Feasibility Study For Different Model Enterprises For Dolakha

Feasibility study of different models of NTFPs based enterprise/cooperative/ public private partnership company that can be set up in programmed VDCs of ECARDS-Dolakha

A Report Submitted To

Ecology, Agriculture and Rural Development Society (ECARDS) Charikot, Dolakha

Submitted By, Khilendra Gurung 2006 1

Acronyms and Abbreviations ANSAB: Asia Network for Sustainable Agriculture and Bioresources CFUGs: Community Forest User Groups DFO: District Forest Office/Officer ECARDS: Ecology, Agriculture and Rural Development Society, Dolakha NSCFP: Nepal Swiss Community Forestry Project NTFPs: Non Timber Forest Products VDCs: Village Development Committees

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Table of Contents 1. Introduction 1 2. Objectives 1 3. Study Area 2 3.1 Location 2 3.2 Forest types 2 3.3 Ethnic composition 3 4. Study Methods 3 5. Findings 4 5.1Different Models of NTFPs Based Community Enterprises to be set up 4 6. Outcomes and Indicators of the Program 5 7. Challenges for Initiating Community Based Forest Enterprises 6 8. Lessons Learned after Conduction of the Program 6 9. Future Strategy 7 10. Strategic Planning 7 Annex 9

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1. Introduction Southern part of Dolakha district is physiographically remote. Due to the remoteness people living there still depend on traditional agriculture practices and nearby forest resources for their subsistence. They are deprived of income generating opportunity by utilizing the available resources in a sustainable way. Moreover, they have been collecting Non Timber Forest Products (NTFPs) for decades for their livelihood support. A traditional collecting practice of NTFPs in unsustainable way has posed a threat to the resources. However, the only medium of their livelihood support is by trading NTFPs collected from the forest and adjoining areas. But, they have no access to the market and always been exploited from the traders for not getting the fair price. In order to address the current situation, it would be the best option to establish different models of forest based community enterprises/cooperatives and public private company participating poor and disadvantaged people and community forestry user groups (CFUGs) through sustainable use of the resources. In this scenario, Ecology, Agriculture and Rural Development Society (ECARDS)-Dolakha had facilitated in the establishment of essential oil processing unit in Hawa VDC with the financial support of Action Aid Nepal. ECARDS handed over the M/S distillation unit with capacity of 2000L. to Shree Setidevi NTPF Production and Processing Cooperative Limited in which 2 cooperatives (Deudhunga Cooperative and Bhimeshwor Cooperative), 7 Community Forestry User Groups (CFUGs) and 35 pro-poor user groups from 7 CFUGs are the members. Realizing the fact, an attempt has been made to study the feasibility of different models of NTFPs based enterprise/cooperative/ public private partnership company that can be set up in programmed VDCs of ECARDS-Dolakha. The study was conducted with the financial support of Action Aid Nepal. 2. Objectives

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The specific objectives are as follows:  To study the feasibility for the establishment of different models of NTFP based enterprises in the study area.  To facilitate enterprise development by assisting the other programs of the project in the study area.  To create the sound environment for the rural communities to be entrepreneur through their capacity building.  To clarify the aims on why and how to be entrepreneur with proper action plan 3. Study Area 3.1 Location: The study area lies in the southern part of Dolakha district which comprises of Jiri, Gairimudi, Mirge, Thulopatal and Hawa VDCs. 3.2 Forest types: According to the study conducted by ECARDS (2005), the vegetation and forest types of the study area comprises as follows: 1. Altitude between 1500m-2500m: In this region, the vegetation is dominated by Schima- Castanopsis forest type with the associated species of Bakle (Cleyera japonica) followed by Mahuwa (Engelhardtia spicata). 2. Above 2000m in the southern slope: In this region, the vegetation type is dominated by mountain oak forest, major components of Kharsu (Quercus semecarpifolia) and associates as Kholme/Kharane (Symplocos pyrifolia/Symplocos ramosissima), Gurans (Rhododendron arboreum) and Laurels. 3. North, North East and North West part above 2000m: The vegetation is dominated by East Himalayan Oak-Laurel forest, major component of which is Phalant (Quercus lamellosa) in which the major associates are Laurels and Dabdabe. 3.3 Ethnic composition: Majority of the population of Jiri VDC constitutes of Jirel followed by Chhetries and Sherpa. Whereas in other VDCs of the study area, the population comprises of Tamang, Sunuwar, Chhetries, Brahmins and underprivileged castes. 4. Study Methods The following methods were employed during the study period:  Interaction program was held to identify the Village Development Committees (VDCs), Community Forestry User Groups (CFUGs),

