producer groups may be formed for PRA to more effectively deliver technical assistance and promote sales. Weidemann Associates, Inc. Page 31           The benefits to costs ratio measures the value of sales for the period divided by the costs associated with generating those sales for that period. The evaluation team has calculated cost benefit ratios for the overall project, for each ESC, and for support to specific companies. Huancayo, for example, generated 25 dollars in sales for each dollar of costs in that ESC, compared to Tarapoto with about 7 dollars of sales for every dollar of costs. For ESC costs, the costs of the PRA central office in Lima are not included. Washington, DC based costs are not included. In general the benefit to cost information by ESC illustrates that the top ESCs in sales are in the better-off areas of Peru, for example in Hyancayo, Piura and Cuzco (Figure 11). Jaen and Pucallpa also have high benefit cost ratios Figure 11. Benefit (Sales) to Cost by ESC, 2007 to 2007 but this is due, apparently, to efforts in rice that coincided with extremely high prices. The cost was little but due to the high prices, the benefits were great. The lowest ESCs on the benefit cost chart correspond to the less developed regions – where most of the poverty is located.21 Tarapoto is also a coca growing area and one would logically conclude it might be less attractive as an investment destination. The poorer regions are 21 Discounting Ancash which is a new ESC with few sales to date Weidemann Associates, Inc. Page 32           usually farther away and more difficult to reach and therefore a smaller number of companies are interested in sourcing product from there or investing, hence lower sales generated by more resources. Looking at the Benefit/Cost ratios for the largest clients substantiates the above observation; most of the top clients are also in the top ESC regions, i.e., Huancayo, Piura, Cuzco. Jaen and Pucallpa. Medium sized companies Table 12. Benefits to Costs by Size of Company, 2004-2007 Size of No. Total Sales / achieved the greatest benefits Company clients Sales US$ Cost $US Costs to costs ratio, with sales of 98 dollars per dollar of technical Large 35 42,821,430 513,956 83 Medium 96 117,451,492 1,198,694 98 assistance (Table 12). Note, costs assigned to companies Small 161 44,570,927 759,027 59 Micro business 189 17,178,207 510,868 34 are only the direct costs of consultants assigned to those Not Classified 83 10,422,553 336,689 31 All Companies 564 232,444,609 3,319,234 70 companies. ESC or PRA Source: PRA central offices do not identify the time they spend with a Table 13. Benefits to Costs by Stage of the Company in the specific company as a cost. Economic Chain, 2004-2007 Hence, the benefits to costs Function in the No. of Sales $US Total Cost Sales / data for specific companies Economic Chain clients $US Cost or manufacturing) of Transformation 227 149,346,067 1,653,202 90 products achieved the greatest benefits to cost Source: PRA Total 564 232,444,609 3,319,234 70 ratio (Table 13). Grouping the largest PRA clients by product and aggregating sales and costs per product produces results that might also be expected (See Annex E for a list of benefits to cost ratio for the 36 largest companies.) Three of the ESCs are located in areas where there is coca production, namely Ayacucho (VRAE), Table 14. Benefits to Costs by ESCs Located in Coca and Non-Coca Pucallpa and Production Areas Tarapoto.22 ESCs (3) in Coca ESCs (7) in Non- Benefits (sales) Production Coca Production do not incorporate all of the costs in providing services. Companies engaged in transformation (processing Commercialization 140 33,908,112 483,047 70 Other Services 33 5,049,764 122,364 41 Primary Production 164 44,140,666 1,060,621 42 for PRA clients Regions Regions associated with these offices averaged $US Average benefits per ESC per year $4,157,653 $3,815,167 Average costs per ESC per year $131,,619 $35,653 Benefits to Costs, Average for 2004-07 10.5 15.3 4.2 million per Source: PRA ESC per year 22 There is coca production in the region of the Huánuco ESC, but not in the areas serviced by PRA. Weidemann Associates, Inc. Page 33           for the period 2004-07 (Table 14). That amount exceeded the average benefits for the seven ESCs located in non-coca producing areas which averaged $US 3.8 million per ESC per year. Average costs per ESC per year in coca producing areas were more than three times the average costs per ESC per year in non-coca producing areas. As a result the ratio of benefits to costs was 10.5 in coca producing areas and 15.3 in non-coca producing areas. Figure 12 shows costs for all ESCs and total PRA Peru costs by year as a percent of sales for that year for the years 2004 to 2007.23 ESC costs in 2004 have dropped from about 10 percent of sales for that year to less than 5 percent of sales in 2007. Total PRA Peru costs in 2004 have declined from about 15 percent of sales for that year to just over 6 percent of sales in 2007. These cost levels related to sales suggest that PRA is generating a history that will allow them to approach potential funding institutions with some confidence. PRAs can argue that their support can be multiplied by a factor of five times or more in increased sales of products from their region or community of interest. It is too soon, in the judgment of the evaluation team, to expect PRA Peru or even ESCs to become self-sustaining. It is feasible however, to consider that within a follow on project it may be possible to secure partial cost recovery with the focus to be able to extend PRA services to additional areas and products. Selecting Clients Common criteria used by PRA to select potential clients include the technical and financial capacity of the company to make the projected investments or purchases; the clarity of the assistance needed and the results expected; and the capacity and motivation of management to follow through on their commitments to the process. Finally, each situation is judged on the potential purchases or investments in the economic corridors. To date, a projection of at least $US 5 in sales for each dollar in technical assistance provided is the “soft” minimum for receiving PRA assistance. As a general rule, once an enterprise and/or a market has been identified and it is determined that the applicant’s raw material needs can be fulfilled through one of the PRA ESCs, a basic diagnosis of the applicant and the market to be supplied is completed. This includes a brief description of the activities to be implemented by the applicant, by PRA and by the potential suppliers, and a projection of product sales. These elements are contained in a business plan which becomes the outline for a work of PRA and for the client. This process ensures that both 23 PRA Peru costs equals ESC costs for all 10 ESCs plus PRA Lima central office costs. Figure 12. PRA Peru Costs as a Percent of Sales Source: PRA Weidemann Associates, Inc. Page 34           ends of the commodity chain can be profitable and identifies the necessary conditions for success. PRA may be asked to support development of a new product. In this case first is assessed the sales potential for the product. As needed PRA will engage specialists to clarify technical production issues and generate reliable sales estimates. With an approved business plan, agreements are negotiated, including a commitment to buy the product, and the project begins. This business plan determines the parameters of the PRA intervention, technical assistance to be provided, estimated costs and benefits, etc. If during implementation an issue arises, which was not contemplated in the business plan, or additional expertise is needed or additional level of effort, a request is submitted to PRA headquarters in Lima, amendments made to the business plan, and forward motion is continued. The business plan includes the TA that is needed, which is usually requested by the client and/or the suppliers/growers, with guidance from PRA. For example, in some cases farmers may believe their product does not require improvement, however, the client and PRA may feel it does. Negotiations are undertaken and the farmers are convinced – in most cases – that they really need improvements in their products or handling processes. Technical assistance is demand driven; what has to be done to make the sale. Studies are not undertaken for esoteric purposes but may be needed from time to time to survey the market in a specific area24 . The cost efficacy of technical assistance provided by local experts compared with external experts was not possible to ascertain, as PRA did not attribute any increase in sales to specific consultants. Most PRA consultants were acquired locally because the issues to be resolved relied on Peruvian market and production issues. Some problems will require consultants acquired internationally. For example, if you are looking for design specialists who are up to date in latest women’s fashions, patterns, designs, and fabrics in Europe or the U.S., one would not look to local sources to provide this expertise. Likewise, if you want a specialist to design an integral program to eliminate the impact of sun blotch in the Peruvian avocado industry, you will need an international expert with experience fighting this disease. If cost is an issue, the Mission could include in a follow on project the Farmer to Farmer program to help ensure that PRA has what it needs to successfully send foreign specialists in the most cost effective way.25 Initially, PRA used more due diligence with respect to the sustainability of the enterprises they selected for assistance. When the enterprises were from outside the production areas they were taken to the highlands by PRA. But experience has taught PRA that in spite of the due diligence and the best recommendations from friends of the project, there is no guarantee that the clients will continue in the project. Clients often dropped-out because of business decisions at the highest level and nothing that PRA did influenced their decisions. Some were sold and the new owners quit the project, while others went through an internal realignment and decided to focus on core business. 24 For example: “Investigación sobre condiciones de la producción textil de Hancayo y Asistencia Técnica de las empresas en el desarrollo de puntos críticos para alcanzar una óptima adecuación del mercado,” a report prepared for PRA, and “Estudio y Evaluación del Potencial Manufacturero en Huancayo – 2000,” CESEM Huancayo, under contract with Chemonics-PRA. 25 Farmer to Farmer is a USAID-based program to send US business, farm, and academic volunteers to developing countries to assist in resolving development issues. Weidemann Associates, Inc. Page 35           After this type of experience in the initial years, PRA realized that those firms that made substantial investment and were willing to assume substantial risk to start and operate in the highlands or jungle areas were usually the businesses that stayed with the program for the project duration. On the other side of the equation, however, are businesses that have their home in the target area, which are frequently sole proprietorships or farmer-owned businesses, e.g., cooperatives or associations. PRA does very little in terms of strengthening these businesses, and several business development specialists reported that PRA only focus on sales and what is necessary to meet the sales criteria such as a specific variety or perhaps aggressive prices. In terms of agronomic assistance, it is usually focused on producing the product demanded by the market with little attention paid to strengthening the underlying businesses or producer associations. Some evaluation team members felt PRA should do more to ensure the sustainability of the assisted enterprises. PRA guards against embarking farmers on a misadventure that produces a product without a market, or to adopt a client that is marketing a product without a future. Feedback from interviews in the field suggested that that the products selected did indeed have room to increase productivity and production so as to lower unit costs and increase income to farmers. PRA seldom conducts studies; more they rely on client knowledge and available market intelligence to select companies that have products with a future. They listen to their clients and learn their views regarding the market and the future of a product. If the client company willing to invest substantial sums in developing the production base, then PRA is unlikely to do exhaustive studies to determine if the client choices have substance. The evaluators found no evidence that PRA was putting effort into developing the market for local TA. Consultants were selected as individuals, with few coming through Peruvian consulting firms or associations. In some cases, the client may have suggested a name or two to contact, but generally PRA identified and selected individual consultants. To the knowledge of the evaluation team, PRA did not have an agenda to develop or strengthen local technical assistance providers. In the case of farmer-owned businesses, PRA helped them connect with markets abroad and in Lima. One example is the fresh green pea market in Lima. PRA made the connection between the growers and their associations and a wholesale buyer of green peas in the market. In general, PRA receives high marks for the quality TA it provides, which improves productivity, assists farmers in organizing themselves and connecting growers with the market. PRA does consider sales potential for the project as a prerequisite to adopting a specific client/product. Other things being equal, PRA selects the product/company giving the greatest sales potential for the projected cost of the intervention. Some evaluation team members were concerned that some companies apply for PRA support for activities they would do without PRA support. It does not appear to the evaluation team that this is a problem at this time for PRA. If this attitude becomes known, clearly PRA should reject the application or discontinue support. However, rare is the occasion that such information would become available prior to project startup. PRA administration and USAID supervision should focus on selecting those client/product combinations that most create sales, as a proxy for employment, in the ESC regions per dollar of PRA support expenses. Weidemann Associates, Inc. Page 36           Some observers were concerned that companies continue to receive PRA support after they are sufficiently well prepared to continue without public sector funding. This does not appear to be a problem for PRA at this time. If it does occur, PRA should insist that a share, or greater share, of PRA costs be paid by the company. “Graduated” businesses are those that have successfully implemented the business plan and no longer receive support from PRA, yet continue to report sales. If the PRA project continues this may become a problem; as of now it is not a problem. However, to avoid potential problems USAID may want to set limits of how long sales by a graduated client should be included in the calculation for payment of incentives. However, each different activity of a client with PRA, or the same activity in a different location would reset the time clock for ending sales reporting. Gender In the Annual Report for 2007 PRA reported that 12 percent of active clients were women-led. Also in 2007, of the 1,454 microenterprises participating Table 15. Permanent Jobs Created by PRA in 2007, by Gender in PRA activities, 66 percent Percent were women-led. ESC Men Women Total Women During FY2007, PRA reports, that 12,765 permanent jobs were generated of which 8,267 (65 percent) went to women (Table 15). Women were active participants in the field visits and interviews that were conducted by the evaluation team, both as business leaders, as group leaders and as workers and employees. Poverty Estimates of Beneficiaries Ayachucho 614 1,209 1,823 66 Cusco 552 788 1,341 56 Huanuco 112 213 325 66 Piura 348 970 1,318 74 Tarapoto Cajamarca 205 165 370 45 607 551 1,158 48 Huaylas Puno 493 205 699 29 155 314 469 67 Huancavelica 177 162 339 48 Total PRA 4,499 8,267 12,765 65 Huancayo 498 912 1,410 64 Jaen 420 1,418 1,838 77 Pucallpa 316 1,358 1,674 81 Ancash 1 2 3 67 Source: PRA 2007 Annual Report The Poverty Assessment Tool (PAT) can be a rapid way to estimate poverty in the communities served by PRA. Though interesting, PRA does not use the results of this analysis to guide their decisions. If USAID finds the results of the PAT useful, the evaluation team suggests USAID finance another institution to conduct the study, with cooperation as needed by PRA. To keep PRA focused on making sales, minimize the number of activities that are not essential to their mission! Weidemann Associates, Inc. Page 37           Conclusions In the original PRA project documentation key project objectives are: • Improve income of the poor, • Provide employment for the poor, • Focus impacts on selected economic corridors, • Apply a private business focus to optimize use of resources, and • Work through Economic Service Centers to 1) Facilitate access to information, 2) Aggressively broker deals, 3) Identify