ADBN & SFDP

ADBN'S EFFORTS TOWARDS ALLEVIATING POVERTY

 Small Farmers Development Program at a glance

 1. Emergence

A great majority of the world's population still resides in rural isolation confronted by problems such as poverty, disease, illiteracy, inadequate resources and such others. About 900 million people of the Asia and the Pacific region are poor. Poverty is still rampant in South Asian region where about half billion people fall under the acute poverty line. In the context of Nepal, it is estimated that about two million household (about 38 percent of the total population) are below poverty line. Incidence of poverty is higher in rural area as compared to the urban and semi-urban area of Nepal. Therefore, reduction of poverty is the main challenge for the development of Nepal, and hence has been the main focussed program in the past as well as present national development plan of the government.

To conquer the problem, the Small Farmers Development Program (SFDP) was initiated in 1975. It was, the outcome of the FAO/UNDP joint regional project named  “Asian Survey of Agrarian Reform and Rural Development”  (ASARRD), which recognized the fact that special efforts were needed to support the poor and disadvantaged groups. As a pilot project in Nepal, it was first tested at Mahendranagar in Dhanusha District (Terai/plain region) in 2032 Bhadra (August 1975) and at Tupche in Nuwakot (Hill region) Districts in 2032 Falgun (February 1976). The Agricultural Development Bank of Nepal (ADBN) was entrusted with the responsibility of executing the project.

2. Necessity of the SFDP Program in Nepal ?

• To improve the socio-economic status of the small farmers.

• To create employment opportunity in the rural areas for poor   people.

• To utilize locally available resources in meaningful way.

• To develop delivery and receiving mechanism system for accessibility of credit and other support services to the small farmers.

• To empower the small farmers.

• To develop independent grass-root level organization of the small farmers.

3. OBJECTIVES

The main objective of the program is to raise the socio-economic status of the small farmers, land less labors including women by bringing them into the mainstream of the development process and by institutional development of their own grass-root level organizations. However the specific objects are to:

• raise the income level of small farmers by increasing their production and productivity of on-farm as well as off-farm  activities.

• raise their social status  by empowering and  involving them in social and community activities.

• create additional opportunity for employment generation by mobilizing their skill, labor, locally available resources in meaningful and productive manner.

• adopt the local delivery mechanism of government agencies and other institutions to the needs of the small farmers.

• develop self-reliance and independent grass-root level organization of the small farmers so that they would be able to organize themselves to plan and carry out the activities for their own development.

• enable small farmers to develop their own institutions and formulate plan and programs and implement them accordingly at grass roots level.

     In order to achieve the above objectives a systematic procedure is followed based on the group approach involving various development agencies, local agencies and small farmers.

4. The features of the Program

The program comprises of various essential socio-economic development program together and is the first target oriented program for the overall development of small farmers. The main features are as follows:

• The small farmers are identified and categorized on the basis of income and expenditure i.e. annual income up to Rs 2500.00 (at 1987/88 prices) per capita. However, to bring the ultra-poor in the mainstream of development, more priority is provided. Ultra-poor is considered as those whose per capita annual income is less than Rs 1200.00

• Program implementation on the basis of group approach.

• Group formation and income bracket. SFDP organizes groups of men and women.

• No discrimination among any community and religion:  The small farmer of any community is eligible for group membership.

• Enhanced knowledge and skill of small farmers by organizing different training/workshop.

•  Implements saving and credit program together.

• Group liability and group guarantee.

• Loan on the basis of capacity and capability of the small farmers.

• More priority for women groups.

• Implementation of essential social and Community development program with the involvement of small farmers and other potential agencies.

• Non-small farmers are also benefited from social and community development program (such as drinking water, community irrigation, repair and maintenance of village road and construction of local village to village and link road).

• Empowerment and leadership development in small farmers.

• Service package to women small farmers by the women SFDP (where group organizer is women and only women small farmer is eligible).

• Holistic approach (implementation of economic, social and community development activities together).

