Strengthening the Dairy Value Chain

in Bangladesh

Funded ByBill and Melinda Gates Foundation

Goal of the ProjectGoal of the ProjectTargeted landless and smallholding households

(incomelt$2day) in North and Northwestern Bangladesh have increased incomes and more sustainable livelihoods through incorporation into a strengthened milk value chain

Improve the milk collection system in rural and remote areas

Increase production by improving access to inputs markets and services by mobilizing groups of poor producers and input service provider

Improve the breedingArtificial Insemination (AI) network

Ensure access to quality animal health services at the producer level

Improve the policy environment

Objectives of the ProjectObjectives of the Project

Area of operation District 9

Upozila 23

Union 91

Village 385

Total participating households 27068

Farmer leaders 2529

Milk collectors 276

Livestock health workers 171

Information Service Centers (ISC) 47

Community Agri-Shops (CAS) 130

Household average production 147 (litersday)

Household average milk sales income 3354 (Takaday)

Average income of Input shops 18141 (TakaMonth)

Livestock health worker income 12604 (TakaMonth)

Pro

ject

fig

ure

s ti

ll d

ate

ldquo The project has employed a group approach to mobilising farmers

From engagement farmers progress through categories C B and A

(chronologically) graduating from C to B to A on the basis of their skill and

competency acquisition rdquo

SDVC Group status

Year Only Women Group

Only men group

Mixed group

Total of women group

Year 1 115 6 170 291 32

Year 2 66 1 161 228 36

Year 3 142 6 216 364 41

Total 323 13 547 883 37

Group Savings Prospect amp Progress

ldquoAccess to finance is critical for small holder farmers to enable them further

invest in dairy development But due to lack of attractive financing options

farmers who have one or less than three cows are reluctant about seeking loans

from financial institutes since the conditions are not favorable rdquo

Access to Finance by Smallholder farmers

The traditional financial institutes in Bangladesh are wary of the dairy industry in general for its exposure to various forms of risk and are thus unwilling to provide seasonal loans without some risk mitigation Very few loans are available that cater to the specific needs of the industry

Dairy farmers need relatively larger loan than an average micro-finance loan and if held to the weekly or monthly repayment schedule like others it becomes problematic to repay because a cow does not become profitable or in other words it can not generate milk as soon as itrsquos bought The financial institutions exist in the working area that SDVC has observed are

1048698 Public Bank 1048698 Private Bank 1048698 NGOs 1048698 Moneylenders 1048698 Families Friends and Relatives

Role of Financial institutions to support smallholder farmers

The loan requirements of Public banks in Bangladesh albeit encourage various agro based industry to apply for financing may be too stringent for small scale farmers to apply In reality on the local level small scale farmers are often out of the lending net because of various inadequacies in terms of meeting bank requirement As a result only mid size farmers who are potentially less risky clients with collateral can only use these loans Interestingly cooperatives do not mitigate the risks for the banks as well as there is no one to hold responsible in case of defaults

There is apathy and indifference in the Private banks about giving loans to dairy industry The industry is considered to be too risky and inefficient to be considered for large loans

The issues regarding NGOs credit are like Paying in weekly installment did not go with the milk production cycle very high interest rate (12-15) was detrimental to the small farmersimposing flat method of interest rather than decline method and Do not have risk mitigating coverage for damage to the cattle

ldquoSince banks and other financial institutions are not interested in providing loan to the small producers in the bottom

of the pyramid SDVC facilitated an informal savings activities through

clustering efforts ie encouraging farmer groups in group savings mechanismrdquo

Group Savings

Group Savings status

Region

No of Groups engaged in savings (As of Mar2011)

Year-1 groups

Year-2 groups

Year-3 groups Total

SDVC 109 175 252 536

of groups formed 291 228 344 863

of groups engaged in savings

37 77 73 62

Savings figures across the regions

Region

Avg total savings per group (As of Mar2011)In BDT

Year-1 groups

Year-2 groups

Year-3 groups Total

Bogra 9890 8361 3310 7187

Rangpur 13912 6501 2451 7621

SDVC 12125 7327 2833 7428

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

Goal of the ProjectGoal of the ProjectTargeted landless and smallholding households

(incomelt$2day) in North and Northwestern Bangladesh have increased incomes and more sustainable livelihoods through incorporation into a strengthened milk value chain

Improve the milk collection system in rural and remote areas

Increase production by improving access to inputs markets and services by mobilizing groups of poor producers and input service provider

Improve the breedingArtificial Insemination (AI) network

Ensure access to quality animal health services at the producer level

Improve the policy environment

Objectives of the ProjectObjectives of the Project

Area of operation District 9

Upozila 23

Union 91

Village 385

Total participating households 27068

Farmer leaders 2529

Milk collectors 276

Livestock health workers 171

Information Service Centers (ISC) 47

Community Agri-Shops (CAS) 130

Household average production 147 (litersday)

Household average milk sales income 3354 (Takaday)

Average income of Input shops 18141 (TakaMonth)

Livestock health worker income 12604 (TakaMonth)

Pro

ject

fig

ure

s ti

ll d

ate

ldquo The project has employed a group approach to mobilising farmers

From engagement farmers progress through categories C B and A

(chronologically) graduating from C to B to A on the basis of their skill and

competency acquisition rdquo

SDVC Group status

Year Only Women Group

Only men group

Mixed group

Total of women group

Year 1 115 6 170 291 32

Year 2 66 1 161 228 36

Year 3 142 6 216 364 41

Total 323 13 547 883 37

Group Savings Prospect amp Progress

ldquoAccess to finance is critical for small holder farmers to enable them further

invest in dairy development But due to lack of attractive financing options

farmers who have one or less than three cows are reluctant about seeking loans

from financial institutes since the conditions are not favorable rdquo

Access to Finance by Smallholder farmers

The traditional financial institutes in Bangladesh are wary of the dairy industry in general for its exposure to various forms of risk and are thus unwilling to provide seasonal loans without some risk mitigation Very few loans are available that cater to the specific needs of the industry

Dairy farmers need relatively larger loan than an average micro-finance loan and if held to the weekly or monthly repayment schedule like others it becomes problematic to repay because a cow does not become profitable or in other words it can not generate milk as soon as itrsquos bought The financial institutions exist in the working area that SDVC has observed are

