Capacity Building of Tea Farmers’ Organizations and Technology Delivery Project background

Nepal has a long history of Tea cultivation, initiated with the establishment of Ilam Tea Estate in the Hills of Ilam District in 1863 and Soktim Tea Estate. Tea is widely cultivated in the eastern hilly regions. Major tea producing districts are Jhapa, Ilam, Panchthar, Dhankuta and Terathum. Tea is one of the main cash crops in the hilly districts in Mechi zone contributing to rural and national economics and to alleviating poverty through income and employment generation. Orthodox tea, which is produced at altitudes between 3000 - 7000 ft are famous for its aroma, bright liquor and subtle, slight fruity flavor, which are mostly sought attributes by the consumers of overseas countries. Orthodox Tea is a high value, flavor intensive perennial crop with a potential for generating foreign exchange, reducing rural poverty, promoting economic growth and improving ecology and environment.

The total land area under orthodox tea plantation is around 14,000 hectares; this industry consists of more than 35 tea states, around 18,000 small orthodox tea farmers and about 17 tea-processing factories (source:  HOTPA). Currently Nepal is producing more than 1.7 million kg of Orthodox tea of which small farmers' contribution amounts to 67.8% (Baseline GTZ, 1997). 2.2 million kg of Orthodox tea is produced in a year 2010(source: HOTPA, 2010). Now Farmer's contribution is more than 85% in production and more than 95% is being exported. More than 90% of orthodox tea is exported to India and overseas countries and the rest is partially used for consumption and partially for blending purpose in black tea to impart good flavor. There are 14 mini processing factories operated by individual tea farmers and cooperatives which produce very nominal quantity but in the future its scope of operation will be increased due to interest of all cooperatives to establish such small factory so that they can produce tea by themselves without depending on factory. 

Due to the growing demand of Organic tea in the international market there is a realization of converting factories and garden of individual farmers into organic by certifying in a group and there are 3 factories and 7 groups already certified by NASA. As the international certification is expensive Code of Conduct for tea produced in Nepal is envisioned in a year 2003, which is owned by Himalayan Orthodox Tea Procedures’ Association (HOTPA) and jointly implemented by HOTPA and TEASEC with support from Tea Alliance, which regulates the production, processing and marketing of tea in Nepal with due consideration for ecological, social and economic dimensions. CoC implementation is at the primitive stage especially at the tea farmer’s level and need more promotion, education, and ultimately economic benefit to them. Now more farmers are attracted towards CoC tea due to the reason that the Internal Control System adopted in CoC has helped the farmers to also get Organic certification within very less time frame. 

Rationale
In the previous phase program intervention with support from Agriterra and SNV, TEASEC has facilitate in establishing 49 cooperatives with 2,859 members and provided them with the services to build their capacity to manage their business. They were provided trainings on cooperative management and accounting. Business plans of all 48 cooperatives have been prepared. Now there are four district level cooperative federations in all program districts and Central Tea Cooperative Federation (CTCF) which is an umbrella organisation representing four district cooperative federations and is recently established. 


All cooperatives are now actively operating with regular savings and credit from their members, they are maintaining four ledger accounting system and few cooperatives have involved in selling green leaf to the factory with regular collection from their members. Cooperative federation in the district is now supporting cooperatives in delivering services with support by TEASEC Social Mobilizers. 15 cooperatives have submitted proposal to the Commercial Agricultural Alliance (CAA), a project implemented by the World Bank and 7 have received funds which has been utilized to invest in developing infrastructure in the tea sector. 

