A clear understanding and definition of the operational scope and boundaries of cooperatives and private businesses involved in the production, marketing, and export of goods and services are of the utmost importance for enhancing national competitiveness. This shows the generalized operational scope and vertical integration of coops with corporate and private businesses to raise national competitiveness in agricultural production, marketing, and exports. In order to be successful, cooperatives and private businesses should actively communicate, collaborate, and coordinate their production, processing, and marketing initiatives. Corporate and private businesses must be more responsive to national/regional and global factors whereas cooperatives must be more responsive to local and national/regional factors.

The Dairy Development Commission was converted to the Dairy Development Corporation (DDC) in 1969, which initiated a milk producer’s orientation program in 1981 and encouraged milk producers to form Milk Producers Associations, which were similar to cooperatives.

Nepal’s dairy sector can be viewed as an example of a somewhat vertically integrated structure in its development. Nepal’s dairy development began with the establishment of Yak Cheese factory in Langtang in 1952 followed by the establishment of dairy cooperatives in Tusal village, Kavre, the formation of the Dairy Development Commission in 1955, and the establishment of the first Central Dairy Plant in Lainchaur in 1956.

The Dairy Development Commission was converted to the Dairy Development Corporation (DDC) in 1969, which initiated a milk producer’s orientation program in 1981 and encouraged milk producers to form Milk Producers Associations, which were similar to cooperatives. The DDC took initiative in converting MPAs into Milk Producer’s Cooperative Societies in 1989. The MPCSs collect milk from the farmers and bring it to milk chilling centers operated by DDC or other private companies.

This three-tier model of dairy development through cooperatives may serve as an example for the establishment and development of other agricultural cooperatives in Nepal.

Thus, at the local level MPCSs play a critical role in production, storage, and marketing of milk, while at the regional level the District Milk Producer’s Cooperative Unions (DMPCUs) are established to support MPCSs in their milk production, delivery, and the general uplift of the living conditions of the milk producers. At the central level, the Central Dairy Cooperative Association Limited Nepal (CDCAN) was established in 1993 to provide support for MPCs and DMPCUs while increasing benefits to the milk producers and enhancing self-reliance on dairy products. By 2010, there were 1,603 MPCSs and 36 DMPUs in Nepal. This three-tier model of dairy development through cooperatives may serve as an example for the establishment and development of other agricultural cooperatives in Nepal.

As Nepalese agriculture is characterized by a resource-limited, smallholder mixed-farming production system, the vertical integration of cooperatives with private businesses will help Nepal in attracting domestic and foreign investments in agriculture, connecting Nepalese agriculture to global markets, protecting small farms from disappearance, consolidating fragmented lands, and installing farm improvement measures. Cooperatives engaged in land-banking will be very helpful for the consolidation of farmlands.

The proposed vertical integration of cooperatives with private and public sectors fits well with the public, private and cooperative model envisioned by the government of Nepal.

Conclusion

As cooperatives include one of the three pillars of national economic development (public, private and cooperative) in Nepal, it is important to enhance the strength, effectiveness, functionality, and outputs from cooperatives in a very transparent and accountable way. Nepal’s federal government makes the national cooperative policies, the provincial governments manage cooperatives at the provincial level, and the local governments implement cooperative policies locally.

Therefore, it is important for cooperatives to clearly define the scope and boundary of their activities, identify opportunities at the grassroots level, and enhance work performance. In this context, NGOs like Asta-Ja and other entities can play an important role. The proposed vertical integration of cooperatives with private and public sectors fits well with the public, private and cooperative model envisioned by the government of Nepal. For a fast-paced socio-economic transformation of Nepal, an effective cooperative movement based on the Asta-Ja Framework, vertical integration of cooperatives with private businesses, and globalization are highly recommended.