Building the Foundation of Nepal’s Coffee Sector

The first specialty coffee shop in Nepal was established in 1999. Today that shop, Himalayan Java, is a household name in the country. Although tea has historically been an integral part of Nepalese social life, local thirst for coffee continues to grow and international demand for Nepalese coffee is steadily rising. But there’s still untapped potential to grow more.

Helvetas, which has worked in Nepal since 1956, played an integral role in the systemic development of Nepal’s coffee sector over the last three decades. This entailed support for production, processing, marketing and policy development. These building blocks led to designing and embedding the appropriate systems and approaches at local, regional and national levels that have allowed coffee to flourish in both the domestic and international marketplace.

Two of Nepal’s foremost coffee experts, Bhola Shrestha and Dr. Badri Bastakoti, worked with Helvetas over many years to help establish and grow the industry. Below, they share perspectives on the key approach for uniting the coffee farming community, creating and adapting systems to make coffee a commercial crop, and the shifts they’ve seen in coffee consumption over the years.

Organizing and training coffee farmers

“Coffee is in my heart and my brain,” says Bhola, an agricultural graduate and practicing coffee farmer who began working with Helvetas in 1996 on a livelihood project that covered five sectors, including coffee. This combination served him well in the many roles he held over the 16 years he worked with Helvetas, including overseeing the setup of coffee cooperatives and a coffee promotion program.

Coffee bushes grow well on gentle slopes under partial shade that is prone to soil erosion but typically unsuitable for other crops. This made the plant a good choice as a soil conservation crop—the reason it was originally introduced by Helvetas. “At that time, no one really knew about the economic value of the crop,” says Bhola.

As more smallholder farmers started to grow coffee, Helvetas provided training on how to avoid or reduce pests and diseases. Peer-to-peer learning was encouraged through Farmer Field Schools that brought farmers together to discuss practical issues on their own farms. “Helvetas is considered a pioneer in the coffee industry in Nepal,” says Bhola. “One of the major gaps in the sector was technical knowledge, since coffee was not a major crop in Nepal. We helped train the first technical experts, who focused on making sure this product could thrive here. This involved introducing different cultivars and determining which disease-resistant varieties were best suited to local conditions.”  

“Unlike other countries, big farms are not possible in Nepal because of the characteristics of the Nepalese agrarian relations and structure. So consolidating the farming community was a necessity for some form of scale in terms of quantity, albeit still small in volume,” says Badri, who is an industrial growth specialist.

Bhola adds, “In the early days one trader held a monopoly on pricing. Farmers were not well paid or paid on time, which led them to organize into a group and register as a nonprofit called the Nepal Coffee Producers Association.”

In 2005 Helvetas commissioned a study to analyze whether to focus Nepal’s coffee production on organic or inorganic methods. The recommendation was organic, with the idea that this designation could help Nepalese coffee stand out in the marketplace—aiming at the niche fair trade market, not the bulk market.

But initially growers were poorly paid for their crop and struggled to access the right markets. “This is why cooperatives were the most relevant intervention of all the work Helvetas did,” says Bhola. “We created a producers-first model where farmers that worked with cooperatives could earn 45% more than working with a private company.”

As a latecomer to coffee cultivation, Nepal faced significant challenges in shifting rural farmers from traditional crops to coffee, especially given the conventional mindset at the time. However, systemic and continuous approaches, tailored to local conditions, played a crucial role in overcoming these challenges.

A holistic approach to supporting a commercial crop

As interest in the sector grew, so did the systems, networks and policies to support it. It was important that appropriate technical advice was locally embedded and readily accessible to coffee farmers. Helvetas trained lead farmers and worked with the government body, the Council for Technical Education and Vocational Training, to develop National Skill Standards for coffee production and processing. As a result, it became possible to become a government certified coffee technician. Now 60 people are accredited as coffee technicians—serving as the main technical support across the country.

To ensure the sector’s growth could be sustainable and reach scale, Helvetas also worked with the government to create a national strategy. “Helvetas was instrumental in working across various ministries to embed the value chain concept and quality control in policy,” says Badri, who started working with Helvetas in 2010 on a coffee promotion project with cooperatives. “One particularly important milestone was the development of guidelines for coffee standards, which was supported by a European Union-funded project in collaboration with Nepal’s Bureau of Standards & Metrology. We also brought together key private sector actors, such as producers—all in pursuit of creating a good product.”