There are 1,200 tea farmers who are still not associated with the cooperatives or farmer’s groups. So the number of cooperatives is likely to increase in the future. These tea farmer’s will be further counselled and provided with services from the TEASEC. Very few female members (2%) are in the cooperatives and in the decision making positions. 
District cooperative federations do not have sufficient human resources to work in a full time basis. Social Mobilizers will thus be stained at District Federation office to maintain database of tea sector and by 2013 they will be permanently stationed there. 
There are existing 15 mini processing units which operate in areas where there is difficulty in transporting green leaf to the big tea factory. There are many such remote places where tea is grown in scattered pocket areas and so need to expand with more mini processing factories in the future. 
There is a growing demand and every tea farmer’s choice to certify their tea garden into organic certification. For certifying with organic it requires minimum of 3 years after complying with ICS. But Himilayan Sangrila has certified with organic by NASA within 2 years along with 2 cooperatives and 1 farmer’s group as a sub licensee. This has been possible due to the reason that they were previously certified with CoC and complying ICS. This means CoC standard is a stepping stone towards organic certification. Similarly, this trend is going to continue as Gorkha factory which is already complying CoC is going for certifying with Organic along with Eco and Sundarpani cooperatives. 
Monitoring of regular tea sector indicators is another aspect which is completely missing. TEASEC will have to take a lead in facilitating to regularly keeping the database of all major tea indicators as there is now a permanent reporting structure from individual farmers to Central Tea Cooperative Federation. Capacity of Social Mobilizers will be enhanced to keep tracking of information. 
The key points are summarized below to justify the need of program:

- Government of Nepal, Ministry of Agriculture, and Cooperative has published “organic guideline” for certification of organic agriculture products. 
- HOTPA, an association of tea factory has a vision of converting all orthodox tea garden of Nepal into organic by the year 2012. Tea being exportable product to EU, Japan and those countries has regulation and pesticides band.
- Major buyers from German (Mr. Thomas Holz) and America have already requested to provide them organic tea due to the reason that if any consignment is detected with pesticides than the whole industry may be collapsed. 
- Almost all chemical fertilizer used in Nepal is imported from India and other third country. Going into organic will stop importing fertilizer and save from losing foreign exchange.
- In neighboring country India at Darjeeling are already in the process of converting their tea garden into organic. Darjeeling tea is looked as a competitor. 
- Organic market of orthodox tea is increasing in the positive trend. 
- European buyers are demanding tea that complies with the CSR standard and CoC covers those aspects of standard.
- Approximately 95 % of orthodox tea is exported to Europe, Japan, America and India that reveals that market of organic orthodox tea is increasing in the positive trend.
- Farmer cooperatives and its federations are instrumental to lobby and advocacy with the government and other donors that will ultimately increase bargaining power of the smallholder farmers.
- 14 mini processing has already been established by the Individual farmers and cooperatives and this will continue to grow in the future. TEASEC will provide necessary services to these mini processing as a commercial business services to improve their quality of tea and overall marketing support.

Context: This is an inclusive proposal prepared by Tea Sector Service Centre (TEASEC) for Agriterra and SNV Netherlands Development Organization (SNV) for funding within the framework of the partnership between Agriterra, SNV and Agri-Pro Focus.
Objectives
Overall goal is to contribute in sustained rural poverty reduction of smallholder tea farmers of eastern district of Nepal by increasing their income, and equally empower small farmer based organizations to provide better technical and management services.

The program envisage following objectives:
1.Capacity building of Central Tea Cooperative Federation (CTCF), District Cooperative Federations and the Cooperatives and provide enterprise development support services. 
2.Implement Inclusive Business (IB) model with the two factories and CoC program by involving tea farming.
3.Provide regular improved tea technology services to the tea farmers. 
4.To establish effective supervision and monitoring system in tea sector for regular information dissemination.
5.Support small processing units established by cooperatives.
6.Capacity enhancement of TEASEC.
7.To empower female members of the cooperatives and bring them in decision making position.

Expected results
Following outputs are expected after implementation of program activities as proposed.
- CTCF will have capacity to independent handle ID/OS services to their federations and cooperatives from 2013 onwards. District level cooperatives and federations will be bring more financial resource and sustained by themselves.
- TEASEC will transfer technology to the 10 mini processing units which will be established in the future by the cooperatives or individual farmers.
- It is expected that additional 7 new cooperatives will be formed and they are provided services on their institutional development.
- 2 factories will continue in IB model and provide necessary services either free or cost sharing basis to the tea farmers such as Organic certification, tea technology etc. 
- Quality of tea will be improved and farmers will be able to fetch 10% high price from the previous year from the tea factory.
- 20% increase in quantity of orthodox tea from the previous year.
- All progress of tea indicators will be reported through regular monitoring database from the TEASEC. Monitoring framework implemented will be accepted by all cooperatives, federations etc.
- At least 48 female executive committee members have leadership power and are capable of managing their cooperative

