Case Study 4

Organic Agriculture in El Salvador:

The Case of Fresh Vegetables in Las Pilas

By Octavio Damiani
Consultant, Office of Evaluation and Studies

Report prepared for the Office of Evaluation and Studies

of the International Fund for Agricultural Development
Rome, August 2001
 Table of Contents

I. Introduction
II. The General Characteristics of Organic Agriculture
III. The Case of Organic Vegetables in Las Pilas
IV. Effects on Small Farmers of the Introduction of Organic Vegetables in Las Pilas
V. Explaining the Adoption of Organic Crops
A. The Characteristics of the Natural Resources in Las Pilas
B. The Role of the Public Sector
C. The Availability of Specialists in Organic Agriculture
D. The Role of NGOs
E. The Support of the Prochalate Project
VI. Constraints, Bottlenecks and Main Forms of Support
A. Technology and Marketing Problems
B. Financing Organic Production
VII. Conclusions and Potential Lessons for Project Design
A. Conclusions
B. Potential Lessons

References

Annex 1. List of persons interviewed

 Acronyms

CENTA National Centre of Agricultural Technology, Ministry of Agriculture and Livestock

CLUSA Cooperative League of the United States of America
GDP Gross Domestic Product
NGO Non-Governmental Organization
Ucraprobex Union of Agrarian Reform Cooperatives of Producers, Processors and Exporters
USAID United States Agency for International Development
 I. INTRODUCTION

1. This report is based on fieldwork carried out in El Salvador between 12 and 24 May 2001 as part
of the thematic study on organic agriculture that is being realized by the IFAD Office of Evaluation
and Studies. During the fieldwork, visits were made to the municipalities of San Ignacio and La
Palma in the highlands of the department of Chalatenango, which concentrates a high proportion of El
Salvador’s vegetable production and almost all the organic production of vegetables. Interviews were
also conducted in San Salvador, San Ignacio and La Palma with officials and professionals at
government agencies, non-governmental organizations (NGOs), the University of El Salvador and
Prochalate, a rural-development project funded by IFAD.

2. The fieldwork involved an analysis of the attractions of organic crops for small farmers, the
problems that these farmers face in the cultivation and sale of organic products and the ways they
have been able to solve the problems. The hypothesis of the research project is that the adoption of
organic crops and animal products may lead to positive effects on the incomes of small farmers. First,
farmers usually receive premium prices for organic products, that is, prices that are higher than those
for the same products produced using conventional technologies. Second, organic technologies may
lower production costs because of the reduction in the need to purchase chemical inputs. Third,
organic technologies may help reduce soil erosion and other processes of natural-resource degradation
that frequently affect small farmers in developing countries, thereby helping to promote more
sustainable models of production.

3. As in other developing countries, organic agricultural products in El Salvador are used mostly for
export and have emerged as a result of the growing demand among consumers, mainly in
industrialized countries. Indeed, several studies have shown that the demand for organic products in
industrialized countries has been increasing rapidly, in contrast to the sales of foods in general, which
have been stagnant or have risen only slowly. The sales of organic foods in the most important
markets (the US, Germany, Japan, Denmark, France, Netherlands, Sweden, Austria, Italy and
Switzerland) have been estimated at USD 11 billion in 1997 and USD 13 billion in 1998. Estimates of
the annual growth rates in demand have varied between 5% and 40%, depending on the country. The
growth in the demand for organic products relates partly to the increasing concern of consumers about
the effects of different types of food on health and about the potential risks of exposure to pesticide
residues in foods. In addition, consumers frequently perceive that organically produced products have
a better taste and more nutrition value. Finally, consumers usually associate organic production with
fewer potential negative effects on the natural environment relative to conventional agricultural
production.

4. Many analysts have been critical of efforts in developing countries to promote organic
agricultural production and, in general, non-traditional export crops. Some critics argue that the
demand for organic products is still relatively low and is likely to increase at a slow pace. Other
authors have criticized non-traditional export crops by using arguments that might also apply to
organic crops. In particular, they have argued that the crops may generate negative distributional
effects by frequently excluding small-scale producers and contributing to land concentration. 1 Some of
these critics have stressed that organic crops require a certification process that is too expensive for
small producers.

5. In contrast, some analysts have offered more mixed or positive views and provide evidence of a
decline in rural poverty due to the adoption of new export crops. Others have found that the effects of
agricultural export booms on rural poverty may depend on specific characteristics of the crops or on
the government policies that affect the microeconomics of the specific crops. 2 Evidence from recent
1
See Barham et al. (1992), Barham, Carter and Sigelko (1994), Carter and Mesbah (1993), Conroy, Murray and
Rosset (1994), De Janvry (1981), Schurman (1993), Stanley (1994), Twomey and Helwege (1991), Williams
(1986).
2
For example, see Carter and Mesbah (1993), Carter, Barham and Mesbah (1996), Damiani (1999), (2000),
Jaffee (1993).

1
studies that have looked at organic crops among small producers have suggested that small farmers in
Latin America and other developing regions may have competitive advantages over larger producers
in the cultivation of organic crops because organic technologies usually rely on labour – the most
available and least costly factor of production among small farmers – in place of chemical inputs.3 In
addition, research on some organic crops, notably coffee, has shown that large and more well
capitalized farmers, who usually apply an input-intensive technology, have suffered significant falls in
yields during the first few years after shifting from a conventional to an organic technology of
production. In contrast, small farmers shifting to organic agriculture have usually shown a rapid
increase in yields because they already used few or no chemical inputs, and the organic technologies
have improved the effect of the labour-intensive technologies that they apply.

6. Although small farmers might find new income opportunities in organic production, they could
face problems that jeopardize their possibilities of success. Shifting to organic production may
involve investments and the application of new methods of production that require credit and
specialized technical assistance often unavailable to small farmers. In addition, selling organic
products may require negotiating with new buyers – often from foreign countries – and planning the
production process in order to meet the more substantial demand of the buyers at certain times of the
year. These tasks typically involve marketing and managerial skills that small farmers usually do not
have.

7. Thus, the fieldwork has involved an analysis of the organic production of vegetables in the Las
Pilas region that addresses the following questions:

(a) What have been the positive and negative effects of organic production on the outputs and
incomes of small farmers?

(b) What have been the main constraints that small farmers have faced when they start to grow
organic crops?

(c) What interventions have government and private organizations implemented to help small farmers
successfully cultivate organic crops?

8. Interviews have been conducted with a total of 13 organic farmers in Las Pilas. This represents
close to one third of the farmers cultivating organic vegetables in the region. The interviews were
open-ended and lasted about one hour each. They focused on the history of the farmers as producers,
their motivations for starting to grow organic crops, the way in which they had learned to apply
organic methods of production, the benefits and costs of adopting organic crops, the problems they
faced when cultivating and selling the crops and the support they received from government and
private agencies in solving the problems. Interviews were also carried out with 26 professionals in
government agencies, NGOs, universities and the Prochalate project and supermarket staff in charge
of purchasing fresh vegetables. These interviews were also open-ended, but somewhat longer (about
two hours), focusing on issues related to the work carried out by the interviewees and the institutions
in which they worked. For example, the interviews with professionals at agricultural research and
extension agencies focused on the research policies and projects of the institutions, as well as on the
past training of the professionals, the approaches and methodologies they applied in their work and
their views on organic agricultural production.

9. The report is organized as follows. The second section offers a brief description of the main
characteristics of organic production. The third section describes organic agricultural production in El
Salvador and provides details about the case of Las Pilas. The fourth section focuses on the effects of
the introduction of organic vegetables on the output and incomes of farmers. The fifth section
analyses the forces that led to the emergence of organic products in El Salvador and the influence of
macroeconomic and agricultural policies and of government institutions, especially agricultural

3
Damiani (2000).

2
research, extension and university training. The sixth section analyses the actions that NGOs and
other agencies have implemented to help small farmers in Las Pilas start growing organic vegetables
successfully. The last section offers some conclusions and preliminary lessons based on the
experience in Las Pilas.

