Chemonics Focuses on ‘Supply Links’ in El Salvador’s Poor North

    Chemonics Chief of Party Enrique Rivas inaugurates a field-based business center in June 2009 as part of a development project funded by the Millennium Challenge Corp. focused on El Salvador's impoverished north. Photo by: Chemonics International

    In the 1980s, the Reagan administration pumped $1 billion into the Salvadoran military to dislodge the leftist Farabundo Marti National Liberation Front guerillas from their strongholds in the country’s impoverished, mountainous north. Today, the FMLN holds the levers of power in El Salvador, and the Millennium Challenge Corp. has earmarked $461 million over five years to help the same region recover from the 12-year civil war that ended in 1992 and killed an estimated 100,000 people.

    MCC’s compact with El Salvador is the largest in Latin America and is managed in part by Chemonics’ Enrique Rivas. Rivas is the chief of party for a $40 million component of the overall MCC El Salvador compact. The project aims to promote rural development in the country’s north by providing technical assistance and capital investment to 9,000 small farmers and entrepreneurs as well as their families.

    A native of Bolivia, Rivas is an agribusiness marketing specialist with more than 19 years of experience working in Latin America, leading value chain analyses and conducting agricultural economic studies.

    Rivas joined Chemonics in 2002. He has served as Chemonics chief of party for a poverty alleviation project sponsored by the U.S. Agency for International Development in Bolivia and as director in the company’s Latin America and Caribbean division in Washington.

    Prior to joining Chemonics, Rivas spent more than 12 years working with international donor organizations such as USAID and the German Technical Cooperation. He earned a postgraduate diploma in agribusiness from the Technological Institute of Superior Studies in Monterrey, Mexico, as well as a bachelor’s degree in agriculture from universities in Bolivia and Argentina.

    Devex spoke with Rivas to learn more about Chemonics’ MCC project in El Salvador. He discussed the company’s market-based approach to spurring the agricultural and tourism sectors, and the challenges of working with local organizations unfamiliar with market economics in El Salvador’s historically impoverished north.

    How is Chemonics implementing MCC’s Productive Development Project in the north?

    We are focused on rural development oriented in five value chains: forestry, horticulture, dairy industry, fruits, handicrafts and tourists. What we are doing is trying to increase the net incomes of about 9,000 families of small farmers and small entrepreneurs in the northern area of the country.

    In practical terms, what we do is identify market opportunities … and try to resolve bottlenecks and limitations in order to increase the sales or the market participation of one group of farmers or group of entrepreneurs. We design technological packages and, based on that, we give technical assistance.

    Our principal indicator internally is increase of sales and externally is the increase of incomes. But both come from the same source. Both are the pillars of our program.

    We use a different market approach, more than a supply chain approach, which is very common in Latin America. All of the NGOs and private consultants are interested in increasing the productivity or increasing the supply. This project is different in that approach.

    We use a fund … and people [local organizations] can obtain resources from this fund in a competitive process. They submit proposals to us, and, based on the quality of proposals, we grant money to them. Or, if we don’t see good proposals, we can take a more proactive position and do a public process in order to select the best companies to run the project.

    [Our goal is] to link poor people with markets. We work with all links in the value chain, not only with small farmers. Usually, we put money in links like the processing plants or wholesalers. It all depends on what it takes to link small farmers more efficiently to markets.

    What is it like working with local non-governmental organizations in the northern part of the country, which was hit hard by the civil war?

    In that area, there are a lot of local organizations. After the war, a lot of money was spread around from different organizations and cooperation agencies. Usually, if civil society is not well-organized, then the NGOs and foundations get most of the money rather than the beneficiaries. That’s what happened … Civil society was not organized after the war, and they did not have the capacity to receive funds after the war and run projects by themselves.

    Traditionally, in this country, cooperative funds were aimed at subsidizing the service suppliers, not the small farmers or the market. That’s what traditionally happened. So, you have a lot of NGOs and foundations seeking money to subsidize their activities and not the farmers.

    They do the same traditional workshops and training courses oriented to increase farmers’ skills and capacities to do better dairy process or vegetables, but nothing oriented to market opportunities or business, or to increase competitiveness of a value chain.

    They usually focus on one part of the value chain - small farmers increasing their production. That’s not the problem now: The problem is the market. First, they develop the supply, then they search for the market. That’s not the way things happen in the business world. Things happen the other way - first the market, then the technical assistance.

    It is not easy [to find local partners with this business mentality]. For this project, we need partners with good technical skills and a market approach. They need to recruit people from the private sector. That’s one big issue here.

    How do you identify local partners for the project?

    We have different ways to identify opportunities. We are working with four subcontractors. All of them have more than 25 years working in this country in specific value chains. They identify the beneficiaries or the market opportunity. That’s one way.

    We have another way: It is a public request for proposals. We run RFPs in the media here, and we receive a lot of ideas and opportunities. During the last process that we did, we received more than 89 proposals for about 25,000 beneficiaries. We filtered them, and we have about 25 good project ideas. That’s the second way we identify opportunities.

    We have a third way, [using our] five business offices in the field. Some people come to our offices searching for assistance. We have one in San Salvador and four in the field. And we are going to have two more.

    Read more:

    Read more business news.

    About the author

    • Andrew Wainer

      Andrew Wainer is director of policy research for Save the Children. He was formerly a senior immigration policy analyst at Bread for the World Institute, which provides policy analysis on hunger and strategies to end it. He has also worked as a journalist and social researcher in Latin America and the United States. Andrew’s research and journalism has appeared in the Los Angeles Times and the Wall Street Journal, among other publications. He holds a master’s degree in Latin American studies from UCLA and is fluent in Spanish and proficient in Portuguese.