Main stakeholders of this project are:
This project will be implemented by TEASEC with the funding support from Agriterra and SNV. There will be advisory services from SNV and indirect supports from Central Tea Cooperative Federation, HOTPA Himalayan Orthodox Tea Producers Association, HIMCOOP Himalayan Tea Producers Cooperative Ltd., and NTCDB National Tea & Coffee Development Board.

The phase IV program will focus on major four focus areas: Institutional development, technology delivery, implementation of IB model and maintaining tea database. Activities under each output are elaborated more in details. 
a.	Institutional Capacity Building and Enterprise Development support
Overall aim is to build the farmers based channel of institution i.e., cooperatives, district level cooperative federations and central tea cooperative federation who will work towards betterment of the tea farmers. Tea cooperatives and central cooperative federation will act as a business entity for collective input supply, marketing and institutional development services, lobby and advocacy on behalf of tea farmers. Till date, 49 tea cooperatives and four district level federations have been registered and are functional. 
Workshop on business plan for 7 new cooperatives: Additional 7 cooperatives will be formed in this phase and they will be provided with the support to prepare a business plan. One day workshop will be conducted inviting two representatives of each cooperative which will be facilitated by the external consultant who will guide to frame the business plan of their cooperatives. Cooperatives representatives will participate in the process and own this business plan to implement in the future.
Training on “cooperative management and leadership” for female executive committee members: In the past, cooperative management and accounting trainings were provided to all the 48 established cooperatives but there was no participation from the female candidates. In the tea sector women’s role is vital in all process. One female from each 48 old cooperatives will participate in this Cooperative management and leadership training with a special focus to the women leadership skill. 
Workshop on entrepreneurship skill to implement business plan activities and market promotion: All 48 cooperatives established have prepared business plan in the past but all the cooperatives members are not very well aware on its detail contents. Cooperatives executive committee will participate in the workshop. A two-day workshop will be organized to orient them as a guideline to implement activities spelled out in their business plan and prepare a market promotion strategy. 
Capacity enhancement of TEASEC field level staff on computer application: In this phase Social Mobilizers (SM) will be stationed at the District Cooperative Federation Office. District Cooperative Federation office is well equipped with the computer and other electronic equipment wherein SM will help them to document all program related activities and report directly to the TEASEC Regional Office. SM will manage their time to mostly be in the field to work closely with the tea farmers. 7 field staff of TEASEC will be trained on use of computer application such as World, Excel, and PowerPoint that will directly support to the regular monitoring database of program activities. 
Training on proposal writing to the 26 old cooperatives: In the first phase 26 cooperatives were registered and strengthened their capacity so that they will be able to provide services to their members. They were provided training on cooperative management and accounting also their business plans were prepared. Many cooperatives are exploring financial resources from the Government and other projects such as CAA and few of them have already received funds. They have now realized that they need capacity to prepare proposals to generate funds. In this regard, 26 old cooperatives representatives will be trained on proposal writing.
Training to the TEASEC 2 senior staff on mini tea processing and tasting technology: Two staff from TEASEC will undertake one month training on mini tea processing and tasting technology in Darjeeling. TEASEC will request Happy Valley Tea Estate to provide training. Now most of the mini tea processing units in the Eastern region have long term plan to invest in mini tea processing unit. This knowledge will help TEASEC to add as a new services. Most of the mini tea processing units also lack tea tasting skill to measure their quality of tea. Once they receive this training, they will organize training targeting to the small mini processing units in Nepal. This will measure their quality of tea and improve in the future and sells in the market at differential prices. TEASEC will generate the additional income from this services for its own sustainability.
b.	Tea Technology Delivery
TEASEC being one of the leading organisation to provide services on technical aspects of tea from input supply until marketing. This output deals with the regular services to the farmers especially on tea plantation, pruning, organic inputs etc. where 4000 numbers of farmers seek this types of services. 
Training on Tea farming technology to the farmers: This is a regular activity to educate tea farmers on improved tea cultivation technology through cooperatives and district cooperatives federations. Tea farming technology includes proper use of inputs (fertilizers, pesticides etc.), regular management of tea garden by regular trimming tea bush and plucking techniques. Improving soil conditions are another important factor for better nutrition. Social mobilizers will closely work with the tea farmers to prepare organic compost fertilizers and pest by using available organic materials. 1200 farmers trained on seasonal technical tea farming technology (nursery, pruning, etc.).
Training on compost making and bio organic pesticides technology to the farmers group: This is also a regular service that is demanded by the farmers as they need to provide regular organic inputs to the tea plants. It is estimated that 222 new farmers those who are supplying green leaf to the Gorkha and Mist Valeey Tea factory will be trained on compost making and and bio organic pesticides. 
Awareness of improved tea technology through distribution of newsletters published by TEASEC: Newsletter is one of the effective communication vehicles so that knowledge on tea and other innovative ideas and learning are communicated. 3 issues of newsletter will be printed 2000 copies and distributed through federations and cooperatives to the farmers. 
c.	Implementation of IB model
SNV Nepal is taking an initiative to implement Inclusive Business (IB) model in the tea sector by working directly with the selected factories interested in this process and bridging the business relationships with the cooperatives and groups those who supply green leaf to those factories. In this process both CoC and Organic tea promotion and certification is a main key agenda where activities will be aligned towards it.

