Bio Diesel: Nepal Experiences (First Draft)

Success case Replication of Bio Diesel Project through Cooperatives Societies in Nepal

[Potentiality, Concept, Methodology and tools]

Bio Diesel Cooperative Enterprise Analysis tool develop by

Ramesh Poudyal

SCR Expert-Nepal

Table of Content

Section-one

Nepal Experiences

Success Case Study of Jathopha Cuscus bio diesel in Nepal

Research and Finding in Nepal

Section –Two

How could Implement in Nepal?

Benefit of Jathopha Cuscus for Nepal.

Section –Three

Organization of Success Jathopha Cuscus Cooperative in Nepal

Definitions/Values/Methodology

Marketing through Cooperative

Business tool

Section Four

Success Case Replication of Jathopha Cuscus Cooperative

Methodology/Practice/Concept of SCR

Steps of SCR

Section Five

Secondary Replication of SCR in new Cooperative

Weakness of SCR Methodology

Annex #1

Annex # 2

Section -OneNepal Experiences

Success Bio Fuel (Diesel) Project

Case Study

1. Prop writer Name: Mr. Moti Bhadhur Rai

2. Address: Simle VDC ward # 07; Therthum; Koshi Zone Eastern Nepal.

3. Registered Name of Industry: Shove Rice Mill -Simle

4. Milling Items: Rice ;Maize; Millets

5. Fuel : Bio Diesel [Using seeds of Jatropha Cuscus]

Mr. Moti Bhahadur Rai is residing in unit (Ward)# 07 of Simle VDC of Threthum District of Koshi zone of Nepal. In the year 2005 he established a rice mill operated by diesel. After short period of time there was big shortage of Diesel in the market in Nepal. Only authorized National Oil supplier of Nepal (Nepal Oil Corporation) has provide him some limited quantities of diesel to run the plant monthly basis. But that limit was good enough for 5-10 days only. After introducing people hardship and live hood problem in this area one Dutch Volunteer visit and come to contact to Mr Rai at his village. He informed to him that there is a possibility to run this plant using Jatropha

Cuscus seeds oil .Which is available in his village too. That is the great breakthrough and inspiration of his life.

Afterward he collected Jatropha Cuscus seeds and extracted oil to replace the Diesel. Since last two years his machine/plant is successfully running and operating

10-12 hour per day. Later on Kathmandu based one of the leading bio energy promotion company called Kristal bio energy Limited has been providing technical; seed extraction and production technology to him.

After using Jatropha Cuscus oil he did not find any problem to run the Machine. Its comparative price is almost 2/3 less than Diesel. Operating cost is less than half then diesel fuel. According to his experiences it has no pollution/less operating cost/ eco friendly, and has sustainable too.

Now many community of eastern zone of Nepal are organizing cooperatives based on Mr Rai Success case experiences to replication the project.

In Ilam/ Panchthar/ Tamlejung and Jhapa districts Success Cooperative business replication Specialist Mr. RAMESH POUDYAL has been providing technical assistant to established such cooperative who has recently developed enterprise analysis tool to develop success business cooperatives for bio fuel.

Success Refinery Case # 2

There were two successes Jatropha Cuscus oil Refinery industries were established in Nepal. Currently these two industry processing capacity is about 20000 kg Jatropa seed. Both factory commercially producing bio diesel in Butwal of Western development region and middle development region of Chitwan district. These two industries were registered under company act of Nepal and a total share capital is Nrs 1 millions. According to General Manager of those factories there were no market problems of the product. And commercially viable too. Major problems were insufficient quantity of raw materials for processing.

Proposed plan in Nepal

Crystal bio-energy Nepal will have a mega farming project of jatropha curcas. 212 million plants are aiming to establish. Assuming of yielding fruits per plant is 8kg. Total plants 212 million plants x8kg per plant 1696000000kg and 3.5 kg = one liter crude oil. 484571429 liter crude oil, wastes 11% to make pure bio-diesel(53302872 liter wastes), pure bio-diesel 431268572 liter. And the rate of 40\-(forty rupees). By-product glycerin 24228572 liter a by-product, press-cake 990000000kg=990000tons.

Section -TwoImplementation strategy in Nepal?

1. Most Potential project to Nepal 2. Under develop country like Nepal has tremendous opportunity to institutionalize

such kind of activities through success case replication on Cooperatives Societies in all over the Country. It will providing a clean, renewable substitute for imported fossil fuels, conserving the dwindling forest resources and other biomass, the residue which remains after the seeds have been crushed is potentially a nutritious animal fodder and can replace chemical fertilizers and so help to preserve the role of organic fertilizers in traditional farming systems" Cooperative societies will have excess marginal to middle level farmers in management/generate income/self employment and for sustainable growth for thousands of men and women.

1.1 Nepal could benefited directly through Wasteland Reclamation and Reforestation

• Income generation from previously Unusable areas • provide huge opportunities from new sustainable and renewable land resources

and crops creating employment Nursery development, soil preparation, irrigation systems, Plantation maintenance, seed collection, oil extraction and Refinery control

• Nepal will also benefit from the increased demand for employment In infrastructure, logistics and Transportation

• Renewable Energy • Erosion Control and Soil Improvement • Promotion of Women employment • Poverty Reduction.

