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CHAPTER I INTRODUCTION Forest sector in Orissa plays an important role in the economy, culture and livelihood of a large number of forest dependent poor and it represents a huge economic resource for the State. The forests of Orissa are rich in both timber and non-timber forest produces (NTFP). Timber and firewood conceived as major forest produces in the State. Sal is the important timber and constitutes about 60 per cent of the timber production of the State. Teak is another valuable timber available mostly in the western part of Orissa. Important among other timber species are Piasal, Asan, Bandhan, Haldu, Kurum, Gambhar, Sisoo, Jammu, Khair, Dharua, Kusum, Champa, etc. Minor Forest Produce (MFP)/Non-Timber Forest Produces (NTFP)/Non Wood Forest Produces (NWFP) are different names people attach to forest produces other than timber. NTFP include all the products obtainable from forest other than timber. NTFP have been classified into the following categories.1 1. Fibres and flosses, 2. Grasses, cane and fodder, 3. Essential oils, 4. Tannins and dyes, 5. Gums and resins, 6. Drugs and medicines, 7. Edible products, 8. Oil seeds, 9. Leaves, and 10. Animal, mineral and miscellaneous products. Important NTFP of the State are Bamboo, Kendu Leaf, Sal seed, Mahua flower and seed, Myrabolans, Broom grass, Tamarind, Sal leaf, Siali leaf and fibre, Sal resin, Tassar cocoons, Lac, Honey, Wax, Genduli gum, Patal garuda, Nux vomica, Chironjee, Fodder grass, Thatching grass, 1

http://www.ntfp.org

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Arrowroot etc. Important products like Bamboo, Kendu leaves and Sal seeds have been nationalised and harvested by the departmental agencies such as Orissa Forest Development Corporation and Tribal Development Cooperative Corporation of Orissa Ltd. Ownership and management of 68 NTFP items have been transferred to Gram Panchayats in 20002. Prior to that most of the NTFP were being management and traded under strict state control. Both short term and long term leases were being given to private traders to trade in different NTFP. However, there has been progressive decline in the forest cover in Orissa during the last few decades. The wasteful exploitation is posing potential danger for the economy and environment besides threat to livelihood sector security of millions of forest dependent poor. Massive deforestation is primarily caused by the increase in biotic pressure, and also due to non-response of forest resources to the increased needs of the people. Due to lack of adequate public and private investment, and absence of adequate externally funded forestry development programmes for the State, forestry sector has remained precisely unattended over the years. NTFPs of Orissa are important sources of non-tax revenue. But most of these are not computed in the State’s revenue as these are consumed by the forest dwellers and are sold in the local markets. At the same time, faulty NTFP policy on collection, trade and disposal, processing and value addition, etc. results in forest potentials to remain unexploited. A number of forest laws and regulations in Orissa have been identified as major hurdles in NTFP trade. Absence of adequate attention to marketing infrastructure also has resulted in the underutilisation of existing forest potential in the State. Further, stringent restrictions on the marketability of certain products like Kendu leaf, Mahua flower on the private lands have encouraged illegal and unfair trade practices. A close scrutiny of the political economy of NTFP management in Orissa suggests that the economic and ecological sustainability considerations have not only been undermined, but also successfully overshadowed by the political ideology of different political parties in power. These NTFPs plays a key role in the lives and livelihood of the poor and marginalized forest dependants of the state who are the tribals of the state (22% of the total population).3 Considering the unimodal, uneven and erratic pattern of rainfall in a state like Orissa, agriculture is gradually ceasing to be reliable hence there is a need for alternate source of livelihood for the poor and 2 3

Literatures available in RCDC and www.banajata.org www.banajata.org

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marginalized mass of the state. Next to agriculture NTFP sustains millions by providing an alternate source for food and income. In most of the forested areas of Orissa, these forest produces have been supporting tribal for more than 6-8 months a year both in terms of subsistence and cash benefit. The importance of this income is more so because of the fact that it comes in the agricultural lean season. Since NTFP have tremendous food as well as commercial value, there is a mutual dependence between the tribal as sellers and the business houses as buyers. Despite the fact that NTFP are a major source of food, tribal communities continue to suffer at the hands of greedy and dishonest traders. NTFP used to contribute substantially to the state's economy in many forms. For the majority of the forest dwellers and rural population NTFP meet their subsistence needs. NTFP provide food security, ingredients for health care, fodder, construction materials and above all cash income during the slack agricultural seasons. The collection of NTFP provides more than 50 per cent of the person-days employment to the forest dwelling communities. In 1955-56, while the govt. earned revenue of Rs.73 lakh from timber and firewood, the revenue from KL, other MFPs and bamboo was Rs.74 lakh. In 1975-76, the revenue from timber and firewood was Rs.5.4 crore and the same from minor forest produce including bamboo and KL was Rs.5.5 crore. In 1995-96, revenue from timber and firewood was Rs.7.95 crore whereas the income from KL, bamboo and other MFPs was about Rs.60 crore. The income from NTFP including Kendu Leaf for the State has always been between 75 to 90 per cent of the total forest revenue. Now the revenue from NTFP has gone down for various reasons.4 The tribal dominated districts of Koraput, Nabarangapur, Rayagada and Malkanagiri are rich in almost all kinds of NTFPs. But actual potentiality of these areas is not being explored due to inaccessibility and lack of interest of the people as well as the different government agencies. The poor tribal always fall in the trap of the somewhat intelligent middlemen and sahukars, hence distraction from more and more collection of these produces from these areas.

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www.banajata.org

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1.1 THE BUSINESS PLAN A business plan tells a complete story about the business in which one wants to enter. It is mostly used as a road map and focussing tool, which should be again considered, as a living document and it must be reviewed and updated every 3 to 6 months. It is always almost required to have a well formatted business plan when one apply for a loan or grant. 1.1.1 Rationale for an NTFP business plan for undivided Koraput district. The present NTFP trade scenario in Orissa particularly in undivided Koraput district can be said as monopolistic. Before the decentralisation processes i.e. transfer of ownership, control and management rights of 68 Minor forest produce to the panchayat the tribals had to face many problem in the collection of the minor forest produces and again at times due to the monopoly trade practices of some of the agencies who were involved in the trade price realisation to the primary procurer was very poor. After the transfer of ownership, control and management rights to panchayat the scenario has not changed. The primary collectors work hard to collect and process the NTFP but they are being paid miserably low as compensation. Traders and the intermediaries are having their network to procure NTFP from the accessible areas. In many remote villages, where there is a high potentiality of a variety of NTFP but the primary collectors don't collect many of them as there is no buyer available in their locality. Gradually there is a distinct shift in the economic activities revolving around NTFP to petty wage work in other sectors. In the bordering areas NTFP trade gets more significant attention, as there is variation in price. There is poor control or regulatory mechanism for inter border trade. Most of the trade runs illegally. There is also misconception in people that they get more prices across the border. In reality they work more and get less if the transaction cost is properly calculated. After the devolution of power to the Gram Panchayat the trends in the market have not yet changed, it still favors the traders and intermediaries. These intermediaries in the value chain of the trade exploit the tribals to the maximum extent and it is also very difficult for the poor tribal to raise voice against them because of the help provided by them at the time of need though it goes in the interest of the intermediaries. The government and government owned agencies/corporations have failed to protect the interest of poor in the context of NTFP. Over these years because of the low returns from the procurement and sale of NTFP

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the people are also not willing to collect NTFP from the forest, hence a sharp decline in the production of NTFP. But there is a great potentiality of a variety of NTFP for ensuring livelihood of the poor of the undivided Koraput district. The most probable way in which it can be done is making a well-structured business plan for the district with an interest of providing maximum benefit to the primary collector i.e. the poor tribal. In this context it will be a wise decision to carry out an NTFP business plan, which will be used as a road map. 1.1.2 Getting started with the NTFP business plan Before concentrating on the business plan we need to concentrate on following questions which will help in generating a viable business plan for the NTFP product •

What we have?

•

What are the requirements?

•

How we are going to achieve it?

1.2 MISSION OF THE BUSINESS •

To acquire at least 35% market share in the total NTFPs traded from undivided Koraput district within three years.

•

To provide a sustainable alternative source of income to the primary procurer without hampering the forest area of the four districts.

1.3 VISION OF THE BUSINESS •

To be the market leader in the NTFP trade.

•

To be the most reliable source of supply of NTFPs to the client (stockist,wholesellers, processing industries)

1.4 OBJECTIVES OF THE BUSINESS

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The NTFPs business will have following objectives •

To identify the products that gives maximum realization based on certain criteria

•

To provide better value realization to the primary collectors for their NTFP collections

•

To provide regular and timely market information on NTFP trade.

•

To provide strategies for procurement of NTFP

•

To provide regular and timely supply of market information on NTFP trade.

1.5 SCOPE OF THE STUDY The study is restricted to undivided Koraput districts of Orissa which includes Koraput, Nabarangapur, Malkanagiri and Rayagada. 1.6 METHODOLOGY AND SOURCES OF DATA First of all we went through literature that was available with us to have a basic idea about the NTFP produce. Then product selection matrix was followed to select the produces for our business plan. Then we did a lot of exploration of the various markets in the states of Orissa and Jagdalpur, which is major transit point for the NTFP for the produces of Orissa and Chhattisgarh. We met with a number of traders, wholesalers, kutchias (small village level traders) and some SHGs, which are involved in NTFP trading. It went about talking with these people discussing about the various aspects of the market. During the study we also visited various organizations like some NGOs, which are helping SHGs to in their trading and government agencies dealing in the marketing and manufacturing of the Siali products like TDCC and ORMAS. Some secondary data were also collected from the forest officials. The Siali market is both unstructured as well as structured market so as per the need the methodology kept on changing. Unstructured in the sense that there are no written records in this sector and structured because there is a well laid down network of this business. 1.7 LIMITATIONS OF THE STUDY

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The study is based on secondary data from the Government as well as Non-Government agencies operating in the areas under study so it is subject to the reliability of the data collected from the above mentioned sources. One of the important limitations with regard to data collection is that the main player in the business i.e. the traders in most of the cases have hesitated to open their mouth with regard to the quantum of trade they are involved in. Most of the calculations have made based on the rough data provided by them. 1.8 CHAPTER PLAN The work involved in the study as mentioned is divided into following chapters. 1.8.1 Review of literature In this chapter, available past information regarding NTFP trade, which are relevant to the present study have been mentioned. The chapter includes policies of the State Government on procurement and trade of NTFPs and major issues involved in NTFP management and trade. Again how the business fits to the organisation and different stakeholders is also discussed. 1.8.2 The product and the market In this chapter, the products identified and their characteristics are discussed to get insights into the kind of product we will be dealing with in the proposed business plan. The nature of the market for different products and competition in the trade are also discussed in this chapter. 1.8.3 Procurement plan In this chapter, the operational part of the business i.e. how the business will be done for all the four districts has been discussed.. 1.8.4 SHG Federation In this chapter, the involvement of SHG federation and its role in the whole process has also been discussed in detail 1.8.5 Marketing plan and financial analysis

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In this chapter, different strategies that will be adopted for different products are discussed in detail. Possibilities of small scale enterprises and financial analysis for each product have been made. 1.8.6 Summary and conclusion In this chapter, summary and conclusion of the entire business plan are presented.

CHAPTER II REIVIEW OF LITERATURE Business plan for the undivided Koraput districts has not been done before this study, but some market analysis for different products has been done by different Government and NonGovernment agencies. In the state Government level policy formulations for the NTFP trade has been done which is discussed below. 2.1 POLICY OF THE STATE GOVERNMENT ON PROCUREMENT AND TRADE OF NON-TIMBER FOREST PRODUCE 5 Non-Timber Forest Produce (NTFP) has traditionally been perceived as an important source of forest revenue. Accordingly the policies relating to NTFP over the years have generally tended to aim at maximisation of revenue. However, NTFP is an important source of livelihood of tribals and the rural poor. These Primary collectors of NTFP, majority of who are women, have limited access to the market, and their primary concern is getting a fair price for the NTFP gathered by them and being able to dispose off the produce gathered. The prevailing system does not adequately provide these facilities to the primary Primary collectors. At the same time, it is also equally important that collection of NTFP must be on non-destructive basis so that sustainability of forests and long term sustainability of the NTFP based livelihood can be reasonably ensured.

