Success Case Replication of Bio Diesel Project in Nepal


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Success Case Replication of Bio Diesel Project in Nepal

  1. 1. 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
  2. 2. Table of ContentSection-oneNepal ExperiencesSuccess Case Study of Jathopha Cuscus bio diesel in NepalResearch and Finding in NepalSection –TwoHow could Implement in Nepal?Benefit of Jathopha Cuscus for Nepal.Section –ThreeOrganization of Success Jathopha Cuscus Cooperative in NepalDefinitions/Values/MethodologyMarketing through CooperativeBusiness toolSection FourSuccess Case Replication of Jathopha Cuscus Cooperative
  3. 3. Methodology/Practice/Concept of SCRSteps of SCRSection FiveSecondary Replication of SCR in new CooperativeWeakness of SCR MethodologyAnnex #1Annex # 2
  4. 4. Section -OneNepal ExperiencesSuccess 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
  5. 5. 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 businessreplication Specialist Mr. RAMESH POUDYAL has been providing technical assistant toestablished such cooperative who has recently developed enterprise analysis tool todevelop success business cooperatives for bio fuel.Success Refinery Case #2There were two successes Jatropha Cuscus oil Refinery industries wereestablished in Nepal. Currently these two industry processing capacity isabout 20000 kg Jatropa seed. Both factory commercially producing bio dieselin Butwal of Western development region and middle development region ofChitwan district. These two industries were registered under company act ofNepal and a total share capital is Nrs 1 millions. According to General Managerof those factories there were no market problems of the product. Andcommercially viable too. Major problems were insufficient quantity of rawmaterials for processing.
  6. 6. Proposed plan in NepalCrystal bio-energy Nepal will have a mega farming project of jatropha curcas. 212million plants are aiming to establish. Assuming of yielding fruits per plant is 8kg. Totalplants 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 glycerin24228572 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.
  7. 7. 1.1 Nepal could benefited directly through Wasteland Reclamation andReforestation • 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 improvedeconomy, 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 abalanced energy policy with the most benefit to the government of Nepal. Bio-diesel isone of several alternative fuels designed to extend the usefulness of petroleum, and thelongevity and cleanliness of diesel engines.The ultimate goal is to contribute to building a stronger, more self-sufficient communityby way of a community-based bio-diesel production model. A community-based bio-diesel distribution program benefits local economies, from the farmers growing thefeedstock 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
  8. 8. 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 blendswith petroleum diesel fuel in any proportion. Power and fuel economy using bio-diesel ispractically identical to petroleum diesel fuel, and year round operation can be achievedby blending with diesel fuel.1.4 Engine and vehicles,All diesel engines and vehicles can use bio-diesel or bio-diesel blends. Certain oldervehicles built before 1993 may require replacement of fuel lines which contain naturalrubber, 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 areindicated by B##, which correspond to the % of bio-diesel in the blended fuel. Forexample, a 20% blend of bio-diesel with 80% diesel fuel is called B20. When bio-diesel isfirst used in a vehicle, it may release fuel tank deposits which can lead to fuel filterplugging. After this initial period, a user can switch between bio-diesel and petroleumdiesel whenever needed or desired, without modification.1.6 Availability, Power ,Performance and EconomyMany alternative fuels have difficulty gaining acceptance because they do not providesimilar performance to their petroleum counterparts. Pure bio-diesel and bio-dieselblended with petroleum diesel fuel provide very similar horsepower, torque, and fuelmileage compared to petroleum diesel fuel. In its pure form, typical bio-diesel will havean energy content 5%-10% lower than typical petroleum diesel. However it should benoted that petroleum diesel fuel energy content can vary as much as 15% from onesupplier to the next. The lower energy content of bio-diesel translates into slightlyreduced performance when bio-diesel is used in 100% form, although users typicallyreport little noticeable change in mileage or performance. When blended with petroleumdiesel at B20 levels, there is less than 2% change in fuel energy content, with users