1.2 Bio-Diesel Benefits to Nepal and research finding [Research data and recommendation were taken from Crystal bio energy company-Nepal-2009and RECAST Nepal 2009]

The smartest technologies deliver benefits to multiple interests, including an improved economy, and a positive impact on the environment and governmental policy.The role of the bio-diesel industry is not to replace petroleum diesel, but to help create a balanced energy policy with the most benefit to the government of Nepal. Bio-diesel is one of several alternative fuels designed to extend the usefulness of petroleum, and the longevity and cleanliness of diesel engines.The ultimate goal is to contribute to building a stronger, more self-sufficient community by way of a community-based bio-diesel production model. A community-based bio-diesel distribution program benefits local economies, from the farmers growing the feedstock to local businesses producing and distributing the fuel to the end consumer. The money stays in the community while reducing impact on the local environment and

increasing energy security.1.3 Easy to use,One of the great advantages of bio-diesel is that it can be used in existing engines, vehicles and infrastructure with practically no changes. bio-diesel can be pumped, stored and burned just like petroleum diesel fuel, and can be used pure , or in blends with petroleum diesel fuel in any proportion. Power and fuel economy using bio-diesel is practically identical to petroleum diesel fuel, and year round operation can be achieved by blending with diesel fuel.1.4 Engine and vehicles,All diesel engines and vehicles can use bio-diesel or bio-diesel blends. Certain older vehicles built before 1993 may require replacement of fuel lines which contain natural rubber, as bio-diesel can cause these lines to swell or crack.1.5 Blending and switching with Diesel Fuel,Bio-diesel can be used 100%(B100) or in blends with petroleum diesel fuel. Blends are indicated by B##, which correspond to the % of bio-diesel in the blended fuel. For example, a 20% blend of bio-diesel with 80% diesel fuel is called B20. When bio-diesel is first used in a vehicle, it may release fuel tank deposits which can lead to fuel filter plugging. After this initial period, a user can switch between bio-diesel and petroleum diesel whenever needed or desired, without modification.1.6 Availability, Power ,Performance and Economy Many alternative fuels have difficulty gaining acceptance because they do not provide similar performance to their petroleum counterparts. Pure bio-diesel and bio-diesel blended with petroleum diesel fuel provide very similar horsepower, torque, and fuel mileage compared to petroleum diesel fuel. In its pure form, typical bio-diesel will have an energy content 5%-10% lower than typical petroleum diesel. However it should be noted that petroleum diesel fuel energy content can vary as much as 15% from one supplier to the next. The lower energy content of bio-diesel translates into slightly reduced performance when bio-diesel is used in 100% form, although users typically report little noticeable change in mileage or performance. When blended with petroleum diesel at B20 levels, there is less than 2% change in fuel energy content, with users

typically reporting no noticeable change in mileage or economy.1.7 Superior lubrication for Engines,The injection system of many diesel engines relies on the fuel to lubricate its parts. The degree to which fuel provides proper lubrication is its lubricity. Low lubricity petroleum diesel fuel can cause premature failure of injection system components and decreased performance. Bio-diesel provides excellent lubricity to the fuel injection system. Recently, with the introduction of law sulphur and ultra low sulphur diesel fuel, many of the compounds which previously provided lubricating properties to parodies fuel have been removed. By blending bio-diesel in amounts as little as 5%, the lubricity of ultra low sulphur diesel can be dramatically improved, and the life of an engine’s fuel injection system extended.1.8 Bio-diesel in cold weather,Just like petroleum diesel fuel, bio-diesel can get in cold weather. The best way to use bio-diesel during the colder months is to blend it with winterized diesel fuel.1.9 Emission and greenhouse gas reduction,Bio-diesel is the only alternative fuel to successfully complete the EPA’s rigorous emissions and health effects study under the Clean Air Act. Bio-diesel provides significantly reduced emissions of carbon monoxide, particulate matter, unburned hydrocarbons, and sulphates compared to petroleum diesel fuel. Additionally, bio-diesel reduces emissions of carcinogenic compounds by as much as 85% compared with petroleum diesel. When blended with petroleum diesel fuel, these emissions reductions are generally directly proportional to the amount of bio-diesel in the blend.1.10close/contact/benefits/from/the-"French/fry-fuel”The reduced particulate and unburned hydrocarbons emissions that result when using bio-diesel are a welcome relief in environments where workers and pedestrians are in close proximity to diesel engines, including public transport, mining, and construction. In addition, when high blends of bio-diesel are used, the exhaust from diesel engines is often described as smelling like fried food, which aside from causing increased hunger in those nearby , is a welcome relief from the smell of diesel fuel exhaust.1.11A-clean-alternative-fuel-for-new-and-old-engines

Diesel engines have long had a reputation of being “dirty” engines. However, with the advent of newer diesel engines equipped with exhaust gas recirculation(EGR), particulate filters, and catalytic converters, clean diesel technology provides incredible fuel efficiency with ultra low emissions levels. When coupled with the use of bio-diesel, both new and old diesel engines can significantly reduce emissions, including particulate matter(black smoke).1.12 A closer look at emissions reduction,Studies on bio-diesel emissions have been conducted for almost 20 years. In that time bio-diesel has undergone the most rigorous testing of any alternative fuel, having been the first and only fuel to be evaluated by the EPA under the Clean Air Act Section 211(b). this study examined the impact of hundreds of regulated and non-regulated exhaust emissions, as well as the potential health effects of these emissions.1.13 Some of these results are summarized below.Average exhaust emissions for 100% bio-diesel compared to petroleum diesel fuel*Particulate-matter-47%Carbonmonoxide-48%Total-unburnedhydrocarbons-67%Nitrogenoxides+10%Non-regulated-emissions Sulfates-100%Polycy-clicaromati-chydrocarbons(PAH)80%NitrateP.aromatic-hydrocarbons(-nPAH)90%SpeciatedH.ozoneformingpotential-50%“acomprehensive-analysis-of-bio-dieselimpactsonexhaustemissions”.1.14 Explanation of emissions types,Particulate-matter(black-smoke)Emissions of particulate matter have been linked to respiratory diseases and are generally considered to be a human health hazard. Emissions of particulate matter are reduced with bio-diesel by 47%.1.15 Carbon monoxide,

Carbon monoxide is a poisonous gas. Reduced with bio-diesel by 48%.Total unburned hydrocarbons, Compounds which contribute to localized formation of smog. Reduced with bio-diesel by 67%.

