Exploring marketing models of Non Timber Forest Produce

STRENGTHENING FOREST BASED LIVELIHOOD IN ODISHA

Nabaghan Ojha

INTRODUCTION

The eastern state of Odisha accounts for 1/4th the of forest-cover in India. Odisha also has 22% of its population belonging to adivasi (indigenous) communities. Furthermore, about 15 million people, both adivasi and non-adivasi, depend on forests for their livelihood; adivasi people depend for 6-8 months of the years on forest resources, especially NTFPs, for their subsistence as well as for cash incomes.

Till recently, NTFP trade was a state monopoly with private business houses, which were granted leases on a long term basis, calling all the shots. Needless to say, this system was highly exploitative. Following the prescriptions of the Provisions of Panchayat (Extension to the Scheduled Area) Act of 1996 – a central legislation, which gives ownership rights to village councils over minor forest produces – the Government of Odisha handed over ownership of 67 items (now 69) to Gram Panchayats (GPs) in March 2000. Despite this positive move, which has now been in place for close to 9 years, trade in NTFP still remains very complex for both primary collectors and the panchayats. However, there is a great potential for NTFP trade to significantly improve household incomes. As the demand for NTFPs in domestic and international markets grows, forest dwellers need help to access alternative markets that pay better prices to primary collectors.This article is part of the NTFP market access programme being implemented by the Regional Centre for Development Cooperation (RCDC) in selected pockets of Odisha. The article tries to analyse different market models of NTFP that could provide fair returns to the primary collectors.

THE NTFP MARKET ACCESS PROGRAMME

In 2003, RCDC graduated from policy research and advocacy activities to the role of a market facilitator. Two reasons that motivated this move were: a. the deregulation of NTFP trade policy was an opportunity to explore possible returns to NTFP collectors, and b. RCDC studies in the central Indian states showed that the absence of a facilitator was a bottleneck in raising procurement prices.

In 2003, RCDC started working on creating an alternative marketing framework for NTFPs to ensure greater returns to the primary collectors in four districts1 of southern Odisha. During the first phase the programme focussed on 89 villages with approximately 2000 families. The interventions began by identifying NTFP-rich clusters and explored the institutional arrangements for their procurement and trade. The strategies used were (i) to work with existing SHGs to involve them in collective trading process ( procure, add value and market forest product including NTFP and surplus agricultural produces), (ii) to help communities develop eight primary cooperatives to collectively trade in NTFPs and build local institutional capacities to negotiate with traders in NTFP; and (iii) float a Pvt. Ltd Company (Mrutika Resources Pvt. Ltd) to get into direct tradingprocess, with the objective of bypassing different steps in the value chain.

Phase I had visualised good harvesting practices, primary processing, proper storage for 5-7 NTFP and collective bargaining of primary collectors/ producers. Market linkages were established for products like Kalmegh, Harra, Dhatki flower, Tamarind, Amla and Nagarmotha. These various activities have had a demonstrable impact on both prices paid for NTFP and, by extension, on the household revenues from sale of NTFP. By way of example, between 2004-05 and 2005-06, the procurement price of tamarind increased from Rs 4.50 to Rs 6/, Kalmegh from Rs 2/ to Rs 5/, Dhawai flower from Rs 2/ to Rs 3.70, Harra from Rs 1- 1.50 to Rs 2 – 2.50 in the project area. It is also noticeable that trade in Harida, Bhuin neem, Brooms, Amla, Dhatki flower, Bidari kand, Nagarmotha, Nux vomica etc. increased by 20-30%. Separately, SHGs have been able to add value to amla, harra, kalmegh, tamarind, satabari, honey and siali leaf, with a further improvement in household revenues.

The 2nd phase focused on facilitating viable community institutions to deal with government policies as well as the complexities of the market. The first phase consolidated the confidence in collective trading, and also encouraged us to think in terms of an expansion, both in terms of area and number of groups and population. Phase II expanded to 194 villages and 3500 families and 22 primary cooperatives. Also, 3 secondary cooperatives, as federations of the primary cooperatives, were established to operate at the level of the district. Five Common Facility Centers were set up in the region with the mandate of processing raw materials into finished and semi-finished products. And finally, a series of sales outlets within each district were established. The 2nd phase also concentrated on quality parameters, technology transfer, sustainable harvesting and enterprise development through focusing on product development.

