Developing Rural Enterprises

Dadeldhura farmers show their produce - Credit: Jisu Mok/Oxfam

Why is this program unique?

Our Enterprise Development Program (EDP) is a unique programs to enhance the capacity of agro-based rural cooperatives and linking them to the formal banking system. The program directly benefits thousands of small farmers, over 80% of them women, in disadvantaged remote areas. 

Oxfam was one of the first development agencies to sign an MOU with a bank, Nepal’s Kumari Bank, which took up the challenge to work in rural areas, providing a strong financial base for cooperatives and easy access to credit to countless small farmers. 

EDP is a global Oxfam program implemented in over fifteen countries. In a 2013 evaluation the Nepal program was noted as one of the most successful.  

What does it do?

Oxfam’s EDP program made its first investment in Nepal in early 2011 and now supports three enterprises: Pavitra Seed Enterprise in Surkhet, DAFACOS Vegetable and Seed Enterprise in Dadeldhura and Nawalparasi Rice Enterprise in the Terai. All three are owned and run by cooperatives. Farmer-members sell their harvest) to the enterprises and they receive agricultural inputs, training, loans and other extension services.

The program builds on Oxfam’s past efforts to establish community based farmers’ groups to unite small farmers. The program also establishes Participatory Learning Centres (PLC) which use the REFLECT method to identify problems and solutions.

Oxfam helps the cooperatives improve their (financial) management systems and prepare a business plan. It also supports the salaries of a general manager, marketing officer and  Junior Technical Assistants (JTA) for a period of three years. 

The cooperative signs agreements with a number of buyers (15-25) and then signs MOUs with farmer groups. The market rate is guaranteed. 

Oxfam’s financial partner is Kumari Bank. Oxfam has deposited a fixed deposit at the bank to act as collateral. This gives confidence to issue loans to the enterprises. So far all cooperatives have repaid their loans in time. At present they take up 90% of repayment risk. 

How does it improve the lives of those involved? 

Around 5,000 member-families benefit directly and 15,000 non-member households benefit indirectly by selling to the cooperative. Over 80% of beneficiaries are women. 

The farmers benefit from increased income due to a move towards high value production and better farming techniques. Their market and market price is guaranteed at the start of the season. The members further receive a dividend from the annual income of the cooperative. 

Although no formal studies have been done, the trend of going to India for seasonal migrant labour is reversing in the communities. The income is being used to send girls to school and get help when family members get sick. Farmers also invest in building a house and buying land. 

The PLC centres greatly help to bring out and solve community and individuals’ problems and finding solutions, including legal issues and inability to access government services. 

Can you give one example? 

Born into a Dalit family, the life of Uma Koli in the past was full of hardship. The mother of four received no respect in the community and was socially discriminated as ‘untouchable’. In addition, she faced economic problems, since she had no source of income.

At present, Uma Koli is one of the best seed farmers in Dadeldhura. She annually supplies 700 kg of seeds, mainly maize, okra, spinach and peas, and earns around NPR 66,000 (£429) per year from her seed business only.

With the support of Oxfam’s Enterprise Development Programme, Uma Koli received training in vegetable seed production. “The enterprise buys all seeds that I produce and pays a very fair price. In addition we receive technical support and services from outreach workers,” says Ms Koli.

Find out more about the changes in Uma Koli’s life here.

What are the risks involved?

Natural disasters such as earthquake, droughts and flooding influence annual production. Political upheaval like strikes and the blockade of Indian border in 2015/16 also create obstacles to the enterprises’ success. Additional risks are the illegal imports of rice from India resulting unfair competition as well as the import of hybrid seeds which create dependency of farmers on multinational companies. 

How will it be replicated or built upon? 

Oxfam is keen to share the good practices with stakeholders such as development agencies, government officials and media representatives. Regional level workshops have been organised to share the learnings. Oxfam’s other regular programs apply this model in Dadeldhura, Baitadi and Darchula district. Plans are underway to work with cooperatives in Udaypur, Nawalparasi, Kapilvastu and Argankanchi.