1.16 Nitrogen oxides,Compounds which contribute to localized formation of smog. The average increase of Nitrogen oxide emissions from bio-diesel is 100%, depending upon the test used in obtaining the data.1.17 Sulphates,Sulphates are major contributors to acid rain. These emissions are practically eliminated when using bio-diesel. 1.18 Polycyclic aromatic hydrocarbons(PAH and nPAH),These compounds have been identified as carcinogenic (cancer causing) compound. Bio-diesel reduces emissions of these compounds by up to 85% for PAH compounds and 90% for nPAH compounds. 1.19 Speculated hydrocarbons,These compounds contribute to the formation of localized smog and ozone. The potential for smog formation from Speculated hydrocarbons is reduced by 50% when using bio-diesel. 1.20 Life cycle reduction of carbon dioxide,Bio-diesel helps reduce the risk of global warming by reducing net carbon emissions to the atmosphere. When bio-diesel is burned , it releases carbon dioxide to the atmosphere, but crops which are used to produce bio-diesel take up carbon dioxide from the atmosphere in their growth cycle. A joint study conducted by the US Department of Agriculture, andThe US Department of Energy determined that bio-diesel reduces net carbon dioxide emissions to the atmosphere by 78.5% compared with petroleum diesel fuel.1.21 Energy Balance and Security,The energy balance of a fuel is a ratio of how much energy is required to produce, refine and distribute the fuel compared to the amount of energy the fuel releases when it is

burned. This property is used to determine how “renewable” a fuel is. A higher ratio indicates a lower environmental impact, as less fossil energy is needed to produce, refine and distribute the fuel. Bio-diesel has a very high energy balance compared to other alternative fuels. A joint study found that on average bio-diesel releases 3.2 units of energy for every one unit of fossil fuel energy used to produce it*. For comparison, diesel fuel delivers only 0.83 units of energy for every unit of fossil fuel energy used to produce it.1.22 Grown, produced and distributed locally,Worldwide, energy security is becoming a hot topic in government and society. Nearly every country in the world depends on imports of various forms of fossil fuel energy, including oil, coal and natural gas. Without a steady supply of affordable energy a country’s economy grinds to a halt, with no fuel for transportation, energy to run power plants and factories, or heat homes. Bio-diesel can improve energy security whenever it is produced in several ways:1.23 Domestic energy crops,When crops used to produce bio-diesel are grown in the country in which the fuel is consumed, each gallon of bio-diesel displaces a gallon of imported crude oil, reducing a country’s dependence on foreign oil supplies. 1.24 Increased refining capacity,Bio-diesel is produced in dedicated refineries which add to overall domestic refining capacity, eliminating the need to import expensive finished product from other countries.

1.25 Difficult targets,When bio-diesel is produced, distributed and used locally in a community based model it presents a much more difficult target for a potential terrorist attack than large centralized facilities like oil refineries or pipelines used the petroleum industry.In the United States, the bio-diesel industry is supported by the Energy Policy Act (EPA) compliance strategy. This legislation allows EPA act covered fleets (federal, state and public utility fleets) to meet their alternative fuel vehicle purchase requirements simply

by buying 450 gallons of pure bio-diesel, and burning it in new or existing diesel vehicles in at least a 20% blend with diesel fuel. The congressional Budge Office and the US Department of Agriculture have confirmed that the bio-diesel option is the least cost alternative fuel option for meeting the Federal government’s EPA act compliance requirements.1.26 Toxicity, biodegradability, safety & recycling,Though it is uncommon for the average person to come into direct contact with fuels, occasional spills do occur, and the impact of the fuel on plants and animals must be considered. Bio-diesel has been proven to be much less toxic than diesel fuel, and is readily biodegradable. These attributes make it less likely to harm the environment if an accidental spill occurred, and far less costly to repair damage and clean up.1.27 Less toxic than table salt,Being derived from vegetable oils, bio-diesel is naturally non-toxic. The acute oral LD50 (lethal dose) of bio-diesel is more than 17.4g\kg. by comparison table salt (Na C1) has an LD50 of 3.0g\kg. this means that table salt is almost 6 times more toxic than bio-diesel.

1.28 Aquatic impacts,In an aquatic environment, bio-diesel is 15 times less toxic to common species of fish than diesel fuel. 1.29 Bio-degradability, In both soil and water, bio-diesel degraded at a rate 4 times faster than regular diesel fuel, with nearby 80% of the carbon in the fuel being readily converted by soil and water borne organisms in as little as 28 days.1. 30 safe and stable fuel,Bio-diesel is safer to handle than petroleum fuel because of its low volatility. Due to the high energy content of all liquid fuels, there is a danger of accidental ignition when the fuel is being stored, transported, or transferred. The possibility of having an accidental ignition is related in part to the temperature at which the fuel will create enough vapours to ignite, known as the flash point temperature. The lower the flash point of a

