Buddha Mani Dhakal

During my recent visit to Nepal, I took a little chance to understand about the practice of keeping improved/hybrid varieties of goats (Boer) by my neighbors and relatives.  Boer or Boerbok (Capra aegagrus hircus) is a South African breed of goat valued for the meat. Many of them do not know the origin of this goat breed, but they get it from local vendors in Nepal. An adult male Boer goat costs around Rs. 250,000.

Keeping improved breeds of livestock as means of family income or for small business development has upscaled in rural parts of Nepal. Poultry farming of broiler chicken is common in districts surrounding big urban centers like Kathmandu, Biratnagar, Butwal, Itahari, Dharan. These sprawling urban clusters serve viable markets for poultry meat.  

Finding money:  Financing better practices 

Hem started a swine (Bangoor) farm with twenty-one piglets he bought for NRs 100,000 from pig research center in Tarahara, Sunsari. He invested Rs 1400,000 (14 lakhs) for construction of the pigsty and other necessary structures, and a lakh for twenty-one piglets. Registration of farm cost him Rs 11000. He now owns 110 piglets and 17 adult pigs;  sells meat for 420/kg and whole animal for Rs30000 on average.

Before starting his own small agribusiness, Hem worked as program manager for Room to Read, World Vision, USAID early reading programs, mostly in Karnali region throughout his twenty year career.   

Loknath Dahal of Buddhashanti-5 had once 120 goats of Boer and local breed. He purchased two male and female Boer goats for Rs 520,000 from Australia through a cooperative in Nawalparasi.  He started the herd with initial investment of around nine lakhs, part of the money he got from government grant. He does not have any now; he could not manage the herd for he devoted time to take care for his bed-ridden mother.

It is not a smooth task for small farmers like Hem or Loknath to find money to start such agri-business or practice improved farming and animal husbandry.  Investing in livestock farming is sometimes a risky game, as the animals may get diseases and whole herd can dwindle.  

34,737 cooperatives operate throughout Nepal, of those 1139 are the small farmers’ cooperative; almost all established with same goal of facilitating small farmers who want to practice the business model of improved agriculture and livestock. However, many of them merely serve as profit-making community banks and credit unions. Some of these “visible” cooperatives happen to receive grants either from the government or from the national federation of cooperatives. These small cooperative groups do not have direct access to multinational donors or investors to apply for grants/seed money. 

Fund sources for Agricultural development

Agriculture makes up 34.3 percent of the GDP with livestock accounting for 26.9 percent of the agricultural GDP (Department of Livestock Services, 2011).  Therefore, it is very logical to invest on agricultural improvement and livestock development in Nepal.

In September 2023, World Bank awarded $20 million to support the Food and Nutrition Security Enhancement Project (FANSEP)-II.  Per World Bank website, the project aims to benefit more than 55,000 small-holder farmers in 16 rural municipalities in Nepal through improved agricultural productivity and nutrition practices and scaling up climate-smart agriculture practices.

The grant agreement (# TF0C1798) was signed between Ministry of Finance (Govt Nepal) and International Development Association (as Bank) under the Global Agriculture and Food Security Program. (agreement signed Dec 1, 2023)  

One of the points included in project execution is:   The Recipient shall make each Matching/Small Grant under a Matching/Small Grant Agreement with each Beneficiary using the form of the model matching/small grant agreement.

This entails the 20 million dollar grant ought to be awarded as sub-grants to small farmers group  and finance the sub-projects under this national program. No specific data or report is available whether any targeted farmer groups and small cooperatives were able to take advantage.  

In a grant report of Global Agriculture and Food Security Program (GAFSP), Nepal government was awarded 46.5 million dollars for Nepal Agriculture and Food Security Project (2011).  The project focused on mid-western and far-western development regions- to improve agriculture productivity, health and nutrition awareness and increase household incomes.

In the project completion report, they rated A and B to four project criteria: Relevance, Efficacy, Efficiency and Sustainability. Most performance evaluation periods are marked “satisfactory” in project report.

IFAD- International Fund for Agricultural Development, a specialized agency of UN has a project report worth $55,402,190 spanning six years from September 2012 to December 2019. The project titled ‘Improved Seed to Farmers Programme’ targeted farmers in Rukum, Rolpa, Salyan, Pyuthan, Arghakhanchi and Gulmi districts. Any resident of these districts might know well how the money helped them to get improved seeds.

In a world bank press release dated November 18, 2021 a project titled Rural Enterprise and Economic Development (REED) worth $80 million was launched jointly by WBG and Government of Nepal. “The project aims to boost Nepal’s agriculture sector by strengthening rural market linkages and promoting entrepreneurship while creating jobs to support post-COVID-19 recovery.” The project was implemented in selected municipalities in five economic corridors covering Koshi, Madesh, Bagmati, Lumbini, Gandaki and Sudurpaschim provinces.  The project is said to align with government’s Agriculture Development Strategy 2015-2035. The focus of the project was to promote market linkages helping small and medium enterprises- particularly owned and operated by women -to strengthen the agriculture sector and entrepreneurship.  

Did it really benefit the target groups or achieve intended outcome?

Another donor agency, Global Green Growth Institute, launched Terai Agribusiness and Enterprise Challenge Fund that disbursed US$ 1.56 million in grants for a 3-year period in Sept 2023.  The grant fund targeted micro and small-scale agribusiness in ten municipalities of Dhanusha and Mahottari districts.

