33rd Sharing Meeting of NNN

March 06, 2009
ANSAB Meeting Hall

Considering the fact that the Small and Medium Forest Enterprises (SMFEs) are important means of the rural livelihood and poverty reduction in Nepal and that it forms an integral component of NTFPs/forest related activities, the main agenda of the meeting were:

  • Discussion on the challenges and barriers faced by SMFEs in Nepal
  • Review and update of the 32nd NNN meeting

I. Introduction
The meeting started with a brief welcome note by Dr. Bhishma P. Subedi, Executive Director of ANSAB. Dr. Subedi briefed the objectives of the meeting and requested all the participants to provide their valuable inputs and ideas towards attaining the set objectives of the meeting. Dr. Subedi highlighted the importance of the government programs, market and service providers in SMFEs development.

Following the introduction, participants paid their tribute to late Mr. Bhaweswar Das, President of Systematic Industrialization of Nepal (SION), who recently passed away fighting an illness of Pneumonia. Mr. Das was an active member of the NNN, and has contributions in the forum from the very beginning of its inception. His contribution towards NNN was noteworthy and his absence will always be felt for its development.

II. Background
Dr. Subedi stated that almost 25% of the forest in the world (377 million ha) is being managed by the communities. Globally, approximate equivalent of US $130 billion is being value added and in Nepal, the figure accounts to an estimate of NRs. 2.5 billion (US $31.25 million). Yet there exists an opportunity of approximate 42 billion of lost opportunity in forestry sector. The FAO estimated that 80% of the population of the “developing” world use NTFPs to meet some of their health and nutritional needs and the estimated total value in world trade in NTFP is approximately US $11 billion.

In Nepal, more than 40% of population is involved in Community Forestry (CF) and almost 50% of those are involved in enterprise and 25% in forest management. These statistics reflects huge potential for SMFEs development in Nepal, yet we are unable to achieve the result and foresee the expected growth of SMFEs in Nepal. This indicates a need to integrate enterprise development and conservation for livelihood enhancement of the forest dependent.

III. Discussion
Discussions were held in two major agendas mentioned above.

AGENDA 1: Discussion on the challenges and barriers faced by SMFEs in Nepal

Realizing the importance of the government programs, market and service providers in SMFEs development, major issues including challenges and barriers faced by SMFEs were identified in three categories. The participants were divided into three sub groups (as per individual’s interest) to discuss on these issues. List of participants in each group is attached in Annex1.

  1. Issues related to service constraints
  2. Issues related to market provisions
  3. Issues related to policy and government programs

A. Issues related to service constraints: The following issues were identified from the group discussion and recommendations made to overcome these issues.

Lack of market understanding: There is a lack of clear market understating among the stakeholders. One first needs to understand what the market is and what exactly does it demand. It is important to understand that the market consists of demand and requirement and therefore the service should be catered accordingly. General requirement such as quality control and assurance, product certification, and product design and packages should be well integrated within the entire market system to sustain in a longer run.

Lack of technology: Technological services are vital in SMFEs growth. Processing, production, input supply etc form the integral component of the SMFEs and therefore, it requires well equipped and updated technologies for their smooth operations. Central institutions such as Department of Plant Resources (DRP) and Nepal Agriculture Research Centre (NARC) are equipped by technological services and coordination among the enterprises and these institutions are necessary to access required technologies.

Lack of human resource: There are inadequate expertises in providing and or handling the technological services required for the operations of SMFEs. More personnel need to be trained to acquire knowledge on technological functioning.


  • Strategic trading partnership and market dialogue should be facilitated and developed for SMFEs promotion.
  • Financing mechanism such as micro finances should be ensured and facilitated to SMFEs and linkages with financial institutions either collateral or other companies should be established.
  • Good governance and management mechanism should be developed to promote SMFEs.
  • Ample research backstopping should be carried out to support further activities in the sector and resource inventory should be carried out to ensure conservation of natural resources while integrating enterprise activities and an effective business plan should be made as an integral component of the operational plan in the community forest management system.
  • Legal and authentic data/information on existing resources should be available from the government record.
  • Required infrastructure such as access to road, storage, offseason transfer should be developed for SMFEs promotion.
  • Identification of the market-buyer requirements (such as quality, quantity, price, Standards, etc.) should also be done to ensure market sustainability.
  • Service providers should be identified and linked with the entrepreneurs. Free services should be avoided as much as possible. Rather quality improvement of the service providers should be given priority.
  • Analysis of the existing and potential services, both to be provided by the government as well as private sector should be done and identified through collaborative efforts.