  9. 9. 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. Thedegree to which fuel provides proper lubrication is its lubricity. Low lubricity petroleumdiesel fuel can cause premature failure of injection system components and decreasedperformance. Bio-diesel provides excellent lubricity to the fuel injection system.Recently, with the introduction of law sulphur and ultra low sulphur diesel fuel, many ofthe compounds which previously provided lubricating properties to parodies fuel havebeen removed. By blending bio-diesel in amounts as little as 5%, the lubricity of ultralow sulphur diesel can be dramatically improved, and the life of an engine’s fuelinjection 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 usebio-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 rigorousemissions and health effects study under the Clean Air Act. Bio-diesel providessignificantly reduced emissions of carbon monoxide, particulate matter, unburnedhydrocarbons, and sulphates compared to petroleum diesel fuel. Additionally, bio-dieselreduces emissions of carcinogenic compounds by as much as 85% compared withpetroleum diesel. When blended with petroleum diesel fuel, these emissions reductionsare 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 usingbio-diesel are a welcome relief in environments where workers and pedestrians are inclose proximity to diesel engines, including public transport, mining, and construction. Inaddition, when high blends of bio-diesel are used, the exhaust from diesel engines isoften described as smelling like fried food, which aside from causing increased hunger inthose nearby , is a welcome relief from the smell of diesel fuel exhaust.1.11A-clean-alternative-fuel-for-new-and-old-engines
  10. 10. Diesel engines have long had a reputation of being “dirty” engines. However, with theadvent of newer diesel engines equipped with exhaust gas recirculation(EGR),particulate filters, and catalytic converters, clean diesel technology provides incrediblefuel 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 particulatematter(black smoke).1.12 A closer look at emissions reduction,Studies on bio-diesel emissions have been conducted for almost 20 years. In that timebio-diesel has undergone the most rigorous testing of any alternative fuel, having beenthe 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 exhaustemissions, 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-emissionsSulfates-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 aregenerally considered to be a human health hazard. Emissions of particulate matter arereduced with bio-diesel by 47%.1.15 Carbon monoxide,
  11. 11. Carbon monoxide is a poisonous gas. Reduced with bio-diesel by 48%.Total unburned hydrocarbons, Compounds which contribute to localized formation ofsmog. Reduced with bio-diesel by 67%.1.16 Nitrogen oxides,Compounds which contribute to localized formation of smog. The average increase ofNitrogen oxide emissions from bio-diesel is 100%, depending upon the test used inobtaining the data.1.17 Sulphates,Sulphates are major contributors to acid rain. These emissions are practically eliminatedwhen 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 and90% for nPAH compounds.1.19 Speculated hydrocarbons,These compounds contribute to the formation of localized smog and ozone. Thepotential for smog formation from Speculated hydrocarbons is reduced by 50% whenusing bio-diesel.1.20 Life cycle reduction of carbon dioxide,Bio-diesel helps reduce the risk of global warming by reducing net carbon emissions tothe atmosphere. When bio-diesel is burned , it releases carbon dioxide to theatmosphere, but crops which are used to produce bio-diesel take up carbon dioxide fromthe atmosphere in their growth cycle. A joint study conducted by the US Department ofAgriculture, andThe US Department of Energy determined that bio-diesel reduces net carbon dioxideemissions 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, refineand distribute the fuel compared to the amount of energy the fuel releases when it is
  12. 12. burned. This property is used to determine how “renewable” a fuel is. A higher ratioindicates 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 toother alternative fuels. A joint study found that on average bio-diesel releases 3.2 unitsof 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 toproduce it.1.22 Grown, produced and distributed locally,Worldwide, energy security is becoming a hot topic in government and society. Nearlyevery 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 acountry’s economy grinds to a halt, with no fuel for transportation, energy to run powerplants and factories, or heat homes. Bio-diesel can improve energy security whenever itis 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 isconsumed, each gallon of bio-diesel displaces a gallon of imported crude oil, reducing acountry’s dependence on foreign oil supplies.1.24 Increased refining capacity,Bio-diesel is produced in dedicated refineries which add to overall domestic refiningcapacity, eliminating the need to import expensive finished product from othercountries.1.25 Difficult targets,When bio-diesel is produced, distributed and used locally in a community based model itpresents a much more difficult target for a potential terrorist attack than largecentralized 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 andpublic utility fleets) to meet their alternative fuel vehicle purchase requirements simply
  13. 13. by buying 450 gallons of pure bio-diesel, and burning it in new or existing diesel vehiclesin at least a 20% blend with diesel fuel. The congressional Budge Office and the USDepartment of Agriculture have confirmed that the bio-diesel option is the least costalternative fuel option for meeting the Federal government’s EPA act compliancerequirements.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 beconsidered. Bio-diesel has been proven to be much less toxic than diesel fuel, and isreadily biodegradable. These attributes make it less likely to harm the environment if anaccidental 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 17.4gkg. by comparison table salt (Na C1) hasan LD50 of 3.0gkg. 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 fishthan diesel fuel.1.29 Bio-degradability,In both soil and water, bio-diesel degraded at a rate 4 times faster than regular dieselfuel, with nearby 80% of the carbon in the fuel being readily converted by soil and waterborne 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 thehigh energy content of all liquid fuels, there is a danger of accidental ignition when thefuel is being stored, transported, or transferred. The possibility of having an accidentalignition is related in part to the temperature at which the fuel will create enoughvapours to ignite, known as the flash point temperature. The lower the flash point of a
