AgBDS on Multi-Partnership

8/13/2019 AgBDS on Multi-Partnership

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A brief concept on:

MULTIPARTNERSHIP MARKETING AND AG-BDS SERVICE FOR

SMALL PRODUCER GROUPS

LET'S DO TOGETHER(Multi-partnership for prosperity)

Prepared and shared by:

Nirdhan (An Ngo for poverty reduction in Nepal)

Head Office, Anamnagar, Kathmandu, Nepal

Contact: Krishna Tiwari,

[email protected],

01-4102969, 9851096192

December, 2013
mailto:[email protected]:[email protected]:[email protected]


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1. Background

The agriculture sector accounts for one-third of the national GDP. Its contribution to

employment, especially in rural areas, is quite considerable and there is a high dependence on

agriculture as the major source of income. Over recent decades, agriculture development hasfailed to keep up with the increased demand from a growing population. With little scope for

increasing area under cultivation, population growth has led to falling average farm size andincreasing fragmentation, which further scatters the agriculture industry.

Entire private sector, especially agro-industries is the engine for agricultural growth in Nepal'scontext. It pushes to generate and disseminate improved agricultural technologies that farmers

can accept and increase farm production and productivity stepping up to higher scale.

Commercialization of farming has seriously been taken as the driver of economy that facilitatesagricultural industrialization for which the nation is striving for. But, lack of coordinated efforts

to organize and unite the fragmented farming has been the major constraint. The collective

actions on finding new markets, supporting small farmers/groups to produce quality products at

required quantity by agro-industries, and again providing access to the quality inputs (marketinghigh tech. and quality inputs) seems the ultimate quest. While searching for practical solutions,

obviously, it is the time for collective actions to get advantage of multi-partnership and a market

platform for agro-business. The approach will pull the farmers to market demands, act more

effectively; simply they grow more and get more.

1.1 Nirdhan (An NGO for poverty reduction in Nepal)

Nirdhan is poverty focused non-profit making social organization and the first replicator of the

Grameen Bank financial system (GBFS) in Nepal. Nirdhan has preceded microfinance in Nepal.

It was established in 1991 as a non-governmental organization under the Society Registration

Act, 1977. Nirdhan NGO, soon after its establishment started to fight against extreme poverty in

Nepal through access to microfinance to poor families. An expedition to expand GBFSthroughout rural Nepal was march forwarded by Nirdhan for the first time in Nepal. Nirdhan

transferred all of its microfinance operations to the Nirdhan Utthan Bank Limited (NUBL), a

sister organization of Nirdhan (NGO) in July 1999 with more than 25000 clients taking NRs.

65,975,092.15 loan; and the expedition has been mutually performed by both of the

organizations sharing two sectors viz. financial and non-financial services. Nirdhan, then, has

focused its works towards non financial services to the clients of NUBL.

Nonfinancial service to the clients/others has included vocational trainings, skill transfer on

improved technologies of agriculture and livestock farming, and startup supports for income

generation, health and protection and asset recovery through community based micro-health

insurance. In the last 5 years, Nirdhan has completed more than 10 livelihoods projects (with the

component "increased access to micro-finance") and has served for more than 100000 families

for livelihoods promotion.

NUBL clients, however, have been getting nonfinancial services to many parts by Nirdhan

through different donor supported development innovation projects, but these are limited to a

small area and clients. Such types of projects/programs lack regular supports and are generally


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emergency relief/start up supports to the marginal, vulnerable and excluded communities which

by nature, might not be supportive towards commercial expansion and agro-business promotion.

Nirdhan, thus, is preparing for Agriculture Business Development Service (Ag-BDS) to MFI

clients with its own initiation on coordination with some private agencies.

Nirdhan is happy to be the active part of nation's target of reducing poverty and appeals to joinhands to attain socio-economic empowerment providing better opportunities to families realizing

their full potential and enjoy the better quality of lives.

1.2 Nirdhan Utthan Bank Limited

Nirdhan Uthhan Bank Limited (NUBL) is the largest Microfinance Institution (MFI) in Nepal,

established with a mission to help reduce poverty empowering women and entrepreneurship

through microfinance services. NUBL, the leading microfinance bank in Nepal has been

providing packages of services to more than 190, 000 rural families in 49 districts of Nepal witha huge network of 118 branch offices and 30,472 groups in 1147 VDCs. More than 60 percent of

total loan portfolio of the bank is in agriculture sector. NUBL's loan schemes have always beenfocused on agriculture loans (seasonal, and midterm loans), irrigation, and agro-business (micro-

enterprise). Recently, the packages were reviewed and revised. Basically, there are fourimportant agriculture loans (Dairy, Irrigation, farm machinery, and crop production) to scale up

agriculture/livestock farming to the resource poor farmers.