1048698 Public Bank 1048698 Private Bank 1048698 NGOs 1048698 Moneylenders 1048698 Families Friends and Relatives

Role of Financial institutions to support smallholder farmers

The loan requirements of Public banks in Bangladesh albeit encourage various agro based industry to apply for financing may be too stringent for small scale farmers to apply In reality on the local level small scale farmers are often out of the lending net because of various inadequacies in terms of meeting bank requirement As a result only mid size farmers who are potentially less risky clients with collateral can only use these loans Interestingly cooperatives do not mitigate the risks for the banks as well as there is no one to hold responsible in case of defaults

There is apathy and indifference in the Private banks about giving loans to dairy industry The industry is considered to be too risky and inefficient to be considered for large loans

The issues regarding NGOs credit are like Paying in weekly installment did not go with the milk production cycle very high interest rate (12-15) was detrimental to the small farmersimposing flat method of interest rather than decline method and Do not have risk mitigating coverage for damage to the cattle

ldquoSince banks and other financial institutions are not interested in providing loan to the small producers in the bottom

of the pyramid SDVC facilitated an informal savings activities through

clustering efforts ie encouraging farmer groups in group savings mechanismrdquo

Group Savings

Group Savings status

Region

No of Groups engaged in savings (As of Mar2011)

Year-1 groups

Year-2 groups

Year-3 groups Total

SDVC 109 175 252 536

of groups formed 291 228 344 863

of groups engaged in savings

37 77 73 62

Savings figures across the regions

Region

Avg total savings per group (As of Mar2011)In BDT

Year-1 groups

Year-2 groups

Year-3 groups Total

Bogra 9890 8361 3310 7187

Rangpur 13912 6501 2451 7621

SDVC 12125 7327 2833 7428

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

Area of operation District 9

Upozila 23

Union 91

Village 385

Total participating households 27068

Farmer leaders 2529

Milk collectors 276

Livestock health workers 171

Information Service Centers (ISC) 47

Community Agri-Shops (CAS) 130

Household average production 147 (litersday)

Household average milk sales income 3354 (Takaday)

Average income of Input shops 18141 (TakaMonth)

Livestock health worker income 12604 (TakaMonth)

Pro

ject

fig

ure

s ti

ll d

ate

ldquo The project has employed a group approach to mobilising farmers

From engagement farmers progress through categories C B and A

(chronologically) graduating from C to B to A on the basis of their skill and

competency acquisition rdquo

SDVC Group status

Year Only Women Group

Only men group

Mixed group

Total of women group

Year 1 115 6 170 291 32

Year 2 66 1 161 228 36

Year 3 142 6 216 364 41

Total 323 13 547 883 37

Group Savings Prospect amp Progress

ldquoAccess to finance is critical for small holder farmers to enable them further

invest in dairy development But due to lack of attractive financing options

farmers who have one or less than three cows are reluctant about seeking loans

from financial institutes since the conditions are not favorable rdquo

Access to Finance by Smallholder farmers

The traditional financial institutes in Bangladesh are wary of the dairy industry in general for its exposure to various forms of risk and are thus unwilling to provide seasonal loans without some risk mitigation Very few loans are available that cater to the specific needs of the industry

Dairy farmers need relatively larger loan than an average micro-finance loan and if held to the weekly or monthly repayment schedule like others it becomes problematic to repay because a cow does not become profitable or in other words it can not generate milk as soon as itrsquos bought The financial institutions exist in the working area that SDVC has observed are

1048698 Public Bank 1048698 Private Bank 1048698 NGOs 1048698 Moneylenders 1048698 Families Friends and Relatives

Role of Financial institutions to support smallholder farmers

The loan requirements of Public banks in Bangladesh albeit encourage various agro based industry to apply for financing may be too stringent for small scale farmers to apply In reality on the local level small scale farmers are often out of the lending net because of various inadequacies in terms of meeting bank requirement As a result only mid size farmers who are potentially less risky clients with collateral can only use these loans Interestingly cooperatives do not mitigate the risks for the banks as well as there is no one to hold responsible in case of defaults

There is apathy and indifference in the Private banks about giving loans to dairy industry The industry is considered to be too risky and inefficient to be considered for large loans

The issues regarding NGOs credit are like Paying in weekly installment did not go with the milk production cycle very high interest rate (12-15) was detrimental to the small farmersimposing flat method of interest rather than decline method and Do not have risk mitigating coverage for damage to the cattle

ldquoSince banks and other financial institutions are not interested in providing loan to the small producers in the bottom

of the pyramid SDVC facilitated an informal savings activities through

clustering efforts ie encouraging farmer groups in group savings mechanismrdquo

Group Savings

Group Savings status

Region

No of Groups engaged in savings (As of Mar2011)

Year-1 groups

Year-2 groups

Year-3 groups Total

SDVC 109 175 252 536

of groups formed 291 228 344 863

of groups engaged in savings

37 77 73 62

Savings figures across the regions

Region

Avg total savings per group (As of Mar2011)In BDT

Year-1 groups

Year-2 groups

Year-3 groups Total

Bogra 9890 8361 3310 7187

Rangpur 13912 6501 2451 7621

SDVC 12125 7327 2833 7428

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

ldquo The project has employed a group approach to mobilising farmers

From engagement farmers progress through categories C B and A

(chronologically) graduating from C to B to A on the basis of their skill and

competency acquisition rdquo

SDVC Group status

Year Only Women Group

Only men group

Mixed group

Total of women group

Year 1 115 6 170 291 32

Year 2 66 1 161 228 36

Year 3 142 6 216 364 41

Total 323 13 547 883 37

Group Savings Prospect amp Progress

ldquoAccess to finance is critical for small holder farmers to enable them further

invest in dairy development But due to lack of attractive financing options

farmers who have one or less than three cows are reluctant about seeking loans

from financial institutes since the conditions are not favorable rdquo

Access to Finance by Smallholder farmers

The traditional financial institutes in Bangladesh are wary of the dairy industry in general for its exposure to various forms of risk and are thus unwilling to provide seasonal loans without some risk mitigation Very few loans are available that cater to the specific needs of the industry

Dairy farmers need relatively larger loan than an average micro-finance loan and if held to the weekly or monthly repayment schedule like others it becomes problematic to repay because a cow does not become profitable or in other words it can not generate milk as soon as itrsquos bought The financial institutions exist in the working area that SDVC has observed are

