OT > 25035 > OT25035

VALUE-CHAIN ANALYSIS OF NTFP \u2013 KALLIBARK, EUPHORBIA ANTIQUORUM IN CHITTOOR DISTRICT OF A.P

Submitted by

RAJANI KUMAR BANDRAPALLI (25035)

ORGANISATION TRAINEESHIP SEGMENT PRM 2004-06

Submitted to DISTRICT RURAL DEVELOPMENT AGENCY, CHITTOOR, A.P July-2005

INSTITUTE OF RURAL MANAGEMENT, ANAND

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Table of contents

Acknowledgements Executive summary Table of contents List of abbreviations

1. Introduction\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u202

2. Objectives of the study\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2

3. Methodology of the study \u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026

4. Limitations of the study\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u

5. Review of literature\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u202

6. Existing value-chain analysis of kallibark and its value added products\u2026\u2026\u2026\u202 6.1. Pre-Harvest, 6.2. Harvest and 6.3. Post-Harvest processes

7. Proposal for establishing Pulverizing plant \u2026\u2026\u2026\u2026\u2026\u2026\u2026\u20

8. Proposal for establishing Agarbatti making unit \u2026\u2026\u2026\u2026\u2026\u2026\u202

9. Conclusion\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026 10. NTFP related problems encountered during the study period and recommendations

for the same\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u202

11. References\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u202 Annexure

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ACKNOWLEDGEMENTS At the out set we would like to thank Prof. L.K.Vaswani, for his guidance and support during our Organizational Traineeship Segment which had helped us immensely in the process of making this paper. We express our gratitude to the host Organisation, DRDA especially to Mr. Shamsher Singh Rawat who is the district collector of Chittoor for taking personal interest in our projects and Mr. Raghunandan Rao who is the Project Director for DPIP,Chittoor and also the reporting officer, for hosting and supporting us and extending maximum possible help throughout our stay. We thank all the DPMU staff and the administrative staff in extending their help to carryon this project. We thank the faculty of IRMA, especially Prof. Shiladitya Roy, Prof. Ashutosh Verma, Prof. Haribandhu Panda, Prof. Madhavi Mehta, Prof. H S Shylendra and Prof S M Panda whose teachings have been the foundation stones towards this effort. We also thank all the DRDA/DPIP staff Chittoor, who helped us in collecting secondary data and last but not the least; we sincerely thank the NTFP collectors of the district, all the Federation members and the field staff for their co-operation and assistance in collecting information for this paper.

Rajani Kumar .B (25035) 3

1. 2. 3. 4. 5.

Value-chain Analysis of NTFP-kallibark, Euphorbia antiquorum Title: in Chittoor District of A.P. Organisation:

District Rural Development Agency, Chittoor.

Reporting Officer:

Mr. P. Raghunandana Rao, Project Director

Faculty Guide:

Prof. L.K.Vaswani

Student’s Name:

Rajani Kumar Bandrapalli (25035)

Objectives of the study: 1. To understand the existing value-chain of the kallibark and its valueadded products. 2. To recommend measures to the organisation, that will improve the existing situation Methodology: The product kallibark is selected to study value-chain among the 45 NTFP items based on the scales of procurement and the no of SHG and non-SHG members benefited. Sources of data: Primary sources: Unstructured interviews with various actors involved in kallibark value-chain. Secondary sources: Reports and Documents available with the Project DRDA, DPIP and SHG federations, websites Scope and Limitations: This study is confined to Chittoor district. The findings and suggestions cannot be replicated without understanding the enabling conditions. Authenticity of information provided by middlemen and traders is one of the limitations. Major Findings: The organisation, DRDA/DPIP is facilitating the activity of NTFP marketing by providing working capital and physical infrastructure to the women SHG federations, training the women in NTFP collection, value addition and providing tie-ups for marketing of their pooled produce. The Community based organisations like VO/ MS (women SHG federations) have made substantial impact on the NTFP collectors by procuring the NTFP items through their procurement centres at remunerative prices, bypassing the exploitative middlemen. Kallibark is one of the major NTFP procured by CBO’s through out the district in around 30 mandals in large quantities (789 tons, during 2004-05), Bark is demanded either from middlemen or readily accepted by the procurement centres and sold to the trader at Chintamani in Karnataka according to the prior agreement between District federation and trader at a specified price.. The bark is made into powder at Chintamani pulverizing plant and sold to wholesalers in Bangalore market; the kallibark powder is one of the ingredients in the preparation of Raw Agarbattis and purchased by Agarbatti making units. The Agarbatti making units under CBO-MS procure the raw materials including kallibark powder from Bangalore and get them rolled by women SHG members and aid in wage employment generation. The Raw Agarbattis are made in different sizes, gauges according to the market demand and are sold to end product manufacturers in markets like Bangalore, Hyderabad, Nagpur, Delhi, and Chennai. Recommendations: Instead of selling the bark to the trader and again procuring the powder from the wholesalers at Bangalore incurring the two ways transportation cost, the pulverizing activity can be taken up by establishing a pulverizing plant under the management of CBO-District

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federation with the technical help and monitoring of project personnel. The activity of the Agarbatti making can be replicated to create wage employment of SHG women given the availability of one of the raw material, funds, monitoring project personnel and with the increasing demand for Raw Agarbattis.

