There have been some negative comments in the Nepali media on the Bhote Kosi hydro project ('The price we pay for power', #142) and a rebuttle from Panda Energy International ('Misleading and inaccurate', #144) regarding the power purchase agreement with the Nepal Electricity Authority (NEA). Trust the Nepalis to completely miss the silver lining in the pockets of shareholders. There is much to thank the promoters for, especially their pioneering work in establishing a few basic principles on how to get rich: Assured market, Business price determined only on the cost of production, and payment in hard Currency. These are the 'ABCs' of joint venture foreign investment in Nepal.
There is no doubt that we will quickly become a nation of rich people (or at least rich shareholders) if we follow these principles. Better still, if we apply the same to the dairy industry the resulting flood of milk would be a Kosi, a dudh Kosi in fact.
The first step in any enterprise is ensuring a market for the product, even though it is plagued by fickle customers and suppliers who undercut each other. Even worse is if selective purchase results in wastage. The first principle then is to force the market to pay for everything produced, thereby creating a captive market. The product must be collected from the place of production: a very important consideration in our roadless country, and absolutely necessary during strikes. If the cow, buffalo or yak is milked, payment must be made.
The second principle is determining price. Right now, the government does a rather unfair job that fails to take into consideration the high cost of production due to special "Nepali Conditions" (read rock bottom productivity). They also assume labour costs are low. One way around would be to give a modest salary, perhaps in dollars, to the dairy farmers and especially women who do most of the work, which brings up the third principle.
Payment has to be made in hard currency if there is foreign equity involved to protect against the steady devaluation of the local currency. Additionally, it ensures a steady stream of foreign investment, the mantra of all economic development. Once the government agrees to buy all the milk produced in a price that is solely dependent on the cost of production (and not current market prices) and to pay for the milk in hard currency, foreign investors will come in hordes to invest in Nepal-SARS or the Maoists be damned.
There is one last trick. The government can easily go back on its word so it is important to have strong support. In Nepal, the shareholders of the Bhote Kosi project have very powerful backers who don't shy away from using force-money, missiles or marines-to get what they want.
To sum up, I propose a multimillion dollar dairy farm, financed almost exclusively by citizens and banks of a certain superpower. The government is to buy all the milk at the site of production and pay in dollars with an annual increase in purchase price linked to the US inflation rate. The purchase price will include a reasonable salary for farmers and include a steady return on the investment, no matter how expensive the investment proves to be. I am even willing to gift the government all the dairy animals after 30 years. Is anyone willing to join me in this venture?
There have been some negative comments in the Nepali media on the Bhote Kosi hydro project ('The price we pay for power', #142) and a rebuttle from Panda Energy International ('Misleading and inaccurate', #144) regarding the power purchase agreement with the Nepal Electricity Authority (NEA).
Trust the Nepalis to completely miss the silver lining in the pockets of shareholders. There is much to thank the promoters for, especially their pioneering work in establishing a few basic principles on how to get rich: Assured market, Business price determined only on the cost of production, and payment in hard Currency. These are the 'ABCs' of joint venture foreign investment in Nepal.
There is no doubt that we will quickly become a nation of rich people (or at least rich shareholders) if we follow these principles. Better still, if we apply the same to the dairy industry the resulting flood of milk would be a Kosi, a dudh Kosi in fact.
The first step in any enterprise is ensuring a market for the product, even though it is plagued by fickle customers and suppliers who undercut each other. Even worse is if selective purchase results in wastage. The first principle then is to force the market to pay for everything produced, thereby creating a captive market. The product must be collected from the place of production: a very important consideration in our roadless country, and absolutely necessary during strikes. If the cow, buffalo or yak is milked, payment must be made.
The second principle is determining price. Right now, the government does a rather unfair job that fails to take into consideration the high cost of production due to special "Nepali Conditions" (read rock bottom productivity). They also assume labour costs are low. One way around would be to give a modest salary, perhaps in dollars, to the dairy farmers and especially women who do most of the work, which brings up the third principle.
Payment has to be made in hard currency if there is foreign equity involved to protect against the steady devaluation of the local currency. Additionally, it ensures a steady stream of foreign investment, the mantra of all economic development. Once the government agrees to buy all the milk produced in a price that is solely dependent on the cost of production (and not current market prices) and to pay for the milk in hard currency, foreign investors will come in hordes to invest in Nepal-SARS or the Maoists be damned.
There is one last trick. The government can easily go back on its word so it is important to have strong support. In Nepal, the shareholders of the Bhote Kosi project have very powerful backers who don't shy away from using force-money, missiles or marines-to get what they want.
To sum up, I propose a multimillion dollar dairy farm, financed almost exclusively by citizens and banks of a certain superpower. The government is to buy all the milk at the site of production and pay in dollars with an annual increase in purchase price linked to the US inflation rate. The purchase price will include a reasonable salary for farmers and include a steady return on the investment, no matter how expensive the investment proves to be. I am even willing to gift the government all the dairy animals after 30 years. Is anyone willing to join me in this venture?
(Kabindra Pradhan has a farm in Butwal and runs a furniture factory in Kathmandu.)
