Feasibility study of different models

of NTFPs based
enterprise/cooperative/ public
private partnership company that
can be set up in programmed VDCs
of ECARDS-Dolakha

A Report Submitted To
Ecology, Agriculture and Rural
Development Society (ECARDS)
Charikot, Dolakha

Submitted By,
Khilendra Gurung
2006

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 Acronyms and Abbreviations

ANSAB: Asia Network for Sustainable Agriculture and Bioresources

CFUGs: Community Forest User Groups
DFO: District Forest Office/Officer
ECARDS: Ecology, Agriculture and Rural Development Society,
Dolakha
NSCFP: Nepal Swiss Community Forestry Project
NTFPs: Non Timber Forest Products
VDCs: Village Development Committees

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Table of Contents
1. Introduction 1
2. Objectives
1
3. Study Area
2
3.1 Location
2
3.2 Forest types 2
3.3 Ethnic composition 3
4. Study Methods 3
5. Findings 4
5.1Different Models of NTFPs Based Community Enterprises to be
set up 4
6. Outcomes and Indicators of the Program
5
7. Challenges for Initiating Community Based Forest Enterprises
6
8. Lessons Learned after Conduction of the Program
6
9. Future Strategy
7
10. Strategic Planning 7
Annex
9

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1. Introduction
Southern part of Dolakha district is physiographically remote. Due
to the remoteness people living there still depend on traditional
agriculture practices and nearby forest resources for their
subsistence. They are deprived of income generating opportunity by
utilizing the available resources in a sustainable way. Moreover,
they have been collecting Non Timber Forest Products (NTFPs) for
decades for their livelihood support. A traditional collecting practice
of NTFPs in unsustainable way has posed a threat to the resources.
However, the only medium of their livelihood support is by trading
NTFPs collected from the forest and adjoining areas. But, they have
no access to the market and always been exploited from the traders
for not getting the fair price.
In order to address the current situation, it would be the best option
to establish different models of forest based community
enterprises/cooperatives and public private company participating
poor and disadvantaged people and community forestry user
groups (CFUGs) through sustainable use of the resources.
In this scenario, Ecology, Agriculture and Rural Development Society
(ECARDS)-Dolakha had facilitated in the establishment of essential
oil processing unit in Hawa VDC with the financial support of Action
Aid Nepal.
ECARDS handed over the M/S distillation unit with capacity of
2000L. to Shree Setidevi NTPF Production and Processing
Cooperative Limited in which 2 cooperatives (Deudhunga
Cooperative and Bhimeshwor Cooperative), 7 Community Forestry
User Groups (CFUGs) and 35 pro-poor user groups from 7 CFUGs are
the members.
Realizing the fact, an attempt has been made to study the feasibility
of different models of NTFPs based enterprise/cooperative/ public
private partnership company that can be set up in programmed
VDCs of ECARDS-Dolakha. The study was conducted with the
financial support of Action Aid Nepal.

2. Objectives

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The specific objectives are as follows:
 To study the feasibility for the establishment of different models
of NTFP based enterprises in the study area.
 To facilitate enterprise development by assisting the other
programs of the project in the study area.
 To create the sound environment for the rural communities to be
entrepreneur through their capacity building.
 To clarify the aims on why and how to be entrepreneur with
proper action plan

3. Study Area
3.1 Location:
The study area lies in the southern part of Dolakha district which
comprises of Jiri, Gairimudi, Mirge, Thulopatal and Hawa VDCs.

3.2 Forest types:

According to the study conducted by ECARDS (2005), the vegetation
and forest types of the study area comprises as follows:
1. Altitude between 1500m-2500m: In this region, the vegetation is
dominated by Schima- Castanopsis forest type with the associated
species of Bakle (Cleyera japonica) followed by Mahuwa
(Engelhardtia spicata).
2. Above 2000m in the southern slope: In this region, the vegetation
type is dominated by mountain oak forest, major components of
Kharsu (Quercus semecarpifolia) and associates as Kholme/Kharane
(Symplocos pyrifolia/Symplocos ramosissima), Gurans
(Rhododendron arboreum) and Laurels.
3. North, North East and North West part above 2000m: The
vegetation is dominated by East Himalayan Oak-Laurel forest, major
component of which is Phalant (Quercus lamellosa) in which the
major associates are Laurels and Dabdabe.

