Capacity Assessment - Rural Entreprises

2014 has given a good start for me. In the first month of the year, I got the chance to visit a Lokta paper Enterprise at Deurali-Sankhuwasabha and a Kiwi Farm at Hile-Dhankuta. Me and one of my colleague visited the enterprises and conducted  business assessment and suggested areas to improve. The product offerings of the enterprises are written below:

Tinjure Non Timber Forestry Enterprise:

Founded in 2062, Tinjure is a community based forestry enterprise that makes Non Timber Forestry Products (NTFP) from the forest resources of 14 member community forests. The company now makes lokta paper sheets (Nepali handmade paper sheets) and Japanese paper sheets (made from lokta and argeli). The company currently produces 4 kg, 6 kg and 8 kgs of paper sheets.

The company has also started a nursery farming and has piloted its business model by supplying seedlings to the member community forests itself. After the successful piloting over the past years, the company is now planning to expand the nursery business. It now supplies the seedlings of lokta, load-shalla and is exploring the market of other products.

This company is also piloting in the making of laligurans juice from the wildly harvested laligurans trees in the member community forests. 

The company can be contacted at : 9842219370, 9852051191

Drying of lokta sheets on the sun

Paper production through Japanese tech.

Putting the lokta pulp on the wooden frames

Wooden frames in which lokta sheets are dried

Indra Traders:

Frustrated by the subsistence farming done by his parents, Mr. Indra Tamang decided to open a farm and be involved in the agriculture in a commercial level. Thus in 1993, he started farming of cardamom in 0.75 Hectare. Now, with time, he has expanded his product portfolio to  kiwi farming (1st commercial level kiwi nursery in Nepal), ground apple nursery, big cardamom farming, chiraito farming etc in over 50 hectares of land.

Mr. Tamang is very keen in agricultural experimentation and is now piloting the commercial production of tomato in his farm at Hile. Mr. Tamang, producer, sourcer, processor, marketer is curreclty supplying his products to the Indian market and is  looking for opportunities to collaborate with other entrepreneurs and enablers who could help him tap the foreign markets for his products. 

He is a good resource person for buying and selling of aforementioned products. He can be contacted at: +977- 02-6540113

dried leaves of ground apple

Tunnel farming of tomato

kiwi nursery

Mr. Tamang in his nursery

Helping Farmers in Nepal

If you are a farmer and stuck in a problem, you don't know what to do? Here is an agriculture counselling team ready to help you at free.

Established about a month ago, Agri-Care Nepal Private Limited (ACNPL) through the service 'Kisan Call Centre' has started toll-free counseling service for farmers.

With this service, farmers from any part of the country can get counseling on farm diseases from experts by making free calls to 1660-56-52999. Farmers can register their problem and nature of diseases through phone calls at the call center. Then the team of agro-technicians studies the case and provides technical counseling to farmers.

Vegetable Seed Production and Current Situation in Nepal

•   Over the last decade, around 50% of the domestic demand for the vegetable seeds was met by the domestic formal (government and private seed companies) sector.

•   The gap in demand of vegetable seeds is mostly met by imports and to some extent domestic informal sector  (farmer to farmer exchange, saved seeds, cross border informal seed supply)

•   Of the 2,000+ MT of vegetable seeds demand, around 3/4th of the total domestic demand in volume term is accounted by peas, (French) bean, onion, radish, cow pea and okra.

•   Cauliflower, cabbage, onion, radish and tomato are the top five vegetables in terms of area under cultivation, account for around 50% of the total area cultivated for vegetables in Nepal.

•   Radish and onion are important (in terms of vegetable seeds); in terms of cultivated area for vegetables and potential volume demand of commercial seed.

•   The current production of vegetable seeds (formal sector) would be less than half of the mentioned figure of around 950 mt (in 2008/9), i.e., around 400-450 mt. A trade survey in 2008/9, carried out by CEAPRED indicates that Kathmandu–based seed businesses bought not more than 340 mt of domestically produced vegetable seeds.

•   If five crops namely radish, broadleaf mustard, cress, peas and bean are excluded then it is estimated that over 80% of the domestic demand for seeds is met through imports.

•   Informal sources could account for anywhere from 30%-45% of the total vegetable seed consumed in Nepal, depending upon situation and circumstances

•   Most of these are introduced varieties of vegetables (cabbage, carrots, coriander, onion, spinach, tomato and zucchini) depend highly on imports. Indigenous varieties such as peas, cowpeas, radish, cucurbit crops, beans and rayo are lesser dependent on imports for seeds supply.