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http://www.ori.nic.in/diorissa/policy.htm

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The State Government have had under their consideration proposals for formulation of an appropriate policy on Non-Timber Forest produce, keeping in view the consideration outlined in the preceding paragraph. While formulating the policy the provisions of the Panchayats (Extension to scheduled areas) Act.1996 have also to be kept in view. The term “minor forest produce” has not been defined. Under the policy of Joint Forest Management, the local communities are being closely involved as partners of Forest Department in the management of degraded forests; and the members of the Vana Samrakshyana Samiti (VSS) are entitled to share the usufructs, including the entire NTFP gathered from such a forest area. On 26th May 2000, Panchayat Raj Department, in exercise of power under section 152 of the OGP Act, issued an administrative order prescribing the manner in which the rights transferred to the GPs shall be dealt with. Government has been pleased to approve of the following policy guidelines for streamlining the system of collection and disposal of various Non-Timber Forest Produce items. The recent policy of the government that identified 85 NTFP, for the first time has made distinction between MFP and NTFP, though not specifically defined. The NTFP are divided into two categories namely, MFP and other NTFP. Forest produces like tamarind, honey, hill brooms, Siali leaves, Myrobolans and tree borne oilseed (TBOs) like Neem, Karanj, babul, Kusum etc. which come to 67 items are termed as MFP and have been kept under control of GPs. The other NTFP consist of two further sub-categories, nationalised produces and lease bar produces. Nationalised produces like Kendu leaves, Sal seeds and bamboo are categorised as “other-NTFP” and are directly controlled by Government. Moreover, certain items, namely Sal leaves, gums, resins and barks of different trees, climbers and roots of various species which have medicinal or other uses come under lease-barred items and are neither put to free trade nor are kept under control of GPs, as collection of these items on commercial scale will have adverse impact on the sustainability of particular species and forest. The list of items of NTFP to be treated as MFP may however be modified by Government from time to time, Gram Panchayat/Gram Sabha in the scheduled areas will have the ownership over MFP produced within its territorial jurisdiction, i.e. in respect of the MFP produced in and

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collected from the Government lands and forest lands within the limits of the revenue villages comprising the Gram Panchayat. Under law, ownership of MFP in non-scheduled areas is not vested in Gram Panchayats. Gram Panchayats both in the scheduled and non-scheduled areas, will, however, have the authority to regulate purchase, procurement (as distinct from collection by primary Primary collectors) and trading in MFP in accordance with the policy outlined in the succeeding paragraph. No Gram Panchayat, whether situated within or outside the scheduled area will have ownership over MFP produced in Reserve Forests, in forest areas under wildlife Sanctuaries and National Parks which are out side the limits of revenue villages. The Gram Panchayats will not therefore have the right to grant lease or licence to any individual or agency for collection of Minor Forest Produce from any Reserve Forest or Sanctuary or National Park. However, members of Vana Samrakshyana Samitis, tribals, artisans, etc. as part of their customary rights will be free to collect Minor Forest Produce from forest areas excluding sanctuaries and National Parks. When any such MFP collected from forest area is brought to a village, i.e. into the territory within a Gram Panchayat, it will come under the Gram Panchayat’s powers to regulate procurement and trading. Where Vana Samrakshyana Samiti has been formed, the Samiti and its members will have priority over the Gram Panchayat in the matter of collection and disposal of Minor Forest Produce of the respective forest area. Any person desirous of purchasing MFP from primary Primary collectors or trading in MFP so purchased shall apply for registration to the concerned Gram Panchayats and the Gram Panchayat may register such dealers or traders for a season from the first day of October to the last day of September of the following year. Since royalty was withdrawn a token amount of Rs. 100/ was fixed as registration fee per each produce that is to be given to the GP in which the traders intend to procure. There is no restriction on the traders on number and volume of produces that they want to trade and transact provided they pay the registration fee. It specified the way registration would be done, keep a record of monthly transaction and most importantly the way the quasi-judicial power of reprimanding unscrupulous traders will be carried out. As per the policy, the GPs can not use their discretion in registering the traders though they can always reprimand unscrupulous ones involved in low payment, irregular procurement etc.

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Dealers and Traders will have to seek fresh registration for the next session. Gram Panchayat shall make all efforts to promote free competition in procurement of MFP by engaging as many dealers for each item of Minor Forest Produce as reasonably practicable. The Gram Panchayat shall also levy an annual registration fee from such dealers or traders at such rate as may be determined by the Gram Panchayat and shall issue a certificate of registration to the registered dealers and traders. The dealers registered by the Gram Panchayats will have to furnish a monthly return to the concerned Range Officer indicating the items of MFP procured, quantity procured and the GP from which procurement was made during the month. No person will be allowed to operate as a Dealer/Trader in MFP in any area without being registered as such by the concerned GP. The collection of MFP by the primary Primary collectors will be subject to reasonable control to be exercised by the Divisional Forest Officer (DFO) in accordance with the provisions of law and sound silvicultural principles laid down in the Forest Working Plan which shall be given publicity in advance in the adjoining GPs. The Government agencies like Orissa Forest Development Corporation (OFDC), Tribal Development Cooperative Corporation (TDCC) etc. may also register themselves with one or more Gram Panchayats for procurement and trading in one or more items of Minor Forest Produce. A Gram Panchayat may cancel the registration of any dealer/trader or may refuse to grant registration for the subsequent seasons if after summary inquiry in course of which the affected party shall be given an opportunity to show cause it is satisfied that the dealer/trader has procured any MFP from the primary collectors at a rate lower than the minimum procurement price fixed for that item of MFP for the relevant year. No lease shall be granted by Government in respect of any Minor Forest Produce nor shall it levy any royalty on these items after commencement of this Resolution. No Forest Department Transit

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permit will be required thereafter for transport/movement of any Minor Forest Produce within the State.

2.2 MAJOR ISSUES IN NTFP MANAGEMENT AND TRADE In Orissa though policies have been formed it has been seen that there is still an apparently monopolistic trade scenario for NTFP. The primary collectors work hard to collect and process the NTFP but they are being paid very miserably low as compensation. The government and government owned agencies/corporations have failed to protect the interest of poor in the context of NTFP. Over these years because of the low returns from the procurement and sale of NTFP the people are also not willing to collect NTFP from the forest, hence a sharp decline in the production of NTFP. But there is a great potentiality of a variety of NTFP for ensuring livelihood of the poor as well as providing substantial revenue to the forest department in comparison to the timber. The only probable solution to it is to look for alternative markets, which can pay more competitive price to the primary collectors

2.3 FIT REQUIREMENTS6

NTFP BUSINESS

TASK REQUIREMNTS

OUTPUTS

COMPETENCIES

NEEDS

STAKEHOLDERS

ORGANIZATION (Facilitator)

(Primary collectors) 6

This model is given by David C. Korten.

EXPRESSION

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DECISION PROCESS

Fig.1 Fit requirement In order to test the viability of the business we have to look into the matching of different players in the process .We have the NTFP business in mind but we have to see how it is related and fitted with the present stakeholder and organisation/agency into consideration. The stakeholders, i.e. primary collectors of NTFPs in this case have the need of marketing their produce in a way to realize a better price and thus improve their earnings. In the lack of any mechanism to come together and high cost involved at the individual level primary collectors have to sell their produce forcibly to the middle level at a price which is decided by the middle man. This has two implication: one that they do not get the right price most of the times and there is not any scope of any extended pay-off beyond receiving fixed price at the time of selling. In the proposed business the SHG federation comes forward with specific programs in the form of value-addition to the produce and gives it time, place and form utility thus increasing the value. But for carrying out this there are task requirements such as processing, storage and managing, for which competencies are required which is filled by appointing a competent administrative staff. The organisation RCDC is having competencies in terms of documentation on NTFP produces and the field level staffs are well equipped with the trade practices .So this matches with the task requirement in the business the main objective of which is to provide maximum benefit to the primary procurer. Hence the organisation with these competencies acts like a facilitation agency for the primary collectors in carrying out the NTFP trade. The proposed SHG federation is different from other business units in that apart from acting as an economic unit, it also takes into account the expression of its members in decision-making process. Thus, overall all the activities and its parts are integrated to generate output for betterment of the primary collectors. From the above discussion it can be inferred that the business will well fitted to the need of the primary collector as well as the organisation who will act as a facilitating agency.

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CHAPTER III THE PRODUCT AND THE MARKET There are 68 non-timber forest produces. But for the business plan only some of them need to be selected. Again in the four districts under study namely Koraput, Nabarangapur, Rayagada and Malkanagiri the importance and potentiality of different produces vary considerably. Before going for the selection of the product it will be wise to know the nature of the NTFP as a whole. 3.1 THE NATURE OF THE PRODUCT7 3.1.1 Fluctuation in production Annual fluctuations of most NTFP commodities in production vary by a margin of 300–400%, leading to a wide variation in supply. This is in sharp contrast to agricultural commodities, where variation in production rarely exceeds 20% of the normal. So it is very difficult to predict the quantity to be produced in the future years. 3.1.2 Lack of uniformity Being nature-based, NTFPs can never be totally uniform in their characteristics. The size, shape, colour and other physical properties depend upon factors like rainfall, temperature, moisture, etc., and it varies from year to year and from location to location. It is one of the major Some of the facts mentioned in this section has been collected from http://www.odi.org.uk/publications/working_papers/wp223 7

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disadvantages in marketing as the consumers want a steady supply and uniform quality. This is particularly relevant for the industrial user, as he has to decide about the formulation of other inputs so as to make the final product uniform. 3.1.3 Seasonal collection Most NTFPs are collected seasonally, though may be in demand through out the year. Selling them locally during the flush season creates an excess of supply over local demand, thus depressing prices. The short season becomes an even bigger constraint when it coincides with the monsoon in Orissa, as drying and transporting of products becomes a serious problem due to a lack of proper drying facilities and roads. It sometimes results in an increase in moisture in the product, which affects its quality and results in low sale value. 3.1.4 Low volumes The NTFPs in the forest Orissa are found in a scattered form and the quantity available from one place is often an uneconomic lot involving high transport costs. Again though large amount of NTFP is available in a particular area due to inaccessibity it is very difficult to collect hence low volume of NTFP is collected. The low volume of NTFP reduces the bargaining power of the producers, resulting in lower realisation. 3.1.5 Fluctuating demand The demand for these products fluctuates widely, as much depends on the production of its substitutes and the changing export scenario. Sometimes it is to the advantage of primary Primary collectors, e.g. hill brooms are greatly in demand in 2002–03, leading to many traders from Andhra Pradesh camping in the villages of tribal districts of Orissa and even paying a high price of Rs 15–16/kg, but often a combination of uncertain production and equally uncertain demand works to the disadvantage of the primary collectors. 3.1.6 Competition with synthetic substitutes With the development of synthetics for various commodities, many of the traditional NTFPs have lost their market or have to face stiff competition from them and domesticated species. For example, as compared to non-edible oil such as mahua available within the country, palm fatty

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imported from Malaysia is cheaper because it has been planted extensively in Malaysia and Indonesia and has the advantage of economy of scale. 3.1.7 Exports. Some NTFPs that are primarily exported are highly susceptible to international demand and prices. This may lead to over-harvesting or a price crash as a result of boom and bust syndrome.

3.2 THE NATURE OF THE ACTORS INVOLVED 3.2.1 Poverty of Primary collectors Most forest extractors are poor, chronically indebted to middlemen or landowners, and are thus not in control over their labour or other terms of exchange. They would stagnate at the subsistence level, and not benefit from high prices, unless they get out of their serfdom. Thus, underdeveloped rural credit markets and extreme poverty influence the disposal of NTFPs at a low price.8 3.2.2 Gender dimension The above mentioned problems become more acute for women entrepreneurs. Burdened with other

roles

traditionally

assigned

to

women

within

the

family,

their

ability to look for far-off markets is restricted. The small sizes of production further aggravates the problem forcing them into a vicious cycle of small markets, low production and (leading to) small surplus.9 3.2.3 Too many intermediaries. There is a long chain between primary collectors and end-users of the NTFPs.There are village level traders who work for market-based commission agents or wholesalers, who would then supply to other wholesalers outside the state. Despite the number of middle men between the producers and consumers being large, Primary collectors do not have the choice of many 8 9

Comments given by Mott, 1998 Comments given by Agarwal, 1989

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intermediaries. This may be due to interlocking of credit and output markets forcing the gatherer to sell to the money lender. In a competitive and efficient system there should be a choice of several buyers. 3.2.4 Nature of buyers The intermediaries are capable of maintaining a stronghold in the marketing network due to their ability to meet the immediate needs of the primary collectors. They offer quick and timely credit, make quick payment and also have a good network of procurement at the door step of the producers. A combination of factors, such as primary collectors’ lack of knowledge of market price, poor marketing structure, poverty and impoverishment and the ineffective state-agencies also strengthen the middlemen’s hold. Further, poor communication and transportation facilities, highly segregated markets and unequal bargaining powers between buyers and sellers make the field more profitable for middlemen (FAO, 1995). Thus, middlemen can and often do exploit the producers’ weak bargaining power due to latter’s ignorance of the market factors, and thereby retain a disproportionate share of producers’ earnings. 3.3 THE NATURE OF THE MARKET 3.3.1 Restrictions related to storage, transportation, processing and marketing The amount of NTFP that can be stored whether by primary collectors or growers vary from item to item. The law also requires the registration of growers of specified forest products whose production is in excess of the specified quantity. Similarly, for transporting NTFPs, transit permits issued by the forest department are still required for most products for their movements within and outside the State. Higher level processing requires permission through registration from the Forest Department. The processor/manufacturer is supposed to submit prescribed declaration, accounts and returns. The Forest Department is the enforcing authority for these laws. These restrictions and permits mean that the traders are at the mercy of FD all the time. Sometimes government officials harass traders and producers even when they are on the right side of law.Forexample,a household can legally store up to 2 quintals of mahua flowers for its own consumption, but villagers have often faced harassment by the local excise officials and the licensed liquor brewers for being in possession of much lesser quantities. There is no publicity

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regarding lifting of restrictions for fear of over-harvesting. Transit Rules are often changed, and it is difficult for tribals to keep themselves up-to-date about the latest rules. For instance, eucalyptus and Acacia auriculaeformis were free from transit rules throughout the state, but in March 2000 this facility was withdrawn for the districts of Malkangiri, Nabarangapur, and Koraput. No reason was assigned in the government order justifying the new restriction. The March 2000 resolution says that changes should be brought about in the existing Orissa Timber and other Forest Produce Transit Rules, 1980. But no such change in law has taken place. Moreover, necessary amendments are required in the Orissa Excise (Mohua Flower) Rules, 1976, the Board’s Excise (Fixation of Fees on Mohua Flower) Rules, 1976 and also in the Sales Tax Act for achieving the objectives of the March 2000 NTFP policy. 3.3.2 Harvesting Sometimes, in order to increase their immediate income, the tribals tend to collect the produce when it is not fully ripe for marketing or use methods of extraction that are not scientific and have the potential of destroying the trees. The present access rights give tribals the freedom to collect any forest produce, but do not encourage him to develop a long term commitment for developing the forests. Similarly, little attention is paid to post-harvest techniques to which the substantial losses in terms of quantity and quality are due. Some of the NGOs operating in the tribal districts of Orissa carry out training programmes for sustainable harvesting of the NTFPs 3.3.3 Quality, grading and storage Tribal primary collectors are often illiterate and ignorant about the quality of the produce. They do

not

generally

get

any

extra

price

for

higher

quality

produce.