2. Objectives

Creating a tri-party network that takes care and nurture of integrated agriculture business Engaging producers, technical supporters, and agro-industries on maximize Increasing the agricultural production by commodity diversification, mechanization, and

commercialization Promoting agro-entrepreneurship finding and expanding markets Increasing agricultural loan and risk management

3. Problem justification

Rural livelihoods is mostly affected by poor market infrastructure, lack of access to financialservice system, unpredictable pest and diseases management issues, unfair trading system mostly

due to lack of information, etc. Promoting entrepreneurship and agro-business has been a major

challenge especially from the small scale farming without delivering package of services needed.

Agricultural commercialization is facing the same kind of problem to grow up agriculture

industry and market. AgBDS service will help to mitigate these problems through decreased perunit cost of production, increased net income of farmers, and wide agro-markets to favor

sustainability.

Agro-products based businesses like seed, feed, food, and agricultural tools have not been able toprovide access to agricultural inputs to rural and remote parts of Nepal. Government of Nepal

has its own problem of scarce human resources, limited funds and programs supporting

subsidized inputs to farmers, and most importantly lack favorable policy and vision to promote


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producers, processer, and markets simultaneously. Direct hamper of nation's inability has often

been discussed from production side abiding the sides of agro-industrial demand. Viewing to the

national program planning and foreign supports on agriculture and livelihoods in Nepal, pushing

factorshave always been considered without matching with the pulling factorsof agriculture

commercialization. Searching for the practical solutions, pulling factors should also be

promoted so that harmony between all actors (producers, processing industries, distributors, andconsumers) could be achieved that automatically pulls farmers take benefit of certain marketplatforms and grow more.

4. Methodology

Poor and marginal farmers are grouped to enjoy the microfinance service within the SRG (SelfReliant Groups) and GB (Grameen Banking) model. Nirdhan Uthhan Bankl Limited (NUBL)

will provide the credit for agriculture production. Agriculture credits have high credit risk which

will be taken care and needs to the farming will be provided by Ag-BDS service (non-financial

supports such as technical backstopping, technology transfer and building market linkages). Thefarming might also be grouped further based on the enterprise (crop/livestock) types. Nominal

fees will be charged for the package of services under AgBDS from farmers and from other

parties in some way. The revenue from the parties will help to continue and expand the servicesto a wider range of costumers for both pushing and pulling agro production and marketing. At

the same time, agro-industries/agro-marketing companies will find an avenue to create new and

expand the existing markets while maximizing customer relations within the tri-party network

(multi-partnership) will be asset for all. Further, agro-processing/marketing companies will havehuge chances of widening their own business scope where they get effective and sustainable

income even from utilizing social costs. Ultimately, there will be win-win situation amongst the

parties within the self sustaining system.

4.1 Ag-BDS Services

The complexity of constraints for a rural farmer such as spars agrarian farms, insufficient man-

power, insufficient resources and helping hands, fragmented and unorganized units of

production, weak bonds between linkages have been seriously considered. And, Nirdhan (NGO)

will provide the package of supplementary services (AgBDS) to the farmers including providing

access to the government and private sector services. The Ag-BDS service will primarily include

the following:

4.1.1 Skill transfer/trainingsFarmers need trainings mainly to grow/rear and market crops/livestock with improved practices

so that production and productivity could be enhanced. AgBDS will provide the essential

trainings to the farmers with the help of technical experts from DADO, DLSO, ARS/NARC andother institutions by facilitation of JTs under NIRDHAN. Such trainings encourage will

encourage farmers to take different types of agriculture loans; and start mechanized and

commercialized farming.

Farmers will be charged for the capacity building towards tech. suitable to the context.


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4.1.2 Farm/herd visits (both emergency and scheduled)Farmers have many problems related to plant protections and animal health. Agriculture

Officers (under NUBL) and JTs will provide the service in supplementary of the governmental

services. Frequent farm/herd visits will be conducted by the technicians. Farmers at any time

can ask about the problems/risks and possible solutions towards particular situation at the farm.

Some supports will also be provided by distributing/making easy access to

medicines/vaccines/hormones/pesticides which will be charged as per the market price. This

package will help manage risk,and ensure the production and productivity.