1048698 Public Bank 1048698 Private Bank 1048698 NGOs 1048698 Moneylenders 1048698 Families Friends and Relatives

Role of Financial institutions to support smallholder farmers

The loan requirements of Public banks in Bangladesh albeit encourage various agro based industry to apply for financing may be too stringent for small scale farmers to apply In reality on the local level small scale farmers are often out of the lending net because of various inadequacies in terms of meeting bank requirement As a result only mid size farmers who are potentially less risky clients with collateral can only use these loans Interestingly cooperatives do not mitigate the risks for the banks as well as there is no one to hold responsible in case of defaults

There is apathy and indifference in the Private banks about giving loans to dairy industry The industry is considered to be too risky and inefficient to be considered for large loans

The issues regarding NGOs credit are like Paying in weekly installment did not go with the milk production cycle very high interest rate (12-15) was detrimental to the small farmersimposing flat method of interest rather than decline method and Do not have risk mitigating coverage for damage to the cattle

ldquoSince banks and other financial institutions are not interested in providing loan to the small producers in the bottom

of the pyramid SDVC facilitated an informal savings activities through

clustering efforts ie encouraging farmer groups in group savings mechanismrdquo

Group Savings

Group Savings status

Region

No of Groups engaged in savings (As of Mar2011)

Year-1 groups

Year-2 groups

Year-3 groups Total

SDVC 109 175 252 536

of groups formed 291 228 344 863

of groups engaged in savings

37 77 73 62

Savings figures across the regions

Region

Avg total savings per group (As of Mar2011)In BDT

Year-1 groups

Year-2 groups

Year-3 groups Total

Bogra 9890 8361 3310 7187

Rangpur 13912 6501 2451 7621

SDVC 12125 7327 2833 7428

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

SDVC Group status

Year Only Women Group

Only men group

Mixed group

Total of women group

Year 1 115 6 170 291 32

Year 2 66 1 161 228 36

Year 3 142 6 216 364 41

Total 323 13 547 883 37

Group Savings Prospect amp Progress

ldquoAccess to finance is critical for small holder farmers to enable them further

invest in dairy development But due to lack of attractive financing options

farmers who have one or less than three cows are reluctant about seeking loans

from financial institutes since the conditions are not favorable rdquo

Access to Finance by Smallholder farmers

The traditional financial institutes in Bangladesh are wary of the dairy industry in general for its exposure to various forms of risk and are thus unwilling to provide seasonal loans without some risk mitigation Very few loans are available that cater to the specific needs of the industry

Dairy farmers need relatively larger loan than an average micro-finance loan and if held to the weekly or monthly repayment schedule like others it becomes problematic to repay because a cow does not become profitable or in other words it can not generate milk as soon as itrsquos bought The financial institutions exist in the working area that SDVC has observed are

1048698 Public Bank 1048698 Private Bank 1048698 NGOs 1048698 Moneylenders 1048698 Families Friends and Relatives

Role of Financial institutions to support smallholder farmers

The loan requirements of Public banks in Bangladesh albeit encourage various agro based industry to apply for financing may be too stringent for small scale farmers to apply In reality on the local level small scale farmers are often out of the lending net because of various inadequacies in terms of meeting bank requirement As a result only mid size farmers who are potentially less risky clients with collateral can only use these loans Interestingly cooperatives do not mitigate the risks for the banks as well as there is no one to hold responsible in case of defaults

There is apathy and indifference in the Private banks about giving loans to dairy industry The industry is considered to be too risky and inefficient to be considered for large loans

The issues regarding NGOs credit are like Paying in weekly installment did not go with the milk production cycle very high interest rate (12-15) was detrimental to the small farmersimposing flat method of interest rather than decline method and Do not have risk mitigating coverage for damage to the cattle

ldquoSince banks and other financial institutions are not interested in providing loan to the small producers in the bottom

of the pyramid SDVC facilitated an informal savings activities through

clustering efforts ie encouraging farmer groups in group savings mechanismrdquo

Group Savings

Group Savings status

Region

No of Groups engaged in savings (As of Mar2011)

Year-1 groups

Year-2 groups

Year-3 groups Total

SDVC 109 175 252 536

of groups formed 291 228 344 863

of groups engaged in savings

37 77 73 62

Savings figures across the regions

Region

Avg total savings per group (As of Mar2011)In BDT

Year-1 groups

Year-2 groups

Year-3 groups Total

Bogra 9890 8361 3310 7187

Rangpur 13912 6501 2451 7621

SDVC 12125 7327 2833 7428

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

Group Savings Prospect amp Progress

ldquoAccess to finance is critical for small holder farmers to enable them further

invest in dairy development But due to lack of attractive financing options

farmers who have one or less than three cows are reluctant about seeking loans

from financial institutes since the conditions are not favorable rdquo

Access to Finance by Smallholder farmers

The traditional financial institutes in Bangladesh are wary of the dairy industry in general for its exposure to various forms of risk and are thus unwilling to provide seasonal loans without some risk mitigation Very few loans are available that cater to the specific needs of the industry

Dairy farmers need relatively larger loan than an average micro-finance loan and if held to the weekly or monthly repayment schedule like others it becomes problematic to repay because a cow does not become profitable or in other words it can not generate milk as soon as itrsquos bought The financial institutions exist in the working area that SDVC has observed are

1048698 Public Bank 1048698 Private Bank 1048698 NGOs 1048698 Moneylenders 1048698 Families Friends and Relatives

Role of Financial institutions to support smallholder farmers

The loan requirements of Public banks in Bangladesh albeit encourage various agro based industry to apply for financing may be too stringent for small scale farmers to apply In reality on the local level small scale farmers are often out of the lending net because of various inadequacies in terms of meeting bank requirement As a result only mid size farmers who are potentially less risky clients with collateral can only use these loans Interestingly cooperatives do not mitigate the risks for the banks as well as there is no one to hold responsible in case of defaults

There is apathy and indifference in the Private banks about giving loans to dairy industry The industry is considered to be too risky and inefficient to be considered for large loans

