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Taking the bank to the farm-gate to deliver value chain financing

Binod Bajgain, CONNECT Coordinator

CONNECT’s partner, Organic Mountain Flavor Pvt. Ltd. (OMF) has set up a ginger processing facility in Sahajpur and provided buy back guarantees to farmers agreeing to buy whatever quantity of ginger, turmeric and other high value spices they grow. Simultaneously, CONNECT and OMF are working to teach organic farming techniques to farmers and support organic certification of their land which will increase ginger prices.

CONNECT has partnered with Prabhu Bank Limited (PBL) to provide value chain financing (VCF) support to farmers of ginger, turmeric and other high value spices in the Sahajpur corridor of Doti. More than 300 farmers from Barchain, Gadsera, Ghagal, Lanakedareshwor and Mannakapadi VDC will benefit from VCF this year.

With support from CONNECT, PBL has travelled to meet farmers and given loans before the start of the season. Farmers are encouraged to buy more seeds and use more land to cultivate ginger and turmeric.

Bringing 300 farmers from these remote VDCs into the formal banking channel is a challenging task. CONNECT and OMF have heavily supported PBL to complete banking requirements. Despite limited human resources in branch and the multiple rounds of off road travel required, Manager of the PBL Dhangadhi Branch, Mr. Nanda Raj Joshi actively engaged in the field and guided major activities including the completion of account opening forms, cheque book distribution, loan-deed signing and loan disbursement to farmers. 

More than 98% of farmers did not have all the necessary documents, for example passport sized photos and photocopies of land and citizenship certificates and there is no infrastructure in the vicinity to organise these documents. Mobile phones were used to take photos which were developed in Dhangadhi and attached to respective files before they were submitted to PBL for further processing. Applicants did not know the names of family members, required to be submitted on the form, and the team had to  enquire with other community members to trace the details.

Physical distance between the bank and these rural corridors with their dispersed settlements of farmers made this process onerous. It takes one complete day of travel to reach Barchain from Dhangadhi. So, the bank travelled with CONNECT for one entire day and started work the next day. After completing forms for farmers close in that area, the team is again on the move to another road head to meet another group of farmers. The meeting time couldn’t be early morning as farmers have to complete early morning work on their farms and could not be late afternoon as they have to walk home. Hence, every group is met early in the afternoon and it takes many days in the field to complete the documentation process. It was equally challenging for farmers to manage their time to walk to the road head, for a minimum for 2 hours, to attend the meeting.

It is not feasible for farmers to travel from these remote VDCs to Dhangadhi to complete the banking process in one round and then return to withdraw their loan amount due to cost and time involved. It was equally difficult for PBL to reach these remote VDCs. CONNECT has bridged the gap between farmers and bank, bringing them together by addressing constraints of both. After 3 months of continuous work, CONNECT has facilitated VCF for 110 farmers. The process is ongoing and we hope that 200 more farmers will receive VCF by 15th of August 2017.