•   Taking an example of 2008/09:

•       Total estimated demand was 1,932 mt (VDD/ DoA),

•       Private / government sector supply was 957.3 mt (49.5%) (VDD/ DoA),

•       Formal imports: 407.8 mt (21.1%) (TEPC),

•       Data Gap comes to  566.9 mt (29.3%), which is met by informal channels and cross-border imports.

Foreign Direct Investment in Poultry Sector in Nepal

Government has initiated the process for opening the poultry sector for foreign direct investment which was banned along with the other 23 sector sectors by the Foreign Investment and Technology Transfer Act 1992 (link).

As per the directive of Industry Promotion Board, Ministry of Industry has prepared the proposal which was tabled at the Cabinet meeting. The ministry proposal plans to allow foreign companies to invest in joint-venture model, keeping the upper bar 75 percent for the foreign company. In addition to it, to enter into the poultry sector, foreign company are required to invest Rs. 500 Million and at least grow 200,000 chicken in a lot.

Although the entry of foreign business giant may affect on the local poultry farmers competing capacity, the new business can bring out improved breed, modern technology, generate greater employment opportunities, open up more space for the feed manufacturers, push the meat processing market and all.

Fishery Insurance Policy Introduced in Nepal

Soon after the introduction of crops, poultry and livestock insurance, the Insurance Board has now introduced the fishery sector insurance policy. The Insurance Board makes it mandatory for the non-life insurance companies to introduce scheme on fishery insurance.

For buying the policies, the fish farm should be done in at least 200 sq. m. and 3 feet depth, except in the case of trout farming which has separate technical requirements.

The farmers can buy insurance policy by paying not more than two percent of the sum assured as premium amount, which is set as a higher limit bar for the insuring companies. But if fishes are grown adopting a highly intensive fish farming technology, a 10 percent discount will have to be given on the premium amount.



The insurance policy covers the loss from from fire, lightning, earthquake, floods, drought, typhoon, hailstorm, diseases, lack of oxygen, excess use of ammonia or use of poisonous substances, among others.

Compensation will be given to farmers based on product or production value. This means insurance coverage will be provided based on market value of fully grown fishes or cost incurred in rearing fishes till the time of their harvest. (This is unlike in the case of crops, livestock and poultry insurance (LinK) in which coverage is provided on cost incurred in growing products till the time of their harvest.) A compensation of 90 percent of sum assured will be given by insurers in the above mentioned loss reasons.

However, insurance companies does not compensates the claims on losses caused by carelessness or overcrowding of fishes in ponds, and if fishes have to be destroyed on government instruction.

New Vegetable Market in Shantinagar-Kathmandu

A breakthrough has been made in the monopoly of Kalimati Fruits and Vegetable markets through the initiation of private sector led alternative market development at Shantinagar.

Five partners have started the project with an initial investment of Rs. 5.3 million (53 lakhs) in 3 ropanis and plan to extend the market in 2 more Ropanis. Along with vegetables and fruits, the markets will sell food commodities, spices, meat and fish products, products of Dairy Development Corporation, organic vegetables and fruits, and cooking gas directly from the farmers. The market opens from 5.30 in the morning till 8.30 in the evening.

This may not be a panacea to the middlemen involvement  in the agricultural sector but this private sector  intervention with price competition in the market is  showing a way of hope to the end farmers by  introducing competition to end the state owned three decades of Agrimarket  Monopoly. 

Handmade Paper Production Process

Nepalese Handmade Lokta paper is made with from the barks of the wild grown shrub (Daphne Bholuwa and Daphne Papyracea) that is grown at most coniferous forests in Nepal at an altitude of 2000m to 4000m.

 Lokta paper is known for its durability and inherent resistance to insects. The lokta fiber is possibly one of the longest and strongest natural fibers in Nepal. Thus, paper made from lokta fiber is very strong. The uneven distribution and length of fibers gives lokta paper a unique texture. Most papers dissolve when put into colour solutions; lokta paper does not Therefore, lokta paper can be dyed using the dip dyeing process. The flexibility of this process gives enormous possibility for designs and colours in lokta paper.

Making paper from lokta barks constitutes manual and indigenous process. 

1. The collectors peel the raw bark from the lokta bush in the forest and dry it in the sun to reduce the weight. 
2. The dried bark is carried to the village by porters where paper is produced. 
3. The lokta is immersed in water to soften and it is cleaned to remove the black spots and impurities. Lokta soaking operation is usually done at night to save  the time. 
4. The cleaned lokta is cooked in a 100 litre drum in a mixture of water and caustic soda. The cooked lokta is washed with clean water to remove the caustic soda. 
5. The clean lokta is then beaten with a wooden mallet to make it into pulp. (In some villages where electricity is available they are using mechanical beater now a days.)
6.  The softened pulp is then moulded in 20 inch x 30 inch wooden frames by spreading the thin pulp (with a proper mix of  water and pulp) to make flat sheets of paper. 
7. The frames are dried in the sun, after which the paper is taken out of the frame.and the lokta paper sheet is ready.