The issues regarding NGOs credit are like Paying in weekly installment did not go with the milk production cycle very high interest rate (12-15) was detrimental to the small farmersimposing flat method of interest rather than decline method and Do not have risk mitigating coverage for damage to the cattle

ldquoSince banks and other financial institutions are not interested in providing loan to the small producers in the bottom

of the pyramid SDVC facilitated an informal savings activities through

clustering efforts ie encouraging farmer groups in group savings mechanismrdquo

Group Savings

Group Savings status

Region

No of Groups engaged in savings (As of Mar2011)

Year-1 groups

Year-2 groups

Year-3 groups Total

SDVC 109 175 252 536

of groups formed 291 228 344 863

of groups engaged in savings

37 77 73 62

Savings figures across the regions

Region

Avg total savings per group (As of Mar2011)In BDT

Year-1 groups

Year-2 groups

Year-3 groups Total

Bogra 9890 8361 3310 7187

Rangpur 13912 6501 2451 7621

SDVC 12125 7327 2833 7428

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

ldquoAccess to finance is critical for small holder farmers to enable them further

invest in dairy development But due to lack of attractive financing options

farmers who have one or less than three cows are reluctant about seeking loans

from financial institutes since the conditions are not favorable rdquo

Access to Finance by Smallholder farmers

The traditional financial institutes in Bangladesh are wary of the dairy industry in general for its exposure to various forms of risk and are thus unwilling to provide seasonal loans without some risk mitigation Very few loans are available that cater to the specific needs of the industry

Dairy farmers need relatively larger loan than an average micro-finance loan and if held to the weekly or monthly repayment schedule like others it becomes problematic to repay because a cow does not become profitable or in other words it can not generate milk as soon as itrsquos bought The financial institutions exist in the working area that SDVC has observed are

1048698 Public Bank 1048698 Private Bank 1048698 NGOs 1048698 Moneylenders 1048698 Families Friends and Relatives

Role of Financial institutions to support smallholder farmers

The loan requirements of Public banks in Bangladesh albeit encourage various agro based industry to apply for financing may be too stringent for small scale farmers to apply In reality on the local level small scale farmers are often out of the lending net because of various inadequacies in terms of meeting bank requirement As a result only mid size farmers who are potentially less risky clients with collateral can only use these loans Interestingly cooperatives do not mitigate the risks for the banks as well as there is no one to hold responsible in case of defaults

There is apathy and indifference in the Private banks about giving loans to dairy industry The industry is considered to be too risky and inefficient to be considered for large loans

The issues regarding NGOs credit are like Paying in weekly installment did not go with the milk production cycle very high interest rate (12-15) was detrimental to the small farmersimposing flat method of interest rather than decline method and Do not have risk mitigating coverage for damage to the cattle

ldquoSince banks and other financial institutions are not interested in providing loan to the small producers in the bottom

of the pyramid SDVC facilitated an informal savings activities through

clustering efforts ie encouraging farmer groups in group savings mechanismrdquo

Group Savings

Group Savings status

Region

No of Groups engaged in savings (As of Mar2011)

Year-1 groups

Year-2 groups

Year-3 groups Total

SDVC 109 175 252 536

of groups formed 291 228 344 863

of groups engaged in savings

37 77 73 62

Savings figures across the regions

Region

Avg total savings per group (As of Mar2011)In BDT

Year-1 groups

Year-2 groups

Year-3 groups Total

Bogra 9890 8361 3310 7187

Rangpur 13912 6501 2451 7621

SDVC 12125 7327 2833 7428

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

Access to Finance by Smallholder farmers

The traditional financial institutes in Bangladesh are wary of the dairy industry in general for its exposure to various forms of risk and are thus unwilling to provide seasonal loans without some risk mitigation Very few loans are available that cater to the specific needs of the industry

Dairy farmers need relatively larger loan than an average micro-finance loan and if held to the weekly or monthly repayment schedule like others it becomes problematic to repay because a cow does not become profitable or in other words it can not generate milk as soon as itrsquos bought The financial institutions exist in the working area that SDVC has observed are

1048698 Public Bank 1048698 Private Bank 1048698 NGOs 1048698 Moneylenders 1048698 Families Friends and Relatives

Role of Financial institutions to support smallholder farmers

The loan requirements of Public banks in Bangladesh albeit encourage various agro based industry to apply for financing may be too stringent for small scale farmers to apply In reality on the local level small scale farmers are often out of the lending net because of various inadequacies in terms of meeting bank requirement As a result only mid size farmers who are potentially less risky clients with collateral can only use these loans Interestingly cooperatives do not mitigate the risks for the banks as well as there is no one to hold responsible in case of defaults

There is apathy and indifference in the Private banks about giving loans to dairy industry The industry is considered to be too risky and inefficient to be considered for large loans

The issues regarding NGOs credit are like Paying in weekly installment did not go with the milk production cycle very high interest rate (12-15) was detrimental to the small farmersimposing flat method of interest rather than decline method and Do not have risk mitigating coverage for damage to the cattle

ldquoSince banks and other financial institutions are not interested in providing loan to the small producers in the bottom

of the pyramid SDVC facilitated an informal savings activities through

clustering efforts ie encouraging farmer groups in group savings mechanismrdquo

Group Savings

Group Savings status

Region

No of Groups engaged in savings (As of Mar2011)

Year-1 groups

Year-2 groups

Year-3 groups Total

SDVC 109 175 252 536

of groups formed 291 228 344 863

of groups engaged in savings

37 77 73 62

Savings figures across the regions

Region

Avg total savings per group (As of Mar2011)In BDT

Year-1 groups

Year-2 groups

Year-3 groups Total

Bogra 9890 8361 3310 7187

Rangpur 13912 6501 2451 7621

SDVC 12125 7327 2833 7428

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

Role of Financial institutions to support smallholder farmers

The loan requirements of Public banks in Bangladesh albeit encourage various agro based industry to apply for financing may be too stringent for small scale farmers to apply In reality on the local level small scale farmers are often out of the lending net because of various inadequacies in terms of meeting bank requirement As a result only mid size farmers who are potentially less risky clients with collateral can only use these loans Interestingly cooperatives do not mitigate the risks for the banks as well as there is no one to hold responsible in case of defaults

There is apathy and indifference in the Private banks about giving loans to dairy industry The industry is considered to be too risky and inefficient to be considered for large loans