• Participatory (involvement of small farmers in planning, programming, project identification, appraisal, project implementation, supervision, follow-up, monitoring and evaluation).

• Have take up (beginning as SFDP) and landing (exit as Small Farmers Cooperative Limited) system.

• Pioneer in poverty alleviation program and world wide appreciation.

5.   Guiding Principle of the Program

a.  Moving toward institutional sustainability: Implementation of institutional development program in all remaining SPOs1

b.  Quality improvement of the program (quality improvements of loan, group, internal resources and staff).

c.   Financial viability and sustainability of the program.

d.   Implementation of program in cost effective manner.

e.   Implementation of essential social and community development activities in order to attain well balance development of the small farmers.

f.    Leadership development capacity and capability build up of small farmers.

g. Involvement of small farmers in the  socio-economic development activities as well as management of the SFDP in order to enabling them to implement the project independently in future.

h.  Implementation of group saving and mobilization program in order to build up saving habit in small farmers, to realize their saving capacity and strength, to mobilize the saved amount in meaningful emergency and other income generating activities.

i.    Empowerment of women.

j.    Ensuring loan repayment.

6.   Strategies of SFDP Implementation

a.    Categorization of groups of small farmers into three categories i.e. excellent, good and bad.

b.    More focus on group cohesive, strengthening, group saving and creation of internal resources. In order to obtain significant increment in internal resources, so that the
SPOs could run their programs with their own resources in sustainable manner, bank has adopted the strategy to tie-up saving with loan outstanding. Saving and loan outstanding amount should be at least at the ratio of 1:10.

c.    Regular and effective meeting of group leaders.

d.   Effective involvement of Sub Project Implementation Committee (SPIC) at district level in the development effort of small farmer program.

e.  Implementation of essential social and community development activities. Generation of resources through: 

*   Initiation of group members (may be in form of cash, kind or labor)

*   Village Development Committee, District Development Committee (DDC).

*   Partnership with local working NGOs.

*   Integration of program with district level/local level Government/I/NGOs.

* UNICEF regional/central office especially for implementation of parental and child education, training program related to WGO/GO and  group members.

*  Government fund through Small Farmers Development Centre.

*  Training at central/regional/SPOs level to enhance knowledge, skill, attitude and behavior. 

*  Empowering Women : Substantial increase in the number of women groups.

*  More priority in implementation of livestock insurance program.

*  Implementation of parental education and child development program.

*  Credit volume according to the capacity, capability and track record of farmers.

*   Determination of loan repayment schedule according to discussion with the small farmers and trend of project income.

*  Classification of all Sub Projects Offices (SPOs) in order to design program so that all possible SPOs will be handed over within the period of five years.

*  Targeting the Poorest (priority to ultra-poor and most disadvantaged group of people).

7. Staffing

The Sub-Project Office (SPO) is managed by a Group Organizer (GO) supported by other assistant staff depending on the coverage, volume of business and other programs. In some potential SPOs Women Group Organizer (WGO) is also assigned to initiate women focused credit and social development programs. Moreover, women empowerment and child development program is also implemented in these SPOs. There are few Women Small farmers Development Project (WSFDP) headed by Women Group Organizer (WGO) and supported by other staff.

8.  Integration of the Program and line agencies

Using the group mobilization mechanism, the Group Organizer and Women Group Organizer facilitate effective integration of credit and social/community development services from the line agencies at the group and community level.

9. Functional body

Sub-Project Implementation Committee (SPIC)

SPIC comprises of  members from various line agencies at the district level and headed by the Chief District Officer (CDO) and coordinated by the Manager of ADBN district level office.

Functions of SPIC

*    Formulate program at project level.

*    Recommend appropriate VDC for the implementation of new SFDP.

*    Coordinate, inspect and supervise the program at project and district level.

*    Integrate their possible program in SFDP.

*    Evaluate the program at district level.