Problems of Acquaculture in Nepal

Fishery in Nepal- A Glimpse:

An estimated 79,000 people are directly or indirectly involved in pond aquaculture activities nationally and the number is increasing. The fisheries and aquaculture sector in Nepal is under development and is one of the priority areas for the Ministry of Agriculture and Cooperatives and is gaining priority from the government. 21 Terai based districts have been declared as fish producing districts and each district has been assigned Fisheries Development Officers.

Overall Scenario:

Fish productivity in Nepal is 3.7MT/ha which is about the same as the regional average (India 3.9, Bangladesh 3.9). But, there are also lots of instances within Nepal where farmers are regularly averaging 10 MT/ha without the increase in capital expenditure. Low productivity is attributable to poor quality fish stock (seed), use of feed and poor pond management.

Fish farmers in Nepal feed the fish irregularly and do not use appropriate feed material hence locally produced table fish is well under-sized in comparison to imported fish from India. Imported fish tends to be 1 kg on average as compared to locally produced fish that is 200-300 gm.

Market Players in this sector:

Different kinds of market players are active in fishery sector; both at market and support roles. At the supporting roles, primarily government and Membership Based Organizations (MBOs) such as Fishery Association of Nepal (FAN) and Chamber of Commerce and Industries exists. Market players such as private hatcheries, nurseries and hawkers are observed in the fish seed businesses. Limited number of feed manufacturers such as Annnapurna Agro Feed and Himalayan Aqua Agritech and local suppliers exist in fish feed market.

Fish Seed supply-chain:

Fish seed can reach to the farmers directly through the hatcheries, through the middlemen hawkers and through the fisheries. Private hatcheries are the main suppliers of fish seed, supplying more than 80% of the total hatchlings, frys and fingerlings. They supply to the nurseries and also supply directly to the farmers. In the case of nurseries; they buy hatchling and/or fry from the hatcheries and raise them for a couple of weeks, make them 2-3 inches long and sell to the farmers. Farmers close to the hatcheries usually buy either from the hatcheries or buy through the hawkers whereas those who are away from hatcheries, buy fingerlings from the nearby nurseries.

Lease Policy is another hurdle:

Pond fish culture currently produces over fifty per cent of total fish consumed in Nepal (capture fisheries production and imported fish accounts for the remainder). An important factor affecting productivity in this segment is the Public Pond Leasing Policy. VDCs and Schools control and lease all the public ponds for about 3-5 years. Farmers wishing to start fish production are hesitant to make an investment in their ponds because there is no guarantee that they will be able to lease the pond again once the first leasing period is over. Majority of the people leasing ponds, under this arrangement, are small-scale farmers who make monthly installments on the lease. According to traders, many farmers pull out fish from their ponds before they reach their full size in order to make these monthly payments.

In a nutshell, low productivity is caused by improper pond management practices, the use of low-quality fish seed and inappropriate feed, lack of technical knowledge and information among farmers, and a fragmented production base inhibiting farmers’ access to sales and supply markets. This sector can be commercialised through the market intervention and policy level initiatives at the above mentioned constraints.

Sugarcane Juice in Nepal

When you go to the terai belt of Nepal in summer, you will see a pool of people in the roadside junctions drinking the immediately prepared sugarcane juice. Available in different flavours and mixes, sugarcane juice is the most popular soft drinks in the southern nepal.

Preparation of the juice is a simple. The juice maker uses a simple machine which takes the raw sugar canes as the input and then crushes it to make the juice. The juice is then treated with different flavors before serving it to the customer. The most popular flavors are the “Birenun”(Rocksalt) and “Mint”(Pudhina), while some drinkers prefer unflavored juice. Interestingly, since the juice is prepared at the roadsides 'Ice-Cubes' are put into the juice to make it colder. 

 (Boy making instant sugarcane juice at a park.) Image credit: Google

Sugarcane juice is preferred for immediate consumption while the storage of juice and its commercialisation is still left untouched. In the ktm valley, people go to the fruit shop to drink sugarcane juice which also includes the patients, particularly the jaundice patients. With the invention of sugarcane juice preserving technology by Tamil Nadu Agricultural University, the future in this segment seems to be promising. The technology allows the juice to be preserved up to a duration of six months. The process of preserving the sugarcane juice involves peeling, crushing, filtration, pasteurization and bottling. Sodium Benzoate and Ammonium Hydroxide is added as preservative. The bottled juice can be stored without any loss in the quality and flavour for six months at room temperature.