II. THE GENERAL CHARACTERISTICS OF ORGANIC AGRICULTURE

10. Organic agriculture originated mainly because of the concerns of consumers, especially in
Australia, Japan, North America and Western Europe and more recently in developing nations about
two issues: (a) the potential negative effects on health of the use of chemical inputs in food production
and (b) the deterioration of natural resources frequently associated with conventional agricultural
technologies. Organic agriculture involves the use of organic inputs in place of chemical ones and
attempts to achieve a more sustainable use of natural resources. The major principles applied in
organic agriculture are the following:

(a) The use of chemical and synthetic fertilizers, pesticides, fungicides and parasiticides is prohibited.

(b) The use of growth hormones is prohibited.

(c) Organic products are employed to protect plants from pests and disease.

(d) Soil-conservation measures are applied.

(e) Organic materials are used to maintain and improve soil fertility.

(f) Monocultivation relying on a diversity of plant types and varieties is avoided.

(g) The consumption of non-renewable sources of energy and raw materials is kept to a minimum.

(h) The natural landscape and the natural biodiversity are conserved.

11. One of the key differences between organic agriculture and other types of sustainable agriculture
is the existence of production norms and procedures of certification. Norms were first created by
private associations at national or regional levels, and they served to give their members the right to
sell their products with the organic brands and the warranty of the respective associations. Later on,
several countries created laws and regulations on the production and processing of organic products.
In most of them, the certification of products became one of the main issues. Certification focuses on
the materials and processes that producers have used in the production of specific crops or animals
and provide a proof to consumers that organic standards have been met. Also, it attempts to set some
standards about what organic production means so as to avoid the coexistence of diverse criteria and
damage to the credibility of the producers and the associations.

12. The certification process starts with the application by a producer or a group of producers to a
certification agency. The certification agency usually sends an inspector to visit the production sites
and evaluate if the production process meets the organic standards. The inspector accomplishes this
based on interviews with producers, field visits to the croplands involved, a review of the organic
fertilizers and other inputs used and laboratory tests of samples of soils, water and agricultural
products. Some of the main requirements that must be met in order to obtain an organic certification
are the following:

(a) Over the previous three years, the land under organic production must not have been used for
conventional agriculture involving the application of chemical or synthetic inputs.

(b) Conventionally grown crops cannot be closer than 15 to 20 m, and there must be a forested area as
a barrier between the organic and conventionally grown crops.

3
(c) The inputs used must be organic. Chemical or synthetic inputs are prohibited.

(d) Soil-conservation measures must be applied.

(e) Small farmer cooperatives and other associations must demonstrate that they are able to organize
their own monitoring systems in order to ensure that organic standards are met by all members.

13. Once the organic certification has been approved, it is valid for one year, during which time
inspectors usually visit the site twice a year without notice.

14. The cost of certification varies, mainly depending on the agency carrying out the certification and
its location and the location of the farm or farms to be evaluated. Certification agencies usually charge
a daily service fee, plus the travel and subsistence expenses of the inspectors. Thus, costs are
substantially lower if the certification agencies are located in the country and if the farm or farms are
not remote. In the case of farmer associations, costs will depend on several factors, among them the
following: (a) the distance of the farms one from another, as the inspectors need more time to visit
farms if they are widely dispersed, or if the roads are in poor condition and (b) the capacity of the
association to establish its own monitoring system; if an association is efficient and able to establish a
credible system to monitor the compliance of its members with the organic standards of production,
the certification process can be based on a sample of producers: the smaller the sample, the better the
monitoring system must be. In any case, the cost of certification per farmer is lower for a farmer
association than for an individual producer.

15. Organic agriculture is not the only alternative to a conventional production system, which is based
on the intensive use of chemical inputs. Other production systems are also more ‘respectful’ of the
natural environment, though they are different from the organic production system. An example is a
sustainable agriculture which does not eliminate chemical inputs completely, but relies on small
quantities of these inputs and applies techniques such as integrated pest management, integrated
nutrients management and integrated herbs management. Such a system offers a compromise between
conventional and organic agriculture, and the resulting products may one day become significant
competitors of organic products.

III. THE CASE OF ORGANIC VEGETABLES IN LAS PILAS

16. The cultivation of organic crops in El Salvador started in the early nineties. It was promoted by
non-governmental organizations (NGOs) that were funded by the United States Agency for
International Development (USAID). As explained later, these NGOs were working on the
implementation of a USAID project that been undertaken in 1988 and that aimed at encouraging the
production and marketing of non-traditional export crops. While the project focused on
conventionally grown crops, these NGOs identified the great opportunities offered by organic crops
and helped farmer groups to change their methods of production, obtain the organic certification and
sell their products.

17. By early 2001, the estimated total area under organic cultivation in El Salvador was close to
3 800 ha, about 0.5% of the cultivated area in the country (see Table 1). Coffee was by far the most
important crop, with 2 100 ha (55% of the organic area). It was cultivated mainly in the highlands of
the central region, including the departments of Santa Ana, La Libertad, Ahuachapán and Uzulután.4
Most organic coffee is exported through the Union of Agrarian Reform Cooperatives of Producers,
Processors and Exporters (Ucraprobex), a second-tier organization comprising 57 farmer cooperatives
– of which seven grow organic coffee – that was created in 1988 to market coffee. Other important
4
The total organic area has been estimated based on data provided by the Cooperative League of the United
States of America (CLUSA), which provides technical assistance to a large share of the organic producers, and
the Union of Agrarian Reform Cooperatives of Producers, Processors and Exporters (Ucraprobex), which
represents most of the certified areas of coffee.

4
crops were cashews (840 ha) and sesame (700 ha), though the significance of the latter has been
falling rapidly due to decreasing international prices. These crops were cultivated mainly in the
departments of La Unión, San Miguel and La Libertad and were also sold mostly through
Ucraprobex. The area accounted for by organic vegetables was about 40 ha, half of which was
certified, while the other half was expected to be certified soon, and it was all being grown in Las
Pilas.

Table 1: Estimated areas of organic crops, 2001 (ha)

Coffee 2 100
Cashews 840
Sesame 700
Bananas 56
Soybeans 50
Peanuts 22
Vegetables 40
Total 3 808
Source: Based on data of CLUSA and Ucraprobex.

18. The Las Pilas region – defined here as the municipalities of San Ignacio and La Palma in the
highlands of the department of Chalatenango – is the most important producer of fresh vegetables in
El Salvador (see map 1). By 2001, the total area cultivated with vegetables in Las Pilas had reached
about 1 400 ha, which represented 36% of the total area of 3 900 ha cultivated with vegetables in the
country (see Table 2). The main crops were cabbages, potatoes and tomatoes, which have traditionally
been grown with conventional technologies that rely on large amounts of chemical inputs.

Map 1. Location of organic vegetable production in Las Pilas region, El Salvador

5
19. Las Pilas also accounts for almost all the areas cultivated with organic vegetables of El Salvador.
The certified areas reached close to 18 ha in 2001, with an additional 18 ha in the process towards
certification. While these areas are small compared to those of organic coffee, cashews and sesame,
they are important for several reasons:

(a) As in other Latin American countries, the production of fresh vegetables with conventional
technologies has been characterized in El Salvador by the significant use of chemical pesticides,
fungicides and other inputs. The use is much more significant for fresh vegetables than it is for coffee,
cashews, sesame, or other crops. The use of chemical inputs has led to serious problems in El
Salvador, including health problems among farmers and increasing production costs.

(b) While organic coffee, cashews and sesame are all exported, there has been no substantial change
in the marketing, as farmers have relied more or less on the same marketing channels that they used
for the conventional products. In contrast, new market channels have been established for organic
fresh vegetables, including supermarkets, restaurants and hotels, to which farmer groups sold their
output directly, in contrast to the situation in conventionally grown cabbages and tomatoes, which are
sold on the food market (La Tiendona) in San Salvador, mostly through middlemen. Thus, the
marketing of organic vegetables have benefited from a reduction in the costs of the intermediaries.

Table 2: General characteristics of Las Pilas region

Population (inhabitants) 23 400

–Urban 5 300 (12.6%)
–Rural 18 100 (77.4%)
Population density (inhabitants/km2) 81
Economically active population (%)
–Agriculture 63.3
–Industry 11.6
–Services 5.7
–Unemployment 19.3
Area of main crops (ha)
–Cabbages 840
–Potatoes 630
–Tomatoes 214
–Sweet peppers 87
–Other vegetables 105
Source: Vice-Ministry of Housing and Urban Development (2000),
CENTA (2000).