3.3 Ethnic composition:

Majority of the population of Jiri VDC constitutes of Jirel followed by
Chhetries and Sherpa. Whereas in other VDCs of the study area, the
population comprises of Tamang, Sunuwar, Chhetries, Brahmins and
underprivileged castes.

4. Study Methods
The following methods were employed during the study period:
 Interaction program was held to identify the Village Development
Committees (VDCs), Community Forestry User Groups (CFUGs),

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 forest products based entrepreneurs, traders and disadvantaged
pro-poor to be included in the program.
 Orientation workshop was held with VDC representatives,
entrepreneurs, traders, social workers, representatives from
CFUGs.
 The following are the objectives for the conduction of orientation
interaction program:
o To introduce and coordinate with FUGs and forest products
based entrepreneur/traders/collectors from the study area
o To search for the possible opportunities from the current
status of FUGs and forest resources of the area
o To identify the NTFPs based different models of enterprises
that can be set up
o To assess about the network between individual entrepreneur
and FUGs and initiate for the cooperative work
o To assess the need based as to establish the forest based
community enterprises
 After the interaction, altogether 17 CFUGs with similar resources,
5 VDCs, local traders, forest products based entrepreneurs and
private sectors were identified.
 The workshop concluded that:
o The identified resources were deforested day by day due to
the unhealthy competition between the collectors/traders.
o The unidentified forest resources were underutilized.
o The poverty level of the people remains unchanged.
 A network was formed to facilitate the establishment of different
models NTFPs based community enterprises in the area.
 Work division was divided among the members of the network
and action plan was prepared.
 Facilitators were selected on the basis of their facilitating
capability and the time they could contribute.
 Worksheet was prepared in order to train the facilitators.
 Orientation program was held for the facilitators with necessary
tasks to educate them on:
o Why to facilitate?
o How to facilitate?
o Whom to facilitate?
o For how long to facilitate?
 Other necessary action plans were prepared according to the
prevailing situation.

5. Findings

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5.1Different Models of NTFPs Based Community Enterprises
to be Set Up
Altogether 7 cottage/small scale pro-poor focused enterprises in
collaboration with CFUGs and other cooperatives/companies can be
established in the study area. Similarly 2 household level
enterprises can be set up in the study area. The following enterprise
development steps/stages should be followed for undertaking
inclusive and different models of NTFP based enterprises to be set
up.
1. Feasibility studies in detail
2. Identification of products
3. Development of enterprise concept
4. Formation of Community Forest User Groups network
5. Identification of poor households
6. Identification of private entrepreneurs/ cooperatives working in
the similar model and products
7. Identification of the resources
8. Initiation for structuring the enterprise
9. Preparation of the statute
10. Registration of the enterprises/ cooperative/ company

The different models of NTFPs based

enterprises/cooperatives/company to be registered set up in
different locations of the study area are presented in the following
table:
SN Enterprises/ cooperatives/Company VDCs/Locations
1 Essential oil (Wintergreen oil) Hawa and Gairimudi
processing cooperative
2 Essential oil (Artemisia, Juniper and Jiri
Abies oils) processing
cooperative/company
3 Essential oil collection and marketing Jiri
cooperative/company
4 Handmade paper (from Lokta and Jiri
Argeli) manufacturing
enterprise/company
5 Allo/Hemp processing enterprise Hawa, Jiri,
household level Thulopatal, Mirge
6 NTFPs cultivation Jiri, Thulopatal,
enterprises/cooperatives Gairimudi, Hawa,
Mirge
7 Jhyau processing enterprises Jiri, Hawa
8 Brandy production (From Chutro and Jiri, Thulopatal,

