About RISM FP and Fri Pad

Summary

Ministry of Agriculture Development (MoAD), Government of Nepal (GoN) is implementing the Raising Income of Small and Medium Farmers Project (RISMFP) financed by the Asian Development Bank (ADB). The project objective is to increase production of High Value Crops (HVC), reduce the market and business risk faced by small and medium sized farmers diversifying HVCs in 10 districts of Mid-Western and Far-Western  Development Regions of Nepal. The Project duration is of six years effective from 14 June 2011 and is expected to end by June 2018. The Department of Agriculture (DoA) Agro-Enterprise Centre (AEC) of FNCCI, and Nepal Rastra Bank (NRB) are the implementing partners, and Fri PAD is the technical service provider of the Project. 

The project includes five districts in Mid-Western Development Region- Banke, Bardiya, Dang, Dailekh and Surkhet and five districts in the Far-Western Development Region- Kailali, Doti, Dadeldhura, Baitadi and Darchula, respectively. These two regions have the lowest human development indices in Nepal due to limited investment in access to services, physical, social and economic infrastructure.  Poverty incidence is high for both region, and within regions, the hill areas suffer higher rates of poverty where up to 70% of households fall below the poverty line. 

Small farmer incomes are limited due to various reasons: a) Low returns from traditional agricultural commodities; b) Small and declining farm sizes with low productivity; and (iii) A supply-driven production system that has not captured potential market benefits for HVC. Therefore, the project intend to assist small and medium sized farmers to diversify HVCs by establishing market linkages; providing capital for inputs and improved technology, and for building post harvest value chain infrastructure including storage, packaging, grading, and processing. The project components includes: a) Agri-Business Grant Facility (AGF) for building Value Chain; b) Business Plan for producing and adding value to HVC; and c) Effective and efficient project management. For all these, the ADB has granted assistance of US$ 20.1 million (about Rs 1.44 billion for implementing a project that aims to raise incomes of small and medium farmers in 10 mid- and far-western districts. The project focuses integrating the rural poor, especially women and marginal groups in high value agriculture and NTFP/MAP value chains and markets thereby offering them the opportunities for improved income, employment opportunities and ability to respond to market demand and opportunities. Since the production of high value commodities in those regions falls mainly into the domain of women, the project is expected to increase women´s cash income level. 

Project grants are provided to: a) Small and medium farmers that are members of existing farmer groups or cooperatives with established market supply agreements for initial inputs and farm technology; and ii) Post harvest enterprises for the development of value chain infrastructure to support the market supply agreements, which contributes to small and medium sized farmers (ADB level 1 results) through increasing rural income, reducing poverty and increasing food security in Nepal (ADB Target 17.14% of the Asia Pacific population living on less than $1 per day by 2015). For the technical and other support services, the project envisions outsource service delivery to nongovernment organizations (NGOs) and the private sectors for farmer mobilization, training, production, and business planning and for feasibility studies to access project funding. The ADB level 2 country outcome performance targets are addressed through the provision of project grants to small and medium sized enterprises (including farmer cooperatives) with the project supporting an estimated 220 enterprises and 890 farmer groups within the ADB performance target of 54,000 enterprise accounts supported. The project contribution to the ADB level 3 operational targets is through the development of the private sector in the poorer parts of rural Nepal (ADB performance target of 30% of projects with private sector involvement) and gender mainstreaming (ADB performance target of 40% of projects with gender mainstreaming). Finally, the implementation modality builds strong partnerships with NGOs for which ADB performance target is for NGO inclusion within 80% of projects. 

Production function is linked with marketing. Agricultural markets in Nepal do not work efficiently for poor small and medium sized farmers. Main reasons of inefficient agriculture marketing are: a)Long chains of transaction between the farmer and the consumer; b) Poor access to reliable and timely market information; c) Small volumes of products of highly varied quality offered by the farmers; and d) Poorly structured and inefficient markets. Farmers are greatly disadvantaged, especially those residing in remote rural areas. Therefore, development of institutional arrangements (GOs, CBOs, Cooperatives) are needed to make markets work better for the small and medium categories of farmers especially to lower transaction costs, improve market coordination and ensure availability of price information in order to improve their access to new input technologies and output markets. Cooperative plays a crucial role in reducing poverty, improving food security and generating employment opportunity. 

The RISMFP plans to overcome major constraints of HVCs production in commercial scale. In this line, the project looks relevant and viable. The success of this project mainly depends on the performance of the various stakeholders and close coordination of various institutions. Such approaches of revitalizing existing organizations including farmers cooperatives with inclusion of disadvantaged and marginal farmers can contribute to food security, ecofriendly management and sustainable HVCs.