Value Chain Study of Allo and Lapsi in Parbat District, Nepal

Team Members- Anuja Raj Sharma Nirmala Singh Bhandari Gayatri Sharma March, 2

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Table of Contents Background ......................................................................................................................... 3 Problem Statement .............................................................................................................. 4 Objectives ........................................................................................................................... 4 Literature Review................................................................................................................ 4 Methodology ....................................................................................................................... 6 

Selection of NTFPs ......................................................................................................... 6 Selection of the Site ........................................................................................................ 6 Data Collection ............................................................................................................... 8 Limitations of the Study.................................................................................................. 8 Research Team- .............................................................................................................. 8 

Result and Discussion ......................................................................................................... 9 Brief Description of the NTFPs- ..................................................................................... 9 Socioeconomic data of the survey ................................................................................ 10 Value Chain Map .......................................................................................................... 12 

Value Chain of Allo .................................................................................................. 12 Value Chain of Lapsi ................................................................................................ 14 Value Addition activities along the chain ................................................................. 16 Pattern of profit distribution along the chain ............................................................ 17 Marketing Links ........................................................................................................ 19 Opportunities and Constraints along the Value Chain .............................................. 21 

Recommendations and Suggestions .................................................................................. 22 Conclusions ....................................................................................................................... 23 Acknowledgements ........................................................................................................... 24 References ......................................................................................................................... 25 Annexes............................................................................................................................. 26  List of Figures Figure 1: Sources of Income among Allo respondents ..................................................... 10 Figure 2: Sources of Income among Lapsi respondents ................................................... 11 Figure 3: Contribution of NTFP in Income of respondents .............................................. 11 Figure 4-General Value Chain Map of Allo ..................................................................... 13 Figure 5- Value Chain Map of Lapsi ................................................................................ 15  List of Tables Table 1: Distribution Pattern of Survey by Gender .......................................................... 10 Table 2: Income Sources ................................................................................................... 10 Table 3: Contribution of NTFP in Income ........................................................................ 10 

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List of Photos Photo 1: Outlet of Allo products in Kusma Bazaar .......................................................... 18 Photo 2: Outlet of Agriculture or Forestry Organic Products Sales and Collection Centre in Kusma Bazaar ( Managed by FECOFUN) ................................................................... 18 Photo 3: Lapsi candy ready for packaging ........................................................................ 19 Photo 4:Drying of the Lapsi candies in solar dyer ............................................................ 19 Photo 5-Weaving cloth in a loom ..................................................................................... 20 Photo 6: An Allo entrepreneur knitting a shawl ............................................................... 20 

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Background Non-Timber Forest Products (hereafter NTFPs) have been collected, used and traded by people since time immemorial. They form an important aspect of the livelihood of people dependent upon it. It is estimated that the NTFPs sub sector in Nepal contributes 5% of national GDP out of the 15% contribution from the forestry sector (CECI, 2004 cited by Pyakurel and Baniya, 2011). A growing interest in the utility and value of NTFPs has emerged in the last two decades in developing countries. In Southeast Asia, at least 29 million people depend on NTFPs for subsistence income. According to the International Centre for Integrated Mountain Development (ICIMOD), global trade in existing MAPs was valued at around US$60 billion in 2000, which is expected to grow to US$5 trillion by 2050 (Pyakurel & Baniya, 2011). NTFPs are increasingly becoming popular in national markets as they are important ingredients of several herbal cosmetics, herbal tea, food, medicines, etc. The value of NTFPs has been recognized widely with its increasing contribution to the Nepalese economy (Edwards 1996). The collection and marketing of NTFPs is a major source of rural income and an important source of revenue to the government. In the mountainous regions of Nepal, 10-100 per cent of households are reported to be involved in commercial collection of NTFPs and medicinal plants, and in some rural hilly areas, it contributes up to 50 per cent of total annual family incomes (Olsen and Larsen, 2003). Though NTFPs were an important source of income of rural people, forest policies worldwide began to put emphasis on NTFPs since late 1990s following an estimate made by Peter et al. (1989) which showed that NTFPs could fetch higher economic return than timber (Banjade and Poudel, 2008).Hence NTFPs have been in the focus of government policies in Nepal for the last three decades. The Government of Nepal specifically brought forward the Herbs and NTFP Development Policy (2004) to promote the holistic development of the herbs and NTFP sub-sector for poverty reduction and biodiversity conservation in Nepal. However the Interim Plan (2007/2008-2009/2010) recognized that Nepal doesn’t have sufficient knowledge of NTFPs to use them as a significant means for reducing poverty (ibid). One way of doing so is to study the value chains. A value chain is a sequence of processes and functions that takes a product or service from its inception through production, processing, marketing and finally to end buyers or consumers (Stoep et al. 2010). It indicates the pathway through which a product flows from raw material to its end product. Thus it is essential that studies be made into management and sustainable use of NTFPs, their harvesting techniques, methods of value addition and marketing. Only then we can optimize the benefits from them and thus reduce poverty and contribute to national income. Most importantly the economic benefit arising out of NTFPs can be studied specifically through study of value chains wherein we study the various stakeholders/actors involved, the pattern of profit distribution and the linkages among them. Through this we can identify ways how equitable benefit sharing can be achieved, where and how value addition is to be done in the chain to increase competitiveness in market and ultimately help in strengthening the value chain.

