15.06.23
Women-led FPC Sold 72,000 Kg Sal Seeds to AAK in Simdega, Jharkhand: Multistakeholder Partnership to Create Robust Forest Economy
On Sunday morning of June 11, 2023, trucks brimming with 72,000 kg of Sal seeds were unloaded at the AAK factory in Bilaspur, with a payment of Rs 10,87,650 to the FPC Kolibera, a formal collective of more than 3000 women operating in Kolebira block of Simdega district in Jharkhand. This remarkable sale symbolized the success of a multi-way collaboration, exemplifying the potential for the creation of wealth at the local level through women-led enterprises. This first-of-its-kind sale was made at a price competitive to both the communities & AAKIPL, thereby, holding immense promise for a long-term sustainable collaboration.
This sale establishes the potential for building a sustainable, thriving, and profitable forest-based economy – one that benefits the forest communities, the industry, and the economy. ISB, AAKIPL, JSLPS, and the Govt. of Jharkhand recognize that this potential can be harnessed through the security of tenure of the forest-dependent communities.
The Initiative on the Forest Economy – an initiative by the Bharti Institute of Public Policy, Indian School of Business (ISB), Hyderabad business model is designed to generate wealth at the local level by establishing direct market linkages between seasonal forest product (SFP) collectors and companies utilizing these valuable resources as raw materials. ISB entered into a collaboration with the Government of Jharkhand in December 2021 to facilitate a robust & sustainable forest economy in the State, anchored in secure tenure. When secure tenure is in place, the communities have the incentive to protect and care for the forests, to avoid over-exploitation of forest resources, and, the right to transform their livelihoods through the sale of forest-based produce. With a special focus on empowering women-led enterprises through financial inclusion, our model has proven successful in implementation, yielding tangible results that speak to its effectiveness. We present you the successful story of Sal Seed Sale from Simdega, district of Jharkhand, including our learning and challenges encountered throughout the journey.
The successful large-scale sale of Sal seeds was made possible through the collaborative efforts of the IoFE team, JSLPS, and AAK, utilizing the aggregation capabilities of farmer Producer Companies (FPC). This collaboration aimed to generate wealth at the local level by leveraging the combined expertise and resources of the partner organizations
The Story
On 12 October 2022, AAK signed a MoU with ISB for working together in creating value and endorsing security of tenure towards building sustainable forest-based economies, anchored around Community Forest Resource Rights (CFR). The value will be created collaboratively by (a) Mechanization for reducing drudgery in collection/harvesting and preventing destruction in value, (b)Capacity Building for Aggregation, and (c) Financial inclusion & literacy.
Following inventory mapping and an in-depth study on the utilization of Sal seeds in the confectionery and oil industries, we strategically selected Sal as the pilot Seasonal Forest Product (SFP) for the Simdega region. Extensive preparations were undertaken, including a collaborative partnership with JSLPS for capacity building and financial inclusion. However, due to unforeseen rainfall patterns, the collection of Sal seeds was impeded, resulting in the unfortunate absence of sales in the previous year.
With extensive groundwork and over a year of dedicated efforts in Simdega, the IoFE team was well-prepared for this year’s sale. Recognizing the limited 15-day window (15-30 May) for Sal seed collection, meticulous preparations were undertaken. Shri Arif Akhtar, State Program Manager at JSLPS, Rural Development Department Government of Jharkhand was highly instrumental in devising a comprehensive plan for implementing a community-managed Sal seed-based livelihood initiative. His efforts led to the successful launch and execution of the collectivization drive. Under his guidance, the entire community achieved success in the Saal seed collectivization business, despite facing numerous challenges. They effectively handled the procurement, ensuring daily cash payments to the community, and managed the processing and initial operations of the value chain. Additionally, with the support of the block team, he played a crucial role in motivating the communities and dealing with middleman dynamics. Despite the absence of sufficient finances, he skillfully managed the large-scale initiative with the limited resources available. To quote Shri Akhtar, “It has been a phenomenal journey to see the women-led community-owned FPC’s leadership transact with a large buyer for a direct sale of big scale. I am looking forward to this model to grow many times over.”
After establishing a comprehensive value chain for Sal Seed through numerous discussions and refinements, the execution phase commenced in April, marked by an introductory meeting with stakeholders and relevant higher officials to ensure seamless coordination and cooperation. These meetings included engaging with the District Program Manager of JSLPS to seek their valuable assistance in capacity building, conferring with the Divisional Forest Officer and District Commissioner of Simdega to address potential roadblocks, consulting with the HDFC cluster Head and General Head of NABARD to ensure financial inclusion and availability of funds for SHGs/FPCs if required. Furthermore, meetings were conducted with the FPC and SHG members, enabling us to inform them about the upcoming sale and empowering them to disseminate this information among the collectors. Additionally, the significance of aggregation economics and the economics of scale were articulated to emphasize the importance of participating in the sale.