(c) The organic production and marketing of vegetables in Las Pilas involved the collective
coordination of tasks among small producers. Because the buyers were demanding substantial
volumes of vegetables that were impossible for individual small farmers to obtain, the farmers needed
to sell their products collectively. Collective action led to new challenges for these small producers.
First, all producers had to meet the same quality standards and to apply properly the organic methods
of production. If one or more producers did not comply, all the farmers might lose their organic
certification and their access to the market. Second, because buyers required a constant supply of
specific amounts of products, farmers needed to plan the cultivation and harvest of the various crops
in order not to concentrate the supply correctly at specific times of the year. Third, the buyers of
organic vegetables required a constant supply of products of good quality. Because many vegetables
are highly perishable, they cannot be stocked without losing quality and value, so they need to be sent
to the market immediately after the harvest, as any delay involves losses in quality and thus the
rejection of the product. In order to avoid delays, the farmers in Las Pilas needed to have labour
available for the harvesting and packing of their output, and they had to contract trucks to bring the
products by road from the fields to the supermarkets, hotels and restaurants, a trip of 125 km from Las

6
Pilas to San Salvador that takes about four hours. All these tasks demanded great effort, including
negotiations, the signing of agreements and planning.

(d) Farmers who grow organic coffee, cashews and sesame in El Salvador all used to grow the same
crops employing conventional technologies. In contrast, farmers who grow organic vegetables in Las
Pilas have undergone a more complex process involving the introduction of new crops, technologies
and systems of production. In fact, most farmers in Las Pilas used to grow small areas of cabbages
and tomatoes with conventional technologies. They shifted to the cultivation of a large number of
vegetables with organic inputs under a system of production based on a sequencing of crops that
allowed the fertility of the soil to be maintained.

(e) In contrast to other organic crops such as coffee which have traditionally been exported, fresh
vegetables were sold on the domestic market and faced harsh competition during the nineties from
imports from neighbouring countries. Indeed, the domestic production of fresh vegetables in El
Salvador only supplied an estimated 20% of the total consumption in the country, while 80% was
imported, mostly from Guatemala and Honduras. Thus, the organic production in Las Pilas represents
a successful case of competition against imports mainly through a focus on product quality and
differentiation.

20. The organic vegetables in Las Pilas are grown by three farmer groups that include a total of 52
farmers: (a) the Los Planes Cooperative of Organic Producers, which includes 32 small farmers and is
the only organization that has obtained its organic certification from the Organic Crop Improvement
Association, a US-based certification agency and (b) two farmer groups in Las Pilas and Los Planes
(named Las Alturas and El Pital) with a total of 30 members. Although these last two groups are
using organic production technologies, they have not obtained certification yet, as they are going
through the three-year transitional period from conventional agriculture. During this three-year
period, farmers cannot use chemical inputs or they will not become certified.

IV. EFFECTS ON SMALL FARMERS OF THE INTRODUCTION OF ORGANIC

VEGETABLES IN LAS PILAS

21. The introduction of organic vegetables in Las Pilas has generated several positive changes in the
production and incomes of small farmers. Some of these changes relate to characteristics of the new
crops without consideration of whether they are organic or conventional, while others are effects
associated with the organic production of the crops. The most important effects have been the
following:

22. (a) Crop diversification. The adoption of organic crops has led to the diversification of production
and incomes, as all the farmers who have adopted organic vegetables have continued to grow the
crops that they used to grow, cabbages, tomatoes and potatoes, but in smaller areas and in addition to
several new crops.

23. (b) A reduction in the area cultivated. Organic crops require substantial amounts of labour in
order to perform all the tasks needed to produce a good-quality product all year round. These tasks
include soil-conservation measures, planting, harvesting, weeding and the preparation and application
of numerous kinds of organic inputs. Because they have not had access to credit, most farmers do not
hire extra wage labour, but rely only on the labour available in their households. Thus, labour has
become the main constraint on expanding the cultivated area among the farmers. As a result, most
farmers who have started to grow organic vegetables have had to reduce their total area under
cultivation. Most of them used to cultivate a yearly average of 2 ha each: 0.7 ha of cabbages, 0.7 ha of
tomatoes and 0.6 ha of potatoes. After the introduction of organic vegetables, the total average
cultivated area fell slightly to 1.9 ha, including about 0.5 ha of organic vegetables and 1.4 ha of
cabbages, tomatoes and potatoes.

7
24. (c) A reduction in production costs. All producers of organic vegetables in El Salvador adopted
organic technologies at the same time that they introduced new crops, so it is impossible to compare
current production costs for organic crops and the previous costs for the conventional production of
the same crops and by the same farmers. However, a comparison can be made between the organic
producers and other conventional producers of the same crops in the region. This comparison shows
that the production costs for all organic crops are lower than the production costs for the same crops
cultivated using conventional technologies (see Table 3).

Table 3: Production costs for selected organic and conventional crops, Las Pilas

Crop Organic* Conventional*

Broccoli 5.5 5.7
Coriander 12.6 14.0
Lettuce 11.5 12.7
Sweet onions 14.9 15.7
Green beans 2.2 11.7
Source: Based on Prochalate (1998), CENTA (1999) and information from Technoserve.
* USD per 10 m2.

25. (d) A decrease in marketing costs. In contrast to conventionally grown crops, organic vegetables
are sold directly to supermarkets, restaurants and hotels. Most farmers in Las Pilas sold their
conventionally grown cabbages, tomatoes and potatoes through middlemen who purchased the
products on their farms and brought them to La Tiendona – the most important central market for
fruits and vegetables in the country – in San Salvador. The Cooperative League of the United States
of America (CLUSA) and Technoserve, a non-profit organization of US origin, both of which played
an active role in the marketing of organic vegetables in Las Pilas, initiated contract negotiations with
supermarkets, signed stable agreements with them and provided trucks to the farmer groups so that
they could sell their output directly. In this way, farmers had been able to reduce the costs of
intermediaries.

26. (e) An increase in incomes and income diversification. The introduction of organic vegetables in
Las Pilas generated a substantial diversification in incomes. The organic farmers used to produce
cabbages, tomatoes, or potatoes during the dry season and corn in the rainy season. Thus, the income
of the farmers depended on two crops, that is, corn and cabbages, tomatoes, or potatoes. In contrast,
the farmers who subsequently introduced organic vegetables produced an average of six organic
crops. Because most of the farmers also continued to grow corn and cabbages or tomatoes, their
income relied on an average of eight crops rather than on only two. In addition, the organic vegetables
were produced all year round, in contrast to the conventional cabbages, tomatoes, potatoes and corn,
which were highly seasonal. Thus, the production of organic vegetables resulted in more constant
sources of income throughout the year.

27. (f) Employment creation. The organic production of vegetables in Las Pilas led to an increase in
the demand for on-farm labour. However, there was little creation of wage labour, as farmers relied
basically on family labour. Post-harvest activities – mainly packing and transportation – also led to
the creation of a limited number of jobs, principally among women. The three packing facilities for
organic products in Las Pilas employed about 45 workers, most of whom were women (in total 40
women, or 89% of all the wage workers in the facilities).

28. (g) A reduction in soil degradation. The adoption of organic crops has had a positive effect on the
natural resources available to small farmers since it implied the implementation of soil-conservation
technologies. First, all farmers who adopted organic crops have had to eliminate completely the slash-
and-burn method of cultivation that was common in the region. Second, the use of terraces and level
curves has replaced crop cultivation in the direction of the slope, thus reducing soil erosion and the
loss of nutrients and water. Third, in contrast to the most common crops in Las Pilas (cabbages,
tomatoes and potatoes), which are grown as monocultures (that is, always planting on the same plots

8
of land), organic vegetables are being grown following a rotation plan, which facilitates the
maintenance of soil structure and fertility. The application of these technologies has been very
important considering the steep slopes – slightly above 50 degrees on average – and thus the risk of
erosion characteristic of Las Pilas.

29. (h) Potential benefits for the environment and human health. Because they have replaced
chemical inputs with organic ones, there are other potential benefits over the medium and long term:

(i) On the spread of pests and diseases that affect crops. Agricultural research has long demonstrated
that the continuous use of chemical pesticides and fungicides is likely to lead to pest resistance and
thus to the increasing use of the inputs to maintain crop yields. Organic methods of production may
lead to a better control of pests and diseases without a rising amount of inputs.