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Problem Statement Most studies related to the market and value chains of NTFPs suggest that benefit is more for the middlemen and Indian traders. Many of the harvesters/collectors do not have an understanding of the market channels, prices and methods of value addition. Because of this they are not getting full benefits and the country is as well loosing its revenue. Thus we have to find out ways how benefit can be optimized for the grassroot actors and only then sustainable management of NTFP resource is possible. Over the last decade , Nepal’s natural products sector has undergone significant changes with the increase in community forest user rights and increased local processing. This has given Nepal an opportunity to expand beyond its dependence on Indian markets, but also highlighted how much more work Nepal needs to become competitive in world markets for natural products while sustainably managing the unique biodiversity of the natural products harvesting areas ( Pokharel et al. 2006 ). Thus it is obvious that Nepal needs to direct activities which help in framing an upgraded NTFP sector and this needs regular studies of market. That is why it is indispensable to carry out value chain studies to assess the market development and promotion. Value chain studies are as well needed to investigate the economic opportunities created by NTFPs at both local and national level.

Objectives The general objective of the study was to assess the value chains of the selected NTFPs. The specific objectives were as follows-

• Value chain mapping of the selected NTFPs –identification of major stakeholders of the chain and their functions

• Value addition activities along the respective chains • Pattern of profit distribution among actors of the chains • Opportunities and constraints along the value chains of the selected NTFPs

Literature Review Residents of hilly areas and ethnic groups have for centuries extracted and spun the fibre to weave durable jackets, porter headbands or straps, fishing nets, ropes, bags, mats, coarse clothing material, and blankets. Allo (Girardinia diversifolia) is known for its strength and durability. It is often lighter and more delicate-looking than its wild contemporaries, jute and hemp. Each hectare of Allo yields around 600kg of fibre. Fibre is extracted on a commercial scale in some districts. Allo is traded either raw (dry bark), or semi-processed (coarse fibre), or in processed form (cloth). Dried bark is traded anywhere between Rs.80 to 100 per kg; coarse fibre between Rs.350 to 380 per kg; and handmade cloth at Rs 350per kg (Pyakurel & Baniya, 2011).

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An action research project on ‘Developing entrepreneurship in value chains of Cinnamomum tamala (Indian bay leaf): linking poor producers to markets for essential oils and spices’, which was implemented in Chamoli district of Uttarakhand, India, and Udayapur district of Nepal by ICIMOD, Nepal. The action research focused on integrating three crosscutting themes – poverty, environment, and gender – into value chain analysis and upgrading, and promoted cross-border learning and the sharing of good practices. A detailed analysis of the bay leaf value chain in the two country sites showed that around 900 tonnes of raw bay leaves are produced and exported from Udayapur in Nepal every year; and 20 to 40 tonnes had been produced from one range of government-managed forests in the last harvest from Chamoli in India in 2002/03. In Udayapur, Nepal, nearly 25% of the total bay leaf is processed as essential oil by Thapa Herbal Company. An estimated 2,150 tonnes of bay leaves are traded to India from Nepal annually. Farmers in Nepal earned a gross margin of 11%, and traders 34%; collectors In India had a margin of 10%, and traders 17%. The bay leaf value chain exhibited strong underlying inequality and power differences between the upstream producers and downstream actors. Key issues to be addressed at the upstream level were lack of organization of the producers, lack of market information and access, absence of quality management practices, lack of capacity to conform to market requirements, policy hurdles to access bay leaf resources on government land, and multiple taxes. Upgrading strategies were developed using a participatory approach (Choudhary et al 2011) Paudel et al. (2009) carried out value chain analysis of NTFPs in five VDCs of Baglung, in which a total of 31 CFUGs were involved. Of the 22 NTFPs identified initially, they were narrowed down to five and finally to two (Allo and Lokta) through the use of Attractiveness Matrix and Ranking Matrix Analysis. The detailed study of their VCs demonstrated that there was an urgent need for skill development trainings, mainly in sustainable harvesting, processing and products development, and exploring detailed information about the possible markets. As local processors were poor, they need basic support services either from CFUGs’ fund or from financial institutions. Major constraints for running Lokta and Allo-based enterprises were identified and possible opportunities were explored. The detailed study of their VCs demonstrated that there was an urgent need for skill development trainings, mainly in sustainable harvesting, processing and products development, and exploring detailed information about the possible markets. The entrepreneurs could be more efficient, increase their productivity and reduce the unit cost of production by using appropriate technology. As local processors were poor, they need basic support services either from CFUGs’ fund or from financial institutions. Maraseni et al. (2006) compared the resource rent or contribution margin of collectors, village traders, Nepali wholesalers and Indian traders for two highly traded non-timber forest products of Nepal, namely asparagus and lichen in four VDCs of Makwanpur district of Nepal. The causes of inequitable margins were investigated, and measures for increasing equity within the supply chain were identified. The research revealed that the margin of asparagus collectors was higher than for the lichen collectors, as lichen was subjected to the high transaction costs of illegal exports. Furthermore, collectors who

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stayed overnight in the forest during the collection period (overnight-stayers) to reduce traveling time had a higher margin than those who went home every day after collection (non-overnight-stayers). In four distinct trading chains analyzed ( Asparagus and lichen value chains for both overnight-stayers and non-overnight-stayers ) , Nepali wholesalers and Indian traders captured most of the resource rent This study has also suggested that helping collectors with credit, training and market information could be instrumental in teaching them to deal directly with wholesalers, with increased bargaining power and risk-bearing capacity.

Methodology

Selection of NTFPs

The NTFPs for the value chain study were selected by stakeholders’ interaction. The NTFPs selected for the study were Allo and Lapsi. These were selected owing to the fact that both of these had been commercialized in the sense that there existed a market and trade and enterprises had been established.