The issues regarding NGOs credit are like Paying in weekly installment did not go with the milk production cycle very high interest rate (12-15) was detrimental to the small farmersimposing flat method of interest rather than decline method and Do not have risk mitigating coverage for damage to the cattle

ldquoSince banks and other financial institutions are not interested in providing loan to the small producers in the bottom

of the pyramid SDVC facilitated an informal savings activities through

clustering efforts ie encouraging farmer groups in group savings mechanismrdquo

Group Savings

Group Savings status

Region

No of Groups engaged in savings (As of Mar2011)

Year-1 groups

Year-2 groups

Year-3 groups Total

SDVC 109 175 252 536

of groups formed 291 228 344 863

of groups engaged in savings

37 77 73 62

Savings figures across the regions

Region

Avg total savings per group (As of Mar2011)In BDT

Year-1 groups

Year-2 groups

Year-3 groups Total

Bogra 9890 8361 3310 7187

Rangpur 13912 6501 2451 7621

SDVC 12125 7327 2833 7428

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

ldquoSince banks and other financial institutions are not interested in providing loan to the small producers in the bottom

of the pyramid SDVC facilitated an informal savings activities through

clustering efforts ie encouraging farmer groups in group savings mechanismrdquo

Group Savings

Group Savings status

Region

No of Groups engaged in savings (As of Mar2011)

Year-1 groups

Year-2 groups

Year-3 groups Total

SDVC 109 175 252 536

of groups formed 291 228 344 863

of groups engaged in savings

37 77 73 62

Savings figures across the regions

Region

Avg total savings per group (As of Mar2011)In BDT

Year-1 groups

Year-2 groups

Year-3 groups Total

Bogra 9890 8361 3310 7187

Rangpur 13912 6501 2451 7621

SDVC 12125 7327 2833 7428

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

Group Savings status

Region

No of Groups engaged in savings (As of Mar2011)

Year-1 groups

Year-2 groups

Year-3 groups Total

SDVC 109 175 252 536

of groups formed 291 228 344 863

of groups engaged in savings

37 77 73 62

Savings figures across the regions

Region

Avg total savings per group (As of Mar2011)In BDT

Year-1 groups

Year-2 groups

Year-3 groups Total

Bogra 9890 8361 3310 7187

Rangpur 13912 6501 2451 7621

SDVC 12125 7327 2833 7428

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

Savings figures across the regions

Region

Avg total savings per group (As of Mar2011)In BDT

Year-1 groups

Year-2 groups

Year-3 groups Total

Bogra 9890 8361 3310 7187

Rangpur 13912 6501 2451 7621

SDVC 12125 7327 2833 7428

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

How do the groups utilize theirSavings

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

Utilization of Savings

Group members are using the savings amount in different mechanism such as

1 Revolving savings amount as loan within group members Group members taking loan from savings amount to meet their dairy related need

2 Weekly savings providing to members by rotation to purchase feed only In this process producer can purchase big volume of feed which results lower purchase cost

3 With the savings amount few groups purchasing cross breed cows and giving to members based on agreement among group and members In some groups members are providing cross breed cows with a view to ensure improved breed cow for 100 group members

4 Group purchasing bulk volume of feed and medicine or arranging schedule vaccination with the group savings This cost low for bulk purchasing and they can arrange vaccination and de warming program maintaining schedule

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

5 Deposit savings money in Bank or in group fund (Some groups that yet couldnt set mechanism for utilization of savings

7 In maximum cases members using the savings amount in dairy purpose but some times groups are also providing loan to meet other emergency needs

Group year

Input purchase by Members ()

Input seller Development ()

Cowcattle Purchase ()

Credit for other dairy related purposes ()

Cash in handbank ()

Total savings ()

Yr-1 groups

16 5 13 33 33 100

Yr-2 groups

13 2 3 29 54 100

Yr-3 groups

7 1 0 27 65 100

All Year 13 3 6 30 47 100

Distribution of Savings Usage by Year 1 2 amp 3 farmer groups

Success Of savings groups

Key successes

bull Savings help small-scale producers reduce their costs in ensuring access to

services and markets

bull In group activities higher participation rate is observed among the savings groups

than other non-saving groups

bull Savings group have become more organized than non-savings group

bull Savings group get easy access to different input and services eg groups can

easily purchase necessary inputs and services utilizing their savings and organize

regular vaccination and de-worming campaign with their savings money)

bull Savings groups also invest their money to purchase high breed cows for their

group members

bull The relatively large amount from savings can be used as collateral when a group

seeks credit from financial organization

Group savings

bull increase resources for potential group or individual activities and reduce

dependency on outsiders

bull serve as a form of ldquoinsurance against riskrdquo

bull improve a sense of group ownership and promote group repayment discipline

bull facilitate access to outside loans (banks are more willing to give loans to groups

that save)

bull can lower the costs of banking and can be used to give bigger loans to members

of the group

bull can be used as emergency loans to members in times of need

Group savings enable

Credit facility Credit within the groupnce the group saving fund becomes big enough the group may decide to lend part of their funds to individual members to help them meet their short-term emergency credit needs These loans should be small and should be repaid in a short time so that other members can also use the fund

Credit with formal institutions The advantages of getting group credit from formal institutions are

bull a group can get more credit

bull members can assist each other in preparing loan applications

bull a group is in a better position to discuss credit with the organization or bank

bull the group can provide evidence of profitability of milk production in the area

Group loans are usually granted with group liability This means that each member is individually responsible for repaying his or her part of the group loan If any member fails to repay his or her part the other group members must repay it This rule ensures that all group members repay their part of the loan - otherwise the group will not be able to borrow from the bank again

Challenges With savings groups

Impediments

bull Some of the savings groups failed to figure out the savings utilization process

bull Challenge in keeping fund credit and accounts by semiliterate members is

commonplace Though some groups have few literate persons but they are not

capable enough to keep proper records of savings

bull It is seen that group members can manage small amount of savings money by

themselves but for big volume they need full assistance from CARE staffs

bull In maximum cases banks are reluctant to open group bank account due to

factors like policy of central bank and absence of proper registration of such

informal groups from government

bull However registration of the savings groups remains a challenge It is due to

complicacy of various preconditions rules and regulations of different ministries

of the government

Registration of savings groups

ldquo Registration of the savings group under agencies of government like ministry of Youth ministry of Women Affairs or ministry of cooperatives is important to provide farmers a legal recognition for their group This formal recognition will help farmers attain annual grant aid from government take financial loans from banks or from other microfinance institutionsrdquo

