Small Farmers: Instrument To End Poverty

Poverty alleviation and food security are possible only through small holder agriculture development and creation of conducive environment for the small and marginal farmers to grow

Issue Name : Vol.10,No 15, March 24,2017 (Chaitra 11,2073)

Dr. Shiv Ram Pd. Koirala

Nepal has been historically known as a poor country, where 21.6 percent of the total population still lives below the poverty line. Despite substantial decline in poverty rate over the years, poverty for those self-employed in agriculture has increased. Poverty is markedly more pronounced in rural and remote areas, where 83 percent of population lives and about 67 percent of them are engaged in agriculture as their primary source of livelihood. Ironically, 60 percent of the farmers are small and marginal who have adopted subsistence farming since long and hence they are categorized as poor. Viewed in this sense, small scale farming and poverty seem interrelated.

So, if the government really commits to lift the people out of poverty and wants to virtually end poverty in all its forms, the small holder farmers must deserve attention. The small holder farmers' contribution to the national economy so far appears not only unrecognized, but also confronted with serious constraints, including limited access to productive resources such as land, improved seed and planting materials, agro-chemicals, credit, information, technology, sustainable farming practices, access to markets and strong farmer based organization among others. Despite the majority of the rural population’s engagement in agriculture, government’s investment, innovation and policies favoring small and marginalized farmers are lacking. Moreover, poverty among female farmers is severe as they lack equal rights and opportunities in the agricultural sector. It is therefore imperative that women should be placed at the center of development strategy.

Poverty alleviation and food security are possible only through small holder agriculture development and creation of conducive environment for the small and marginal farmers to grow. The government’s effort to recognize the contribution of farmers through pension scheme along with Prime Minster's Agriculture Modernization Project designed with a view to making the country self-reliant in agriculture production is of course commendable. Moreover, Agriculture Development Strategy (ADS), which is envisaged to transform Nepal’s farm sector in the face of common challenges, such as climate change, food price volatility, low productivity and water stress, is of course a milestone to bring the agriculture sector into a new height of economic development. In this context, worth mentioning is the role of Small Farmers Agriculture Cooperatives (SFACL) and Small Farmers Development Bank (SFDBL), both established in small farmer’s initiatives. Three tiered structure, only small/marginal farmer’s ownership, majority women’s involvement, mandatory coverage in all the wards of a VDC, Inclusion of Dalit (untouchables) and Janjatis (ethnicity) and group approach are some of the distinct features of SFACLs which distinguish them from other cooperatives in the country. The numbers of such cooperatives by the end of mid-January counted 549 and 120 replicated cooperatives are in the process of hand over to the local communities. Regarding outreach, they have served about 600 thousand small and marginal farmer members in 66 districts of the country, women participation exceeding 76 percent. Though almost all the SFACLs show good performance in terms of sustainability, outreach and governance, women owned and managed SFCLs, which are 237 in number, excel others. These cooperatives have become a ray of hope for the rural poor and small holder farmers not only because they collect savings and supply credit to them but they also insist on social and human capital formation in local level. Savings collection of approximately Rs. 20 billion and loan from SFDBL of about 12.5billion, constituting Rs. 32.5 billion is the loan portfolio of SFACLs with member small farmers as on mid-January 2017. These cooperatives, since a couple of years back have been emphasizing on community based organic farming, high breed cattle rearing, and agricultural value chain etc. Financial literacy program and cooperative   education to members have been their regular activities. Community farming undertaken by SFACL Maharanijhoda, Jhapa and Tea processing industry operated by the small farmer members of SFACL, Prithivinagar, Jhapa along with the operation of several rice, pulse, seed processing, and oil mills apart from livestock, agriculture and fisheries projects prove that small and marginal farmers could be instrumental to end poverty if they are given opportunity and access to resources. Most of the coop members these days are engaged in either micro or small enterprise operation or undertake commercial livestock or agricultural projects. SFDBL, which is mainly owned by the SFACLs, believes that widespread poverty can end once the poor small and marginal farmers especially women farmers are empowered with adequate resources and skill.

The Bank therefore has been constantly advocating with the government and donors to extend support to its partner SFACLs in capacity building, institutional strengthening, business development services and replication activities to expand the outreach in sustainable manner. The Bank itself anticipates support from the government and donors in the form of soft loan fund, grants and technical support to meet its goal of providing access to microfinance services to one million small farmer households through at least 1000 SFACLs and link them to supply chain. The SFDBL has consistently been able to prove that the financial resources either in the form of loan or grant from the government or donor agencies can directly reach to the targeted poor small farmers in a nominal operating cost through the partner SFACLs. Despite the Bank’s constant effort to empower the small and marginal farmers and contribute to the government’s campaign to alleviate poverty, forthcoming policy and legal issues are likely to obstruct its smooth functioning. However, the bank expects to overcome such issues and challenges since it is moving forward keeping the poor small/marginal farmers at the center and therefore has become able to win trust of the government, donors and all other stakeholders at large.

(Koirala is Deputy CEO at Small Farmers Development Bank)

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