Selection of the Site Parbat district, which is located in the Western development region of Nepal, was selected for the study. The district was selected because vast majority of the poor people live in rural areas of the district and large expanses are out of main stream economy. As the government policy is to target rural poverty, it cannot be addressed without the development of such areas. Rural producers can over come poverty only if they develop a sustainable economic base with links to urban and export markets. Specifically, Shalija VDC and Mudikuwa VDC were selected for value chain study of Allo and Lapsi respectively. The considerations were that these VDCs had abundance of the respective NTFPs and enterprises were set up in both VDCs for the marketing of the NTFPs. Hampal CFUG was the main source of Allo collection for the entrepreneurs. In case of Lapsi, most collection was from private lands but key informants of the Modibeni CFUG of Mudikuwa VDC and Chaukapokhari CFUG of Shankarpokhari VDC were interviewed as these CFUGs were located near to the enterprise.

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Shalija VDC

Mudikuwa VDC

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Data Collection

Primary data in the field were collected through focus group discussions, key informant interviews, CFUG meetings and stakeholders’ consultations. The Allo processing enterprise and the Lapsi processing enterprise were visited in the respective VDCs were visited. CFUG meetings were carried out with the key persons of the Hampal CFUG of Shalija VDC and the Modibeni CFUG of the Mudikuwa VDC. The allo entrepreneurs (who were coincidentally both collectors and traders) were interviewed for details about the value chain. Likewise the collectors of Lapsi and the owner of the Lapsi processing enterprise were interviewed. Key informants especially people from FECOFUN, Chamber of Commerce and Federation of Handicrafts Association were also interviewed

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Limitations of the Study The study covers value chain activities of the respective NTFPs only in Parbat district and doesn’t involve the overall national and international scenario. Specifically, it covers the pocket areas of the concerned NTFPs. Owing to limited time duration of the study, it was not possible to carry out detailed and elaborate studies of the various aspects of the value. Only representatives of relevant CFUGs and key informants (collector, traders and processors) were the source of information for this study because of time and cost limitations.

Research Team-

Dr. Anuja Raj Sharma, Under Secretary, Community Forestry Division, Department of Forest was the coordinator of the research team. The other team members were Nirmala Singh Bhandari and Gayatri Sharma, AFOs in the same division.

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Result and Discussion

Brief Description of the NTFPs- Allo

Girardinia diversifolia (Common names: Allo, Chalne sisnu, Lekali sisnu, Thulo sisnu, Bhangre sisnu, Ullu sisnu; English name:Himalayan nettle, Stinging nettle; Family: Urticaceae) is a herbaceous perennial shrub found in subtropical and temperate regions of Nepal. The stem bark of Allo contains fibres with unique strength, smoothness and silk-like luster. The fibre is used to make clothing since times immemorial. The fibre, thread and woven clothes are commercially traded in a few districts of Nepal. G. diversifolia is a robust shrub reaching up to a height of 2m. Leaves are stalked, alternate, dentate, and palmately divided with three distinct nerves running to three lobes. A mature leaf measures 10 to 24cm by 7 to 18cm. Leaf blades and stalks contain long awl-shaped bristles and stinging hair. Flowers are sessile and borne on axillary and terminal-branched spikes. Flowers are green to yellowish-green in colour, while flowering occurs in July-August and fruiting from September to early November. Lapsi

Lapsi (Choerospondias axillaris) is a deciduous tree of the family Anacardiaceae, growing up to 20 meters tall. The tree is dioecious, with male and female trees producing different types of inflorescence. Male flowers occur in long clusters and have curving, brown-veined petals about 3 millimeters long. Female flowers are solitary in leaf axils at the tips of branches. They are larger than the male flowers and yield the edible drupe. Its fruit is about 3 centimeters long and has a soft whitish sour flesh and green to yellow skin. The fruit is made into pickles, fruit tarts, and sour, spicy candy in Nepal. The tree has long been cultivated in rural Nepal for its fruit

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Socioeconomic data of the survey A total of 16 formal interviews were carried out with key informants related with the Allo and Lapsi Value Chain. Of these, four collectors of Allo and six traders of Allo were interviewed. Of the six traders, two are presently in Kusma Bazaar and have an outlet through which they sell Allo and other organically manufactured items. In case of Lapsi, the collectors were spread over at least 5 VDCs and time constraints did not allow meeting all of them. So a total of six collectors were interviewed. Informal interviews were carried out with the owner of the Lapsi enterprise and FECOFUN chairman. Table 1: Distribution Pattern of Survey by Gender Gender Allo Lapsi Remarks Male 100 % Although the collectors interviewed were all males,

females from each HH also participate in collection Female 100 % Other family members who involved in collection

were also female.

Table 2: Income Sources

In case of Allo, NTFP trade (especially Allo) was the primary income source of more than 50 % of the respondents. But in Lapsi, NTFP trade did not come as a major income source instead Agriculture and remittances were important income sources.

Figure 1: Sources of Income among Allo respondents

Major Incomes

Allo respondents ( % )

Lapsi respondents ( %)

Remittance 33 Agriculture 33 33 Livestock Farming

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Formal Job 16 18 NTFP trade 51

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Figure 2: Sources of Income among Lapsi respondents Table 3: Contribution of NTFP in Income

Figure 3: Contribution of NTFP in Income of respondents

The contribution of NTFP to income of hhs was less in case of the respondents of Lapsi as the collectors were just selling Lapsi from their private lands and did not engage in value addition and processing activities. In case of Allo, there was considerable share of Allo in the income as they were involved at almost all levels of the value chain. This gave them the opportunity of gaining more benefits than would have been possible if they were just one actor. On average, the annual income from Allo was NRs 35000. In case of Lapsi, the average annual income was NRs 5000.

Share of NTFP in total income ( % )

Allo respondents ( % )

Lapsi respondents (%)

0 – 10 17 83 11 – 20 - 21 – 30 17 17 31 – 40 - 41 - 50 33 51-60 17 > 90 16

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Value Chain Map Figure no. 1 and 2 present general value chain maps of Allo and Lapsi showing major functions, actors, physical flow of the product, various markets and supporting and regulating agencies.

