- The Washington Times - Sunday, November 21, 2004

TALAVERA, Philippines — Michael Ramos slides under the water buffalo as the animal shifts nervously in her muddy pen, her tail swatting the black flies swarming over her hide. With a quick jerk, Mr. Ramos reaches under the bulky creature and draws her milk into a pail.

The 20-year-old farmer’s son never dreamed he could make a living tending carabaos, as water buffalos are called in the Philippines. There simply wasn’t an established market for their milk. Mr. Ramos expected to scrape out a living growing rice in the fields near his home.

“But today, we can earn a lot selling carabao milk — more than we can growing rice or vegetables,” said the barefoot man who works in shorts and a basketball jersey.

“We now have a reliable place to sell our milk every day. That’s been a big help to us.”

Mr. Ramos and his family are benefiting from a loan program funded by the Asian Development Bank (ADB) and other international donors and administered by the Philippine government. It helps small farmers — in this case by setting up a milk-processing plant near their homes so they have a guaranteed market for their dairy products.

The farmers say the money they now earn allows them to improve their homes, keep their children in school longer and invest in their work in hopes of enjoying greater prosperity.

Such projects are becoming a larger part of the activities of the ADB, the World Bank and other multilateral development banks.

Once known mainly for large-scale construction projects like building roads and bridges, they now undertake child-nutrition programs and help set up national banking systems.

The change partly is a result of pressure by wealthy donor nations to make development banks prove they actually help people become less poor.

In countries like the Philippines and Bangladesh, this is being done by a management strategy called Managing for Development Results.

“To be effective, results management must become an integral part of the culture of the institution and be communicated by ADB top management to those inside and outside the institution,” John B. Taylor, U.S. Treasury undersecretary for international affairs, told the bank’s management at its annual meeting in South Korea this year.

At the ADB, this results-oriented strategy measures success in terms of the benefits delivered to people like Mr. Ramos, the carabao farmer, rather than by how much money the bank has been able to lend.

“[It] is about focusing our operations much more strongly on the lives we need to improve, rather than the money we wish to deliver,” Joseph Eichenberger, one of the bank’s four vice presidents and a former U.S. Treasury official, told bank employees at a recent gathering.

“It is about lending programs shaped by what poverty and human dignity urgently demand, rather than by what we can comfortably supply,” he said.

“It requires cutting back on the often self-spun web of bureaucratic obstacles that can rob us of our efficiency, our enthusiasm, and our inherent strengths,” he said.

The Manila-based ADB employs more than 800 development specialists, economists and others who oversee an annual lending budget of some $6 billion across a region that encompasses two-thirds of the world’s population.

“We are a very good project financier,” said Bruce Purdue, an ADB official helping oversee the program. “We know how to get money, design a project, and implement it. We know how to award the contracts for consultants and handle procurement. We can build a good school, hospital or highway.”

But increasingly, said Mr. Purdue, donors, loan recipients and nongovernmental organizations are saying: “Well, you have done all these successful projects, but what is the impact? You built a nice school, but have more kids been educated? You have a great hospital, but has infant mortality declined?”

The challenge facing development officials at the ADB and other development banks like the World Bank and Inter-American Development Bank, both based in Washington, is that they have limited control over how their projects are implemented by the borrowing governments, officials say.

Ian Vasquez, director of the Project on Global Economic Liberty at the Cato Institute in Washington, said some things essential to overcoming poverty in the long term, such as the poor’s access to credit and their ability to meet the regulations to form a business, often are beyond the purview of development banks.

“It’s good that development banks are turning their attention to more efficient ways to get money to the poor,” Mr. Vasquez said in a telephone interview. “But in a way, it’s more efficient welfare. There’s still a dependence on subsidized loans.

“Domestic policy changes and restructuring at the national level need to be addressed over the long term.”

Arguments over the need for domestic policy changes, however, don’t mean much to Mr. Ramos and his neighbors in Talavera, a small town a few hours north of Manila.

The program they benefit from was formed after it was discovered that poor farmers who received farm lots under a land-redistribution program in the Philippines often lost their farms to banks because they couldn’t make a profit.

The loan package, called the Agrarian Reform Communities Project, brings farmers together and helps them with roads, irrigation and livelihood projects so they can hold onto their land and lift themselves out of poverty.

In the case of Mr. Ramos and many of his neighbors, a milk-processing plant partly funded by an ADB loan buys their carabao milk and processes it into ready-to-drink products, cheese and candy that are sold to nearby schools and stores.

The plant gives farmers a steady market for their milk and allows them to focus on dairy farming rather than sales and marketing.

Previously, a development project would be judged simply by whether the processing plant was built properly and was functioning as intended.

Now, development workers must examine whether the farmers in the area really earn more than before, and whether or not a project has improved their lives.

In the case of the Ramos family, the answer is clear. By focusing on dairy farming, they have increased their monthly income from about $100 a month to about $400. With that, they have managed to buy a motorcycle with a sidecar to help the family get around and put one of their daughters through college.

“We have been farmers all our lives,” said Maria Ramos, a mother of four. “But we have always had trouble making ends meet. Now, we are able to make enough money and save some. We make a profit on the farm every month.”

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