completed· Livelihoods

Increasing value addition on potato through cold store investment and grading

Bajrabarahi is one of the most active cooperatives in Makwanpur district. Bajrabarahi refers to the village and area where the cooperative is operating. The cooperative is located approximately 100 km South-West from Kathmandu. The cooperative has 1.259 members (mostly women). Since its start in 2006 the cooperative has mainly been involved in the provision of credit and saving services to its members. The cooperative furthermore supplies farm inputs to its members at a favorable price and gives trainings to its members on mainly agricultural aspects. The cooperative started as a group within a small farmers development project initiated by the Agricultural Development Bank of Nepal. The project promoted the habit of group savings. When the project phased out the group decided to register as a cooperative in order to strengthen its position and continue the activities in the future. Other groups under the project were sensitized to join the cooperative. When the project phased out the Development Bank handed over all the management, assets and finance to the cooperative. At the time of handover there were 52 groups and the total outstanding loan to the 52 groups was 4.2 million NPR. Today the total number of groups has increased to 161 and the total outstanding loan amount is 120 million NPR whereas total current savings stands at 50 million NPR. In 2009 the cooperative invested in its own office and banking building in the village of Bajrabarahi. In the same year, they also started to supply farm inputs to their members from the shop inside the new building. The current chairperson and general manager are also the founders of the cooperative. The cooperative was formed from the ongoing need from farmers to get access to finance in an accessible and affordable way. During its time of formation access to finance was a key challenge for farmers in the region. However, nowadays many other (private) financial institutions have started to provide financial services in the region. The presence of other service providers has reduced the need and importance of the cooperative and has also resulted in much more competition for the cooperative in providing their financial services to their members. At the same time, the member farmers have started to pressure the cooperative on finding solutions towards their challenges in marketing of the agricultural produce from the farmers. The production by the member farmers in the region is very good, but marketing is a big challenge. Farmers are not united in their output marketing and depend on traders to sell their products. These traders dominate the market and the market price, resulting in a significant gap between farm-gate-price and end-consumer price. Although savings and credit is the core business of the cooperative, the board and management would like to respond to the demand from the members and divert its activities also into output marketing of the crops of the members. Also the government of Nepal gives pressure to the cooperative to focus more on marketing and processing instead of financial services. On top of that, if members cannot sell their products against a good price, they will also not be able to pay back their loan to the cooperative. Although the cooperative is ambitious to enter into output marketing and process in order to add value to the produce of their members, the cooperative at the same time addresses its concerns as it has very limited knowledge and skills on agricultural marketing and processing. The vegetables produced by their members are very sensitive for diseases and their shelf live is very limited, making the business a very risky activity. Therefore, the cooperative is exploring opportunities to strengthen its capacity and slowly enter vegetable marketing in such a way that risks are minimized. To minimize these risks, the cooperative has given priority focus on potato as it can be stored for a relatively long period of time. The cooperative plans to first learn from experience build with potato marketing and processing before it plans to become active in fresh vegetables. Bajrabarahi is located approximately 30 km South-West from Kathmandu. The cooperative has 1.259 members (mostly women). Since its start in 2006 the cooperative has mainly been involved in the provision of credit and saving services to its members. However, nowadays many other (private) financial institutions have started to provide financial services in the region. The presence of other service providers has reduced the need and importance of the cooperative and has also resulted in much more competition for the cooperative in providing their financial services to their members. At the same time, the member farmers have started to pressure the cooperative on finding solutions towards their challenges in marketing of the agricultural produce from the farmers. The production by the member farmers in the region is very good, but marketing is a big challenge. Farmers are not united in their output marketing and depend on traders to sell their products. These traders dominate the market and the market price, resulting in a significant gap between farm-gate-price and end-consumer price. Agriterra and Bajrabahari have the ambition that by the end of 2019, SFACL Bajrabarahi runs a profitable potato business on behalf of its members. DAF MAkwapur will support the cooperative in their output marketing by making available a (part-time) Marketing and Business Development Officer, who will support especially in marketing linkages, marketing strategy development and implementation (use of coop logo; support marketing subcommittee in establishing market linkages etc). Potato has been identified as the commercial crop in the cooperative and being the third commodity in Nepal with a growing demand, it is concluded that this is a high potential crop for commercial farming. Cooperative marketing increases the bargaining and countervalining power of the producers, and it is expected to realise higher profit/ income for farmers by cooperative sales. 2017 goal: Run a pilot on cooperative output marketing of potatoes with 150 members. Long term goal: Agriterra and Bajrabahari have the ambition that by the end of 2019, SFACL Bajrabarahi runs a profitable potato business on behalf of its members.