Some

attempts have been made to make them aware about the quality by giving incremental price for different grades for gum karaya in Andhra Pradesh, where grading is based on the colour and purity of the gum that is easy to distinguish visually, but Orissa’s government has not replicated this. The primary collectors bring produce in mixed form and it is then graded at the pooling point, which results in extra costs. The upgraded goods fetch lower prices. Generally, the price applicable for the lowest quality is paid for the mixed product. Storage in thatched roof

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godowns where goods remain to be transported for a number of days, affects the quality of goods. Goods sometimes become infested by insects, lost to rodents or the moisture content increases, resulting in a deterioration of quality, particularly during the monsoon period. Returns on NTFPs such as tamarind, mahua, and amla can be doubled if stocked in a cold storage for 5–6 months.

3.3.4 Market information Primary collectors’ information and awareness about buyers, the prevailing market price, and government rules is inadequate. Primary collectors hardly know what the consumers want or need. The longer the marketing chain, the less likely that this information will be available to the producer/gatherer. Lack of fit between what the final consumer wants and the actual product results in wastage and low prices. In a competitive and efficient market, information should circulate freely. 3.3.5 Lack of infrastructure facilities Infrastructure facilities, such as roads, transportation, communications, etc. are not developed in forest areas, making them even more inaccessible. Due to a lack of these infrastructure facilities, the product costs increase as it requires extra cost to transport the goods from the interior areas. Moreover, it leaves the inner forest inaccessible and therefore full potential of the forest is not tapped. As a result presently the NTFP is collected only from the periphery forests. 3.3.6 Market access Primary collectors’ contact is generally limited to the village buyer alone, whereas in a competitive and efficient system there should be a large number of buyers and sellers. Primary collectors seldom ever bring their produce to the town. They are uncertain about the price they would get in the town for their produce in relation to the costs and risks of transporting NTFPs. Thus, although these products ultimately reach a very large market, the market is geographically limited as far as Primary collectors are concerned.

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Taking the above facts about the product, actors involved and the type of market into consideration it is very important to select the appropriate products from the total 68 listed NTFPs for the present business plan. For the purpose of selection of the NTFPs an important tool called product selection matrix was used. The matrix was applied for different products in different clusters identified. Following criteria were taken in the matrix in selecting the product. •

Marketing

•

Ecological

•

Socio-economic

•

Techno-logical

Under each criterion different items were taken which were scaled for different products taking the place into consideration also. Grand total of the scale for each product in each cluster was found out. Based on the score the products those were identified for the business are namely Tamarind, Amla, and Mahua, Siali leaves, Hill broom and Honey.10 3.4 CHARACTERISTICS OF THE PRODUCTS SELECTED11 3.4.1 Hill broom The Hill broom grass scientifically known as Thysanolaena maxima is a tall, reed-like perennial grass which is usually found on shady forest slopes. It thrives well in soils having high moisture content. The most valuable part of this plant is the inflorescence (average length is 30-40 cm) which is borne by the panicle of the plant. Depending on the quality of inflorescence it bears the price of the produce is determined. The best quality of hill broom is found in Bonda hills of Malkanagiri district and Kashipur block of Rayagada district. Proper time of harvest is one of the important factors which determine the quality of the produce. If it is not harvested in proper time, the inflorescence gradually loses its colour and strength, hence degrading the quality. The green and fine textured inflorescence is of the best quality so the best time of harvesting is between 10

Details of the clusters and products for the respective clusters have been discussed in the Chapter IV Information included in this section has been collected from different books published by RCDC in regional language,discussion with the persons involved in the trade and also the books published by Vasundhara 11

20

first and third week of January. The potential area under undivided Koraput districts is as follows: Table 1. District wise Availability of Hill Broom Name

of

the Koraput

district Availability(Kg)

Malkanagiri 2800

Nabarangapur

Rayagada

1320 680 Source: Status Report, 2000 on Orissa forest, Govt of Orissa

3.4.1.1 Uses Hill brooms which are made from the inflorescence the hill broom grass are mostly used in the homes for cleaning purpose. Because of the smooth sweeping capacity and elegant appearance these are the most preferred and desired as compared to others. As the price of the product is high these are not commonly used by the rural poor (except by the primary collector who harvest them).The grasses can be also used as cattle feed.There are different grades of the produce found in different districts. Grading is done based on the size (short or long) of the broom sticks and quality (thicker or thinner). Generally following grades are found Table 2. Different Grades of Hill Broom Grade

Length of the broom stick

Weight per bundle

I

37-40inchs

350grams

II

36 inches

300grams

III

32 inches

250grams

Source: Discussion with the traders 3.4.1.2 Present trade practices and market The primary collector generally collects the broomsticks from the forest area and these are sun dried for three to four days. The dried inflorescence is sold off by the primary collectors directly in the market (weekly haat) or in some cases some sort of value addition is done by them to get higher price. But most of the time to fulfill the immediate need they require money so they are bound to sell their produce without any value addition at their level. In Malkanagiri the primary

21

collectors sale the produce in unit basis unlike weight basis as in case of Rayagada and Nabarangapur.There is a wide price variation seen in the hill broom produced in the four districts under consideration (Koraput, Malkanagiri, Rayagada & Nabarangapur).Two types of brooms are found in Malkanagiri viz.Bonda type and Didai type.

Table 3. Different Types of Hill Brooms in Malkanagiri Types

No. of units per Kg

Price per unit(Rs)

Major Market

Bonda

5

5-6

Vijayanagaram,Vizag

Didai

3

10-12 Source: Discussion with the NGO Parivartan

So Didai type is considered to be of good quality. The Hill brooms found in Nabarangapur and Rayagada are traded by the primary procurer in weight basis and are of inferior quality to Malkanagiri, hence fetch lesser price (Average price Rs 4 per unit).At each higher level of intermediaries the price of the produce increases by 5-10%.The major markets for these districts are Jagdalpur, Saloor, etc.where big traders and wholesalers are present who directly meet the demand of the target market. It has been seen that by some kind of value addition at the primary collectors level more price as well as profit can be realised .The best result will be obtained when groups of primary collectors get together and may be with the help of other people’s organisation try to reach the end market reducing the different intermediaries involved in the trade practices.SHG groups at village level can involve themselves in making the broom instead of selling the dried inflorescence in the market. By this they can also minimise the cost of production to a larger extent in comparison to a private trader or any other agency as the members of the society themselves are the providers as well as processors of the raw materials.

22

3.4.2 Mahua Mahua is the flower of Madhuca Indica, a tree also named after its flower. It is not cut down like the other trees during the slash or and burn cultivation as its value is much greater to the tribal than the area rendered unproductive by its shade and roots. The value of Mahua consists in the fleshy corolla of its flower, and in its seed commonly called Tola.

Table 4. District wise Availability of Mahua Name

of

the Koraput

Malkanagiri

Nabarangapur

district Availability(MT) 50 1200 4000 Source: Status Report, 2000 on Orissa forest, Govt of Orissa

Rayagada 100

3.4.2.1 Procurement practices During the showering season in March and April, the cream coloured corollas of Mahua fall on the ground by themselves after their moulting on the ground. Usually the showering takes place between 4o’clock to 10 o’clock in the morning. The primary collectors collect the flower on a cleaned ground. Total sugar content of the flower is maximum when the flower is mature and ready to fall. The collection season lasts for three to four weeks. It is marked by three differential phases, i.e., the beginning, the middle and the end. Collection is maximum during the middle phase when most of the flowers are mature enough to fall. The flower collected are taken home and spread on open ground for sun drying. Racking is needed twice or thrice a day to avoid blocking and to ensure uniform drying. After three four days of good sun drying, the flower turns reddish with a reduction in weight of about 70%. Improper drying makes flower blackish, thus reduces its quality due to in sufficient drying. The degradation in quality may cause a lowering in market price by30% or more. The dried flower can be stored for a comparatively longer period than the raw flower. Mahua can be stored in the harvesting season and sold in the lean season for better realisation of money.

23

3.4.2.2 Uses Mahua flowers are sugary and sickly taste and smell. It is a major food article for the tribals. Sometimes sweets are prepared out of Mahua flower. Mahua is also processed to prepare vinegar, jam and gur (jaggery). Mahua is also used as cattle feed. But the most popular use of Mahua is in preparation of liquor. The Ranchi based ‘society for rural industrialisation’ has been successful in processing Mahua to yield a low cost substitute for kismis. At the village level, it is mostly the Kirana shop owners who buy Mahua from the villagers. The Kirana shop owners sell it to the country liquor processors (called Bhattiwallahs) in nearby places. These are the ones who pay license fees to process liquor. Post March 2000 no significant change has been observed in the ground realities with regard to Mahua. Though the ownership rights was transferred to the Panchayat, the Excise Department still continues to hold control over the licensing and hence it is only a very few powerful private players with big financial muscle who control the trade. 3.4.3 Tamarind The plant bear fruit in November- December and attain maturing through ripening in MarchApril when they are collected. A fully-grown tree yields about 180 to 225kg per season. Three varieties of tamarind are traded in the market. Those are seeded, seedless or deseeded and tamarind pulp. Tamarind of Nabarangapur and Malkangiri districts are more rich in pulp (approximately 55%) and hence of good quality. The amount of seed that is available in tamarind of Rayagada district is 25% more than the tamarind available in its neighbouring districts. There is high fluctuation in the production of tamarind over the period in Orissa. Table 5. District wise availability of Tamarind Name

of

the Koraput

district Availability(MT)

Malkanagiri

Nabarangapur

Rayagada

800 1550 7000 Source: Status Report, 2000 on Orissa forest, Govt of Orissa

24

3.4.3.1 Uses The fruit pulp of tamarind is a common flavouring and souring agent in the Indian food, particularly for the south Indian dishes like rasam and charu. Other traditional uses of the pulp include polishing and cleaning of the metal ware. The strongly acidic pulp easily removes temporary stains and imparts lustre to the metallic surface. Rather uncommon among the people is the use of pulp in the form of a concentrate is used in instant soft drinks, instant soups and noodles, cough syrups, candies and a preservative in food processing. The tamarind seed is also marketed. Its seed consist of a outer hard and brown cover. The kernel constitutes about seventy percent of its weight. The kernel is separated from its cover either by soaking or roasting the seed for a day in water. The commercial as well as domestic value of the tamarind seed actually lies in its kernel. The kernels are more portentous than barley and maize and the flour of dried kernel is sometimes mixed with wheat or other cereal flours to make chapattis and pancakes, etc. The kernel contain sizing chemical and the kernel powder (called TKP or tamarind kernel powder) is used in the textile industries as a sizing material. TKP has some advantage over common starches (because very little or no softening required if TKP is applied) and is more acceptable as well as useful in its blended form. When boiled with water (containing boric acid and phenol), TKP turns into a good paper adhesive. TKP is used in paper industries, jute industries and plywood industries also. 3.4.3.2 Widening product scope From the above discussion we can have the following picture about the economy of scope of Tamarind. Tamarind Fiber Tamarind fruit (seeded and deseeded)

Seed

Fig.2 Widening the Scope of the Product

Tamarind

25

Tamarind fruit is used as flavoring and souring substance and also in making syrup and pickles. Kernel is extracted from the seed of tamarind and it is used in Jute industries, Paper industry and in textile industry. Its fiber can be used to prepare coir. The parameters on which quality of tamarind is graded will provide basic information about how tamarind is traded. Quality is based on a few primary characteristics of the commodity. They are: •

Seeded or deseeded: The most basic form of classifying tamarind. The former is the cheaper and less preferred variety whereas the later moves faster in most of the Tamarind consuming areas.

•

Colour: the original colour is reddish brown and this happens to be the most preferred one. A reason for the same being the fact that the tamarind used in the rasam or sambar lends its colour to the preparation. The colours may vary from dark brown (almost black) for the old stocks, which are not refrigerated properly. The price of tamarind rise with the Tamarind’s proximity to the desired reddish brown colour. Hence, tamarind is preferred to be stored in cold storage.