  14. 14. fuel is, the lower the temperature at which the fuel can form a combustible mixture. Forexample, gasoline has a flash point of -400 F. bio-diesel on the other hand has a flashpoint of over 2660 F, meaning it cannot form a combustible mixture until it is heatedwell above the boiling point of water. It is rare that fuel is subjected to these types ofconditions, making bio-diesel significantly safer to store, handle, and transport thanpetroleum diesel. In fact, many researches and studies the have classified bio-diesel asa non-flammable liquid.1.31 Recycling: recovering energy resources,Bio-diesel can be made from many different oils and fats, including many wasteproducts. Waste cooking oil, normally disposed of or used in animal feed mixtures canbe converted to high quality bio-diesel using a process employed by companies such aspacific bio-diesel technologies. The use of used cooking oils as a bio-diesel feedstock hasincreased their value significantly in recent years, making proper collection andrecycling of these oils more cost effective, and lowering the volume of these oilsdestined for sewers and landfills. Other low value oils and fats which can be made intobio-diesel include yellow grease, inedible tallow, and trap grease. In one example of thebenefits of how bio-diesel production can increase recycling, the pacific bio-dieselproduction facilities in the Hawaiian islands have diverted nearly 190,000 tons of usedcooking 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’sproduction and use can provide a host of economic benefits for local communities. Thecommunity based model of bio-diesel production is particularly beneficial. In this model,locally available feedstock are collected , converted to bio-diesel, then distributed andused within the community. This model keeps energy dollars in the community insteadof sending them to foreign oil producers and refineries outside the community. Theperipheral 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.
  15. 15. -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 aregrown in a sustainable manner, using good stewardship practices, there are long termbenefits to farmers, farming communities and the land. Many crops which yield oils usedfor bio-diesel production can be a beneficial rotation for other food crops, includingsoybeans when used in a traditional corn rotation, and canola when used in a wheatrotation. Using crops in rotation can improve soil health and reduce erosion. The overallimpacts of growing energy crops are complex, with thousands of variables. However, theadded value created for oilseed crops by the production of bio-diesel is a tangiblebenefit for farming communities, and when coupled with sustainable farming practicescan 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 canopt 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 recentyears, and is predicted to continue to rise according to a 2001 study by the USDepartment of Agriculture. The study projects a total cash crop increase of $5.2 billionby 2010--an average net increase to farms of $300 million per year--with soybean pricesincreasing 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 ofa successful market and feedstock flexibility, plant operators and farmers can bothcontinue 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 supportand 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-dieseldevelopment programs such as Nursery Development, Procurement of seed, Extraction
  16. 16. of oil, Trans-etherification (refining of oil), Blending and Trade, Research andDevelopment, Education and Trainings, Funding, and follow up program. Therefore, werequest that the Government of Nepal provide the following: Standardization of hybridseed of Jatropha curcas.Disused land, marginal land, forest depleted land, and encroachment land of thegovernment of Nepal should be provided to the farmers and professional entrepreneurs.Land registration fee and land revenue should be waived for professional farmers fornon-edible oil borne seed farming especially based on Bio-diesel program.Loan process and easy funding system should be developed and the low interestprogram should be declared by the government of Nepal for the first two years ofplantation of Jatropha curcas (bio-diesel plants)As an economic incentive, the government of Nepal should declare a 90% income taxreduction for bio-diesel production companies and bio-diesel plants farmingprogrammers.Additionally, all related equipment required to produce bio-diesel should be exemptfrom excise duty. AndProposed Training Toolkit Outline of Cooperative EnterpriseDevelopmentOUTLINEModule # 1 : Business Planning
  17. 17. 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/RiskModule # 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.