LIST OF ABBREVIATIONS DRDA: District Rural Development Agency DPIP: District Poverty Initiatives Programme RPEP: Rural Poverty Eradication Programme IKP: Indira Kranti Padam PMRY: Prime Minister Rojgar Yojana CMEY: Chief Minister Employment Yojana SGSY: Sampoorna Grammen Swarojgar Yojana EAS: Employment Assurance Scheme NTFP: Non-Timber Forest Product SHG: Self-Help Group VO: Village Organisation MS: Mandal Samakya /Mandal SHG Federation ZS: Zilla Samakya/ District SHG Federation JFM: Joint Forest Management VSS: Vana Samrakshana Samiti GCC: Girijan Cooperative Corporation KVIC: Khadi and Village Industries Commission CIF-SP: Community Investment Fund-Sub Project

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List of Annexure

Annexure 1…………Opening and Closing balance sheet of the proposed pulverising plant Annexure 2………...Working Capital Requirement of the proposed pulverising plant. Annexure 3………..Profit and Loss statement of the proposed pulverising plant. Annexure 4…..….. Opening and Closing balance sheet of the proposed Agarbatti unit. Annexure 5……… .Working Capital Requirement of the proposed Agarbatti unit. Annexure 6……… Profit and Loss statement of the proposed Agarbatti unit.

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1. INTRODUCTION Chittoor is the southern most district of Andhra Pradesh adjacent to the states-Tamilnadu and Karnataka, comprising 66 mandals and with the geographical area of 15,151 sq km, and 2108 sq km forest cover accounting to 13.91 percent of the geographic area. Basically Chittoor is a dry district and much of the population depends on the livestock and other activities rather than agriculture due to high frequency of droughts. For the past 50 years both the governments, centre and state have taken some initiatives to develop the district through the implementation of programmes like DPAP, PMRY, CMEY, SGSY, EAS at various points of times, but many of the programmes have not yielded desired results in the up-liftment of the rural poor and much of the benefits have accrued to welloff, even among poor and not percolating to the poorest of the poor. The District poverty initiatives programme (DPIP/ RPEP/Velugu /IKP) was initiated by the state government with an objective of women empowerment by creating self managed and sustainable institutions in the year, 2000, and later merged with the existing District rural Development Agency (DRDA) in the year, 2003, to avoid the duplication of developmental interventions implemented by both centre and state government. Under the DPIP, the organisation has formed SHGs’ and SHG federations at village, mandal and district level as mentioned below, and strengthened them through provision of income generating activities like NTFP procurement and marketing, agricultural produce marketing, and employment generation opportunities like employment assurance scheme, Agarbatti making. The structure of the SHG federations is in the following manner in Chittoor district – SHG at the member level:

10-15 members in the village form an SHG (Self-Help Group). VO (Village Organization) at the village level:

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All the SHGs in the village form a VO to regulate the SHG activities. Hence this VO is at the village level. MS (Mandal Samakhya/federation) at the Mandal level:

All the VOs in the Mandal federate to form the Mandal Samakhya. This MS takes the responsibility to carry out various activities and programs to be implemented by the government. It also carries out businesses with the help of the Community Coordinators, botanists and other field staff available and with the help of funds from the government. The MS monitors the VO working. Also the funds granted to the MS from the government will be revolved through the MS. ZS (Zilla Samakhya/federation) at the District level:

All the Mandal Samakyas’ federate at the Mandal level to form the ZS. The Non-Timber Forest Products (NTFP) procurement and marketing intervention is taken-up as income generating activity by Mandal Federations in 2003 in various phases and at present done in 53 mandals and organizes procurement of 46 products through 75 procurement centers, employing 98 village botanists, 19 botanists and 3 APM’s and 2 DPM (including one NTFP marketing consultant). Total no of beneficiaries targeted by the intervention are 19,367 SHG members and 2,481 Non-SHG members in the last year, 2004-05, with the addition of another 10 mandals in the current year the benefit may extend to another 5000 members. The performance summary of the NTFP activity is given below, Last year performance 2004-05,

Total procurement value: 73.33 lakh Value of the produce sold: 70.34 lakh Dividends given to beneficiaries: 1.47 lakh Net profit: 3.44 lakh Stock remaining at the year-end: 16.07 lakh

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For the year, 2005-06

Target for 2004-05(March, 05): Rs 156.00 lakh Procurement up to Sept. 2004: Rs 45.45 lakh Value of the produce sold: Rs. 35.96 lakh Net profit (only VO share): Rs. 2.80 lakh Stock remaining: Rs. 26.79 lakh Out of the total 46 NTFP products procured by the organization, kallibark – The bark of Euphorbia antiquorum is the product which occupies the important position in the NTFP

marketing activity and is being done in many mandals across the district.

1. OBJECTIVES OF THE STUDY:

1) To understand the existing value-chain of the kallibark and its value-added products. 2) To recommend the measures to the organisation, that will improve the existing situation.

2. METHODOLOGY AND SOURCES OF DATA:

The kallibark is selected to study value chain due to its importance to the SHG federations in terms of procurement quantities (789 ton / annum) and benefits of it being accrued to around 2,500 SHG members and non-members in the district. The value-chain of the kallibark is tracked by meeting various actors i.e. NTFP collectors, middlemen, forest department personnel, employees of Mandal Federation’s procurement centre, local pulverizing plant personnel, contract trader at Chintamani, Karnataka and wholesalers of bark powder in Bangalore. Data collection is through both semi structured and unstructured interviews, the semi structured interviews are conducted with the NTFP collectors/ beneficiaries to obtain details regarding the processes of collection and the risks and benefits involved in NTFP activity, while unstructured interviews are carried out with the middlemen and traders, because of their hesitation to 9

reveal the margins and trade channels operated by them. The secondary sources of data are reports and documents available with the Project DRDA, DPIP and SHG federations and also Websites.