10. Target group

The rural small farmer whose income is less than NRs 2500 per capita is considered as target group. Moreover, land less agricultural labor, tenants, share cropper, fisherman, and others asset less rural people who are depending on agricultural related occupation are considered as small farmers. On top of that, small farmers are further categorized as cited below:

*    Poor: annual income between NRs 1800 to Nrs 2500 per capita

*    Very poor: annual income between NRs 1200 to Nrs 1800 per capita

*    Ultra poor: annual income less than NRs 1200 per capita

11. Operational Modalities

11.1 Operation Modalities for new SPO:

*   On the basis of baseline survey, potential Village Development Committee (VDC) is selected and on the recommendation of SPIC, Small Farmers Development Centre of ADBN, at central office approved the new SPO.

*    Posting of GO and other supporting staff.

*    Pre-household survey of the VDC and preparation of project profile. On the basis of this survey GO identifies small farmers and categories them.

*    Detail household survey of small farmers is conducted before formation of group.

*    Management of orientation and training program in order to enhance the knowledge and skill of the small farmers.

*    Involvement of small farmers in community development programs.

*    Involvement of small farmers in creditworthy income generating activities.

*    Empowerment of small farmers.

*    Organization building of small farmers at grass-root level.

*    Independent implementation of program by the small farmers.

11.2 Various model implemented within the ambit of program are as follows:

*    Saving and credit as Micro-credit program.

*    Saving credit and insurance.

*    Saving credit plus program (implementation of essential community development activities) as Micro-financing program.

*    Institutional Development Program with the full participation of small farmers.

*    Women Small Farmers Development Project especially for the empowerment of women (one project in each development region).

12. Administrative framework

A separate, Small Farmers Development Centre within the ADBN is entrusted at central level, which is responsible to formulate plans, policies and strategies for SFDP activities. In the field, the SFDP is administered through ADBN’s networks of 13 Supervision and Controlling Offices (SCOs) established in various regions of the country based upon the volume of business and topography of the country.

13. Major activities

a.  Economic activities:

   SFDP provides credit for different purposes related to production, farm mechanization, marketing, and other income/employment generating activities. Credit support has been fruitful in improving the economic status of the small farmers by increasing the productivity and production of agricultural related projects.  Moreover, they are benefiting by engaging themselves in small-scale cottage industry with the credit support. 

b.  Social and community development:

    Considering the fact that the process of economic development and social enhancement should be so related that they become mutually supportive and re-enforcing. So apart from credit, the program incorporates essential social and community development activities such as adult education, population education, parental education, child care center, health and nutrition, establishment of drinking water schemes, community hall, school roofing, community irrigation schemes, community plantation and foot trail and gravel road construction, repair and maintenance of village road, Vegetable seed distribution and other appropriate and needy program.

c.  Community Surface Irrigation Program (CSIP):

     Community surface irrigation development is a highly prioritized and demanded program by the small farmers. The SFDP has been emphasizing the construction of irrigation schemes at community level with active participation of small farmers from initiation to evaluation stage of the program.  As of mid July 2000 the program has benefited over 25900 hectares of land of more than 29437 households through 564 schemes. The recently conducted study on “Effectiveness of CSIP” indicates that there is significant improvement in socio-economic change of the beneficiaries farmers after completion of the project. It is mainly due to positive change in cropping pattern, crop diversification, increase in land value, change in food habit and positive thinking in child education especially girl child.

d. Environment Conservation:

    Environmental promotion and conservation is another important activity initiated by the program with the support of UNICEF. The main sense of the environmental activities in SFDP is to reduce pressure of workload on women and strain on environment. As most of small farmers are badly affected by the deforestation i.e. lack of fire wood, timber for housing and furniture, fodder for livestock, drying of drinking water sources, more time to collect fodder and other materials from the forest, depletion of soil fertility and other more. Activities implemented in this program are as community plantation, distribution of saplings of fruit and fodder and timber tree, leasehold fodder and forest program, plantation to protect the sources of drinking water and irrigation canals, drinking water schemes, construction of convenient latrine and smoke less stove, bio-gas plant, use of compost manure and  other appropriate program to promote the environmental conservation programs.

e.  Gender and Development:

   Considering the low socio-economic status of rural women, Women Development Program (WDP) was initiated to discern the concerns and cater to their special needs in 1982 as an integral part of SFDP. Aimed at providing the basic services to rural poor women, Women Development Program (WDP) is

    being implemented in all of the SPOs in general and intensively in 36 SPOs. Altogether more than 30 thousand women small farmer members are being provided with services to enable them undertake various on-farm and off-farm income generating activities. More priority to women members is given in group formation and implementation of program. At present 5 Women SFDP is in implementation one in each development region, where women group organizer is deputed. These SFDP provides services only to women group members. Overall performances of women group members are better as compared to their counterpart.

 f.  Livestock Insurance

    One of the main portfolios of loan of small farmers is livestock. Its share in total outstanding loan is about half. Among livestock, share of milking cow and buffalo, she-calves are much more compared to the rest. Although, profit from livestock is more and is preferred by small farmers it is more risky compared to their other business. Because, in case of sudden death of cow/buffalo farmers have to face series of problems in one hand and bank has to face problem in loan repayment in other hand. More over, insurance program encourages farmers for raising improved breed and supports in generation of internal resources. Therefore, ADBN has provided special arrangement for the insurance of small farmer’s livestock by their own committee. Support of Government in terms of providing 50% subsidy in premium is highly appreciable and it motivates small farmers toward the program.

14.  Coverage

        Status and situation of SFDP: 

    Present Status of only SFDP
(as of mid-July 2004)

Trasformed Farmers Managed Small

Framers Co-operative Limited(SFCLs)

15. Performances

Positive: (positive impact due to the program)

*    Increase in production and productivity of agricultural and livestock sector

*    Increase in use of improved agricultural inputs and technology

*     Rural physical infrastructures build up (community hall, road maintenance, community surface irrigation projects, community drinking water scheme and such other).

*    Access for credit for income generation

*    Increase in socio-economic status

*    Increases in literacy rate especially adult literacy.

*   Access to health service: positive change in food habit, improvement in the health of mother and children, improved hygiene and sanitation.

*   Access to safe drinking water

*   Leadership development (implementation of SFCL by the small farmers trained by the SPOs)

* Increase in participation of small farmers

* Increase in status of women and children: Increased participation in livelihood projects by  women. More convenience in doing household responsibility for women.

Constraints:

*   Maoist insurgency

*   High transaction costs (credit)

*   Very low coverage and volume of business

*   Questionable financial viability and sustainability of the program

*   Poor loan recovery rate

*   Time consuming

*   Staff productivity very low

*   Supply driven program

*   Lack of feeling of ownership among small farmers

16. New approach

*   Implementation of Institutional Development Program in remaining all SPOs with quality   improvement.

*  Transformation of bank owned all potential SPOs into small farmers owned and administered Small Farmers Cooperative Limited (SFCL) within 2 years.

*   Implementation of essential social and community development activities to achieve better       quality.

*   Implementation of livestock insurance program.

*   More focus on formation of women group.

*   Priority to ultra-poor and backward communities.

17.  Institutional Development Phase

In order to implement the program financially viable and sustainable manner by empowering the grass-root level organization of small farmers so that they can implement the program by themselves, ADBN has initiated Institutional Development Program (IDP). It is an innovative approach developed within the SFDP Program and is based on the participatory approach. 

ADBN has planned to implement this program in all SPOs and gradually hand over these SPOs to the small farmers. Bank has adopted specific package for SPOs selected for the IDP process and general package for SPOs trying to enter in the process of IDP. As of mid-July 2004, 161 SPOs have been handed over to the organization of small farmers i.e. Small Farmers Cooperative Limited (SFCL) and 75 are in the process of IDP. Various study reports reveal that performances of SFCL are quite encourageable and are comparatively better than other such program. Significant improvement in internal resources, decrease in operational cost, operational and financial viability is some of the major achievements made by SFCL. Moreover, the local small farmers administer it and all staff are from the family of small farmers. Therefore, they are more responsible and performance oriented. 