The expansion of area i.e. 89 villages in the 1st phase to 194 villages in the 2nd phase resulted in an increased profit margin of the cooperatives as well as the income of families. The trade transaction which was Rs 76 lakh in 2006 went up to more than 3 crores2 by end of the 2nd phase which includes trade of value added products. The additional income of families involved in NTFP trade increased by up to Rs 2500 in some areas in these years, with a steady increase in household incomes over the past three years. Product development, a key focus in the 2nd phase, has added a sizeable amount to the overall income of the groups.

KEY ACHIEVEMENTS

The different initiatives undertaken have regulated about 40-50 NTFPs collected by the members of 22 primary cooperatives. Despite the risks and complexities in NTFP trade a sizeable portion ofNTFP market has been tapped by these 22 cooperatives in 4 districts. In addition, due to initiatives in the value chain (sale of raw material, value addition, etc.), the programme has managed to increase adivasi incomes. Phase II saw a 30 per cent increase in household revenue, along with a quadrupled business turn over in comparison to phase I. The prices of NTFPs in phase II has increased to 3-4 times in comparison to 2006.

Through bulk trading, the initiative has provided a substantial income to about 40 per cent of total families in 22 clusters. A sizeable portion of households in the operational area has been engaged 2-3 months in a year in retail trading activities. The programme has gained substantial expertise in Sal seed management after its denationalization in April 2006. Efforts have been made in facilitating sustainable trade of Sal seed and in creating a viable platform for good trade between the buyers and sellers. The process has identified mechanisms to ensure meaningful links between the primary collectors, their support organizations and the trading community. All this has led to an affirmative change in attitude of forest communities towards forest conservation and management.

SUSTAINABILITY

The emphasis on institutional development has meant the empowerment of primary collectors, SHGs and cooperatives that are instrumental in sustaining the programme in the long run. The capacity building of the SHGs and their members ensure the formation of vibrant institutions like cooperatives; they are taught improved negotiating skills to deal with different financial institutions, marketing agencies etc. It creates opportunities for the primary collectors and their organisations to come together to share experiences and market information, the value chain and barriers of trade,improved business practices etc. The institutions are then in a position to plan their investments and to utilize their funds in an appropriate way, minimizing financial risks. State policies also keep the SHGs at the fore front and facilitate linkages between SHGs and financial institutions. Also, a three tier structure of the institutions has been operational in the project area with systems in place to maintain information flow, transparency and accountability at each level. This contributes to the sustainability of the institutions at respective levels. The initiative has attempted to strengthen theseinstitutions through capacity building on market access, fair trade, trade advocacy at the district level and the block level, as well as on sustainable harvesting of NTFP, resource mobilization etc. With all these inputs the interventions appear to be sustainable in the long run.

REPLICABLE OR NOT?

The selected clusters for this programme are from forested and NTFP rich areas, with the people highly depended on NTFPs. The cooperatives formed gradually extended their activity of NTFP procurement to neighbouring areas; this might catalyze other villages to form their own cooperatives to deal with NTFP trade. As yet 8 cooperatives have been formed in separate clusters of the same districts. The cooperatives that are being trained in the project might be helpful for primary collectors, SHGs and other groups in the neighbouring areas for establishing community based forest management and trade of NTFP. Better prices for NTFPs, through the project would definitely impact the primary collectors and traders in the area. Similarly, the message of value addition would definitely raise the income of the primary producers and have its ripple effect. As SHGs have access to small funds from financial institutions some of them would either take up enterprises oftheir own or approach the cooperatives/project for necessary support.

KEY INSIGHTS

RCDC has experimented with a number of strategies in the last couple of years while implementing the programme. When the programme was initiated in Odisha there was hardly any development organization involved in the NTFP market access initiative. Even state marketing institutions like the Tribal Development Cooperative Corporation (TDCC) were not in a position to establish effective marketing strategy in NTFP trade. In the initial days the programme suffered huge amounts of loss in the trading process. The programme changed strategies constantly to achieve its objective. Now it has been established that though NTFP market is quite volatile and involves lot of risks there is enough scope to provide fair prices to the primary collectors if facilitated properly. The organizations that are getting into the process gradually won’t face all those difficulties in accessing the right kind of market, value chain etc. The strategy that worked well could be replicated without wasting time the failed strategies. The government of Odisha today is trying to use the expertise of RCDC while integrating the NTFP programme in different development schemes.