4.1.3 Technical backstopping and business counselingMost of the farmers are cultivating traditional methods and have been limited within subsistence

agriculture. Agro-entrepreneurship has yet not come into the loop of earning money but just

focuses to meet food, shelter and clothing. At the current scale, cultivation costs are generally

very high with minimal yield. Counseling the farmers on improved breeds/varieties and other

technologies will be provided at regular basis. Ag BDS will help farmers to plan and execute as

planned on crop calendar and intensify farming for sustainable benefits. Buildingentrepreneurship will help farmers think the same farming from business perspective which

pushes towards commercialization. Thus, increased benefits to all parties of agro-market from

the effective system could be tapped.

4.1.5 Value addition by good pre and post harvest technologiesFarmers have not become able to maximize income through the farm products utilizing different

utilities (time, place and form utility). Unknowingly low value products are being marketed

only due to unmatched harvesting time such as harvesting vegetables during peak season, and

without following safe methods and type of edible portion. Method demonstration following

improved practices with the help of AgBDS services on proper pre and post-harvest system will

lead to increase value of the products. In addition, Nirdhan will facilitate farmers to adopt safeagriculture practices, builds links to post harvest facilities like cold stores/cellar stores/chilling

centers or other means. Further, processing of the products like pickle, jam, jelly, marmalade,

chips, Biscuits, Dalmoths, etc. making and packaging will add value to the product. On the

other hand, employment creation and business promotion will be secured.

4.1.6 Market information and MarketingThe price lists of different products at markets in a regular basis will be disseminated and

encouragements will be made to catch sustainable benefits by adjusting commodity types and

cultivation technology. Hence, increase in the producers' haggling power and providing wider

choices to sell the products in different markets will be provided. Further, access to quality

input servicewill also be provided which will buy and sell the processed products, and market

them. The revenue stream of AgBDS can also be widened by providing this service. Farmers

will also get value of some of the products which would not be possible without such service.

4.1.7 Forward and backward LinkageProduct collection and links with different seed, food and feed companies, diary centers, other

private firms (Eg. farm machinery business), or marketing cooperatives/wholesale buyers will


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make farmers feel secure and encourage area of production. In turn, area of AgBDS service will

be increased gradually. Nirdhan, as an AgBDS service provider, will arrange for the linkage of

farmers to the input suppliers and markets. Assuring the quality inputs at competitive price and

marketing of farm products will also be a cross advantage to create a closer relation with

farmers and private firms.

4.1.8 Access to government and other service providersThere are many service provider institutions like DADO, DLSO, I/NGOs, etc. who are

providing different services to the farmers. Creation of production groups and facilitating them

to register with other service providers will help farmers to get resources free of cost/or at low

cost. Encouraging farmers to utilize services from Seed and Soil testing labs under Nepal

government, and other vaccination camps will certainly make farmers feel a change due to

AgBDS, believe as their own solution finder, and will adopt the message disseminated.

4.2 Ag BDS network/multi-partnershipDue to the lack of collective actions together, various subsectors fail to achieve success.Agriculture sector is the one which has most distinct as well as dependable parties without one

the other parties rarely can think to exist. In Nepalese context, small market sizes and limited

boundaries to a narrow circle, fluctuating production trends, hiking food, agro-inputs prices, and

unorganized marketing systems has been major limiting factors of commercial farming and

agro-industrialization. Ag BDS network will bring producer groups, agro-industries, input

suppliers, and other support providing organizations together at a single platform to tackle

against and avoid such constraints. In gist, a network will be formed including seed, feed, agro-

tools companies/marketers, AgBDS service provider, Micro-finance bank, and the producer

groups which will be actively involved in agriculture business promotion. In the process,

AgBDS service provider, Nirdhan will initiate, act as bridge between parties and lead onexecution.

4.3 Activities to be carried out- Enterprise selection, finding feasible farming enterprises

- Orienting clients/groups

- Calculating area of production, possible production (tonnage)- Agreements between:

a. Nirdhan (Ag BDS service provider) and the partners for Ag-BDS services

b. Nirdhan/farmer/producer groups and agro industries for input supply and purchase of farm

products

- Preparation of business plan and detail implementation plan- Hiring staffs and execution

- Service delivery to farmers the by Nirdhan with the supports from the partner orgs.

5 Outputs of Ag BDS5.1 Scope for farmers/ producer groups


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Farmers are at lower strata at present context, lack most of resources, and as a result many

other businesses have been limited to a dwarf bench mark. So, the ultimate benefit of the

platform should go to small scale farmers.