(ii) On the health of farmers and rural wage workers and their families. The excessive use of
chemical inputs in agriculture has been frequently associated with health problems among farmers
and wage workers. In the case of El Salvador, this issue has been receiving increasing attention.
Newspapers have presented reports on the health problems caused by pesticides, and the Ministry of
Health has carried out relevant research. A study that was awarded the National Medicine Prize in
2000 indicated that a high proportion of patients with kidney problems had been exposed to
pesticides. The study analysed 202 patients who had been accepted at the National Rosales Hospital
with renal insufficiency between November 1999 and March 2000. It found that, while 67 of these
patients showed recognized risk factors for their health problems, such as high blood pressure or
diabetes, 135 did not exhibit any apparent risk factor. About 73% of the members of this latter group
had been exposed to pesticides at their workplace, and most of them came from areas where
cultivation was characterized by the intensive use of pesticides, including La Paz, San Salvador,
Sonsonate and other coastal zones where cotton was being grown.5

30. Their concern over the possible health problems associated with the use of chemical inputs was
one of the most important reasons organic farmers mentioned when responding to a question about
why they had adopted organic methods of production. One of the farmers said that, “I am the father of
six children, and I was worried that my children and myself could become sick because of the use of
pesticides.” Similar opinions emerged in most of the interviews carried out with organic farmers in
Las Pilas.

31. Finally, interesting issues revolve around the potential bias against women in organic farming and
whether organic crops provide job opportunities for women. Most farmers who cultivate organic
vegetables in Las Pilas are men, and the share of women is lower than their corresponding share in the
rural population in general and in the farmer population. This is due to several factors: (a) The
cultivation of organic vegetables in Las Pilas involves investments mainly in soil-conservation
measures that require stable forms of land tenure. In addition, they require irrigation systems in order
to be able to produce vegetables all year round. Thus, one possible reason for the relatively low share
of women might be the lower share of women who benefit from stable forms of land tenure and who
have access to irrigation systems. Unfortunately, information on these factors are not available. This
represents an area of research that should be addressed in the future. (b) The technologies applied in
the organic cultivation of vegetables in Las Pilas do not require special abilities in which men or
women are especially skillful, or in which their participation could be affected by cultural factors.
However, some of the most important technologies – notably the implementation of soil-conservation
measures – require a substantial amount of physical effort, making it more difficult for women to
participate. While it might be possible to hire workers to carry out these tasks, most farmers do not
have the resources to hire wage labour, and no credit is available for paying for labour.

5
See La Prensa Gráfica (20 May 2001), pages 4C and 5C.

9
 V. EXPLAINING THE ADOPTION OF ORGANIC CROPS

A. The Characteristics of the Natural Resources in Las Pilas

32. While El Salvador is relatively poor in natural resources compared to neighbouring countries, it
does possess areas with a high potential for agriculture. In the case of organic vegetables, some of the
characteristics of Las Pilas provide competitive advantages for the production of vegetables:

33. (a) Las Pilas is located between 1 800 and 2 000 m above sea level, so the average temperature is
significantly lower than in the rest of the country. The average temperature is 15.2 degrees Celsius,
with average highs of 21.4 degrees and lows of 12.2 degrees. Annual precipitation is 1 600 mm, with
the rains concentrated between May and October. These climate conditions are very appropriate for
the production of vegetables. Pests and diseases affect crops significantly less in the highlands than in
the lowlands, where temperature and humidity are greater. However, Las Pilas is characterized by
fragile soils and steep slopes, with crops usually grown on lands that slope between 30 and 40%.

34. (b) The availability of a large number of sources of good-quality water in the highlands makes it
possible for farmers to irrigate their crops at low cost. A recent study has identified 76 sources of
water in the highlands of the municipalities of San Ignacio and La Palma, of which 45 (59%) had not
yet been used. Because water is located in the highlands, farmers do not need to invest in pumps and
to spend money on fuel or electricity to bring the water to their plots. Water is channeled to the farms
by tube wells, stored in water reservoirs at the farms and used for irrigation systems which usually
rely on aspersion technology. Although the water is quite plentiful, not all small farmers have access
to the irrigation systems. Investments are needed for off-farm (tube wells) and on-farm infrastructure
(land preparation and aspersion devices).

35. Although the Las Pilas region has good potential for the production of fresh vegetables, other
important variables make it difficult for farmers to compete even on the domestic market. First,
neighbouring countries – especially Guatemala, but also Honduras – have more extensive areas and a
greater variety of ecosystems than El Salvador and thus a larger supply of a wide variety of
agricultural products. Second, the labour costs in Honduras and Guatemala are lower than they are in
El Salvador, contributing to lower production costs. Third, although Las Pilas is located closer to San
Salvador, which concentrates a high proportion of the domestic demand, the roads are in poor
condition, and this leads to higher transport costs and negatively affects the quality of products.

B. The Role of the Public Sector

36. This section argues that the public sector has had a marginal role in the development of organic
agricultural production in El Salvador. Indeed, the emergence and growth of organic production have
taken place in the context of economic policies that are generally unfavourable to agriculture. In
addition, the main institutions involved in rural development – in particular, agricultural research and
extension – are not supportive of organic agriculture.

1. Economic and agricultural policies

37. The emergence and growth of organic production have occurred in the wake of policies that were
in general unfavourable to agriculture. During the nineties, the Government implemented economic
reform policies that had a significant influence on the agricultural sector and on the institutions
involved in agricultural and rural development. The most important economic policies related to trade
liberalization, the reduction of fiscal deficits, financial reform, the reduction of the role of the state in
the marketing of inputs and products and the reform of the government agencies in agriculture. El
Salvador is in the Central American Common Market, which also includes Costa Rica, Guatemala,
Honduras and Nicaragua, and, like other Latin American and Caribbean countries, it joined the World
Trade Organization during the nineties. As a part of the commitments implied in these agreements, El
Salvador lowered dramatically the levels of protection during the nineties. In addition, the exchange

10
rate remained almost unchanged during the entire decade, and a new Monetary Integration Law was
approved in late 2000.

38. Partly as a result of these policies, the economy of El Salvador performed well during the
nineties. Inflation was at an average 7% between 1993 and 2000 and showed a declining trend. The
gross domestic product (GDP) grew rapidly, at an average rate of 4.8% between 1990 and 2000, and
the per-capita GDP growth rate was 1.9%. The high growth rates were linked to a dramatic increase in
exports and a substantial change in the relative product share. The value of exports jumped from
USD 662 million in 1990 to almost USD 3 billion in 2000, and the share of manufactured goods in
total exports rose from 12.2% to 54.5% over the same period.

39. Meanwhile, the structure of the economy was substantially transformed. The relative share of
manufacturing increased from an average 21.7% of GDP between 1992-94 to 22.7% in 1997-99, but
the share of the agricultural sector dropped from an average 15.1% to 12.6% of GDP. The annual
growth in manufacturing reached 6.6% between 1990 and 1999, while that in agriculture was only
1.9%.

40. Agriculture was negatively affected by the reduction in tariffs and non-tariff protection measures.
In the case of fresh vegetables, El Salvador lowered the tariffs on imports from Guatemala, Honduras
and Nicaragua to 0% and on imports from other countries to 15%. While the Government was
pursuing an open trade policy, the appreciation in the real exchange rate led to a loss in the
competitiveness of agriculture. The competition from imported agricultural products, especially from
neighbouring countries (Guatemala and Honduras), increased dramatically, and most subsectors were
unable to attain productivity gains sufficient to offset their loss in competitiveness. As a result, the
agricultural sector became unstable. There was great variation in the impact on products. Basic grains
(corn and beans) remained stagnant, with substantial annual differences due solely to climate factors,
while livestock and poultry grew, respectively, 3.6% and 4.6% annually in the period 1994-99.
Imports increased for almost all agricultural products. The value of the imports of fresh vegetables
rose 32%, from USD 5.3 million in 1990 to USD 7 million in 1999 (see Table 4).

41. Moreover, the Government decided in May 2000 to impose a value-added tax of 13% on all
agricultural products sold on the domestic market. Such a tax is paid on most industrial goods, but
agricultural products had been exempt. Because of the significant tax evasion that occurs in the
marketing of agricultural products in La Tiendona relative to the products sold in supermarkets and to
hotel chains, this measure affected more negatively the producers of organic products.