3. LIMITATIONS OF THE STUDY:

1) The study done is limited to Chittoor district. The study is context specific and cannot be replicated with out understanding the enabling conditions. 2) Veracity of the information provided by middlemen and traders in the value chain. 3) No scientific studies available about potential bark yield of plant.

4. REVIEW OF LITERATURE: Kallibark-Botanical details:

The genus Euphorbia, comprising over 2.000 species, is well represented in India. While most of the approximately 190 species found in the country are herbs and shrubs, only 19 species, inhabiting arid parts of the country, have developed a xerophytic habit and show succulence. Euphorbia antiquorum

Described by Linnaeus in 1753, this Euphorbia, whose specific name means 'of the ancients', was one of the two species to be described from India. Wide spread throughout peninsular India, it can be found growing up to an altitude of 800 m. One of the largest armed tree Euphorbias with an average height of 5 - 7 m., it has been known to attain gigantic proportions if left undisturbed. It has upward curving, segmented branches with thick sinuate wings. Leaves are insignificant and fall off quickly. The bark is usually shed from the main stem at the base of branches. Yellow cyathia can be in triads or 3 - 4 individual together. They are full of honey that attracts bees. Seed capsules turn deep red on maturity. The odour of its latex is pungent and lingering. Propagation is by seed or vegetatively.

5. EXISTING VALUE-CHAIN OF KALLIBARK AND ITS VALUE ADDED PRODUCTS: 6.1 Pre-harvesting:

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The useful part, Bark is collected by the NTFP collectors for which the Equipment carried are, Sickle, Pickaxe, Gunny/ LDPE bags and Thread. Sickle and pickaxe is usually carried by them to forest not to harvest bark but, as a usual practice to fend themselves from wild animals or to cut the bushes obstructing their passage. The pickaxe and sickle, which are not frequently purchased, there are occasions where single equipment is used through out the life period of NTFP collector, except for maintenance. In case the equipment is lost due to misplacement or theft, it is purchased from santha (rural bazaar) held in near by towns at regular intervals i.e. week. The equipment costs about Rs 50-100 depending upon the size, if the pickaxe has to be sharpened it incurs an expenditure of Rs. 20 and Rs. 10 for sickle, usually collectors purchase them when they get payments after selling their produce. They do not go for loan or credit from the middlemen exclusively for the purpose of purchasing the equipment. The kalli or Bontha Jamudu tree is present scattered widely in the forest and all the rights over the plant and its products lies with forest department. There is no intervention by the forest department either to procure kallibark on its own or through its authorized agencies like VSS (Vana Samrakshana Samatis) or GCC (Girijan Cooperative Corporation) procurement centers, though there is no procurement of the bark by these agencies, middlemen used to procure from the NTFP collectors and sell it to local pulverizing plants. The Government of Andhra Pradesh has issued orders for constituting village level forest protection committees called Vana Samrakshana Samithies (VSS) for management and protection of forest resources under JFM programme. The Joint Forest Management (JFM) programme envisages constitution of Vana Samrakshana Samithies (VSS) with certain rights, duties and responsibilities. •

Every household living in the hamlets / villages / cluster of villages, particularly those depending on forest for the daily needs, would have the option of becoming a Member of Samithi. However, all Scheduled Caste / Scheduled Tribe members of the hamlets / villages / cluster of villages would become members of Samithi

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automatically. Any two adult members could represent the household and out of them one must be a woman. •

The members of VSS shall elect a 15 member Managing Committee out of which at least 5 members shall be women.

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The Members of VSS, individually and collectively shall be responsible to: 1. Ensure protection of forest against encroachment, grazing, fires and thefts of forest produce 2. Carry out development of forests in accordance with the approved Joint Forest Management Plan. 3. Make other villagers aware of the importance of forests.

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Members of VSS shall have the power to apprehend the forest offenders and hand them over to the authorities concerned to take action under the provisions of the relevant forest Acts and Rules. The members are entitled to 25% of the "Compounding fees" collected from such offenders where the offence was committed outside their JFM area as an incentive for the good work done by VSS.

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Along with trees for fuel, fodder and timber, the village community shall be permitted to plant such fruit trees as would fit with the overall scheme of afforestation, such as Amla, Imli, Mohua as well as shrubs, fodder legumes and grasses which would meet local needs, help soil and water conservation and enrich the degraded soil / land. Even local medicinal plants may be grown according to the requirements and preference to beneficiaries.

Returns for VSS Members: The members of the Vana Samrakshana Samithi (VSS) protecting the forests shall be entitled to the following share from the forests: •

All Non-timber Forest Produce except those for which GCC holds the monopoly rights. However the right to collection shall remain with the VSS members, if they desire. The members shall be paid the collection charges upon delivery of the produce as per the rates fixed by the Government.

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•

VSS members shall be entitled to 100% share in timber and bamboo harvested from the regenerated degraded forests as prescribed in the approved Micro Plan subject to the following conditions:

1. Expenditure incurred on the harvesting shall be deducted from the total income. However, the harvesting work will be got done by the members of the VSS only as far as possible. 2. Expenditure necessary to sustain the productivity of the forests like raising plantations, carrying out other silvicultural operations and soil and moisture conservation measures as per the micro plan shall be deducted from the total income. This amount will be retained in the joint account of Vana Samrakshana Samithies and the Forest Department for ploughing back in the forests under the management of the Vana Samrakshana Samithies. The VSS procure the NTFP items at village level and sell them at the end of the season through forest department for the highest paying trader by auction. Decision to collect NTFP The decision to collect NTFP items depend upon various factors like availability of agricultural wage employment in near by villages and hamlets, availability of works assigned by forest department like contour terracing to the VSS, which serve as a major employment source in some tribal areas where VSS’s are active. In absence of some or any of these employment opportunities the forest dependents go for collection of the NTFP items like kallibark, tamarind, honey, soapnuts or useful parts of medicinal plants like roots or leaves, the item to be collected is in turn influenced by the demand from the procurers like GCC, middlemen or procurement centres of SHG Mandal federations’. Among the NTFP items the kallibark is available throughout the year and is procured by village botanists of MS procurement centres’ irrespective of the season, hence this option is open to NTFP collectors at any point of time.