•

Moisture and dryness: different areas have different preferences for the level of dryness of the moisture however none of the extreme is desired anywhere. The dry Tamarind being non-sticky occupies larger volumes and give the visual impression of good quality. It should also hold less foreign matter. However the moist variety is preferred for its juice content by some while others prefer it for the ease of pulping it before adding it to food preparation

•

Fruit size: the discerning buyers, particularly those for large scale, industrial purposes prefer fruit with large pods. The quantity of pulp in these large pods is a greater percentage of whole and thus provides greater value for money and less wastage.

•

Foreign matter: it can be in the form of bits of the shell remaining stuck to the pulp. Some seeds that remain inside the fruit ( as deseeding is very rarely complete), the fibres that hold the fruit intact and sand and dust that is collected during the whole process of harvesting, deshelling, deseeding, packaging, storage and transportation. The amount of such foreign matters does have an adverse bearing on the price the tamarind will command.

•

Deseeding, colour and foreign materials are factors that can be easily controlled by ensuring a minimum level of care and precaution when handling the commodity. The 26

moisture factor though largely dependent on environmental; conditions while the fruit is on the plant, can be controlled at the storage and transportation stages to minimise the losses.

3.4.3.3 Existing trend of marketing A major chunk of tamarind produced in undivided Koraput district is exported to southern states of India. One of the major markets for the tamarind trade is Vijaynagaram and Hyderabad.The trader channel of tamarind is given below.

Local kutchias (@ 10-10.50 per kg)

Wholesaler (@12 per kg)

Stockist of outside state (@ 12.5 per kg) Fig.3 Trade channel of Tamarind The above price is for deseeded tamarind in 2004. The tamarind pulp has an export potential having its demand in the Arab countries and the west. Most of the tamarind dispatched from Orissa is not in the deseeded form bur in the seeded one. There is not a single TKP processing plant in Orissa. Hence, its marketing is facilitated by the brokers who charge a commission of 5% to facilitate the marketing. Inside the state few traders dominate the tamarind market. The formation of cartel of trader and immediate need of money pull down the primary procurer to a disadvantageous position in the bargaining for good realisation of money. The district level wholesalers have tiers of agents at the semi urban and village level. These agents either buy directly from the primary collectors or buy through their sub-agents. Though government machinery fix price of tamarind keeping in mind better price realisation by the primary procurer, the trading of tamarind take place at much lower rate than

27

the minimum procurement price because of the above mentioned reason. The price of tamarind also depends on the supply-demand equation. If the production of tamarind increases then the price of tamarind falls drastically and vice-versa. 3.4.4 Siali leaves Siali commonly called by various names in various parts of India. Its common name includes names like Siali patta, Madrasi patta, khali patra, patroli, adda leaves, etc. It is a creeper plant with high regeneration capacity. Its is mostly found in the Sal forest and it grows well in place with good moisture content like near streams and seasonal falls and other water bodies. Siali is a major non-timber forest produce. This creeper is found in abundance in the, forests of Koraput, Rayagada, and Malkangiri districts. This plant has a seasonality pattern of growth. Grows best during the rainy months, the leaves during these months are tender, soft, good green colored, without holes and big sized so from May to November the good period of the growth is there. From December onwards the quality starts deteriorating the leaves start becoming thick, dull colored, with holes and size also starts to decrease. From February onwards the autumn starts and the leaves start to fall also the moisture content starts to decrease and so its availability becomes difficult and during the month of April it is not seen at all in the forest in most of the places. Table 6. District Wise Availability of Siali Leaves Name

of

the Koraput

district Availability(MT)

-

Malkanagiri

Nabarangapur

Rayagada

150 200 Source: Status Report, 2000 on Orissa forest, Govt of Orissa

3.4.4.1 Uses and importance Siali is basically used for making leaf plates which is used in great number for various purposes like the marriage parties, religious parties, in temples, for wrapping and for parcel, in hotels etc. Its stem forms a very strong rope for tying it is very often used as rope for various purposes and it remains strong for a considerable period of time.

28

Siali, a major non-timber forest product playing a very significant role in the life of the people who are mostly dependent on the forest for their livelihood of undivided Koraput districts. These people are mostly ST/SC people, who use the Siali leaf in making the leaf plates and then selling them in the market to traders. The various products of Siali leaves are in great demand in various parts of India. In southern states like Andhra Pradesh, Tamilnadu, Karnataka then in the states like Maharashtra, Gujarat and Rajasthan the various products of Siali are in great demand through out the year but the demand increases immensely during the marriages and festival seasons. The people are getting their bread and butter from this creeper for some 6-7 months of the year in these parts of the country. Siali is a non-timber forest product, which has a tremendous potential to provide self-employment opportunity that to with very reasonable amount of investment. 3.4.4.2 Primary producers and the collectors of Siali leaf plates12 The primary producers of Siali leaf plates and collectors of Siali leaves are women. Mostly the ST/SC community is engaged in this activity. This work is both time consuming and laborious activity. The women have to go to the jungle early in the morning; many of them start as early as 5 o’clock in the morning. They have to cover many kilometres before they come to the place where they can find the Siali leaves while talking with the primary producers we came to know that they travelled some 7 -8 kilometres to get the Siali products. The Siali products pass through various steps before taking proper shape of plate. First the leaves are collected then they are stitched and then dried in the sunlight. After drying the leaves are sorted and made in to bundles and then they are ready for being sold in the market. At present the women of various parts of undivided Koraput district are mostly involved in making simply the leaf plates without any value addition. It is a very time consuming work. They have to spend one whole day in collection of leave, the leaves that are brought from the jungle in one day is sufficient for the making of leave plates for 2 days. In the two days they are able to make some 4 – 6 chakkies (one chakkie has 80 leaf plates) of leaf plates. A person in one day is able to stitch some where around 3 -3.5 chakkie of rough stitched plates in a week they spend about half day to dry and sell 4 days stitched plates roughly about 14 12

The facts and figures given in this section are totally based on the discussion with the primary collector in one of the tribal village.

29

chakkies. The rate that they get fluctuates between Rs. 3.50-5.00 per chakkie. So they are able to earn about Rs. 49 – Rs.70 in a week. So yearly they are able to earn a sum of around Rs.1500 – Rs.2500 through this activity stitching around 300-500 plates. 3.4.4.3 Products made from Siali leaves and their cost in the market At the village level where the primary producers generally reside the Siali products are generally differentiated based on the type of stitching that is used in making the plates. Either the people use sticks made from the dry stalk of palm plant or they use the thread for stitching based on the type of stitching and the number of stick pieces used. Based on these criteria we can classify the plates in two categories: •

Those made by using hand – these are called as rough stitched where the number of sticks used is few, then comes medium stitched where the sticks used are more than used in the rough stitched and then there is the fine stitched which is a very fine art of stitching the plates by leaving very little space between the sticks used.

•

Those made by using the machine, called the machine stitched plates

If we look at the cost that each type of the leaf plates has in the market, we find that the fine stitched plates are costly than the machine stitched then comes the medium stitched and then the rough stitched (fine stitched > machine stitched > medium stitched > rough stitched). But in terms of number of these plates being made by the people the scenario is just the opposite. (Rough stitched > Medium stitched > Machine stitched > Fine stitched). Price wise ranking is (Machine stitched > = Fine stitched > Medium stitched >Rough stitched.) These products are generally made by the primary producers. Often they prepare the rough stitch plates traditionally. In recent times they have started preparing the remaining three types of plate after getting assistance from some external agencies like NGO’s and Government bodies. Now more and more people involved in plates making activity are slowly getting into making these plates (machine, fine, medium stitched) because these plates are fetching them good money and there is a very good demand of these products in the outside market. A look at per day return that per producer gets gives a good understanding about this scenario.

30

3.4.4.4 Economics of Siali plate making One person in 8 hours stitches about 125 such plates.1/3rd of a day is required to collect leaves for stitching of 125 plates. 1/2 of the day is spent on drying and selling 6 days produce which is roughly about 750 plates i.e. seven and a half chakkies are produced. The money that this product fetches in the market varies from Rs. 20 to Rs.25 per 100 plates. This way the return per day per producer comes to Rs. 17.50 to Rs. 22.50 3.4.4.4.1 Machine stitched plates One person is able to stitch about 200 plates in 8 hours. 1/2of a day is spent in collection of leaves for stitching the 200 plates. They spend about 1/2day in drying and selling the 6 days stitched plate’s roughly about 1200 plates i.e. twelve chakkies. The price that this product gets in market varies from Rs. 18 to Rs.22 per 100 plates. This way the per day return per producer comes to Rs. 23 to Rs. 24. 3.4.4.4.2 Medium stitched plates Generally one person is able to make in 8 hours about 250 plates. 1/2day is spent in collecting the leaves for making 250 plates. They spend about 1/2day in drying and selling 6 days produce which is roughly 1500 in number i.e. fifteen chakkies. The price that this product gets in the market varies between Rs. 12 to Rs.17 per 100 plates. This way the per day return per producer comes to Rs. 19 to Rs. 27. 3.4.4.5 Upcoming trend in the leaf plate sector This sector of leaf plate is at present undergoing tremendous change. Now every day new changes are taking place in the Siali leaf market in terms of products. Now people are moving towards various types of value addition in the plates. Value addition is being in the form of cutting of various plates then the people are also taking up the moulding of the leaves in a great way. If we talk about the cutting aspect we find that just by simply cutting the plates in a uniform way about their edges the price of the product increases by 4 – 5 rupees. These products are in great demand in the southern states. Although in terms of there usage they are still basically used for eating. In the moulded section we find a whole range of various products are being made and

31

they are found in good number in the market. Various type of moulded products are present in the market some are having only Siali leaves as the raw materials other’s use various materials as raw materials like the news, lamination paper, Sal leaves, brown paper, cardboard, etc. 3.4.4.6 Market of Siali leaves Siali leaf plates market is mostly towards the southern states. States like Andhra Pradesh, Karnataka, Tamilnadu, and Kerala have a very good market for Siali leaf plates. Hyderabad is a big market for moulded products of the Siali leaves and Vijayawada is a very big market for the loose leaves of Siali. Although both these places are in Andhra Pradesh but there is basic difference in the like for the leaf plates. People of Hyderabad like to have food in 14 inches plates where as the people in Vijayawada prefer the 16 inches plates (information obtained from talking with the traders). The reason being that in Vijayawada the fooding habits to have a large number of dishes in small bowls which requires large place so they like the 16 inches plates where as in Hyderabad they don’t go for so many bowls and hence like 14 inches plate. In Vijayawada the Mahavirguda place is wholesale market for Siali loose leaves. There are some 79 whole sellers in that market who are controlling the loose-leaf business. Close to the market is wholesale market of moulded plate’s Chittori market. There are some 40-50 wholesalers and retailers are present dealing in this business. In Hyderabad there are many manufacturers and there are many wholesalers dealing in the business. The important markets are Begam bazaar market where the actual market is called the Ashok market. Where there are some 15 -17 whole sellers and retailer. Then there is the Munda market at some distance from the Secunderabad station. There is another market near Malakpeth. The moulding units are situated mostly at the industrial area far away from the main city although there some units also situated in the city. In Hyderabad and Vijayawada the Siali leaves come from states like Orissa particularly from undivided Koraput districts, Chattisgarh, Madhya Pradesh, and also from inside the state from places like the Shriharikota, Kothakota, etc. From Madhya Pradesh and Chattisgarh the leaves come from Ambikapur, Bilaspur. These leaves are not only used in the entire state but also supplied to other states like Karnataka, Tamilnadu, Delhi Maharashtra, Gujarat, etc. there is a great demand in Pune for siali plates which can be used as a substitute for buffet plate.