Table 4: Value of imports of fresh vegetables (USD ‘000s)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Tomatoes 1 482.8 1 525.1 1 520.7 1 379.5 1 405.7 2 205.2 2 625.1 2 673.7 5 827.2 2 417.5
Papa 916.9 1 318.3 1 226.2 907.9 1 198.8 1 969.9 1 854.5 2 086.7 556.0 948.1
Onions 624.2 626.0 623.9 480.0 555.2 841.3 964.8 1 582.1 1 303.9 928.5
Cabbages 650.3 613.7 825.7 999.3 961.3 1 082.5 1 211.7 1 537.5 466.5 618.1
Garlic 34.1 50.2 55.7 59.9 61.6 169.9 154.8 115.9 182.8 393.0
Green
peppers 7.6 10.9 25.2 9.3 36.1 95.9 150.8 365.2 503.2 341.0
Carrots 338.1 427.9 389.1 385.3 628.7 475.4 489.5 612.8 188.9 192.2
Lettuce 174.5 236.4 203.1 233.5 389.8 419.2 513.5 451.2 177.0 162.5
Cauliflower 149.6 211.3 202.7 163.9 296.8 376.5 473.6 487.2 177.6 124.7
Broccoli 590.2 259.4 80.6 31.8 59.3 192.4 163.7 237.7 142.9 97.3
Other 327.4 586.8 904.6 665.9 1 078.5 1 511.8 1 427.5 2 331.2 1 645.3 802.8
Total 5 295.8 5 866.0 6 057.6 5 316.4 6 671.6 9 340.0 10 029.6 12 481.2 11 171.3 7 025.7
Source: Ministry of Agriculture and Livestock.

11
2. The role of government agencies

42. Public-sector agricultural research and extension had a marginal role in the emergence and
development of organic agriculture in Las Pilas and in El Salvador in general. This was due partly to
the difficulties that agricultural research and extension experienced as a result of budget cuts and the
consequences of public-sector reform.

43. Public-sector agricultural research and extension are carried out by the National Centre of
Agricultural Technology (CENTA), which is part of the Ministry of Agriculture and Livestock. While
El Salvador has a long tradition of financing for agricultural research and extension and of strong
interaction with international research centres, the CENTA budget has been declining because of the
efforts to reduce public deficits. In 1996, the CENTA budget was equivalent to 1.5% of the GDP in
agriculture, while CENTA research activities was equivalent to a little under 0.5% (World Bank,
1997). In addition, most research funds during the nineties came from loans and grants from
international organizations and donors, especially the World Bank, the Inter-American Development
Bank, USAID and the German Agency for Technical Cooperation.

44. In the early nineties, CENTA had undergone a major reform as a part of a World Bank-financed
project that aimed at strengthening the organization through investments in infrastructure, equipment
and training. The Government closed CENTA in 1990 and dismissed the 2 700 staff. It then reopened
the organization a few months later under new management and with a staff of 700. Although
CENTA retained its old name, the organization was officially opened once more in 1993, following
the implementation of several changes. CENTA had become autonomous and was now mandated to
serve small-scale farmers, a substantial change from the previous focus on commercial crops for
export. By 1996, the CENTA staff had grown to 900, of which 650 were technical personnel, and the
rest support staff. The technical personnel consisted of 74 researchers and 576 extension agents.

45. In addition to its budget problems, a major weakness of CENTA has been the low level of
training among the staff. By early 2000, the number of researchers had fallen to less than 70; none of
these had a doctoral degree, and fewer than ten had a master’s degree.

46. CENTA research activities focused on basic grains (corn, beans and sorghum) until the early
nineties. As a result of the reorientation, research and extension work at CENTA started to
concentrate on small farmers. In addition, new products were joined on the agenda, including
livestock and pastures, fruits, vegetables, fibres and oil seeds. However, the research on organic
products was almost non-existent and involved only one researcher who was part of a new project
supported by the Japanese International Cooperation Agency and who was examining organic
fertilizers (locally called ‘bocashi’). The project sought to promote vegetable production and had
some interest in organic methods.

47. The interviews carried out at CENTA indicate that most of the researchers are not very willing to
undertake research projects on organic products. Most researchers have been trained in conventional
methods of production and are not convinced of the potential of organic production. Most of them
raised questions about the possible technological and marketing problems and did not express a desire
to open new lines of research.

48. While the public-sector agencies dealing with agricultural and rural development have not been
especially supportive of organic agriculture, the Prochalate project implemented by the Ministry of
Agriculture and Livestock become an important actor in the development of organic vegetables in Las
Pilas. Designed by IFAD in agreement with the Government, Prochalate aimed at improving the
incomes and the quality of the lives of the rural poor in the department of Chalatenango, one of the
poorest in the country and one of the most affected by the war. The project was cofinanced by several
agencies and by the Government for a total of USD 39 million, including an IFAD loan of
USD 13 million. The project objectives were to: (a) recover the production base, (b) raise incomes
and living conditions among rural populations and (c) strengthen peasant organizations.

12
49. The Prochalate plan did not involve a specific mention of organic agriculture as a possible
alternative for diversifying agricultural production among the project beneficiaries. However, organic
agriculture came to be included through the initiative of one of the consulting firms contracted by the
project to provide extension services. Prochalate provided extension services to small farmers through
public (CENTA) and private agencies (NGOs and consulting firms) that were contracted and then
monitored and evaluated by the project executive unit. Although the project established some
common criteria, these NGOs and consulting firms applied different approaches, strategies and
methodologies in their work with farmers. In Las Pilas, Prochalate contracted Technoserve.
Technoserve’s actions were market oriented and emphasized the search for new crops that could find
a demand in dynamic domestic or international markets. Technoserve did not focus only on
agricultural technology, but also on marketing and on improving the managerial skills of small
farmers. In Las Pilas, Technoserve explicitly took into account the experience of CLUSA, which had
already been successful in promoting the organic production of vegetables in the region.

C. The Availability of Specialists in Organic Agriculture

50. The interviews carried out with agricultural professionals in El Salvador suggested that the lack of
professionals with the knowledge and ability to provide technical assistance in organic technologies
has been one of the main obstacles to the expansion of organic agriculture. By 2001, there were
virtually no agronomists, agricultural specialists, or extension workers in the country who had studied
organic agriculture as part of their preparation. All those working in organic agriculture had only
followed training programmes, mostly in other countries. Most of them had participated in the same
training programmes as the farmers and said that they were learning from the farmers rather than
teaching the farmers about the new organic technologies.

51. In 2001, 12 universities in El Salvador had programmes in the agricultural sciences and
agronomy. In all cases, the curriculum was based on conventional agriculture and the use of Green
Revolution technologies. Only very recently, a few universities had begun addressing the issues of
sustainable development and environmental conservation. In 2001, the School of Agricultural
Sciences at the University of El Salvador started a new two-year master’s programme in sustainable
agriculture. The programme was based on experiences in foreign universities – mainly the University
of Chapingo in Mexico – and had attracted a total of 30 students during the first year, most of them
mid-career professionals working in the public and private sectors. Matías Delgado University had
started a one-year diploma in organic agriculture. Other universities had programmes that did not
concentrate specifically on sustainable or organic agriculture, but which focused on related themes,
such as a master’s programme in environment at the Central American University and a master’s
programme in natural resources at the National University of El Salvador.

52. These initiatives represent great progress in the provision of opportunities to students in
alternative production technologies and methods. However, they are recent and thus did not play a
role in the emergence and growth of organic farming in El Salvador.

D. The Role of NGOs

53. NGOs had a dominant part in the emergence and expansion of organic agricultural production in
Las Pilas and in El Salvador in general. Organic crops were first introduced in El Salvador in 1993,
when they were being promoted by the Salvadoran branch of CLUSA, a US trade association
representing the cooperative business community. CLUSA had been implementing international
programmes in developing countries since 1953 and had become established in El Salvador in 1988.
At that time, it started to work through a USD 14.2 million USAID project – the Non-Traditional
Agricultural Export Production and Marketing Project – which aimed to increase the production and
marketing of non-traditional agricultural products by rural cooperatives, small farmer groups and
exporters. The major agricultural exports at that time included traditional crops such as coffee, sugar
and cotton, the exports of which had been declining since the early eighties due to several factors,

13
including increased production costs, the conflict that affected El Salvador and low world market
prices.