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6.2. Harvesting / collection Collection of kallibark is done through out the year with its availability and is not restricted to a particular season. In some mandals, where other employment opportunities are meager and when the availability of other NTFP items is less, the tribal collectors take up this activity of kallibark collection in large scale and are wage earner for almost 6-8 months. The kallibark is collected during entire day and in a day of collection they go into the forest at around 8-9 p.m. and return in the evening at about 6 a.m., they restrain from going into the forest if it is a rainy day or festival. The bark fell off from the tree is picked up usually, but in certain areas where there is no awareness about sustainable harvesting methods of forest produce or when Scheduled castes and other castes who are not primarily dependent upon forest for their livelihoods peel off the bark from the stem making the plant susceptible to diseases and pests and eventually causing the death of plant. The NTFP collectors usually go in couples to the forest with the equipment necessary for the collection. In case of kallibark both men and women collect bark and each women and men collect about 20-25kgs and 25-30kg respectively. Threat of wild animal attack, Snake or scorpion bites and inclement weather conditions are some of the risks involved in NTFP collection.

6.3. Post Harvest Processes Packaging and transport of raw material: The kallibark collected in the polythene bag is tied with thread at the end of day’s collection and is brought to the village or hamlet on head by the collector himself, the transport is pain staking, carrying the head load of bark for 1-4 km. The polythene bags are supplied by mandal federations to the NTFP collectors free of cost through the village botanists of procurement centres. Procedure for storage at home: If the wet bark is picked up, it is dried in open space on a sunny day in front of the house by spreading on polythene bags or on land directly, this is

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done mostly by women and is done only in free time and no labour is hired for this purpose, when the wet bark so collected is spread on land directly, it is soiled and increase the wastage loss at the market end unless proper care is taken while packing the bark in the gunny bags. The dry bark collected is kept in houses; until they make sufficient quantity to dispose off, the disposal is prior to the weekly held rural bazaars (santha) of that area or sold immediately to the procurement centre if there is an urgent need for money. 6.3.1. Value Addition at Procurement Level:

No value-addition activities like Grading and sorting is done at procurement centers, but cleaning and drying is done in rare cases, when they botanist feel that the whole lot is prone to rejection by the trader due to wet and soiled bark. 6.3.2. Marketing Channels:

Channels available for collector for marketing: 1. Middlemen: The local influential persons act as middlemen and procure the kallibark, sell it to the local pulverizing plants or in some places the pulverizing plant personnel directly involve in the procurement of kallibark at the village level. The middlemen supply the polythene bags and allow the produce to be pooled till truck load at village level. The price paid is on the basis of bag at Rs. 70-100 per bag of 70 kg, Rs. 1-1.5 per Kg bark approximately. The trader gives an advance for the procurement and is deducted from the payments at the time of bark procurement. He wields great influence on the collectors, as he is a local person operating through many years. 2. Procurement centers of Mandal Samakya /federation: These are the pooling centers established by various MSs’ and are maintained with the Community Investment Fund-Sub-Project NTFP to procure NTFP items. In some NTFP procuring mandals there are 1-5 procurement centers and each managed by an employee, village botanist, with the aid of procurement committee members of MS, who are also VO leaders responsible for making payments to the NTFP

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collectors. These are basically established to bypass the exploitative middlemen and to provide benefits directly to the NTFP collectors. To establish a procurement center the project DPIP has suggested a criteria consisting of, 1. Minimum turn over of Rs. 5 lakh 2. Minimum no of beneficiaries should be 100. Earlier there were 122 procurement centers at village level and few at mandal level but at present there are 75 procurement centers engaged in the procurement of NTFP items through out the district, this reduction in the no of PC’s is due to inability of some of the them to satisfy the criteria suggested by DPIP. Majority of the PC’s are katcha houses and have no basic amenities of safe storage except facilities for piling up of gunny bags. The procurement price paid by procurement committee members for kallibark is Rs. 2/kg. Some of the advantages of this channel are, •

Remunerative price to the NTFP collectors when compared with middlemen.

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Timely payments by the procurement committee members who are elected from the NTFP collectors themselves.

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The transport costs incurred in disposing off the produce has reduced.

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Transparency in weighing and payments due to the measurement of the produce with the spring balance available with the village botanist.

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Employment generation leading to reduced migration of forest dependents in search of alternate employment.

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Sharing of benefits as dividends to beneficiaries.