Despite these huge grant funds from multinational donor partners, Nepalese farmers who live off the farming and animal husbandry have not been able to produce sufficient food and become self-reliant in agriculture. Milk is still imported from India, just like any vegetable and grains. Meanwhile, small farmers complain of the investment cost outweighing the market price when the products actually reach the market.

Poor reporting and data management

The government does not have a central database for keeping track of the grants, loans and investments made nor any comprehensive report of the outcome/impact in any given year.  Most reports are published by funding agencies and project implementation partners. Obviously, their reports reflect glamorous figures.  For instance, Feed the Future Program of USAID helped farmers and private sector firms access more than 60.4 million dollars to finance the agriculture related business and expand production systems in 2021.

No one cares if the impact this huge dollar made gave clear positive message to discouraged farmers.  On the government side, the data and reports are meagre and too poor to examine the real outcomes of such financing.

In a press report by myRepublica, Gandaki Province government is mentioned to have awarded NRs 30 million and 906 thousand to dairy farmers in fiscal year 2023-24. Similarly, nepalnews.com (January 12,2025) reports the release of over 107.66 billion rupees in grants for agriculture sector development in the last five years.  Of that, Rs 20.3 billion is awarded as direct grants to agricultural cooperatives, farmer groups and firms.  The amount came from national and international funding partners.

These sporadic media reports are not always credible sources of information.   

Financing Livestock improvement projects

As per one World Bank report on Livestock Sector Innovation Project, 200, 000 (2lakh) livestock producers from 271 municipalities will be the primary beneficiaries of the project.  The project allocated funds in four distinct components, amounting to $80 million. The project appraisal document of World Bank proposed to cover districts of Panchthar, Ilam, Dhankuta, Morang, Sunsari, Udayapur, Saptari, Dhanusha, Siraha, Kathmandu, Kabhre, Makwanpur, Chitwan,Shyangja, Kaski, Mustang, Manang, Tanahun, Myagdi, Rupandehi, Nawalparasi, Gulmi and Bardiya. 

“Livestock Sector Innovation Project is an integrated approach to enhance milk quality, dairy animal productivity and milk consumption by vulnerable household members in rural Nepal” reads an information brochure of USAID. 

 Not to be oblivious, it is likely duplication of program – two giant funding sources investing on same project domain. The two funders might have different approaches, but how does the concerned department evaluate the impact and for what purpose?

USAID awarded funds to University of Florida’s Institute of Food and Agricultural Sciences for the Innovation Lab for Livestock system project. In this five-year initiative (October 2015- September 2020), the university partnered with International Livestock Research Institute (ILRI) for project design and implementation. Two Nepali institutions involved in implementation were NARC and Himalayan College of Agricultural Sciences and Technology. Heifer International Nepal was awarded some part of project funding.

What can be gleaned from these implemented projects and the magnitude of funding for agriculture and livestock development is that percentage of these humongous dollars that trickles down to actual farmers is miniscule. Multiple project partners mean a good chunk of fund goes to pay them for air fare, vehicles, star hotels, coffee, sumptuous lunch, staff at various levels, so on. One friend who spent ….. years in leading projects told me, “you get all perks for signing two or three papers and talking with few people”. 

Yes, workshops are organized, trainings offered, thousands of seed money awarded, farmer groups formed, yet the impact is not visible enough to reflect improvement of conditions. Conversely, any significant change that took place during the project cycle reverts after the project is handed over to local government, or a management entity.  Most of the times, it is “coconut in monkey’s hand”.

Small farmers/cooperatives lack skill and competitive advantage

Who are smallholder farmers and who are the bigger or commercial scale? In Nepal, most land is  family owned, divided and sub-divided into pieces among the members. So, by ownership, not more than 15-20 bigha on average is available to a family. This is even smaller in hills and mountains. Thus, by Nepalese standard, commercial farming is limited to small area of cultivable land, mostly in Terai. However, farmers in hill districts too have thrived by growing fruit trees and vines. Kiwi, Cashew, Cardamom and mandarins are high-value cash crops for hills.

The small farmers’ cooperatives are really not very knowledgeable and capable of acquiring resources or seek funding directly from the multinational funding agencies. The government departments and central federation of cooperatives take priority in fund solicitation, operating projects and publishing reports.  The small cooperatives in rural Nepal do not even have the technical and managerial skills and unaware of when such grant funds are open. Therefore, they are bound to rely on the miniature financial package that trickles down.

Meanwhile, the farmers also face the uncertainties of market- prices and volume of sale. Since most farm inputs are purchased- seeds, fertilizers, pesticides and tools, the products do not get the fair market value at harvest time.  This unreliability of market downplays farmers’ competitiveness as cost benefit ratio remains high.  

It is equally disheartening to comply with conditions imposed by external finance partners for agriculture- livestock as well as crops. The conditions are in favor of monoculture: certain brand of hybrid or GMO seeds, certain pesticide or a particular breed of cattle. Crop diversity in agriculture is the only way to preserve seeds and practice mixed culture or crop rotation. This traditional method of keeping soil vitality contributes to natural adaptation cycle of crops. Indigenous cultivars of the cereal crops and vegetables are gradually on decline. This is quite an alarming fact of genetic loss.

When the concerned government departments or a national agency like NARC or University faculty is not the supervising entity that monitors and evaluates the funded projects, the result is largely in favor of those multinational investing/donor partners who brazen up the result and publish colorful reports.

The loss is to Nepalese farmers, Nepal’s agro-biodiversity and Nepal’s soil and water.