fuel is, the lower the temperature at which the fuel can form a combustible mixture. For example, gasoline has a flash point of -400 F. bio-diesel on the other hand has a flash point of over 2660 F, meaning it cannot form a combustible mixture until it is heated well above the boiling point of water. It is rare that fuel is subjected to these types of conditions, making bio-diesel significantly safer to store, handle, and transport than petroleum diesel. In fact, many researches and studies the have classified bio-diesel as a non-flammable liquid.1.31 Recycling: recovering energy resources,Bio-diesel can be made from many different oils and fats, including many waste products. Waste cooking oil, normally disposed of or used in animal feed mixtures can be converted to high quality bio-diesel using a process employed by companies such as pacific bio-diesel technologies. The use of used cooking oils as a bio-diesel feedstock has increased their value significantly in recent years, making proper collection and recycling of these oils more cost effective, and lowering the volume of these oils destined for sewers and landfills. Other low value oils and fats which can be made into bio-diesel include yellow grease, inedible tallow, and trap grease. In one example of the benefits of how bio-diesel production can increase recycling, the pacific bio-diesel production facilities in the Hawaiian islands have diverted nearly 190,000 tons of used cooking oil and grease trap waste since they began production.1.32 Economic development,Since bio-diesel is a fuel which can be created from locally available resources, it’s production and use can provide a host of economic benefits for local communities. The community based model of bio-diesel production is particularly beneficial. In this model, locally available feedstock are collected , converted to bio-diesel, then distributed and used within the community. This model keeps energy dollars in the community instead of sending them to foreign oil producers and refineries outside the community. The peripheral benefits of this type of model are different for each case, but can include: -increased tax base from bio-diesel production operations.-jobs created for feedstock farming and \or collection.-skilled jobs created for bio-diesel production and distribution.

-income for local feedstock producers and refiners.1.33 Sustainable farming and value added agriculture,Bio-diesel feedstock can come from a variety of agricultural crops. When these crops are grown in a sustainable manner, using good stewardship practices, there are long term benefits to farmers, farming communities and the land. Many crops which yield oils used for bio-diesel production can be a beneficial rotation for other food crops, including soybeans when used in a traditional corn rotation, and canola when used in a wheat rotation. Using crops in rotation can improve soil health and reduce erosion. The overall impacts of growing energy crops are complex, with thousands of variables. However, the added value created for oilseed crops by the production of bio-diesel is a tangible benefit for farming communities, and when coupled with sustainable farming practices can provide benefits to farming communities and the environment.1.34 Sustainable bio-diesel production,Since there are multiple feedstock from which to make bio-diesel, plant operators can opt for the least expensive feedstock currently available, if they have a multiple-feedstock system. This flexibility makes producers less subject to price fluctuations.One example of this is noted by the prices of soybean oil. Its price has doubled in recent years, and is predicted to continue to rise according to a 2001 study by the US Department of Agriculture. The study projects a total cash crop increase of $5.2 billion by 2010--an average net increase to farms of $300 million per year--with soybean prices increasing 17 cents per bushel annually over that period.1.35 Every body wins,Ultimately this creates multiple beneficiaries of the production of bio-diesel. By virtue of a successful market and feedstock flexibility, plant operators and farmers can both continue to operate in a marketplace with increases in revenue.1.36 Legislative support and policy making, Many countries have bio-diesel program, such countries are given legislative support and have drawn up a National policy on bio-diesel development. In Nepal, a national level mission has to be organized to cover all aspects of bio-diesel development programs such as Nursery Development, Procurement of seed, Extraction

of oil, Trans-etherification (refining of oil), Blending and Trade, Research and Development, Education and Trainings, Funding, and follow up program. Therefore, we request that the Government of Nepal provide the following: Standardization of hybrid seed of Jatropha curcas.Disused land, marginal land, forest depleted land, and encroachment land of the government of Nepal should be provided to the farmers and professional entrepreneurs.Land registration fee and land revenue should be waived for professional farmers for non-edible oil borne seed farming especially based on Bio-diesel program.

Loan process and easy funding system should be developed and the low interest program should be declared by the government of Nepal for the first two years of plantation of Jatropha curcas (bio-diesel plants)As an economic incentive, the government of Nepal should declare a 90% income tax reduction for bio-diesel production companies and bio-diesel plants farming programmers.Additionally, all related equipment required to produce bio-diesel should be exempt from excise duty. And

Proposed Training Toolkit Outline of Cooperative Enterprise Development OUTLINE

Module # 1 : Business Planning

1.1 What is a business plan? Why a Business Plan and what is the Structure of a Business Plan?

1.2 Market Based Business Planning?

1.3 Risk Assessment! Concept of Risk Management!

1.4 Choice of Production or Service for Cooperative Enterprise Development.

1.5 Business Sustainability in Cooperatives.

1.6 Log-frame Analysis and Planning.

Module # 2 : Input Planning for Cooperative Business

2.1 Raw Materials/Input/Labor/Technology.

2.2 Assessment of Supply Channel/Cost/Risk

Module # 3 : Financial Planning

3.1 Cost of inputs (Raw Materials/Appliances Packaging)

3.2 Financial Inputs (loan/share/saving/etc)

3.3 Expected Income (at least more than US@ 1/day)

Module # 4 : Skill Development

Through success case replication methodology

4.1 Locate and Identify Success Case.

4.2 Ascertain the economic validity of the Success Case.

4.3 Establish the Success Case Replication Training

4.4 Establish criteria for selection of the Trainee Cooperatives.

Quality

Control Supply

Guaranteed

4.5 Secure funding for the training.

4.6 Arrange the necessary follow-up.

Module # 6 : Costing and Marketing of Cooperative Production

6.1 Elements of Costing

6.2 Pricing & Marketing Concept in Business.

Module # 7 : Saving and Credit Business in Cooperatives

7.1 "5" Concept of Credit.

7.2 "PEARL" Models of Business Analysis.