The apex body of the SHG-federations – District Federation (Zilla Samakya) signed an agreement for supply of kallibark at Rs. 3.1/kg with a trader in Chintamani, Karnataka for a period of one year, at the rate of 100 tonnes per month in the year 2004, hence the bark is directly transported to Chintamani from the procurement centers of mandal federations’, incurring the fright charges and loading charges. The transportation cost for 7-10 tonne bark costs Rs 3000-4000 approximately depending on the distance of the mandal federation from the Chintamani plant. Some of the conditions in the agreement are, the gunny bags for transport are to be supplied by the

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trader. The bark has to be supplied free of dust and mud after grading and processing and no material loss can be claimed by the trader while unloading, he can visit the procurement center to ensure the quality material supply. He also doesn’t have the right to reject the material once it reaches the destination. After facing the competition from the local pulverizing plants the trader revised the purchase price to Rs 3.5/kg of bark. The bill amount for the bark is paid through cheque at the same time to the respective MS account. Of all the NTFP items procured by the procurement centers, only kallibark is directly transported from procurement center to Chintamani, but other NTFP items procured by the centers are transported to the district federation godown in Chittoor, later sold to wholesalers depending on the highest quoted price for individual items. To transport the NTFP item from procurement center to godown or outside the state, Form 2 permit issued by the forest department is essential. The pulverising plant at Chintamani, M/S Vinayaka Agarbatti Works purchases the bark not only from Chittoor District Velugu Federation, but also from the middlemen of near by districts of A.P and Karnataka and pays them price on par with current market prices. The trader at Chintamani has a plant worth Rs 10 lakh, including machinery and building. The end product of his plant, kallibark powder is sold at a average price of Rs. 6.6/kg, (Rs 320 for 48 kg bag) to the wholesalers, the wholesalers bear the transportation costs till the Bangalore and sell the same powder at Rs. 7 /kg (forwarded at Bangalore) to the Agarbatti making units. 6.3.4. Agarbatti Making Unit:

A salient feature of Agarbatti unit not found in many other village industrial units is that this industrial unit is ideally suitable for employment of women in very large numbers. Men, women, aged persons and even partially handicapped persons can be employed. This industry has got tremendous potentiality for employment generation throughout the country because of ever increasing demand.

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Acknowledging the importance of Agarbatti making as suitable employment generation activity to rural poor women the project-DPIP has provided community investment fund to the Mandal Federation - BAIREDDIPALLE under CIF-SP and employed an experienced technical person to run the Agarbatti making unit and a powder mixing plant costing about Rs 90,000 is provided as infrastructure grant with the funds of DRDA. Later this Agarbatti making activity is extended to the PEDDATIPPASAMUDRAM Mandal Federation. At present the Agarbatti-making unit at Baireddipalle is generating employment to about 300 members in 6 villages. Some of the characteristic features of the Agarbatti making unit are, Hand made Simple technical know-how Low capital investment Highly labour intensive No dependence on power supply No work related hazards Rolling of sticks can be done at the homes of the artisans. Tools used in Agarbatti making are, Wooden Rolling desk Aluminum Vessels & drums Tin trays Balance with weight Spoons Wooden racks Electronic weighing machine Raw Material used is: Bamboo sticks Jiggat powder Nurva powder Charcoal powder Perfumes having different fragrances

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Manufacturing Process of Raw Agarbatti: The bamboo splints are sorted out and coloured at one end of the splints upto the desired length (1/5), depending on the length of bamboo splints used i.e. 8, 9 or 10 inches. The powders of Jigget, dust and charcoal are mixed in definite proportion (which varies with desired quality), The above powders are thoroughly mixed in the mixing machine provided by DRDA and sieved through a mesh fitted to the machine to yield a mix of fine powder, this material is collected in gunny bags and stored for further use, the unwanted material is collected at one end of the machine in a gunny bag. Nurva powder (kallibark powder) is used as finishing material in addition to the above three raw materials to improve quality of the raw Agarbatti. The rolling activity of raw Agarbatti is done in 5 villages and near to unit by the women, who are both SHG members and non members, the raw material for rolling is taken to villages weekly and distributed to women beneficiaries in the village, where as the beneficiaries around the unit come and collect raw material according to their requirement. For every 1 kg of mix powder, 300 gm of Nurva and 350 gm of bamboo splints are given to women beneficiaries after weighing on the electronic weighing machine. The women beneficiaries are expected to return the same weight of raw Agarbattis rolled. In the rolling process water is added to this mixture to prepare Atta (dough) the semi solid dough is placed on the rolling desk and applied/rolled over the bamboo sticks uniformly by hand, leaving the coloured portion of the sticks. The rolled Agarbatti are dried in sunlight and made bundles. The beneficiaries are paid Rs 21 as wages for rolling of 1 kg of mix powder near Baireddipalle unit, and Rs. 8.5 per 1000 sticks is paid to the beneficiaries in the remaining 5 villages. In case of preparation of scented Agarbattis the dried raw Agarbattis are perfumed using various methods of dipping, brushing and spraying. The perfumed Agarbattis are wrapped with butter/polythene paper before packing in attractive cartoons. Another type of Agarbatti is Masala Agarbatti, prepared using different types of herbs having high fragrance value. The ingredients and herbs as required are mixed to make dough. The dough so prepared is quoted over the bamboo sticks uniformly by hand and then packed.

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At present the unit at Baireddipalle is into production of 8 inches, medium size (10-12 guage) Agarbatti, which fetch Rs. 34-35 in the wholesale market and there is a scope to increase the price by Rs. 1 in near future. Quality control: The raw materials, powders etc. used in the manufacturing of Agarbatti have no in-built standards. However, the quality of finished product can be tested as per the following specifications of Bureau of Indian Standards. 1. Visual Inspection: The sticks shall be strong enough to stand up right and shall not bend under their own weight. 2. Coating: The application of the coating (paste) shall be uniform. 3. Fragrance: The sticks shall give out pleasant aroma continuously while burning for its full length of the coated portion. 4. Size of the sticks: The bare portion of the sticks shall not be more than 20 percent of the declared length. Burning quality: a) The Agarbattis shall burn continuously and shall not extinguish before burning of the entire coated portion. b) The smoke/fumes produced as a result of burning the Agarbattis shall not be irritating to the nostrils/ eyes. c) While burning the Agarbattis, no sparks shall be produced nor shall any part of the glowing tip alongwith the unburnt coating shall fall off so as to constitute a fire hazard of any kind. The raw Agarbattis has great demand from the wholesale purchasers, who in turn supply these raw Agarbattis to well-established retailers, the fragrances are added here at the retailer end after mapping fragrances liked in various parts of the country to improve the customer acceptability, this is done by major brands like ITC-Mangaldeep, Ambica Darbarbatti, cycle brand and Sarvodaya of KVIC, etc.

