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Co-ops to get cash subsidy, customs duty exemption

KATHMANDU, FEB 09 -
The Ministry of Agriculture and Cooperatives (MoAC) has endorsed guidelines on providing financial grants and discounts on customs duty to cooperatives and their central associations.

The procedure has specified the degree and extent of government support besides the criteria to be eligible to get the subsidies.

“The working procedure has aimed at providing cash subsidies to underprivileged communities engaged in cooperatives farming,” said DoC Registrar Sudarshan Prasad Dhakal who is also the member secretary of the committee formed to implement the scheme.

The seven-member committee is headed by the agriculture secretary. It has recommended that the government provide up to 50 percent of the investment required except the cost of the land to those involved in cooperative farming. “However, the subsidy will not go beyond Rs 1.5 million,” states the guidelines.

The government can provide subsidies on machinery of up to 50 percent of the total cost to agriculture processing factories, according to the guidelines. “However, the subsidy will not be more than Rs 1 million,” states the procedure.

The government had announced in the budget that subsidies would be provided to purchase machines for agriculture processing factories that are used for processing products such as cardamom, tea, coffee, orange, betel nut, honey, hog plum and dairy items. 

Cooperatives applying for the subsidies are required to submit a working plan regarding the establishment of the enterprise and its scheme and potential. Likewise, 80 percent of the raw materials used must be domestic, and local manpower should be employed for a cooperative to be eligible to receive the grant. Cooperatives are allowed to operate a production plant jointly. However, a cooperative engaged in more than one production unit will be barred from getting the subsidy, says the working procedure.

Similarly, cooperatives that do not produce evidence that they have held annual general meetings for the last two years, have not held new elections or have become inactive will also be ineligible to get the facility. The committee will recommend to the Finance Ministry that the cooperatives that have held annual general meetings regularly be given the subsidies. Similarly, the cooperatives that have had their transactions audited will be recommended for exemption of customs duty on the import of machinery and vehicles.

The cooperatives should also have been providing service to more than 100 members, have annual transactions of more than Rs 1 million, have access to storage and transportation and have been engaged in an enterprise related to perishable farm goods.

Likewise, the working procedures has provisioned that the committee could recommend for customs duty exemption on the import of tractors and other agricultural machinery for cooperatives that are engaged in collective farming. However, the farm should have a minimum area of 50 ropanis in the mountain and hill regions and 8 bighas in the Tarai.

Cooperatives receiving grants from the government are not allowed to sell their production plant for the next 10 years. If it is necessary to sell the machinery, they have to obtain the approval of the Department of Cooperatives.

“If any cooperative fails to start the planned enterprise on time and sells the plant before the deadline after getting the subsidy, it will have to pay back the entire amount of the subsidy plus a 10 percent fine,” states the working procedure. The cooperatives are also required to employ Nepali workers if they require unskilled workers, but they are allowed to hire foreigners if skilled Nepali workers cannot be found.

Dhakal said that they would monitor the cooperatives to make sure that the grants are being utilized properly.  The government has announced several measures to help cooperatives in farm production as they have been identified as a pillar of the national economy.


Posted on: 2012-02-10 10:33

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