the need for policy studies and dialogue, and 4) Promote mechanism for coordination and problem solving. A. PRA is an excellent economic development project that is achieving most of its objectives. B. Improve income of the poor: PRA is improving incomes of the poor. The hypothesis that business growth, as measured by sales, generates income for the poor in the economic corridors is supported by the stories of participants, as well as a preliminary estimate of indirect income impacts using multipliers from Bolivia with similar geographical regions and producer income levels. Peru household income data that would enable reliable statistical inferences was not available. C. Provide employment for the poor: Most of the 14 million PRA generated workdays were provided by the poor from the economic corridors. Nearly every beneficiary statement to evaluation team members cited improved employment with PRA activities. D. Focus on selected economic corridors: Only economic activities connected with the selected economic corridors are accepted for support by PRA. Many PRA directed personnel specifically sought out the poor to participate in PRA activities. E. Work through Economic Service Centers: Locating the ESCs in the economic corridors near the target clients and providing nearly all PRA assistance through the ESCs worked well. Facilitating access to information and aggressively brokering deals are the most successful components of assistance provided to clients. Identifying the need for policy studies and dialogue and promoting mechanisms for coordination and problem solving was limited and by project’s end was mostly dormant.26 F. PRA is changing attitudes and actions on how economic development projects are implemented. Non-governmental organizations that implement economic development projects, especially operators of the ESCs or NGOs that are working in the areas where PRA is working, are those that most frequently are adapting the PRA market-pull methods in their projects. Several municipal and regional governments are also observing the increased sales and revenue flowing back to the towns and villages, and are 26 For a brief period during PRA implementation policy actions focused on removing barriers to increased business, which resulted in studies and activities to fund and implement improved roads. This evaluation did not address this component. Weidemann Associates, Inc. Page 38           contributing personnel time and other resources to support business growth. They state that increased sales generate greater income for their constituents. G. A PRA strength is building confidence between buyers and sellers, especially small producers. For many, the experience divide between city center buyers and small rural producers is too great for a satisfying business experience for either party. Identifying the buyer, first with specific product standards, communicates market signals in a way that producers can better respond to. Technical assistance focuses on those specific actions that are needed to meet market conditions. Producers are not just getting trained, they are preparing for a sale. H. For the most part, PRA keeps projects simple and focused on making the deal, which is a cornerstone of its success in Peru. For those companies with good potential, PRA helps define sales objectives and shared actions. I. Market-pull works, which is a decisive factor in achieving impact. J. The PRA field team understands and applies the market-pull message and keeps it central to its work. Keeping focused requires vigilance. When working closely with a group of poor producers, one finds weaknesses that may not hinder the sale, but would strengthen the group if resolved. PRA leadership discourages detours from their primary objective. K. Due to its success to date, the PRA methodology is being adopted by private and public sectors. The hope that other businesses would adopt the PRA methodology without PRA assistance, occurred only occasionally. Many businesses that observed success by other businesses using the PRA methodology themselves approached PRA for assistance. Not anticipated was the extent to which NGOs and local and regional governments are applying parts of the PRA methodology. L. Using NGOs as ESC operators has been an effective approach. Other types of institutions could also be good operators. Setting clear selection and operating criteria is the key element. M. In 2007 every dollar in local ESC costs generates about 20 dollars in sales, and every dollar of PRA Peru (ESC plus Lima office) costs generates more than 15 dollars in sales. Since these numbers reflect seven years of business building, it is expected that when starting out with a new community the numbers will be much smaller, especially in the early years. Nevertheless, in a follow on project, PRA could consider offering performance targets to local communities and governments and businesses in exchange for their financial support. N. Momentum is high at present. USAID can enhance impact most by continuity. O. PRA’s monitoring and evaluation unit reliably measure key variables, such as sales, employment generated and investments. The monitoring group works independently of the operations group and no evidence surfaced suggesting that decisions by the monitoring personnel regarding which sales or investments to count or on how to estimate work days were changed by PRA or USAID leadership. The cost data by client does not provide reliable estimates of true costs because only reports the costs of consultants engaged for that client. ESC personnel do not allocate their time by client, nor are non-personnel costs allocated by client. Weidemann Associates, Inc. Page 39           Ayacucho: Planting of artichokes, Artichoke Technical Specialists of AIB Agroindustrias, Business Development Specialists of PRA y the producer P. PRA and Alternative Development have similar objectives for the areas in which they overlap, but use fundamentally different approaches that do work well together. In some cases they can cooperate, each doing the part they do best, with positive results for each project and USAID. Insisting on cooperation for all or nearly all cases will be counterproductive. Q. Women are active and significant participants at all levels in the businesses and groups supported by PRA. R. The MYPE Competitiva and PRA projects have a limited relationship and no active coordination of activities was identified by the evaluation team. S. To date the participation of mining companies has positive results for PRA, the leveraging USAID and GOP resources and strengthening the private sector focus of the project. Potential undesirable interference by the mining companies has not occurred. Both mining companies are pleased with PRA results and anticipate providing continued funding. T. The continuity of the Project Manager– who thoroughly understands the PRA concept and methodology – from the beginning has also contributed to the success of PRA. Recommendations A. PRA is working effectively. A follow-on project should maintain the current approach. B. Keep the project focus simple – on market-pull and making deals. C. Market-pull first, supply push follows. Retain this order for continued PRA success. D. PRA can be a good source for identifying needed changes in the business environment. A separate group should work to resolve these environment issues. PRA’s decision to work with a client should always only consider if the client can be successful in the current business environment. E. Retain incentives based on targets for sales and investment. Employment is a derived number based on sales; incentives on employment will only amplify the incentives on sales. Weidemann Associates, Inc. Page 40           Incentives may vary by purpose, for example sales or investments, by year, or by ESC. However, keep them simple and clearly related to project objectives. Note, the greater are the options for incentives the greater the burden for someone to be sufficiently informed about PRA to approve effective performance targets. F. Collect employment data by companies directly, with their monthly reports. Continue estimating work days for agricultural production and other products that are made with individual and family labor. G. Continue use of NGOs or other legal entities as subcontractors (ESC operators), but insist on local presence and decision-making. H. Do not put PRA under AD, and do not ask AD to become PRA. Cooperation should be encouraged, yet forced collaboration and duplication must be avoided. I. A break in sales momentum will be costly; it is important to move quickly to the next phase of PRA. J. Gathering actual data on family impact is needed. Participant income could be collected within the project activities at a reasonable cost and would help meet the needs of some of the funding agencies. Data capable of statistically reliable control group incomes is more costly and not recommended to be included in a follow on project. K. Bring in other funding sources to extend the impact of PRA. It is important to especially cultivate those institutions that traditionally provide supply-push support for development projects, including GOP as well as international development agencies. Also continue the funding relationships with mining companies. L. Going forward, PRA should develop guidelines on how ESCs should interact with local governments that wish to promote business development in their community. This is especially critical if the communities are offering funding to support the ESC. M. Do not send the wrong message to PRA implementers regarding short-term technical assistance. There may be times when a foreign expert – whether or not s/he speaks Spanish - is preferable to a host country national with language capabilities but short on experience. N. Explore possibilities to secure Farmer to Farmer volunteers for the PRA follow-on. This may entail funding a Farmer to Farmer representative in Peru to ensure the scope of work plans are well prepared and coordinated carefully with the client. O. Activate cooperation between MYPE Competitiva and PRA to help remove barriers to business development. PRA can identify policies, regulations and practices that constrain business, and MYPE Competitiva can support Peruvian institutions to implement the appropriate changes. Lessons Learned A. When the PRA implementation agency was changed from CONFIEP to Chemonics the logic behind the implementation of the policy component changed significantly. Weidemann Associates, Inc. Page 41           Addressing the expectations and/or approaches for the policy component at that time would have simplified project administration, and helped PRA focus on perfecting its original core services and capabilities. B. Cooperation between PRA and Alternative Development only will occur with active USAID encouragement, for example written into the Statement of Work for each project. Allow the respective project directors to make specific decisions on how and when to cooperate. C. The insertion of PRA into the Alternative Development activity and its subsequent extraction lost one to two years of time for PRA to perfect its methodologies and ability to create new products/markets, or improve its capacity to help producers deliver products the market wanted. D. For projects offering direct support to individual businesses, continuity of support is a critical component that reduces risk for existing and potential businesses. Move forward decision-making for extensions to a project or if a follow on project will be implemented to allow promotion of business participation to continue without interruption. E. The companies that make substantive investments in the areas where they are sourcing their raw materials are the firms which are the better, sustainable PRA clients and generate longer lasting impact. Firms with little or no investments in the highlands are more likely to drop-out from the project or at the end of the day leave the farmers with crops in the field. Likewise, firms which actually plant a crop themselves and have first￾hand experience growing are more likely to understand the costs of production and the problems facing farmers. F. Stability of key USAID personnel such as the Project Manager is important to project success. Unresolved Issues A. PRA is built on the hypothesis that business growth, as measured by sales, generates income for residents of the economic corridors. This evaluation provides preliminary direct evidence using multipliers from Bolivia, circumstantial and anecdotal evidence that this hypothesis holds. Available project data does not permit statistical inferences nor is data available to verify that income increases reported by participants exceeds overall income increases in the region. B. Policy dialogue is an important issue that could improve the business climate in Peru. PRA is a good source to identify issues that need resolution/changing, however it is not the vehicle for effecting these changes. Somehow a good policy dialogue related to business climate, rural and agricultural development, the availability of medium-term investment credit and other issues needs to be fostered. C. Strengthening of selected PRA clients could lead to important additional gains. PRA is currently not tasked with such interventions and probably should not be in any follow-on project. However, clients such as farmer associations, other farmer owned businesses (e.g., agricultural service cooperatives), small handicraft operations (e.g., Artesanias Weidemann Associates, Inc. Page 42           Sumak Maki, Nilda Lopez) and certain other medium size firms could use business/cooperative/association development expertise. D. Another issue regards the development of certain monopoly situations, e.g., Leche Gloria in the Mantaro Valley. Farmers are at a disadvantage as Gloria is the only reliable destination for fresh milk. Helping the Mantaro Valley dairy producers – and in other areas where similar situations may also exist – to create a bargaining association or similar group to represent farmer interests offsetting any monopoly situation will be important. E. For certain types of agricultural and livestock development projects medium-term credit is necessary. Planting avocados, coffee, cocoa and developing a dairy industry are long￾term projects that require 3 to 5 years before pay-back. Currently there is no medium- or long-term credit available for agricultural production in Peru. PRA cannot resolve this issue. However, working in these industries without the availability of medium-term credit is problematic and limits their potential growth. Creative methods to remedy this do exist that would involve raising capital on the local stock market through the sale of tax-free government guaranteed bonds. But to implement such a scheme would require not only policy dialogue but also technical assistance, both of which are outside the scope of PRA. Weidemann Associates, Inc. Page 43           Annexes Weidemann Associates, Inc. Page 44           Annex A: Contacts by the Evaluation Team Name Institution Title Telephone Email Abelardo Manrique Diaz S. Univ. Nacional de Ancash & Laguna Canrash Profesor Principal & trout farmer (043)9847528 Abelardo_md@yahoo.es Agusto Paredes Assn de Productores President Pesacocha, Juanduval Alejandra Blanco Yanapana Perú Coodinadora Proyectos 5184243636 alejandrablancorodriguez@hotm ail.com Alejandro Carillo Papr ka farmer, Santiago Farmer Alejandro Huertas Técnico PRA Espinosa Huina, Huarma, Huaraz Alejandro Rojas CARE-Lima Coordinator Sustainable 417-1100, Ext. arojas@care.org.pe Sarapura Economic Development 1136 Alfredo Lira Aib Agroindustrias Adjunto 9833-1089 Gerente General 9037-9816 & alira@a b.com.pe Programs Alfredo Sullcaray Group of handicraft Leader of Group artisans, Sumak Maki, Pucara, Acobamba Allison Coppell de Guerrero Cia. Minera Antamina S.A. Coordinadora de Dessarrollo Productivo 51 1 217-3000 acoppel@antamina.com Americo Torres Artichoke Producer Farmer delivering to Agromantaro Augusto Agro Mantaro, San Isidro Gerente 51 1 222 0513 augusto.agromantaro@speedy. Fernandini com.pe Ana Maria Andrade Navarro CARE y PRA Jefe del ESC, Cusco 51 084 25 aandrade@care.org.pe Antonio Castillo PROINVERSION Director 5116121200 acastillo@proinversion.gob.pe Armando Taboada Espino Municipality of Moro, Santa Province, Chimbote Municipal Avocado Project Coordinator Bel Milsele Serio Asociación Santa María de Chicmo Presidente Benita Cutipa Royal Knit Gerente 5114255494 benita@rkperu.com Bicquer Pérez PRA Técnico 51849668380 bicquerp@yahoo.es Carlos A. Santa Creaciones CARSANT Gerente General (064)9649872 csantacruz@carsant.com Cruz Carlos Gantu M. PRA Artichoke specialist, Chavin Mpl. Carlos Sanchez G. PRA Project Gestor de Negocios (067)965-2178 csanchez@infonegocio.net.pe Carlos Silva Velasquez CEDEPAS Norte Director General Adjunto 073 34 6287 csilva@cedepas.org.pe Carlos Trujillo PRA Gestor de Negocios 5161578410 ctrujillo@prapucallpa.com Cesar Fernandez Maldonado Municipality of Moro, Santa Province, Chimbote PRA consultant Constancio PRA Gestor de Negocios (067)965-2186 Huayhuani@infonegocio.net.pe Huayhuani Dante Lale Ortiz, Juan Mendizabal, Denis Isla Mendizabal Assn de Productores