Promoting sustainable and responsible business practices in four agricultural value chains of Nepal

Promotion of sustainable enterprises in the four agricultural value chains of tea, cardamom, ginger, and dairy in post-conflict Nepal helped build local capacities to advocate for socially responsible labour practices. The successful experience in the tea value chain brought about positive ripple effects in fostering a culture of dialogue and collaboration in other agricultural value chains, giving a boost to promoting sustainable enterprises in Nepal.

In 2015, Nepal was a country recovering from a decade-long conflict. The structural weaknesses of the economy and the lack of incentives for investment hampered private sector development and job creation. Recognizing the essential roles of the private sector for employment generation, the Danish-funded UNNATI-Inclusive Growth Program in Nepal aimed to promote sustainable and inclusive growth for poverty reduction and to raise the country’s living standards. The ILO led Advocacy for Rights and Good Corporate Governance (2015-2018), a sub-component of the UNNATI project that promoted responsible business development.

Inclusive growth and job creation in the agricultural sector: a development priority

The agriculture sector is the economic backbone of Nepal. It provides livelihoods for two-thirds of the population and accounts for one-third of the country’s gross domestic product. ILO’s activities in the value chains of tea, ginger, dairy, and cardamom industries – all identified priority sectors in the government’s development plans - focused on raising awareness on the labour dimension of corporate social responsibility (CSR) based on the principles of the ILO MNE Declaration and the 1998 Declaration on Fundamental Principles and Rights at Work. The ILO MNE Declaration especially served as a guiding instrument to help maximise the benefits that trade across productive value chains could bring in terms of employment creation and broader socio-economic development, while addressing the decent work challenges that stem from business operations and the complexities associated with value chain structures. In 2015, an ILO-supported national tripartite-plus conference on sustainable and responsible business practices involved relevant ministries as well as representative employers’ and workers’ organizations.

Building capacity of value chain actors to advocate for responsible business practices

The ILO supported a joint effort of the Nepalese government, workers’ and employers’ organizations, cooperatives, NGOs, farmers’ associations, media as well as commodity associations to advance sustainable and responsible business. Through the Advocacy Challenge Fund (ACF), ILO technical assistance promoted dialogue among the value chain stakeholders. It did so by engaging them through evidence-based advocacy and policy dialogues while helping reinforce their capacities to advocate for and to put into practice the principles of the ILO MNE Declaration, including the Fundamental Principles and Rights at Work. Training-of-trainer workshops were organised to develop a pool of local experts on these topics to facilitate further promotion of decent work in the target industries. A total of 821 activities were organised with the support of the Advocacy Challenge Fund, including 232 workshops, 208 trainings, and 18 public-private dialogues.
ILO experts provided direct technical assistance as resource persons for ILO constituents during multi-stakeholders dialogues, awareness-raising seminars and a weeklong training programme on the MNE Declaration. Moreover, an ILO specialist on occupational safety and health (OSH) provided hands-on training in the target value chains to help improve the safety and living and working conditions of workers.

Establishment of a Tea Task Force for enhanced social dialogue

In 2017 and 2018, the ILO supported 13 workshops and training activities on the ILO MNE Declaration to build the capacity of stakeholders in the tea sector to stimulate the uptake the principles of the MNE Declaration. Given that improving occupational safety and health in this sector was a decent work priority, over 60 events were organised in the tea sector to help improve the safety and living and working conditions of women and male farmers.

During an ILO-supported tripartite-plus workshop on responsible business conducted in Ilam’s tea sector in eastern Nepal in May 2016, participating stakeholders identified the key decent work challenges in their value chains resulting in the establishment of the “Task Force on Quality Tea through Promoting Responsible and Sustainable Business Practices in the Tea Sector.” The Taskforce aimed at promoting the production of high quality tea based on improved working conditions in the tea production process. This initiative became a national initiative when the ILO organised in July 2017 a Tea Task Force tripartite-plus meeting in Kathmandu. Representatives of the government, workers’ and employers’ organizations and other relevant stakeholders came together to discuss and identify challenges for advancing responsible business practices as well as concrete joint-actions to address them across the entire tea value chain. This tripartite-plus dialogue involving national and district level partners from across the seven districts, led to the unanimous election of the representative of the Federation of Nepalese Chamber of Commerce and Industry (FNCCI) as the Chairperson of the Task Force, and the adoption of the Terms of Reference for the Task Force.

In 2018, the Tea Task Force successfully advocated for the government to take action against tea factories that were reluctant to pay the minimum wage to the tea workers as per the New Labour Act 2017. The Ministry of Labour, Employment and Social Security (MoLESS) announced the establishment of a High-Level Task Force in September 2018 to tackle existing broader problems and challenges in the tea value chain, including minimum wage issue. The MoLESS coordinated this High Level Task Force, comprised of the representatives of the government, Joint Trade Union Coordination Center (JTUCC), Federation of the Nepalese Chambers of Commerce and Industry (FNCCI) and the Nepal Tea Producers’ Association.

Today, the Tea Task Force, created in 2016 with support from the ILO, acts as an autonomous entity. Dialogue amongst the value chain actors continued after the closure of the UNNATI programme. It continued to function as an advocacy group to defend the rights of the industry stakeholders and to negotiate their common interest with the other actors. For example, it initiated policy proposals with the local, provincial and federal governments to improve the competitiveness of the tea sector. These included the registration and promotion of a tea trademark logo (Nepal Tea: Quality from the Himalayas); the revision of land taxes and tea-related policies; and implementation and dissemination of good OSH practices in the sector. As a result of these advocacy efforts, the federal government revised its tea policy, and developed and circulated guidelines to avoid multiple taxes at province and local levels. Additionally, the provincial cabinet declared Province #1 as tea priority zone, and Suryodaya Municipality, one of the major production hub for tea, succeeded in fixing a base rate for tea leaves to protect the income of smallholder farmers.

Ripple effect across the Nepalese value chains

ILO interventions allowed for beneficial ripple effects on responsible business practices both within and amongst the different value chains. The successful outcome of the Tea Task Force efforts in the upward revision of minimum wages in the tea farms and factories inspired actors in the ginger and cardamom sectors to install a similar industry dialogue platform for joint action. A Cardamom Task Force was established as well as a Ginger Network. Both platforms aim to promote decent work through showcasing of good practices, improved competitiveness and increased dialogue across their value chains.

Moreover, the process produced a positive spin-off among the cooperatives who were crucial partners of the project. First, the Confederation of Nepalese Industries, the National Cooperative Federation (NCF) and the District Cooperative Union Limited (DCUL) developed with ILO technical support a ‘code of conduct’ on responsible business practices for the four agricultural value chains. Over 500 cooperative leaders and members of NCF and DCUL participated in sensitization workshops for the roll-out of the code of conduct. Secondly, ILO training on accounting management helped cooperatives in the dairy sector better manage their business through elaboration of business plans. 75% of the participating dairy cooperatives prepared business plan and communicated their plan with dairy value chain actors and later shared their experience and learning with their peers. Clearly, the ILO interventions resulted in fostering a culture of collaboration amongst the cooperatives and advanced dialogue amongst the different local stakeholders operating along the value chains.

The way forward

Through concrete and supporting activities of the project, the ILO was able to bring together numerous organizations for an informed dialogue to help advance the common objective of generating more and better jobs through socially responsible labour practices in four key value chains in Nepal. The value chain actors continue to engage with each other to promote sustainable and responsible business, and are looking into ways to further scale-up their dialogue platforms for joint action.