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Fig. 1: Existing trade of kallibark and its value-added products .

NTFP collectors

Agarbatti units, (Baireddipalle, mandal) and Peddatippasamudram (PTM mandal)

MS Procurement centres Intermediaries

Local pulverizing plants

A.P

Pulverizing plant (Chintamani, K.A) K.A

Wholesalers, Bangalore 21

Fig. 2: Proposed value-chain for kallibark and its value added products .

NTFP collectors

Procurement centres (Mandal Federation)

Pulverizing plant (District Federation)

Agarbatti units (Mandal Federation)

Wholesaler Dealers (Bangalore)

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6. Proposal for Establishment of Pulverizing Plant:

The kallibark is collected by the procurement centers of MS across the district in an organized way and in huge volumes; no value addition activity is taken up till date. In the context of project-DPIP being phased out by the government of A.P to leave the self managed SHG federations in place to sustain themselves, the rationale of proposing the pulverizing plant under the ownership of District federation is to create income generating assets for the federations to become financially sustainable in the long run even after withdrawal of the project. Following is the analysis done to propose the plan, Market analysis: Kallibark is one of the major ingredients used in preparation of Agarbattis and its continuous demand is felt by many of the wholesale traders due to lack of near substitute to replace the kallibark powder also the colour imparted by the kallibark powder to the raw Agarbatti is preferred by many purchasers. Technical analysis: The average procurement of the kallibark is 600 tons per annum spread in 31 mandals and majority of the bark is collected from the Easterm mandals like Kalakada, C.G Gallu, Chandragiri, approximately 60 percent, out of the Westerm mandals, Baireddipalle, Bangarupalem, Palamner procure majority of the produce, hence the plant can be set up in an area considering both these kallibark procurement clusters. The operating cycle of the plant is one month, with the present average annual procurement of 600 tons, the monthly procurement is 50 tons. The proposed plant capacity is 2.5 tons per day plant operating at 80 percent efficiency and working for 25 days a month. Hence the plant process 2 tons per day with a recovery of 90 percent, amounting to 45 tons of total output. Financial analysis: Total initial investment is Rs. 11, 32,500, this is partly financed by long term loan from the bank at 12 percent interest to an amount of Rs. 8, 52,500 and the remaining amount is raised as share capital from District Federation, Rs. 2, 50,000 and 30 Mandal Federations, each contributing Rs 1000 (10 shares of Rs. 100 each), who will have stake in the activity. The share capital is used as working capital initially to avoid

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the high interest on short term loan for working capital. The details of gross, net profits and cash flows along with the opening and closing balance sheets were presented in annexure: 1-3. Economic analysis: The net profit of the proposal is Rs 6, 79,519 per annum in the first year after repaying the bank loan. Out of the procurement cost of Rs 21 lakh per annum, 12 lakh goes to NTFP collectors and the remaining is retained with the mandal federations deducting the expenditure of procurement, maintenance and transportation. Ecological analysis: The plant will be established in compliance with the forest department rules and regulations in procurement of raw material i.e. bark with forest permits and sale of pulverized powder. Also the sustainable harvest of kallibark by the NTFP collectors will be emphasized through the SHG federations and the existing Vana Samrakshana Samatis’ (VSS) in collaboration with the forest department. SWOT analysis - Pulverizing plant:

Strengths: •

Assured raw material supply to the pulverizing plant, because of agreement between District federation and procurement centers of mandal Federations.

•

Reduced transport costs to both MS’s in terms of transporting the bark to Chintamani trader and Agarbatti units procuring raw material from Bangalore.

•

Ploughing back of profits as dividends to MS’s in proportion to their share capital contribution, which will strengthen their financial base in the long run.

•

Sufficient fund availability with the District and mandal federations in the form of CIF-SP-NTFP

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Weaknesses: •

Excessive dependence on technical personnel might lead to hijacking of the unit in the absence of continuous monitoring and evaluation by the MS leaders.

•

Dependence on the wholesalers for sale of majority of the kallibark Powder (Nurva), of the 45 tons of powder processed by plant only 6 tons can be lifted by the 2 mandal federations’ for their Agarbatti making activity and the remaining powder have to be disposed through wholesalers which is an inherent draw back build into unless the MF s’ have sufficient no of Agarbatti units to purchase all the powder.

Opportunities: •

Initial monitoring support by Project personnel is available before the project-DPIP withdrawal.

•

Switch over to other raw material in case of kallibark shortage, as the plant is used to pulverize other material like tamarind bark, charcoal etc.

Threats: •

The long term sustainability of the activity depends on the sustainable harvest of the kallibark i.e. by collecting the fell off bark from the plant base rather than plucking the bark from the stem with sickle, if proper care is not taken in training and creating the awareness among the NTFP collectors this unsustainable harvest of bark may threaten raw material supply

•

Competition from the open market in offering admixture powder at low price will pose a threat if proper care is not taken in projecting powder sold as superior quality.