Importance and plans for registration

Importance of registration

(1) The annual grantaid from government departments will help the farmers in their group

mobilization after SDVC exits

(2) Registration will give the group recognition as a unique entity which will encourage farmers

to continue different group activities

(3) Extreme poor producers from registered group can get easy access to VGD card or other

aids (sewing machine cow etc)

(4) Other CARENon CARE Project may give prioritized support to the registered groups

(5) women affairs will work in awareness and empowerment issues with registered groups

They will also keep the group in close follow up through regular communication

Group registration plan

SDVC is actively facilitating the registration process with government ministries like Youth

Women Affairs and Cooperatives etc Though 50 of the groups will be eligible for

Registration by year 5 of the project but for governmentrsquos internal policies of enrolment SDVC

opts for registering 10 of the savings groups which will work as model groups for other dairy

Communities to be registered gradually in future

Success Of savings groups

Key successes

bull Savings help small-scale producers reduce their costs in ensuring access to

services and markets

bull In group activities higher participation rate is observed among the savings groups

than other non-saving groups

bull Savings group have become more organized than non-savings group

bull Savings group get easy access to different input and services eg groups can

easily purchase necessary inputs and services utilizing their savings and organize

regular vaccination and de-worming campaign with their savings money)

bull Savings groups also invest their money to purchase high breed cows for their

group members

bull The relatively large amount from savings can be used as collateral when a group

seeks credit from financial organization

Group savings

bull increase resources for potential group or individual activities and reduce

dependency on outsiders

bull serve as a form of ldquoinsurance against riskrdquo

bull improve a sense of group ownership and promote group repayment discipline

bull facilitate access to outside loans (banks are more willing to give loans to groups

that save)

bull can lower the costs of banking and can be used to give bigger loans to members

of the group

bull can be used as emergency loans to members in times of need

Group savings enable

Credit facility Credit within the groupnce the group saving fund becomes big enough the group may decide to lend part of their funds to individual members to help them meet their short-term emergency credit needs These loans should be small and should be repaid in a short time so that other members can also use the fund

Credit with formal institutions The advantages of getting group credit from formal institutions are

bull a group can get more credit

bull members can assist each other in preparing loan applications

bull a group is in a better position to discuss credit with the organization or bank

bull the group can provide evidence of profitability of milk production in the area

Group loans are usually granted with group liability This means that each member is individually responsible for repaying his or her part of the group loan If any member fails to repay his or her part the other group members must repay it This rule ensures that all group members repay their part of the loan - otherwise the group will not be able to borrow from the bank again

Challenges With savings groups

Impediments

bull Some of the savings groups failed to figure out the savings utilization process

bull Challenge in keeping fund credit and accounts by semiliterate members is

commonplace Though some groups have few literate persons but they are not

capable enough to keep proper records of savings

bull It is seen that group members can manage small amount of savings money by

themselves but for big volume they need full assistance from CARE staffs

bull In maximum cases banks are reluctant to open group bank account due to

factors like policy of central bank and absence of proper registration of such

informal groups from government

bull However registration of the savings groups remains a challenge It is due to

complicacy of various preconditions rules and regulations of different ministries

of the government

Registration of savings groups

ldquo Registration of the savings group under agencies of government like ministry of Youth ministry of Women Affairs or ministry of cooperatives is important to provide farmers a legal recognition for their group This formal recognition will help farmers attain annual grant aid from government take financial loans from banks or from other microfinance institutionsrdquo

Importance and plans for registration

Importance of registration

(1) The annual grantaid from government departments will help the farmers in their group

mobilization after SDVC exits

(2) Registration will give the group recognition as a unique entity which will encourage farmers

to continue different group activities

(3) Extreme poor producers from registered group can get easy access to VGD card or other

aids (sewing machine cow etc)

(4) Other CARENon CARE Project may give prioritized support to the registered groups

(5) women affairs will work in awareness and empowerment issues with registered groups

They will also keep the group in close follow up through regular communication

Group registration plan

SDVC is actively facilitating the registration process with government ministries like Youth

Women Affairs and Cooperatives etc Though 50 of the groups will be eligible for

Registration by year 5 of the project but for governmentrsquos internal policies of enrolment SDVC

opts for registering 10 of the savings groups which will work as model groups for other dairy

Communities to be registered gradually in future

Key successes

bull Savings help small-scale producers reduce their costs in ensuring access to

services and markets

bull In group activities higher participation rate is observed among the savings groups

than other non-saving groups

bull Savings group have become more organized than non-savings group

bull Savings group get easy access to different input and services eg groups can

easily purchase necessary inputs and services utilizing their savings and organize

regular vaccination and de-worming campaign with their savings money)

bull Savings groups also invest their money to purchase high breed cows for their

group members

bull The relatively large amount from savings can be used as collateral when a group

seeks credit from financial organization

Group savings

bull increase resources for potential group or individual activities and reduce

dependency on outsiders

bull serve as a form of ldquoinsurance against riskrdquo

bull improve a sense of group ownership and promote group repayment discipline

bull facilitate access to outside loans (banks are more willing to give loans to groups

that save)

bull can lower the costs of banking and can be used to give bigger loans to members

of the group

bull can be used as emergency loans to members in times of need

Group savings enable

Credit facility Credit within the groupnce the group saving fund becomes big enough the group may decide to lend part of their funds to individual members to help them meet their short-term emergency credit needs These loans should be small and should be repaid in a short time so that other members can also use the fund

Credit with formal institutions The advantages of getting group credit from formal institutions are

bull a group can get more credit

bull members can assist each other in preparing loan applications

bull a group is in a better position to discuss credit with the organization or bank

bull the group can provide evidence of profitability of milk production in the area

Group loans are usually granted with group liability This means that each member is individually responsible for repaying his or her part of the group loan If any member fails to repay his or her part the other group members must repay it This rule ensures that all group members repay their part of the loan - otherwise the group will not be able to borrow from the bank again