Objectives of IDP

*   To develop organization of the small farmers at the grass-root level

*   To enhance their knowledge, skill and attitude by involving them in different training programs.

*   To develop leadership capability and managerial skill among small farmers.

*   To involve them in every activities of SPOs and thus able to continue the activities of SFCL

*   To create internal resources at local level and use it for meaningful purposes.

*   To increase share of small farmers and able to make them self-sustainable gradually.

* To promote sustainable financial intermediary linkage between the bank and the small farmers.

*  To expand and increase coverage and volume of business in a cost and time effective manner.

Why IDP ?

*   To explore the potentiality of small farmers.

*   Capacity and capability build-up of small farmers.

*  To know their strength, power and voice by them as well as by others who have interest in development of small farmers.

*  To develop bargaining capacity in small farmers (within the SFCL as well as outside SFCL such as government and non government organisations for the development works).

*   SFDP as a time bound project and not for always.

*   To provide services to the remaining small farmers.

*  Empowerment of small farmers at household, group, inter-group, community, district and national level.

*   To know the strength of rural small-scattered capital that was considered as useless in past.

*   To provide rural banking services.

*   To achieve financial viability.

*   To implement new innovative programs suited to the need of small farmers.

Achievements

*        Obtained international CGAP award (For outstanding performance in rural poverty alleviation)

*         Organizational development

*         Increase in participation of small farmers

*         Significant increase in internal resources

*         Significant decrease in operating cost

*         Financial viability

*         Relatively increase in coverage

*         Increase in volume of business

*         Comparatively increase in participation of women

*         Increase in social status and prestige

Strategy

Several studies carried out to assess the efficiency of SFCL and progress report of SFCL clearly reveals that SFCL is developing as one of the best models for poverty alleviation. Therefore ADBN has planned to implement the program in all SPOs gradually.

In order to make the SFCL viable and sustainable, ADBN has planned to hand over the remaining SPOs, after quality improvement. Past experiences indicate that credit alone is not sufficient for quality improvement of SPOs. Therefore ADBN has been providing more focus for implementation of saving and credit program along with social and community development activities. Essential social and community development activities has been in implementation with the support of small farmers own initiation, VDC/DDC, line agencies, local level GO/INGO/NGO, and support of government as well as donors with the initiation of central office.

Package for IDP

General Package (for those SPOs which are still not entered in the IDP process)

Essential activities

*   Introductory workshop

*   Exchange visit

*   Group saving and mobilization

*   Group mobilization

*   Income generating activities

*   Livestock’s insurance program

*   Interaction of GOs/WGOs and bank officials

A.  Specific Package (intensive package)

Area: SPOs, which are in the Process (Targeted for hand over) of IDP

No of SPOs: 75

Types of training/activities

*   Introductory seminar

*   GOs/WGOs

*   Promoters

*   Youth workers

*   Workshop for bank officials and line agencies

*   Interaction program for GO as well as bank officials

*   Training to inter-group members

*   Training to main committee members

*   Account ,Loan ,Financial Management training to MC and youth workers

*   Refresher training to youth workers on account and financial management

*   Technical-Village level technician

*   Exchange visit

*   Group saving and mobilization

*   Group mobilization

*   Income generating activities

*   Livestock’s insurance

*   Participatory evaluation workshop at SPOs level

18. Future Plan

* Implementation of Institutional Development Program in all SPOs and gradual transformation of SPOs into SFCL within 2 years with quality improvement.

*   More priority for the implementation of livestock insurance program.

*   Implementation of new women SFDP.

*   More priority for formation of women groups.

*   Implementation of GO/WGO Interaction program.

*   Management of assistant GO from local small farmers.

*   Group solidarity. 

*   Review and improvement in the process of IDP.

*   Strengthening of Sana Kisan Bank

*   Implementation of SFDP by SFCL as farmers to farmers approach.

*   Implementation of essential social and community development program Empowerment of women.

*       Replication of program in "Farmers To Farmers" approach strengthening.