Agropecuarios de Gramasu, Sachopen President, Secretary & Treasurer Dante Pallardel Meza & eight coffee farmers & coop directors Doug Tinsler Coop Agraria Sanchirio Palomar Chemonics Washington Gerente General Vice President, Asia (064)531010 & (064)995-1996 202-955-3300 cafesanchirio@hotmail.com dtinsler@chemonmics.com Weidemann Associates, Inc. Page 45 Diego Gordillo Mountain Lodges of Perú Gerente Operaciones 5184243636 diego.gordillo@mountainlodges ofperu.com           Elmer Valdeiglesias Asoc. Productores Apus Salcantay Técnico PRA Enrique Rivera Vivero Los Inkas Farm Manager Erica L. Hill Chemonics Washington Associate, Latin America and the Carribean 202 955 3351 ehill@chemonics.com Esperanza Cooperativa PANGOA Gerente (064)543-017 cacpangoa@terra.com.pe Dionicio Castillo Fanny Mosquera PRA Chief of ESC (067)965-0134 fmosquera@infonegocio.net.pe Faustino Hurtado Comunidad Auqu bamba Presidente asoc.auqui@yahoo.es Felipe Guaman Municipality of Moro, Santa Province, Chimbote Asst Director Economic Development Felipe Villanueva Comité de Productores Tesorero de Plátano Ucayali (COPPU) Fernando Hurtado Pascual DEVIDA, Comisión Nacional para el Desarrollo y Vida sin Drogas Gerente de Desarrollo Alternativo 511 449 0007 thurtado@devida.gob.pe Fernando Mendoza Vicuña Hearders Assn. Clost to Huancavelica President Fernando Orihuela R. & Comtroller Granja Orihuela Owner, Gen. Manager, Comtroller (064)331-959 forihuela@hotmail.com Fernando Ruiz Cámara de Comecio Presidente 5184222502 ruizcaro@terra.com.pe Caro Cuzco Five directors & staff Cooperativa PANGOA Directors & staff (064)543-017 cacpangoa@terra.com.pe Flora Alicia Royal Knit EIRL Capacitadora Huancalaquiri Germán Saldaña Dirección Subdirección Regional Agraria Responsable Gino Fosca Empacadora de Frutos Gerente General 51 1 98 25 gfosca@empafrut.com Harten Tropicales SAC 6208 Glodaldo Alvarez Municipality of Acobamba Mayor Gonzalo Aguirre PRA Gestor de Negocios 51 73 34 6287 gonzaloaguirre@tierra.com.pe Guzman Llamoca C. Assn. Promotores Alpacqueros Pecuarios y Servicios Multiples de Huancavelica (APROAL) President Hector Martinez Municipality Chavin de Chief of Economic Hector Rubina Soc. Agricola Viru General Manager Huantar Development Dept Hercules Cordova PRA Gestor de Negocios 5161481513 hcordova@prapucllpa.com Heriberto Tamani OLAMSA (ACEITE DE PALMA) Presidente 5161590982 olamsa@terra.com.pe Holmes Coz Municipality of Acoria Chief of Municipal Trout Briceno Production Honorato Chavez Asoc. Productores Apus Salcantay Directivo Inés Ardiles Guerrero PRA Lima Coordinadora, Centros de Servicios 51 1 441 1110 iardiles@chemonicspe.com Economicós - Sierra Ing. Flavio D. Ventura Silva APIREC (Asociacion de Pisicultores Region Ventro) & F&C Asesores y Consultores Fish farm owner & President of APIREC Ivan E. Isla Rojas Coop Satipo Ltda Presidente (064)545030 satipo@cacsatipo.org Ivan Pineda INDACO - APROCAV Presidente 5184282785 ivanpineda@hotmail.com Jacqueline PRONAMACHCS Gerente de Produccion 01-98465010 jquintana@pronamaches.gob.pe Quintana Flores y Transformacion Agraria Jaime Sucaticona Ticona CECOVASA Gerente General 51 51 32 1587 cecovasa@ddm.com.pe Weidemann Associates, Inc. Page 46           James T. Riordan Chemonics Washington Director, Latin America 202 955 7562 jriordan@chemonics.com and the Carribbean Javier Soto PRA Gestor de Negocios 5161578410 jsoto@prapucallpa.com Jay Goulden CARE-Lima Program Director 417-1100 Ext. jgoulden@care.org.pe 659 Jeremiah Carew USAID/Lima Jefe Ajunto, Oficina de Programs 51 1 618 1221 jcarew@usaid.gov Joaquin de la Piscifactorias de los Gerente General 51 1 344 0757 jdelapiedra@pisciperu.com.pe Piedra Andes S.A. Joel Chavez Yalico Comité de Productores de Plátano Ucayali (COPPU) Extensionista joelcarlos22@hotmail.com John B. Nittler Chemonics Washington Vice President Principal 202 955 3351 jnittler @chemonics.com Latin America and the Carribean Jorge Chara B. Finca Rio Colorado, Passion Fruit Administrator Jorge López de Castilla Sierra Exportadora Gerente General 2150730 jlopez@sierraexportadora.gob.p e Jose Casimiro CAPAS-PRA Paprika technician Jorge Vigo OLAMSA (ACEITE DE PALMA) Gerente General 5161590982 olamsa@terra.com.pe José Iturrios Padilla PRA Lima Chief of Party 51 1 221 3266 jiturrios@chemonicspe.com Jose Sanchez SemPerú Selva Gerente Técnico 5161577858 josesanchez@semperu.com Juan Balberto Chaufa T. Assn de Productores de Palta de Montecomun, Moro, Chimbote President Juan Carlos MYPE Competitiva, Chief of Party 511 22 68 022 mypecompetitiva.com Mathews S. Nathan Associates Juan del Mar Cooperativa Huayapota Jefe Programa Organico 5184282292 coclacof@terra.com.pe Juan Loayza Louis Dreyfus Peru Controller 51 1 221 4321 juan.loayza@ldcommodities.co Bellido m Juan Malpartida Porras Consultant PARA Consultant 067-453212 jdmalpartida@msn.com Juan Manuel USAID/Lima Office of Economic 51 1 618 1352 jrobles@usaid.gov Robles Ayllon Development and the Environment Juan Muñoz PRA Jefe ESC 5161578410 jmunoz@prapucallpa.com Julio Lozano Coop Satipo Ltda Farmers & Directors (064)545030 satipo@cacsatipo.org Meza, Hector Guillermo Chavez & five additional technicians & farmers Julio Mantari de la Cruz Owner fish farm in Concepcion Owner (064)984-8205, (064)581-829 Justo Sanchez Artichoke Producer Farmer delivering to Agromantaro Leonidas Bendezu Fernandez Municipality of Acoria Mayor Luis A. Heras Centro Piscicola Arco Iris Gerente (01)96213311 luisheras@terra.com.pe Schaefer Luis Pardo Figueroa T. Piscifactorias de los Andes S.A. Jefe de Procesamiento (064)581-625 lpardo@piscisperi.com Luis Rodriguez Papr ka farmer, Santiago Farmer Feliz Huina, Huarma, Huaraz Manuel Calderón Asociación Valle Sagrado Fiscal Manuel Estacio PRA Técnico PRA Solis Manuel Guevara Pstpkoc KANTU Gerente de Ventas 5184270704 mguevara@ckantu.com Manuel Orellano Artichoke Producer Farmer delivering to Weidemann Associates, Inc. Page 47           Cordoba Agromantaro Manuel Sanchez Comité de Productores de Plátano Ucayali (COPPU) Presidente Manuel Santa Cia. Minera Antamina Oficina de Relaciones 51 1 217-3000 msantamaria@antamina.com Maria Rizo Patron S.A. Comun itarias, Area Asuntos Corporativos Marco Aspilcueta Barbachán PRA Lima Especialisto en Monitoreo y Evaluacion 51 1 221 3266 maspilcueta@chemonicspe.com Marco Herrera Exportadora Agricola Coordinador de 51 1 247 1197 marco.herrera@sierrayselva.co Montanez Organica SAC Proyectos de m Marco Huayanay PRA Técnico PRA Produccion Organica Mario Bringas PARA Jefe de ESC (064)963-1590 mariobringas@terra.com.pe Mario Ocharan Casabona Prom Peru Market Intelligence Management 222-1222 & 221-0880 mocharan@promperu.gob.pe Mariscal Alvarado Leche Gloria, Concepcion Administrator Cooling (064)436-063 plantahuancayo@yahoo.es Plant Maritsa Arriola B. AICASA Export Gerente General 51 1 528 5360 aicasa@aicasaperu.com Mauricio Moscoso PRA Director de los ESC 9665-5652 mmoscoso@chemonicspe.com Miguel Angel Zegarra PRA Gestor de Negocios (064)963-1568 miguelangelzg@terra.com.pe Miguel Fossa Limones Piuranos SAC Gerente General 51 73 31 0166 miguelfossa@limonespiuranos.c om Miguel Paz CECOVASA (Café) Commercial Manager 5114233927 info@cecovasa.com.pe Miguel Valdivieso SemPerú Selva Gerente Planeamiento 5161577858 semperuselva@semperu.com Milton Quijano CAPAS S.A.C. Promoter of Paprika Miluska Arriola AICASA Export Gerente Comercial miluzca@aicasaperu.com Nancy Zamalloa Piscifactorias de los Andes S.A. Jefe de Producción Nehemias Cayo PRA Paprika Specialist in Poma G. Santiago Huina, Huarma, Huaraz Nilda Lopez Handicrafts Producer Owner and leader of group of over 100 women, Huancavelica Noel Caque Chavin Municipal artichoke technician Noelle Veltze PRA Lima Gerente de Operaciones 51 1 221 3266 nveltze@chemonicspe.com Octavio Oncoya Papr ka farmer, Santiago Farmer Huina, Huarma, Huaraz Orlando, Lourdes, Pasquel, Wilin Dairy farmers, Huancayo region Dairy farmers associated w/Leche Gloria, Concepcion Oswaldo Guerrero Municipality Chavin de Huantar Oswaldo Ramirez Tuya PRA Otilia Quispe Asociación Choaucamayo (043)994-7031 oramirez@praancash.com Paul figueroa Cuentas PRA Paulino Loa Oficina municipal de Promoción Económica (OMPE) Paulov Sifuentes Fernandez CAPAS S.A.C. Gerente General 2355907, 2354666, Cell: 405-2696 capasagroperu@peru.com Chief of Economic & Social Development Dept. Gestor de Negocios Fiscal Jefe del CSE 51 73 34 6267 pfigueroa@terra.com.pe Responsable Pedro Camacho Daza PRA Jefe, Centro de Servicios Economicos 51 043 42 8668 pcamacho@praancash.com Ancash Policarpio Benadillo Papr ka farmer, Santiago Huina, Huarma, Huaraz Farmer Primitivo Ortiz Artichoke producer, Chavin Raúl del Aguila Central COCLA Gerente General 5184282292 coclacof@terra.com.pe Weidemann Associates, Inc. Page 48           Rita Amparo CEAR Presidente (064)235717 ritaorrego@hotmail.com Roberto Flores Breshia Export Gerente Orrego B. Romulo Cooperativa Divisoria Gerente 5162563972 romuloechegaray@hotmail.com Echegaray Roque Benavides Cia. De Minas Buenaventura SSA President and CEO 51 1 419 2538 roqueban@buenaventura.com.p e Sandra Hidalgo Globe Natural Agricultural Division 51 1 254 6138 shidalgo@globenatural.com Reque Santos Escobar Mena Asociacion de Pequenos Productores de Banano Organico Saman y Anexos Presidente 51 9 54 3811 appbosa@yahoo.com Sonia Gomez PRA Gestor de Negicios (067)969-2000 s.gomez@infonegocio.net.pe Steve Olive USAID/Lima Chief, Office of Economic Growth and Environment 51 1 618 1356 solive@usaid.gov T. David Johnston USAID/Wash djohnston@usaid.gov Ten farmers growing green peas Pea association of Allpas, Acobamba, Huancavelica Farmers Two artichoke Artichoke Producers Farmers delivering to Vicente Nuñez SemPerú Selva Gerente General 5161577858 vicente.nunez@sfmbam.com farmers Agromantaro Zulma Jeri PRA-Huancayo Gestora de Negocios (064)963-1533 zulmajeripra@terra.com.pe Weidemann Associates, Inc. Page 49           Annex B. Literature and References 1. Agreement between USAID/Peru and the Confederación Nacional de Instituciones Empresariales Privadas, September 1998, Lima, Peru. 2. “Investigación sobre condiciones de la producción textil de Hancayo y Asistencia Técnica de las empresas en el desarrollo de puntos críticos para alcanzar una óptima adecuación del mercado,” a report prepared for PRA under contract with Chemonics-PRA. 3. “Estudio y Evaluación del Potencial Manufacturero en Huancayo – 2000,” CESEM Huancayo, a report prepared for PRA under contract with Chemonics-PRA. 4. PRA Project Annual and Quarterly Reports. 5. PRA Project, Proyecto PRA Informa, various issues. 6. ProExpansion, Mercando Estratégicos para el Perú, Lima. 7. ProExpansion, Oportunidades Productivas del Perú, Lima. 8. Scarborough, Andrew, Calculating the Multiplier Effect of Targeted Households’ Annual Increases in Income on Bolivia’s Gross Domestic Product, Stage II, Oregano, Onion, Grape and Berry Programs, 2005. 9. PRA Project, Poverty Assessment Tool, 2008. 10. PRA Project, Business Plans, various. 11. Wesley, David, Trout Farming in Peru: The Lake Titicaca Decision, Northeastern University and Richard Ivey School of Business, The University of Western Ontario, 12. Riordan, James T., One Buyer at a Time, Stanford Social Innovation Review, Winter 2007. 13. Woller, Gary, Summary of the Characteristics, Impact, Best Practices and Research Topics of Business Incubators, USAID Business Growth Initiative, 2007. 14. International Cacao Organization, Quarterly Bulletin of Cacao Statistics. 15. Ministerio de Trabajo, Empleo y Seguridad Social, Dirección General de Estudios, Impacto Macroeconómico del Programa Jefas y Jefes de Hogar, Argentina, 2002. 16. Sierra Exportadora, Lineamientos y Estrategias de Desarrollo, Lima, slide presentation. 17. USAID, Country Strategic Plan for Peru, FY2002 – FY2006, for external use, 2001. 18. Checchi Consulting, A qualitative Assessment of the Poverty Reduction and Alleviation Program, Volume I, 2003. 19. PRA Projecto, Sistema de Monitoreo y Evaluación del PARA, 2007. Weidemann Associates, Inc. Page 50           Annex C. Sales, Investments and Work Days Generated by Year by ESC Resultados de ventas $US del PRA, periodo 2000-2007 (año calendario Perú) Ancash 0 0 0 0 0 0 0 104,816 104,816 Cajamarca 249,990 1,098,811 3,335,906 2,262,896 2,731,216 2,364,196 2,432,215 2,992,603 17,467,832 Huancavelica 0 0 1,772 189,175 404,304 1,080,238 1,011,459 1,017,439 3,704,388 Huanuco 367,915 640,533 931,537 1,050,751 680,291 697,544 1,084,662 1,587,831 7,041,064 Jaen 14,603 428,311 1,481,222 2,013,874 6,006,296 5,238,596 5,470,288 7,623,721 28,276,910 Pucallpa** 8,862 618,993 1,233,243 1,918,220 4,744,627 5,878,054 7,605,325 8,556,951 30,564,274 Tarapoto*** 90,461 697,620 308,990 1,593,387 1,956,515 2,850,196 3,658,108 1,896,306 13,051,583 * Se le incluye los resultados del CSE PDA VRAE CSE 2000 2001 2002 2003 2004 2005 2006 2007 TOTAL Ayacucho* 793 477,900 740,938 1,283,477 995,952 2,630,104 3,864,952 5,254,747 15,248,863 Cusco 0 221,705 1,637,485 3,485,396 2,748,343 5,819,506 6,937,245 8,848,843 29,698,522 Huancayo 221,764 829,812 2,402,075 3,078,794 4,403,177 6,261,890 10,266,731 12,346,920 39,811,162 Huaylas 10,419 492,178 969,867 1,418,838 2,565,875 3,875,966 4,907,945 5,411,396 19,652,483 Piura 0 0 0 0 0 874,599 6,919,963 9,389,971 17,184,533 Puno 94,146 266,948 439,589 2,413,453 3,572,757 1,347,996 1,151,313 1,351,977 10,638,179 Total Sales 1,058,953 5,772,808 13,482,624 20,708,261 30,809,353 38,918,884 55,310,205 66,383,520 232,444,609 ** Se le incluye los resultados del CSE PDA Aguaytía y Tingo María *** Se le incluye los resultados del CSE PDA Tocache-Juanjuí CSE 2000 2001 2002 2003 2004 2005 2006 2007 TOTAL Resultado de Inversiones $US del PRA, periodo Enero 2000-Diciembre 2007 ANCASH 0 0 0 0 0 0 0 13,329 13,329 AYACUCHO 0 23,010 2,464 0 44,079 101,440 180,831 182,512 534,336 CAJAMARCA 16,800 30,703 227,123 59,774 44,809 0 0 0 379,210 CUSCO 0 16,000 116 0 0 692,317 144,776 1,009,145 1,862,354 HUANCAVELICA 0 0 114 0 0 177,569 29,929 0 207,613 HUANCAYO 4,000 54,362 176,179 404,918 278,399 1,767,730 626,705 185,523 3,497,817 HUANUCO 24,525 13,779 0 0 0 113,488 0 28,156 179,948 HUAYLAS 9,400 242,850 1,231,341 347,012 157,661 2,147 0 0 1,990,412 JAEN 43 30,971 1,300 8,626 23,379 464,002 299,107 376,439 1,203,868 PIURA 0 0 0 0 0 24,686 1,799,513 367,219 2,191,418 PUCALLPA 14,048 12,786 44,978 115,286 1,009,810 612,716 976,037 154,322 2,939,982 PUNO 19,889 286 0 0 149,694 0 0 0 169,868 TARAPOTO 0 39,603 733,242 110,621 132,481 0 0 0 1,015,947 Total general 88,704 464,351 2,416,858 1,046,237 1,840,312 3,956,096 4,056,898 2,316,645 16,186,100 * Año calendario Enero-Diciembre Weidemann Associates, Inc. Page 51           Resultado de Empleo (Jornales) del PRA, periodo Enero 2000-Diciembre 2007 ANCASH 0 0 0 0 0 0 0 1,589 1,589 CAJAMARCA 37,206 117,738 202,250 126,142 136,279 90,547 76,313 73,972 860,447 HUANCAVELICA 0 0 342 37,648 58,173 119,058 76,334 108,488 400,042 HUANUCO 22,897 52,651 65,892 83,649 44,772 46,141 50,861 60,956 427,819 JAEN 1,985 65,613 232,609 174,777 250,331 268,702 319,178 351,124 1,664,319 PUCALLPA 1,698 69,802 191,604 177,397 405,201 340,866 346,391 284,832 1,817,789 TARAPOTO 6,102 48,030 38,444 215,650 211,040 322,379 499,339 176,336 1,517,321 * Año calendario Enero-Diciembre CSE 2000 2001 2002 2003 2004 2005 2006 2007 TOTAL AYACUCHO 113 40,502 159,351 258,916 148,179 224,188 347,303 440,880 1,619,431 CUSCO 0 6,196 98,079 320,068 208,965 383,138 272,536 251,824 1,540,806 HUANCAYO 3,905 18,194 166,015 200,149 294,005 247,439 297,928 271,109 1,498,744 HUAYLAS 1,681 56,791 48,056 24,257 44,901 93,960 96,901 96,145 462,690 PIURA 0 0 0 0 0 51,077 299,062 343,857 693,996 PUNO 2,889 13,548 40,988 521,526 414,306 253,059 129,151 134,017 1,509,485 Total general 78,475 489,065 1,243,631 2,140,178 2,216,152 2,440,553 2,811,298 2,595,127 14,014,478 Weidemann Associates, Inc. Page 52           Annex D. PRA Active Clients 2008 CSE ANCASH PISCIFACTORIA DE LOS ANDES TRUCHA AGRIFOOD EXPORT S.R.L. TARA CSE AYACUCHO CACAO CACAO VRAE S.A. CONSORCIO COOPERATIVASAGRARIAS CAFETALERAS CACVRA CACAO QUINACHO CONSORCIO PAPA BUENA PAPA ESFIEL S. A. MENESTRAS Y LEGUMINOSAS JULIAN CURO BENDEZU PALTA PRODEMA ALIMENTOS PROCESADOS ARTESANIAS J.LESLY EXPORTS ARTÍCULOS DEL HOGAR Y ARTESANIA R BERROCAL S.R LTDA ARTÍCULOS DEL HOGAR Y ARTESANIA NUTREINA S.A. ALCACHOFA EMPRESA AGROMPEX EIRL MANI MACEDONIO PALOMINO TORRES ARTÍCULOS DEL HOGAR Y ARTESANIA MULTIAGRO IMPORT EXPORT SAC CAFÉ ALLPA SAC ARTÍCULOS DEL HOGAR Y ARTESANIA MOLINERA LOS ANGELES S.A CEREALES PERUARTCRAFTS SAC ARTÍCULOS DEL HOGAR Y ARTESANIA ASOCIACION DE PRODUCTORES AGROPECUARIOS "LA COMPAÑÍA AJO " AGROCONDOR SRL MAIZ ASOCIACION DE JOVENES MICROEMPRESARIOS DE PICHARI ARTÍCULOS DEL HOGAR Y ARTESANIA B & Q S. A. C. FRUTAS MULTISERVICIOS NSQ SAC MADERA SUMAQ QARA E. I. R. L. ARTÍCULOS DEL HOGAR Y ARTESANIA AGROCONDOR S. R. L AROMATICAS Y MEDICINALES RAUL LAURA BELTRAN ARTÍCULOS DEL HOGAR Y ARTESANIA ASOCIACION LOS TRECE DE AYNA TRUCHA ASOCIACION DE PRODUCTORES DEL DISTRITO DE ACOCRO ALCACHOFA CEDIAPI MISKITA KUYAYKI MIEL MACHU PICCHU COFFE TRADING CACAO CSE CUSCO CERAMICAS KANTU SCRL LISTELOS CERAMICOS PISCIFACTORIA DE LOS ANDES SA TRUCHA CECOVASA (CAFÉ ORGANICO) CAFÉ ALISUR SAC MENESTRAS Y LEGUMINOSAS INDACO S.A POLLOS CACAO Weidemann Associates, Inc. Page 53           CACAO AICASA CAFÉ AICACOLOR COLORANTE