Challenges With savings groups

Impediments

bull Some of the savings groups failed to figure out the savings utilization process

bull Challenge in keeping fund credit and accounts by semiliterate members is

commonplace Though some groups have few literate persons but they are not

capable enough to keep proper records of savings

bull It is seen that group members can manage small amount of savings money by

themselves but for big volume they need full assistance from CARE staffs

bull In maximum cases banks are reluctant to open group bank account due to

factors like policy of central bank and absence of proper registration of such

informal groups from government

bull However registration of the savings groups remains a challenge It is due to

complicacy of various preconditions rules and regulations of different ministries

of the government

Registration of savings groups

ldquo Registration of the savings group under agencies of government like ministry of Youth ministry of Women Affairs or ministry of cooperatives is important to provide farmers a legal recognition for their group This formal recognition will help farmers attain annual grant aid from government take financial loans from banks or from other microfinance institutionsrdquo

Importance and plans for registration

Importance of registration

(1) The annual grantaid from government departments will help the farmers in their group

mobilization after SDVC exits

(2) Registration will give the group recognition as a unique entity which will encourage farmers

to continue different group activities

(3) Extreme poor producers from registered group can get easy access to VGD card or other

aids (sewing machine cow etc)

(4) Other CARENon CARE Project may give prioritized support to the registered groups

(5) women affairs will work in awareness and empowerment issues with registered groups

They will also keep the group in close follow up through regular communication

Group registration plan

SDVC is actively facilitating the registration process with government ministries like Youth

Women Affairs and Cooperatives etc Though 50 of the groups will be eligible for

Registration by year 5 of the project but for governmentrsquos internal policies of enrolment SDVC

opts for registering 10 of the savings groups which will work as model groups for other dairy

Communities to be registered gradually in future

Group savings

bull increase resources for potential group or individual activities and reduce

dependency on outsiders

bull serve as a form of ldquoinsurance against riskrdquo

bull improve a sense of group ownership and promote group repayment discipline

bull facilitate access to outside loans (banks are more willing to give loans to groups

that save)

bull can lower the costs of banking and can be used to give bigger loans to members

of the group

bull can be used as emergency loans to members in times of need

Group savings enable

Credit facility Credit within the groupnce the group saving fund becomes big enough the group may decide to lend part of their funds to individual members to help them meet their short-term emergency credit needs These loans should be small and should be repaid in a short time so that other members can also use the fund

Credit with formal institutions The advantages of getting group credit from formal institutions are

bull a group can get more credit

bull members can assist each other in preparing loan applications

bull a group is in a better position to discuss credit with the organization or bank

bull the group can provide evidence of profitability of milk production in the area

Group loans are usually granted with group liability This means that each member is individually responsible for repaying his or her part of the group loan If any member fails to repay his or her part the other group members must repay it This rule ensures that all group members repay their part of the loan - otherwise the group will not be able to borrow from the bank again

Challenges With savings groups

Impediments

bull Some of the savings groups failed to figure out the savings utilization process

bull Challenge in keeping fund credit and accounts by semiliterate members is

commonplace Though some groups have few literate persons but they are not

capable enough to keep proper records of savings

bull It is seen that group members can manage small amount of savings money by

themselves but for big volume they need full assistance from CARE staffs

bull In maximum cases banks are reluctant to open group bank account due to

factors like policy of central bank and absence of proper registration of such

informal groups from government

bull However registration of the savings groups remains a challenge It is due to

complicacy of various preconditions rules and regulations of different ministries

of the government

Registration of savings groups

ldquo Registration of the savings group under agencies of government like ministry of Youth ministry of Women Affairs or ministry of cooperatives is important to provide farmers a legal recognition for their group This formal recognition will help farmers attain annual grant aid from government take financial loans from banks or from other microfinance institutionsrdquo

Importance and plans for registration

Importance of registration

(1) The annual grantaid from government departments will help the farmers in their group

mobilization after SDVC exits

(2) Registration will give the group recognition as a unique entity which will encourage farmers

to continue different group activities

(3) Extreme poor producers from registered group can get easy access to VGD card or other

aids (sewing machine cow etc)

(4) Other CARENon CARE Project may give prioritized support to the registered groups

(5) women affairs will work in awareness and empowerment issues with registered groups

They will also keep the group in close follow up through regular communication

Group registration plan

SDVC is actively facilitating the registration process with government ministries like Youth

Women Affairs and Cooperatives etc Though 50 of the groups will be eligible for

Registration by year 5 of the project but for governmentrsquos internal policies of enrolment SDVC

opts for registering 10 of the savings groups which will work as model groups for other dairy

Communities to be registered gradually in future

Group savings enable

Credit facility Credit within the groupnce the group saving fund becomes big enough the group may decide to lend part of their funds to individual members to help them meet their short-term emergency credit needs These loans should be small and should be repaid in a short time so that other members can also use the fund

Credit with formal institutions The advantages of getting group credit from formal institutions are

bull a group can get more credit

bull members can assist each other in preparing loan applications

bull a group is in a better position to discuss credit with the organization or bank

bull the group can provide evidence of profitability of milk production in the area

Group loans are usually granted with group liability This means that each member is individually responsible for repaying his or her part of the group loan If any member fails to repay his or her part the other group members must repay it This rule ensures that all group members repay their part of the loan - otherwise the group will not be able to borrow from the bank again

Challenges With savings groups

Impediments

bull Some of the savings groups failed to figure out the savings utilization process

bull Challenge in keeping fund credit and accounts by semiliterate members is

commonplace Though some groups have few literate persons but they are not

capable enough to keep proper records of savings

bull It is seen that group members can manage small amount of savings money by

themselves but for big volume they need full assistance from CARE staffs

bull In maximum cases banks are reluctant to open group bank account due to

factors like policy of central bank and absence of proper registration of such

informal groups from government

bull However registration of the savings groups remains a challenge It is due to

complicacy of various preconditions rules and regulations of different ministries

of the government

Registration of savings groups

ldquo Registration of the savings group under agencies of government like ministry of Youth ministry of Women Affairs or ministry of cooperatives is important to provide farmers a legal recognition for their group This formal recognition will help farmers attain annual grant aid from government take financial loans from banks or from other microfinance institutionsrdquo

Importance and plans for registration

Importance of registration

(1) The annual grantaid from government departments will help the farmers in their group

mobilization after SDVC exits

(2) Registration will give the group recognition as a unique entity which will encourage farmers

to continue different group activities

(3) Extreme poor producers from registered group can get easy access to VGD card or other

aids (sewing machine cow etc)

(4) Other CARENon CARE Project may give prioritized support to the registered groups