32

In plate market the cost of the plates depends a lot on the type of raw material being used. Like the foil that is used can be of high cost due to its good quality or the board that is used might be of different quality, even the use of gum quantity changes the price of the products. Hence the cost of the plates varies a lot. Like the computer-laminated plates, silver/gold foil papers, even the newspaper base plates can show change by 15 – 20 paise depending on the quality. 3.4.5 Amla Amla, one of the three constituent of “Trifala” is the fruit of the plant Emblica officinalis, a small or medium sized deciduous tree. Flowering in the tree takes place in the month of summer and the fruits get matured during winter. The color of the fruit is greenish when it is tender and later on changes to light yellowish to pinkish as it matures. It tastes sour. It is a rich source of vitamin C and its content of ascorbic acid is next to only that of Barbados cherry. The best time for collection is March and April. The tree is mostly found in the forest as wild species but now days it is being grown in a large scale after the market demand increased greatly. The average yield of wild Amla-trees growing in the forests is 25 kg.As there is only one species of Amla so there is hardly any variation in the fruit quality but in general the wild varieties have comparatively smaller fruits and are of better medicinal use in comparison to the cultivated one.(larger fruit hence more pulp). 3.4.5.1 Uses Green Amla is sold immediately (Within 48 hours) after packing in sacks. After harvesting it can be processed within two days of its collection. To maintain good quality it is boiled for 8-10 minutes (Over boiling would damage its natural color).But sometimes it is stored in the cold storage for a period of 1-2 months. Dry Amla is stored in sacks in godowns. Dry Amla can be stored up to one year. After one year it is susceptible to fungus attack. Before storing the Amla it is very important to ensure whether it is fully dried or not. If it is not fully dried then it is susceptible to fungus attack immediately. Now as the demand for this product increases there is heavy competition even among the primary collectors to collect it from the forest so in most of the cases it has been seen that an individual, keeping in mind that if he doesn’t collect someone else would take it away, is

33

collecting the produce before time. Again it has been noticed that instead of plucking the fruit or by shaking the tree the primary collectors cut the tree so the production potential is going to hamper by this kind of practice by the primary collectors. Out of the four districts under study the good potentiality of the product is seen in Koraput, Rayagada and Nabarangapur district. Table 7. District Potentiality of Green Amla Name

of

the Koraput

Malkanagiri

Nabarangapur

Rayagada

65

20

district Availability(MT)

120

Source: Status Report, 2000 on Orissa forest, Govt of Orissa

3.4.5.2 Widening Product Scope

Amla

Fruit

Leaves

Stem bark

Fig.4 Widening the Product Scope of Amla The fruit is used for making pickles, preserves, jellies, curries and Shampoos. The stem bark yields about 12 percent of tannin on zero moisture basis, whereas the tannin content in the twig bark is fairly high about 21 percent. The leaves yield about 22 percent tan and 17 percent soluble non-tans. Although the leaves and twigs contain high tannin content but collection of these for commercial exploitation is difficult. Fruit also contains fairly high tannin content about 25.5 per

34

cent but the soluble non-tan being very high about 38.7 percent is unsuitable in tanning industry. The fruit is of great value in indigenous medicine. It is cooling, diuretic and laxative, dried fruit is useful in diarrhoea and dysentery also in anaemia, jaundice and dyspepsia (T. Krishnamurthy). Bigger size Amla with lower fibre content is preferred for murabba and ladoo preparation. The smaller size of Amla (green and harvested earlier) is preferred for chyavanprash one of the highly commercialized product. Processed 1 Kg Green Amla

200 grams of dried deseeded Amla

Average procurement price for 1 Kg of green Amla: Rs 4 Average market Price of 1 Kg of dried, unseeded Amla: Rs 30 3.4.5.3 Marketing of Amla Generally Amla is marketed in two forms, one is fresh green Amla and the other one is dried Amla. Both the types have different market requirements. Fleshy and large sized fruits without spots yield better rates then smaller counterparts with spots. Amla collected and dried during November and December are immature and yields a blackish grade produce that fetch cheaper rate. The mature fruits (harvested in January to March) on drying give a reddish brown (brick red) colour to the produce that is considered as superior grades. Market selling price between the two different grades can vary up to 4-6 rupees per kg. There are a number of domestic consumers in the state who depend on local supplies mainly for ayurvedic drug manufacturing. The primary collectors in the above mentioned regions either supply them directly on order or sell their produce in local haats to the traders or the drug manufacturers. The sun dried materials from the respective districts reaches to the wholesalers present in Raipur, Dhamtari, Ambikapur, Jagdalpur, Kantabanji, and Khariar Road. There is heavy demand of seedless type of dried Amla which fetches a price range of Rs 30 to Rs60 in different months of the year.

35

30 20 10

PRICE 2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

0 1986

RATE PER KG

PRICE TREND OF AONLA (1986-2003) 40

YEAR

Fig.5 Price Trend of Amla From the above chart it is clear that the demand for Amla has increased sharply from Rs.1.70 per Quintal in 1986 to Rs.38 in 2002. The increase has been sharp particularly 1993 onwards when many usage of Amla was found out. There are two reasons contributing to this sharp increase in price level. One is production is going down and the second is more demand of the produce in the market place.There is a great variation between the price at which the end consumer buys and the t available to the primary collector (Around 300-400%). 3.4.6 Honey Honey is a natural product that has no substitute. Although honey was perhaps first used by man as a sweet food, it is used not only for its food value, but also for its medicinal and therapeutic properties, and for its characteristic flavour and taste. Other food sweeteners like the high fructose corn syrup, jaggery or molasses syrups can never be likened to honey, and serve only as simple sweet and nutritive substances. Table 8.District Wise Availability of Honey Name

of

the Koraput

Malkanagiri

Nabarangapur

Rayagada

district Availability(MT)

-

-

20

-

Source: Status Report, 2000 on Orissa forest, Govt of Orissa

36

3.4.6.1 Rock bee honey and apiary honey There are two types of honey namely rock bee honey and apiary honey. But there is no difference in rock bee and apiary honeys, when they are in the hive. It is only the process of harvesting that makes rock bee honey inferior. If immature rock bee honey is collected, it shows more water and gets spoilt. In the process of pressing or squeezing, this honey gets contaminated with larval juices, and other extraneous matter. Such honey can be processed and excess water or extraneous matter removed. After processing the honey is equal in almost all respects to the apiary honey. After processing this honey also can get special grade and can get a better price. The tribals of the region lack knowledge of proper methods of collection, storage and transport of honey. Tribal honey collectors in forests and beekeepers practicing traditional methods of beekeeping produce and market pure honey. The deficiencies found in this honey are due to ignorance of the health and hygiene norms or quality standards. They do not know also the methods and benefits of producing high grade honey. Honey is collected by the crude method of pressing the combs by hand or by squeezing it out of the combs in a piece of cloth. It is stored in any type of vessel and often in an exposed condition. In the case of the people who live adjacent to urban areas and have gradually adapted the urban way of life, the ignorance gives way to indifference. At present there is an unhealthy competition between these honeys. The situation developed due to the shortage of apiary honey, consumer preference for such honeys, and the absence of a rational pricing policy. Marketing of honey, being unorganized, there is no control or regulatory mechanism under which misrepresentation of forest or rock bee honeys as apiary honey can be prevented in the market. It is often the private traders or honey packers who sell rock bee honey as apiary honey. They procure rock bee honey from tribals or forest contractors at a very cheap rate and after simple process sell it as apiary honey. They can thus afford selling such honeys at a lower rate than genuine apiary honeys. This affects the marketing of apiary honey through the organized channels. In the pricing policy rock bee honeys can be priced differentially to avoid unnecessary competition. If rock bee honey is not processed, it gets a lower grade and will be priced at a

37

lower rate. Honeys of lower grades can be used in industry and a lower price will help in their greater consumption in this sector. 3.4.6.2 Marketing of different types of honey 3.4.6.2.1 Forest Honey Forest honey is usually sold outside the region where it is produced. It is processed and bottled by private firms or individual packers, who obtain this honey from agents and contractors of minor forest produce. Small quantities of forest honey are sold by honey collectors who are the tribals of the region themselves in the nearby market. It is usually brought to the weekly markets (haat). Petty traders sometimes procure this honey and organize its retail sales in small shops or, where possible, by door-to-door hawking through trained hawkers. It is a common practice for some honey dealers from rural or semi-urban areas to sell honey in the streets of nearby towns or cities. To convince the customers of the genuineness of the product, they flaunt the combs of the dwarf bee, that are earlier filled by them with some sweet syrup. Quite often this works, and the dealer earns a tidy sum this way. 3.4.6.2.2 Apiary Honey This is generally marketed in or near the place of its production. There is always a demand for the apiary honey and many beekeepers find it advantageous to sell their produce at their door, rather than supply it to their society. There is usually a good market in the hill stations and places of tourist attraction that also happen to have a well-developed modern beekeeping industry. Apiary honey marketed through private firms and individual packers is often from the surplus states, sold in this case in non-local markets. 3.4.6.3 Price Structure The price structure is regulated by the market forces of supply and demand and is not related to the cost of production. The benefits of higher price never reach the beekeeper. Depending on the quality of the honey also price is determined. The produce is being sold in the market with or without branding. Branded produce are well processed and hence sold at higher price than

38

unbranded. In Nabarangapur district KBK honey is sold at a price of Rs120 per kg where as in Koraput district Vasundhara honey is sold at a price of Rs 160 per kg.The procurement price is much lower than the price paid by the end user. generally the processing plants procure the unprocessed honey from the primary collectors at a price of Rs 75 per kg.The Girijan Cooperative Corporation, Visakhapatnam, Andhra Pradesh, is much involved in the procurement of rock as well as apiary honey from the tribals.At times the tribals are exploited by the small local level trader in giving them proper price of their produce. Some problems and constraints faced by the honey producer, resulting from the existing organization are: irregular price structure of honey, exploitation of the tribals exploitation of the tribal honey collectors by contractors and petty traders, unhealthy competition between forest and apiary honey. There is need to organize the entire production, processing and marketing activities in the honey the tribal dominated districts of undivided Koraput. This will ensure a rational pricing structure for honey and open up possibilities for better value realization to the tribals.The honey produced in those regions have a good demand in the nearby states. With the use of modern collection, storage, processing and bottling technologies the potential market can be tapped and hence better value realization to the tribals. 3.5 THE EXISTING MARKET OF NTFPs 3.5.1 Characteristics of market faced by producers, intermediaries and customers As far as the procurement level is considered there has always been demand-supply gap in case of NTFPs. The intermediaries take over the risks of transporting, sorting, grading, packaging, financing, and all the activities involved in getting the produce from the farm or orchard to the consumer. There are different intermediaries in the produce chain. The produce after harvest has to pass through multiple channels before reaching the consumer because most of the time the primary collectors do not directly sell the produces. The most common practice followed by the district level wholesaler is to get prior contract for the amount to be supplied and show the stockist of outside state and quality that can be obtained from the region and then they are financed by wholesalers or the commission agents. The produces are then sold to the factory to process it to desirable form for the end consumer. The district level wholesaler are then paid agreed amount depending upon the agreement that would have been made between the to parties.

39

A small number of producers have direct dealings with the consumers or sell their produce through the commission agents. Commission agents, generally known as kutchias also include the forwarding agents who own the responsibility of proper packaging and transit. They are the most important link in the marketing of minor forest produce and control about two-thirds of the total market. The primary collectors seldom grade the produce. These intermediaries also do not follow a standardized method for grading. They manually sort out according to variety, shape, size, colour etc. Processing factories procure from the wholesalers or their special agents. The retail distribution is done by local kutchias, agents appointed by the district level wholesaler in various village or suburban level markets.

The traders, wholesalers and kutchias each take a commission commensurate to cover the risks handled and the tasks performed by them. SHGs usually eliminate one or more links in the chain by taking over the functions of that intermediary and performing the functions for its members. The important wholesale minor forest produce markets in India are Calcutta, Delhi, Bombay, Madras, Ahmedabad, Pune and Nagpur. From undivided Koraput districts Jagdalpur, Raipur, Dhantari, Salur, Vijaynagaram, Parvatipuram, Hyderabad are the market where trade is being done. Price fluctuation is another important characteristic of this market. Because of irregular supply price is determined by each year’s total production. Other factors affecting price are, supply and demand of particular varieties, periods of availability, weather conditions, transport facilities, and quality and appearance.

The structure of the existing value chain with different intermediaries is given in the next page.

40

PRIMARY COLLECTORS Mainly tribals

KUCHIYAS Roaming/Village based petty traders

LOCAL TRADERS Locally based traders who also attend mandies

AGENTS Agents of mainly large town based traders

TRADERS In large towns

WHOLESELLERS In large towns

INDUSTRIES Medicinal/Pharmaceutic al industries

STOKISTS/RETAILERS In different states

CONSUMERS Fig. 6 Structure of intermediaries in the value chain of NTFP produce

41

CHAPTER IV PROCUREMENT PLAN From the previous Chapter it is clear that there is a great potential of NTFPs in different clusters (identified) of the undivided Koraput district .We have also discussed the present trade scenario and the value chain. From the existing value chain it is clear that there are many intermediaries in between the primary procurers and the end user of the final produce. The intermediaries directly or indirectly procure the locally available NTFPs from the primary collector. It is very difficult to remove all the intermediaries in the value chain at the initial period as they have the local knowledge of motivating the tribals to be positively pre-disposed towards them. A well planned, sound procurement strategy which involves maximum value realization to the primary collectors can increase the volume of the business and hence larger market share in the trade. Considering the present trade situation in the four tribal districts under consideration we propose to have a strong procurement strategy for the NTFPs identified in the four districts. Depending on the potentiality and availability of NTFPs, 10 clusters have been identified from the four districts for the procurement of the produces. We propose to form 10 SHG federations in the clusters identified for the business. Collection of NTFPs will be done by the SHG members themselves or they can procure from the primary collectors at a price above the existing market price.The total collection will be kept in the SHG federation godown and later on the produces will be sold to the whole seller/big trader.

42

4.1PROCUREMENT PLAN FOR KORAPUT DISTRICT

Fig.7 Different Clusters in Koraput District13 Table 9. Details of the Clusters Identified in Koraput District.14

Cluster

NTFPs

Potentia Trade

Possible

Organis

selected

lity

procurem

ation

ent

involved

(Approx.)

