Namaste! After Rwanda, we moved to Nepal. It was one of the biggest changes made so far in our aroundtheworld.coop trip. Not only did we change continent, but we encountered a big shift in terms of temperature (from 35° C to 3° C). This required our bodies a longer than expected period to get used to the new climate, so we almost spent two weeks recovering from high fever and virus! Despite this, the challenge allowed us to understand clearly how impressively kind, supportive and friendly the Nepalese people are. From everyone at the NACCFL to the management of the cooperative, until the staff of the two hostels where we were staying, everyone took care of us in an unforgettable way and a way for which we will be forever grateful.
Once recovered, we were finally ready to fully embark on our next adventure! We documented the Bhabishya Nirman Sana Kishan, an agricultural saving and credit cooperative member of the NACCFL located in the Dakshinkali municipality, in the Kathmandu Valley. This time, our moment of coop-to-coop present sharing happened right at the beginning. The very first day we met we took the chance to give to NACCFL as well as to the coop managers and board members the present prepared by the Rwandan Coproriz-Ntende coop that is a calendar with pictures and sentences representing the daily work of rice farmers and typical Rwandan baskets.
To tell this cooperative story in the best way, this post will be structured as follows: firstly, we’ll provide some background information to illustrate how this coop model has developed and the role played by the NACCFL in the development; then, we’ll tell you a little about this coop, its story and functions; finally, as usual, at the end of this post, after sharing some food for thought, we’ll tell you about our next destination!
What is a Small Farmer Agro-Cooperative Limited (SFACL)?
The Small Farmer Agro-Cooperative Limited (SFACL) is an innovative Nepalese coop model, part of Nepalese community based microfinance institutions. This model has its roots in a government-led programme, the Small Farmer Development Programme, which was carried out back in the 80’s with the support of FAO/UNDP and the Agricultural Bank of Nepal. The project was articulated in Sub-programme offices (SPOs), with the aim of providing financial and non-financial services to smallholder farmers. It consisted of loans and saving services, social mobilization and leadership development. It was then in the 90’s that as a result of an action research project, those SPOs were encouraged to transform into autonomous, independent and self-managed cooperative enterprises, giving birth to the SFACL model.
Nowadays, the SFACL is an agricultural saving and credit cooperative, widely spread in Nepal. The Nepal Agricultural Cooperative Central Federation (NACCFL) is the cooperative representative organization; it gathers 995 cooperatives, comprising 82% women members and 44% youth. The NACCFL operates in three main areas that are policy advocacy, capacity building and network expansion. It provides financial and non-financial services, working in cooperation with the Small Farmers Development Bank Limited.
As mentioned, the Bhabishya Nirman Sana Kishan, the cooperative we documented, is a NACCFL member. Its story was told to us by the coop managing director, Ms Parbati Upreti, and by coop members during focus group discussions and interviews. This coop was first set up 7 years ago by people from the Dakshinkali municipality.
Why set up a SFACL?
As they explained to us, the urgency to set up a SFACL was due to three main burning issues:
- The main moneylenders at the local level were landowners who would lend only at very high interest rates, requiring land as collateral. As most farmers did not manage to repay the loans, it resulted in big losses of land. In addition, the moment they got the loan, farmers were compelled to work on landowner’s land. Very often farmers had to send their children to work on those lands, taking them out of school. Getting loans from those landowners or other big business men would mean for small farmers there was also a limitation in terms of where to sell their produce as they were compelled to sell it to the moneylenders at the price fixed by them.
- In addition, there were issues surrounding the young population owing to high unemployment rates, and most of the youth preferred to migrate abroad. To cover their expenses, they used to get loans from the same landowners, giving as collateral their parents’ land. However, very often what they managed to earn abroad was only just enough to repay the loan, so when they came back to their village they found themselves back at the starting point, if not still indebted.
- Along with such moneylenders, another opportunity for smallholder farmers to get loans was Micro Finance Institutions (MFIs) whose programmes were mostly directed at women. However, these MFIs used to provide loans without monitoring or tutoring women, resulting in most women using loans only to cover household expenditures, entering into a debt trap that led some of them to give up their lives.
