As dawn breaks, thousands of farmers in the villages of southern Lalitpur carry small jerricans of milk and walk down the winding trails. The fat content of the milk is measured, and the milk is poured into big cans, and loaded into the vans that supply Kathmandu. The farmers have a smoke and tea at the shop, chat about business and then trek back to their homes.

If you are flying into Kathmandu, the villages of southern Lalitpur glide by below the wing five minutes before landing. Yet, until 15 years ago, these villages were as remote and poor as the remotest parts of roadless Nepal. But thanks to two feisty farmers-Ram Prasad Banjara of Bhukhel and Bhim Prasad Gautam of Ghusel villages-who pioneered the dairy industry here in 1985, milk has transformed the area and generated income for some 5,000 families.

The 20 Village Development Committees of southern Lalitpur currently supply up to 18,000 litres of fresh milk to the Dairy Development Corporation (DDC) and 6,500 litres to other private dairies in Kathmandu. The remaining 7,000 litres are consumed locally, or converted into khuwa. All this earns the villagers a stunning Rs 150 million a year.

Before 1981, the villagers had no access to a market for fresh milk, and so they boiled all the milk down to khuwa and ghiu. The huge quantities of firewood this needed devastated the Mahabharat forests, contributing to the unprecedented flash floods and landslides of 1981.

But the road from Tika Bhairab changed everything. It was possible to get fresh milk down to the city, and business boomed so fast, the DDC set up a chilling centre of 11,000 litre- capacity to store milk.

There is a lesson here in the hills of southern Lalitpur for the architects of Nepal's Tenth Five-Year Plan: Nepali villagers can do very well without central planning, thank you. They can help themselves, and if the Tenth Plan is to focus on agriculture development and poverty alleviation then it has to encourage farmers like those here with a very simple thing like gaining access to markets.
Dairy farming is risky and complex business. The buffaloes get sick, milk production falls, a small mistake could sour milk easily. Selling milk to dairies involves multiple transactions, and yet farmers in Lalitpur have managed it.

There are thousands of milk producers and hundreds of porters organised under 49 active milk production cooperatives. Farmers handle this complex network, and carry out the transactions smoothly without much of a fuss. Four years ago they also formed a district federation of milk cooperatives to safeguard farmers' interests. They did all this without outside assistance.

The result is there for all to see: an area of Nepal that was chronically short of food nearly half the year is now self-sufficient.

Imported cross-bred lahure bhaisi cost up to Rs 40,000 each. They are from India and not used to the terrain, so they are stall-fed. Farmers grow their own fodder in their bari, and the manure from the stalls recycles nutrients into the farmers' vegetable gardens. Some have built biogas plants, so they don't need firewood anymore. Most farmers invest in new buffaloes with the money they save. There are now over 4,000 buffaloes in the area, and 1,000 new buffaloes are imported every year.

In a sense this is a totally laissez faire economy-the government is nowhere to be seen. There is no livestock development programme in the villages, there are no soft loans for farmers, there is no government veterinarian service. The farmers here have decided there is no point waiting for the government to deliver. They now rely completely on the free market.

Development activities implemented by foreign-aided projects in the area may have played some role in developing southern Lalitpur's dairy industry, but they haven't been as reliable as the farmers' own initiatives. The EU-funded milk cable car to bring fresh milk from outlying villages worked for a while, but stopped operating in early 2001. It left in a lurch hundreds of farmers who had depended on the ropeway for access to the road.

Foreign funded project come with a flurry of jargon-filled activities: rapid appraisals, needs assessment, skills-training for income generation, communication and financial management. There are periodic meetings to monitor progress and benefit sharing, and empower villagers, there are coordination meetings and workshops, where guidelines for sustainable development are prepared. But as soon as the foreign cash runs out, the activities come to a halt. Farmers are left high and dry, with no visible change in their living conditions.

What was the catalyst in southern Lalitpur? How did the farmers organise? How did they form groups, train themselves in accessing loans and husbanding buffaloes, coordinating among milk producers and milk transporters, managing to obtain quality fodder, securing finance, keeping records of transactions, punishing defaulters, receiving veterinary services, getting rid of animals after they ceased producing milk profitably? Who inspired thousands of farmers? Who taught them the skills and techniques of milk production and marketing? How did the leadership develop?

The answers to these are complicated, but they present significant lessons for development practitioners. Like Ilam and some other parts of Nepal, Lalitpur villagers have taken their destiny in their own hands. And this could represent the most effective model for poverty reduction and rural development in Nepal. There is no need to learn from Uganda, learn from Lalitpur.

(Madhukar Upadhya worked as a watershed manager in southern Lalitpur between between 1986 and 1998.)