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 Aiselu and Gurans) enterprises Gairimudi, Hawa,
Mirge
9 Jam and pickle (from chutro) making Jiri, Thulopatal,
enterprises at household level Gairimudi, Hawa,
Mirge

After the registration of those different inclusive models of

enterprises in various locations of the study area, the following
steps are to be adopted:
1. Training and capacity building
2. Infrastructure setting
3. Product design and development
4. Business plan preparation
5. Operation of enterprises
6. Quality control and standardization
7. Marketing linkage of the products
8. Sharing of benefits
9. Review and analysis
10. Diversification of the products
11. Creating goodwill (image) of the enterprises

6. Outcomes and Indicators of the Program

 Representative from VDCs and CFUGs, local traders, forest
products based entrepreneurs, social workers, DFO/DFO staffs,
representative from ECARDS and concern stakeholders were
participated in the interaction program.
 A network "NTFPs Based Enterprise Management and
Coordination Committee" inclusive of all walks of lives from the
community was formed.
 Facilitators were selected as per the recommendation of the
network.
 The entry point of the project was formed after the development
of local facilitators and focal persons to conduct the further
programs and the local inhabitants could follow-up the project
with their demands/proposals.
 People have started advocating/discussing/interacting about the
establishment of regional level forest based community
enterprise (an inclusive model) in Jiri; a centre of Southern
Dolakha; which has assisted to search for various options to be
implemented.
 Identification of NTFPs, prioritization of NTFPs and identification
of potential enterprises utilizing the NTFPs resources in
Community Forests of the selected VDCs.

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 Publicity/interaction/advocacy of inclusive model of
enterprise/cooperative/company in the rural areas of the
Southern Dolakha.
 Inspiration for the amendment of the operational plan of CFUGs
to become an entrepreneur.
 A local level "Forest Based Community Enterprise Promotion
Committee" was formed in Jiri, Gairimudi, Hawa, Thulopatal and
Mrige VDCs.
 A joint committee was formed between Gairimudi and Hawa
VDCs for distilling the essential oils from wintergreen plant.
 The user groups including pro-poor residing in Southern Dolakha
starts enjoying the program supported by ECARDS/Action Aid
Nepal after implementing the program.
 With support from ECARDS/Action Aid Nepal, the unsuccessful
entrepreneur and the registered enterprise unable to run could
have the privilege to be a successful entrepreneur and run the
enterprise smoothly.
 The implementation of this program has created the prospects
for the sustainable enterprise development in Southern part of
Dolakha.

7. Challenges for Initiating Community Based Forest

Enterprises
The following are the identified challenges for initiating community
based forest enterprises:
 It is an extremely difficult task for the community mobilization
process.
 It is a hard task to convert the NTFPs based proprietorship
enterprises running in traditional fashion to the community
owned enterprises.
 The illiterate society cannot accept the new concept; they
believe in the thoughts of the persons who work for their own
interest.
 It is a challenging task to break through the traditional networks
of proprietorship entrepreneurs.
 The rural people and even the local entrepreneurs' doubt that
the community based enterprise could run smoothly.
 The local people have a tendency to protest on each others
matter and that they hardly accept the leadership of others
leading to trustless environment.

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 The local entrepreneurs have the calculation that the community
based enterprises are not profitable.
 The local people are engaged in traditional agrarian practice and
cannot contribute their time for such enterprises, due to the lack
of trustworthy environment.
 The local people are not aware about the marketing linkages and
information of the products to be manufactured by the
enterprises.