B. Issues related to market provisions: The following issues were identified from the group discussion and recommendations made to overcome these issues.

Lack of quality assurance: The quality should be assured not only at the producer level but from the entrepreneurs and consumers level too.

Low production capacity: In order to increase the production capacity, farmer’s knowledge and skills should be utilized in both production as well as group marketing activities.

Lack of market understanding: The overall market system should be well understood by the market actors. There seems to be limited market knowledge among the market actors. Therefore, a common understanding of the existing and emerging market system is needed among the key actors of the sub sector.

Weak infrastructure: One of major components that link the enterprises with the market is road. Such basic infrastructures are lacking in most of the rural districts of Nepal. These services have to be improved for better market linkages of SMFEs.

Limited investment capacity: Investment in terms of finances, human resources and technology is lacking in our context. Certain legal requirements or standards such as certification (be it forest or product), Initial Environmental Examination (IEE), Environmental Impact Assessment (EIA), requires huge financial, technical and as well as human resources. So efforts should be given towards identifying institutions holding such investment abilities.

Weak market information: There is lack of market awareness among the entrepreneurs and other stakeholders. In order to overcome this, awareness on Market Information System (MIS) could be raised through different media such as FM, TV, and Newspapers, etc. Regular update and information on MIS is essential for SMFEs growth, therefore efforts should also be made towards disseminating MIS for relevant stakeholders.

Weak pricing system: There seems to be lack of clarity among the market actors about the pricing system. Specific specialties of a product should be considered and highlighted while designing the package. For example, cultural, regional and geographical peculiarities of a product say Yarshagumba, Seabuckthorn, Aloe Vera, etc. should be well understood and marketed indicating their benefits. Geographical branding should also be encouraged while determining the market price. For example, Timur of Salyan could be priced higher than ordinary Timur, as it is said to be of the highest quality. Likewise, price could also be fixed on the basis of relative concentration of Timur (say 3%, 4%, 5% of active ingredient).


  • Market traceability: it is very important to have the market traceability and understand the basics such as who produces the goods, under want circumstances are these goods produced, what are the quantity demands, kind of varieties available in the market and kind of certification requirement it could undergo.
  • Market linkages: The entrepreneurs should be linked with the domestic as well as international market. Market linkages should also be established for the cultivated products, as cultivation is the backbone of conservation. Various provisions such as certified planting services, quality assurance, and research and development should be encouraged.
  • Monitoring system: It should analyze and monitor the relationship and linkages within the entire chain of the market system.
  • Private public collaboration: It is very important to collaborate with the government programs, private sectors and market actors to ensure sustainable market for the product.

C. Issues related to policy and government programs: The following issues were identified from the group discussion and recommendations made to overcome these issues.

Lack of policy implementation: Though there are strong legal backups such as legislations, supporting strategies and guidelines to help implement NTFP policy, it hasn’t yet been implemented fully. This shows the gap in policy implementation which is hindering the growth and development of NTFP sub sector.

Lack of NTFP national plan: Though the government was supposed to develop NTFP national implementation plan, it has not yet been formulated and brought into practice. This indicated the urgent need of formulation o f a NTFP National Plan.

Lack of harmonization in policy: There are contradictory provisions among different policies. For SMFEs development, industrial and forest policies should be synchronized. Most of the SMFEs exists within the forest areas and therefore are bound to comply with both the forest as well as industrial policies. This practice has to be minimized and policy duplication should also be avoided as much as possible. It was mentioned that the government is currently in the process of revising the industrial policy for which actors of both the sectors (industrial and forest) should be consulted for effective policy amendments.

Species wise zonation for commercial cultivation: It is important to identify potential areas /zones for commercial cultivation of specific species. Scoping should be done to analyze various factors such as soil quality, temperature, humidity etc to find out the feasibility of the species for commercial cultivation in potential areas. This would ensure optimum production of the NTFPs in their potential zones.

Impractical royalty fixation: It was emphasized that the current royalty fixations for NTFPs is highly impractical and therefore practical consideration should be given while fixing royalties. Issues of double taxation, and royalty upliftment for cultivated NTFPs should also be well versed in the policies. A specific example of double taxation was cited as: tax payment provision in each municipality while importing NTFPs from Nepalgunj to Kathmandu. This has created an undue pressure of tax clearance in every single municipality passing via the route. It was mentioned that the Department of Forest (DoF) had up lifted double taxation for Timber, however is yet to be applied for NTFPs.