Value Chain of Allo

The Value chain map of Allo was prepared based on the findings from interviews with the Allo entrepreneurs of Hampal Allo Processing Micro Enterprise Group and other meso and macro level actors. The collectors, who are 10 HHs of Hampal VDC, are the only ones involved in collection of Allo. They have been organized in the form of a micro-enterprise by the financial and technical support of a lot of different meso level actors. ANSAB and MEDEP have given trainings to the entrepreneurs on processing and value addition techniques. The collectors collect Allo from the CFUGs during the months of Poush to Falgun (December-February). They have to pay Rs 100 per HH per season as fee to the CFUG. One person can collect about 5 kg of Allo in a day. More than one person from the HH can go for collection. Thus the initial input by each HH is just Rs 100. However, some of them buy from nearby VDCs as well. The price for the Allo ranges from Rs 50-70/kg. The Allo after being harvested is processed locally at the enterprise itself. The processed Allo in the form of fluffy wool can be sold at Rs 250-270 per kg. It should be noted here that 5 kg of Allo makes around 2.5 kg of wool. This wool upon spinning is made into a yarn. The yarn fetches a price of Rs 600-1200 per kg depending upon the quality. The finer the yarn, the expensive it becomes. The 2.5 kg of wool makes around 2 kg of the yarn. This yarn is then woven into cloth and can be sold between Rs 400-500 per meter. The 2 kg yarn can make around 12 meters of cloth.

Being a micro enterprise, most of the benefits in this value chain are for the entrepreneurs, who are both the collectors, processors and traders as well. They are involved in collection, processing, spinning, weaving and dyeing as well. Out of the 10 HHs involved, only two are involved in trade. These two entrepreneurs have an outlet in Kusma Bazaar and are selling finished products of Allo as Shawls, Purses, Wallets, and Bags etc. The entrepreneurs staying in Shalija sell woven cloth to Japanese Tourist occasionally. But the majority of the woven cloth is sold by them to the two traders at Kusma, who charge them 5 % as commission fee. The traders send these cloths to various traders in Pokhara, who specialize in making finished products from them. They in turn buy the finished products from the traders of Pokhara and sell it from their own outlet. So it seems that if they could specialize more in making finished products, then the entrepreneurs could make more profit. The costs involved in the chain and borne by the entrepreneurs include the costs of dyes, cotton thread for weaving and transportation costs.

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Figure 4-General Value Chain Map of Allo

Value Chain Actors Meso Level Actors Macro level Actors

Consumption Traders

Weavers

Spinning Processing of Fibre Collection from CFUGs, National forests Input Supply

Collectors NRs 50-70/kg

Processors-Processed fibre in wool form NRs 250-270/kg

Weavers -Woven Cloth NRs 400-450/m

Traders (Kaski )-Diversified products as bags, purse, shawls, etc

Spinners-Fibre in form of yarn NRs 600-1200/kg

Nepali Market-Parbat and Kaski districts

ANSAB, MEDEP, LFP, DDC, VDC, International Himalayan Foundation, DFO, Chamber of Commerce

Fee to CFUG for collection-Rs 100 per hh per season

DFO FECOFUN

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Value Chain of Lapsi

The Value Chain of Lapsi was prepared by taking the Lapsi Processing Enterprise as the main trader body. Lapsi was mostly found to occur in private lands and in public lands as well. A nursery maintained by an NGO (Parbat Community Development Society-PCDS) in the Mudikuwa VDC supplies seedlings to villagers. The farmers and their families involve in collection. Collection usually spans between the months of Mangsir to Magh (December to February). Locally available instruments as sickles, ladder and long sticks are used to harvest the Lapsi. The farmers collect the Lapsi and sell it to the local processing enterprise at the rate of Rs 10-15 per kg. The enterprise then does processing to produce an array of products as Pickle, Jam and Candy. The enterprise sells the products after performing various value addition activities. The enterprise collects Lapsi from farmers of 5 VDCs of Parbat (Shankar Pokhari, Limithana, Bhagara, Mudikuwa and Thapathana). Around 100 collectors are expected to be present in total. Some village traders also buy Lapsi from them and sell them in Kusma Bazzaar at Rs 20-25 per kg. Traders from Pokhara are also said to buy Lapsi from the farmers. They buy the whole tree and pay the farmers by making a guess of the total production. The price usually comes to around 10 per kg. They sell the Lapsi in Pokhara at a retail price of Rs 60 per kg and a wholesale price of Rs 40 per kg. The enterprise collected around 120 quintals of Lapsi from collectors of the five VDCs in the year 2067 and this year the collection has reached 90 quintals till date.

The price of the Lapsi products is said to have a close correlation with the price of sugar. Processing is done at the village itself in the enterprise. It is estimated that 3 kg of Lapsi gives around 1- 1.25 kg of pulp. Pulp is used to make Lapsi Candies and Jam. Whole part of Lapsi (with the seed as well) is used to make pickle. The price of Lapsi Jam ranges from Rs 80 – 90 per 400 gm. The retailers are sold at the rate of Rs 90 per 400 gm while the wholesalers are sold at the rate of Rs 80 per 400 gm. Lapsi pickle price ranges form Rs 80 per 400 gm to the retailers to Rs 70 per 400 gm to the wholesalers. Lapsi candies are sold at the price of Rs 21 per 75 gm to the wholesalers and Rs 25 per 75 gm to the retailers. These prices are the ones that the enterprise charges to the retailers and wholesalers on the whole. When these products arrive at places as Baglung, Myagdi, Kaski and Kathmandu (Organic Village), the prices they them range from Rs 110 -130 per 400 gm for the Lapsi Jam and Rs 100-120 per 400 gm for the Lapsi pickle. However, the enterprise has been giving 5-10 % of its production in samples for promotion of the product. Meso level actors as LFP, ded and PCDS have been helping the enterprise with support of training, equipment and promotion of the products in market.

