Bhutan - Daga Shingdra Tshogpa: The Revival of a Rural Enterprise
Primary thematic focus: Sub-national capacity development: local solutions, national strengths
In a Nutshell:
Daga Shingdra Tshogpa (DST), formed in late 2005 was going through a crisis. The case describes the attempts in making DST a profitable rural based enterprise - the importance of awareness creation and capacity building of local bodies and the need for inclusion of good governance in a farmers’ group.
Dagana district grows an abundance of fruits like oranges, passion fruits, guava, and pears. The Ministry of Agriculture, with support from UNDP has set up an Integrated Food Processing Plant (IFPP). A farmers’ group was formed around the IFPP in 2005, with the aim to increase household income through collective engagement in the food processing industry. SNV Bhutan provided initial support to the farmers’ group, which is named Daga Shindgra Tshogpa (DST). DST has 97 members, representing about 87 households. The main activities of DST over the past years have been production of orange pulp and orange export. Up to the 2008 season, DST has undertaken business transaction of about USD 125,000 a year, yet in the past two seasons DST suffered a total loss of USD 47,916.
In early 2009, MoA requested SNV to support the revival of DST. SNV and stakeholders, looked at:
a) Management of bookkeeping
b) DST by-laws, and management (business) plan
c) DST management – Board and Executive Committee
d) Stakeholder coordination and support services and found the following:
- DST bylaws were decent, but developed by just 5% of DST members with external agencies and without broader member consultation. 80% of members are not aware of its existence.
- The group has been operating its business without much direction or support. No management or business plan was developed.
- No clear book keeping of the business transactions. No proper record of money transactions was maintained. The system could be (and was) manipulated by smart people to make easy money at the cost of the group.
- The roles and responsibilities as spelled out in the by-laws are not followed, and there are no accountability measures in place.
- Trust amongst the members and in the board was at the lowest, and the group was at the verge of collapse.
- The lack of participation and support of main service providers – like the district administration, technical support providers, local governance authorities, etc.
a) An exercise on group dynamics and group formation
b) Revision of the current by-laws in a very consultative and participative manner
c) Re-election of the board and executive members
d) Development of a business plan, but currently focusing on orange business
e) Developing a simple but accountable financial manual, and training people on proper book-keeping
f) Most importantly, a lot of attention was given to governance aspects like institutional arrangements, roles and responsibilities, accountability, participation in decision-making, gender and participation of ethnic groups, amongst others.
1. For the first time, more than 65% of members participated in the General Assembly meeting
2. A revised by-laws and a business plan are in place
3. District administration had taken full interest in DST activities, and stood as guarantor for a loan from a financial institution. Ministry of Agriculture as allocated a full time officer to support DST in the 2009-2010 orange season.
4. Ministry of Agriculture is using the DST by-laws and its business plan as a showcase for other farmers’ groups
5. DST currently undertaking orange business activity seriously. 2009-10 season business expected to make sufficient income to pay of loan and earlier outstanding debts.
6. MoA is looking at DST to be registered as one of the first cooperative once the cooperative act becomes operational. Although DST is now on track, ongoing support is still required, especially in bookkeeping and documentation, group dynamics and trust building, and accountability.
Results and Critical Factors:
The DST farmers’ group is now become a reasonably well functioning group. There is renewed trust and interest amongst the members and board members, although this needs further attention and support. The DST has managed to engage fruitfully with the district administration. There has been more clarity on the roles of the stakeholders. The capacity of the DST has been build, to a large extent, on proper documentation and bookkeeping. Capacity building on meeting management was done but needs further attention. The district administration was involved, to the extent possible, that they agreed to stand as guarantor against the loan of DST from the financial institution. Further participation and support from District Administration needs attention. DST is well on the way to make profit for the first time since its inception, and it is expected they can pay off the loan and other outstanding debts the group had incurred over the years.
The following are the critical factors that are necessary to make a farmers’ group successful enterprise:
a) Sufficient awareness building and training to improve group dynamics
b) Proper understanding of the members on the purpose and objective of “why the need for a group”. The need should come from the community and not the other way around (e.g. the need of the government to export oranges).
c) Roles of stakeholders should be made clear from the beginning.
d) Active participation of stakeholders is required if future support needs are to be streamlined.
e) Good governance aspects, such as accountability and transparency should be incorporated from the very beginning if a group is to succeed.
f) A clear capacity needs assessment followed by a capacity building plan and phase out plan for support should be in place.
Name of Primary Contact Person: Kencho Wangdi
Title of Primary Contact Person: Portfolio Coordinator