Enhancing Livelihoods and Poverty Reduction of Mountain People by Linking Value products and Services (HVP) to Value Chain Development

Starting Date: December 1, 2008
Ending Date: December 1, 2010
Location: Baitadi and Darchula
Donor(s): The Ford Foundation
Implementation Partner(s): International Centre for Integrated Mountain Development (ICIMOD)
Budget: 60,000 USD

The overall objective of this project was to increase the economic benefit and to reduce the risks for small-scale producers, farmers and processors of high value products and services through the development of equitable and dynamic value chains.

The specific objectives of ANSAB in this partnership were to:

  • Analyze the Value Chains of Rittha and Timur to identify upgrading strategies; and
  • Implement the identified strategies targeting primarily 200 poor households in the project area.

The project became successful in increasing the economic benefits and reducing the risk for small-scale primary producers (200 HHs) who are involved in the NTFPs business i.e. Ritha and Chiuree in project areas. The primary beneficiaries of this project are poor and ultra-poor; however, the project left its mark to thousands of households residing in and around project area. To provide maximum outcomes to the people, the project revised some interventions. Initially, the project had planned to work in the Ritha and Timur value chains to obtain its objectives, however, later minimized the activities in Timur and integrated interventions in Chiuree as the latter was found comparatively more remunerative

The project identified several constraints including lack of practices on local value addition and product diversification, low knowledge on quality parameters, limited input supply, lack of reliable market information, unorganized market, limited access to finance and lack of proper infrastructure. These constrains have both social, economic and physical impacts to the rural livelihood especially to poor and ultra poor who are highly dependent on these natural resources for income and other requirements. The producers were not getting fair price, there was loss of benefits due to poor quality product,  there was prevalence of unfair competition, the locals were vulnerable to loss due to lack of reliable market information, trust relationship among the actors of chain was not so strong, there was presence of biasness to women, children and elders in trade, only few market centers were linked to locals, the trade was disorganized, there was increment in cost due to lack of infrastructure etc which ultimately had caused losses to the local economy and to rural livelihood.

Considering all these factors and after thorough value chain analysis done, the project prepared participatory upgrading strategies targeting to benefit the actors along the value chain through product upgrading, process upgrading, functional upgrading, market upgrading and governance interventions. These strategies incorporated various activities from initial resource management and harvesting to final stages of selling to buyers. The major part of the project was in formation of community based marketing company which has equal participation from producers as well as local traders. The  company became successful in certain extent in achieving its main objectives to organize trade, capacitate producers, traders and locals, increase and contribute to local economy by reaping benefits of economies of scale in natural products trade,  increased bargaining power of locals, providing fair price to producers, conduct value addition activities etc. The local producer and traders were strengthened in the NTFP trade from their locality and were placed in better position in the value chain. In its first year of operation, the company was able to organize the trade and channelized 162 MT of Ritha through it. The company generated Rs 1,62,000 as profit from this transaction, part of which later was distributed to 8 sub-groups each with Rs.3000 and to 5 CFUGs each with Rs. 2000. For the first time, the company was able to create a market linkage with Kathmandu based exporting company, which provided premium price for their Ritha. This opportunity provided them with extra income and alternative market for their product as well as created awareness among local producers and traders on issues of quality and value addition. The company was able to generate several employments who are directly and indirectly involved with it including 1 permanent staff, 2 seasonal staffs, 40 women for sorting and grading activities and 85  people for weighing, packaging and transportation. Similarly, the company also provided producers with Rs 2 extra for the better quality Ritha. The trust relationship between producers and traders has also strengthened. Due to its organized operation and benefits shared to producers and traders, the community based marketing model can be regarded as successful model.

The formation of sub-groups proved to be a remarkable intervention of the project for uplifting the livelihood of rural poor. Total of 12 sub-groups were created in the project area – 9 sub-groups for Ritha and 3 additional for Chiuree collection. The capacity building activities conducted on the sub-groups for practicing sustainable harvesting and post harvesting methods, developing business plans, running microenterprises and creating revolving funds within the group for better financial access found to be fruitful for empowering those poor and ultra-poor and helping them enhance their livelihood through better incomes. Sub-groups were also linked to various government and development agencies which proved to be a good initiation for mobilizing the rural poor to take over their issues to the relevant authorities.

The establishment of processing facility within the community based marketing company was a sustainable step for the company as well as a profitable venture for both local people and economy. The financial and technical assistance needed for equipments and machineries which were provided by the project helped in the establishment of facility. To assure and strengthen the holdings of sub-groups and CFUGs in the company, shares equivalent to the machineries purchase were allocated to subgroups. This has resulted in self owning of the company by the locals who are mostly poor and provided them with greater share in the company.

One of the interventions that could not reach its end is that of tree registration. Though high collaborative efforts from both producers and project staffs were included in tree registration the process was not attended due to cumbersome bureaucratic process and unclear government policy. However, the initiation was a good start to develop a collective voice against the royalty issues and a major step for lobbying the policy makers for its review. The step should be continued until the tax exemption is given to privately grown NTFPs which will be a great step for providing more incentives to the rural poor.

Other activities like conducting entrepreneurship and business planning trainings, orientations on quality, harvesting, post harvesting and market issues, meetings, surveys, awareness raising campaigns, market visits, market studies, management backstopping, share distributions, MIS disseminations, nursery establishments, plantations, preparation of guidelines etc and other regular project activities played their respective roles in obtaining the objective of the project and bringing it in successful completion. Mobilization of LRPs was a vital step for proper implementation of the activities and it is advisable for future projects to maintain LRPs and gain their confidences for maximum outputs from projects.

With this conclusion, some of the interventions are still needed which are listed as below.

  • Backstopping to marketing company (MNPPL): MNPPL is recently formed and need more support until it works in full operation.
  • Marketing support to MNPPL: MNPPL just started to develop products from Ritha and Chiuree so that there is still need to support this company until the products are smoothly marketed.
  • Tree registration: Though all the ground work of tree registration is completed and DFO needs to certify the privately grown Ritha trees so that there is still need of support to materialize the tree registration process.
  • The community based marketing model has been proved to be successful in benefitting both producers and traders and hence should be replicated to other places as well.