7.3 Loan without Collect (Group Leading)

7.4 Loan Portfolio Analysis.

7.5 Effective rate of Interest on Saving/Credit.

7.6 Scaling-up Saving/Credit Business/viability Plan.

Module # 8 : Participatory Impact Monitoring (PIM)

8.1 Concept, Methods & Technique of PIM.

8.2 Monitoring Reporting System.

8.3 Follow-up System & Execution of Monitoring Reports.

Module # 9 : Cooperative Membership Participation in Cooperative Business

Quality

Control Supply

Guaranteed

9.1 Gender responsive Cooperative Business Planning

9.2Dropout/Dormant/and Active Members are effective & Impact in Business Promotion

Module # 10 : Geometric Replication of Success Case (SCR)

10.1 Ten steps of SCR

10.2 Follow-up Schedule of SCR

10.3 Supervision and Monitoring of SCR

Module # 11: Business Networking with Partners Organization

11.1 Public/Private/Government/Trade Faire/Wholesale/Retail

11.2 Local/District/National/International Linkage

Market and Marketing linkages and Issues of agriculture cooperatives

With the growing interest in activities to link farmers to markets it seems essential that low cost methods of exchanging experiences must be found and cooperatives should consider how best to exchange experiences at international level in order to avoid constant reinventing of the wheel. At national level, government, donors and cooperatives should establish market linkage coordinating mechanisms to facilitate

Quality

Control Supply

Guaranteed

the exchange of information and avoid competition for the chance to work with promising market outlets and potentially viable farmers.

Fig1: Existing Production Marketing Linkages of Primary Cooperatives

Fig – 2: Role of District Cooperative Union to Develop Production Marketing for their Members Cooperatives.

Export to Indian Market and Intl.

Market

Cooperatives to Domestic Traders

Cooperatives to Leading Farmers

Cooperatives to

Retailers

Coops to Agro-Processing Unit

Primary Agro-

Producers Cooperatives

Export to Tibetan Market

Cooperatives to Wholesalers

Farmers Group

Individual Farmers

Farmers Group

Farmers Group

Information Sharing

Coordination to Private

Sector

Training

Quality

Control Supply

Guaranteed

Coordination to

Marketing Agents

District Cooperative Union

Primary Agro Producers Cooperatives

Fig – 3: Role of Central Union to Develop Production and Marketing Linkages of Agro-Producers Cooperatives.

Important

Section -Four

Success Business Replication of Jatropha

Central Cooperative Union

District Union

Explore Domestic

National/International Market

Information Sharing

Pay back Guaranteed to the Farmers

Maintain Relationship with Donors

Maintain Linkage with International

Agent

Provide Training

Primary

Concept, Practice and Methodology

The Success Case Replication (SCR) methodology differs from normal government/NGOs/INGOs sponsored training in the following ways

The training is not conducted in a government training center. Training is conducted at the site of the

1. successful cooperative marketing enterprise. This “on site” training eliminates the need to build a training center.

2. The training is not conducted by government officers or trainers. Training is conducted by the management and staff of the successful cooperative. This training is often conducted free of charge by the successful cooperative or at very low costs per trainer as compared to high cost government trainers.

3. The training is not based on textbooks or on theoretical blackboard presentations by government instructors. Training is “fully practical” and “hands on” with the trainees observing the management, staff and members of the successful enterprise in action and then themselves practicing each step of the successful marketing enterprise. For example, the book keepers learn how to keep marketing records and then practice the process during an actual product sale. The marketing officer learns how the coop strikes daily price agreements with the product buyers and then he actually conducts a bargaining session with a buyer. The trainee who is a vegetable producer observes the planting, maintenance and harvesting processes as demonstrated by a successful member vegetable grower. The trainee then practices each step of the process in the field of the successful cooperative member.

4. When the members of the trainee cooperative return home and begin the “Replication” process, they will, inevitably, encounter problems as with all new marketing enterprises. Follow-up corrective action is required to solve these problems. It can take the form of a visit back to the successful cooperative by the trainee cooperative to seek advice or it can involve a member of the successful cooperative coming to the new site to give advice. The government cooperative promotion agency should assist with this all-important problem solving follow-up.

5. When the trainee cooperative has become successful in its new marketing enterprise, then the staff of the government cooperative promotion agency should document this new success case to substantiate the economic benefits gained by the members. Once the success case replication has proven fully successful, then this new cooperative enterprise can be used as an SCR training center to promote multiple replications of the successful enterprise. The replication process to new marketing cooperatives must be limited so that the market will not suffer from over supply and falling prices, which will harm both the success case and the trainee cooperatives.

(a) What is Success Cooperative business replication?

Success Case Replication is :a simple, cost-effective and Self-reliable training methodology.

How does Success Case Replication differ from other training systems? The successful persons design the training course and conduct the training.

the successful persons follows up progress in replication and help trainees to overcome problems.

Basic Philosophy of Success Case Replication

It is based on human nature.

All humans observe and imitate their more successfull peers.

How does Success Case Replication work?

Locate agricultural cooperative societies which are successful in achieving high incomes for their members.

Utilize the “Successful Agro Cooperatives” to train other less successful cooperatives or help establish new cooperatives.

How does Success Case Replication provide practical “Hands-On" training?

Training must be “Hands-On” with each trainee carrying out each activity.

SCR training must cover RPM:

R = Raw materials,

P = Production process, and

M = Marketing.

Why is Success Case Replication self-reliant?

Villagers come to realize that they can learn from similar cooperatives rather than waiting for outside professional training.

SCR reduces dependency on other sources of help.

SCR identifies successful persons or cooperatives in the local area and uses them as models.

SCR elevates the managers, staff and members of these success cases (cooperatives) to become teachers of their peers.

Why is Success Case Replication cost-effective?