54. CLUSA initially focused on a mix of conventionally grown crops, including melons, watermelons
and other fruits and vegetables. After the conflict ended in 1990, leaders of Ucraprobex – a
Salvadoran second-tier cooperative organization comprising 57 cooperatives – approached CLUSA to
obtain assistance in discovering ways to begin farming again on their lands, much of which had been
abandoned during the conflict. CLUSA undertook field research and found that, because large areas
given over to coffee crops had remained unexploited for a long time, there was a great opportunity to
turn them into organic areas. Following discussions, CLUSA started to promote among Ucraprobex
members the idea of cultivating organic coffee. The main actions of CLUSA were to: (a) link
producers with the agencies that provided the certification of organic products and (b) furnish
technical assistance and training to farmers so that they would be able properly to apply organic
methods of production and obtain organic certification.

55. CLUSA began working with two cooperatives of coffee producers in 1993. It brought in
specialists and foreign consultants to train cooperative members in organic production. It also
contacted the Organic Crop Improvement Association, a recognized US certification agency of
organic products, to carry out inspections and certify the coffee crops. The first certified organic
coffee was exported in 1994, and Ucraprobex started marketing a new brand (Café Pipil).

56. During this same period, CLUSA started working in other regions of the country and with other
crops, including sesame, cashews and vegetables. Its promotion of organic vegetables concentrated on
Los Planes, where CLUSA found favourable climate conditions for growing organic vegetables.
CLUSA initially worked with only five farmers, but others soon joined. CLUSA provided training
and technical assistance with organic crops, as well as with organizational matters to encourage
collective action. This eventually led to the creation of a formal organization in 1996, the Los Planes
Cooperative of Organic Producers, that originally included 36 farmers.

57. CLUSA helped the Los Planes Cooperative of Organic Producers to establish links with
supermarkets and hotel chains. As a result, the Los Planes cooperative began selling organic
vegetables to two supermarkets in San Salvador (La Despensa de San Juan and Hiper Europa) and
three hotels (Camino Real, Radisson Plaza and El Salvador). The main actions that CLUSA carried
out to promote organic crops and help small farmers overcome certain bottlenecks that arose after the
introduction of organic crops will be analysed in more detail in Section VI.

E. The Support of the Prochalate Project

58. Following the successful experience of CLUSA, the Prochalate project became involved with two
other farmer groups. It provided technical assistance to farmers through several specialized NGOs. In
Las Pilas and Los Planes, it contracted Technoserve, which had been active in a large number of
developing countries and started to work in Las Pilas in 1998 with a group of 15 farmers. In 1999, it
began assisting another group of 15 farmers in Los Planes (see Table 5).

59. Since 1999, through Technoserve, the two farmer groups have been selling to Super Selectos and
Hiper Paiz, two of the main supermarket chains in El Salvador. In addition, Technoserve has been
selling to two other supermarket chains – Hiper Europa and La Despensa de San Juan – through the
Federation of Irrigation Farmers of El Salvador, a second-tier organization that comprises four
associations of irrigators. Hiper Paiz, a supermarket chain based in Guatemala, has one large
supermarket in San Salvador and 19 smaller stores elsewhere throughout the country. Super Selectos
is a locally based firm with 74 stores throughout the country, but mostly San Salvador. Hiper Europa
has four large stores in San Salvador, while La Despensa de San Juan has 28 stores, of which 60% are
located in the capital. Farmers were also able to sell organic vegetables to some restaurants in San
Salvador for time, but they stopped due to the small level of demand.

14
Table 5: Prochalate and Technoserve: area of organic vegetables, Las Pilas and Los Planes (ha)

Carrots 1.9
Sweet onions 0.8
Cilantro 1.0
Lettuce 0.4
Beet carrots 0.1
Broccoli 0.2
Radishes 1.0
Perejil 0.0
Spinach 0.0
Guicoy 0.1
Green beans 0.4
Tomatoes 3.9
Cauliflower 0.2
Apium 0.1
Repollo 0.2
Escarola 0.1
Total 10.4
Source: Technoserve.

VI. CONSTRAINTS, BOTTLENECKS AND MAIN FORMS OF SUPPORT

60. To succeed in selling to supermarkets and hotel chains, farmers needed to solve several problems.
Not all these were specific to organic vegetables; some were specific to any production of vegetables
for the market niche that the farmers had selected. The most important problems were the following:

A. Technology and Marketing Problems

61. (1) Mastering organic methods of production. To obtain the full benefit from selling organic
products, farmers had to acquire certification as organic producers, which in turn required the
adoption of organic methods of production. While all the farmers interviewed stressed that they did
not find organic technologies difficult, they needed to be convinced of the advantages of switching
from conventional to organic methods, and they had to learn how to apply the organic technologies.
The adoption of organic production required training and technical assistance to accomplish this.

62. (2) Marketing. Small farmers who grow organic vegetables used to sell their conventionally
grown crops (cabbages, tomatoes and potatoes) through middlemen who came to their farms to
purchase the output and then sold it in La Tiendona market in San Salvador. In contrast, small farmers
sell the organic vegetables directly to supermarkets and hotels, as La Tiendona does not pay a price
premium for organic products. Thus, small farmers have had to negotiate and establish contacts with
supermarkets and hotels.

63. (3) Obtaining a product of high quality. Supermarket and hotel consumers of organic and non-
organic vegetables assign great importance to the characteristics of the product, such as colour, size,
uniformity and taste. These characteristics have to be as uniform as possible, and products of different
sizes and different taste have to be avoided. To obtain these quality characteristics requires: (a) the
application of a production technology that prevents the attack of pests and ensures as much as
possible uniform, visually pleasing products, (b) careful harvesting, classification and post-harvest
processing to eliminate any pests that might damage the product after harvest and (c) transport under
controlled humidity and temperature. The small organic producers in Las Pilas needed to apply an
appropriate technology to obtain a high-quality product and acquire appropriate harvest facilities and
transportation.

64. (4) Obtaining a constant and reliable supply of products. The supermarkets in San Salvador
required a substantial and constant supply of vegetables (both organic and non-organic), which the

15
farmers in Las Pilas needed to send three times a week all year round. If the farmers could not meet
this requirement, they would very likely lose access to the market, as the supermarkets would start
buying from other suppliers. To obtain a constant and reliable supply of products, three conditions
had to be met: (a) the farmers needed to organize themselves to market collectively in order to have
available the volumes of product required by the buyers, (b) the farmers had to plan production in
order to harvest products every week and at the same time avoid harvesting all the vegetables all at
once and (c) farmers needed irrigation in order to be able to grow vegetables all year round.

65. (5) Coordinating a high number of tasks. In contrast to most manufactured products and to grains,
most vegetables in Las Pilas are highly perishable and cannot be stocked without sacrificing some
quality and value. Thus, the products need to be delivered to the supermarkets soon after the harvest.
Any delay involves losses in quality and thus penalties, usually the rejection of the product without
any payment. In order to avoid delays, producers need to have labour available for the harvest and
packing and trucks to bring the output by road from the fields to San Salvador.

66. Both CLUSA and Technoserve were instrumental in identifying the potential of the promotion of
organic crops among small farmers in Las Pilas and in helping them apply organic technologies and
obtain certification as organic producers. Both organizations provided several services to farmers,
including training, extension, loans and outright grants. In the case of CLUSA, the extension and
training were furnished by foreign and local agronomists with great experience in organic production.
In the case of Technoserve, they were supplied by three agronomists who were hired and trained by
the organization. Two of the agronomists were technology specialists, and the other was a marketing
specialist.

67. The technical assistance and training focused on three major areas: (a) the technologies associated
with the new crops and the organic methods required to obtain organic certification, (b) the
establishment of contacts with supermarkets and other buyers and coordinating product deliveries to
them and (c) the organization of tasks, including the planning of production and harvesting. In
contrast to the emphasis of most extension services on agricultural technology, the most important
issues in Las Pilas were the last two: the negotiation of marketing channels and assistance in planning
production and marketing.