All these problems led Ms Parbati and others to act and create an opportunity that could improve smallholders’ lives. So, they founded the cooperative whose name means “Future Creation”.
Watch the video to know more about their story!
How does the coop work?
The cooperative is basically a saving and credit cooperative. Members deposit their savings and can get loans without collateral. Members are mainly smallholder farmers. To get the loans they must prove the loan will be invested in an income generating activity, such as vegetable farming, poultry farming, buffalo rearing, etc. The coop provides training, monitoring and market opportunities. To date the coop has 920 members, out of which 740 are women and 557 are young people. The coop has 32,844,000 Nepalese rupees (265,552 euro) of savings and 35,783,000 Nepalese rupees (289,315 euro) of loans.
How has the life of members changed being in the cooperative?
We carried out two focus groups, one with adults and one with young people. We also carried out several interviews. Their answers embraced the three dimensions of sustainable development.
- Economic dimension: getting the loan enabled them to enter into income generating activities, in turn contributing to expanding capabilities such as access to good education for their children, improved nutrition and healthcare.
- Social dimension: feeling empowered; being proud of being a farmer; being independent; feeling included and accepted by the community… these are just some of the recurrent answers provided.
- Environmental dimension: engaging in organic farms, sharing innovative ways among farmers about how to reduce chemical fertilizers.
Food for thought: what can we learn from the Bhabishya Nirman Sana Kishan coop story?
Too often, even in the coop world, when talking about a successful coop, people think about a coop that is strong from the entrepreneurial point of view, capable of growth. We had this realization while documenting this coop. Probably, there are other coops that have a higher value chain development, or stronger access to the market than the one we documented. Can we therefore consider this coop less performing than others just because those aspects are not so developed? What actually compounds coop performance? This Nepalese step made Andrea and myself think a lot about this.
During my past working experience, with the Roma Tre University, FAO and Coop College, I had the chance to work around those concepts and this case study gave us the opportunity for further exploration.
- Mariagrazia Rocchigiani and Denis Herbel, my colleagues at FAO, defined coop performance as composed of three main aspects: relevance, effectiveness and financial viability. That is to say, we can consider a coop to be well performing when the services provided effectively respond to member needs and the coop manages to be financially sound. At the heart of this concept, there is the capacity of the coop to meet members’ needs over time in a sustainable way.
- With professor Pasquale De Muro, we also investigated coops from a human development perspective, namely how coops through their associative and entrepreneurial dimensions can enlarge people’s freedoms to live the life they value.
So, with these two concepts in mind, we value the experience of the coop we documented of extraordinary interest. This cooperative managed to free people from the domination of landowners, providing people with the possibility to live the life they value, sending their children to school (and not to work on landowners’ land), being free from debt traps, participating in community life, being free to sell their products where they want, at the price they want. They managed to do this with an accurate financial management, being now a financially sound enterprise. They are doing fantastic collective work for human development and we are honoured to have had the chance to record their story. We wish them to continue on this path of achievements in order to meet members’ needs in a more and more effective way.
The decade 2019-2028 was dedicated by the UNs to Family Farming: we do believe that stories like this one should be inspirational to everyone regarding how important is collective action for family farmers, being a driver of inclusion, innovation and most of all, sustainable human development.
We’d like to thank everyone at the Bhabishya Nirman Sana Kishan. In particular, we’d like to thank Ms Parbati Upreti and Mr Binod Bastola for taking care of us during our stay in Dakshinkali. We are also extremely grateful to everyone at the NACCFL, in particular to Mr Rudra Bhattarai, General Manager, and Ms Meena Pokrel, Senior Programme Manager, for their cooperation. Special thanks go to Ms Kajol Bajracharya, for being an excellent fixeur and interpreter! Finally, we’d like to thank the ICA Asia-Pacific Director, Mr Balu Iyer, the ICA Asia-Pacific communications officer, Ms Anam Mittra, as well as everyone at the International Co-operative Alliance.
Thanks! Dhanyabad! धन्यवाद!
We are now ready to move to the next country, documenting a cooperative in the educational sector! Malaysia, here we come!