JSLPS (Jharkhand State Livelihood Promotion Society) as a mobilizer, AAK as the buyer, FPC Kolebira as a seller, IoFE team as a facilitator of the sale.
Commencing on the 2nd of May, the IoFE team proactively initiated a series of meetings with key stakeholders, ensuring preparedness for the upcoming sale scheduled for the first week of June. Here is the list of events that happened to make the sale possible.
In a concerted effort to ensure long-term sustainability, AAK-ISB-JSLPS organized a comprehensive three-day workshop across all three blocks, focused on educating collectors about sustainable and hygienic collection practices. This workshop aimed to empower the collectors with the knowledge and skills necessary for fostering a sustainable and environmentally conscious approach to their operations.
Mr. Abhijeet Parmar and Mr. Sandip Chowdhury from the IoFE team met the Chief Welfare Secretary to update him about the Sal seed sale and to ask his assistance for expedited coordination in Simdega.
Sushma (Head-Strategic initiative), Sukanya (Enterprise Lead), Sandip (IoFE’s National Coordinator) from ISB, and Anubhav Shrivastava (Procurement Head from AAK) came to Ranchi and had multiple meetings with JSLPS, Mr. Diprava Lakra, Welfare Secretary to lay out the plan and divide the responsibilities. The major discussion revolved around the final price of Sal seeds to FPC, advance money to FPC as a token of trust, quality of Sal seeds, one point of aggregation vs multiple, etc.
Major Challenges
Insufficient Fund; to address the issue of insufficient funds ahead of time, meetings were coordinated with Banks, NABARD, and JSLPL, resulting in the assurance that the FPC had ample financial resources for the sale season. However, complications arose when it was discovered that the available funds were designated for CIF rather than for FPCs. Lastly, Affan, the Block Coordinator from JSLPS and acting CEO of the FPC Kolebira provided invaluable support by allocating sufficient funds to the rural service centers, enabling upfront payments to the collectors. This timely intervention alleviated the financial constraints and ensured a smooth execution of the sales.
Price Selection; the selection of an appropriate price posed a challenge, with the FPC emphasizing the importance of early price disclosure to mobilize collectors and facilitate aggregation. However, due to uncertainties surrounding transportation costs and the quality and quantity of Sal seeds, an early disclosure was not feasible. The price was eventually revealed once the local markets opened. Nevertheless, a challenge arose as local traders increased the prices to Rs. 18 per kg upon witnessing the mobilization drive. In response, we engaged in conversations with several traders, cautioning them against artificially inflating prices if they intended to sustain their market presence in the long term. Leveraging the longstanding connection of JSLPS with communities and ensuring clear communication about the necessity of aggregation, we successfully mobilized and collected a substantial amount of 72,000 kilograms of Sal seeds.
Quality of Sal Seeds, throughout the initial discussions, AAK expressed concerns regarding the quality of the sal seeds. To address these concerns, samples were collected from Jaldega and Kolebira and sent to AAK for evaluation. As the mobilization efforts commenced, there was uncertainty surrounding whether the collected sal seeds would meet the required standards. On 1st June, we received an update from Suresh at AAK, indicating that the sample from Kolebira met their requirements, while the sample from Jaldega was rejected due to insufficient stearin quality. Affan provided invaluable support by allocating additional manpower at the rural service centers to ensure thorough quality checks using moisture meters. Consequently, we successfully collected 30 tonnes in Kolebira and 40 tonnes in Bano, meeting the required standards for AAK.
Arrangement of Logistics; in the process of organizing logistics, a hurdle emerged when no trucks were available on 5 June. In a collaborative effort, JSLPS and IoFE joined forces to arrange trucks. Finally, Mr. Sandip successfully arranged three trucks, with one 30 metric-ton truck destined for Kolebira and two 25 metric-ton trucks for Bano. To ensure a seamless execution, two transport permits were prepared, one for Jharkhand and another for Chhattisgarh, as the drop location was Bilaspur. Mr. Sandip accompanied the trucks to facilitate a smooth transportation process. The appointed transporter was registered as an AAK vendor and received direct payment from AAK.
The successful sale of 72,000 kg of Sal seeds by the women-led FPC to AAK in Simdega, Jharkhand, highlights the effectiveness of the multistakeholder partnership in creating a robust forest economy. Despite challenges, the collaborative efforts ensured a seamless execution, demonstrating the potential for generating wealth at the local level. Establishing a multistakeholder business model is crucial for fostering secure and sustainable futures for communities and forests. This collaborative approach ensures the harmonious coexistence of economic development and environmental preservation, laying the foundation for a prosperous and sustainable future.