The cost and performance of paid agricultural extension services : the case of agricultural technology transfer in Nicaragua

Budgets for extension services have been reduced in many countries. One response to these reductions in public services in some countries has been to privatize extension services - with extension services provided for a fee, by either public agencies or private companies. Under the new approach, producers become clients instead of beneficiaries. The authors examine ways to measure the cost of providing paid-extension services and its performance and apply these indicators to data on Nicaragua, where paid extension has existed for several years. Data were insufficient to compare the quality of privately and publicly provided extension services, but available data suggest that the costs of extension have declined over time. Results suggest that paid extension is feasible and has a positive impact, even in a relatively poor country such as Nicaragua. The national system for agricultural technology-transfer services was redesigned to include three main modules: mass media and free demonstrations; cofinanced extension services; and private extension services. The relatively high cost recovery rates in Nicaragua and the economic performance of the two paid programs show that even poor farmers are willing to pay for a service that improves their economic efficiency and ability to earn a living. To the surprise of everyone involved, Nicaragua's producer clients understood that without cost-sharing, the system would not endure.