Up along a winding road that hugs the steep, verdant hills of a village in northern Pakistan, the Khana Mori Dairy Association meets in a small wooden shed that serves as their office. They are discussing ways to increase milk production from their buffalos since the milk chiller business next door wants to buy more milk from them. Selling more milk could increase their daily income but it also would require more inputs and, for the women who form the majority of the association, additional time away from their household responsibilities. Also, they discussed whether it would be more profitable to use any additional milk produced for yogurts, cheeses, or other value-added foods.

In a country whose stability is threatened by the Taliban and where the voices of women are often diminished, the association's thoughtful deliberation on the growth of their microenterprises is remarkable in several ways. But even more extraordinary is how they emerged from the destruction that characterized the area nearly five years ago. On October 8, 2005, a massive earthquake struck this area in northern Pakistan along the disputed territory of Kashmir.¹ Considered Pakistan's worst natural disaster, the earthquake killed almost 73,000 people and injured another 70,000. Most of the area's infrastructure was destroyed and 2.8 million residents were left without shelter.

The large-scale international humanitarian aid that followed focused on many of the immediate needs of earthquake survivors. But rebuilding in this conflict-prone region would require sustained and carefully designed assistance. The area's largely rural and agricultural nature meant the disaster's impact on local livelihoods was extensive. Losses from damage to crops, livestock, and irrigation systems were estimated at $223 million. Nearly 1.6 million residents, or 29 percent of the local population, suffered from the loss of jobs or livelihoods.² Livelihood restoration would require considerable assistance, at an estimated $311 million.³

To help survivors like the women of Khana Mori village, USAID's Improving Livelihoods and Enterprise Development (I-LED) program began in August 2006 as a holistic and sustainable response to the extensive need for economic reconstruction in the Azad Jammu Kashmir (AJK) area of Pakistan. I-LED focused on nurturing local businesses through the value chain approach and providing livelihoods restoration, formal trainings and technical assistance. I-LED also concentrated on grants for business startups and building a dynamic business environment through local economic development.

In the wake of the disaster, small grants to replace lost assets were distributed by I-LED on a competitive basis to those who lost the most. Grantees also were required to make a contribution, usually in kind. Grants focused first on assets most easily replaced, such as chickens; grants for larger assets like cows and buffalos came later. On larger projects such as drinking water supply repair, villages also were consulted. Following this asset restoration phase, the focus turned to value chains. I-LED researched existing value chains and identified promising areas of focus. The program's provision of new technology and training helped make these selected value chains successful, and I-LED also helped organize associations since few, if any, previously existed. Success was measured through an extensive performance monitoring plan (PMP) that tracked indicators such as the number of full-time jobs created, amount of local contribution to grants, percentage of women trained, and percentage of women grantees. The PMP included at least 10 major indicators, and several studies were conducted throughout the project to evaluate impact.

"I-LED has made strong advances in the dairy, vegetable, fruit, and poultry sectors in AJK, through strategically targeting the creation of businesses in input supply, production, value addition, and marketing. It also has significantly strengthened important value chains in the area," explained Mark Treacy, program director of I-LED's partner, Citizens Network for Foreign Affairs.⁴

For the Hussain family, an I-LED cost-share grant and training in poultry production not only helped restore a previous livelihood, but also improved their income potential. "I established a 1,000 broiler shed in 2009 with the technical and financial support of I-LED," says Mr. Hussain. "I ran the business with the help of my wife. I applied the skills learned through trainings and netted 60,000 rupees (approximately $700 USD) from my first flock." With the growth of the business, more members of the family have engaged. The proximity of the family's microenterprise to their home allowed Mr. Hussain's daughter, Shazia, to assume management of the business after completing secondary school and training in poultry production. Other men and women farmers in the Bagh district talk about their new ability to increase yields from vegetable gardens especially in the winter months when less fresh food is available. I-LED's introduction of tunnel farming using drip irrigation and seeds for indefinite varieties has led sometimes to increased yields of as much as 300 percent. The farmers also formed a vegetable cooperative to ease the problem of getting inputs.

"When given access to opportunities, especially credit or cost-share grants, the farmers were commit-ted to doing everything possible to get ahead and improve yields," observed Marilee Kane, USAID's I-LED manager. "They used to lose 50 percent or more of their crops to rodents over the winter but with the above-ground storage facilities co-financed by the project, they lose almost nothing and get higher prices for certified seed."

I-LED's ability to create economic opportunity in a post-disaster setting also has yielded benefits for potato farmers in the troubled Khyber Puktoonkhwa (KPK) province, where the project was expanded.⁵ The top of KPK's Kaghan Valley, around 10,000 feet, is an ideal climate for potato growing. I-LED and the Hazara Potato Research Institute provided farmers with seedlings imported from Holland and training in the production, harvesting, storage, grading and marketing of seed potatoes. Buyers like Pepsi and Cash-and-Carry are sourcing from the farmers and willing to pay more for these seed potatoes. The graded potatoes bring 33 percent more in profits per unit weight versus ungraded table potatoes, especially in the spring when potato farmers all over the country are looking for seed.

I-LED has had significant measurable impact on the region. During the asset restoration phase, 72,000 individuals were reached through asset distribution, capacity building or physical infrastructure restoration projects and 26,000 households directly benefitted from the program. During the value chain phase, 3,100 new or existing small enterprises were supported, providing approximately 5,000 full time jobs. Businessmen and businesswomen participating in the program have supplied 2,463 million rupees (approximately $28.8 million USD) as their contribution to total grants of 5,204 million rupees (approximately $60.9 million USD). The net business turnover is expected to be 13 million rupees per annum (approximately $150,000 USD). And, over the course of the program, I-LED created or bolstered more than 30 business associations.

Back in the office of the Khana Mori Dairy Association, the members feel the challenge of increasing milk production is one the association may be able to meet. Since joining the association, the dairy farmers have benefitted from lower input costs and government extension services such as veterinary treatment for their buffalos. "Individually we would have paid higher prices and been ignored by the local government," said Khadija, the association's chair, "but together we can negotiate with suppliers and demand local government services."

Discussion now shifts to topics beyond milk production and input costs. Steady income from their microenterprises and the association's growth has enabled them to begin saving collectively so that the association can become an informal lending source for its members. While they have not determined the terms of lending, several members already envision using the microloans for purposes other than business, such as weddings, the birth of children and grandchildren, and other life events that would have been difficult to celebrate five years ago.

July 7, 2010
This publication was written by Borany Penh of the U.S. Agency for International Development. Borany spent three months in Pakistan in the spring of 2010 to aid in economic development. Visiting with the Khana Mori Dairy Association and the Hussain family, Borany saw firsthand the positive impacts of the I-LED program.

¹7.6 magnitude on the Richter scale
²2005 Earthquake Damage and Needs As-sessment, Asian Development Bank and World Bank, November 12 2005, page 13-14
³ibid
⁴www.cnfa.org
⁵formerly North West Frontier Province or NWFP