Microfinance Practice: [MFP] Re: Returns to small farm investments

Thank you Mr Burgess, and the answers to my question have tended to support your irritation. Lots of data about returns to massive donor funded small farmer assistance projects, very little about whether a farmer earns enough on his investment in fertiliser or a well to justify borrowing the money to pay for it.

But we have to remember that the ODA (also the old acronym for the UK version, but like you I mean the whole aid and development machine) is fundamentally different from the business world, in that both institutional and individual performance are measured by how much money is spent, not by how much is earned. 'We must get to 0.7% of GNP', 'we must disburse more than agency x in country y', and all that.

When I first got into this odd aid trade in 1974 I remember very naively asking an international functionary how he knew whether he was doing better this year than last year. He replied 'Last year I spent $x million, this year I'll spend $2x million'. Up to then I had thought that spending was a thing to be reduced...

Your broader point is so important too, particularly in India where I do most of my work and where several hundred million people are pretty much excluded from earning or buying anything much. Here is UK we are working hard to achieve similar levels of inequity, I believe you all in USA are way ahead of us in that race, but that's about all manner of non-money things.

Malcolm

----- Original Message -----

From: Peter Burgess

To: MicrofinancePractice@yahoogroups.com

Sent: Tuesday, January 17, 2012 7:35 PM

Subject: [MFP] Re: Returns to small farm investments

Dear Professor Harper

Your questions strikes a chord ... and makes me mad as hell.

The need for you to ask your question is, in my view, an indictment of
the whole official development assistance (ODA) establishment which
should have the data you are requesting not only easily accessible,
but in universal use.

I am an old corporate accountant/CFO and know something of cost
accounting, and am appalled ... going back 30 years ... at the
incredibly weak base of factual cost information that emerged from
decades of project work. I attribute this to a serious diminution of
the role of accountancy throughout the ODA community which has served
those who are corrupt and with self serving agendas well.

If my memory serves me well, both the World Bank and the FAO used to
have quite sophisticated farm models which used the data you asked
about ... but this goes back to the 1980s or before. These were used
intensively for planning but less so in my modest experience in the
management of the projects, and the actual costs versus the
theoretical costs were rarely computed.

It should be relatively easy to get an answer to the question of money
costs and money revenues which results in money profit ... but I argue
that there are other dimensions that need to be brought into the
equation. Going back to being a corporate CFO, it was easy to improve
the profitability of a unit in the USA by firing US workers and
relocating to China or Thailand or wherever ... but in the long run it
is the wealth of the US workers that enables the goods being produced
to be bought. When this runs out, the profits are over ... a situation
that is now playing out.

Neither corporate money accounting nor economic analysis takes into
account in an adequate way the impact of decisions on the society and
the economy. In a capitalist market economy investments are made where
money profit is likely, but this leaves out about half the world's
people who have needs but do not have money to buy. As things stand
the opportunity cost of their (unskilled) labor is tiny ... but I
argue that the opportunity value of satisfying their needs is pretty
large. At the moment the money markets ignore value and impact, yet it
is value that is going to change the world for the better, not profit.

I hope you are able to find the data you are looking for ... sounds
interesting what you are working on.

Peter Burgess
____________
Peter Burgess
True Value Metrics
Meaningful Metrics for a Smart Society
twitter: @peterbnyc @truevaluemetric
www.truevaluemetrics.org
blog: http://truevaluemetrics.blogspot.com
blog: http://communityanalyticsca.blogspot.com
www.tr-ac-net.org (being phased out!)
mobile: 212 744 6469
landline in PA 570 431 4043
email: peterbnyc@gmail.com
skype: peterburgessnyc
Books: Search Peter Burgess at www.lulu.com