Paul Polak was fifteen when he got his first taste of farming. Learning that he could make extra pocket money by selling strawberries, he convinced two farmers to partner with him to grow his own. After a year of sweat and labour, he hired a group of women to help pick strawberries during harvest season for 5 cents a quart. He then took his crop to Loblaws, the biggest grocery store in Hamilton at the time, and struck a deal to sell seven and a half acres of strawberries at 25 cents a quart. After deducting his expenses and repaying loans to his father, his profit was 700 dollars for two summers’ work, equivalent to about 7000 dollars today.
As a teenager who at the time was more interested in girls, ballroom dancing, and playing softball, the business didn’t last and he left after pocketing the money. He became a psychiatrist and later realized that poverty was the root cause to many illnesses he saw. Looking back 57 years later, the strawberry business gave him an appreciation of what it takes to run a small farm and make money doing it. You had to grow valuable crops, find a market to sell them at a profit, have a good source of affordable plants and fertilizer, and hope that your crops don’t get wiped out by diseases and pests.
Today, Polak is better known for starting an organization called International Development Enterprises (iDE) in the early 1980s that designs affordable irrigation tools to help small-acreage farmers. They would help farmers select a few high-value fruits and vegetables that would grow well in their area, sell them seeds and fertilizers to grow these crops, and help them sell at a profit in the marketplace. In turn, they ended poverty for some 17 million people living on a dollar a day.
In his book Out of Poverty: What Works When Traditional Approaches Fail, Polak argues that we have little hope in achieving the Millennium Development Goals if we continue with a “business as usual” approach. The way we think about poverty and what can be done to end it is severely influenced by three great poverty eradication myths:
1) We can donate people out of poverty.
The Millennium Development Goals centre around the notion that people who live under a dollar a day are too poor to invest their money to move out of poverty. So development experts ask for billions of dollars, or gifts, from rich countries to poor countries for building missing infrastructure that would allow growth to take off and end poverty. This strategy is fatally flawed.
What happens is Western “experts” with little or no exposure to rural villages will decide how the money is spent. Word gets out that there are big dollar giveaways, attracting developing country politicians and get-rich-quick businessmen who want to fulfill the contracts. Highly-publicized ribbon-cutting ceremonies are held. For the first year or so, the projects will yield excellent results because of big investments in input and modern machinery supervised by well-paid Western consultants, and extensive media coverage. But after money for the project runs out, everything goes back to normal.
This is not an uncommon scenario. In the past, many organizations had donated village hand pumps to provide clean drinking water only to return two years later to find that 80 percent of them were not working. No one had assumed ownership of the product so when the pumps broke, they were left broken.
2) National economic growth will end poverty.
People living in remote rural areas will continually get bypassed by urban-centered industrial growth. India and China reported sustained economic growth rates but still have several hundred million people living in extreme poverty. It is the economic growth in remote rural areas on one-acre farms where poor people live that is needed, not generic per capita GDP growth that takes place primarily through industrialization in urban areas.
3) Big business will end poverty.
Multinationals know very well how to make money. But very few multinationals know how to make a profit serving customers who survive on less than a dollar a day and who may be illiterate. If most multinationals continue to serve only the small percentage of wealthy people, the belief that big business will end poverty will remain nothing more than a myth. Big businesses have to learn how to provide affordable goods and services that can increase the income of poor people and make a profit doing it.
Contrary to how it was viewed in the first twenty years of iDE, “business” doesn’t have to be a dirty word. Polak believes the way we tackle poverty needs to change. We need to unleash the market forces to find solutions to the problems.
iDE is just like any other business. It provides a product or service to its customers at a price they are willing to pay. But the goal is not simply to turn a profit. By providing simple solutions such as low-cost treadle pumps and drip irrigation systems at an affordable price, it helps increase the livelihoods of small scale farmers who make up 70 percent of the world’s poorest people, while at the same time achieves financial sustainability and is therefore able to operate longer than the lifespan of a donation. It also assumes ownership of the products and listens to its customers to understand their needs and devise ways to serve them. As a result, it is able to make a significant impact on poverty and has the potential to do much more.