Inclusive Business is an entrepreneurial initiative seeking to build bridges between business and low-income communities for the benefit of both. It is one which seeks to contribute towards poverty alleviation by including lower-income communities within value chains while not loosing sight of the ultimate goal of business, which is to generate profits. The IB model shows that private sector operators working on a profit-making basis can make significant and sustainable contributions to social development through working with poor communities.

Most of the farmers are now aware of CoC and its benefits but the only concern was its brand identity in the international market and slow pace of working from HOTPA. CoC concept shall still be a valid as a stepping stone for the farmers those who cannot afford to apply for organic certificate. Regular CoC program activities will be continued to increase the number of CoC farmers. 

Although CoC was introduced in the year 2003, Implementation of CoC at Farmers level has been insignificant. SNV was requested by the Alliance partners to support CoC implementation at farmer’s level. Experience shows that CoC implementation is a time taking activity and therefore needs to be implemented further till all the Factories (15 factories and more) are under CoC implementation and should be continued further till all the factories and their farmers are fully certified. Therefore, TEASEC proposes to support factories identified by HOTPA for CoC implementation in raising awareness, information, and agreement aspects.

Following activities will be carried out under this output.
Raise awareness to the farmers on Organic and CoC tea farming technology through informal orientation and counselling: Now many farmers are aware on CoC and others are mostly interested on Organic due to its international image. Many farmers those who are interested in organic certification but cannot afford it due to cost issue they have an alternative choice as CoC, where the same monitoring Internal Control System is valid for organic certification in the future. To convert all gardens into organic there need a massive awareness campaign. However, TEASEC will utilize its human resources to aware farmers to adopt Organic and CoC tea farming by sensitization and counselling. It is expected that additional 409 farmers ( 241 farmers associated with Gorkha tea factory and 168 with Mist Valley tea factory) will be converted towards organic tea farming practices.
Coordination with the factories for CoC implementation: TEASEC staff will work closely with the factories those who produce CoC and Organic tea. In the previous phase 2 factories were selected for implementation of IB model and it will be continued this year as well where individual farmers and cooperatives avail services from them for organic inputs and other non financial technical and business services. There will be regular coordination meeting with the factory manager by the TEASEC manager and Social Mobilizers for establishing networking with the cooperatives and groups, those who are interested in supplying green leaf certified either by CoC or Organic.  One more tea factory will enter into organic certification process within this period.  
One Conduct 2 to 3 days training on Organic and CoC sensitization, ICS, and other certification: Internal control system (ICS) will be set-up in each cluster within CoC farmers group for regular monitoring of tea garden so that it is free from chemicals. In each tea farmers group, one ICS inspector will be self-appointed who will be trained for supervision and monitoring of tea garden. They will be trained to fill logbook by each individual farmer. Upon agreeing on CoC certification, Logbooks are distributed to the farmers. Logbook provides detail real time information about the tea garden owned by the farmers. This information provides buyers guarantee that the products is quality produced which is free from chemicals. The ICS system shall be applied to the organic and CoC farmers groups as well.
Implement IB model with the two factories and farmer's groups: Himalayan Shangri-La and Gorkha Tea Estate are the two factories selected in the previous phase for the implementation of IB model. All regular activities carried out in the past will be continued to foster business relationships and link more cooperatives and groups with the factory with improved quality of green leaf either CoC or Organic certified. 