(MT) Naranpatna,Bandhuga,

Tamarind

3150

1900(60.3%)15

(MT) 200

Laxmipur

Siali leaves

55

22(40%)

20

Koraput,Jeypore.Dash

Tamarind

1000

710(71%)

200

bantpur

Hill broom

130

55(42%)

50

NEWS,

Amla

3000

2200(73%0

60

CYSD

13

JSVSS

www.mapsofindia.com The data given under the column “trade” and “possible procurement” have been collected by discussing with the NGOs in the respective clusters and the SHGs that are going to involve in the trade. Same procedure was followed for other districts also. 15 Figure in the bracket denotes the % of the total NTFPs traded 14

43

Nandapur,Padua

Tamarind

600

350(58%)

250

Amla

50

38(76%)

20

Siali leaves

15

8(53%)

5

RASS

Source: Forest Department and Survey In Koraput district three clusters have been identified to procure the NTFPs potentially available. From the above table it is evident that there is a great potential of tamarind in the areas of Narayanpatna, Bandhugaon and Laxmipur. In these regions though potentiality is more the trade scenario is not that much satisfactory. Out of the total potentiality of 3150 MT only 1900 MT are being trade by all the players in the market. Around 40% of the produce is not collected from the forest due to negligence of the primary collectors which is again due to the low price at the time of better harvest. The nearest market for these produces are Parvatipuram and Sallure.In this cluster JSVSS is working which has already formed 55 SHGs.As of now no group has undertaken NTFP trade so creating awareness among the group members with the consultation of JSVSS would be a better proposition for the business. An organization called NEWS is working in the nearby villages of Koraput.It has already created awareness among the tribals about the importance of NTFPs and the profit in the trade. To know the number of SHGs that will be involved in the trade practices in that particular cluster we visited different SHGs and from our discussion with different groups and JSVSS we selected 14 SHGs which can take up the tamarind trade. The groups identified were told how to go for the trade competing the local trader and kutchias.The total quantity of tamarind that can be procured by the groups from the primary collectors and the amount collected by them were estimated. It was found that from that particular cluster 200 MT of tamarind can be procured through SHG. Similar operation was carried out in other clusters for finding out the possible procurement through different SHGs in the respective clusters of the district. From the above table it is clear that in the first year of trade we can have a share of around 20% in the tamarind trade in Koraput district. The SHGs are directed to procure the produce from the 44

primary collectors at a price higher than the existing market price i.e. the price given by the local trader. As these traders are the competitors of the SHGs which are in trade, there will be many conflicts in the trade. The groups will be educated enough to face any kind of threat and challenges from the traders. Procurement of tamarind can be increased in the next year. Procurement of produce from the primary collectors will be done by the SHGs in a weekly basis in the village haats.The amount procured will be taken to the SHG federation and stored in the godown of the federation. For tamarind deseeding will be done at the SHG group level in the villages by the group members. Deseeding machines will be provided to each SHG group for carrying out the operation. 4.2 PROCUREMENT PLAN FOR MALKANAGIRI DISTRICT

Fig.8 Different Clusters in Malkanagiri District Table 10. Details of the Clusters Identified in Malkanagiri District

45

Cluster

NTFPs

Potentiality

Trade

Possible

Organ

selected

(MT)

(Approx.)

procurem

isatio

ent

n

(MT)

involv ed

Mathili,K.Guma,

Tamarind

1500

1100(73%)

500

Khairaput

Siali leaves

70

35(50%)

40

Pariva

Mahua

100

60(60%)

30

rtan

Honey Honey

200Kg 250Kg

110Kg (55%) 80Kg ,SDF 180Kg (72%) 150Kg SMVS Source: Forest Department and Survey

Chitrokonda,Balimele

In Malkanagiri two clusters have been identified and tamarind, sialileaves, honey and mahua have been selected. Most of the traders have the opinion that doing business in Malkanagiri is a risky proposition because it is a naxalite area. So if at all they do trade in this area the primary collector/the kutchia has to bring the produce outside the district. Here we can do the business with much involvement of the local NGOs and SHG groups. The markets for different produces identified are Khariar Road, Kantabanji andVishakhapatnam.The local NGOs operating in the two clusters are Parivartan and SMVS which have formed around 200 SHGs.The main advantage of Parivartan is it has already mobilized people for NTFP trade and last year 5 SHG have earned profit in mahua trade. So there will be less effort required to educate people for involvement in the trade. In this district Shantilal is the biggest wholesaler who has around 40% of the total market share in the trade. As it is a threat for the big traders outside the state to bear the risk of transportation of the produce from the SHG federation godown to the desired market, it will be better proposition if the federation directly sale the produce to Shantilal.There is high risk involved in these clusters so for minimization of risk proper steps should be taken. Similar procedure was followed in estimating the total procurement possible from the two clusters as done in the clusters of Koraput district. 4.3 PROCUREMENT PLAN FOR RAYAGADA DISTRICT

46

Fig.9 Different Clusters in Rayagada District Table 11. Details of the clusters identified in Rayagada district Cluster

NTFPs

Potentiality

Trade

Possible

Organisation

selected

(MT)

(Approx.)

procure

involved

ment (MT) Chandrapur

Hill broom

50

32(64%)

15(30%)

SKSAF

Bisam cuttack

Honey Siali leaves

40Kg 200

23(57%) 120(60%)

15(37%) 50(25%)

Vikash Niketa Nirvar

Tamarind

200

135(67%)

50(25%)

Amla

150

125(83%) 30(20%) Source: Forest Department and Survey

47

Two clusters namely Chandrapur and Bisam Cuttack have been identified in Rayagada district which are the two major blocks of the district. In this district though there is a greater potential of Harida nobody wants to collect and process it because no assured market for the produce has been found out.The cost of deseeding and drying it is much more than the price provided by the traders in the local haat.So we also ignore this product for the first year but after establishment of the business in the area people can be encouraged to take initiative to get into harida trade also which has a good demand in the medicine industry. From the above table it is clear that we can have a share of 30% in the Hill Broom business in Chandrapur block, which will be a good achievement in the first year of business. On an average

4.4 PROCUREMENT PLAN NABARANGAPUR DISTRICT

48

Fig.10 Different clusters in nabarangapur district Table 12. Details of the clusters identified in nabarangapur district Cluster

NTFPs

Potentiality

Trade

Possible

Organ

selected

(MT)

(Approx.)

procurem

isation

ent

involv

(MT)

ed

Raighar

Mahua

1000

600 (60%)

350 (35%)

ICDS

Jharigam

Tamarind Mahua

150 2500

78(52%) 1450 (58%)

30 (20%) 750 (30%)

RCDC

Umerkote Papadahandi

Tamarind Mahua

60 1200

36 (60%) 540 (45%)

25 (41%) 300 (25%)

Tentulikhunti

Tamarind

100

60 (60%)

40 (40%)

Hill broom

15

10 (68%) 7 (46%) Source: Forest Department and Survey

There are three clusters which have been identified in Nabarangapur district.RCDC has played an active role in mobilizing people for carrying out productive activity. It has brought major

49

changes in the lives of tribal of these areas. The Chacha panchyat of Jharigaon block is already involved in the trade and the existing federation in this area is very strong and active in bringing about changes in the village community.NTFP trade is a part of the initiative taken by the federation and as it was felt by the members that the trade can make them earn more and more and thus lead a better life ,the groups are now eager to do the trade in larger scale. From the above discussion for four districts we have seen that there is a great potential for almost all the produces that are identified. But due to inaccessibility and lack of interest of the tribals on an average 60% of the total produce is being traded. Rest 40% of the produce is untapped by the tribals and it remains as such without any use. When the cost of collection is less than the price realization the poor tribal hesitate to collect the produces from the forest.The involvement of traders and local level kutchias are to be reduced by any means. Though it is not possible to eliminate them completely in the first year of trade but their influence can be reduced to a greater extent by procurement of produces through SHG groups. We propose to form more and more SHGs in the clusters identified with the help of the local NGOs operating in the respective clusters and encourage them to get into the trade. Again it will be an automatic process. Looking into the profit earned by a group which is in trade, the other group will definitely think of generating profit by involving itself in the trade.In this way more and more SHGs will be included in the trade and new groups will be formed. There need to be 10 SHGs federation in the 10 clusters identified. In some clusters federations already exist so due emphasis will be given to form federations in all the clusters before getting into the trade. The entire produce from all the SHGs involved in the trade will be collected and stored in the godown.The party (preferably wholesaler outside the state) will be required to come to the federation and produces will be delivered to the party at that point. The party will take all the cost and risk once the produces are released from the federation godown.

CHAPTER V

50

SHG FEDERATION The proposed SHG Federation to be formed in each of the clusters identified is the aggregation of the all the SHGs of that cluster. The federation will be doing the business in a large scale. Therefore 10 SHG federation will be formed which will be independent in their operation.The SHGs are bound to give the procured produce to the federation. 5.1 COMPETITIVE ADVANTAGES OF THE SHG FEDERATION The SHG federation is having the following competitive advantages with regard to the NTFP trade. 5.1.1 Price paid to primary collectors A federation of SHG would be able to provide a better return to the primary collectors while supplying at a better rate to the customers by cutting down the number of intermediaries in the chain. This would increase the market while fulfilling its objective of bettering the primary collector’s position. Aside from getting a better price the primary collector would also be sure of getting the payment unlike the traders who often refuse to pay as much as 50% of the outstanding amounts. The primary collector is also assured of absence of any malfunction that is carried out by traders in weighing to cheat the tribals of the area. 5.1.2 Extended payoffs The federation of SHG offers extended payoffs beyond the sale of produce, to the primary collector by way of patronage refund, and share in the profits generated after the sale of the produce to the party. 5.1.3 Reduction in transaction costs Combining the produce of the individual primary collectors reduces transaction costs; so each primary collector does not have to spend on transport, storage, etc. This avoids waste and saves the primary collectors’ resources.

51

5.1.4 Reducing agent’s burdens of grading, etc Agents are benefited when they buy from the federation of SHG, and are even willing to pay a higher price, if the federation of SHG offers functions like grading and sorting that will reduce the work for the agent. 5.1.5 Less heavy investment The burden of heavy investment cannot be borne by a single primary collector or a small group. But a big group would each have to invest just a fraction of the amount, while reaping all the benefits of the same. 5.1.6 Use of Govt. schemes A federation of SHG would be able to take advantage of all the Govt. schemes available under which it would get subsidies for processing of the minor forest produces and lower tax and interest liabilities, etc. 5.1.7 Better bargaining power A federation of SHG would have better bargaining power than an unorganized number of primary collectors, each of whom would be susceptible to harassment from traders, distress sales, etc. Strength in numbers and self-reliance would be exemplified in such an establishment. However this would be subject to the federation of SHG being able to negotiate reasonable terms of trade. 5.1.8 Education and Information A federation of SHG would be able to disseminate education to the primary collectors, procure good varieties of produce by following quality assured harvesting methods, keep in touch with technological improvements to help primary collectors increase harvesting of good quality forest produce and decrease the amount of wastages, use methods of delaying the produce to give it time utility for better realization of money, offer timely advice on pest control and disease prevention, etc. Keeping primary collectors aware of the market conditions would also reduce information asymmetry and increase the primary collectors’ empowerment.

52

5.2 COSTS, RISKS AND BENEFITS OF SHG FEDERATIONS VIS-A-VIS EXISTING CHANNELS. 5.2.1 Regular Channel In the regular channel for the produce trade, ownership is transferred from the primary collector as soon as he sells to the trader. The trader never assures him that he will procure all the produce, and in the time of a glut, the primary collector loses out the most, since he has nowhere to sell and in urgent need of cash. The middleman provides a link in the chain, but gives no extra benefit to the primary collector since he bears all the risks and costs of grading transporting, packaging and storing. There is less involvement of the primary collector in the producerconsumer chain and since he does not bear risk beyond sale, he does not get any share in the profits at later stages in the chain as well. 5.2.2 Pre harvest Contractors In the case of sale by pre harvest contract, the agreement is made before the produce are ready and the risk is transferred directly to the trader, who has to maintain the agreed price and take the agreed quantity thereafter. He also bears the additional costs and risks. Price fluctuations may affect either the primary collectors or the trader, depending on whether it rises or falls. The primary collector still gets no extra benefit in the chain, although at least he has the guarantee of an assured off take of at least a part of his produce, if not the whole. 5.2.3 Marketing through SHG federation In a federation of SHG, the primary collectors’ interest in the goods remains even if the ownership is passed on to the federation of SHG when the sale is made. This is because the federation of SHG assures him of procurement of the entire produce and acts as a pooling agent, thereby reducing his costs of transport and other transaction costs considerably. The federation of SHG acts as a facilitator for marketing, on his behalf. It also offers forward and backward linkages. Most importantly, it is the primary collectors’ decisions that influence the federation of SHGs functioning so the primary collector gets to make decisions about what should be done with his produce, which will bring him the best price and profit.

53

5.3 AREA OF OPERATION OF THE SHG FEDERATION The proposed federation of SHG will have a federal structure encompassing different SHG group of primary collector of the different clusters identified in the Undivided Koraput District of Orissa. To be a member they must be primary collectors of minor forest produce. These districts have about 1051 thousands hectares of forest area which abundantly rich in minor forest produce. Also some non-collectors may also join to strengthen the financial muscle of the federation to maintain competition between the SHG federation and traders so that they can get a better price for their produce. Ten number of SHG federation will be formed in the ten clusters identified. Each SHG federation will do the business independently in its region. 5.4 STRUCTURE AND COMPOSITION OF THE SHG FEDERATION The administrative structure of the federation will comprise of the following three tier: •

General Body.

•

Executive Body.

•

Administrative office.