NATURAL GREENHILL FOODS CEREALES MONTAIN LODGE PERUVIAN TURISMO ASOCIACION DE PRODUCTORES DE KIWICHA CEREALES ARTESANIA EL INCA ARTÍCULOS DEL HOGAR Y ARTESANIA AGRIFOOD EXPORT SRL TARA SOCIEDAD AGRICOLA VIRU ALCACHOFA PRODUCTORES DE KIWICHA DE MOLLEPATA CEREALES COCLA LTDA 281 AROMATICAS Y MEDICINALES CSE HUANCAVELICA FEDERACION ASOCIACIO. PRODUCT. AGROPEC. MENESTRAS Y LEGUMINOSAS ACOBAMBA(FAPAA) ASOCIACION PROMOTORES ALPAQUEROS HVCA. FIBRAS Y LANAS AGRICULTORES HUANCAVELICA ALCACHOFA PISCIGRANJA MUNICIPAL DE ACORIA TRUCHA COMITÉ DE CRIADORES DE CAMELIDOS SILVESTRES DE FIBRAS Y LANAS HUANCAVELICA-VICUÑA LUZ - ORFITA MENESTRAS Y LEGUMINOSAS ALLPA S.A.C ARTÍCULOS DEL HOGAR Y ARTESANIA NILTAIRO ARTÍCULOS DEL HOGAR Y ARTESANIA COMUNIDAD CAMPESINA “CENTRO UNION” MACA RAYMISA S.A. ARTÍCULOS DEL HOGAR Y ARTESANIA ARTESANIA "SUMAK MAKI" ARTÍCULOS DEL HOGAR Y ARTESANIA ASOCIACIÓN QAMPAQ ART ARTÍCULOS DEL HOGAR Y ARTESANIA PERU ARTCRAFTS ARTÍCULOS DEL HOGAR Y ARTESANIA CSE HUANCAYO PISCIFACTORIA DE LOS ANDES SA TRUCHA SELVA INDUSTRIAL S.A. PRODUCTOS PROCESADOS AGROMANTARO S.A.C. ALCACHOFA GLORIA S.A. DERIVADOS LÁCTEOS TALSA ALCACHOFA COOPERATIVA AGRARIA CAFETALERA PANGOA LTDA CAFÉ, CACAO, FRUTAS COOPERATIVA AGRARIA CAFETALERA SATIPO LTDA CAFÉ, CACAO, FRUTAS PROFRUTEX FRUTAS ASOCIACIÓN DE PRODUCTORES ECOLÓGICOS DE SANGARENI – APROESA CAFÉ ECOMUSA SANCHIRIO ORGANIC COFFEE CAFÉ CORPORACIÓN DE PRODUCTORES CAFÉ PERÚ S.A.C. CAFÉ ASOCIACIÓN DE PRODUCTORES AGROPECUARIOS GRAMAZÚ – CAFÉ TSACHOPEN CSE HUANUCO DEPRONAR TARA Weidemann Associates, Inc. Page 54           AGROMANTARO S.A.C. ALCACHOFA HORTENSIAS HUANUCO FLORES Y PLANTAS SILVIA RAMÍREZ DE AZAÑEDO FRUTAS CSE HUAYLAS DANPER TRUJILLO SAC ALCACHOFA CSE JAEN AGROSINOR SAC ARROZ COOPERATIVA AGRARIA CAFETALERA BAGUA GRANDE CAFÉ RAINFOREST TRADING SAC CAFÉ MOLISELVA/ J.CAMPOS & HNOS FRUTAS ASOCIACION PRODUCTORES DE PAPAYA DE CHIRIACO FRUTAS LOUIS DREYFUS PERU S.A. CAFÉ UNICAFEC - UNIÓN DE CAFETALEROS ECOLOGICOS CAFÉ JORGE BASILIO GROSSMAN FRUTAS APROCASSI - ASOCIACIÓN PROVINCIAL DE CAFETALEROS CAFÉ SOLIDARIOS DE SAN IGNACIO PRODUCTORES AGRUPADOS DE SANDÍA FRUTAS FRUTAS DERIVADAS DE LA SELVA SRL FRUTAS AGROINDUSTRIA PRO PERU ALIMENTOS PROCESADOS A.RUBIO / F.NUÑEZ FRUTAS ARTURO RUBIO & FRUDERSEL FRUTAS A. RUBIO / F. NUÑEZ FRUTAS CSE PIURA GLOBE NATURAL INTERNATIONAL SAC MENESTRAS Y LEGUMINOSAS EMPAFRUT SAC FRUTAS DINA RUIDIAS VALLADOLID LIMON PROCESADORA MEJIA SAC MENESTRAS Y LEGUMINOSAS MANGOS VALLA EIRL FRUTAS CAUPI MORROPON MENESTRAS Y LEGUMINOSAS EXPORT IMPORT CANDRES SAC MENESTRAS Y LEGUMINOSAS CARAPEZ TRADERS SAC PRODUCTOS HIDROBIOLOGICOS GRUPO AJIES Y PIMIENTOS AJIES Y PIMIENTO APPBOSA FRUTAS ASPPBO FRUTAS PROCESADORA SAC - PRODUCTORES DE GANDUL MENESTRAS Y LEGUMINOSAS AMPBAO FRUTAS DON LIMON SAC LIMON SEACORP PERU SAC PRODUCTOS HIDROBIOLOGICOS TOMAS PEÑA MENESTRAS Y LEGUMINOSAS ALISUR SAC MENESTRAS Y LEGUMINOSAS APOQ FRUTAS CSE PUCALLPA NCS AMERICAN FORESTAL MADERA MADERAS PERUANAS MADERA Weidemann Associates, Inc. Page 55           CONSORCIO DE PRODUCTORES DE PLATANO DE UCAYALI - COPPU FRUTAS CONSORCIO FORESTAL AMAZONICO MADERA ASOCIACIÓN DE PALMICULTORES DE SHAMBILLO PALMA ACEITERA COOPERATIVA AGRARIA LA DIVISORIA CAFÉ, CACAO AGROINDUSTRIAS CAMPO VERDE SAC ALGODÓN FORSAC MADERA ASOCIACIÓN DE PRODUCTORES DE LECHE DE LEONCIO PRADO – APROLEC-LP DERIVADOS LÁCTEOS ROLANDO CHAMBERGO YAURI FRUTAS AGRO INDUSTRIAL CAMPO NUEVO SAC SOYA, MAIZ MULTIAGROS EXPORT IMPORT SAC CACAO ASOCIACION DE CACAOTEROS TECNIFICADOS DE PADRE ABAD CACAO AGROFLORA DEL HUALLAGA FLORES Y PLANTAS FEED CEREAL & COTTON EIRL ALGODÓN SUPER PISOS S.A MADERA CSE TATAPOTO ALGODONERA DE LA SELVA SAC ALGODÓN ALGODONERA JUANJUI SAC ALGODÓN ROMERO TRADING SAC ALGODÓN ACOPAGRO CACAO ROMERO TRADING SA CACAO CARLOS L TORREJON RUBIO Y PRODUCTORES DE ALMIZCLE ALMIZCLE COOPERATIVA AGRARIA INDUSTRIAL NARANJILLO LTDA CACAO AQUILINA PALOMINO CAPCHA CACAO CAI TOCACHE CACAO Weidemann Associates, Inc. Page 56 Annex E: PRAs 36 Largest Clients Position in Stat Commodity Benefits / No. Client Product Corridor us Chain *** Size Net Sales Costs Costs **** ** 1 PISCIFACTORIA DE LOS ANDES SA Trout HUANCAYO CC Transform LARGE 15,642,684 14,269 1,096 2 OLAMSA S.A Oil Palm PUCALLPA G Transform MEDIUM 15,456,060 72,260 214 3 SONG ROSES SAC Flowers HUAYLAS G Primary MEDIUM 12,271,565 8,012 1,532 4 AGROSINOR SAC Rice JAEN CC Transform MEDIUM 10,400,961 25,037 415 5 MOLISELVA/ DON ISAAC Rice JAEN G Transform MEDIUM 8,019,270 10,112 793 6 CERAMICAS KANTU SCRL Ceramic Tiles CUSCO CC Transform MEDIUM 6,944,138 26,177 265 7 TRASFORMADORA AGRICOLA SAC Tara CAJAMARCA G Marketing MEDIUM 6,082,681 4,457 1,365 8 LA GRANJA ORIHUELA EIRL Chickens HUANCAYO G Transform MEDIUM 5,710,387 2,777 2,057 9 PISCIFACTORIA DE LOS ANDES SA Trout CUSCO CC Transform LARGE 4,927,011 21,461 230 CECOVASA (CAFÉ 10 Coffee CUSCO CC Transform LARGE 4,483,379 49,342 91 ORGANICO) 11 AICACOLOR Natural Pigments￾colors CUSCO G Transform MEDIUM 3,901,654 13,237 295 AGRICOLA EL BIAVO SAC Y Not 12 Rice TARAPOTO Transform LARGE 3,628,475 4,202 864 EMPRESAS RELACIONADAS CC 13 SELVA INDUSTRIAL S.A. Processed products HUANCAYO CC Transform MEDIUM 3,137,421 10,108 310 14 NCS AMERICAN FORESTAL Logs-Wood PUCALLPA CC Transform MEDIUM 3,113,069 15,095 206 15 ARIN SA Gold chains CAJAMARCA G Transform MEDIUM 3,062,027 1,785 1,715 GLOBE NATURAL Beans & Other 16 PIURA CC Transform LARGE 2,894,597 41,324 70 INTERNATIONAL SAC Legumes Weidemann Associates, Inc. Page 57 17 EMPAFRUT SAC Fruits PIURA CC Primary MEDIUM 2,847,847 6,265 455 ALGODONERA DE LA SELVA 18 Cotton TARAPOTO CC Transform MEDIUM 2,745,828 65,909 42 SAC 19 AGROMANTARO S.A.C. Artichoke HUANCAYO CC Transform MEDIUM 2,587,415 19,814 131 20 MADERAS PERUANAS Wood/Lumber PUCALLPA CC Transform MEDIUM 2,528,338 6,624 382 21 CACAO VRAE S.A. Cocoa AYACUCHO CC Transform SMALL 2,187,470 37,627 58 22 EMPRESA CAOCA SRL Fruits JAEN G Marketing SMALL 2,054,147 0 23 GLORIA S.A. Milk & other Dairy Products HUANCAYO CC Transform LARGE 2,046,010 8,317 246 24 DINA RUIDIAS VALLADOLID Lemons PIURA CC Marketing SMALL 1,934,284 9,245 209 25 ROYAL KNIT E.I.R.L. Knitwear PUNO G Transform SMALL 1,869,730 10,597 176 Beans and 26 PROCESADORA MEJIA SAC PIURA CC Transform LARGE 1,837,415 30,326 61 other Legumes 27 POTATO PRODUCERS HUANUCO Potato HUANUCO G Primary NOT A BUSINES S 1,820,493 104,390 17 Not 28 AGROFORESTAL Rice TARAPOTO Transform MEDIUM 1,778,608 8,695 205 CC 29 CONSORCIO PAPA BUENA Potato AYACUCHO CC Marketing SMALL 1,718,779 14,094 122 30 CECOALP 2 Alpaca fiber PUNO G Transform MEDIUM 1,669,193 0 31 AGRO EXPORT CAJAMARCA S.A.C Tara CAJAMARCA G Transform SMALL 1,647,790 3,514 469 32 TALSA Artichoke HUANCAYO CC Transform LARGE 1,591,589 39,381 40 34 ALGODONERA JUANJUI SAC Cotton TARAPOTO CC Transform MICRO 1,457,404 43,580 33 33 VIVERO LOS INKAS S.A.C Flowers HUANCAYO G Primary MEDIUM 1,474,175 6,144 240 35 CONSORCIO DE PRODUCTORES DE PLATANO DE UCAYALI - COPPU Fruits PUCALLPA CC Primary SMALL 1,436,359 15,869 91 Weidemann Associates, Inc. Page 58 SEM PERU SELVA SAC / PRODUCTORES DE MAD EN 36 Corn PUCALLPA G Primary MEDIUM 1,396,963 29,615 47 RESTINGAS DE UCAYALI - AMUCAU * Companies with name in italics belong to closed ESCs ** Status: CC = current client, G = graduated client *** Transform = Transform Raw Products, Primary = Production of Primary Products, Marketing = Marketing and Sales **** Costs by company only include direct consultant costs; they do not include the time of PRA personnel or other direct costs. SONGROSES- HUAYLAS: Están sumados los buquets y las rosas (dos planes de negocio) CECOVASA-CUSCO-PUNO: Están sumados los resultados del Puno y Cusco. AICACOLOR-CUSCO: Están sumados la bixina y la oleorresina de páprika SELVA INDUSTRIAL (SEINSA)-HUANCAYO: Están sumados todos los planes CAOCA-JAEN: Están sumados los dos planes de yacón y granadilla Weidemann Associates, Inc. Page 59           Annex F: Sector Analysis Alcachofa Por Gladys Triveño Alcachofa es un producto de historia reciente. Hace menos de 10 años se empezó a desarrollar la cadena (Proyecto MSP-USAID). En un inicio, se comenzó a sembrar y probar distintas variedades de alcachofa sin espinas en Costa y mucho más tarde se introdujo en Sierra. El interés que ha generado esta hortaliza ha motivado que el Instituto Peruano del Espárrago, IPE, que reune a las principales empresas exportadoras de espárrago se cambie de nombre a Instituto Peruano del Espárrago y Hortalizas (IPEH). Muchas de las empresas que forman parte de esta organización son parte de la lista de clientes del PRA como compradores de alcachofa en Sierra. Tiene mercado. Las exportaciones siguen una tendencia positiva de crecimiento. Evolución del total de exportaciones de alcachofa (miles de US$) 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2000 2001 2002 2003 2004 2005 2006 2007 Fuente: SUNAT El mayor porcentaje de exportaciones son procesadas. Las que más han crecido son las exportaciones de alcachofas preparadas. Esto explica que incluso en el caso de la producción en Sierra, se haya podido atraer a empresas para invertir cerca de las zonas productivas. Tal sería el caso de la inversión de AgroMantaro en Concepción, Junín. Weidemann Associates, Inc. Page 60           Exportaciones de alcachofas preparadas Exportaciones de alcachofas frescas o 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 o conservadas* refrigeradas (miles de US$) (miles de US$) 35 30 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2000 2001 2002 2003 2004 2005 2006 2007 *Fuente: Sunat. Correspondiente a la partida 0709100000 hasta marzo de de 2007, y la partida 2005991000 desde abril de 2007. *Fuente. SUNAT. Correspondiente a la partida 2005901000 hasta marzo 2007, y la partida 0709903000 desde abril de 2007. El Perú ha empezado a jugar en las ligas mayores. En 2006, fue el cuarto exportador mundial de alcachofa. Principales exportadores mundiales de alcachofas, 2006 Países Exportadores Total Exportado (miles de $US) España 175,017 Italia 112,873 Francia 108,575 Perú 69,702 Países Bajos 62,509 Fuente: TRADEMAP, SUNAT, comprende partidas fresca y conservadas Se ha convertido en el tercer productor mundial. Con un nivel de rendimiento mayor que el que alcanzan Italia y España, según la FAO. Productores Mundiales de Alcachofa, 2006 Países Producció Superficie Rendimiento n TM cosechada (HA) (TM/HA) España 200,135 18,792 10.7 Argentina 89,498 4,861 18.4 China 60,000 10,000 6.0 Francia 53,524 10,294 5.2 Otros 166,519 16,421 10.3 Italia 468,964 50,383 9.3 Perú 113,114 6,722 16.8 Egipto 70,000 3,500 20.0 Marruecos 55,175 3,175 17.4 Estados Unidos 30,100 7,900 4.8 Total 1,315,029 131,868 10.0 Fuente: FAOSTAT y MINAG Weidemann Associates, Inc. Page 61           El PRA ha contribuido a lograr esos resultados. En el siguiente gráfico se ve claramente, como el PRA ha ayudado a la evolución y despegue de la cadena. Producción de Alcachofa, en la regiones que actúa el PRA (Toneladas) 0.4% 2.4% 10.9% 27.0% 52.9% 36.8% 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Toneladas 0% 10% 20% 30% 40% 50% 60% 70% 80% Porcentajes 2001 2002 2003 2004 2005 2006 % participación del PRA Producción MINAG Producción PRA Fuente: MINAG, Base de informacón del Proyecto PRA La intervención del PRA en algunas regiones, representa un porcentaje importante de la producción que registra la región, según estadísticas del MINAG. Es importante mencionar que el porcentaje de Junín es reducido en la medida que esta región produce gran cantidad de la alcachofa con espinas orientada al mercado interno. La alcachofa que se produce con intervención del PRA se orienta prioritariamente al mercado externo. Participación del PRA en la producción de alcachofa, por regiones , 2006 % 100% 94.1% 90% 80% 70% 60% 53.0% 50% 41.3% 40% 30% 20% 10% 5.1% 0% Ancash Huánuco Cajamarca Junín Weidemann Fuente: MINAG, Base de información del Proyecto PRA Associates, Inc. Page 62           Las ventas de Ventas Netas por Cada Región Donde Actúa el PARA (miles de $US) alcachofa, Región 2005 2006 2007 atribuibles a los CSE, se han incrementado en los últimos tres años. Junín sigue concentrando la mayor cantidad de ventas, seguido Ayacucho 4.9 3.2 249.1 Cajamarca 31.0 16.9 0 Cusco 0 0 58.6 Huancavelica 129.9 157.4 47.6 Junín 829.5 1,339.8 2,406.5 Huánuco 0 99.1 168.5 Ancash 1,066,3 1,277.9 1,468.4 por Ancash y Total 2,061.5 2,894.3 4,398.7 Ayacucho. A Fuente: Base de Información del Proyecto PRA pesar de ello, las ventas de alcachofa con intervención del PRA solo representan el 4% del total exportado, pero lo positivo es que corresponden a Sierra. Las externalidades que está generando la intervención del PRA Las inversiones realizadas por Talsa y Agromantaro, así como la intervención de 4 empresas más que compran en la zona del Valle del Mantaro han impulsado la aparición de otros negocios vinculados. Los proveedores de insumos. Han jugado un doble rol en la cadena productiva. Algunas de las empresas, suscriben alianzas estratégicas con tiendas de agroquímicos (fertilizantes, pesticidas, herramientas, etc.) para que además de suministrar los insumos, apoyen la labor de difusión del trabajo de la empresa en el cultivo de la alcachofa y concienticen a los productores con los cuales tenían contacto. Las empresas de transporte. Cuando las empresas no tienen sus propios camiones, contratan empresas de transporte local para acopiar en zonas alejadas. Supervisores de campo. Se ha creado una demanda de profesionales con conocimiento del cultivo que son los responsables de visitar los campos por cuenta de la empresa y en muchos casos reclutar productores. Estos pueden ser parte de la planilla de la empresa, ser uno de los líderes de las comunidades que producen alcachofa, o, incluso los proveedores de insumos. Jornaleras que participan del proceso productivo. En época de cosecha existe una gran demanda de jornaleras para que apoyen en el procesamiento de la alcachofa en conservas. Proveedores de envases de vidrio. Lamentablemente, no hay una planta regional proveedora de estos envases y éstos son traídos desde Lima. Weidemann Associates, Inc. Page 63           Cacao Por Alfredo Mendívil Producción de cacao mundialmente ésta incrementando gradualmente desde 2000, llegando a monto aproximada de 3.5 millones toneladas al año en los últimos años. Fuente: International Cocoa Organization (ICCCO Africa es la región de mayor producción, representando 72 por ciento de la producción mundial 2006/07. Producción en las Américas representan solo 12 por ciento. Perú no se presenta individualmente en los datos de figura en la ICCO. Ya en la década de 1980 el cacao del Perú era reconocido como de gran calidad cuando se le aplicaba un apropiado tratamiento de post cosecha, lo que no ocurría normalmente, en Weidemann Associates, Inc. Page 64 Producción de Cacao Mundial y en las Américas 2002/03 2003/04 2004/05 2005/06 2006/07 Africa 2,234 2,658 2,381 2,644 2,427 Americ a 500 445 443 445 429 Brazil 163 163 171 162 140 Ecuado r 87 117 116 114 114 Otros 250 165 156 169 175 Asia 498 548 560 627 580 Mundial           parte debido al bajo precio en el mercado internacional, a los muy bajos rendimientos por hectárea (250 kg/Ha de promedio nacional) y a cultivarse por muy pequeños productores. En estas condiciones, la ONUDI financiada por el programa de las NNUU contra las drogas, a partir de 1985 inició el llamado Proyecto Cacao en los valles del Alto Huallaga, Monzón, Huallaga Central y Pachitea. En vista que se debía mejorar la productividad y para eso se necesitaba de una modernización de la tecnología aplicada en la época, se contrató la consultoría del Dr. Fausto Coral, experto en cacao de nacionalidad brasileña y ampliamente conocido en los círculos científicos cacaoteros. El cambio propuesto y que se comenzó a aplicar en 1986 fue radical. Considerando que el cacaotero es un árbol que bien cuidado debe producir comercialmente durante 30-40 años, la primera propuesta del consultor fue la introducción de clones (variedades) superiores que permitan mejorar aún más la productividad y calidad. Debido al ecosistema o al tipo de suelos existentes en el Perú y el Ecuador, el cacao producido en estos dos países es el de mejor calidad a nivel mundial, a tal punto que en esa época, los chocolates europeo muy finos debían contener por lo menos un 25% de cacao tipo Nacional del Ecuador (el peruano era de poca presencia por el bajo volumen que se comercializaba). Así se hizo y se pasó al segundo paso tecnológico, que fue la preparación de viveros, pues las plantas bien criadas y formadas resultarán en árboles sanos, fuertes y buenos productores por los siguientes 30-40 años). También se debió modificar el tamaño de los árboles, que en el Perú eran de muy alto porte (entre 6 á 8 m. de altura), con lo que se dificultaba la cosecha y las podas. Se recomendó que los árboles no debían pasar de lo 3.5 m. de altura, en vista que el 80% de la producción del cacao se da hasta 1.5 m desde el suelo y principalmente en los troncos. Con esta altura también se facilita la cosecha y las podas de formación y sanitarias. En vista que las plantaciones existentes eran de árboles de gran altura, se introdujo modificaciones en la cosecha y podas, evitando subir al árbol, como era práctica común, y así evitar destruir o dañar los cojines florales (que es donde se producen los cacao) que no son