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Strengths and weaknesses

Experience so far shows both strengths and weaknesses of demand-side financing of AAS.

Strengths Weaknesses
  • Promote empowerment of farmers and accountability of service providers towards them
  • Can ensure relevance to different categories of
  • farmers and adaptation to change
  • Increase effectiveness in terms of quality and results 
  • High degree of ownership of farmer-driven and -managed AAS
  • Substantial  rganisational and individual capacity development required, with sufficient time and resources
  • Transparency of financing mechanisms and demandled processes required but not sufficient in existing systems
  • Need promotion of pluralistic services so that farmers have a choice
  • Vulnerable to political will and policy instability

Best-fit considerations

Demand-driven financing mechanisms for AAS require an enabling environment to function well. There is a need for strong and healthy institutions close to their users. Local institutions and FOs need to have, or to be ready to develop, the capacity and procedures to become relevant, transparent, and accountable to users and members. There also needs to be consensus on conducive policies and willingness by policy- and decision-makers to promote pluralism in service delivery, and to move the responsibility as well as the decision-making power to users.

Demand-driven financing works most effectively when services connect with activities that raise farmers’ incomes, (6)
As is the case with DAAS and Colácteos.
 for example by increasing market opportunities. Some INDAP programmes that connect to agribusiness succeed by focusing on productivity and commercialisation, whereas farmers who have no additional opportunities for commercial production have little incentive to engage.