  18. 18. 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
  19. 19. 9.1 Gender responsive Cooperative Business Planning 9.2 Dropout/Dormant/and Active Members are effective & Impact in Business PromotionModule # 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 SCRModule # 11: Business Networking with Partners Organization 11.1 Public/Private/Government/Trade Faire/Wholesale/Retail 11.2 Local/District/National/International LinkageMarket and Marketing linkages and Issues of agriculturecooperatives 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
  20. 20. the exchange of information and avoid competition for the chance to work with promising market outlets and potentially viable farmers. Cooperatives toFig1: Existing Production Marketing Linkages of Primary Cooperatives Leading Farmers Export to Indian Cooperatives to Market and Intl. Domestic Traders Market Coops to Agro- Export to Tibetan Primary Processing Uni Market t Agro- Producers Cooperatives Cooperative Cooperatives to s to Wholesalers Retailers Farmers Group Farmers Farmers Coordinatio Group Group n to Quality Marketing Control Agents Coordinatio Trainin Supply n to Private gGuarantee Information Sector d SharingFig – 2: Role of District Cooperative Union to Develop Production Marketing for theirMembers Cooperatives. Individual Farmers District Cooperative Union Primary Agro Producers
  21. 21. Maintain Relationship with Donors Pay back Guaranteed to the Farmers Maintain Linkage with Information International Sharing AgentFig – 3: Role of Central Union to Develop Production and Marketing Linkages of Agro-Producers Cooperatives. Provide Explore Training DomesticNational/Inter national MarketImportant Central Cooperative UnionSection -FourSuccess Business Replication of Jatropha District Union Primary
  22. 22. Concept, Practice and MethodologyThe Success Case Replication (SCR) methodology differs from normal government/NGOs/INGOs sponsored training in the following waysThe 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.
  23. 23. 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.
  24. 24.  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 achievinghigh 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.
  25. 25. 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.
  26. 26.  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 statusDuring 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:
  27. 27.  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.
  28. 28.  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 PThere 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
  29. 29. 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 cooperationStep 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.
  30. 30. 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 P 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 essentialStep 6: Practical “Hands-on” Train • Success case person best designer of course content • Emphasize the successful cooperatives problem solving during trainingStep 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
  31. 31. 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 collectStep 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 enterpriseStep 11: Secondary Multiplications[Please see below Section Four]Section-six
  32. 32. 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
  33. 33. • 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 minimalWeaknesses of the Methodology 1. Does not replace conventional training/extension: • Technical training and extension essential to progress Can accelerate tech transfer by “replicating” successes already achieved with conventional technical training2. Depends on local success cases: • Absence of local successes
  34. 34. • 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 time5. 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 method8. 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
  35. 35. 9. Market Opportunity Survey • Unsatisfied DEMAND for product • Potential for EXPANDING/IMPROVING • Sources for financial and technical assistance • Other producers of same product Market competitionAnnex #1Questioners for Success CaseIdentificationStage One: Location of Success Case1.1 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 ________
  36. 36. 1.8 Membership __________ NCF; DCU _________ Others _________1.9 Membership Compositions: Dalit ______; Janajati ______ Underprivileged ______ othersStage Two: Set Up System/Consultation2.0 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) ___________________________________________________
  37. 37. (c) ___________________________________________________ Problems How ResolvedStage Three: Variety of Success Case3.1 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? _______________ __________________________________________________________________