d.	Monitoring
In the Agriterra mission visit from 21 to 26 November 2010 it was clearly mentioned that Monitoring and Evaluation component is absent and mostly output oriented. However, TEASEC has realized its importance and prepared a M&E format for primary cooperatives, focussing on tea production data. The data will be consolidated at District level and later at Central Federation level, starting from 2011 onwards. In this phase TEASEC will seek services from external consultant to prepare regular monitoring forms to track regular data from the Social Mobilizers who will be stationed at the District Federation offices.
Preparation of monitoring tools: All necessary monitoring tools necessary for regular data collection from the field will be prepared. At present there is no proper data collection format and entry system in a database to generate report other then qualitative and direct intervention details. Most of the program related both outputs and outcomes indicators will be regularly monitored in a prescribed format. 
Orientation to the TEASEC field team on monitoring framework and data recording: There will be 3 days orientation to the field level staff of TEASEC to teach them on data collection procedure from the field when they are visiting factories, cooperatives, and individual farmers.  They will be practically demonstrated in the field to actually record data. 
Regular updating of database from the filled and reporting: All program intervention activities will be monthly reported by the Social Mobilizers in the district TEASEC office which will be compiled by the Program Manager. There will be a separate reporting forms prepared to compile quantitative information and narrative summary report for qualitative information. Program Manager will be involved in monitoring of all level of interventions at the district level and partially in direct intervention on regular capacity building activities. 

Monitoring and evaluation:
&#9642;  Formation of new 7 cooperatives and conduct business plan training to this newly formed cooperatives to their cooperatives representatives
&#9642; One female from each 48 old cooperatives trained on Coop management and leadership
&#9642; 2 days workshop conducted to the 48 cooperative and oriented on implementation and business promotion.
&#9642; 7 field staff will be trained on computer application.
&#9642; 26 old cooperatives representatives are trained and capable to prepare proposals for their resource mobilization.
&#9642; 2 staff of TEASEC will undertake one month training on mini tea processing and tasting technology in Darjeeling.
&#9642; 1200 farmers are provided need based informal training on seasonal tea technology, Organic inputs, etc. through TEASEC staff in the field.&#9642; TEASEC Social Mobilizes interaction with the tea farmers and factory once a week.&#9642;  409 farmers practice Organic farming and 187 farmers certified
&#9642;  409 farmers practice CoC farming.
&#9642;  6 of farmer's group are linked with the factory
&#9642; Monthly recording and reporting of basic indicators i.e., production quantity, price, plantation area, no. of farmers etc. from existing farmers’ organisation (Cooperatives, groups, etc.). 
&#9642; Monthly updating information of all regular program activities by District/Manager and Social Mobilizer(s).


Sustainability and cost efficiency: From 2013 onwards all institutional development services to the new and existing cooperatives will be handed over to the Central Tea Cooperative Federation and only technical services delivery to the farmers will be provided by the TEASEC. CTCF will be capable to independently provide services in the future. However, TEASEC will collaborate with CTCF to mobilize resource in the tea sector from various donors and Government funds. TEASEC will restructure its entity into a private consulting firm or NGO but as a profit making organisation. TEASEC will have a capacity to generate revenue by exploring funds from various donors and providing services to the farmer's organizations in improve tea technology.

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