recuperables. Igualmente se implantó mejoras en los tratamientos fitosanitarios y en la sombra del cultivo. Como punto culminante, en esa época se diseñó prácticas especiales para la fermentación y secado de las almendras, dado que se acostumbraba no fermentarlas ni secarlas al sol, sino tan solo dejarlas colgadas de un árbol dentro de un saco de yuet. La fermentación uniforme a temperatura mayor de 55 ºC es recomendable para matar el germen y propiciar que se produzcan reacciones bioquímicas en las almendras, que son responsables del mejor sabor y olor finales. En los países de mayor producción en el mundo, la fermentación se acostumbra hacer en volúmenes de 1 m3 con lo que obtiene muy buena uniformidad y temperatura en el proceso. Para la realidad nacional esto era impracticable dado que cada productor disponía para fermentar no más de 0.1 m3 por lo que se diseñó y, luego de un importante período de pruebas, se liberó a los productores un fermentador de pequeño porte. Similar problema hubo con el secado, y hoy día ya no se seca directamente sobre el suelo, sino sobre mantas que evitan la contaminación de las almendras. Los grandes acopiadores, sean estos empresas, cooperativas o asociaciones de productores, ya están acopiando el cacao “en baba” (sin fermentar), o bien lo tienen programado para un futuro cercano, para evitar la des-uniformidad en la fermentación y están terminando el secado en secadores artificiales, que uniformizan el contenido de humedad. El aumento de áreas sembradas de cacao en los valles de selva donde se ubican los Corredores viene incrementándose muy rápidamente, debido a los incentivos que devienen del aumento de Weidemann Associates, Inc. Page 65           productividad con las tecnologías mejoradas que se aplican (en algunos casos pasan de los 1,250 Kg/ha.) y del precio de venta, que en las bolsas han llegado hasta US$ 2,800 por TM y el cacao peruano certificado “orgánico” además de su reconocida calidad, ha llegado a pagarse hasta en US$ 3,300 por TM en el año 2007. Al igual que en el caso del café, son diversas las empresas que se disputan el cacao peruano y la novedad es la certificación “orgánica” de las tierras de cultivo, con lo cual se puede acceder a mercados de mayor precio, como son los “orgánicos”. Las organizaciones acopiadoras están apoyando la certificación “orgánica” en vista que eso les facilita el acceso a mejores precios. Weidemann Associates, Inc. Page 66           GRAFICO 1: AREA DE COCA Y PRODUCCION DE CAFE (1992-2006) - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 Café Por Alfredo Mendívil con contribución por José Lazarte Desde hace 2-3 años el precio del café en los mercados internacionales ha alcanzado los más altos niveles de los últimos 25 años y el café peruano se ha orientado hacia los denominados Mercados Especiales, tales como el orgánico, cultivado bajo sombra, de determinada zona de producción, Mercado Justo, etc. que paga premios sobre las cotizaciones de la Bolsa de Nueva York o Londres. El cambio se inició a mediados de los años ‘90 y más precisamente en 1994 a través de un proyecto financiado por la USAID denominado Microenterprisse and Small Producers Support Project – MSP, ejecutado conjuntamente con la Asociación de Exportadores – ADEX. En vista que la tecnología aplicada para el cultivo del café en el Perú resultaba en muy bajos rendimientos (7-8 qq/ha como promedio nacional en esa época) y calidad, en parte motivados por los bajos precios en los mercados internacionales, donde llegó a cotizarse hasta en US$ 38.00 por qq, se invitó a un experto costarricense para que revise la tecnología que se venía aplicando y presentar las recomendaciones que considere conveniente. La respuesta fue contundente y dada la experiencia cafetalera del consultor se propuso un cambio radical, modernizando la tecnología. Grafico 1 muestra el incremento en las GRAFICO 2: PRECIOS AL PRODUCTOR DE LA plantaciones de café en Perú (línea roja SIERRA (PONDERADO) SOLES/KILO en el grafico). El desplegué de la producción de café ocurrió por varios razones, entre los cuales son la reducción de las áreas de coca (línea verde en el grafico), depreciación relativa de la agricultura andina (grafico 2), alza en los precios del café (grafico 3), y el apoyo internacional a 0.81 la producción de café. 0.90 0.83 0.81 0.84 0.85 Así se inició una transformación de los cafetales en el Perú, aunque muy lentamente debido a sus altos costos de 00/01 01/02 02/03 03/04 04/05 06/05 Weidemann Associates, Inc. Page 67           GRAFICO 3: PRECIO CAFÉ "OTROS SUAVES" (CENTAVOS US $/LIBRA) 1976 - 2007 (A septiembre) 143 235 128 195 189 80 64 122 62 120 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 implantación y mantenimiento, contra los bajos rendimientos que se lograban, la lentitud de su rehabilitación o recuperación (3 años) y la débil situación económica de los productores, amenazados también por el narcotráfico y el terrorismo. Sin embargo, la USAID, a través del Oficial del Proyecto, Sr. Michael Maxie, realizó un intenso trabajo de presentación de los cafés peruanos en los foros y exposiciones cafetaleras en el mundo, con la categoría de “especiales”. Esta labor tuvo éxito y fue potenciada por el paulatino aumento de precios en los mercados internacionales, que animó a los productores a dar mayor atención a sus campos de café. Más adelante se incluyó la certificación “orgánica” de muchas áreas de cultivo. Otro aspecto que influyó en gran medida para su recuperación, fue que casi la totalidad del área de cultivo era de la variedad “Typica” cultivada bajo sombra natural de bosque raleado, que es reconocida mundialmente como generadora de cafés de alta calidad. Finalmente, en los últimos años el café peruano ha alcanzado los más altos precios cotizados en las Bolsas y la presentación de “cafés especiales” además de la certificación “orgánica”, que han permitido un vuelco total en su demanda y comercio, siendo disputado por los procesadores y exportadores nacionales, así como por los más sofisticados mercados internacionales. Los compradores demandan un café bien procesado, esto es, bien fermentado, despulpado y secado uniformemente. Para esto se introdujo la implementación de tinas para el fermentado y se diseñaron despulpadoras de pequeño tamaño, al alcance de los pequeños productores. Para el secado se diseñaron secadores solares que protegen los granos de la lluvia y, bien orientados, permiten regular la temperatura interior manejando las puertas del mismo y mantener la más adecuada temperatura. En la actualidad son muchas las empresas, cooperativas o asociaciones de productores que acopian y comercializan café directamente a los mercados internacionales. Apoyados por la calidad y los compradores en el exterior, las organizaciones acopiadoras obtienen créditos en bancos europeos y norteamericanos, a muy bajas tasas de interés, con los cuales financian el acopio, que se produce en muy corto período, aunque variable según se trate del lugar en el país. Weidemann Associates, Inc. Page 68           Frijol Por Jose Lazarte Efectivamente, según ALISUR (www.alisur.net) una empresa que se dedica a la promoción y comercialización de frijoles, él “canario” cuenta con este galardón por “…su textura, sabor y ser el preferido por la mayoría de exigentes chef latinos”. El comité de productores de AUQUIBAMBA (Burgos) se dedica a la producción, acopio y comercialización de esta leguminosa, que ha logrado adaptarse en este valle interandino. Pertenecen al distrito de PICHIRHUA (Provincia de Abancay, Apurimac), clasificado como de “extrema pobreza”; sin embargo, aprovechando la asociatividad, el concurso de la empresa ALISUR y el soporte de PRA vienen realizando una digna gestión. El primer punto del emprendimiento es “la conexión con el mercado”, esto es enfoque de demanda por el cual el comprador (ALISUR) establece calidades, suministro y marco operativo para que la organización y los productores asociados establezcan su plan de trabajo. Todo este, regido por un contrato, en él cual ambas partes definen contraprestaciones. Un segundo aspecto, aunque en la dinámica social vendría a ser él primer eslabón, es él planeamiento del cultivo. Es curioso, pero el “fríjol canario” es huésped de la costa, de modo que haberse cobijado en los andes a mas de 2.000 metros por encima del mar ya es un punto a favor, que estaría denotando un cambio en la cédula de cultivo y, por lo tanto reducir el riesgo que significa cultivar papa. Para dejarnos de dudas, él tubérculo en él período de nuestra visita, se cotizaba en 0.45 soles por kilo, en tanto que “el canario” recibe 2.60 soles por la misma unidad. De partida, la diferencia es notable. Otro aspecto, que los productores destacan (tratándose de una innovación para ellos) es que para mejorar rendimientos (y más ingresos, por cierto) deben rotar el (los cultivos) y bien que lo han asumido, dado que en la campaña 2007, la producción del “canario” se redujo en 18%, bajando sus ingresos. Es importante apreciar el eslabonamiento por él lado de la demanda, permitiéndoles construir una gerencia intermedia en la localidad, que organiza la producción, agenciando insumos para él manejo agrícola, él acopio de acuerdo a las especificaciones y el procesamiento (trilla, limpieza, embalaje) para posteriormente despachar al canal de distribución. Esta experiencia, ha “globalizado” a Auquibamba debido a que resaltan una marca comercial de origen: “La Apurimeña”, que es él logo con él cual se comercializa el producto en los retails de Lima. Por último, con escasos recursos, él comité ha establecido un esquema de doble entrada con la base asociativa: De un lado, con cargo a las ventas adquieren insumos para él campo, cumplida la campaña, acopian el producto lo estandarizan, aplican el descuento y honran las obligaciones con la mercantil. En mi opinión, la base de esta dinámica, es la confianza ¿Quién dijo que los pobres no son responsables? La clave del éxito es él capital social. Weidemann Associates, Inc. Page 69           Trucha Por Fernando Talavera Al hablar del departamento de Junín, es casi obligatorio hablar de la trucha, este exquisito producto de la familia de los salmónidos que fuera introducida en Perú hace varias décadas, proveniente de los estados Unidos de Norteamérica y Canadá. Con el correr del tiempo, el Departamento de Junín se ha convertido en el primer productor a nivel nacional, absorbiendo mas del 50% de la producción nacional y la tendencia va a más. Los centros de reproducción se instalaron en diferentes lugares de la sierra peruana (Huaraz, Huancayo, Cajamarca, Arequipa y Puno) diseminando los alevinos (larvas) a través de los ríos y lagunas del Perú, y es en Huancayo (Junín) donde el producto además de la crianza, comienza a ser procesado é incursiona en los mercados competitivos del exterior. El desarrollo de la TRUCHA, pasa por diferentes etapas de crecimiento, que requieren atención y cuidado para evitar o reducir la mortalidad. • Los llamados Alevinos,(larvas) de un mes, deben pesar alrededor de 5grs. • Los juveniles primarios, hasta de cuatro meses, que deben pesar 20grs. • Los juveniles mayores, hasta de 8 meses de edad, con mas de 140grs. • Engorde, en esta etapa su peso va de 140 a 300 grs, con 9 o 10 meses. La alimentación y oxigenación de las larvas es esencial a su crecimiento, al igual que las condiciones químicas del agua donde se desarrollan. Se calcula que de cada 50,000 alevinos, se puede obtener finalmente 9 toneladas de producto para la venta. PRODUCCION Producción de Trucha en Perú Los datos históricos de producción de Year Peru Bolivia Chile Global trucha muestra que la producción en Perú ha multiplicado más de tres veces 1996 1,400 300 54,429 384,180 1995 929 520 42,719 365,240 desde 2000 hasta 2006, con producción este año de 6,100 toneladas. Sin 1998 1,600 320 75,108 437,989 embargo, Perú queda un productor pequeño en el mundo y en comparación 1999 1,800 328 50,414 414,980 2000 1,857 335 79,566 447,204 con Chile. 1997 1,448 312 77,110 427,329 2001 2,675 250 109,895 511,470 2002 2,981 328 111,681 506,741 Durante el año 2005 la producción se incrementó a más de 5,000 TM, 2004 4,699 310 122,252 499,262 2003 3,111 274 109,578 490,652 distribuidas en localidades como se presenta en el cuadro. Para el año 2006, 2005 5,475 300 118,279 486,928 2006 6,100 se estima que la producción se En Toneladas incrementó a 6,100TM. Fuente: Naciones Unidas Food and Agriculture Organization EXPORTACIONES Las cifras que nos proporciona la Asociación de Exportadores son alentadoras, pues muestran un crecimiento sostenido en los últimos años: Weidemann Associates, Inc. Page 70           Puno 2,243 Junín 2,119 Lima 291 Pasco 253 Huancavelica 134 Ayacucho 93 Huánuco 68 Cajamarca 48 Apurimac 57 Ancash 45 Cuzco 30 Tacna 29 La Libertad 27 Amazonas 22 Arequipa 20 • AÑO 2002 monto exportado US$ 664,000 Distribución de la • AÑO 2005 monto exportado US$ 3,279,761 producción de Trucha en • AÑO 2006 monto exportado US$ 4,214,770 Perú 2005 La mayoría de productores a nivel nacional son pequeños, pero Localidad Toneladas existen tres empresas que si se han tomado en serio la producción técnica y exportación: • Pisifactoria Los Andes • Frigorifico SAMA • Reinas del Pacífico El primero de los nombrados lidera largamente el ranking de exportaciones. Esta empresa cuenta con una planta procesadora de primer nivel, y al momento ya tiene un total de 42 presentaciones en el mercado. Del total de su producción, el 25 por ciento se queda en el mercado peruano, en los principales supermercados y hoteles, incentivando el consumo interno. Las principales presentaciones de exportación son en Filete de Trucha, Trucha Fresca sin Cabeza, Trucha Eviscerada, Filete de Trucha Congelada con Piel, y van principalmente a Canadá, UA, Total 5,469 Suecia, Alemania y España. Fuente: Aquahoy DEMANDA EXTERNA.- El mercado internacional, se mantiene insatisfecho, el consumo se muestra incentivado especialmente en el tipo ARCO IRIS, empujando la demanda internacional y también los precios. Los importadores mundiales principales son Japon (65%), Rusia (12%), Alemania (6%), Tailandia (5%), y Polonia (2%). Es importante señalar que el mercado internacional en este preciado producto moviliza más de 500 millones de dólares anuales, generando además, efectos multiplicadores importantes ,no solo en términos de empleo, sino también en negocios y actividades colaterales, de pequeñas industrias, comercios y servicios. DATOS GENERALES Y CONCLUSIONES.- • El potencial en Perú para el desarrollo de trucha, es significativo, hay detectadas más de 1,200 lagunas con potencial para crianza. • El costo de la inversión no es muy alta, permitiendo que muchos pequeños productores ingresen a la cadena productiva, y sean beneficiados. • La Trucha es un producto altamente nutricional, con gran concentración de ácidos grasos Omega-3 y rica en vitamina A y D. • La trucha como presentación puede servirse cruda, para sushi o sashimi, o también hervida, frita o a la plancha. • Hay demanda internacional insatisfecha. Nuestro país en términos de volúmenes exportados, no contribuye más que con un 0.8% (US$ 4 millones) de los $US 500 millones anuales que mueve el comercio internacional. EL PRA Y SU CONTRIBUCION.