Laxman Devkota stands smiling in his warehouse, sacks of onions and potatoes stacked all around him. Strictly, it is not “his” warehouse – the building, which stands within a trading complex, is owned by Surkhet municipality and managed by a committee of three traders, three farmers, and three municipal representatives. Laxman is a former farmer from Goganpani – the settlement described in our previous blog. He took up vegetable trading 15 years ago with a starting capital of NRs 25,000 (then some USD 330) and now has an annual turnover, he says, of roughly NRs 360,000,000 (about USD 4,820,000). He is coy about his profit margin, but wholesale vegetables are clearly big business. This is especially true of off-season vegetables – those grown in the winter when rainfall is sparse, and irrigation is necessary to produce a crop.
This blog outlines the facilitation provided by Helvetas in the development of the off-season vegetable value chain from the rural area of Goganpani to Surkhet, the booming provincial capital of Karnali province (Western Nepal), and the adjacent plains of the Terai. Helvetas engagement began with the establishment of a water supply – enough both for drinking, thus reducing the time women spent in fetching household supplies during the dry season, and for carefully controlled dry season irrigation. But there is no point in growing vegetables for sale unless there is access to a market.
Identifying key intervention points in the value chain
When planning an intervention in any value chain - whether it is vegetables of something else – an important first step is a full analysis of the chain of actors involved, their roles, and any blockages in the chain. Such an analysis for the off-season vegetable chain in Goganpani is shown in diagrammatic form below. We identified the main hindrances in the value chain to small farmers as collection and transport.
Helvetas approached a local grocery shop owner in Bubairakhe, a market hub near the vegetable production pockets, and encouraged him to establish a vegetable collection point. At the same time, we linked him to Laxman Devkota, who had already started working as a wholesaler. We suggested the signing of a written agreement between the two, to ensure fair and transparent business transactions. Laxman Devkota started transporting vegetables from the collection center to Surkhet. Since at that time there were no banking facilities in the village, and carrying large amounts of cash was hazardous, trading was based on a token system. Farmers brought their products to the local collection center, and received a token stipulating the amount to be paid. Low value tokens were exchangeable with goods in the grocery shop, whilst larger amounts were redeemable from the wholesaler in Surkhet. This system had potential to favor the traders, through forcing producers to “purchase” goods from them, but the facilitating role of Helvetas helped to ensure trust between all parties. In the absence of local cash flow, the token system served to grow the value chain.
Some fifteen years on, banking facilities are well developed in Goganpani, and tokens are no longer necessary. There are also four local collectors rather than one. Laxman Devkota and other wholesalers place their orders with the different collectors and pay directly into their bank accounts. The collectors in turn pay cash to the farmers, who remain mostly women. The existence of several collectors means that prices can be negotiated; furthermore, mobile network coverage allows farmers to check market prices in Surkhet before making any deal. Such market information also allows farmers to decide exactly what and when to plant, as they know well the time needed for each crop to reach maturity.
The local collectors are now also starting to provide quality inputs to farmers on credit, to encourage the production of certain vegetable varieties with a high market value. This credit is settled following the harvest. Laxman Devkota is meanwhile planning to train farmers in grading their produce; in this way he and they can gain higher prices as there are different markets for different grades, and buyers are willing to pay for uniformity.
Although both women and men are involved in vegetable cultivation, it is women who undertake much of the day-to-day work. They do not see the type of profits made by Laxman Devkota –nevertheless, vegetables represent their best opportunity to gain an income. Twenty-five-year old Nirmala Shahi is typical in this respect, her calloused hands revealing the manual labor entailed. Like other women, Nirmala is a member of various savings and credit groups – in her case four, into each of which she pays NRs 100 (roughly USD 1) per month. She also has savings for her daughter and son, aged 4 and 2 respectively, in a children’s club. Her daughter has already started school in a private, English-medium school, and her son will follow when he is old enough.
Nirmala Shahi, Vegetable producer, Goganpani
This is the main motivation driving Nirmala, and one echoed by almost everyone we met in Goganpani. The linkages between rural Goganpani and urban Surkhet seem set to only grow and develop further.