Agricultural startup in the shade of Everest
Published: April 2, 2014
An MIT Sloan undergraduate student is passionate about helping farmers in his native Nepal
Shambhu Koirala’s rice mill, under construction in Nepal
It takes a flight to Kathmandu, a 12-hour bus ride, and a four-day walk to get to Shambhu Koirala’s hometown in northern Nepal.
In spite of the distance from MIT Sloan, Koirala, SB ’14, has traveled home several times this past year to help Nepali rice farmers improve their lives.
Koirala is the son of one of those rural farmers, and he saw his father and others work 12 to 15 hours a day, seven days a week, to barely eke out a living in the remote area, which is in the shadow of Mount Everest, but not close enough to benefit from the famous mountain’s tourism industry.
Shambhu Koirala, SB ’14
Koirala, who has five sisters, first left his hometown at the age of 10 when he received a scholarship to the National School of Nepal in Kathmandu. He studied there for eight years, returning home just twice a year because the distance was so great. His father was immensely proud of him. “It was like a dream come true for both of us,” Koirala said.
Koirala’s mother died from a brain hemorrhage when he was in the ninth grade. It was an event that spurred his interest in biology. In 2008, he received another scholarship to study in the United Kingdom, and then finally, an opportunity to attend MIT. He enrolled in biological engineering (Course 20), but in his junior year, realized that business (Course 15) was a better fit.
He knew he wanted to make an impact early on, and the farmers’ situation at home nagged at him. “These farmers work really hard, and they don’t get paid enough … There is something wrong with the system,” Koirala said.
The farmers grow the rice, but are forced to sell the product to middlemen, who then sell the rice to commercial processing mills. Both the middlemen and the mills make a nice profit while the farmer is squeezed out. The average farmer in Nepal, according to Koirala, makes the equivalent of about $360 a year. Most of the farmers build their own homes, usually mud and bamboo huts with thatched roofs, but they still need money for clothing, education, and other essentials for their families.
Koirala and his friend Sumana Shrestha, MBA ’13, who’s also from Nepal, brainstormed and decided to establish a mill in one of the villages, so farmers could deal with the mill directly and take home more money at the end of the day.
They applied for a grant at the MIT Public Service Center and entered the MIT IDEAS Global Challenge Contest, an annual invention and entrepreneurship competition that focuses on underserved communities. They won $5,000 in the competition last year and were also awarded another $5,000 from an Expedition Grant, as well as another $1,000 from an additional grant.
The funding was helpful, but Koirala underestimated how much money he needed to make his dream a reality. He returned to Nepal last summer and got to work. He enlisted his father, his brothers-in-law, and some local students to collect data for him and scout out potential mill sites. “I went around to many villages. I wanted a village that was not too far from the road, and I wanted small-time farmers. It had to have electricity, too,” he said.
He discovered a village, Amaha, about 15 miles from his own village that met the requirements. Koirala’s brother-in-law is overseeing the mill’s construction, and Koirala recruited some local students to conduct pro bono market research. He trained the students to find the average price of rice, how distribution works, and how to package the rice.
The building, which will be 890 square feet, is still under construction, but Koirala has predicted it should be open in time for the next rice harvesting season, which is in August. He is still attempting to solve an electricity obstacle (“I may have to buy my own transformer to get the electricity, and the transformer costs around $5,000.”) Once the mill is complete, Koirala will furnish it with the equipment, including a husker, polisher, grader, and grain elevator, which he bargained strenuously for last summer. He anticipates that the mill will employ three or four workers who will process 2,200 pounds of rice each hour.
Once he graduates in June, Koirala plans to the stay in the United States to earn his MBA before he returns to Nepal, where he will continue to work in agribusiness.