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Economic Development and Opportunity

Global Food Crisis Response (GFCR)

September 2008 - February 2011
Bill & Melinda Gates Foundation; World Food Programme (WFP)
Far West (Kailali, Dadledhura, Baitadi)
1,200 households for value chain interventions; 2,213 households food security interventions, and over 3,200 households for financial access interventions
$913,677 (Nepal only)
Economic Development and Opportunity
ECARDS-Nepal; Nirdhan Utthan Bank, Ltd.; Private Sector Actors

The Challenge
The crisis in world food markets due to high food prices is drastically decreasing food security and purchasing power for the poorest populations in the world. In the past three years, the price of basic commodities has gone up by roughly 80 percent, with the price of wheat and rice doubling between March 2007 and March 2008. According to the Food and Agriculture Organization (FAO), food crises persist in 32 countries around the world. In the absence of external assistance to meet immediate needs, the food supply for the poorest households in these countries will become less secure, leading to greater malnutrition and the adoption of negative coping mechanisms (such as selling off assets, eating seed stock and taking children out of school). Most experts expect food prices to remain at elevated levels for years (FAO 2008).

Beneficiaries whose food storage was washed away by the September 2008 floodBeneficiaries whose food storage was washed away by
the September 2008 flood

Nepal has been identified by the FAO as one of the countries in crisis due to severe localized food insecurity, attributable to the influx of refugees, a concentration of internally displaced persons, or areas with combinations of crop failure and deep poverty. On average, the Nepalese population spends more than half its income on food, a situation exacerbated by increases of 20 to 30 percent in food prices recently (UN WFP and NDRI 2008). According to the Nepal Development Research Group (NDRI) and United Nations World Food Programme (UN WFP), approximately 2.5 million people in rural Nepal are in immediate need of food assistance and a further 3.9 million are at risk of becoming food insecure due to higher food prices.

The Opportunity

The Global Food Crisis Response
In response, Mercy Corps partnered with the Bill and Melinda Gate Foundation to implement a "Global Food Crisis Response" program across five countries: Central African Republic (with co-financing by the Food and Agriculture Organization (FAO)); Nepal (with co-financing by the World Food Programme (WFP)); Niger; Somalia; and, Sri Lanka. The response focused simultaneously on immediate ability to access food as well as medium and longer term solutions to developing more sustainable food and agricultural systems. In Nepal, the program works in the Far Western districts of Kailali, Baitadi and Dadeldhura. The overall goal of GFCR Nepal is to improve immediate and medium-term food security, while laying the groundwork for long-term solutions. To attain this goal, Mercy Corps Nepal implemented cash-for-work (CFW) to increase purchasing power of food insecure communities in the short term and agricultural value chain enhancement activities, enhanced by ongoing activities to expand access to finance, to lay the groundwork for more sustainable resilience in the medium and long term. Mercy Corps partnered with ECARDS , a national Nepali NGO, and Nirdhan Utthan Bank Limited (NUBL), a microfinance institution, to implement the project in ten Village Development Committees (VDCs).

Project interventions include:

Immediate Assistance: Wage Labor in Support of Public Works Schemes
Implemented in partnership with WFP, the Cash for Work (CfW) component of the project provided cash transfers to highly food insecure households through wage labor opportunities for 2,213 extremely vulnerable households, including 992 households affected by the September 19th 2008 floods in Kailali and an additional 1,221 households in the Baitadi, Dadeldura and Kailali districts who face chronic food insecurity. CfW enabled participating communities to construct and/or repair 96 infrastructure projects that contributed to improved local food and agriculture systems while reducing the risk of future food security shocks, such as agricultural roads, irrigation systems, and flood mitigation works. Total wages of US $209,000 were paid to 2,213 households in return for a 42-days labor and materials contribution from the communities. Wages received by beneficiaries were used primarily to purchase food, but also for expenses related to education, health care, seeds, and irrigation.

Beneficiaries whose food storage was washed away by the septGFCR beneficiaries involved in CfW
scheme-village road construction
Evacuation route constructed by beneficiaries through CfWEvacuation route constructed by
beneficiaries through CfW
An elderly beneficiary of Lalipur holding the cash received An elderly beneficiary of Lalipur
holding the cash received

Bolstering Agricultural Profitability: Business Opportunities for Smallholder Farmers

Beneficiaries selecting ginger seeds for plantationBeneficiaries treating ginger seed in Trichoderma

Based on a value chain analysis commissioned by Mercy Corps, smallholder farmers in target communities are being empowered and organized to expand agricultural outputs of two "high-impact" crops: ginger and potato. Mercy Corps is working with farmers groups and cooperatives to facilitate access to high quality seeds through market channels; promote and/or introduce the use of improved technologies to control disease and increase yields; and, improve business and technical practices. Mercy Corps is also facilitating linkages between farmers groups and market actors - such as input suppliers, traders, and businesses - to strengthen the overall ginger and potato value chains in Kailali, Dadeldhura and Baitadi, resulting in sales agreements between farmers groups and cooperatives, contract farming arrangements between cooperatives and traders, and improved market information systems. These activities are strengthening 43 farmers groups comprising 1,200 households in six VDCs, in addition to a range of value chain actors. After only 18 months, these activities had resulted in average value of production increases of 266% for farmers, and the work continues. Mercy Corps and partners are currently working to further strengthen seed supply networks, reinforce key plant protection and production practices (through disease management, micro-irrigation, and varietal selection), and improve value chain efficiency. In all of these activities, the project encourages the development of self-sustaining private sector actors at the input and post-harvest ends of a value chain that was previously extremely weak, and still requires significant strengthening.

Resilience to Shocks: Promoting Improved Access to Financial Services

Mercy Corps is partnering with Nirdhan Utthan Bank Limited (NUBL) to extend access to formal financial services into the Far-Western hills. NUBL formed microfinance groups with 100% female membership; trained these groups on savings and lending methodologies and financial literacy; and, started saving processes in the groups. To date, NUBL has provided over NPR 35,703,579 ($476,000) in loans to over 3,200 clients. Loans have been used services/trade (51%), agriculture (34%), cottage industries (4%) and other (8%). The project has linked NUBL to 300 project-supported farming households to date, with loans going towards potato and ginger production. Finally, the project is working with its cooperative partners to expand alternative savings and lending channels for their members.