68. Because CLUSA was initially working with a small number of farmers, it had a limited amount of
products available, so it targeted domestic consumers. It first contacted supermarkets, and, because
consumers were still not particularly aware of the organic nature of the product, CLUSA had to
undertake an intensive promotion campaign among managers and supermarket workers. The organic
market then started to develop rapidly. In order to make the process more sustainable, USAID urged
the creation of a local organization that could carry out the marketing of non-agricultural products. As
a result, the Producers and Exporters of El Salvador was established in 1994 as a cooperative
company. Starting with a fund of USD 7 000 provided by CLUSA, the company initially had 11
members, including a mix of producer, exporter and cooperative groups who purchased a minimum of
SVC 20 000 (USD 2 286) of the shares of the company, receiving in return marketing services and a
share in the year-end profits. By 2001, the company had 12 members, most of whom were
cooperatives and farmer groups, which represented about 2 500 producers.

69. Because the supermarkets required a constant flow of product, the farmers in Las Pilas and Los
Planes had to plan their production so that they could harvest every week. The climate in the region
permits this sort of year-round production. However, the farmers were used to growing their crops in
only two seasons. Irrigated cabbages, tomatoes and potatoes were grown during the dry season
(between November-December and April-May), followed by corn in the rainy season (starting in
May-June). In contrast, the vegetables for the supermarkets had to be grown all year round. This
required planning the production of all the farmers as a group and individually. Each farmer had to
plant and harvest every week.

16
70. Organizing this programme of production was quite a complex job. It required the collection of
information from all farmers in order to determine the availability of the output expected for the next
week, communicating this information to the supermarkets, noting the needs of the supermarkets and
distributing quotas among the farmers according to this demand. Then, members would harvest their
product and send the output on Thursdays to the packing facilities. Once the product had been packed,
trucks would collect and transport it to the supermarkets in San Salvador. In the case of Super
Selectos, the product would be transferred to smaller vehicles and distributed among the branches.

71. With respect to the training, in 1998, technicians of Technoserve and Prochalate identified a
training centre in Costa Rica that provided training in organic agriculture. The centre, the Organic
Agriculture Training Centre, was located and managed by a private firm (Jugar del Valle) in Laguna
de Alfaro Ruiz (province of Alajuela), which grew vegetables and had obtained organic certification
in the early nineties. Jugar del Valle had substantial experience in the production and marketing of
vegetables. At the centre, they provided training based on their experience to farmer groups desiring
to undertake the cultivation of organic crops.

72. Technoserve arranged with the Organic Agriculture Training Centre to train farmers and
extension workers from Prochalate. The training sessions took place in 1998 and 1999, and they
included an eight-day programme that emphasized practical issues. Thus, the farmers were able to
learn by doing. They were instructed in the inputs appropriate for soil fertilization and for combating
pests and disease. Almost all the farmers interviewed had participated in the training sessions and
stressed that they had learned most of the technologies of organic production there.

73. To sum up, training was effective mainly for several reasons. (a) The participation of trainers who
were also farmers facilitated the learning process because of the similar language and the closer
understanding of the problems and difficulties involved in the adoption of organic crops. (b) The
sessions were very practical, and the farmers learned how to produce organic inputs independently.
(c) Rather than encouraging the farmers to adopt organic crops based on price and market advantages,
the training emphasized the benefits of organic crops for human health, the conservation and long-
term productivity of soils and the potential reduction in the costs of production.

B. Financing Organic Production

74. (1) Carrying out essential on-farm investments. The lack of access to credit to pay for investments
such as farm machinery and equipment is one of the most common constraints in the promotion of
change among small producers. For this reason, most IFAD projects include a component to help
make credit available to farmers, usually by the establishment of credit funds or guarantee-fund
schemes. While the role of credit has been important in making possible the introduction of new crops
and improving agricultural production, credit components have often faced several problems,
including high default rates.

75. Interestingly, the cultivation of organic vegetables in Las Pilas did not require the purchase of any
machinery or equipment, as all tasks were manual and relied on simple materials. However,
individual farmers had to undertake some essential on-farm investments. Some of these investments
were specific to organic production, while others were common to vegetable production in general.
On-farm investments had to be undertaken in the following areas:

76. (a) Soil-conservation measures. Most farmers who started to grow organic crops had cultivated
conventional crops without applying any conservation measures. Therefore, the shift to organic
production required cultivation on level curves and terraces to prevent erosion. These conservation
measures only provide returns after a several years. For example, one farmer explained that “the
investments are really only at the beginning, when we had to implement the conservation measures.
Afterwards, organic crops are not that complicated, although we do need to work more to do the job
that pesticides used to do for us.” This represented the opinion of most of the farmers interviewed,

17
who all emphasized that the soil-conservation measures were quite costly in terms of labour and
represented the most important investment in the shift to organic production.

77. (b) Irrigation infrastructure. The use of irrigation technology was not necessary in organic
production, but it was essential for growing vegetables all year round and obtaining a constant flow of
the product, especially in the dry season. All the farmers who belonged to farmer groups already had
irrigation available, as this was a condition that CLUSA and Technoserve had imposed when they
created the farmer groups that would work in organic agriculture. Thus, these farmers did not have to
make new investments. However, small farmers without irrigation needed to invest in on-farm
equipment and in infrastructure to bring water from the source. The amount of these investments
depended on the distance from the water source to the farm. It was around SVC 2 000 (USD 229) for
1 000 m of tube wells and the aspersion devices. The distance over which the organic farmers in Las
Pilas had to bring the water varied from between 1 to 4 km, which represented an investment of
between SVC 2 000 (USD 229) and SVC 8 000 (USD 916).

78. Interestingly, the organic production of vegetables in Las Pilas emerged mostly in the absence of
formal sources of on-farm credit. The most relevant on-farm investments revolved around soil-
conservation measures. Because these measures involve mainly labour, farmers implemented them
using family labour. In addition, the farmers who have continued growing the same crop, but who
have shifted to organic methods of production stress that yields fall substantially in the first two or
three years and then start to stabilize at levels normally slightly lower than the levels of the yields
accruing to conventional methods of production. However, in the case of Las Pilas, because the
farmers shifted to other crops for organic production, they did not experience this phenomenon.

79. Farmers growing perennial crops like mango or grapes must carry out significant investments, but
they must also wait for two or three years to obtain the first revenues from the plantation. Thus, they
need to obtain investment credit and other sources of revenue to maintain their families. In contrast,
the farmers in Las Pilas grow annual crops that can be harvested a short time after plantation (usually
between two and four months), so they have been able to obtain the incomes necessary to maintain
themselves and their families.

80. (2) Off-farm investments: packing facilities and transport. The marketing of fresh organic
vegetables has required facilities where the products could be classified according to quality and then
washed and packed before being sent to the supermarkets. These facilities could be simple, as were
the ones owned by the farmers working with Technoserve, which were located in an open space and
included a wood structure with a metal roof, wood tables and plastic tanks cut in half for washing the
vegetables, or they could be more sophisticated, like the ones owned by CLUSA’s farmers, which
were made of regular construction materials and included a freezing room. While facilities like the
former can cost about SVC 10 000 (about USD 1 100), the latter would cost about SVC 150 000
(about USD 17 100). In the latter case, CLUSA provided a combination of grants and credit so that
the farmers could build the packing facilities and buy a truck.

81. In contrast to the on-farm investments, the off-farm ones were not affordable for individual small
farmers. Moreover, a single small farmer would not be able to produce enough to keep the facilities
working at full capacity. Thus, both CLUSA and Technoserve promoted the construction and use of
collective packing facilities and transportation and helped farmers to obtain the necessary funds for
them. CLUSA helped the Los Planes Cooperative of Organic Producers to obtain grant funds from the
Inter-American Foundation to build packing and storage facilities. In addition, the cooperative
obtained a soft loan from USAID for the purchase of a truck. Prochalate also provided long-term
credit (SVC 115 000, or about USD 13 100) to the Los Planes cooperative for the construction of a
greenhouse that could serve the collective production of lettuce plantings. This allowed the
cooperative to obtain plantings at a much lower cost, since members used to purchase them from
Guatemalan producers. In the case of the other farmer groups that were assisted by Technoserve,
Prochalate provided them with outright grants for the construction of packing facilities.

