Panchakanya Agriculture Cooperative Limited

Producer cooperatives have long helped members increase their competitiveness, and there’s no question that Panchakanya’s model could be adopted by growers elsewhere in the world seeking to embrace organic production. Panchakanya’s leaders draw three lessons from their experience:

First, Uddav believes that the “transition [to organic] should be gradual, so that those who want to shift to organic farming can minimize possible losses due to reduced yields in the initial years.” The use of support technologies, like plastic tunnels that allow for off- season tomato production, can ease this transition. It’s also common to see farmers in Nepal using their land to grow produce and animals together, and a shift to organic production makes this interdependence critical.

Second, technical assistance and outside funding support were instrumental in Panchakanya’s early successes. Notes Bhimendra, “The cooperative has benefitted immeasurably from external assistance, including DADO, OneCert, and Winrock’s Farmer to Farmer program.”

Third, the localization of inputs—whether through capturing manure and plant wastes, selling seeds to other farmers, or making loans locally through their microcredit program—has been a critical strategy for reducing Panchakanya’s costs enough to offset initial decreases in production.

Though Panchakanya Agriculture Cooperative has already bested many challenges, it is still struggling with four:

• Organic Certification: With support from the Farmer- to-Farmer program and OneCert, the cooperative is well versed in the global requirements for organic certification. It has started to set up the necessary tracking systems but, lacking even a single dedicated computer, the cooperative is having difficulty communicating with the certification agencies. It’s now seeking partners, such as local agencies or NGOs, who could serve as intermediaries.
  
  
• Membership: There are currently 200 new farmers clamoring to join, but the leadership of Panchakanya is wary of growing the cooperative without assurances that the new members understand and are completely committed to organic production. Newcomers need to know that the first few years in organic farming may bring decreased yields, decreased profits, or both. The cooperative wants to guarantee that new members will stick with the program to prevent sudden drops in production or the embarrassment of products not meeting their organic standards. Some expansion is likely. Even an increase of 30 farmers will double the cooperative’s size and production capacity, and allow for hiring a motorized vehicle for distribution and collective marketing.
  
  
• Scale: The market demands quality product and regularity of supply. Panchakanya’s small yields and inconsistent volumes make it difficult to market members’ produce and command premium prices. This puts Panchakanya at a competitive disadvantage against larger, non-organic farms in the region that can fulfill bigger contracts. Most co-op members produce only a basket or two of each food item at a time. Even with a village collection center to aggregate output and market collectively, the total amounts are so small that it has been hard to convince traditional supermarkets or natural food stores to hassle with purchasing from Panchakanya. At one point, the cooperative hired a person to make multiple bicycle deliveries per day to a department store, but the deal fell apart when they couldn’t ensure the a steady volume of quality produce each week.
  
  
• Organic Infrastructure: Panchakanya’s situation isn’t helped by the lack of an organic sales infrastructure in Kathmandu. Although demand for organic and natural foods is steadily rising, there are only a few dedicated shops selling organic vegetables. “The member-farmers are mostly selling in regular vegetable markets and are unable to obtain a premium price,” says Bhimendra. “Currently, only four out of thirty-five farmers are supplying about a hundred kilos per day to the organic shops at premium price.”

Despite its ongoing challenges, Panchakanya’s innovations are starting to catch on in other regions of the Kathmandu valley. The cooperative has become a center for visiting farmers, hosting five to six groups per year with as many as 20-30 participants per group. “Now the cooperative has some momentum, and has gained a very good name and fame,” says Bhimendra. “In other villages, there are similar groups, encouraged partly by the DADO showcasing Panchakanya as an example. There is a lot of interest among officials and other farmers. People are coming even from outside the area to see how we work, and they are leaving with a very good impression.”