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forest products based entrepreneurs, traders and disadvantaged pro-poor to be included in the program. Orientation workshop was held with VDC representatives, entrepreneurs, traders, social workers, representatives from CFUGs. The following are the objectives for the conduction of orientation interaction program: o To introduce and coordinate with FUGs and forest products based entrepreneur/traders/collectors from the study area o To search for the possible opportunities from the current status of FUGs and forest resources of the area o To identify the NTFPs based different models of enterprises that can be set up o To assess about the network between individual entrepreneur and FUGs and initiate for the cooperative work o To assess the need based as to establish the forest based community enterprises After the interaction, altogether 17 CFUGs with similar resources, 5 VDCs, local traders, forest products based entrepreneurs and private sectors were identified. The workshop concluded that: o The identified resources were deforested day by day due to the unhealthy competition between the collectors/traders. o The unidentified forest resources were underutilized. o The poverty level of the people remains unchanged. A network was formed to facilitate the establishment of different models NTFPs based community enterprises in the area. Work division was divided among the members of the network and action plan was prepared. Facilitators were selected on the basis of their facilitating capability and the time they could contribute. Worksheet was prepared in order to train the facilitators. Orientation program was held for the facilitators with necessary tasks to educate them on: o Why to facilitate? o How to facilitate? o Whom to facilitate? o For how long to facilitate? Other necessary action plans were prepared according to the prevailing situation.

5. Findings 6

5.1Different Models of NTFPs Based Community Enterprises to be Set Up Altogether 7 cottage/small scale pro-poor focused enterprises in collaboration with CFUGs and other cooperatives/companies can be established in the study area. Similarly 2 household level enterprises can be set up in the study area. The following enterprise development steps/stages should be followed for undertaking inclusive and different models of NTFP based enterprises to be set up. 1. Feasibility studies in detail 2. Identification of products 3. Development of enterprise concept 4. Formation of Community Forest User Groups network 5. Identification of poor households 6. Identification of private entrepreneurs/ cooperatives working in the similar model and products 7. Identification of the resources 8. Initiation for structuring the enterprise 9. Preparation of the statute 10. Registration of the enterprises/ cooperative/ company The different models of NTFPs based enterprises/cooperatives/company to be registered set up in different locations of the study area are presented in the following table: SN Enterprises/ cooperatives/Company VDCs/Locations 1 Essential oil (Wintergreen oil) Hawa and Gairimudi processing cooperative 2 Essential oil (Artemisia, Juniper and Jiri Abies oils) processing cooperative/company 3 Essential oil collection and marketing Jiri cooperative/company 4 Handmade paper (from Lokta and Jiri Argeli) manufacturing enterprise/company 5 Allo/Hemp processing enterprise Hawa, Jiri, household level Thulopatal, Mirge 6 NTFPs cultivation Jiri, Thulopatal, enterprises/cooperatives Gairimudi, Hawa, Mirge 7 Jhyau processing enterprises Jiri, Hawa 8 Brandy production (From Chutro and Jiri, Thulopatal, 7

Aiselu and Gurans) enterprises 9

Jam and pickle (from chutro) making enterprises at household level

Gairimudi, Hawa, Mirge Jiri, Thulopatal, Gairimudi, Hawa, Mirge

After the registration of those different inclusive models of enterprises in various locations of the study area, the following steps are to be adopted: 1. Training and capacity building 2. Infrastructure setting 3. Product design and development 4. Business plan preparation 5. Operation of enterprises 6. Quality control and standardization 7. Marketing linkage of the products 8. Sharing of benefits 9. Review and analysis 10. Diversification of the products 11. Creating goodwill (image) of the enterprises 6. Outcomes and Indicators of the Program  Representative from VDCs and CFUGs, local traders, forest products based entrepreneurs, social workers, DFO/DFO staffs, representative from ECARDS and concern stakeholders were participated in the interaction program.  A network "NTFPs Based Enterprise Management and Coordination Committee" inclusive of all walks of lives from the community was formed.  Facilitators were selected as per the recommendation of the network.  The entry point of the project was formed after the development of local facilitators and focal persons to conduct the further programs and the local inhabitants could follow-up the project with their demands/proposals.  People have started advocating/discussing/interacting about the establishment of regional level forest based community enterprise (an inclusive model) in Jiri; a centre of Southern Dolakha; which has assisted to search for various options to be implemented.  Identification of NTFPs, prioritization of NTFPs and identification of potential enterprises utilizing the NTFPs resources in Community Forests of the selected VDCs. 8

 Publicity/interaction/advocacy of inclusive model of enterprise/cooperative/company in the rural areas of the Southern Dolakha.  Inspiration for the amendment of the operational plan of CFUGs to become an entrepreneur.  A local level "Forest Based Community Enterprise Promotion Committee" was formed in Jiri, Gairimudi, Hawa, Thulopatal and Mrige VDCs.  A joint committee was formed between Gairimudi and Hawa VDCs for distilling the essential oils from wintergreen plant.  The user groups including pro-poor residing in Southern Dolakha starts enjoying the program supported by ECARDS/Action Aid Nepal after implementing the program.  With support from ECARDS/Action Aid Nepal, the unsuccessful entrepreneur and the registered enterprise unable to run could have the privilege to be a successful entrepreneur and run the enterprise smoothly.  The implementation of this program has created the prospects for the sustainable enterprise development in Southern part of Dolakha.

