The largest Mexican agricultural project, the Farmers Direct Support Program, prepares to launch a comprehensive impact evaluation

PROCAMPO Evaluation Plan (In Spanish only)

PROCAMPO (“Programa de Apoyos Directos al Campo,” or “Farmers Direct Support Program”) was originally designed to compensate staple producers who were expected to face declining prices after the initiation of the North American Free Trade Agreement (NAFTA). The program provided cash transfers to agricultural producers who had land dedicated to staple production in the period prior to NAFTA. PROCAMPO has been in place for over 15 years, and while it has been modified over that time it continues to provide a subsidy per hectare of land cultivated to all farmers who were originally subscribed and it remains the largest Mexican agricultural program.

As one of the main instruments of Mexican agricultural policy today, PROCAMPO seeks to improve the wellbeing of farmers by increasing and stabilizing their income. To accomplish this, the program provides decoupled direct support payments to help farmers overcome financial constraints that may limit their capacity to make productive investments. Although decoupled subsidies are not directly linked to production choices, empirical evidence suggests that they can affect production decisions, particularly under the presence of market imperfections such as credit constraints.

By providing cash, PROCAMPO helps credit-constrained farmers invest in agricultural production and obtain higher returns on production. In this way, each peso transferred to a farmer may increase income by more than a peso creating a multiplier effect.

The strategy to evaluate PROCAMPO will focus not only on measuring the impact on the level of farmers’ income, but on understanding the channels through which PROCAMPO transfers can increase farmers’ income beyond the amount of the transfer. The evaluation will first identify the impact of PROCAMPO on productive investment and spending in agriculture and second, it will identify how this can be translated into higher productivity and therefore, higher income and competitiveness. For this purpose, the evaluation will focus on a variety of indicators, including: (i) net agricultural income; (ii) value of production per hectare; (iii) value of inputs used per hectare, and (iv) value of on-farm agricultural investments. The evaluation will also consider the impact of PROCAMPO on environmental outcomes such as pesticide use and land management.

The impact of PROCAMPO is expected to be heterogeneous and understanding how the impact may vary by types of beneficiaries is important for designing policies to complement the program’s transfers.

The evaluation will also assess the heterogeneity of impact by implementing a careful data collection strategy on a nationally-representative sample that allows measuring the impact by land size, geographical regions, access to irrigation and type of land tenure, among others. The evaluation will devote particular attention to the assessment of the impact of PROCAMPO on poorer farmers.

The data collection strategy represents one of the most important IDB efforts to obtain first hand empirical evidence of program impact. It includes collecting two rounds of survey data in 2011 and 2013, in order to create a panel of about 10,000 farmers. The survey instrument is a rich questionnaire that comprises about twelve modules and over 300 questions regarding farmers’ livelihood strategies, income sources, demographic information, access to savings and credit, food security, as well as a very detailed module on agricultural inputs and production. Overall, the collected data will be a valuable resource with information that is useful not only to evaluate PROCAMPO, but to understand farmer behavior in Mexico.

Identifying the impact of PROCAMPO on agricultural outcomes is challenging, as the program has been in place for a number of years. The evaluation will implement various methods, but the main approach will be a combination of propensity score with double difference, and instrumental variables will be used to corroborate the program’s impact.

The final result of the evaluation will not only provide evidence of the multiplier effect of PROCAMPO on farmers’ income and agricultural productivity, but it will also contribute to the understanding of the development effectiveness of decoupled subsidies in rural settings.