When it comes to nutritious product, even the middle class people give more weight to quality than the price. Since the quality of real juice, the no. 1 juice market leader, is questioned with many controversies one can easily tap into this market with a quality product.

Agriculture in Nepal

Nepal being an agricultural country employs more than ⅔  of the country’s population. But, contributing to 35% of the country’s GDP it is one of the highly unproductive sector. Commercialization of agriculture has been a highly publicized statement whereas nothing is actually done and issues remains the same.

The first issue I see is the financing challenge for small scale farmers. Although the policy requirement for the corporate banks to invest in the agriculture sector is minimum 10%, the banks are allocating their 2.7% of the capital in this sector. It is seen that the banks prefer to pay the fine to the investment. Also, here is a specialized Agricultural Development Bank  which provides loan to the dealers and traders but the SME farmers complain a lot on being deprived of the financing. There are commercial financial institutions which provide housing loan, auto loan at 9% but the same institution charges 14% for the agricultural loan. Government has recognized the three pillars economic model where cooperatives is recognized as one of the active contributor, but the lack of regulations and imprudence on the sector has neglected the development of grassroot agripreneurship. Simply, an interest rate of 18% and service charge of 2% encourage (total of 18% in average) wouldn't encourage  an aspiring entrepreneur who is facing the financial challenge.

Another challenge I see is on the part of insurance. I don’t know if there is any agricultural insurance policy in Nepal. I see the two major risks on the agricultural sector on two aspects: (1) Product risk: Risk involved during starting the sowing of the seeds to the shipment of the produced products. This can include risks from diseases, risks from the natural calamities, risks from theft, and etc. The risk is even more high in the production of organic products where no chemicals can be used. If a product catches the disease the whole farm is sickened. (2) Price risk. Risk involved in the uncertainty of getting the best value of the product produced. The price risk can be best clarified with the case of sugarcane pricing. The price of sugarcane is fixed after the negotiation between sugar mill owners and sugarcane producers association. Generally, the meeting is set after India fixes the price for Indian sugarcane. Their point on setting the meeting after India sets the price is to make the price of sugarcane in Nepal equal to the Indian market price so that no Nepalese farmers would sell their sugarcane to the Indian market for getting the better price and Nepal does not need to face the shortage of sugar canes. By that time, it will already be late for the sales and farmers are in rush to repay their loan taken during the chhath and dashain-depawali. Understanding this dependency, sugar mills always delay for the meeting so that it creates pressure on the sugarcane producers to lower down the price.

With all these hassles and price risk, a farmer won't get motivated for increasing the production and productivity.

The next issue I would like to highlight is the involvement of the agencies spending some much of resources in providing training to the farmers and providing them production knowledge while keeping the business development training to zero. The farmers learn, they implement and produce the products but when it comes to the sales they don’t have the direct access to the market. No one is going to purchase their product until it comes from the redundant channel. The farmers , with no options left, now have to rely on the middlemen traders for selling their products who ultimately are taking large share of profits giving the farmers petty amount of profit. The farmers now need to get empowered not only from the production methodology but also from the business perspective. They should be trained enough on aspects of quality preservation, supply chain, marketing, etc.

Another major constraint in the agricultural market is the dominance of the sector by few large markets where the price is controlled more by the things other than the fluctuation in demand and supply. Dependence of the whole capital city on one and only one large vegetable market clarifies the least bargaining power of the producers and the monopoly of few large scale of traders. Establishment of large scale alternative markets is necessary for enabling the farmers to get the best value.

Despite the constraints, there are so many opportunities in this sector which have been still untouched. With the growing middle-class population, the demand for organic and semi-organic food has been increasing. Although the business scope has been identified, the demand has not been yet catered. It is positive that like minded entrepreneurs have been discussing at this idea of serving organic/semi organic agricultural products. Green-Mart Chain project is one potential project that we (at Biruwa Ventures) have been discussing upon. Next, the financing from the seed fund capitalists like Uddhyami Impact Fund, Gazaab Ventures  fund etc. , who provide equity financing and even loan financing without any collateral raises a hope for the budding entrepreneurs who were not able to start their business because of lagging the start-up capital. Info Dev : a world bank group project is opening the first agricultural business incubation center in Nepal which will help the farmers to look at their problems, analyze them, and solve them individually. These all initiatives raises a hope for better agricultural  future, at least I see the hope.