  38. 38. Stage Four: Technology of Market Refinements Technology Difficulties How solved • Vegetables & Fruits • Coffee • Herbs • Multipurpo • Others • Rural ServicesStage Five: Standards & Technology related to Production & Marketing3.4 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? ______________________________________________________
  39. 39. 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 Marketability1. 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 levelTotal Ave. Revenue NRS Share of Women
  40. 40. at member level Women Participation Other marginalized groupsSecond Item : Cash CostS.N. Particular NRs. Total Cash CostsTotal Production : ___________________________________________________Total Income NRs. ___________________________________________________Less Cost NRs. ___________________________________________________Net Profit ___________________________________________________
  41. 41. Stage Nine : Successful Case Person Identification/Catalyst Agent6.1 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 AGMs 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 Governance2.1 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 ]
  42. 42. 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 Members 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 __________________________
  43. 43. Annex # 2Business Plan for Success BusinessReplicationA. Introduction1. . Femal MaleName e:2. 3. TotalAddress members::4. Active 5. Sharemembers: capital Rs:6. Registration 7. MaleNumber, Date, Place: Chairperson: M/F Femal Male
  44. 44. e8. Executive Committee Members: Total :B. Vision and Mission1. What are the objectives of forming the cooperative? 1. Organize farmers involved in vegetable and fruit 1 farming 1. Establish direct contact between the farmers and 2 consumers 1. To transform traditional and subsistence-oriented 3 farmers into commercial farmers 1. To institutionalize agro-based trade 4 1. Promote production of vegetables and fruits up to 5 international markets while considering competition in the marketC. Business chosen for replication: Please check.
  45. 45. D. What kinds of business activities to undertake in the business on an SCR basis? Type of Project Quanti Amou Profi Remar ty nt Rs t ks 1. 2. 3. 4. 5.E. What are the advantages of the project (overall development of farmers, better quality products, etc.)
  46. 46. F. Is it based an your skills and experience or market demand; is there anyother special reason for selecting this product?G. Supply of Raw Materials Provide details in the table below: S. Type of Required Quantity Total N. Material Quantity Are the above raw materials available at your cooperative site and from whom? The cooperative provides these to the members.
  47. 47. H. Production: What is the production/manufacturing cycle for each product (from procurement of raw materials to sale in the market)? S. Production Cycle Time Quanti Remar N. Required ty ksI.Division of Responsibilities Do you need to employ additional people to run this business? S.N Personal Number Cost (NRs) Responsibili . Skill ties
  48. 48. J. and Equipment Required What kinds of tools and equipment do you need? S. Tools and Pric Numbe Total Useful Life Equipment e Rs r of Tools & N. cost Equipment Rs 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)
  49. 49. 5. Purchase of sprayerK. 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
  50. 50. 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
  51. 51. 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 Dont have quantity. Dont have proper sheds/places But they provide credit.
  52. 52. L. Financial Aspectsa. Investment needs What will be your financial needs.b. Fixed Investment Rs Equipment/machiner y Land/building Totalc. Working Capital Rs Raw Materials Production/manufacturin g cost Administration cost
  53. 53. 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?
  54. 54. S.N Production/ Total Unit Total . Amount Pric Sales Quantity/Sales per Rs e Amount Member Rsf. Financial Statement: Not Possible at this moment. Profit/Loss Account : S.N Cost Particulars Amount Earning Amount Rs . Rs. Particulars 1. Opening stock 2. Purchase 3. Electricity
  55. 55. S.N Cost Particulars Amount Earning Amount Rs. Rs. Particulars4. Salary/wages5. Repair & maintenance6. Telephone, postage7. Printing/statione ry8. Local transport9. Office expenses10. Advertisement11. Staff welfare12. Consulting charges13. Books, newspaper14. Insurance15. Depreciation16. Rent
  56. 56. S.N Cost Particulars Amount Earning Amount Rs . Rs. Particulars Totalg. 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
  57. 57. h. Cash Flow Not possible now.S. Particulars Amount In NRs. Remark sN. 1 2 3 4 5 6 7 8 9 10 11 121. Cash inflow Opening balance Sales receipts Any other income Total (A)2. Cash outflow Rent Electricity Postage & Telephone Transportation
  58. 58. Repayment of loan Insurance Any other expanses Total (B)3. Net cash flow (A+B) Closing balanceQ. How do the participants/cooperative think that women members will be included in the SCR process?Q. Role of Women in SCRThank You.