The successful person lives in the local areas.

Training is often given free of cost by the successful person, or he/she asks for a much lower pay rate than is paid to government trainers.

The successful cooperative or enterprise is used as the training site.

It eliminates the need for an expensive training center.

He/she is available to help his/her trainees if they encounter difficulties.

Strengths of the Success Case Replication Methodology

It is a simple training system.

It is an appropriate and powerful training tool for AURA (Are uready for Action)Areas

It involves low risk since it is based on locally proven technology

It helps to overcome problems of local cooperatives

It is locally familiar and tested

Villagers serve as teachers/resource persons. Its advantages are:

Familiar with local customs

Speak local languages

Come from the same social setting/economic status

During training at the successful cooperative:

Trainees see the actual working enterprise.

They believe they can replicate their peers.

They benefit from "Hands-On" training.

It equalizes social status since:

Trainers and trainees come from the same community.

They are usually of the same or similar social status.

Similarities encourage confidence to replicate the success.

It has many applications as follows:

Can use any technology.

Individuals groups or even large institutions can be replicated.

The successful person lives in the local areas.

Training is often given free of cost by the successful person, or he/she asks for a much lower pay rate than is paid to government trainers.

The successful cooperative or enterprise is used as the training site.

It eliminates the need for an expensive training center.

He/she is available to help his/her trainees if they encounter difficulties.

Why does it work at the grassroots level?

Successful people at the local enterprise level:

Overcome local problems.

Have valuable experience.

Grassroots community approach (as against top-down approach)

Local people select success cases for training.

Local people determine if the enterprise is viable.

They make matches based on local experiences and values.

Training is relevant to the community

Enterprises have demonstrated success.

Trainers have practical skills.

Trainers are conversant with local constraints.

Section-FiveSCR MethodologyStages of Success cooperative Business Replication

There are a total of eleven stages of the Success Replication Methodology.

The Eleven Steps

Step 1: Locate success cases

Step 2: Ascertain if the success is “replicable”

Step 3: Assess trainers “willingness” to train

Step 4: Identify and select trainees

Step 5: Match trainer to the trainees

Step 6: Establish practical “hands-on” training program

Step 7: Supervise training

Step 8: Plan the business with the COOP

P

Step 9: Access credit

Step 10: Arrange follow-up with business development services

Step 11: Achieve secondary “multiplications

Step 1: Locate Success Cases

• Most villagers and member of cooperatives can tell you who is most successful among their peers (Leave these examples out if you do not plan to include the stories)

• Ask people in the same occupation or with the same enterprise.• Praise the Successful Person to get his interest (Normally skeptical until praised)

Offer the chance to become a “Teacher” to his peers to promote cooperation

Step 2: Find Out if Success Case is Replicable

• Net Profit (conduct net profit example)• Viable Production Process • Price Stability (eggs in Thailand)• Limited Market Capacity (Palm sugar cakes) • Unlimited Capacity (is desirable)• Unfilled Market Demand (is helpful)

Step 3: “Willingness” to Train

• Many are willing to train • But Market Analysis necessary• Desire to become teacher may lead the selfish to hide their secrets of success.

Step 4: Carefully Select Trainees

• The determine interest level (fruit trees)• Visit success case site to familiarize • Do not pressure the skeptical (high failure rates when motivation low)• Assets and start up cash essential)• Selection improves rapidly over time (Patiya mat 2 /5, then 10/10: Mooda

stool 1/5 and then 5/10)Step 5: Match Trainer to the Trainees

• Similar market access• Location of trainee and trainer• Transportation and accommodation• Same social level• Similar assets and access to credit

Pre-training visit essential

Step 6: Practical “Hands-on” Train

• Success case person best designer of course content • Emphasize the successful cooperatives problem solving during training

Step 7: Supervise Training

• Complete coverage of R = Raw Materials, P = Processing, M = Marketing.• Special emphasis on marketing. • Reduce need for corrective follow-up• Quality control

P

Step 8: Plan the Business with the Graduate

• Secure funding• Identify location• Build or renovate• Infrastructure-Water, electricity etc.• Permits• Tools/equipment• Supply of raw materials• Start production• Control quality• Devise sales strategy (See Annex 24 and 25)

Step 9: Access Credit

• Credit Essential• Sources of credit• Attempt to link to existing institutions for sustainability• Project provides grants and loans• Loans: field workers collect

Step 10: Arrange Follow-up Assistance

• Most new enterprises encounter problems• Success case person or cooperatives is key “Problem Solver”• This assistance can make or break new enterprise

Step 11: Secondary Multiplications[Please see below Section Four]

Section-six

Procedures and Methodology of Secondary Multiplications

(a) Second Generation Multiplication

• Alert all trainees before training starts – that they may well train in the future• Keep within market limitation • Accelerate group activities

(b) Cost Benefit Records

• Know the VALUE of your programme to convince yourself and the donor• Costs = staff time and training costs• Benefits = net income first year• Divide the costs by the benefits to obtain

Cost/Benefit Ratio

( C) Case-Replication, Why Does it Work at the grass roots level?