The input supply of the enterprise involves costs associated with buying of other raw materials as sugar, oil, potassium meta bi sulphate (preservative for pulp), other condiments; payment of revenue to CFUG (5 % of total profit) and PCDS (5 % of the total profit- for their networking and coordination effort); payment of tax to Food Quality Control, Federation of Handicrafts, transport cost, storage cost, labor cost, fuel cost, electricity cost and equipment/machinery cost.

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Figure 5- Value Chain Map of Lapsi

Value Chain Actors Meso Level Actors Macro level Actors

Consumption

District Traders Processing Input Supply

Enterprise NRs 10-15/kg

Collectors Collect from CFUGs, Private land

Small Traders at Kusma Bazaar NRs 20-25/Kg

Retailers and Wholesalers in Baglung/Myagdi/Pokhara/Kathmandu ( Kathmandu Organic Village) LP-(90-100)per 400gm LJ-(100-110)per 400gm

Lapsi Pickle (LP)-Rs 70-80 per 400gm

Lapsi Jam ( LJ)-NRs 80 -90 per

Lapsi Candy(LC)-NRs 21-25

LFP, ded, PCDS

DFO DSWSCO FECOFUN

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Value Addition activities along the chain Value addition activities along the Allo Value Chain- The Allo bark is stripped off from the green culms/stems by using sickles and wearing gloves on hand. The dry stems are directly brought home without debarking. The various value addition activities along the value chain are described below in brief-

Cooking- The bark is immersed in water for minimum of one day to soften the fibres. Thereafter it is cooked in with ash/caustic soda. When caustic soda is used the time of cooking is around one hour but with ash it takes around 4 – 5 hours. Yet the processors prefer ash as it does not affect the hands much. Green bark cooks faster while dry bark takes longer time. It is left overnight.

Beating and Washing- The bark is then beat by placing them on stones. Thereafter it is washed in water to remove the ash.

Cleansing and Beating- The bark is then mixed with either Kamero (white soil, consisting of Calcium Carbonate) or Maize Flour or Powder of Rice husk and is dried in the sun for a whole day. This helps to bring shine and luster to the fibre. It is then beat to remove the cleansing agents. Thereafter it is sun dried and the fibre becomes ready to be separated manually. It is then made soft and fluffy like wool by use of “chimti”.

Spinning- The fluffy wool is made into yarn by spinning it in the traditional spinning machine, called the “Charkha”. Finer yarn is considered good quality.

Weaving- Weaving is done in the handloom. Cotton thread is usually used as base when weaving.

Pressing-The woven cloth is pressed by the use of pressing machine and the cloths that are pressed fetch higher value.

Coloring- In some cases the yarn is colored as well but the color was found to fade and it has thus not been used so much.

Value addition activities along the Lapsi Value Chain- Once the Lapsi arrives at the enterprise, they are sorted out for bad ones and are then washed thoroughly for further processing into pulp. The processing steps have been described below in brief.

Boiling- Thoroughly washed Lapsi fruits are boiled with water in the ratio of 2: 1(Lapsi: Water) until the peel splits.

Mashing of fruit- The boiled fruit is drained to remove water and is then mashed along with the peel using a pulping machine. The stones are then removed manually.

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Addition of Preservative-A preservative called Potassium Meta bisulphate is added. Salt can also be used.

Storage-It is then filled into polythene containers and stored for later use.

Making of Pickle-The fruit is boiled and used along with seed for making pickle. Spice mix (coriander, chilli, turmeric, pepper, cloves), salt and mustard oil are mixed to the boiled fruit (water is drained out) and cooked for another 30 minutes. It is then packed into tightly sealed polythene packets or sterilized bottles and stored in cool dry places.

Making of Jam-Two parts of sugar, 2 parts of water and one part of pulp is cooked to make jam. Pectin is used to make the jam set.

Making of candy-Candy is made by cooking one part of sugar with one part of pulp and 5 gm of clove powder for each kilogram of the pulp. Once the mixture cools, these are rolled into small balls and placed on trays and dried by placing over the solar dryer. After they dry they are packed into polythene bags and stored in a cool dry place.

Pattern of profit distribution along the chain Allo- In case of the Allo value chain it was observed that most of the profit remains within the collectors themselves as they are involved from collection to processing to final weaving of cloths and sell their products themselves. The only problem that was seen was that they time and often sell the woven cloth directly to traders from Pokhara due to lack of skill in making finished products as purse, wallets, handbags etc. So the entrepreneurs could benefit much more if they could be able to design the finished marketable items as purse, bags, wallets etc. Lapsi-The Lapsi value chain shows that the collectors have hardly any benefit due to not having the processing skills and equipment. They are forced to sell the fruit to the local enterprise, which the collectors say pays them a minimal price. Thus on average the collectors earn around Rs 5000-10,000 from selling the Lapsi. The total input cost of the enterprise is estimated to be around Rs 4.5 lakh for processing 120 Quintal of Lapsi (for the year 2067/68) and a total of Rs 8 lakh of Lapsi products were sold by the enterprise. Thus more interventions are needed to make the collectors gain more profit in the value chain.