- Weidemann Associates, Inc. Page 71           Es importante señalar, que el proyecto PRA, ha venido ayudando significativamente en el desarrollo de esta actividad ,pues detectó esta demanda y apoyo decididamente en el aspecto técnico, y de capacitación, creando confianza ,entre productores y empresarios. Esto ha hecho posible la creación de una cadena de valor, que viene ampliándose, generando nuevos empleos que están ayudando a reducir la pobreza en el Perú. Weidemann Associates, Inc. Page 72           Avocado By Bob Flick Avocados to Enter the US Market in 2008 The US Animal and Plant Health Inspection Service (APHIS) reported to Peru's National Agrarian Health Service (SENASA) that Peruvian avocados would enter the US market in the last quarter of 200827 . This signals the opening of an opportunity for Peru to develop their avocado industry, particularly the Hass variety, which is the principal variety sought for the U.S. market. In the meantime Peru continues to export the green skin variety better known as Fuerte, plus some Hass variety, to European markets, primarily France. Source: www.livingperu.com In a recent publication by Sierra Exportadora (Sierra Exportadora, Serie Estudos Economicos No. 1, February 2008), the potential for growth of the avocado industry in the Peruvian highlands is explored. According to this publication – which is in accord with well known and accepted market intelligence - the future of producing Hass avocados is bright, whether in Peru or other Pacific Andean countries. And with the U.S. market opening to Peruvian fruit later this year, a real target of business opportunity is available. While per capita avocado consumption is up in both Europe and the US, US production continues to decline as orchards are being replaced with other higher value fruit (e.g., blueberries) or converted to shopping centers. Similarly in Spain, urbanization is also taking its toll on avocado production and Israel, another producer, has little room to expand production significantly. Turmoil in South Africa, where plantations are under threat of land reform, means additional new plantings are at a stand still. This bodes well for highland avocado production in South and Central America, where climate, soil and water conditions are favorable and markets are reachable by sea, particularly if Hass is shipped. In this vein, South African avocado and mango giant Westphalia, visited avocado production areas in Chile, Peru and Ecuador – where climate is perfect – in 2004 and 2005 seeking investment opportunities. Attracting the South Africans as investors would be a real coup for the Peruvian Hass industry. Peru is said to currently export approximately 37,500 metric tons of avocados, 99 percent of which are thought to be the Fuerte variety. The GOP does not apparently distinguish between Hass or Fuerte in its export statistics and since the green skinned varieties are grown throughout most of Peru it is difficult to trace Hass by geographic region. Nevertheless, future plantings of avocados in Peru are said to be focused on Hass. Production Problems to Resolve 27 www freshplaza.com. Article “Peruvian Avocados to Enter the US Market in 2008” published on web site on January 2, 2008. Weidemann Associates, Inc. Page 73           In avocado growing areas in and around Moro, Chimbote, assisted by the PRA project are in need of expert international technical assistance regarding the viral affliction “Sun Blotch” (Avocado Sunblotch Viroid – ASBVD) and in dealing with phytophthora cinnamomi, commonly known as avocado root rot. 28 Reportedly there are NO nurseries with certified Sun Blotch-free plants or root stock and the only laboratory with capabilities to diagnose Sun Blotch is at La Molina, the national agricultural university of Peru in Lima. These two diseases are threats to the economic viability of growing avocados in Peru and the development of programs to effectively combat them are urgently needed. Interestingly, neither Sun Blotch nor root rot are causes to keep Peruvian avocados from the U.S. or European markets. However, unless these diseases are overcome Peru will not survive in the highly competitive world markets due to reduced yields and dying orchards. Reportedly Chile has an effective Sun Blotch eradication program that has met with success. Orchards are certified Sun Blotch free so planting material purchased from these sources are guaranteed clean. In Ecuador, on the other hand, very little Sun Blotch is found in key Hass producing valleys in the Andes (Imbabura, Pichincha, Tungurahua, and Loja, principally) and has not been reported as a problem. Colombia has not reported Sun Blotch to be a threat either and large areas of Hass have recently been planted in and around Medellin and other highland coffee producing areas. Source: www.livinginperu.com 28 Farmers interviewed say the entire country has these problems. Weidemann Associates, Inc. Page 74           Annex G. Benefits Cost Ratio by Product Producto Ventas Netas US$ Costo de AT $US (1) Beneficio/Costo ARROZ 26,168,753 140,250 187 TRUCHA 22,254,044 127,921 174 PALMA ACEITERA 16,269,332 142,165 114 FLORES Y PLANTAS 15,216,962 50,590 301 FRUTAS 14,296,095 182,491 78 CAFÉ 14,583,585 279,294 52 MENESTRAS Y LEGUMINOSAS 13,667,806 260,881 52 TARA 12,855,769 68,292 188 ALCACHOFA 11,268,662 359,258 31 MADERA 7,193,141 94,602 76 LISTELOS CERAMICOS 6,944,138 34,411 202 ALGODÓN 7,190,467 239,191 30 CACAO 6,448,317 208,404 31 POLLOS 6,177,807 19,621 315 PAPA 5,210,425 143,505 36 JOYERÍA 4,594,723 12,347 372 FIBRAS Y LANAS 4,078,073 45,474 90 COLORANTE NATURAL 4,032,274 18,565 217 CONFECCIONES 3,828,473 56,075 68 ARTÍCULOS DEL HOGAR Y ARTESANIA 3,891,144 17,144 227 TURISMO 3,632,394 12,510 290 PRODUCTOS PROCESADOS 3,479,343 21,538 162 MAIZ 3,089,855 193,515 16 DERIVADOS LÁCTEOS 3,445,357 36,063 96 LIMON 2,319,753 17,917 129 ALIMENTOS PROCESADOS 1,744,900 8,300 210 CEREALES 1,432,663 77,137 19 PRODUCTOS HIDROBIOLOGICOS 1,125,663 16,672 68 PALTA 863,601 13,084 66 MANI 692,080 15,401 45 AJIES Y PIMIENTO 606,416 14,003 43 AJONJOLI 442,732 5,345 83 ESPECIAS 422,671 1,611 262 ALMIZCLE 283,143 18,773 15 PIMIENTO PIQUILLO 232,502 17,747 13 AROMATICAS Y MEDICINALES 223,299 36,622 6 BARBASCO 221,004 1,332 166 GANADO EN PIE 128,686 7,318 18 FORRAJE 121,470 8,093 15 AJO 91,283 23,757 4 SOYA 77,116 31,508 2 MACA 45,721 2,185 21 MIEL 18,646 1,778 10 CAUCHO NATURAL 1,300 219 6 Total general 230,911,588 3,082,908 75 Para la gestión 2000 a 2007. (1) Para obtener esta cifra distribuimos los gastos en AT por asignar entre los sectores y clientes de acuerdo a su peso en las ventas totales. Weidemann Associates, Inc. Page 75           Annex H: Examples of PRA and PDA Collaboration Following are a few instances of where PRA and PDA jointly supported business development. Many of these initiatives originated during the period when PRA was directly supporting Alternative Development activities. Examples Observed by Evaluation Team Juanjui Los productores de cacao de la zona de Juanjui que se han beneficiado con los plantones distribuidos por el PDA entre los agricultores firmantes del referido convenio, son clientes preferenciales de las empresas y cooperativas que apoya el PRA, orientándose con la relación de agricultores beneficiarios de esta distribución y el cronograma de cosechas de acuerdo al desarrollo esperado de las siembras, proporcionados por el PDA. El volumen de producción es aún reducido en razón a la edad de las plantaciones. Sin embargo, el PRA ya ha promovido el relacionamiento de los productores de cacao de Huicungo, Alto del Sol, San Ramón, APAVI y APROVIT, entre otros comités de cacaoteros de la región Juanjui, con la empresa Romero Trading y las cooperativas ACOPAGRO y Agraria Industrial Naranjillo, propiciando y apoyando en la certificación orgánica de sus tierras, con la finalidad de que obtengan mejores precios en los mercados internacionales de cacao. En vista que gran parte de los productores de cacao son también productores de algodón áspero, el PRA ha prestado apoyo y asesoramiento a las empresas comercializadoras de este producto en beneficio de los agricultores firmantes del convenio de erradicación voluntaria y propiciando la certificación orgánica de sus tierras, además de la producción de semillas certificadas, con la finalidad de asegurar mayor uniformidad de la fibra y elevar la productividad. Entre las empresas que comercializan el algodón áspero que han sido relacionadas con los productores beneficiarios del PDA, se encuentra Romero Trading S.A., Algodonera de la Selva S.A.C. – ALSELVA y Algodonera Juanjui S.A.C. Aguaytía En esta zona, el Proyecto PRA promovió la comercialización en Lima de la producción de plátano “Bellaco” generada por los beneficiarios del PDA agrupados en el Consorcio de Productores de Plátano de Ucayali – COPPU, que habían perdido sus cultivos de plátano variedad FIAH por no tener aceptación en el mercado nacional. Por otro lado, también han prestado y continúan prestando atención prioritaria a los agricultores productores de Café y Cacao organizados en la “Cooperativa Agraria de Comercialización La Divisoria”, que agrupa a productores firmantes del convenio de erradicación voluntaria en San Alejandro y La Divisoria. En este caso también se ha orientado la producción hacia mercados especiales por origen y características especiales (producción orgánica), obteniendo precios muy superiores a los cotizados en las bolsas de Nueva York y Londres, así como en Alemania, Italia y Francia, entre otros. Weidemann Associates, Inc. Page 76           Valle de los Ríos Apurímac y Ene Luego que la USAID dispusiera el retiro del PDA de este importante valle cocalero, el Proyecto PRA ha multiplicado sus esfuerzos en apoyo de los productores firmantes del convenio de erradicación voluntaria y otros beneficiados por el apoyo prestado por la USAID desde varios años antes. En este sentido, destaca el apoyo comercial prestado a las empresas MULTIAGRO y Machu Picchu, además de la Cooperativa Valle del Río Apurímac – CACVRA y Cacao VRAE para la comercialización de cacao y café, permitiendo que los productores agrupados en diversas asociaciones como la Asociación de Productores Agropecuarios Sierra y Selva Valle del Río Apurímac y las Comunidades Nativas de Quempiri puedan comercializar directamente y sin intermediarios, su producción de cacao y café con las empresas y cooperativas arriba mencionadas, obteniendo mejores precios y otros beneficios adicionales, como entre otros se puede mencionar la asistencia técnica en el cultivo del cacao. Paralelamente, los beneficiarios del PDA para la crianza de truchas agrupados en la Asociación Los 13 de Ayna y la Asociación de campesinos de Anco, que quedaron sin apoyo luego de la salida del PDA, recibieron el apoyo del PRA para mejorar la tecnología de crianza y comercializar adecuadamente su producción, especialmente dentro del mismo VRAE. Queda claramente establecido que el Proyecto PARA ha puesto especial atención a coordinar y apoyar a los beneficiarios del PDA. Esta colaboración no concertada, se ha observado bastante más estrecha a nivel campo que a nivel de oficinas centrales. Se sugiere que en el futuro la coordinación sea más cercana, para permitir que cuando las metas de producción del PDA se estén dando, el PRA pueda ya contar con arreglos comerciales para la misma. Examples Provided by PRA Staff 1. Negocio de Madera Certificada con la Comunidad Nativa de SINCHI ROCA: El PDA financió el trabajo de campo para el inventario forestal y la elaboración de los planes de manejo. EL PRA apoyó con asistencia técnica para las operaciones forestales y el sostenimiento de la certificación forestal y articulación con el mercado. 2. Negocio de Caucho con Sinchi Roca y Puerto Nuevo: El PRA identificó las oportunidades comerciales y contactó con compradores de caucho. El PDA financió el equipamiento, los gastos operativos y capacitación a los extractores. 3. Para la certificación de la concesión forestal de Maderas Peruanas, el PDA apoyo con asistencia técnica para la elaboración de mapas. 4. Negocio de Café y CACAO con la Cooperativa La Divisoria: El PDA apoyó en el financiamiento para la instalación de nuevas áreas de cultivo. El PRA contribuyó asistencia técnica para mejorar la calidad del producto y acceso a la certificación orgánica. 5. CCACAO en San Alejandro: A través de las ECA ( Escuelas de Campo ) promovidas por el PDA , el PRA coordinó para que en el plan de trabajo de las ECAs se incluya la certificación orgánica. Weidemann Associates, Inc. Page 77           6. Piña Goleen: El PDA financió la instalación de piña en el sector de Huacamayo (Aguaytía) y el PRA ayudó con asistencia técnica para mejorar calidad de la fruta y programar el abastecimiento y articulación con el mercado. 7. Venta de Leche Fresca por pequeños ganaderos de la comunidad de Guacamayo: El PDA apoyó con un modulo de 25 vaquillonas y un toro y el PRA apoyó con el acercamiento comercial a los productores con APROLEC (Cliente del PRA en Tingo María), capacitación a través de pasantías y articulación con el mercado. 8. Maíz amarillo duro en la Zona de Neshuya, Curimana con la empresa SEM Perú Selva: El PDA financió la compra de semilla y los jornales de campo la empresa privada los fertilizantes y el PRA la asistencia técnica y la articulación con el mercado el acceso al crédito por parte de la empresa privada. 9. Palma Aceitera con OLAMSA en Neshuya y ASPPASH en Shambillo: El PDA financia la adquisición de plantones y el PRA provee la asistencia técnica para mejorar la productividad y la calidad de la materia prima. 10. Algodón Áspero en la Zona de San Alejandro con ASFERA: El PDA financió la instalación del cultivos con comunidades que erradicaron la coca y el PRA organizó el acopio y la articulación con el mercado y acceso al crédito. 11. Platino en Aguaytia con el COPPU: El PDA financió la instalación del cultivo y el PRA ayudó con la asistencia técnica para mejorar la calidad de la fruta y el acceso al mercado. Weidemann Associates, Inc. Page 78           Annex I: Evaluation SOW with Response to Questions The SOW for the Evaluation Team is contained below. In the section titled “Objectives of the Evaluation,” a brief response is provided for specific questions, written in italics. USAID/Peru, through its Economic Growth and Environment (EGE) Team, wishes to contract the services of a multi-disciplinary team to conduct a final evaluation of the Poverty Reduction and Alleviation (PRA) activity. Purpose: The evaluation will provide the USAID/Peru Front Office with an informed basis to consider options for follow-on economic growth assistance that would nurture continued development of market-led rural diversification in Peru’s economic corridors. In particular, subsequent assistance will focus on helping Peru maximize potential economic growth and poverty reduction benefits under the U.S.-Peru Trade Promotion Agreement (PTPA) and other market opportunities. In turn, the evaluation’s findings, conclusions, and recommendations will provide the Mission’s EGE Team with a foundation for designing the follow-on activity. Focus: In the prior (mid-term) evaluation of PRA, the focus was on determining the impact and cost effectiveness of the activities and operations of PRA and providing recommendations on means and measures that could be taken to improve the project’s performance in the future. The specific questions raised in the Terms of Reference for the mid-term evaluation are presented in Annex A. An electronic copy of the mid-term evaluation itself, titled “A Qualitative Assessment of the Poverty Reduction and Alleviation Program Funded by the U.S. Agency for International Development in Peru – Volume 1” (January 2003), is available. The final evaluation will examine the impact (both direct and indirect), cost effectiveness, and strengths and weaknesses of PRA-supported activities and operations. In addition, the evaluation will include some sector analysis regarding how to enhance sustainable, market-led diversification that increases the competitiveness of targeted economic corridors and enterprises. This mix of PRA evaluation and sector analysis will provide a solid basis for informing the design of the follow-on activity. Scope: 1. The scope is an external evaluation of the original PRA activity (as designed) in the context of current economic growth dynamics (e.g., pending entry into force of the PTPA). As originally designed, the key activity was the Economic Services Centers (ESC) component which provided a range of business development services to assisted enterprises. The evaluation will not address two activity components that were subsequently added to PRA: (a) the public-private partnership (PPP) for infrastructure component and (b) the forestry component that will be addressed through other avenues. Neither will the final evaluation examine the PRA policy component which became relatively inactive over the course of the project. Weidemann Associates, Inc. Page 79           2. For the ESC component, the evaluation will conduct analysis of data drawn from a sample of the principal enterprises and business/value chains. On average, PRA has assisted four enterprises per economic corridor, across 10 corridors: Ancash, Ayacucho, Cusco, Huancavelica, Huancayo, Huánuco, Jaén, Piura, Pucallpa, and Tarapoto. The evaluation team will present to the Mission, for review and approval, a sample design for collection and analysis of data across three samples: Sample 1 (PRA-assisted enterprises); Sample 2 (“demonstration effect enterprises” that did not receive PRA assistance but that are replicating investments in product lines initially produced by enterprises that received PRA assistance); and Sample 3 (business/value chains within an economic corridor having PRA￾assisted enterprises). Sample 2 is particularly important in terms of generating information to estimate PRA’s indirect impact. The samples should roughly reflect the percentage distribution of agricultural and non-agricultural enterprises assisted by PRA. 3. The evaluation will cover a five-year period of PRA implementation from January 2003 – January 2008 (reference: the mid-term evaluation was completed in January 2003). Background PRA Genesis - In 1994, USAID/Peru prepared a comprehensive Food Security Strategy for Peru. The strategy examined the status of food security in Peru, identified major obstacles to improving food security, and defined promising programmatic responses for USAID/Peru. Its main conclusions and recommendations were summarized as follows (in the terms of reference for the mid-term evaluation): • Peru's food insecurity is principally a question of poverty; • Poverty, especially extreme poverty, is concentrated in rural areas of the Sierra, as well as among the non-Spanish speaking population; • The poor and extremely poor suffer not only from low incomes, but also from limited access to markets and public services; • The root cause of poverty in Peru is low labor productivity which, in turn, reflects inadequate investment in human and material capital and poorly developed public policies and institutions. The Poverty Reduction and Alleviation (PRA) Activity is an outgrowth of this USAID/Peru Food Security Strategy of 1994. During 1996, USAID/Peru worked closely with the GOP to operationalize its Anti-Poverty Strategy. The result was an approach that