WB/Paraguay: 200.000 Rural Poor to Benefit from Improved Agriculture and Social Empowerment

December 5, 2013

WASHINGTON, December 5th, 2013 –The World Bank Board of Directors approved today US$100 million additional financing for Paraguay’s Sustainable Agriculture and Rural Development Project (PRODERS), which aims to improve the socio-economic conditions of small-scale farmers and indigenous communities. The additional financing will help strengthen access to markets and value chains and enhance community organization and self-governance.

"This project will help reduce poverty through integrated solutions in the departments with the highest concentration of rural poverty. We also seek to improve the family income and quality of life of the beneficiaries, with sustainability as a key concern," said Germán Rojas Irigoyen, Paraguay's Minister of Economy. "Attacking the problem of poverty is one of the main challenges of the Paraguayan government, as this is the most direct way to change the country’s course and increase the wellbeing for the majority of the population," said Rojas Irigoyen.

The new resources will enable PRODERS to scale up poverty reduction in the Caazapá, Canindeyú and Concepción departments, as well as San Pedro and Caaguazú, which were already covered under the original project. Together these five departments of Eastern Paraguay account for 97 percent of the rural population. It is expected that an additional 200,000 beneficiaries will be reached, bringing the total number of beneficiaries to 256,000.

We strongly support Paraguay’s efforts to fight extreme poverty. Considering that some 800,000 rural poor in Paraguay live off agriculture, by supporting rural investment financing, community organization and extension services the project will contribute to reduce poverty in rural areas,” said Penelope Brook, World Bank Country Director for Paraguay.

The Project comprises five components:

1. Community Organization Development and Capacity Building:  Training programs for small-scale farmers and indigenous communities on sustainable natural resources management; animal production and health practices and agricultural production techniques.

2. Rural Extension and Adaptive Research: Promotion of participatory rural assessments and on-farm technology to improve existing agricultural production practices, with a goal to diversify production and respond to demands from small-scale farmers and indigenous communities to support the adaptation of production practices to local agro-ecological conditions.

3. Sustainable Rural Development Fund: Provision of Community Grants for investments identified by the communities in the areas of basic infrastructure, sustainable agriculture, diversification of production systems to increase income, among others.

4. Animal Health Improvement: Strengthening of the institutional and operational capacity to manage animal health issues.

5. Project Management, Monitoring and Evaluation: Strengthening of the Ministry of Agriculture’s institutional, operational, administrative and financial management capacity for the implementation and monitoring of the project.

Paraguay has one of the highest levels of poverty in Latin America, with about one third of the population living below the poverty line and 18 percent in extreme poverty. Poverty is concentrated in rural area, which has 40 percent of the total population but concentrates two thirds of the extreme poor. Almost 45 percent of the rural population (1.2 million Paraguayans) live in poverty, compared to less than 25 percent in urban areas.

The US$100 million Investment Loan has a fix spread and a 30-year maturity period, including an 8-year grace period.

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