Livestock Project to Help Improve Food Security, Nutrition, and Incomes in Nepal

MANILA, PHILIPPINES (22 December 2003) - ADB has approved a US$20 million loan to help increase livestock productivity in Nepal.

The project, the fourth ADB-supported livestock development project in Nepal since 1980, will improve levels of food security, nutrition, incomes, and employment from livestock production and small-scale livestock related enterprises for 164,000 families in 48 districts of Nepal.

It will focus on the development of profitable and sustainable livestock enterprises through two key elements - intensive livestock production in 22 districts; and processing, marketing and commercialization of livestock subsector services in 22 focus districts as well as selected districts from the intensive production area.

The project includes a livestock pilot program for five higher altitude districts and capacity building for participating communities, organizations, and the Department of Livestock Services (DLS) to better support the project.

"The livestock subsector is one of the key entry points for programs to reach the rural poor and, if correctly oriented to small animals, its development favors disadvantaged groups, such as women and poor farmers," says Brian Fawcett, ADB Principal Project Economist.

To improve productivity, 15 livestock improvement enterprises have been identified, to give some choice to the 69,000 farmers expected to participate. Emphasis will be on smaller investments such as forages, goats, calf rearing, pigs, and poultry to enable a high proportion of poorer families to participate.

Training is proposed for feed millers, poultry farmers, and feed ingredient suppliers to improve the standard of feed formulation. About 20 entrepreneurs will be assisted to establish small-scale feed mill operations in the intensive livestock production areas. Loans will also be provided for biogas digesters by collaborating programs.

To promote processing and marketing of livestock products, microcredit for small enterprises will be made available to commercial banks through the Rural Microfinance Development Center.

More than 1,000 small enterprises will be created, with investments ranging from live animal markets to milk chilling centers, milk processing facilities, slaughter slabs, meat shops, and para-veterinary practices. A range of training will be available to improve the skills of those already involved in processing and marketing.

In at least 22 livestock commercial centers, existing live animal markets will be improved and new markets developed. The project will also provide credit for 370 new dairy outlets comprising chilling centers, small-scale and cottage dairies, and cold chain retail outlets.

Nepal has one of the highest livestock populations per capita and per unit of cultivable land of any country in Asia and more than 80% of its working population is engaged in subsistence agriculture. Livestock is an integral part of this economic activity, and provides both additional household income and nutrition for the family.

Livestock is a fast growing agriculture subsector and is considered important in poverty reduction. It grew by an average of more than 3% annually during the 1990s, accelerating from 1.6% during the first half of the decade to 3.6% in the second half.

The sector accounts for 31% of agricultural gross domestic product. The Government's Agriculture Perspective Plan period (1995-2015) aims to increase this to 45% by the latter part of the period.

But while a great deal of progress has been made over the last 30 years and innovative new approaches have been developed, the rural population will come under increasing pressure to supply the rapidly rising number of urban consumers with their meat, milk, and egg requirements.

The project will increase household incomes by about 50% in the project areas, where almost half live below the poverty line. It will also give special attention to women's development, as more than 70% of the female population is engaged in livestock rearing.

The total project cost is estimated at $33 million, more than 60% of which is covered by the ADB loan. It comes from ADB's concessional Asian Development Fund and carries a 32-year term, including a grace period of eight years. Interest is at 1% per annum during the grace period and 1.5% per annum subsequently,

The Government will contribute $5 million, the Rural Microfinance Development Center and other microfinance intermediaries will cover $6.5 million, and the beneficiaries will add $1.5 million to cover the total project cost.