Once the technical advices, entrepreneurship counseling, micro-credit for the production

project, access to quality input at right time, and the certainty of market of the farm

products will encourage them to scale up level of farming. Sustainable income generation,

exploitation of local resources, employment creation, and socio-economic security will be

the most possible benefit to farmers.

5.2 Scope for marketing firms/agro-industriesPractically saying, the platform would be the most important asset for the private firms to

have business friendly environment since the partners stay, discuss and act together for

such a social and sacred business. The following benefits explain about scope for agro-

industries/marketing firms.

- Creation of new markets, expansion of client/member-farmer based marketing throughthe use of marketing platform

- Utilization of network created by each other (different organizations)- Method demonstration of the products and utilization of farmer to farmer dissemination- Chance to know feedbacks about the product from farmers' side at the earliest,

experiment and update the product as per the demand.

- Reduction of market risk, ease on practical planning for input-output- Scope for other relations such as donor agencies and other technical as well as financial

supports

- Utilization of social fund on marketing which maintains company and costumerrelationsand led to mutual benefits

- Effective use of marketing cost of the private sector: low cost of operation for all partiesUltimately, private sectors could tap a large scope by maximizing profit; name and fame

to a large section of untapped market area from the collective actions.

Options to the private firms:

- Agreement for the purchase of farm products: either with Nirdhan or with farmers- Financial support: either based on commission during marketing or based on

fixed/regular term amount

5.3 Scope for NirdhanNirdhan has recently added BDS under its program sections and accordingly the strategiesand plans are being finalized. Ag-BDS will be the major part of the program for non-

financial service to the NUBL clients. For the execution, Nirdhan will get supporting hands

from different sectors (esp. private) and ensure the service in sustainable (Eg. multi

partnerships). At first, piloting will be performed for initial 6 months or up to a year.

Nirdhan will functionalize one of its wings, a profit making service provider (Nirdhan

Marketing Services Pvt. Ltd.) which will sustainably provide the fee-based services. To


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sum up all benefits, it will find better ways of prosperity for small scale farmers and other

sectors.

5.4 Scope for NUBLNUBL also has scope of getting support from collective actions such as managing, reducing the

credit risk of agriculture sector loan, building entrepreneurship among clients level, increasing

the agriculture loan portfolio, and maximizing along with the social service business.

6 Sustainability of Ag-BDSInstitutional capacity: As the context never stops, poverty is dynamic. Likewise, definition of

microfinance has been changing which can easily be observed from the changing packages of

services from the past to present. For the competitiveness, Nirdhan and NUBL have developed a

very good intuitional capacity, organizational profile, and have a good network and coverage.

NUBL being a well established profit making company, sustainable part is much stronger.

Further, there are other private and public sectors which feel need of AgBDS.Human resources: In each branch, there will be one veterinary/agriculture JT which will be

backed up and updated on newer technologies by Agriculture Officers of NUBL. There is a

program manager for Ag BDS service at head office of Nirdhan which will actively involved in

making coordination, updates on technologies and parties of the multi-partnership network. The

program manager will lead the Ag BDS. The JTs will directly be involved in market creation of

AgBDS, forming different agriculture/livestock produce groups, encourage farmers to join BDS,

collect demands, and prepare plans of production and marketing taking advantage of the

marketing platform.

Staffing and remuneration: These JTs will have basic salary plus incentive based

performance/achievement. Performance evaluation of field staffs will be performed regularly at

farmer's door, field certification, demand/supply, and revenue/output. Nirdhan marketing

Services Pvt. Ltd., profit making company under Nirdhan can be functionalized to implement the

service which will have to ensure profitable AgBDS business.

Viable income: Farmers have to pay nominal price for the service from Nirdhan (or Nirdhan

Marketing Services Pvt. Ltd.). As the platform directly ease for the marketing of a particular

private firm and provide quality input service to marginal farmers, marketing and social costs

will further widen the revenue stream of Ag BDS so that continuation and expansion to a larger

mass could be done as well. During initial years, the farms/herds will be demonstration plots for

Ag-BDS where farmers will compare and feel the effectiveness of the service. Gradually, morefarmers will want to have such services and the revenue will increase with reduced operational

costs, hence the AgBDS service continues and grows up by joining other farmer groups as well.

Apart from the linkage charges, sell of the inputs (quality manure such as vermicompost, tea or

liquid bio-fertilizers, hormones/growth regulators/medicines, vaccines, pesticides, etc.) will

make the Ag-BDS service profitable, replicable, and sustainable.

THANK YOU!

Documents

AgBDS on Multi-Partnership