Insufficient supporting programs: It was discussed that there was no effort being made by the government to facilitate required services for SMFEs growth. Access to microfinance and financial institutions should be incorporated within the plan and importance should be given towards linking SMFEs with these services such as trade support services and building institutional framework.


  • There needs to be coordination between the Local Development Committees such as Village Development Committees ( VDCs) and District Development Committees (DDCs) and Department of Forest
  • There should be an exposure to different market actors and inputs be gathered from different actors
  • Discussion on the same issue should be held in a bigger forum including different stakeholders such as users, producers, legal advisors, expertise, traders and financial institutions, service providers, concerned institutions, and relevant government personnel.

AGENDA 2: Review and update of the 32nd NNN
The 32nd NNN meeting held on August 29, 08, to discuss the policy issues such as IEE/EIA in community forestry had identified and discussed the challenges faced due to enforcement of such legal provisions (IEE/EIA) in Community Forestry. The meeting had realized the cost implications of IEE/EIA as a major challenge in its implementation. It was discussed that  Community Forestry in itself reflects an exemplary management practices for conservation and livelihood improvement, and consists ample tools such as operational plan, business plan, inventory etc to safeguard the environment. Imposition of EIA/IEE is an addition burden to the community as it requires substantial financial as well as human resource with technical expertise.

Therefore, a taskforce was formulated to further analyze the impact of IEE/EIA in community forestry. The taskforce through series of meetings concluded that EIA/IEE needed further amendment to address current issues created by these policies. Some of prominent issues of the policy included: undue economic pressure for local communities, lack of stakeholder’s consultation during policy amendment, duplication of resource management procedures and lack of clarity in the policy itself. Considering these issues, it was decide that a policy (IEE/EIA) recommendation proposal be submitted to concerned authorities. The policy recommendation proposal had been developed including all the above mentioned issues. This meeting discussed on the same issues and provided its consent to submit the policy review proposal to the concerned authorities such as Ministry of Environment, Science and Technology, Ministry of Forest, Soil and Conservation and Depart of Forest, Ministry of Industries, Commerce and Supply and other related institutions.

Annex 1: Name list of participants in each group:

Group A – Policy

1. Mr. Prakash Sayami, Department of Forest Division Chief, CFD

2. Dr. Rishi R. Koirala, NHRC, Executive B.M

3. Dr. Nirmal Bhattarai, ICIMOD, MAPs Specialist

4. Mr. Pushpa R. Shrestha, Department of Plant Resources, Deputy Director General

5. Mr. Raj Bd. Shrestha, MEDEP, MES

6. Mr. Pankaj Kumar Das, HNCC, Program Officer

7. Dr. Bhishma P. Subedi, ANSAB, Executive Director

Group B – Market

8. Mr. Sharad Rai, Practical Action, Sr. Project Officer

9. Mr. Karma Bhutia, The Mountain Institute, NTFP Officer

10. Mr. Hari Bastola, CECI Country, Representative

11. Mr. Nanendra Nath Tiwari, Ayurveda Campus Professor

12. Ms. Indramati Moktan, FECOFUN, Member

13. Ms. Reejuta Sharma, ANSAB, Communication Offier

Group C – Services

14. Mr. Martin Dietz Helvetas, International Program Advisor

15. Mr. Narendra Raisaily, Winrock International, Training Program Coordinator

16. Mr. Vijaya Sthapit, IDE Nepal, Coordinator

17. Ms. Rudrikshya R. Parajuli, NSCFP, Project Manager

18. Mr. Govinda Poudel, Nepal Forest Association, Program Manager

19. Mr. Sahas Man Shrestha, Department of Forest, Research and Survey Director General

20. Mr. Himlal Shrestha, Kathmandu Forestry, College Lecturer

21. Mr. Bhishnu Bhandari, IUCN Nepal, CTA

22. Mr. Mani Ram Banjade, Forest Action, Theme Leader

23. Mr. Bijendra P. Singh, HANDPASS, General Member

24. Mr. Shiva S. Pandey, ANSAB, Manager -NRM

25. Mr. Nabaraj Panta, ANSAB, Enterprise Development Officer

26. Ms. Sony Baral, ANSAB, NRM Officer

27. Mr. Kiran Timalsina, ANSAB, Manager – ARC