(5) women affairs will work in awareness and empowerment issues with registered groups

They will also keep the group in close follow up through regular communication

Group registration plan

SDVC is actively facilitating the registration process with government ministries like Youth

Women Affairs and Cooperatives etc Though 50 of the groups will be eligible for

Registration by year 5 of the project but for governmentrsquos internal policies of enrolment SDVC

opts for registering 10 of the savings groups which will work as model groups for other dairy

Communities to be registered gradually in future

Challenges With savings groups

Impediments

bull Some of the savings groups failed to figure out the savings utilization process

bull Challenge in keeping fund credit and accounts by semiliterate members is

commonplace Though some groups have few literate persons but they are not

capable enough to keep proper records of savings

bull It is seen that group members can manage small amount of savings money by

themselves but for big volume they need full assistance from CARE staffs

bull In maximum cases banks are reluctant to open group bank account due to

factors like policy of central bank and absence of proper registration of such

informal groups from government

bull However registration of the savings groups remains a challenge It is due to

complicacy of various preconditions rules and regulations of different ministries

of the government

Registration of savings groups

ldquo Registration of the savings group under agencies of government like ministry of Youth ministry of Women Affairs or ministry of cooperatives is important to provide farmers a legal recognition for their group This formal recognition will help farmers attain annual grant aid from government take financial loans from banks or from other microfinance institutionsrdquo

Importance and plans for registration

Importance of registration

(1) The annual grantaid from government departments will help the farmers in their group

mobilization after SDVC exits

(2) Registration will give the group recognition as a unique entity which will encourage farmers

to continue different group activities

(3) Extreme poor producers from registered group can get easy access to VGD card or other

aids (sewing machine cow etc)

(4) Other CARENon CARE Project may give prioritized support to the registered groups

(5) women affairs will work in awareness and empowerment issues with registered groups

They will also keep the group in close follow up through regular communication

Group registration plan

SDVC is actively facilitating the registration process with government ministries like Youth

Women Affairs and Cooperatives etc Though 50 of the groups will be eligible for

Registration by year 5 of the project but for governmentrsquos internal policies of enrolment SDVC

opts for registering 10 of the savings groups which will work as model groups for other dairy

Communities to be registered gradually in future

Impediments

bull Some of the savings groups failed to figure out the savings utilization process

bull Challenge in keeping fund credit and accounts by semiliterate members is

commonplace Though some groups have few literate persons but they are not

capable enough to keep proper records of savings

bull It is seen that group members can manage small amount of savings money by

themselves but for big volume they need full assistance from CARE staffs

bull In maximum cases banks are reluctant to open group bank account due to

factors like policy of central bank and absence of proper registration of such

informal groups from government

bull However registration of the savings groups remains a challenge It is due to

complicacy of various preconditions rules and regulations of different ministries

of the government

Registration of savings groups

ldquo Registration of the savings group under agencies of government like ministry of Youth ministry of Women Affairs or ministry of cooperatives is important to provide farmers a legal recognition for their group This formal recognition will help farmers attain annual grant aid from government take financial loans from banks or from other microfinance institutionsrdquo

Importance and plans for registration

Importance of registration

(1) The annual grantaid from government departments will help the farmers in their group

mobilization after SDVC exits

(2) Registration will give the group recognition as a unique entity which will encourage farmers

to continue different group activities

(3) Extreme poor producers from registered group can get easy access to VGD card or other

aids (sewing machine cow etc)

(4) Other CARENon CARE Project may give prioritized support to the registered groups

(5) women affairs will work in awareness and empowerment issues with registered groups

They will also keep the group in close follow up through regular communication

Group registration plan

SDVC is actively facilitating the registration process with government ministries like Youth

Women Affairs and Cooperatives etc Though 50 of the groups will be eligible for

Registration by year 5 of the project but for governmentrsquos internal policies of enrolment SDVC

opts for registering 10 of the savings groups which will work as model groups for other dairy

Communities to be registered gradually in future

Registration of savings groups

ldquo Registration of the savings group under agencies of government like ministry of Youth ministry of Women Affairs or ministry of cooperatives is important to provide farmers a legal recognition for their group This formal recognition will help farmers attain annual grant aid from government take financial loans from banks or from other microfinance institutionsrdquo

Importance and plans for registration

Importance of registration

(1) The annual grantaid from government departments will help the farmers in their group

mobilization after SDVC exits

(2) Registration will give the group recognition as a unique entity which will encourage farmers

to continue different group activities

(3) Extreme poor producers from registered group can get easy access to VGD card or other

aids (sewing machine cow etc)

(4) Other CARENon CARE Project may give prioritized support to the registered groups

(5) women affairs will work in awareness and empowerment issues with registered groups

They will also keep the group in close follow up through regular communication

Group registration plan

SDVC is actively facilitating the registration process with government ministries like Youth

Women Affairs and Cooperatives etc Though 50 of the groups will be eligible for

Registration by year 5 of the project but for governmentrsquos internal policies of enrolment SDVC

opts for registering 10 of the savings groups which will work as model groups for other dairy

Communities to be registered gradually in future

Importance and plans for registration

Importance of registration

(1) The annual grantaid from government departments will help the farmers in their group

mobilization after SDVC exits

(2) Registration will give the group recognition as a unique entity which will encourage farmers

to continue different group activities

(3) Extreme poor producers from registered group can get easy access to VGD card or other

aids (sewing machine cow etc)

(4) Other CARENon CARE Project may give prioritized support to the registered groups

(5) women affairs will work in awareness and empowerment issues with registered groups

They will also keep the group in close follow up through regular communication

Group registration plan

SDVC is actively facilitating the registration process with government ministries like Youth

Women Affairs and Cooperatives etc Though 50 of the groups will be eligible for

Registration by year 5 of the project but for governmentrsquos internal policies of enrolment SDVC

opts for registering 10 of the savings groups which will work as model groups for other dairy

Communities to be registered gradually in future

• Strengthening the Dairy Value Chain in Bangladesh
• Slide 2
• Slide 3
• ldquo The project has employed a group approach to mobilising farmers From engagement farmers progress through categories C B and A (chronologically) graduating from C to B to A on the basis of their skill and competency acquisition rdquo
• Slide 5
• Group Savings Prospect amp Progress
• Slide 7
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