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Photo 1: Outlet of Allo products in Kusma Bazaar

Photo 2: Outlet of Agriculture or Forestry Organic Products Sales and Collection Centre in Kusma Bazaar ( Managed by FECOFUN)

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Photo 3: Lapsi candy ready for packaging

Photo 4:Drying of the Lapsi candies in solar dyer

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Photo 5-Weaving cloth in a loom

Photo 6: An Allo entrepreneur knitting a shawl

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Marketing Links Allo- In case of Allo, the entrepreneurs staying in Shalija sold their yarn/thread to the outlet at Kusma Bazaar most of the time. Only very occasionally they sold woven cloth directly to tourist in the village itself. The source of information regarding the price was usually through phone contacts with other traders of Pokhara and Kathmandu. The outlet in Kusma Bazaar was established in 2066 BS. Prior to that, the entrepreneurs used to sell Allo through facilitators of the Micro Enterprise Development Programme. Now the outlet is a center for collection as well as sale of Allo. Problems with marketing in the Allo Value Chain-The Allo entrepreneurs however were selling Allo goods with trademark of a enterprise of Pokhara. They were not aware of the process of registering for a trademark and had the misconception that it would be too costly to do so. Thus they were selling the woven cloth to the traders of Pokhara and buying readymade items from them, with a trademark tag of Pokhara. The research team made contacts with the chairman of the Federation of Handicrafts Association of Nepal regarding this. The Federation has decided to help the entrepreneurs in getting the trademark as soon as possible. Lapsi- In case of Lapsi, the collectors had no other market options except to sell to the Lapsi enterprise. It was very rare that a few traders from Kusma Bazaar came to buy Lapsi and sometimes wholesalers from Kathmandu and Pokhara also come. The wholesalers buy the Lapsi of the whole tree and pay on a basis of estimation. Selling to a wholesaler seems like a better option for the collectors as this reduces the time and energy spent in harvesting the Lapsi. Problems with marketing in the Lapsi Value Chain- Lapsi needs to be processed within a few days of collection. Thus the enterprise cannot buy all Lapsi at a time without giving due consideration for processing. So sometimes some of the collectors cannot get a very good price for their Lapsi as it might get overripe. There is problem with selling of the Lapsi products as these have to compete with cheaper quality products from India and Terai.

Opportunities and Constraints along the Value Chain Allo Value Chain Opportunities

• With global concern on climate change, use of Allo fibre is an attractive option for many environmental friendly people. So the demand for it is obvious to rise.

• Allo can be planted on private lands and even on public lands for commercial production. The leaves and inflorescence can be used as vegetable. With commercial plantation is aspect can also aid to income generation.

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• Use of cloths made from Allo fibre is said to cure skin diseases. So there is an opportunity for marketing it from that aspect.

Constraints • The entrepreneurs do not have skills for making finished products as wallets,

purse, bags and they are forced to sell the woven cloth directly. • There is very little information about the price of Allo in the market • The entrepreneurs were facing problems with registering their products and using

a trademark. Hence they were selling their products using a trademark of an enterprise of Pokhara.

Lapsi Value Chain Opportunities

• Parbat district has high production of Lapsi, so there is high opportunity for large scale production of Lapsi products and even exporting the products overseas. .

• Besides the Lapsi fruit, the stones which are now being used as fuel could be used for other better things as making shirts buttons.

Constraints • The fluctuating price of raw materials (especially sugar and other items as jars)

affects the production and price fixation. • The market has to face competition with products of lower price and poor quality,

especially those from India and Terai. This has created a problem for the products.

• Lack of transport facility affects the transportation of Lapsi from collection centre to the enterprise.

• Most of the collectors are farmers and they pay more attention to farming activities and less attention to Lapsi harvesting. So at times they simply let the Lapsi overripe.

• In the hills, Lapsi ripes a bit late compared to the Teria and this affects the processing and production of Lapsi products. While the hill Lapsi is being processed the Terai Lapsi products already start to arrive.

• Harvesting is a major problem with very large and older trees. Use of locally available materials limit complete harvesting.

Recommendations and Suggestions Expansion and Improvements of local and regional markets-The local and regional markets should be improved so that consumption in them increases. In case of Lapsi, local consumption is very low. Regional markets as Pokhara, Kathmandu, Myagdi and Baglung are selling the products but competition with similar cheaper products makes the product less attractive to consumers.

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Raising awareness regarding the use of organic products- Many people are unaware of the benefits of using organically produced products. So, raising awareness on such aspect helps in promoting the product.

Technological intervention is needed-Technological interventions are needed to make the products good enough for export and of top quality. Like in case of Allo, the technique used for dyeing the yarn was not good enough as the color faded and when used in combination with just Allo, the color smeared over it. And the finishing of the readymade goods made from Allo wasn’t that much impressive.

Entrepreneurs need to be made knowledgeable about the process of registration and trademark aspects- The Allo entrepreneurs were in shadow regarding the process of registration and were using the trademark of another enterprise despite the fact that the product was made by them. Thus policy advocacy should be a priority for the entrepreneurs.

Commercial Plantation of Allo in Private land-Allo has been planted in South India on a commercial scale, so studies need to be made into that aspect even for Nepal and if possible, they could be planted on private lands as well. This is especially important now from the fact that the use of natural fibres is gaining worldwide popularity and there is a huge scope for export. Overall upgrading of the value chain- Value chain upgrading especially in terms of market identification and expansion, setting of parameters for quality and trainings to actors of the chain will greatly enhance the value chain further.

Conclusions

The value chains of Allo and Lapsi showed that if intervention could be made for the collectors to be involved in processing as well as trade then they could benefit more. This was true for the case of Allo. In the case of Allo, the collectors had been given trainings for processing, spinning, weaving and dyeing. This enabled them to gain more benefits then had they been only playing the role of one particular actor in the chain. The Allo entrepreneurs have a considerable income form Allo and the average annual income from Allo amounted to NRs 35000. The Lapsi value chain showed that the collectors had not gained much benefit owing to the fact they had neither the equipments nor the skills for processing. Marketing was an issue in both the cases. Though the Lapsi products were not traced up to India as in other value chains, the India made Lapsi products presented a challenge to the Nepalese manufacture. Thus there should be a quality control mechanism where such cheaper and lower quality products’ entry to the country is checked. Awareness regarding the use of organically manufactured products could also help foster the market. Extending the marketing channels and providing training could be an option for promoting both the value chains.