7. Proposal for Establishment of Agarbatti Unit:

This is the replication proposal to establish an Agarbatti unit under the ownership of mandal federation to augment their income and to provide employment to the SHG

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women, considering the existing Agarbatti units, the proposal is to generate income for 6 villages, each with 50 beneficiaries, totaling to 300 members through out the year. Market analysis: Agarbatti industry at present is Rs 1000 crores market, and is projected to grow annually at 3-4 percent with 50 billion sticks sold per year in India. i.e the ITC Agarbatti division was created recently to tap this potential market and has targeted to capture 10 percent share in the next 15 years with its brands like Mangaldeep, Nivedan, Ashageet, and Spriha, the strategy is to outsource the raw Agarbattis from 2 wholesalers (Anath Agarbatti co. and Sankranti Agarbatti co.) in Bangalore who in turn procure raw Agarbattis rolled by SHG women in and around Bangalore and also through vakti vikas Kendra, an NGO related to art of living foundation. Technical analysis: The raw material required to 300 members per month, if each women rolling 1 kg raw material per day is, Jigget (gum): 4,000 kg Charcoal powder: 6,000 kg Both is called together as MIXING and mixed in the ratio of 1:1.5 Nurva (kallibark powder): 3,000 kg Bamboo splints: 3,500 kg Totaling to 16,500 kg, this material is distributed and on an average 15,015 Kg of raw Agarbattis are collected from the village SHG women. Financial analysis: The cost of the project is Rs 797,500 and is financed partly by Mandal federation in the form of share capital and partly in the form of short term loan as working capital requirement at 18 percent interest per annum. The remaining working capital requirement is financed by short term bank loan with an effective interest rate of 18 percent per annum, the infrastructure, machinery (mixing machine) will be provided by DRDA in the form of grant, under the infrastructure provision to cottage industries.

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The opening balance sheet, profit/loss statement, working capital requirement is given in Annexure - 4 to 6. Economic analysis: Wage Employment generation is the basic idea behind the establishment of the Agarbatti unit by SHG mandal federation, the economic benefits accrued by the unit includes, the 120000 kg of mix is distributed to the SHG members, by paying them Rs. 21 per kg of mix rolled, there by providing wages to an amount of Rs 25, 20,000. The total sales are 1, 80,180 kg (91% recovery of the given 120000 kg) of raw Agarbattis, which amounts to Rs 63, 06,300. Apart, from saving of Rs 18,000 per annum in the form of transport costs if kallibark powder has to be procured from the District federation pulverizing plant instead of Chintamani, Karnataka Ecological analysis: The Agarbatti unit is a small scale industry recognised by government to promote rural employment to wage labourers by using simple technology, it seems there is no threat to the environment by establishment of the unit. SWOT analysis - Agarbatti unit:

Strengths: •

Creation of wage employment to around 300 SHG women.

•

Sufficient fund availability in the form of CIF- SP-NTFP with the mandal federation to take up the activity.

Weaknesses: •

Venturing of unit into retail business of Agarbattis is difficult due to lack of R&D and Brand building, is also limited by the technical know how of the women leading the MS.

•

Excessive Dependence on technical persons employed for procurement of other raw material and sale of raw Agarbattis may lead to the hijacking of

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the unit in the absence of proper monitoring by the women SHG leaders of MS. Opportunities: •

High demand for Raw Agarbattis in the open market

•

Initial monitoring support by the Project personnel can be availed to appraise the unit in monthly intervals.

•

Quality raw Agarbattis can be obtained due to compliance from SHG members as they are part and parcel of federation unit and by ploughing back the profits obtained to the MS in the form of dividends to Agarbatti rolling women, there by motivating them to supply quality raw Agarbattis.

•

The volume of the end product – raw Agarbattis being produced at 120000 per annum gives the scope to have tie-ups with major raw Agarbatti traders or procurers like ITC or KVIC.

Threats: •

At present the entire production of raw agrbattis are intended to sell to the wholesalers considering the high demand for raw Agarbattis in the market, the continuous dependence on these wholesalers may pose a threat in the future.

8. Conclusion:

The NTFP collection and marketing in the form of bartering is not new to the NTFP collectors, but with the involvement of the players like forest department and intervention agencies the process of NTFP marketing is still evolving towards market integration, one such intervention is DPIP NTFP trade through SHG federations, which is making substantial impact at the ground level, even though with its own limitations like extant of operation, still there is great scope in extending the activity from mere procurement and marketing of raw material to value addition and direct marketing of end products by the beneficiaries themselves. Further this can be strengthened by taking up this opportunity as income generating activities by SHG federations.

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10. NTFP RELATED PROBLEMS ENCOUNTERED DURING THE STUDY PERIOD AND RECOMMENDATIONS FOR THE SAME:

Payments to the NTFP collectors: In many procurement centers the Payments to the procured items are paid by the village botanists, instead of the responsible procurement committee members of that village organization, even though this is done in accordance with the convenience of the procurement committee members in the long run this may create the problem of embezzlement of funds by the village botanists. Recommendation: This can be avoided by making sure the procurement committee members disbursing payment to the NTFP collectors instead of village botanists. This in turn can be achieved by creating awareness among the SHG federation leaders and procurement committee members regarding long term implications of such an activity by the employees like APM, APO and DPM. In some areas both the village botanist and the procurement committee are from the same family, wife being a procurement committee member and village botanist, husband have the more chance of misappropriation of funds Recommendation: the selection of the procurement committee members and also village botanist are done by VO concerned, hence the guidance can be provided by the MS personnel to the VO executive body not to recruit or elect the VB and Procurement committee member from the same family. NTFP collecting SHG Members not in VSS: There are about 150 Vana Samrakshana Samitis (VSS) throughout the district, the forest department approves the NTFP item collecting permits only to the VSS, those who are SHG members are not in the VSSs’ or vice versa. Hence there is a problem in the collection and sale of NTFP items by these forest dependents, recently a convergence meeting held between forest department personnel, District SHG Federation and GCC (Girijan Cooperative Corporation) facilitated by Project – DPIP. One of the outcomes is that, all the forest dependents, who are in SHG’s should also be in VSS. There is a request from the SHG NTFP collectors to