8. Lessons Learned after Conduction of the Program

The following are the lessons learned after conducting the
programs:
 It is absolutely an ambitious planning to set up different models
of community enterprises in the area.
 Without the initial feasibility study and infrastructure
development, the direct implementing strategic program will not
succeed.
 The conclusion and the programs made by the participants of the
workshop/interaction program cannot be implemented in the
community level.
 The pro-poor focus model of community enterprise is ambitious
which is difficult to implement in practice.
 The enterprise development facilitators are unable to provide the
total enterprise development package (raw materials inventory,
efficient technology transfer, production scheme, management,
cost/profit analysis and marketing linkage) during the motivation
to local people to establish the model enterprises. The principle
of model enterprises is not sufficient at the initial stage.
 The pro-poor, identified during the well being ranking process,
are not physically and mentally sound who are mostly isolated
from their families. Such persons if included in the enterprise are
not expected to contribute for the betterment of the enterprise.
 Micro-credit facility should be provided to the rural entrepreneurs
in order to initiate the enterprises in the rural areas.

9. Future Strategy
ECARDS' future strategy seeks to transform the traditional
occupation (subsistence agriculture and NTFP collection) of the poor
community living in remote Southern part Dolakha to the forest
based community enterprises development for their livelihood
upliftment.
The following are the future strategies to be conducted:

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 Identification of other possible different models of enterprises.
 Marketing management of the products produced by different
levels of forest based enterprises; establishing Jiri or Charikot as
a marketing centre.
 Conduction of research on the use of local NTFPs for various
purposes in local level. For example: establishing natural
treatment centre in Jiri for treating various ailments and
producing different items of food supplements.
 Motivation to rural people to be entrepreneur with coordination
from all sectors of the society.
 Development of skilled manpower to lead/motivate rural people
to be entrepreneur and run different models of enterprises in
Southern part of Dolakha.

10. Strategic Planning

The strategic plans for the follow up of the program are as given in
the table below:
SN Activities Responsibility Strategy
1 Capacity building/skill ECARDS Collaboration with
development to NSCFP/ANSAB
enterprise facilitator
and entrepreneurs
2 Infrastructure setting ECARDS/Deudhun Collaboration with
of the registered ga Cooperative FUGs, other user
enterprises groups and
NSCFP/ANSAB
3 Training on Product ECARDS/Deudhun Collaboration with
design and ga Cooperative NSCFP/ANSAB
development
4 Training on quality ECARDS/Deudhun Collaboration with
control and ga Cooperative NSCFP/ANSAB
standardization and
certifications
5 Preparation of ECARDS ECARDS will
business plan contribute in
collaboration with
NSCFP/ANSAB
6 Operation of the Owners of the Company itself
enterprises concerned will involve with
enterprises support from
ECARDS and
Deudhunga

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7 Marketing linkages of Deudhunga Company itself
the products produced Cooperative will involve with
by the enterprises support from
ECARDS and
Deudhunga
cooperative
8 Formation of collective ECARDS and Collaboration with
marketing center Deudhunga NSCFP/ANSAB
Cooperative
9 Identification and ECARDS FUGs and other
extension of other user groups in
possible models of collaboration with
enterprises NSCFP/ANSAB
10 Conduction of research ECARDS ECARDS will
on the use of local contribute in
NTFPs for various collaboration with
purposes NSCFP/ANSAB

Annex

Annex-1: Identification of potential NTFPs in the study

area
S VDCs Potential NTFPs
N
1 Thulopatal Lokta, Machhino, Chutro, Kukurdaino, Angeri,
and Hawa Bilaune, Argeli, Kurilo, Nigalo, Allo, Chirayito,

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 Jhyau
2 Jiri Lokta, Machhino, Kukurdaino, Allo, Chutro,
Argeli, Jamane mandro, Nagbeli, Aiselu, Nigalo,
Kurilo, Chirayito, Jhyau, Titepati
3 Gairimudi Lokta, Machhino, Chirayito, Kukurdaino, Argeli,
Aiselu, Chutro, Jhyau, Kurilo, Majitho, Ngbeli,
Allo, Ban tarul
4 Mirge Lokta, Nagbeli, Chirayito, Allo, Majitho, Kharane,
Kukurdaino, Chutro, Argeli, Aiselu, Nigalo, Jhyau,
Titepati

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