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FEATURE STORY November 1, 2018

Nepal: Seizing Opportunity by the Teeth

This feature story is an outcome of infoDev, a multi-donor program administered by the World Bank Group, with a focus on entrepreneurs in developing economies. This story was originally published on August 7, 2017. 

High up in the Himalayas, where yak have roamed the mountainsides for centuries, generation after generation of Nepalese have leisurely chewed on a cheese known as churpi. Made in part from yak milk, churpi is hard at first but softens into a consistency similar to chewing gum to slowly dissolve in a tangy taste.

A few industrious Nepalese entrepreneurs came up with a way to expand churpi’s marketability beyond Nepal’s traditional food sector and tap into a global market worth billions of dollars: the pet food industry.

Today, churpi has quickly become an international market hit, refined, adapted, and sold as a dog chew.

Mohindra Singh Judge is one of the inventive entrepreneurs that saw churpi’s money-making potential. He started selling churpi in 2011, until one day he saw an opportunity to scale up operations and enter the pet food industry.

“Churpi is a 100% natural product, handmade through traditional methods and natural ingredients, like milk, lime juice, and salt. Although it’s known locally as a traditional snack, overseas it has become very popular as dog chew,” says Judge. “It’s considered one of the best chews by veterinarians in its product category.”

Today, his company, Godawari International, is one of the largest processors of high-quality churpi in the country, with exports to India, Japan, Taiwan, Canada, and the United States. Godawari procures and processes its products through direct trade relationships with over 2,000 farmers in the eastern Himalayas.

In these remote areas, every day local farmers collect milk from free-range bovines — yak, cows, and chauri, a hybrid of yaks and cows. The milk is then transported to the nearest micro-dairy where churpi and nauni (butter) are produced. In a month, 40-50 micro-dairies can collect about 250,000 liters of milk to produce 10 tons of churpi and generate income for roughly 500-600 farmers.

To complete the process, the churpi is delivered to Godawari’s processing plant where it’s sorted for quality, then cut, processed, treated, inspected, and finally sent to local distributors and exporters.

Early last year, infoDev — a multi-donor program of the World Bank Group’s Trade & Competitiveness Global Practice, a joint practice of the World Bank and International Finance Corporation (IFC) — began working with Judge to grow his business even further. Godawari was selected to participate in the pilot phase of the Nepal Agribusiness Innovation Center (AIC) — a new business hub developed by the World Bank Group and Nepal’s Ministry of Agricultural Development to increase the competitiveness and growth of local agro-processing companies through coaching, training, market linkages, and investment facilitation.

In order to expand, the company needed to access capital. One of the first options considered was Business Oxygen (BO2), a Nepal-based fund that is part of IFC’s SME Ventures initiative. The fund combines risk capital financing with advisory support to help small and medium-sized enterprises develop fundamental financial systems, quality-assurance standards, and corporate governance frameworks.

“Funds like Business Oxygen are best suited for entrepreneurs with significant growth potential who also have the right skill set and technical preparation,” says Siddhant Raj Pandey, BO2’s CEO. “Business-supporting programs like the Agribusiness Innovation Center are key to developing and expanding markets; they help local companies access the expertise and resources they need to scale, while also providing venture funds with a competitive pipeline of investment-ready companies.”

To help Godawari access new funding, infoDev helped the company refine its business plan, prepare for due diligence, and apply for investment. As a result, in less than a year, Godawari was able to secure an NPR 50 million (about $500,000) equity investment from BO2.

“Before infoDev’s support, we faced several challenges in working with local banks and analyzing investment decisions,” says Judge, Godawari’s founder. “We could not afford to hire the legal, financial, or technical experts needed to develop a business plan or even develop a proper accounting system. infoDev has carefully assessed Godawari International, identifying the improvements needed to further increase profitability and achieve our organizational goals.”

The capital raised will help Godawari scale its operations and reach new markets around the world. When asked where his company will be in five years, Judge describes a modern enterprise focused on improving quality, reducing costs, and increasing production through strategic investment in technology.

“These efforts will help us expand into new markets in the European Union, United Kingdom, Australia, and China, while also adding other authentic Nepali foods to our product line, like ghee (butter),” he says. “Ultimately, what we really want is to help generate employment in Nepal and improve the livelihood of farmers in remote Himalayan regions.”

Building on the success and lessons learned from Godawari, the Agribusiness Innovation Center will support over 150 high-growth agro-processing companies over the next 18 months. The center was officially launched in April 2017. It was made possible with support from the Nepal’s Ministry of Agricultural Development-World Bank Group Project for Agriculture Commercialization and Trade, and technical assistance provided by infoDev with funding from the governments of Finland, Norway, and Sweden.