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issue identity cards to them to avoid frequent harassment by the forest personnel in doubt of their genuineness in collecting permitted forest products. Recommendation: The process of forming VSS has to be done as soon as possible to over come this problem, the initiative of forming VSS should be taken by both forest department personnel and by the botanist, the botanists should pursue the forest department personnel to form VSS where ever the member body is constituted as per the JFM specifications. The issue of identity cards to the SHG NTFP collectors will be automatically solved once all the members are in VSS, because the forest department issues identity cards to VSS members considering them as genuine NTFP collectors. Higher prices are being paid to the kallibark bark collectors in 2-3 mandals compared to the other mandals, the reason given by the botanists and VB is to pay competitive prices as offered by middlemen operating in the area. Recommendation: The procurement price for any NTFP item has to be fixed by the mandal federations for its procurement centers considering its profitability. But not according to the convenience of the botanists and village botanists, otherwise the procurement can be left to the open market, if the prices offered are higher than the prices offered by mandal federations. As the main objective of the mandal federation is to offer remunerative prices to the NTFP collectors and to free them from exploitative middlemen. Benefit sharing is not done in majority of the mandals: almost all the mandal federations have earned benefits through the NTFP activity, and none of them are distributing their profits to the NTFP collectors, and is being used as recycle fund for NTFP procurement along with the CIF-SP –NTFP. Recommendation: The project has already proposed the method of sharing the profits i.e 80% of sales price to the NTFP collectors, 10% to the MS, 10% to the VO and VSS. Profit sharing works as an incentive to the NTFP collectors to dispose off their produce to the Procurement centers only and makes them feel that they are stakeholders in the federated institutions like VO, MS. Hence the credibility of the federated institutions can be build up by distributing the profits back to the NTFP collectors.

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Instances of ceasing procurement of kallibark: The withdrawal of procurement activity by the village botanist with the orders from the botanist due to the reason of non availability of storage space makes the NTFP collectors to loose their trust in the procurement channel and leads to the dependency on the other channels like middlemen. Recommendation: The fluctuations in the arrival of the NTFP are less and the limited arrival difference can be sorted out by meeting the stakeholders in the pooling chain like NTFP collectors, village botanists and procurement committee members. The risk of excessive stocking can be planned by the procurement center and arrangements can be done considering the arrivals of the NTFP items in that season, and by hiring the storage space if necessary rather than ceasing the procurement activity.

APM and Mandal Samakyas’ step motherly treatment to NTFP activity: the APM and MS are not giving sufficient care to evaluate the performance of botanist and treating the NTFP activity as a separate entity beyond their purview. Recommendation: The Mandal Samkya (MS) can evaluate the botanist performance according to the monthly work schedule submitted by him at the beginning of the month, in the monthly MS meeting and attendance for the same can be made compulsory, unless with a genuine reason as decided by the MS leaders or with a prior permission of the MS. NTFP - APM (procurement) monitoring botanists in about 25 mandals, and has to look after his allotted 2 mandals and also he has to procure NTFP items from all the NTFP mandals. Recommendation: APM performing the above said activeties in the district is cumbersome and may compromise on the quality of the work done by him, hence the Recruitment of botanist for the 2 mandals, which were looked after by APMProcurement, and allowing him to do the monitoring and procurement as full time activities may improve the quality of the activities.

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Lack of full time DPM-NTFP-the NTFP activity being a business of Rs. 77 lakhs in the last year and estimated Rs. 150 lakhs in the current year needs a continuous monitoring on all the personnel involved. The lack of full time NTFP-DPM is posing threat to the NTFP activity in the district itself, His need is felt by the delay in the approval of forest permits at the FRO level (forest range officer) to be given to MS, even though the grant of permits has agreed in the convergence meeting held with ZS, Forest department and GCC. The monthly botanists’ review meet is held by NTFP-APMs’ in the absence of NTFP -DPM with out proper coordination among themselves. DPM-NTFP-Consultant, value additions, it seems after failure of the Amla venture has not taken up any Value addition activity. Recommendation: One of the corrective measures can be to Recall DPM-NTFP from SERP, if he can be relieved of the services there or a possible appointment of a NEW DPM-NTFP by the project. Monitoring of the technical units like Agarbatti unit of Baireddipalle: The Agarbatti unit is functioning as an independent unit, except, for submission of occasional reports to the MS, it seems there is a lack of monitoring by the employees like APM and APO, except for an occasional encounter with the unit employee at MS meeting. There is complacence on the part of APM and APO monitoring considering it as full of technicalities, which has to be done by unit employees rather than their interference. Even the MS considers it as employee business to provide employment to the Agarbatti rolling women. There is also a problem of sub-standard quality raw agarbattis rolled by SHG women. Recommendation: Frequent monitoring of the technical unit at the level of APM and APO, appraising the monthly performance report to be submitted by employee of the unit to MS. The lack of quality compliance of the raw Agarbattis rolled by the SHG women can be dealt through the MS-VO-SHG channel, instead unit employee deals with them in his personal status rather than as an employee of MS.

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REFERENCES

Anonymous (2004), Value-chain, SERP, Govt of A.P., 121pp. http://www.velugu.com http://www.fgas.de.com http://www.aponline.gov.in http://www.kvic.org

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