7. Challenges for Initiating Community Based Forest Enterprises The following are the identified challenges for initiating community based forest enterprises:  It is an extremely difficult task for the community mobilization process.  It is a hard task to convert the NTFPs based proprietorship enterprises running in traditional fashion to the community owned enterprises.  The illiterate society cannot accept the new concept; they believe in the thoughts of the persons who work for their own interest.  It is a challenging task to break through the traditional networks of proprietorship entrepreneurs.  The rural people and even the local entrepreneurs' doubt that the community based enterprise could run smoothly.  The local people have a tendency to protest on each others matter and that they hardly accept the leadership of others leading to trustless environment.

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 The local entrepreneurs have the calculation that the community based enterprises are not profitable.  The local people are engaged in traditional agrarian practice and cannot contribute their time for such enterprises, due to the lack of trustworthy environment.  The local people are not aware about the marketing linkages and information of the products to be manufactured by the enterprises. 8. Lessons Learned after Conduction of the Program The following are the lessons learned after conducting the programs:  It is absolutely an ambitious planning to set up different models of community enterprises in the area.  Without the initial feasibility study and infrastructure development, the direct implementing strategic program will not succeed.  The conclusion and the programs made by the participants of the workshop/interaction program cannot be implemented in the community level.  The pro-poor focus model of community enterprise is ambitious which is difficult to implement in practice.  The enterprise development facilitators are unable to provide the total enterprise development package (raw materials inventory, efficient technology transfer, production scheme, management, cost/profit analysis and marketing linkage) during the motivation to local people to establish the model enterprises. The principle of model enterprises is not sufficient at the initial stage.  The pro-poor, identified during the well being ranking process, are not physically and mentally sound who are mostly isolated from their families. Such persons if included in the enterprise are not expected to contribute for the betterment of the enterprise.  Micro-credit facility should be provided to the rural entrepreneurs in order to initiate the enterprises in the rural areas. 9. Future Strategy ECARDS' future strategy seeks to transform the traditional occupation (subsistence agriculture and NTFP collection) of the poor community living in remote Southern part Dolakha to the forest based community enterprises development for their livelihood upliftment. The following are the future strategies to be conducted:

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 Identification of other possible different models of enterprises.  Marketing management of the products produced by different levels of forest based enterprises; establishing Jiri or Charikot as a marketing centre.  Conduction of research on the use of local NTFPs for various purposes in local level. For example: establishing natural treatment centre in Jiri for treating various ailments and producing different items of food supplements.  Motivation to rural people to be entrepreneur with coordination from all sectors of the society.  Development of skilled manpower to lead/motivate rural people to be entrepreneur and run different models of enterprises in Southern part of Dolakha. 10. Strategic Planning The strategic plans for the follow up of the program are as given in the table below: SN Activities Responsibility Strategy 1 Capacity building/skill ECARDS Collaboration with development to NSCFP/ANSAB enterprise facilitator and entrepreneurs 2 Infrastructure setting ECARDS/Deudhun Collaboration with of the registered ga Cooperative FUGs, other user enterprises groups and NSCFP/ANSAB 3 Training on Product ECARDS/Deudhun Collaboration with design and ga Cooperative NSCFP/ANSAB development 4 Training on quality ECARDS/Deudhun Collaboration with control and ga Cooperative NSCFP/ANSAB standardization and certifications 5 Preparation of ECARDS ECARDS will business plan contribute in collaboration with NSCFP/ANSAB 6 Operation of the Owners of the Company itself enterprises concerned will involve with enterprises support from ECARDS and Deudhunga

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Marketing linkages of the products produced by the enterprises

Deudhunga Cooperative

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Formation of collective marketing center

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ECARDS and Deudhunga Cooperative ECARDS

Identification and extension of other possible models of enterprises Conduction of research ECARDS on the use of local NTFPs for various purposes

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Company itself will involve with support from ECARDS and Deudhunga cooperative Collaboration with NSCFP/ANSAB FUGs and other user groups in collaboration with NSCFP/ANSAB ECARDS will contribute in collaboration with NSCFP/ANSAB

Annex

Annex-1: Identification of potential NTFPs in the study area S N 1

VDCs

Potential NTFPs

Thulopatal and Hawa

Lokta, Machhino, Chutro, Kukurdaino, Angeri, Bilaune, Argeli, Kurilo, Nigalo, Allo, Chirayito, 12

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Jiri

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Gairimudi

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Mirge

Jhyau Lokta, Machhino, Kukurdaino, Allo, Chutro, Argeli, Jamane mandro, Nagbeli, Aiselu, Nigalo, Kurilo, Chirayito, Jhyau, Titepati Lokta, Machhino, Chirayito, Kukurdaino, Argeli, Aiselu, Chutro, Jhyau, Kurilo, Majitho, Ngbeli, Allo, Ban tarul Lokta, Nagbeli, Chirayito, Allo, Majitho, Kharane, Kukurdaino, Chutro, Argeli, Aiselu, Nigalo, Jhyau, Titepati

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