links poverty-stricken rural areas to lower hierarchy cities and these, in turn, to higher hierarchy cities in an "economic corridors" strategy. Using the USAID/Peru-funded GOP Poverty Map of Peru (which geographically identified 419 poor and extremely poor districts) and data on population and market growth of intermediate cities during 1990-95, 24 economic corridors were identified. To set priorities among the 24 corridors, the Anti-Poverty Strategy ranked each by two criteria: the economic potential of the corridor and its connection with extremely poor people. According to the ranking, PRA concentrates its attention on the following 10 priority corridors: Ayacucho, Weidemann Associates, Inc. Page 80           Cajamarca, Cuzco, Huancayo, Huanuco, Huaylas, Jaen, Pucallpa, Puno, and Tarapoto. In order to consolidate USAID/Peru efforts to implement the poverty reduction and alleviation strategy, not only does PRA focus its activities within the economic corridors, but the Title II program uses its phase-down approach to do the same, thereby complementing PRA's actions. PRA Objectives - The goal of PRA is to improve the incomes of Peru's poor and extremely poor, thereby reducing their poverty and achieving sustained improvements in their food security. Its purpose is to expand opportunities for sustained productive employment and income growth for the poor and the extremely poor. Experiences in Peru and elsewhere in Latin America suggest that there are four essential interconnecting conditions to achieve a permanent reduction in poverty, that is, to create substantial numbers of income- and job-creating opportunities. Simultaneously, a fifth condition must prevail to temporarily alleviate extreme poverty; that is, a social safety net must underlie those still unable to increase incomes or find jobs. Together, these five conditions are: • The existence of a favorable investment climate - investors will not open or expand businesses if the policy environment is not propitious, or if government investment is wasteful and unproductive; • The availability at reasonable cost of know-how to identify market opportunities and broker trade agreements; • The presence of reliable public infrastructure - especially roads, electricity, and irrigation - that lowers high costs of doing business; • Investment in human capital, specifically in basic education where the foundation for future learning is laid, and in vocational training where productive skills are developed; and • The existence of a social safety net which targets the extremely poor who are as yet unable to take advantage of the first four conditions for reducing poverty, but which improves their capacity to eventually participate in these areas. Based on these interconnected conditions, USAID/Peru developed its economic corridors approach for its Strategic Objective No. 2: Increased Economic Opportunities for the Poor in Selected Economic Corridors. This approach presents the rationale for and logic of PRA. Economic Service Centers: The Economic Service Centers (ESCs) are PRA's cornerstone. One (or more) has been established in ten priority economic corridors where they draw upon the experiences of both producers and investors and provide services directly to them to improve their competitiveness. Each Center has a number of principal functions, including: 0. Facilitate access to information on markets (both domestic and foreign), technical and management assistance, financial services, legal protection, notary services, transport, insurance, etc., with the objective of lowering the costs of entry into markets and broadening the participation of local people in them. The Centers do not provide any physical or financial inputs, but facilitate the access of producers and investors to information and services. Weidemann Associates, Inc. Page 81           1. Act as an aggressive broker of deals between foreign and domestic buyers and investors, on the one hand, and local producers, on the other. When necessary, the Centers provide specialized technical assistance and on-the-job training to resolve specific problems that stand in the way of local businesses getting started and expanding. In short, the approach is arranging for buyers and sellers to get together who most likely would not have met otherwise. 2. Identify the need for policy studies and dialogue - Each Center seeks to identify policy-based constraints that restrict economic opportunities and increase the transaction costs of micro, small, and medium farms and businesses. The Center communicates the constraints to PRA management, which can then conduct appropriate analyses and bring alternative solutions to the attention of officials. (NOTE: the team will not evaluate this component) 3. Promote mechanisms for coordination and problem solving among key private and public sector entities in economic corridors at a regional level. Each Center works to identify the key institutional players at the corridor level who influence decision making as well as the actions required to address constraints that restrict economic opportunities. As necessary, each Center facilitates the formation of task-oriented committees or advisory groups. The Center will act as a catalyst and bring together institutional representatives at the highest level possible to ensure the leverage and decision making authority required for effective implementation. The other two elements of the poverty reduction track - investment in productive infrastructure and investment in education - are very important in increasing incomes and employment of the poor and extremely poor, and are handled in a complementary manner with GOP and other USAID/Peru and donor funding. Simultaneously, the poverty alleviation track will be coordinated with the GOP and the USAID/Peru Title II programs. As will be noted further below, subsequent to the mid-term evaluation, PRA acquired two new functions: (1) beginning in 2003, public-private partnerships (PPPs) to address infrastructure needs such as roads; and (2) beginning in 2006, forestry certification under forest concessions. Based on discussions within the Mission, it was agreed that this final evaluation will not include evaluation of either of these two components that will be assessed through alternative avenues. The Mission recognizes that the direct impact that PRA can make in these corridors is extremely limited given all the widespread needs stemming from the high levels of poverty, extreme poverty, and unemployment. The hypothesis and expectation is that the promotion of successful business ventures in some of the more remote areas of Peru will demonstrate the viability of working in these areas and encourage continued and further investment in the future. Put more directly, that success will breed further success. Accordingly, as identified in the Terms of Reference for the mid-term evaluation, the chief means for measuring progress for this activity model are: increases in sales of clients that are directly attributable to PRA assistance; increases in employment stemming from these interventions; and increases in investment that PRA clients make in the corridors. Decisions on the institutional partners responsible for each individual Center were made on a corridor-by-corridor basis. Electing the most appropriate institutional home for the Centers by taking into account the particular institutions available and the services demanded in each locale was considered to improve the chances for leaving behind sustainable employment and income Weidemann Associates, Inc. Page 82           opportunities. It should be noted that, from the outset, the organizational and operational sustainability of the Centers themselves was not of particular interest. If, after five years, the Centers were to be closed amidst a more vibrant local economy providing incomes and jobs for the poor within a Center's corridor, with other service providers fulfilling functions previously provided by the Centers, the Mission’s view was that the strategy would have proved successful. The design also called for an institutional contractor to assist the local implementing partner in obtaining the expertise needed to undertake the required policy studies, locate technical experts, and undertake publicity campaigns, among other functions. It was to be contracted directly by USAID/Peru, and to monitor and gather data on the effectiveness of the ESCs in fulfilling their role within PRA and in meeting the needs of clients in the priority economic corridors. Chemonics International was competitively selected and contracted in October 1999 as the institutional contractor. In that role, the Chemonics team served as strategic advisors, technical assistance providers, and as a monitoring and evaluation team for the PRA activity. Chemonics' contract was subsequently modified in April 2001 to expand their responsibilities to include achievement of the employment generation and increased sales objectives expected of the ten ESCs. Objectives of the Evaluation: The final evaluation will provide quantitative and qualitative analysis of the impact (both direct and indirect), cost effectiveness, and strengths and weaknesses of PRA-supported activities and operations. In addition, the evaluation will include some sector analysis regarding how to enhance sustainable, market-led diversification that increases the competitiveness of targeted economic corridors and enterprises. This mix of PRA evaluation and sector analysis will provide a solid basis for informing the design of the follow-on activity which will be implemented with the PTPA and other market opportunities in mind. USAID/Peru believes, based on the mid-term evaluation, subsequent quarterly reports, and contact with project beneficiaries, that the experience of PRA has proven the validity of the activity’s original overarching development premise. This premise consists of first identifying effective demand for products and services that can be provided in selected economic corridors, and then linking that demand with local providers and producer groups. While the results achieved to date are impressive and augur well for continued economic expansion in the corridors, the Mission recognizes that fostering growth in these challenging areas is a long-term task. There are a number of specific items and issues that the Mission seeks to have the evaluation address and, to ensure that these topics are covered, these TOR include a series of questions (listed below) that should be answered by the evaluation team. The team will examine issues and questions in the following five thematic areas: 1. PRA’s Direct and Indirect Impacts Weidemann Associates, Inc. Page 83           2. PRA’s Economic Service Centers (ESC) Component 3. PRA and Alternative Development 4. Assistance to Agricultural vs. Manufacturing and Services Sectors 5. Operational Questions 1. PRA’s Direct and Indirect Impacts: The evaluation team will have access to information regarding the degree to which PRA generated new sales among its clients and new employment over the life of the activity. But there are, as yet, two indirect impacts that need to be quantified: (1) indirect, multiplier effect employment (if feasible within cost and data limitations, this may be quantified via an input-output matrix); and (2) demonstration effect businesses (e.g., how many artichoke enterprises now exist, and what portion of those were directly assisted by PRA vs. the portion that were not directly assisted? For example, from 2001-2007, PRA assistance was directly responsible for an increase of 366 hectares of artichokes in Huancayo, located in the Department of Junin. During that same time period, overall artichoke production in Junin increased by roughly 430 hectares. Can we assume that the example of those businesses supported by PRA indirectly led to some portion of the remaining increase in artichoke production in Junin not directly attributable to PRA assistance? Did other producers begin to plant different varieties of artichoke originally introduced by PRA?). • Taking into account these two indirect effects, what was PRA’s impact on regional GDP? What impact did such a multiplier effect have on employment? See Table 6. • What have been the indirect impacts of PRA assistance relative to its original development hypothesis, design, benchmarks, and targets? Are impacts greater now than when PRA was last evaluated in late 2002? Selected indicators of indirect impact are discussed in the section PRA’s Direct and Indirect Impacts. Sales, work days generated and investments have all increased compared to the2002 evaluation. • Taking into account direct and indirect impacts of different interventions, where is the return on USAID investment the highest in terms of geographic location and sub-sector? Analysis to answer this question might find, for example, that investment in artichokes in Huancayo had the highest return on $1 USAID investment, while investment in gold jewelry in Piura had the least. See tables 12 and 13, annex E, and figure 11 for data on the benefits to costs. • How many beneficiaries were reached, how much were sales increased, how many jobs were created, and at what cost per beneficiary? (NOTE: The PRA database contains detailed information in this area.) See figures 2,3 and43 for sales, work days and employment data. Data on costs is contained in tables 11, 12 and13, figures10, 10 and 12, and in annex E. • Do per beneficiary costs differ in coca-producing corridors compared with corridors not producing coca? Is it more expensive to link markets to ex-coca growers in intensive coca growing regions? Benefits to costs vary substantially by ESC. Intensive coca growing is only one of many factors determining the benefits to costs ratio, and probably not the most Weidemann Associates, Inc. Page 84           important reason. Huánuco, for example had one of the lowest benefit to cost ration, but Pucallpa had a relative high cost to benefit ratio. • How does impact disaggregate by gender (e.g., to what extent has PRA helped women) and by corridor (e.g. corridors with coca production vs. corridors without coca production)? PRA did not maintain results data by sex of the beneficiary or of the company owner or managers. Overall PRA estimates that 37 percent of beneficiaries are women. Women participants in the focus groups with producers accounted for about one third. • Was there a significant demonstration effect stimulating the entry of new producers or investors in product lines where early producers were initially assisted by PRA? There was a demonstration effect for some crops, and the evaluation team with PRA staff identified 101 instances of at least partial utilization of the PRA methodology by non PRA clients (see table 4). • What has been the experience of producers who did not receive project assistance but are now investing in growing the same crops or manufacturing the same products that initially were produced by enterprises that received PRA assistance? Buyers of products supported by PRA have begun to place field agents to encourage other growers to plant the desired crops, much like PRA does, though their level of technical assistance is lower than that provided by PRA. • How did enterprises (not receiving PRA assistance) learn how to make replicative investments in PRA-assisted product lines, and what assistance, if any, did they receive from non-PRA sources? In most cases the technical assistance provided by PRA is easily replicated. Replication or no is more a business investment decision than a technical barrier. 2. Economic Service Centers (ESC) Component: • Within the ESC component, what worked, what did not, and why? How are the existing alliances working? The centers visited had been working for several years and seemed to have operational details worked out, except for Ancash, which was new, and was having administrative problems to process payments quickly. We anticipate that will be resolved. The ESCs selected all had a presence in the area, which facilitated making contacts and effectively administrating the program. The evaluation team did not attempt to evaluate the issues surrounding PRISMA as an ESC operator. • What external factors influenced positive or negative outcomes? During the project period Peru enjoyed an overall growing economy, helped by generally high and increasing prices for several of the commodities supported through PRA, for example, rice, cotton, cacao, coffee, and others. This was a welcome positive influence. On the disruptive side, temporary inclusion of PRA in providing services for the alternative development created an artificial expansion, and later a contraction phase that created much uncertainty and, we are told, motivated business agents to minimize recruitment of new clients until the budget issues were settled and the needed offices were closed. • How effectively has PRA coordinated with Sierra Exportadora, other GOP entities, Title II Private Voluntary Organizations (PVOs), the private sector, and other USAID projects (MYPE Competitive, Alternative Development, etc.)