Government agencies involved in the delivery of services to livestock producers in Nepal were found to be generally weak. The Department of Agriculture and the Department of Livestock Development and Health suffered from inadequate numbers of staff and inadequate training. Field staff and extension services had few incentives. Such limitations handicapped the ability of these agencies to support livestock development.

Planned

Achieved

To form small-farmer groups and recruit project support staff, including group organizers and assistant group organizers. The strategy involved organizing small farmers and landless labourers into groups based on common economic activities and production resources so that they could benefit from the larger scale of operations and access to credit. Under Phase II, 5 810 small-farmer groups with a total of 58 100 members were to be formed, 200 subproject offices were to be established and staffed and 30 women’s group organizers were to be recruited.

To establish four regional training centres and provide training including livestock development for small-farmer group members, group organizers, assistant group organizers and women’s group organizers. In Phase II, five regional training centres were to be constructed or rehabilitated.

By 1989, 4 667 small-farmer groups with 42 345 members had been formed. By the end of Phase II, 6 954 groups with more than 47 455 members had been formed. At project completion, 323 ADBN staff had been selected and trained as group organizers. Although not provided for at Phase I appraisal, 532 women’s groups with 4 271 members were formed and received training in goat and buffalo husbandry. By 1991, 89 women’s group organizers had been recruited and 1 978 women’s groups had been formed, with 16 351 members.

The four regional training centres were established at Letang, Biratnagar, Anandaban and Napalganj; 30 176 beneficiaries received training in 42 subjects including group concepts, group savings and livestock development. Under Phase II, 594 group organizers or assistants and 257 women’s group organizers received training; 5 043 beneficiaries participated in workshops/seminars on livestock development; 6 257 completed training in agricultural and livestock development and 4 384 in organization and management of small-farmer groups. In Phase II, five rural training centres were established in Morang, Banke, Kailali, Rupandeli and Chitwan.

Buffalo raising is associated with high risks and high initial costs. A possible solution was to establish a livestock-insurance scheme, with the aim of protecting small farmers against the risks.

Planned

Achieved

To support a feasibility study into the proposed livestock-insurance scheme and launch it on a pilot basis in eight subproject offices.

To facilitate establishment of a group savings scheme with the objective of making small-farmer group members self-reliant.

Consultants hired to carry out the feasibility study and develop a livestock-insurance scheme recommended a group scheme based on a 10% premium. At project completion, the scheme was under trial at Mahendranager, where it was popular and livestock mortality had been checked.

The group savings scheme grew from NPR 4.5 million in 1986-1987 to NPR 14.5 million at the end of 1991.

One of the weaknesses in the Nepalese development process was lack of institutional arrangements for delivering services. This is exemplified by the inadequacy of credit for small farmers. Most agricultural credit for small farmers provided by financial institutions actually goes to large farmers. Nepal lacks the institutional infrastructure for delivery of the credit services needed to boost farmers’ production and incomes. High initial costs mean that small farmers cannot afford to purchase a pair of bullocks out of their own resources.

In Phase II, the livestock component targeted only those districts that had the potential for livestock production, including support services and access to stable markets. Applicants for livestock credit were required to follow guidelines and undergo training. They were encouraged to plant fodder trees and grow forage. Only animals certified as being in good health could be purchased. Preconditions for granting loans for livestock development included:

• possession of fundamental livestock-management skills;
• adequate on-farm feed resources and agreement to develop these further; and
• contribution to a small-farmer group emergency fund to underwrite loss of buffalo.
  

To provide loans for activities identified by groups and their members on a group guarantee basis requiring no other collateral or security. In cases of default by one member, the group was to be collectively responsible; no further loans would be advanced until the default was remedied. Part of the income generated by the group was to be transferred to a group savings fund to provide for members’ consumption loans, or other purposes according to group decisions, reducing dependence on private borrowing at high rates.

In Phase I, to provide credit to purchase:

• 4 800 milk buffalo of local breeds;
• 300 pairs of buffalo heifers;
• 3 700 goat units of four does and one buck (18 500 animals);
• 1 400 sheep units of five sheep each (7 000 animals);
  
• 300 sows;
• 3 000 bullocks for farmers in the Hills and 4 600 bullocks in the Terai; and
• 500 bullock carts.

In Phase II, to provide credit to purchase:

• 8 380 buffalo; and
• 10 424 goats.
  

Group solidarity was weakened by the bank’s demand for individual collateral in addition to the group guarantee. Repayment became problematic, because group liability was not introduced and groups did not impose enough social pressure for repayment.
Under Phase I, farmers were able to purchase:

• 8 318 milk buffalo;
• 3 174 buffalo heifers;
• 16 691 goats;
• 1 845 sheep;
• 3 983 pigs;
• 13 281 pairs of draft bullocks; and
• 1 241 bullock carts.

Lack of extension and training compromised productivity, however. As pig raising was a relatively new activity in Nepal, small farmers had little understanding of housing, feeding and husbandry requirements; the advice they received was generally poor. Among the smallest farmers, introduction mortalities for milk buffalo were about 10-15%; of the buffalo purchased, 10-15% failed to get back in calf and 20-25% contracted mastitis. In some cases, buffalo were provided in areas with underdeveloped milk markets and low milk prices, making credit repayment difficult.

Under Phase II, farmers were able to purchase:

• 18 679 buffalo; and
• 39 705 goats.