By 2018, Bhola and Badri had helped guide 15,000 coffee growers (45% of whom are women) into 156 cooperatives. The power of collective bargaining worked as intended: “The farmers secured a good price, and the right amount of money got to them at the right time,” says Badri. “This really sparked their enthusiasm and encouraged them to keep growing this crop.”

But the sector still has room left to grow—literally. “Helvetas supported the government on an analysis of suitability for coffee arabica in Nepal and found that 1.1 million hectares could still be used for general coffee and 62,000 hectares remained for specialty coffee,” says Bhola.

Coffee’s place in Nepal today – and its challenges

“I first started farming coffee to implement the learnings from my 30 years of journeying with coffee,” says Bhola. Five years ago, he planted coffee on a hectare of land on his parents’ property in Gorkha, the town in central Nepal where he was born. He affectionately calls the plot his Coffee Garden. “I also wanted to educate the farmers in my area and to encourage them to utilize their fallow land. The goal of my farm is not to earn money—it is to teach and inspire.”

“In the rural areas, tea is still the main drink, and coffee is viewed as a special drink for visitors and tourists,” says Bhola. “But this has been shifting in the districts where coffee is grown.”

In Kathmandu, it’s easy to find a Himalayan Java or another specialty coffee shop to get a coffee fix. “In 2010 our research showed that there were only about 10 cafes in Kathmandu, even in the tourist hot spots. Now there are around 6,000,” says Badri, who lives in Kathmandu and is still playing a key role in the sector—he’s currently working on a European Union project supporting the enterprise growth of coffee. “Even in my neighborhood I can see cafes that have opened, and almost every morning I go to one and drink coffee. Coffee culture is coming here, brought by the new generation.”   

More challenges exist around coffee consumption than just a rural-urban divide. “We need to raise production,” says Badri. “Producers cannot meet internal demand with current production.” The numbers validate this reality. According to statistics from Nepal’s Department of Customs for the fiscal year 2023-2024, Nepal imported 443 metric tons of coffee valued at $3.1 million. In contrast, Nepal exported 88.85 metric tons of coffee worth $1.1 million.    

To increase quantity, fallow land needs to be planted with coffee—but a lot of this land is fallow because of labor migration, explains Badri. “Many people in Nepal around ages 24-49 seek employment outside the country. But after age 50 many return home; for those people, coffee could be a profession in rural areas. Farming coffee does not require hard labor in relation to other farming.”

It’s critical that increased quantity doesn’t reduce quality. “Maintaining the quality is always a challenge. These days buyers say Nepal’s coffee is high quality, but there is no room for complacency,” says Badri. “However, boosting high-quality coffee production will require sufficient funding to support small growers' transition to coffee farming. This may involve financial incentives and other support to help establish Nepali coffee in international markets and encourage collaboration between local government and the private sector.”

The good news, says Badri, is that it’s clear there’s still a lot of opportunity in this sector and that the necessary frameworks and structures are in place to realize that opportunity. “The continued donor interest in coffee, particularly from the European Union, can be largely attributed to the lasting impact of Helvetas’ interventions over the past decades. Municipalities in Nepal have also demonstrated a strong interest in coffee, actively supporting its cultivation through the development of policies, programs and budget allocations. The government’s National Tea and Coffee Development Board has been allocating funds and implementing innovative programs to further the growth of the sector. And the government has also recognized coffee as an emerging export in its five-year trade integration strategy and prioritized it in the long-term Agriculture Development Strategy (ADS 2015-35).”

Bhola agrees that systems change has been achieved in the coffee sector. “Helvetas’ name and fame in this country is from two things: trail bridges and coffee,” he says. You might cross one of the 10,000 trail bridges Helvetas helped design or build in Nepal on the way to a coffee-growing district. “And in these districts, wherever you go, the people who are now running the cooperatives, working as agriculture extension agents and promoting coffee—these are the people Helvetas helped train,” says Badri.

This form of systemic change is what Helvetas hopes to see in Nepal and the 35 other countries we work in around the world. Systems that were thoughtfully developed in collaboration with an array of local partners—government, non-government and private—and which continue to thrive and evolve without our ongoing support.  

Additional Reading

• Coffee Learning Series: A History of Helvetas’ Support for a Promising Economic Growth Sector, co-authored by Bhola Shrestha and Dr. Badri Bastakoti