Bank of Kathmandu 1

SAKCHYAM ‘SANA KISAN UKHU KARJA’: Providing Access to Finance for Sugarcane Farmers in Kanchanpur and Kailali

Background

In 2016, Nepal produced about 4.37 million tons of sugarcane over 80,931 hectares of land. Industry problems such as access to finance and delay in fixing the price of their produce however, are discouraging farmers from continuing their traditional sugarcane farming lifestyle.

Challenges Faced

Sugarcane farmers take more than a year to grow their produce. Meanwhile, it takes up to 3-5 months for the farmers to receive payments from the date of selling their produce to the mill. Unlike other crops, sugarcane needs to be processed immediately after harvesting. With high-interest loans taken from informal money lenders, little to zero financial literacy, and the risk of the sugarcane drying in the fields, farmers are forced to sell their produce for cheap prices to local mills or even to mills in India (Sugarcane farmers hit by lack of buyers).

Sakchyam’s Intervention

With support from UKaid Sakchyam, Bank of Kathmandu’s (BoKs) launched the Sakchyam Sana Kisan Ukhu Karja product, in partnership with Mahakali Sugar Mill. This product lets farmers in Kanchanpur and Kailai deposit their sugarcane at Mahakali Sugar Mill and take loans up to 70% of the invoice value attached. The average loan size is NPR 20,000 and such loans allow farmers to take care of financial needs and repay the bank after they get paid by the mill.

Likely Impact

Due to Sakchyam’s intervention, the farmers enjoy better prices for their product and benefit from affordable interest loans from the bank. The success of this intervention will also mean that sugarcane farmers will be able to sell their produce locally, and not have to travel to India to sell there for lower prices.

The NPR 96 million in loans that has been disbursed over the project duration has benefitted 1,445 smallholder sugarcane farmers, of which 80% are from the Tharu community, and rest are Madhesis and Dalit women (at least 3% of the total beneficiaries are women). Progress in all these factors means possible replication of this product in other districts in Nepal.