| “But why, some say, the moon? Why choose this as our goal? And they may well ask why climb the highest mountain?... We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.” (the complete speech) Conclusions from the Governmental Moon Subsidize Project. For effective business-oriented subsidies, we need to take into account and answer the following three questions: - WHY do we subsidize? e.g., to create jobs and companies.
- WHAT do we subsidize? e.g., landing a man on the moon.
- HOW will subsidies transform the economy? e.g., reorganize and express the capabilities and creativity of the local workforce.
Note. In his speech, the President hardly mentions any specific technology, although technologies are essential to the project's success. What do you think applies from this to the use of government subsidies in Africa, India, and other emerging economies, and how would you apply it in practice? THE SUBSIDIZE ULTIMATE “TEST” Subsidizes can be devastating for farmers’ future or the springboard that will catapult them to the life of prosperity; the difference depends on the GOALS of what the subsidies are meant to generate. You see, subsidies recalibrate the entire business ecosystem, making people and companies focus on benefiting the most from what seems as "easy money." At times that can be at the expense of overall reduced profitability. Therefore, the test of knowing if a subsidy to improve farmers’ lives is doing its job is simple and can be answered with a single simple question – “Following the subsidy, did farmers increase their income? Yes / No.” This is measurable, both on a qualitative and quantitative scale. The growing global number of poor people is an alarming call proving beyond any doubt that today most of the subsidies are aimed at reducing expenses. Unfortunately, reducing costs is not correlated to income increase. In short, current subsidies are ineffective in decreasing poverty. SUBSIDISING “HOPES” Governments wish to see their subsidy funds used well, and for this, they need clear criteria. By asking simple questions, we can discover the criteria that would create the most significant impact. We will start by asking - Is farmers' goal to buy chemicals, machinery, or services? The answer is sharp - NO!! Chemicals, machinery, and services are mere “tools” that the farmer is using in the process of growing his crop. We hope these tools will help the farmer to produce better products and sell more. We then assume that if the farmer sold more and better produce, he would increase his income and improve his livelihood. In the above scenario, which is familiar to us all, we subsidize stages in “the process” of produce production (e.g., chemicals, machinery, and services). In this case, we face a big problem – what if farmers use those Goods and Services but do not get the desired impact? You see, the farmer hopes to increase his yield, he hopes to improve the quality of his produce, he hopes to find buyers, he hopes to export, he hopes to get a better price for his produce, etc. Today, smallholders’ livelihood is based on "hopes." As the farmer and we hope for better results, it is sad, but none of us can be certain of the future business results. Therefore, our best assumption would be that farmers' income next year would remain unchanged. Meaning, without a change, the farmer and his family would remain in poverty. Hence, subsidies are not dealing with business per se but prevent further deterioration of smallholders' harsh economic and social situation. SUBSIDIESING “RESULTS” For decades governments subsidize “hopes” with no sign of significant positive change in the agro-industry of emerging economies. Here I propose a slightly different approach of deciding how to invest subsidy funds better while decreasing uncertainty, omitting the need to rely on "hopes," and increasing cooperation within the value chain. This approach is based on subsidizing certain specific results instead of in the uncertain process. What if instead of subsidizing “the means in the process” (e.g., chemicals, equipment, services, etc.) and hoping for results, the government would set Goals and subsidize the Result that matches those goals? To better understand, here are examples of the difference between subsidizing "Process" to subsidizing "Results." Example 1: (a) Subsidy Process-oriented – the goal enables the farmer to buy more goods and services. Hence, subsidizing goods and services. Expected income – rising prices of subsidized goods and services. (b) Subsidy Results-oriented – the goal is to have farmers growing more and better produce suitable for export (higher prices). Hence, subsidizing the kilograms of "Export Quality" produce sold by the farmer to an export-oriented packinghouse. Expected impact – goods and services providers would show more interest in farmers' professional and business results. Farmers will have to adapt to the highest quality standards required for selling their produce in the premium export markets. Example 2: (a) Subsidy Process-oriented– the goal is to have a packinghouse for farmers to export their produce. Hence, subsidizing the construction of a packinghouse. Expected impact – packinghouses will be available but not necessarily active or fitted for the actual demands of farmers, traders, and exporters. (b) Subsidy Results-oriented– the goal is to increase fresh produce export. Hence, subsidizing each Kg, the packinghouse is exporting. Expected impact - the entire value chain will have to reorganize, improve collaboration, and work in harmony. Subsidizing the farmers is fine as long as we directly link the subsidy to the desired Result. | 