5.4.1 General Body The General Body will comprise of the members of all the SHGs of a particular cluster. The main function of the General Body will be to elect an Executive Body and take decisions on the major issues of running the federation. There shall be a General Body Meeting (GBM) every month or every second month as decided by members. The issues to be discussed in General Body Meeting (GBM) would range from setting the rules for the election, assessing the performance of federation, deciding about the businesses to enter in, progress in the trade undertaken, appointing Executive Body etc. 5.4.2 Executive body The executive of the federation shall be appointed by the General Body by an election procedure. The executive committee shall comprise of Board of Governors consisting of the number of SHGs in the trade (preferably 10). For the purpose of smooth functioning and having a fair and proper checks and balance following structure is proposed. 54

5.4.2.1 Elected Members Out of every SHG in a particular cluster 1 member will be elected by holding elections or by mutual consensus. If more number of SHG will be thee then to reduce the member to a reasonable number say 10 proper arrangements will be made. This structure will ensure proper functioning of the federation as each of the directors will be responsible for mobilizing the members of the SHGs in their area to contribute to the federation. This will also promote equitable sharing of the power and proper representation of the members from all the SHGs. The tenure of the elected members will be for 1 year in the initial years so as to prevent any form of political interference or any form of manipulation. Again the performance of the elected member will be judged at the end of the year. 5.4.2.2 Nominated Member There will be one nominated member from the management to give responsibility and accountability to management in taking decisions. This will also form an inter-relationship between the elected body and management. An important problem which is faced by the federation is that mostly the elected member’s lack the actual knowledge about the trade and its nuances and thus decisions taken sometimes becomes very difficult to implement and this most of times becomes matter of disagreement between the board members and management. So, a nominated member from management will help them in solving any such problems. The tenure of this director will be fixed only for one year and will have to be kept on revolving between other management staff.

55

GENERAL BODY Elected Members (1 per SHG)

Nominated from management-1

BOARD OF GOVERNERS

From bank (Funding agency)-1

Manager-1 MANAGEMENT (Total – 3)

Accountant - 1

Supervisor - 1

Workers -5

OPERATIONAL STAFF

Fig.11 Structure of a SHG federation

56

5.4.2.3 Non-Executive Director There shall be a non-executive director who may be appointed from the bank/funding organisation. The Director appointed will have the prime job of forging external linkages and help the federation in dealing with the external environment. His tenure will be for one year. 5.4.3 Administrative Office The administrative office will consists of three professional staff all appointed by the Executive Body. There shall be one Manager who will be responsible for looking to the marketing, procurement and other activities of the daily routine. He will; also make contact with the outside party. The second will be an Accountant who will look after the accounts and will also look through the training. He will be responsible for looking towards the stock position and demand of the produce. A supervisor will be appointed to help in the training for proper method of harvesting of the produces and also to look after the transport of the produce to the wholesale market where ever necessary and other things related to the trade 5.4.4 Operational Staff The operational staff will consist initially of 5 labor employees. These workers will be primarily for storing the collected produces in the godowns and other operations in the federation. The number of labour can be increased as per the requirements in different season during the seasonal demand by hiring laborers on daily wages 5.5 ACTIVITIES OF THE SHG FEDERATION The proposed SHG federation will have the following activities: •

Core activities

•

Peripheral activities

57

5.5.1 Core activities The core activities of the SHG federation will be procurement of the produce from primary collectors, manual grading and sorting according to the variety, condition of produce and size of the produce, marketing of the produce to whole sellers and simple value addition. Though the SHG federation will initially have different SHGs those are involved in trading of minor forest produce. Primary collectors will themselves bring the produce to the SHG federation. However the SHG federation will have a schedule of procurement as to the variety such that different varieties of produce are collected on different weekdays, which will facilitate the SHG federation’s functioning as well as the members. After the primary collectors bring the produce the produces will be separated depending on the condition that is the damaged and bruised produces, which will fetch lesser price in the market, will be separated. After this the some of the NTFPs wherever possible will be graded based on size, colour and other determinant of quality. This is essential, as differential price will be paid to the members depending on the quality so as to avoid cross subsidization. Grading and sorting will also provide the SHG federation with a competitive advantage as the conventional channels do not provide this benefit. Primary collectors will be provided at the time of procurement after grading in presence of them and according to the differential prices previously determined by the SHG federation. Simple value addition to the produces will be done through home based processing of the produces in addition to the grading. For instance a portion of the total minor forest produce, which would be of lower quality, can be sold in the local market or other places where these produces would be sellable. This will help in provision of better margin to the members as well as in diversification of the demand. One of the major activities of the SHG federation will be arranging for wholesale marketing of the produces. For this the SHG federation will have to make arrangements with the wholesale traders and for transporting the produce from the procurement centre to the buyer. The SHG federation will track the demand situation in the market and to some extent control the supply according to the demand by scheduling the harvest. Also adoption of better packaging practices by the SHG federation will reduce the damages and losses during transport. The SHG federation will bear the transport, packaging, marketing costs and this will be eventually be adjusted from the patronage refund to members.

58

The SHG federation will also take up small scale processing of the produce namely siali leaves, hill broom and honey. It can also be done in later stage when sufficient fund is generated. This will also be a core activity of the SHG federation, as it will give greater margins to the members as well as adding time and place utilities. 5.5.2 Peripheral activities Periphery activities of the SHG federation include providing training for adoption of better harvesting practices, extension services like providing credit to the members. In minor forest produce improved harvesting practices play a very important role in the yield and quality of the produce. In minor forest produce proper harvesting plays a very important role. For instance if during harvesting the inflorescence of hill broom is left on the plant to dry itself, loses its quality because drying on the plant means maturity and development of flowers. Hence the SHG federation proposes to take up training the primary collectors in proper harvesting practices so that the losses will be minimized and also the produce will fetch better price in the market. Also by having linkages with different governmental agencies and universities primary collectors will be informed about the better practices. 5.5.3 Activity profile Activity profile of the SHG federation will include: •

Keeping track of harvest time of all the members.

•

Procurement of the produce and payment to members in stages

•

Weighing

•

Simple value addition through grading, sorting, storing and simple processing.

•

Care to avoid rotting and insect attacks to forest produce like siali leaves during storage and regular inspection for rotten and damaged produces

•

Adoption of simple marketing propositions so as to expand the demand

•

Packaging, transporting and selling to the wholesaler and in the markets in the out side of states to increase the area of marketing.

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Table 13. Nature of activities of the SHG federation Activity

Marketing of

Main task

Weighing,

minor Grading,

Problem area

Skills

Major

Opport

required

agencies

unities

involved Wholesalers

Profitabi

Competitors,

Perishability of Maintaining

Threats

the produces,

quality and Retailers,

lity,

Delayed

forest

Sorting,

Price

managing

Financial

Reduced

payment

produce.

Storage,

Fluctuation,

price,

agency,

post

from

Packing,

Non compliance Negotiation

Government

harvest

wholesalers,

transport,

by members,

agency,

loss,

Rotting and

Selling,

Glut in market

intermediary

Better

pest

with traders

attack.

Simple

bodies

to bargaini

Strained

processing

provide

ng

relationship

and

market

power

with

Marketing

information

existing

like RCDC.

traders.

some

5.6 COMPLIANCE ENSURING MECHANISMS The most effective compliance mechanism will be the provision of remunerative prices to the members so that they do not find it attractive to supply to the existing channels. However in addition to this other compliance mechanisms adopted by the SHG federation will be: •

Peer pressure will be helpful in monitoring the compliance of the members to the minimum supply rule and also to certain extent for members meeting the quality requirements.

•

If any member does not supply to the SHG federation consecutively for three years then his/her membership stands cancelled and he/she will not be allowed a re-entry for three years. Also the entry fee paid by the member will not be refunded.

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•

Also any outstanding payments for a member who is quitting the SHG federation will stand cancelled on exit.

5.7 RISKS AND BENEFITS 5.7.1 Benefits The primary collector members will get more remunerative prices primarily due to removal of the margins accruing to the intermediaries in the channel. Also the assurance of uptake of the produce by the SHG federation is very important. The SHG federation as compared to the current scenario will specifically benefit primary collectors. The traders or stockist of the markets those are in the out side of the state, procure only from the district level wholesaler. Thus primary collectors owning small number of trees either have to supply to the kutchias who come to the villages and charge a higher margin or have to bear the transportation cost and sell the produce themselves in nearby markets. In this case another problem is that in glut situations they have to sell their produce at throwaway prices because of the infeasibility of bringing back the produce. Thus the SHG federation by providing a means of assured uptake will be greatly benefiting its members. Also in the case of conventional channels once the risk is transferred to the intermediaries the primary collectors do not get the additional benefits that the produce may fetch in the market. In case of SHG federation however the primary collectors get extended payoff in the form of redistribution of surplus in proportion to their contribution. Other benefits will be the training and education in improved harvesting practices provided to the members and reduced transportation losses due to adoption of better packaging practices. Also the transaction costs will be reduced due to the greater volumes. The risk of selling is shifted to the SHG federation while having the possibility of share in the surplus.

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5.7.2 Risks After procurement from the primary collectors the risk is borne by the SHG federation. However essentially the risk is borne by the members as their share capital is at risk. 5.8 QUALITY ASSESSMENT AND PRICING METHODS After the produces are brought to the SHG federation grading and sorting is done by the staff of the SHG federation. Minor forest produces are graded according to the varieties and are priced at the average estimated wholesale price for the variety during the season. Produces of low quality are separated to be sold in the local or in the less remunerative market. Minor forest produces are further graded according to size, colour and other quality parameters for different forest produce. Differential price is paid on the basis of quality. This would be done to prevent cross-subsidisation.

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CHAPTER VI MARKETING PLAN In a federation of SHG, the primary collectors’ interest in the goods remains even if the ownership is passed on to the federation of SHG when the sale is made. This is because the federation of SHG assures him of procurement of the entire produce and acts as a pooling agent, thereby reducing his costs of transport and other transaction costs considerably. The federation of SHG acts as a facilitator for marketing, on his behalf. It also offers forward and backward linkages. Most importantly, it is the primary collectors’ decisions that influence the federation of SHGs functioning so the primary collector gets to make decisions about what should be done with his produce, which will bring him the best price and profit. The proposed value chain has been ginen in the next page.

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PRIMARY COLLECTORS Mainly tribals

KUCHIYAS Roaming/Village based petty traders

SHG Federation Cluster wise SHGs to collect & market the

TRADERS In large towns

WHOLESELLERS In large towns

STOKISTS/RETAILERS In different states

INDUSTRIES Medicinal/Pharmaceutic al industries

CONSUMERS Fig.12 Marketing through SHG federation (Proposed value chain)

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6.1 Pricing strategy The price of most of the produce that we are dealing with depends on the demand and supply equation of the particular year. But as the SHG federation will operate by removing some of the intermediaries of the value chain of the market, it can decide a better remunerative price for the NTFP as compared to its competitors those are operating in the particular area. The competitors would include the other district level wholesalers and kutchias. But we can decide about the pricing strategy to be followed for the products that can be sold under some brand name. Those are honey, siali leaf plates and hill brooms. For instance if honey would be sold under the brand name it will compete with the brands like Dabur, Sarvodaya and KBK honey. If we consider the price and perception graph Dabur honey would come at the top having both high quality perception by the consumer and high market price. Right from the beginning it would be difficult to compete with Dabur honey as far as perception about quality is considered. But the market segment that Sarvodaya and KBK targets there is possibility to compete with them both in regards to the quality and price. Quality perception can be created at par with Sarvodaya honey by proper advertising and pricing can be made nearly close to KBK honey, so that this can eat into the market of both Sarvodaya and KBK honey. Similarly pricing of siali leaves and hill brooms can be made keeping in mind the how their competitors operate in the market. 6.2 Promotional strategy Following promotional strategy can be adopted for marketing of the non-timber forest produce. •

Exhibitions

•

Trade shows

•

Trader-SHG interface (with help of Govt)

There are different annual tribal festival in the districts namely Paraba in Koraput,Mondei in nabarangapur where exhibition stall can be put and awareness on NTFPs and different products can be generated. In exhibitions and trade shows the quality and quantity of the produce available in the area can be projected and potential customer can be trapped.Trader SHG interface would minimise the information asymmetry and proper market demand and quality required can de disseminated to the primary procurer.