? Provide specific examples of successful collaboration. Coordination with alternative development after the separation has Weidemann Associates, Inc. Page 85           been moderate to limited. Cooperation with Sierra Exportadora has begun and it appears that more will be coming in the months ahead. There is little coordination with MYPE Competitive. • Are any of the ESC-supported functions starting to be provided by other non-USAID funded sources (e.g., public sector agencies at national or decentralized levels, for-profit enterprises, or non-profits)? To what extent have clusters or value-chains emerged or evolved to support specific products and what factors constrain development of sustainable and competitive clusters that can help producers: o To access market information needed to make business investment and management decisions? o To link with buyers and make business deals? o To access technical and management assistance, especially to (1) ensure that product characteristics meet product specifications demanded by the market (including export markets); and (2) increase productivity to help ensure enterprise profitability for producers? o To attract investment to the Economic Corridors that will help develop, expand, and enhance the sustainability of business enterprises? Sierra Exportadora claims it will follow PRA methodology in the future; in the field today it is not apparent that the current projects are market-pull to the extent that PRA defines that concept. NGOs may be the group that is most trying to duplicate PRA methodology for those projects that sell products in the market. Most of PRA activities include value chains supported by PRA. Clusters are functioning for trout, although at a relatively low level of organization. Artichoke production in the sierra is attracting additional buyers and suppliers outside PRA and clusters may soon form for this product. • If PRA were to be continued in some format, which of the four (above listed) functions originally supported by PRA would merit continued USAID support, which should no longer be supported by USAID (or receive reduced support – e.g., with producers covering a larger percentage of cost), and what (if any) functions would merit being added? PRA engages in all of the above activities, though they are mostly reactive rather than proactive. That means, their client tells them what is needed, then PRA tries to effectively provide the needed assistance. • What options might USAID and local stakeholders explore under a follow-on activity to build sustainability of PRA-type service provision into local institutions? Based on a review of PRA and related developments in the environment, what are the options for building “sustainability” into the follow-on mechanism (e.g. public-private partnerships)? The evaluation team believes that the ESC benefits to costs ratio raises the option that during the next project it is possible to promote partial recovery of costs for some centers and some clients. With guidance from USAID the team did not attempt to develop more detailed guidelines. The evaluation team considers that few ESCs will ever be fully self sustainable. 3. PRA and Alternative Development: Building on the analysis provided in answering the aforementioned thematic issues and questions, the evaluation will answer the following additional questions: Weidemann Associates, Inc. Page 86           • How successful has PRA been in making market linkages in PDA (Alternative Development Program) areas and what can be done to improve those linkages? Beginning in 2003 PRA focused major resources on making linkages in PDA service areas. Many of those linkages continued after the direct cooperation was reassigned by USAID. PRA continues to link production in the PDA regions with markets, but coordination with PDA is much reduced. The body of the report has suggestions for improved linkages. • Did PRA help meet alternative development (AD) objectives? Yes. • Given that PRA is now partially funded by AD Program Element funding, should the follow￾on activity be financed by AD program element funding or not? PRA and PDA should be able to cooperate in many areas, but the projects have fundamentally distinct underpinnings and philosophies. . • Based on the team’s analyses in economic corridors that fall within the purview of the AD program, what management and financing arrangements should USAID utilize to bring about further collaboration and greater impact for both programs in these areas? • Did combining PRA and Counternarcotics objectives work and how might this work better in the future? Trying to combine the objectives of PRA and counternarcotics did not work, their objectives may seem to be similar, but their methodologies are quite different and did not mesh well when attached during 2003 and 2004. 4. Assistance to Agricultural vs. Manufacturing and Services Sectors: Peru’s population is becoming more urban which implies an expectation that manufacturing and services would make an increasing contribution to an economy’s GDP. PRA was not directed to work in specific sectors, just to pursue increments in sales, but roughly 95% of PRA-assisted activities have been in the agricultural sector. Perhaps enterprises based in PRA’s target corridors have a comparative advantage (based on access to land and labor) to quickly link with market demand for agricultural products. At the same time, perhaps the enabling environment for investment in manufacturing and services is yet relatively weak but could improve as Peru moves to implement the U.S.-Peru Trade Promotion Agreement (PTPA). • Why is the percentage of PRA’s work so high with respect to the agricultural sector? See table 8 for an estimate of share of work in the agricultural sector, and the discussion relating to this question. • Would PRA have had a greater impact on linking markets to manufacturing and service enterprises in PRA-assisted corridors if greater emphasis had been placed on and more attention directed to addressing policy reforms? We found no data that would directly address this question for policies at the national or regional level; so here is an opinion based on observations in the field and conversations with participants. Existing policies clearly restrain trade and increase costs. If PRA had been able to resolve these issues perhaps the impacts would have been greater. However, after the departure of CONFIEP was not the best placed institution to promote policy change. Incentives on sales, and not on policy change means policy work will take place only if it can demonstrate immediate and significant changes in sales. On occasion PRA personnel did assist resolving policy issues for local communities. Weidemann Associates, Inc. Page 87           • In terms of different economic growth models, what type(s) of USAID assistance would be most effective in: o Nurturing an enabling environment for entrepreneurial (innovative) capitalism in the economic corridors and Peru’s economy overall? o Helping entrepreneurs and investors to more effectively link into supply chains and attract investment and support of big firm enterprises (e.g. Wong, Carrefour, etc.)? o Advancing reforms to support market-led diversification in the economic corridors or Peru’s economy overall? The second option is what PRA does best. The business environment is very important and needs work; let PRA provide input for policy work, but not be charged with implementing that task. As an aside, the big firm enterprises seldom invest in suppliers, more often the reverse applies: suppliers are required to invest in “shelf space.” • What are the views of key stakeholders – other donors, national ministries or agencies (Agriculture, Trade, Labor, Environment), regional and municipal governments – regarding the PRA approach to market-led (trade-led) diversification as an engine for economic growth and poverty reduction? The response of DEVIDA, Sierra Exportadora, regional and local governments and NGOs that were implementing projects aimed at selling to buyers were very optimistic about the PRA methodology. Producers also believe it works for them. • How can the successes of PRA be used to convince national, regional, and local governments of their proper role in the development process? During the follow on project PRA should be able to project with some confidence that for every dollar of support they can generate X dollars of sales, or the client (or a local government, for example) does not pay. • What constraints, within and outside the region, impede the corridors from becoming more competitive, and at what level do these constraints need to be addressed (national, provincial/municipal, enterprise, and/or other)? • Which constraints should USAID’s MYPE Competitiva Project address that would impact favorably on competitiveness in the corridors served by PRA? • What role(s) can USAID play in relation to other donors, and in which priority areas would USAID-assisted interventions be most effective in addressing the identified constraints? Encourage PRA do what it does best, market pull. Then try to coordinate with other institutions to provide support for the supply-push that actually takes much of PRA’s budget. This will not be simple; the typical supply-push by a donor does much more than prepare to make a sale. • What are the opportunities for alliances/public-private partnerships? 5. Operational Questions: The evaluation team will examine the following operational questions: • Calculate the cost efficacy ratio, defined as the ratio of project investment (fixed costs plus technical assistance costs) relative to the increased sales that can be attributed as resulting from the technical assistance provided to PRA-assisted enterprises, for each Weidemann Associates, Inc. Page 88           of the following categories: o Economic corridors; o 30 principal PRA-assisted clients, classified by value of sales. See the report for this data. • What criteria have been used to define the technical assistance needed to assist enterprises in solving problems? The client requests the technical assistance, PRA accepts or rejects. Of course there is negotiation with the client on what is best to do. PRA does tend to focus on assistance that increases sales, little more. • What can be concluded about the comparative cost efficacy of technical assistance provided by local experts compared with external experts? A comparison of apples to oranges. When local assistance is available and can resolve the problem acquire locally. Sometimes only internationally acquired consultants have the experience to resolve a problem. • What evidence exists that PRA has directed attention to the concept of the sustainability of: o The assisted enterprises? They attempt to assess sustainability when deciding to accept a client. Once accepted, their TA is focused on successful sales, beyond that they do little institution building. o Productive sub-sectors (products) within economic corridors? Again PRA focuses on sales, but that focus has generated more stable market conditions for several crops, such as artichokes, trout, dry beans and peas, limes, and of course cacao and coffee – with a lot of help from AD for these last two. o The development of a local market of technical assistance services? Little emphasis is given to establishing a local market for technical assistance services. Several employees of PRA have been hired by buyers to help maintain purchases. • How do the principal enterprises receiving PRA assistance rate the value of the technical assistance received, by the following categories: Very high for all of the below. o Technical aspects of producing a product? o Organizational aspects of getting several producers to produce the same product? o Markets (i.e., market information, facilitating contacts with buyers, etc.)? Weidemann Associates, Inc. Page 89           • What is the evidence that the type of technical assistance and the level of profit that a client would require in order to make an investment has been determined in accordance with pre-established technical criteria that include whether the assistance would result in sustainable sales? Each client is evaluated based on their situation. There are not a sufficient number of clients in a specific sector to establish prudential norms that would suggest sustainable sales. There are only a few trout buyers and they are so different that pre-established criteria is not workable. On the agricultural production side PRA does use pre-established criteria for how to deliver technical assistance and, in some cases, which producers to admit to the group. • How adequate are the criteria that the PRA monitoring office uses to collect and analyze the data that provide the basis for estimating the impact of PRA assistance? Monitoring appears to work independently of PRA operations. We did not receive any complaints that PRA leadership over ruled a decision by monitoring on what portion of sales, work days generated, or investments to include in the reports by participants. The data collection process appears to be reliable and reasonable. Sources of Information The evaluation team will be expected to meet with members of the USAID/Peru Economic Growth and Environment (EGE) Team, the USAID Alternative Development Team, the USAID MYPE Competitiva Team, USAID senior management, the Chemonics team responsible for managing PRA, the staffs of the ten ESC operators, other key players associated with PRA, and at least twenty of the principal clients of PRA. The team will also review written material related to the project from the following sources: • USAID: Activity Approval Document; Chemonics original contract and amendments; PRA mid￾term evaluation report; and project correspondence. • Chemonics: Quarterly, semiannual and annual reports; Monitoring and Evaluation Unit's quarterly and field trip reports; product strategies; and overseas and local technical assistance consultants' reports. • Access to Chemonics’ PRA database to conduct quantitative analyses in support of this evaluation. • Economic Service Centers (ESCs): Client business plans and quarterly progress reports; biweekly operations reports; and local technical assistance reports. • Other sources of economic, business, and poverty data: e.g., El Instituto Nacional de Estadística e Información (www.inei.gob.pe); CPI polling firm (www.cpi.com.pe); The World Bank; Economist Intelligence Unit; etc. Methodology This will be an external evaluation but should be conducted in consultation with USAID/Peru and Chemonics to ensure that the team has the fullest possible background and contact Weidemann Associates, Inc. Page 90           information. The key issues to be addressed by the evaluation team should be developed in consultation with the EGE Team during the evaluation team's first meeting with the Mission. The methodological instruments to be used should focus on obtaining information, opinions, and quantitative data from counterparts, contractors, partners, PRA clients, beneficiaries, GOP entities, and other donors. These will include the preparation of appropriate questionnaires that will enable the team to gather all the information required from all parties involved in, or related to, the activity. The evaluation team should consider starting its work with a paper review of all the documents cited in the “Sources of Information” section above. It should also be prepared to conduct interviews with a sample of assisted enterprises and “demonstration effect” (or “replicative”) enterprises in a sample of corridors. The evaluation methodology also should provide for an assessment of approximately 10 business/value chains (to include participating productive and service enterprises). At this point, it is unclear whether the evaluation will use probability or non-probability samples. The Mission expects the evaluation team to present strong quantitative analysis, within data limitations, that clearly addresses key issues found in the research questions such as the direct and indirect impact and cost effectiveness of PRA. The Mission is looking for new, creative suggestions regarding this evaluation, and it is anticipated that the implementer will provide a more detailed explanation of the proposed methodology for carrying out the work. The methodology will be comprised of a mix of tools appropriate to the evaluation’s research questions. These tools may include a combination of the following: • Review PRA documentation (e.g., mid-term evaluation; quarterly reports); • Quantitative analyses (e.g., cost-benefit or return on investment analysis, as appropriate); • Review trade and competitiveness constraints identified by MYPE Competitiva and other sources (e.g., Alternative Development Project; World Bank “Doing Business” Report); • Organize focus group discussions with PRA, MYPE Competitiva, and Alternative Development stakeholders; • Conduct stakeholder interviews (ESCs; service providers; assisted and non-assisted enterprises); • Case studies of successful enterprises and successful (or emerging) supply chains, value chains, and/or clusters. To facilitate the bidder’s formulation of the methodology to be used for quantitative analyses of such issues as direct and indirect impact and cost-benefit ratios, Annex B provides a summary description of the content and structure of the data in the PRA database. 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