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Acknowledgements The team members of this study team would like to thank the District Forest Office, Parbat for the tremendous help and support they have provided. Thanks are due to Mr. Harischandra Sapkota, AFO, DFO, Parbat for his great enthusiasm and facilitation in making arrangements with the entrepreneurs of Allo and Lapsi. Similarly, we would like to thank the staff at Kaligandaki Rangepost and Gyadi Rangepost. We would like to thank the FECOFUN Chairman Mr. Kishor Sapkota for giving us a lot of insight into the Allo and Lapsi Value Chain. Finally, we would like to thank all the entrepreneurs of Allo and Lapsi who participated in this study and gave us valuable information. We highly appreciate their help and cooperation at all stages of this study.

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References Pyakurel D. & Baniya A. 2011. NTFPs: Impetus for Conservation and Livelihood support in Nepal. A Reference Book on Ecology, Conservation, Product Development and Economic Analysis of Selected NTFPs of Langtang Area in the Sacred Himalayan Landscape. WWF Nepal. Choudhary, D; Pandit, BH; Kinhal, G; Kollmair, M (2011) Pro-poor value chain development for high value products in mountain regions: Cinnamomum tamala. Kathmandu: ICIMOD Stoep, Gail A Vander, Pokharel, Ujwal R., Rajbhandari, M., Shrestha, S., and Damodar, K. 2010. Enhancing Competitiveness of Nepal’s Large Cardamom Value Chain. SNV, Nepal. Retrieved on 8/9/2011 http://www.snvworld.org/en/countries/nepal/PublishingImages/Enhancing%20Competitiveness%20of%20Nepal%27s%20Cardamom%20Value%20Chain.pdf

Paudel, A., Subedi, B.P., Gyawali S., Thapa G. K. and Sharma, M.B. 2009. Value chain analysis of non-timber forest products in Baglung district, Nepal.Banko JanakariVolume 19 (2): 33 - 41. Banjade, M. R. and Sharma Paudel, N. 2008. Economic Potential of Non-timber Forest Products in Nepal: Myth or Reality? Journal of Forest and Livelihood 7(1): 36 – 48. Maraseni T.N., Shivakoti, G. P., Cockfield, G., and Apan, A. 2006. Nepalese Non-timber Forest Products: An Analysis of the Equitability of Profit Distribution across a Supply Chain to India. Small-scale Forest Economics, Management and Policy, 5(2): 191 - 206, 2006. Retrieved on 8/7/2011 at http://www.eprints.usq.edu.au/1366/01/Maraseni_et_al._FINAL.pdf Pokharel B., Subedi, M., Sapkota, I. B., Subedi, B., The Asia Network for Sustainable Agriculture and Bioresources (ANSAB), and EnterpriseWorks/VITA for International Resources Group (IRG). 2006. Role of Natural Products in resource management, poverty alleviation and good governance-A case study of Jatamansi and Wintergreen value chains in Nepal. Retrieved on 8/16/2011 at ://www.ansab.org/publication/role-of-natural-products-in-resource-management-poverty-alleviation-and-good-governance/ Herbs and NTFP Development Policy. 2004. GoN. Olsen C.S. and Larsen H.O. 2003. Alpine medicinal plant trade and Himalayan mountain livelihood strategies. The Geographical Journal. 169:243-254. Edwards D. M. 1996. Non-Timber Forest Products for Nepal: Aspect of the Trade in Medicinal and Aromatic Plants. FORESC Monograph 1/96, Forest Research and Survey Center, Ministry of Forests and Soil Conservation, Kathmandu.

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Annexes Annex 1 -Checklist of Questions for Stakeholders Meeting (DFO, FECOFUN, NGOs/CBOs, Collectors and Traders of NTFPs)

1. Which NTFPs are traded mostly in the NTFP, please specify in rank?

2. Please give the names of CFUGs that engage in the trade of these NTFPs ( two NTFPs will be chosen from the ranking provided )

S.N Name of CFUG Address Remarks

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3. What is the tentative flow of NTFP 1 through various levels of actors?

4. What is the tentative flow of NTFP 2 through various levels of actors?

5. Could we get a list of traders operating in vicinity of the selected CFUGs?

S.N Name of Trader Contact Details Remarks

Annex 2- Checklist of Questions for CFUG level Meeting 1 Name of the CFUG 2 Address of the CFUG

NTFP1 collectors

Village traders (Petty shop?)

Road-head traders (identify)

Terai / District suppliers

Terai traders

Production

Storage/transportation

Primary processing/storage/transportation

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3 Area of the Forest 4 Type of Forest ( Natural-1, Afforestation-2,

Both-3, Other-4)

5 Main Vegetation type 6 Major NTFPs found in the CFUG

7 NTFPs collected mainly for personal use 8 NTFPs collected for trade purpose 9 Does the CFUG levy fee on the selected

NTFPs? NTFP 1 If yes, how much Rs………/…….

NTFP 2 If yes, how much, Rs………/….

10 Is there any special rule pertaining to collection of NTFPs? Describe.

NTFP1

NTFP 2

11 Is there any special provision of NTFP allocation to special groups (women, dalit, ethnic groups, poor, others ) Yes-1, No-2

12 If yes, for which group/s?

13 What is the special provision?

14 Can non-users collect NTFPs as well? Yes-1, No-2

15 If yes, how is this regulated?

16 What is the approximate number of non-users who come to collect?

NTFP1 NTFP 2

17 How many of the CFUG users (%) are involved in collection of NTFPs?

18 More specifically, how many are involved in collection of the two NTFPs

NTFP 1 NTFP 2

19 What price do the collectors get when they sell the NTFPs in village itself?

NTFP 1 Rs………/…..

