Except for a few indicators, the participants in the Small Farmer Development Programme were seen to be better off than the non-participants, although the extent varied from aspect to aspect. It is not possible to say if the participants were already better off before the project, given the tendency for already well-off elite (and their dependents) to monopolise over virtually every aspect of development in countries like Nepal.2 However, on the basis of such criteria as land ownership, cropping patterns and access to irrigation, the two groups seem to have been quite comparable. And hence, at least some of the difference in production and consumption could possibly be attributed to participation in the Small Farmer Development Project. In Nepal, it has been difficult to find even this small measure of improvement in a large number of rural development projects. From this point of view, this programme can be considered to have had a relatively favourable impact on the participants, although it is not free from some major problems.
2 For a fuller discussion of this theme see Mahesh Banskota ‘Foreign Aid and Rural Development in Nepal’, in Integrated Development Systems, Foreign Aid and Development of Nepal. Kathmandu, 1983.
Following are the major problems of the programme, as identified by farmers (both participants and non-participants) and group organisers.3
3 See Nepal Rastra Bank, op. cit., pp. 139-145.
(1) Many participants and non-participants are still unclear about the objectives and purposes of the Small Farmer Development Programme.
(2) The loan procedures are still too complicated and the period of loan repayment is too short.
(3) In the name of small farmers, many large farmers have succeeded in taking advantage of the programme,
(4) There is lack of coordination amongst the service delivery institutions (like those providing credit and inputs).
(5) There is substantial pressure from the rich to prevent small farmers from participating in the programme.
(6) There is evidence of misuse of loans.
(7) The mortality rate of livestock is high because of poor support services resulting in huge debts of the farmers to the cooperative societies and the banks.
(8) If it was a problem for some to find the right group, many others were not even asked to join any groups. Amongst the non-participants, 72 per cent indicated that they would join a group if they were asked.1
1 Nepal Rastra Bank, op. cit., p. 143
(9) Many members of the participating group also complained about the lack of unity among the farmers, the threat by local elite and too much time being devoted to voluntary activities.
(10) Another major problem is the question of the continued role of ADB/N both in terms of providing a revolving fund and its management role. Even in projects that are over five years old, there are no signs that SFDP groups have mastered the art of moving ahead without the leadership of the ADB/N. The concept of a revolving fund has not yet materialised. In some areas, even after five years, there are no signs that those previously excluded from group participation will ever be included.2 Although a good deal is being said about group lending, the repayment rates have not been all that encouraging. Its only advantage probably lies in being able to pool each other’s collateral for bigger loans than they could get as individuals. If this is so, then the problem is not really one of group formation but one of banking practices. As most banks engaged in this type of lending are either in the public sector or have such loans fully insured, there is really no reason why collateral requirements by the banks cannot be changed!
2 These points are based upon the author’s own observation in Tupche which is among the oldest SFDPs and has become a show piece.
The most important message that comes out of the review and experience of the SFDP so far is clearly the need for more investment funds into the agricultural sector of Nepal. SFDP has succeeded in channelising funds to the smaller farmers for their farming activities; and although the ‘before and after’ picture is not available, the ‘with and without’ SFDP picture appears quite encouraging. An important implication of this would be that the provision of resources to the water and nutrient-starved agricultural sector of Nepal through disadvantaged groups (like the small farmers) can have favourable impact on the poverty situation. On the whole, the SFDP can be replicated fairly easily if the Bank can (a) mobilise the required funds, (b) train its field staff to work with smaller groups which is not always very rewarding, and if there is effective support from different input and service delivery institutions.