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CHAPTER VII FINANCIAL DETAILS The SHG federation would be started with the minimum possible investments so as not to sink too much into fixed costs from its inception. The initial entry fee would be Rs 100 per head for each member and each share would cost Rs. 100(Average).The value has been kept high so that it is difficult for primary collectors to leave and so as to make them take more of an interest in the SHG federation because of their high stakes in it. A loan would have to be taken, preferably from a bank rather than from the Government so as to avoid undue interference. The operating cycle would be 12 months. The wholesalers also pay in stages (we have assumed 25% each month.) As a result, the money put into purchasing the produce, would come back into the SHG federation within a maximum time limit of 6 months, given the length of the season and the frequency of transactions at the market. The cash flow, income statement for the first year and the balance sheet at the end the first year is given in the annexure. 7.1 Terms of exchange Terms of exchange would not necessarily be better for the SHG federation simply because it is a SHG federation. The manager would have to negotiate prices with every trip to the wholesale market. It would be suitable for the SHG federation not to become dependent ton on the wholesaler or trader but to distribute the produce along several so as to earn better prices from each. Transactions with primary collectors would be on a cash basis. The SHG federation would negotiate for the wholesalers to pay at 25% installments. 7.2 Self-reliance – Dependence - Locus of control It would be ideal to have complete self-reliance in the SHG federation, such that the members’ equity was funding the requirements of the SHG federation. However, this would not be possible, even with the low initial investment required. The SHG federation, in the initial years would have to depend on part of its financing coming from a bank loan. There would be less dependence on outside financing if the member share contribution were to be increased but that

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would only deter them from coming to the SHG federation. The debt equity ratio to begin with is slightly less than 1:1. So there would be majority of the funds being generated internally. 7.3 Liability of members As the SHG federation is assuring off take of the produce risk of collection of the member primary collectors is reduces to an extent. Marketing risk however, lies with the primary collectors. If the SHG federation were unable to negotiate profitably with the trader or wholesaler, the primary collector would have to suffer to the extent of bearing loss in the proportion of the volume of the produce given by him. Ultimately the shareholder members in the SHG federations would be bearing any possible loss. SHG federation would bear the risks of storing the produce. If unable to recover its costs it would have to decide whether to bear the risk or to shift it to the primary collectors. 7.4 Nature of Costs and Risk (Surplus/loss) - Sharing mechanisms The sharing of profits after appropriations to reserves for various purposes would be in the ratio of volume and value supplied. This would ensure that the person giving the highest volume of the most valuable variety would get the highest share in the profit. More primary collectors with better varieties would then come forward to join the SHG federation and with better quality being supplied, terms of trade would improve. 7.5 FINANCIAL ANALYSIS Table 14: Raw material Sr No

Description of Raw Materials

1 2 3 4 5 6

Amla Tamarind Siali Leaves Honey Mahua Hill Broom

Yearly Quantity Units 11000 4900000 120000 5000 1480000 72000

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Rate Per Unit (Rs.)

Cost Per Year (Rs.) 3 6 7 75 7 20

33000 29400000 840000 375000 10360000 1440000

Table 15: Net Profit from Sales Sr No 1 2 3 4 5 6

Description of Raw Materials

Sales

Amla Tamarind Siali Leaves Honey Mahua Hill Broom

275000 12800000 2520000 634500 13357000 2160000

Expenses

Net Profit

198106 10181233 1229330 550761 11361550 1626246

76893 2618766 1281470 83738 1995450 533753

Table 16: Financial Ratios

Debt to Equity Ratio Interest Coverage Ratio Return on investment

Amla

Tamarind

Debt/equity

0.66

EBIT/Interest Expense

14.9

Net profit after 0.5 taxes/total assets

Honey

Mahua

0.27

Siali Leaves 0.2

1.55

0.03

Hill Broom 0.23

88

19.9

2.82

913

2.86

0.88

0.74

0.13

0.98

0.77

7.5.1 Tamarind LIABILITIES SHARE CAPITAL LONG TERM LOAN TOTAL

LIABILITIES SHARE CAPITAL RESERVE FUND LONG TERM LOAN TOTAL

OPENING BALANCE SHEET AMOUNT(Rs.) ASSETS 80000 BUILDING 280000 PLANT & EQUIPMENT CASH 360000 TOTAL CLOSING BALANCE SHEET AMOUNT (Rs.) ASSETS 80000 958266.67 280000 1318266.667

BUILDING PLANT & EQUIPMENT CASH TOTAL

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AMOUNT(Rs.) 100000 250000 10000 360000

AMOUNT (Rs.) 90000.00 187500.00 1040766.67 1318266.667

The tamarind has a high ROI of 0.88 because it is more of a trading business than a processing unit. There is a minimal fixed asset required; instead it requires us to store the tamarind in cold storage till winter to get better value realization. It equally has high interest coverage ration as the value realized from storage and selling is high there by covering our interest on loans. 7.5.2 Mahua LIABILITIES SHARE CAPITAL LONG TERM LOAN

TOTAL

LIABILITIES SHARE CAPITAL RESERVE FUND LONG TERM LOAN TOTAL

OPENING BALANCE SHEET AMOUNT(Rs.) ASSETS 7000 BUILDING 20000 PLANT & EQUIPMENT EXCISE LICENSE CASH 27000 TOTAL CLOSING BALANCE SHEET AMOUNT (Rs.) ASSETS 7000 BUILDING 630467 PLANT & EQUIPMENT 20000 EXCISE LICENSE CASH 657467 TOTAL

AMOUNT(Rs.) 10000 5000 2000 10000 27000

AMOUNT (Rs.) 9000 3750 2000 642717 657467

The return on investment for Mahua 0.98 is high mainly because there is minimal fixed asset required unlike other products. It has high value realization without much processing. The only major cost being the Excise duty. Because of its high profit and low investment, it has very good interest coverage ratio 7.5.3 Amla LIABILITIES SHARE CAPITAL LONG TERM LOAN

OPENING BALANCE SHEET AMOUNT(Rs.) ASSETS 26000 BUILDING 104000 PLANT & EQUIPMENT

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AMOUNT(Rs.) 100000 20000

TOTAL

LIABILITIES SHARE CAPITAL RESERVE FUND LONG TERM LOAN TOTAL

CASH 130000 TOTAL CLOSING BALANCE SHEET AMOUNT (Rs.) ASSETS 26000 131793.33 104000 261793.33

BUILDING PLANT & EQUIPMENT CASH TOTAL

10000 130000

AMOUNT (Rs.) 90000.00 15000.00 156793.33 261793.33

The ROI is comfortable with 0.5 values. The interest coverage ratio is 14.9 indicating the interest being covered by our profits comfortably. 7.5.4 Siali Leaves LIABILITIES SHARE CAPITAL LONG TERM LOAN TOTAL

LIABILITIES SHARE CAPITAL RESERVE FUND LONG TERM LOAN TOTAL

OPENING BALANCE SHEET AMOUNT(Rs.) ASSETS 92000 BUILDING PLANT & EQUIPMENT 368000 CASH 460000 TOTAL CLOSING BALANCE SHEET AMOUNT (Rs.) ASSETS 92000 BUILDING 1281470.00 PLANT & EQUIPMENT 368000 DEBTORS CASH 1741470 TOTAL

AMOUNT(Rs.) 100000 350000 10000 460000

AMOUNT (Rs.) 90000.00 262500.00 630000 758970.00 1741470

There is good return on investment and since its prices are stable, it would make a better product to go for business. Although there is some fixed asset requirement, it can be met with the shareholders fund.

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7.5.5 Honey LIABILITIES SHARE CAPITAL LONG TERM LOAN TOTAL

LIABILITIES SHARE CAPITAL RESERVE FUND LONG TERM LOAN TOTAL

OPENING BALANCE SHEET AMOUNT(Rs.) ASSETS 138000 BUILDING 322000 PLANT & EQUIPMENT CASH 460000 TOTAL CLOSING BALANCE SHEET AMOUNT (Rs.) ASSETS 138000 BUILDING 69938.33 PLANT & EQUIPMENT 322000 DEBTORS CASH 529938.33 TOTAL

AMOUNT(Rs.) 100000 350000 10000 460000

AMOUNT (Rs.) 90000.00 262500.00 126900 50538.33 529938.33

This venture is risky as it involves high capital investment compared to other products and there is no assured supply of raw material. The debt equity although 1.55, it is likely to come down in the subsequent years. The major problem with honey is that to attain breakeven we need fair quantity of honey making us dependent on supply. 7.5.6 Hill Broom LIABILITIES SHARE CAPITAL LONG TERM LOAN TOTAL

LIABILITIES SHARE CAPITAL RESERVE FUND LONG TERM LOAN

OPENING BALANCE SHEET AMOUNT(Rs.) ASSETS 32000 BUILDING 128000 PLANT & EQUIPMENT CASH 160000 TOTAL CLOSING BALANCE SHEET AMOUNT (Rs.) ASSETS 32000 BUILDING 530553.33 PLANT & EQUIPMENT 128000 DEBTORS

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AMOUNT(Rs.) 100000 50000 10000 160000

AMOUNT (Rs.) 90000.00 37500.00 540000

TOTAL

CASH 690553.33 TOTAL

23053.33 690553.33

The ROI is 0.77 indicating good returns from our initial investment. There is a need to brand the product for better realization. The product is having low interest coverage ratio compared to other products because it requires high fixed asset investment that is mainly covered by long term loan. Further details like cash flow and profit and loss account of individual products are attached in the annexures.

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CHAPTER VIII SUMMARY AND CONCLUSION The forests of Orissa are rich in both timber and non-timber forest produces (NTFP).It provides livelihood to the tribals (22% of total population) of the state. The tribal dominated districts of Orissa namely Koraput, Nabarangapur, Malkanagiri and Rayagada are rich in NTFPs from which the poor tribals derive their livelihood support in the lean season. The collection of NTFPs is a 

source of cash income; especially during the slack seasons. In most of these areas it provides  livelihood to for 6­8 months and in some cases the whole year. Hence it has a great bearing  on the lives of the poor tribals.

Though the tribal dominated districts of Koraput, Nabarangapur, Rayagada and Malkanagiri are rich in almost all kinds of NTFPs, the actual potentiality of these areas is not being explored / utilised due to inaccessibility and lack of interest of the people as well as different government agencies. Before decentralization the price realization to the primary collectors was very poor due to the monopoly leasing practices. Now, after decentralization in the year 2000 i.e. the transfer of ownership, control and management of NTFPs the traders play an active role in exploiting the primary collectors. Hence in both ways the poor tribals suffer and are disinterested in collection and trade of NTFP. A business plan with a broad mission of providing a sustainable alternative source of income to the primary procurer of undivided Koraput districts with better price realization was undertaken. Taking into consideration the nature of the product, actors involved and nature of the market the products that are to be included in the business plan were decided using product selection matrix. 10 clusters (Koraput: 3, Nabarangapur: 3, malkanagiri: 2, Rayagada: 2) were identified taking into consideration the availability of NTFPs and its accessibility. The products selected on the basis of the score obtained from the product selection matrix are Tamarind, Amla, Hill Broom, Siali Leaves, Mahua and Honey. It has been seen that there is considerable variation in the quality and quantity of different in different clusters identified. For example the quality of Hill

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Broom found in Bonda hills of Malkanagiri district is of better quality as compared to that found in other clusters; hence accordingly there is price variation in the market. Similarly for other products price variation is seen and there is high fluctuation in the price of Tamarind and Mahua in different time of a year. The NTFP market was found to be totally unorganized and controlled by a series of intermediaries in between the primary producer and the final consumer. These intermediaries include village level kutchia, small trader in the haat, commission agent, big trader and wholesaler in large town. In most of the product the final selling price is more than double the procurement price. During the field visit it was found that many local NGOs are working for the tribals in the clusters identified. Some SHGs formed by these NGOs are also involved in the NTFP trade. To provide better value realization of the NTFPs to the primary collectors it has been planned to carry out the business through the SHG federations.SHG Federations will be formed in all the 10 clusters identified. It has been proposed that the SHGs of the respective clusters will collect themselves as well as procure the produce from the primary collectors of the area concerned. The produce thus collected will be brought to the SHG Federation godown twice in a week. Some simple value addition will also be done at the federation level as well as SHG level. Tamarind deseeding machine will be provided to the SHGs for this purpose. In case of siali leaves sorting and grading of the produce will be done at the federation level and stitching of plate is also recommended. There will be a governing body of each federation which will look after the entire trade process. The quanta of produce that can be procured from different clusters were found by discussing with the SHGs and the NGOs of the respective clusters. Again it was seen that 40% of the most of the NTFPs is untapped by the market. Only 50-60 % of the total produce is being traded. Through SHG Federation on an average 20% of the total produce of a particular cluster can be procured and traded. From second year onwards the procurement will be increased as more and more SHGs will be formed and number of SHGs involved in the trade will also be increased looking into the profit gained by the peer group. Hence market share of the SHG federation will be increased. Possibility of setting up of small scale enterprises for Siali leaves; Hill broom and

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Honey processing plant were also seen. There will be prior contract with the wholesalers (preferably outside the state like Jagdalpur, Raipur, Vishakhapatnam, Salure etc.)for the better marketing of the produce. The present study concludes that tribals are the primary procurer of non-timber forest produce. Due to erratic rainfall and undulated landscape of undivided Koraput district they need to have an alternate source of income. Hence, NTFP business, which can provide maximum benefit to the primary procurer, can help to improve their economic condition. Emphasis will be laid on the marketing of the forest produce and processing of some NTFP so that the tribals can get better benefit. For heavy investment in the future the fund should be generated from the profit of the business.

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REFERENCES

Books and Aricles 1. Pattanaik, Nityananda “ Essential forest produce in Orissa”, D.K. Print world (p) Ltd. (2003) 2. NTFP profile series : II, “ Hill Broom”, Vasundhara 3. NTFP profile series : III, “ Tamarind”, Vasundhara 4. NTFP profile series: IV, “Mahua”, Vasundhara 5. NTFP profile series: X, “Aonla”, Vasundhara. 6. Status Report 2000 on Orissa forest.

Websites www.banajata.org www.ntfp.org www.odi.org.uk www.ori.nic.in www.vasundharaorissa.org www.planningcommission.nic.in

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