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82. The interviews carried out among farmers showed that there were conditions that had to be met in
order to render the investments practical. These included the following:

(a) The farmers needed to have land that was under stable forms of tenure. Because the returns on the
soil-conservation measures would be obtained only after several years, farmers with unstable forms of
land tenure were not willing to carry them out. For example, one of the organic farmers stressed that
“it would have been impossible for me to do organic vegetables if I were not the owner of the land.
Anyone can rent a piece of land to cultivate cabbage or tomato with fertilizers and pesticides for only
one year, but one has to wait for years to see the fruits of starting with organic crops. You work a lot
without much return the first year, but the soil gets better year after year because of the organic
fertilizers and the soil rotation, and the productivity keeps improving. You can’t make all this effort
one year and then leave the gains of your effort for others to obtain.”

(b) Farmers needed resources to pay for the labour required to implement the soil-conservation
measures. The soil-conservation measures required a lot of labour. Part of the labour was supplied by
the families of the farmers, and part was supplied by hired workers.

VII. CONCLUSIONS AND POTENTIAL LESSONS FOR PROJECT DESIGN

A. Conclusions

83. This analysis of the organic production of vegetables in Las Pilas shows that:

84. (1) NGOs have played the dominant role in the emergence of organic production in Las Pilas and
El Salvador in general. These NGOs have not been specialized in organic agriculture or in
environmental issues, and they have not promoted organic production as a result of a specific concern
for the conservation of natural resources. They are specialized in agricultural and rural development
and have a business-oriented perspective, and they participated in the implementation of a USAID
project that promoted the production of non-traditional crops for export. They identified organic
production as one of the possible non-traditional alternatives for small farmers.

85. (2) Government policies and institutions have in general not been supportive of organic
agriculture, and they have frequently posed obstacles for the development of this agriculture. During
the nineties, agriculture in general faced a policy environment that was characterized by the
overvaluation of the exchange rate, the reduction of tariffs and non-tariff barriers, the reduction of
public expenditures through government agencies specialized in agriculture – mainly extension and
research – and the lack of agricultural credit. A value-added tax was even imposed on fresh
agricultural products in May 2000. These policies favoured imported goods and made access to
agricultural services more difficult for small farmers. Furthermore, the government agricultural
research and extension agency did not include a research programme in organic agriculture. The
IFAD-funded Prochalate project, which was implemented by the Ministry of Agriculture and
Livestock, was an exception because it contracted out to public and private agencies the provision of
extension services to small farmers. The private providers include NGOs and consulting firms with
differing perspectives, strategies and methodologies. One of them (Technoserve) become essential in
the development of organic vegetables in Las Pilas.

86. (3) Universities and training institutions in El Salvador have recently initiated programmes in
organic agriculture both at the doctorate and the master’s levels. However, no professional has yet
graduated from these programmes. Most of the professionals who are working in the public and
private sectors have been trained in conventional agriculture. Thus, most researchers and extension
workers have little knowledge of organic agriculture and have even frequently opposed it.

87. (4) Because most farmers in Las Pilas have continued growing the same crops they grew with
conventional technologies, the shift to organic vegetables has meant a diversification in production,

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with the substitution of organic vegetables for conventional crops and a slight decrease in the total
cultivated area.

88. (5) Organic vegetables in Las Pilas have represented an attractive alternative for small farmers
and have had a positive effect on output and incomes. They have involved lower production costs and
better prices for the products. In addition, they have led to the more sustainable use of natural
resources and, according to the farmers, to positive effects on the health of farmers.

89. (6) The adoption of organic vegetables has not required significant on-farm investments. The
most important of these has been the investments in soil-conservation measures. All the farmers have
been able to implement these on-farm investments – which have involved mainly labour – without a
need for credit and by relying on their own resources. The most important off-farm investments that
organic farmers have had to make have included collective investments in packing and storage
facilities and transport.

90. (7) The chief forms of the support that NGOs and the Prochalate project provided to small
farmers who adopted organic vegetables in Las Pilas included training, technical assistance, support
for collective action, and a mix of credit and outright grants for collective post-harvest infrastructure
(packing and storage facilities) and transport (refrigerator trucks).

B. Potential Lessons

91. The case of Las Pilas offers some potential lessons for policy design and implementation that will
be tested in the other cases in this research project. These potential lessons include the following:

92. (1) Organic production may be an attractive alternative for small farmers. However, the adoption
of organic crops requires a careful selection among farmers, as not all small farmers are likely to
succeed. In particular, farmers should have land that is under a stable form of tenure – preferably
ownership – so that the required investments in soil conservation can be carried out. Soil-conservation
measures are the most important on-farm investment required in organic production, and the returns
to them will only be obtained in the medium to long term.

93. (2) Technical assistance and training in organic production technologies are essential, and they
should focus on meeting the standards for obtaining organic certification. Organic certification will be
essential if farmers are to sell their products on the market and receive premium prices. In addition,
the technical assistance must help farmers plan their production so that their products become
available when the market requires or when the market pays the best prices.

94. (3) While assistance in agricultural production is essential, it is certainly not sufficient if small
farmers are to succeed. Technical assistance and training should also promote and strengthen
collective action so that small farmers are provided with the skills necessary to organize effectively.
Collective action is a key because small farmers need to have a sufficient amount of product to meet
market demands and to gain the benefits of economies of scale in quality-classification, packing,
transport and marketing.

95. On-farm credit may not be necessary for all organic crops. Soil-conservation measures that
involve basically only labour account for the main on-farm investments involved in organic
vegetables, so small farmers may be able to take advantage of the availability of family labour. Thus,
the availability of credit for hiring labour could help them expand the area under cultivation, but the
absence of credit would not render the adoption of organic crops impossible. Grants could be
provided to cover the labour involved in soil-conservation measures.

96. The off-farm investments are the most important investments required in the production of
organic vegetables. The investments relate to packing and storage facilities and vehicles for the
transport of products to markets. In the case of small farmers, these investments should be collective,

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and projects could provide outright grants to finance them as a part of the process of shifting to new
activities.

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 Annex: List of persons interviewed

1. Professionals and officials at government agencies, NGOs and farmer associations

Omar Lara, coordinator, Technoserve-Prochalate

Roberto Vega Lara, executive director, Technoserve
Mario Montano, director of operations, Prochalate
Jaime Bran Recinos, Las Pilas area manager, Prochalate
Pablo Sanabria, technical analyst, Technoserve
Salvador Arévalo, technical analyst, Technoserve
Wilfredo Cuéllar, marketing manager, Technoserve
Jorge Antonio Gómez, marketing manager, ROCA Project
Cárdenas, ROCA Project
Godofredo Pacheco, Encargado de Negocios, Producers and Exporters of El Salvador
Néstor Palma, general manager, Ucraprobex
Carlos Mario García, management subdirector, CENTA
Héctor René Milla, marketing researcher, CENTA
Adonis Moreira Rivas, natural resources specialist, CENTA
Miguel Román Cortés, Investigador en manejo integrado y hortalizas, CENTA
Pablo Posada, chief, Agency of La Palma and Las Pilas, CENTA
Martín Antonio Fuentes, extensionist, Agency of La Palma and Las Pilas, CENTA
Eduardo Huidogro, director, Oficina de Agronegocios, Ministry of Agriculture and Livestock
Francisco Márques, Dirección de Estadística Agropecuaria, Ministry of Agriculture and Livestock
Stanley Kuehn, national director, CLUSA
José León Bonilla, director-president, CLUSA
Mario Urrutia, executive director, CLUSA
Francisco Lara, dean of the Faculty Agricultural Sciences, University of El Salvador
Guillermo Mogoyón, Gerente de Perecederos, Hiper Paiz
Carlos Salazar, marketing manager, Federation of Irrigation Farmers of El Salvador
Haydée de Flores, manager of fruits and vegetables, Super Selectos

2. Farmers growing organic vegetables

Héctor Deros, Los Planos Cooperative of Organic Producers

Adelmo Antonio Arriaga, president, Los Planos Cooperative of Organic Producers
Francisco Mancía
Israel Guillén Guevara
Juan Gutiérrez
Rosa Irma Guillén
Secundino Mata
Teodoso Alvarado
Ernesto Hernández
Efraín Antonio Hernández
Saúl Alberto Vargas
Oscar René Hernández
Humberto García

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