NTFP 2 Rs……../……..

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20 What price do they get when they sell in bigger markets?

NTFP 1 Rs………/…..

NTFP 2 Rs………/…..

21 Do the collectors perform any value addition activities for the NTFPs? Yes-1, No-2

NTFP 1

NTFP 2

22 If yes, what type of activities, describe NTFP1

NTFP 2

23 What constraints exist in NTFP management and trade? Please specify

24 Are users planting NTFPs in private lands? Yes-1, No-2

25 If yes, what types of NTFPs, please specify.

26 In the past 5 years, what is the status of NTFPs? Increasing, decreasing, same.

NTFP 1 NTFP 2

27 If increasing or decreasing, what is the cause for it? Give up to three reasons, starting with most important first.

NTFP 1 NTFP 2

1.

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2.

3.

28 Name of the market near by the community forest

29 When they sale the collected NTFPs? 1-Same day, 2-once a week, 3-Monthly basis 4-Contingency needs

NTFP 1 NTFP 2

30 When they sale the collected NTFPs? 1-Same day, 2-once a week, 3-Monthly basis 4-Contingency needs

NTFP1 NTFP 2

31 Users’ knowledge on value addition: 1-Little, 2- Average, 3-Good

32 Type of value added on NTFPs 1-Cleaning, 2-Drying, 3-Grinding,4-Storage 5-Packing

NTFP 1 NTFP 2

Information on collected NTFPs Name of NTFPs

Collection time Amount collected by an adult/day

Cost of collection ( labor +material )

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Annex 3- Questionnaire for Collectors Name of Interviewer Date of Interview District VDC/ Municipality 1 Name of HH head 2 Name of respondent 3 Address of respondent 4 Age of respondent 5 Sex( M/F) 6 Education (highest class

passed), if never went school write 0.

7 Main source of income, mention at least three in order of rank, 1 indicates the main income source.

8 Average annual income (Rs.) 9 Income form NTFP trade

(Rs.)

10 Family size 11 Landholding status Khet

Bari Pasture

12 CFUG Membership-name the CF where HH is member.

13 Besides the respondent, how many other family members involve in NTFP collection?

14 Please give the details of the other family members involved in NTFP collection

Name of respondent

Relationship to hh head

Age Sex Education Number of days NTFPs collected

14 How long has the respondent

been in this occupation?

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15 Please give a detail of the following activities for the NTFPs

NTFP1 NTFP 2

Time of collection ( specify period of months )

Average amount that can be collected per day

Total amount collected in the past 12 months

Number of days ( in total for the HH ) spent in collection

Where do you collect from? Specify in percent.(%)

CF: CF: NF: NF: Private land: Private land: Other specify: Other specify:

Did you pay any fees? ( Rs. ) CF: CF: NF: NF: Private land: Private land: Other specify: Other specify:

How much have you sold in the past 12 months?

What was the average selling price?

What was the SP in the beginning of the season?

What was the SP towards the end of the season?

Who were your customers? Please write down ( Individual hhs, village traders, district traders, other specify)

How do you find customers ?( 1-traders come in search themselves, 2-through our previous contacts, 3-sitting in a market place,4- through cooperatives that collect NTFPs, 5-other specify

What is the method of harvesting that you use? Please specify. Which are the nearby markets of these NTFPs, please name.

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Do you perform any value addition activities? If yes, what types- write down? Cleaning-1, drying-2, Grinding-3, Packaging-4, Storage-5, other specify------- - 6

16 What are the sources of market information for you? Please specify ( 1-None, 2- Traders, 3- DFO, 4-FECOFUN, 5- NGOs/CBOs, 6-Cooperatives/Enterprises, 7-Specify…………….. others

17 Have you got any help from any organization for NTFP collection ?

From what type of organization- Type of help received-

18 What are the problems that you are facing regarding NTFP collection ?

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19 Are there any suggestions how this can be improved?

Annex 4- Checklist of Questionnaire for traders Name of Interviewer Date of Interview Name of the market area 1 Name of respondent 2 What type of trader the respondent

is? Specify ( Village trader, wholesaler, retailer, etc )

3 Address of the respondent 4 Original home district of the

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respondent 5 Age 6 Sex 7 Education 8 HH size 9 Landholding status Khet

Bari Kharbari

10 Main income source ( rank most important as 1 )

1 2 3

11 How much NTFP contribute to income? ( in % )

12 Type of trade ( Professional, Occasional, Sporadic )

13 How long have you been in the trade?

14 How much did you purchase in the past 12 months?

NTFP1 NTFP 2

15 Where do you buy these from? ( 1-Colelctors, 2- Village traders, 3- District wholesalers, 4-other specify)

16 At what price did you purchase on average?

17 What was the price in the beginning of the season?

18 What was the price in the end of the season?

19 What much royalty did you have to pay?

20 How much tax did you have to pay?

21 What was the transport cost?

22 Was there any storage cost?

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23 Was there any processing cost?

24 Besides these, were there any unofficial costs?

25 Other costs if any, specify

26 Where do you sell your products?

27 Did you carry out any value addition activities, if so specify?

28 What constraints do you see in NTFP trade?

29 What are your suggestions to overcome these?

Annex 5 List of people in stakeholders meeting

1. Harischandra Sapkota, AFO, DFO, Parbat 2. Saraswati Aryal, Ranger,DFP Parbat 3. Kishor Sapkota, Chairman ,FECOFUN, Parbat 4. Shiva Prasad Sharma, Chairman, Federation of Handicrafts Association, Parbat 5. Shiva Pariyar, Ranger, Kaligandaki Rangepost, Parbat