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PMSD Toolkit

Project Name: Managing Risk through Economic Development(M-RED), implemented by Mercy Corps

Country: Nepal

Timeframe: Phase 1 (2013 – 2016)

Sector: Sugarcane and Banana as part of resilience strategy

Unique Features: Explicit synergy between market systems and resilience during program design, analysis and implementation

Use cases covered by this case study: 

Tools used in this case study:

Case Study

Can MSD build resilience in fragile contexts?

The M-RED project implemented by Mercy Corps showcases a unique hybrid of market systems approaches and resilience building approaches aimed at disaster risk reduction. The project worked in agricultural market systems in the Far West Terai region of Nepal with high potential to boost incomes while reducing exposure to floods and droughts in communities.

As part of the market analysis, the project team identified a number of systemic constraints for this remote part of Nepal including access to capital, financial literacy, access to markets and extension services. With many overlapping constraints, disaster risk reduction has rarely been prioritized as part of farming or household decision-making. The community faces numerous risks, but the greatest is unpredictable swelling rivers driven by monsoons, deforestation and broader climate changes.

Ultimately, the market system selection landed on two ‘nexus’ crops which promised to change the underlying ecological risks related to flooding while offering a market incentive to change farmer behaviour. Sugarcane was selected because it can be planted on riverbanks that are prone to erosion, reclaiming riverbeds and preventing river cutting and future flooding. It offers potentially large markets but faces a history of cyclical phases of market expansion and contraction. Banana was selected as a high-value cash crop with a stable market more accessible to women, that can replace rice paddy areas that are also prone to flooding.

M-RED brought together community members and community disaster management committees for participatory resilience and market assessments, which included shock and stress mapping and market analysis. These approaches clearly draw on many of the PMSD core principles, and the exercises helped inform farmers about disaster risk and introduce the idea of economic opportunities that can reduce risks. Later, as part of its intervention strategy the project applied a range of facilitation tactics and activities to generate multi-stakeholder partnerships to support sugarcane production:

  • A local private sector sugar mill signed an MOU to purchase sugarcane; contributed to training curriculum, and later gave inputs to farmers on credit and leased machinery to support land preparation.
  • The district agricultural office provided technical inputs on training curriculum, paid for trainings, and signed MOU with the mill and farmers
  • Local agricultural input suppliers provided access to relevant seeds and fertilizers specific to the varieties of sugarcane
  • Smaller ‘agro-vets’ at a community level delivered extension services to farmers; monitored demonstration plots; and helped deliver key inputs.

Farmers were initially skeptical of the commercial benefits of farming sugarcane given their experience seeing periods of oversupply and price collapse. Following the participatory disaster risk analysis, farmers shifted their thinking to promote sugarcane for its ecological and flood prevention benefits, perceived to outweigh the economic risks. Parallel resilience interventions that encouraged building green infrastructure and linking villages to existing community-based early warning systems reinforced this new way of thinking.

Project support kick-started activity but decreased over time: from 50% support for input production costs in Year 1 to 15% in Year 3, when the project ended. Ultimately the underlying partnership between market actors reinforced the new behaviours: After one successful growing season, the mill was more willing to provide improved saplings, fertilizer and pesticides at discount to ensure its own supply. And farmers saw immediate flood reduction and crowded in to plant more sugarcane.

Beyond the direct project areas, farmers in nearby communities also shifted to sugarcane production based on the observed benefits, and new investments in both sugar and molasses mills helped to accommodate this demand. For inputs and extension services, the project’s emphasis on private agro-vets overcame a historical problem of weak (public sector) extension capacity. The market for agro-vet services quickly grew based on their proven expertise and commitment to local farmers.

Overall, the investment led to a rapid increase in the sugarcane produced in the area. In 2015, the local sugar mill was overwhelmed and unable to purchase all excess supply prior to the new mills being operational, and in some instances farmers abandoned or even burned their crops. This highlights the complex trade-offs between ecological and economic risk management. Post project analysis concluded that diversification (beyond just a single crop) is crucial to manage risk more holistically.

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