Successful people with local enterprises have

• Overcome local problems • Valuable experience

(d)Villagers as Teachers

• Familiar with local circumstances• Speak local language• Come from same social level

(e)Realistic Success Model

• Trainees see the actual working enterprise • They believe they can replicate their peers

• They benefit from hands on training (f) Strengths of the Philosophy

• Simple Concept• Powerful Tool

(g) Risk Reduction

• Based on locally proven technology• Problems already overcome • Familiar and tested • Familiar and tested

(h) Many applications:

• Can use any technology• Can replicate individual, group or even large institution

(i) Low Cost:

• Trainer is often free or at very low cost• Training costs are usually minimal

Weaknesses of the Methodology

1. Does not replace conventional training/extension:

• Technical training and extension essential to progressCan accelerate tech transfer by “replicating” successes already achieved with conventional technical training

2. Depends on local success cases:

• Absence of local successes

• Absence of market3. Transferring success across barriers:

• Local circumstances may determine success • Physical and cultural barriers (bamboo, hilltribe trainers)

4. Requires commitment of trainees:

• Poor trainee selection means low success • Cultural sensitivity and judgment involved• Selection improves over time

5. Requires honest trainer:

• Holding back on business “secrets” • Assessing real “willingness”

6. Market Oversupply:

• Unlimited markets• Limited markets• Uncontrolled multiple replications• 7. Attitude of Field Staff: • Critical “catalyst” essential to SCR• Attitude can endanger method

8. Cost Benefit Records

• Know the VALUE of your programme to convince yourself and the donor• Costs = staff time and training costs• Benefits = net income first year• Divide the costs by the benefits to obtain

Cost/Benefit Ratio

9. Market Opportunity Survey

• Unsatisfied DEMAND for product• Potential for EXPANDING/IMPROVING• Sources for financial and technical assistance• Other producers of same product

Market competition

Annex #1

Questioners' for Success Case IdentificationStage One: Location of Success Case

1.1 Success Case Name : __________________________________________

1.2 Address: ___________________________________________________

1.3 Contact # : ____________________ 1.4 Date of Establishment : __________

1.5 Working VDCs : ______________ 1.5 Business Area : ________________

1.6 Total Members: ________ Male __________ Females ________

1.7 Boards Members ________ Male __________ Females ________

1.8 Membership __________ NCF; DCU _________ Others _________

1.9 Membership Compositions: Dalit ______; Janajati ______ Underprivileged ______

others

Stage Two: Set Up System/Consultation

2.0 What prompted setting up this business cooperative: ______________________

2.1 How was it done: __________________________________________________

2.2 What is your source of information or facilitation: _________________________

2.3 Did you know of other exiting businesses that are successful in this area? and How

did it encourage you ? __________________________________________

2.4 What was the most difficult problems _____________________________ in establishing it

as a cooperative business? ________________________________

How were they solved?

(a) ___________________________________________________

(b) ___________________________________________________

(c) ___________________________________________________

Problems How Resolved

Stage Three: Variety of Success Case

3.1 Did any NGO or COBs or Bank help to provide information to set up Business

cooperatives? _____________________________________________________

3.2 Do you have a positive balance sheet ? or, are you in debt ? What is you strategy to

increase your profit margin? _______________________________________

3.3 Do you have any business analysis (Record/Idea) by which you were may Confident

that this Business may definitely could get success? _______________

__________________________________________________________________

Stage Four: Technology of Market Refinements

Technology Difficulties How solved

• Vegetables & Fruits

• Coffee

• Herbs

• Multipurpo

• Others

• Rural Services

Stage Five: Standards & Technology related to Production & Marketing

3.4 How did you identify Market opportunity? ______________________________

3.5 How long did you take to run this cooperative at least in marginal profit?

________________________________________________________________

3.6 How did you manage your total financial need to run these Business cooperatives?

______________________________________________________

Is the market changing rapidly for your type of product? ___________________

3.7 When market oversupply does not appear to be a problem? Then what you

probably to ? ______________________________________________________

How did you adjust you operation to the changing market? Do you have difficulties

in the marketing process? What are these? How were they solved? __-

__________________________________________________________________

Stage Six: Profitability and Marketability

1. Does your Cooperatives ______ on a profitable margin ?__________________

2. How efforts are made to maintain of profitable margin ? ___________________

3. What efforts are made to _________ loss into profit ? _____________________

4. What are the main obstacles? _________________________________________

5. What efforts made to overcome those obstacles? __________________________

Total Production at Coop level

Total Ave. Revenue NRS Share of Women

at member level Women Participation

Other marginalized groups

Second Item : Cash Cost

S.N. Particular NRs.

1.

2.

3.

4.

5.

Total Cash Costs

Total Production : ___________________________________________________

Total Income NRs. ___________________________________________________

Less Cost NRs. ___________________________________________________

Net Profit ___________________________________________________

Stage Nine : Successful Case Person Identification/Catalyst Agent

6.1 Cooperative Manager. What ? How? With Major Functions ! _______________

6.2 Individual Members. What ? How? With Major Functions ! ________________

6.3 INGs/CBOs/ Individual etc. How ? What ? ______________________________

6.4 AGM's role to make it become success Role ? ____________________________

Training Facilities in the Successful case Site for replication _______________________

Member to member training for SCR Facilities ? Venue/Accommodations/Cost _______

Follow up after Training ? _________________________________________________

Ownership and Governance

2.1 Share Capital Nrs __________ 2.2 Frequency of AGM ______

2.3 Frequency of Regular Board meeting __________________________________

2.4 Board minuet [Yes] [No] 2.5 Audit [ Yes ] [ No ]

2.6 Organization Structure [Yes] [No] 2.7 Work Division [ Yes ] [ No ]

2.8 Annual Budget Nrs. _____________ 2.9Annual Plan and Programes ____

2.10 Management Policy [Yes] [No]

2.11 Member's Average Income Level/Annum ______________________

Institutional Arrangement ____ (Existing Whole Cooperative Business) ____________

• Cost of Fund NRs. __________________________________________________

• Operating Cost NRs. ________________________________________________

• Staff Turnover/Year _________________________________________________

• Rate of Interest/Year (Lending) ________________________________________

• Monitoring Policy (System) ___________________________________________

• Transparency (Policy and System) _____________________________________

• Cooperation among Members _________________________________________

• Shared Value ______________________________________________________

• Members Education (Level)________ illiterate ______ literate SLC________ IA _______

BA ___________ Above ______________

• Others __________________________

Annex # 2

Business Plan for Success Business Replication

A. Introduction

1. Name :

. Female

Male

2. Address:

3. Total members:

4. Active members:

5. Share capital Rs:

6. Registration Number, Date, Place:

7. Chairperson: M/F

Male

Femal Male

e

8. Executive Committee Members: Total :

B. Vision and Mission

1. What are the objectives of forming the cooperative?

1.1

Organize farmers involved in vegetable and fruit farming

1.2

Establish direct contact between the farmers and consumers

1.3

To transform traditional and subsistence-oriented farmers into commercial farmers

1.4

To institutionalize agro-based trade

1.5

Promote production of vegetables and fruits up to international markets while considering competition in the market

C. Business chosen for replication: Please check.

D. What kinds of business activities to undertake in the business on an SCR basis?

Type of Project Quantity

Amount Rs

Profit

Remarks

1.

2.

3.

4.

5.

E. What are the advantages of the project (overall development of farmers, better quality products, etc.)

F. Is it based an your skills and experience or market demand; is there any other special reason for selecting this product?

G. Supply of Raw Materials

Provide details in the table below:

S.N.

Type of Material

Required Quantity Total Quantity

Are the above raw materials available at your cooperative site and from whom?

The cooperative provides these to the members.

H. Production:

What is the production/manufacturing cycle for each product (from procurement of raw materials to sale in the market)?

S.N.

Production Cycle Time Required

Quantity

Remarks

I.Division of Responsibilities

Do you need to employ additional people to run this business?

S.N.

Personal Skill

Number Cost (NRs) Responsibilities

J. and Equipment Required

What kinds of tools and equipment do you need?

S.

N.

Tools and Equipment

Price Rs

Number

Total

cost Rs

Useful Life of Tools & Equipment

1. Tractor use 6 hours per bigha

2. Pump-set use 3-4 times

3. Pesticide sprayer 3-4 times

4. Hand tools (kuto, kodalo)

5. Purchase of sprayer

K. Marketing

1. Product

1.1 Who will be your customers?

(a) Business persons from local area and outside

1.2 Why are they interested to buy your product?

(a) To meet daily needs

1.3 What type of quality standards do you intend to follow?

(a) Packaging and grading varies by product

1.4 What types of packaging will you use?

(a) Will use baskets (doko), bags, plastic crate as

needed

1.5 Where will you locate retail unit and why?

(a) Will sell to local consumers in the local market

1.6 What expense do you expect to incur on retail?

(a) Will increase by 5%

2. Price

2.1 What would be the retail and wholesale price/unit?

(a) Wholesale price Rs 10, retail price Rs 15

2.2 Will consumers be willing to pay the price?

(a) Yes, since there is demand in the market.

2.3 Do you sell on credit?

(a) Yes, based on trust

2.4 Were the cooperative members consulted about the price?

3. Promotion

3.1 How would you promote/distribute the product?

3.2 Who are you competitors? Where are they located?

(a) Traders in Kathmandu, Pokhara, Narayanghat and Hetauda.

3.3 What is their size and market potential?

(a) They are like us.

3.4 What are the strengths and weaknesses of your competitors?

(a) Their weakness is producing the same kinds of vegetables.

3.5 Don't have quantity. Don't have proper sheds/places But they provide credit.

L. Financial Aspects

a. Investment needs

What will be your financial needs.

b. Fixed Investment Rs

Equipment/machinery

Land/building

Total

c. Working Capital Rs

Raw Materials

Production/manufacturing cost

Administration cost

Land and Building

Total Investment NRs.

D. Source of fund

Source Amount Rs.

Loan

Members' share capital

Group investment

Accumulated group saving

Grant

Any other

Total NRs.:

e. Sales

What is your forecast of total sales?

S.N.

Production/

Quantity/Sales per Member

Total Amount Rs

Unit Price

Total Sales Amount Rs

f. Financial Statement:

Not Possible at this moment.

Profit/Loss Account :

S.N.

Cost Particulars Amount Rs.

Earning Particulars

Amount Rs

1. Opening stock

2. Purchase

3. Electricity

S.N.

Cost Particulars Amount Rs.

Earning Particulars

Amount Rs

4. Salary/wages

5. Repair & maintenance

6. Telephone, postage

7. Printing/stationery

8. Local transport

9. Office expenses

10. Advertisement

11. Staff welfare

12. Consulting charges

13. Books, newspaper

14. Insurance

15. Depreciation

16. Rent

S.N.

Cost Particulars Amount Rs.

Earning Particulars

Amount Rs

Total

g. Profitability

Sales (monthly/yearly) Total cost NRs. Gross Profit NRs.

SCR Training Required at SCR Site:

1. Training for Cooperative Board Members

2. Cooperative Management Training

3. Marketing Training

4. Accounting Training

5. Production Training

6. Quality Control Training

h. Cash Flow

Not possible now.

S.

N.

Particulars Amount In NRs. Remarks1 2 3 4 5 6 7 8 9 10 11 12

1. Cash inflow

Opening balance

Sales receipts

Any other income

Total (A)

2. Cash outflow

Rent

Electricity

Postage & Telephone

Transportation

Repayment of loan

Insurance

Any other expanses

Total (B)

3. Net cash flow (A+B)

Closing balance

Q. How do the participants/cooperative think that women members will be included in the SCR process?

Q. Role of Women in SCR

Thank You.