Report of the Study on Mahua Sub Sector For

Chhattisgarh State Institute of Rural Development Department of Panchayat & Rural Development, Govt. of Chhattisgarh

Nimora, Raipur (C.G.) - 492015

Team

Barna Baibhaba Panda Pradeep kumar Mishra

Radha Thakur

Submitted by

The Livelihood School D-1,Machna Colony

Shivaji Nagar,Bhopal Ph:0755-4209040

www.thelivelihoodschool.in

Executive Summary Seventy five per cent of the tribal households in our country are engaged in Mahua flower collection meaning a population of around 7.5 million is into this livelihood activity. Various studies indicate that a household gets between Rs 2500-5000 in a normal Mahua year. An estimate says that 28600 person years of employment are generated in mahua flower collection every year(FGLG India, 2008). But the income for the primary collectors/processors in this transaction is very low. This is often attributed to an unorganized market and little access of the primary collectors to the market. The major issues in Mahua flower sub sector are

• Distress selling and low price realization at the producer end • Unsustainable harvesting and often environmentally damaging practices in

collection • Depletion of the resource base and its concentration in the hands of large farmers • Non availability of credit for producers • Absence of quality standards and non adherence to quality parameters • Failed initiatives leading to a hands off approach by state agencies • No major commercial breakthroughs in alternative products development

The study find three major leverage points namely credit, storage and knowledge. The recommendations along with their financial implications are given below. Recommendations: Credit

• A micro credit fund should be created for meeting the cash needs of Mahua collectors and Mahua procurement is assisted through this fund. The fund may be placed in the hands of producer organizations.

• Appropriate credit cum insurance product may be designed to meet the specific requirements keeping the Mahua trade cycle in mind.

• At the apex level, the fund should be managed by a special purpose vehicle for at least three to five years. The experiences gained in the process may be incorporated in future design.

• A decentralized procurement mechanism should be created so that primary collectors get better price of their produce. This mechanism should be managed at the cluster level by an organization of primary collectors. Van Dhan Samitis and Mahua Banks are initiatives that need to be considered while designing such a mechanism. Existing MFP cooperatives may be encouraged to take up collection of Mahua flower. CGMFP federation had already issued circulars in this respect.

Recommendations: Storage A decentralized storage infrastructure with large number of mini godowns at vantage places should be created in public private partnership mode. This infrastructure should be placed in the hands of the panchayats who would charge a fee and manage the godowns. The following two models can be considered.

• Panchayats construct and manage, charge a storage fee • Panchayats construct, producers manage and pay a rent

Recommendations: Knowledge A combination of local wisdom and modern practices would reduce spoilage, improve quality and fetch better prices.

• Knowledge and practices relating to harvesting and post harvesting treatments need to be codified. Protocols developed and suggested by Ministry of Environment and Forests should be popularized through training and campaign programmes.

• Orientation of the primary producers and traders on grading and marking of

Mahua as prescribed in Mahua Flower Grading and Marking Rules, 2008 should undertaken on a regular basis.

Other significant recommendations

• Plantation of Mahua trees needs to be encouraged given the level of depletion of resources. Plantation programmes by state forest department and various other agencies should have a component for Mahua plantation. NREGA can be harnessed for the purpose of both plantations on individual lands and common lands. A variant of Tree patta model can be worked out for poorer families having no or less land.

• A National Transit Code may be formulated/facilitated for inter state movement of Mahua as Mahua is both exported and imported by Chhattisgarh in substantial quantities. This would cut down on transaction costs.

• As trade through mandi has come down drastically, mandi tax may be imposed only on the produce traded through mandi.

• An inter state consultation forum on excise regulations relating to Mahua flower may be evolved so that the effects of sudden changes are minimized.

Financial implications of recommendations The micro credit fund should start with an initial corpus of Rs200 million targeting financing 10-20 per cent of annual trade in Mahua flower in terms of value. The storage infrastructure would cost around Rs400million for 1000 mini godowns. Knowledge related interventions others would cost around Rs100 million. The total cost of the intervention comes to Rs700 million which is expected to benefit at least 20 per cent of state population or four million people. PRIs are expected to play a critical role in the whole process. The model suggested has a better poverty outcome than the poverty alleviation programs being implemented at a lesser cost. 1. Background

Scheduled Tribes and other traditional forest dwellers across the country collect and sell a range of forest produces to earn a living. Forest produces not only commands a large share but also a critical element in their livelihood basket. The timing and the cash yielding nature of a large number of forest produces make it an indispensable part of their life. The income from forest produces goes as investment in agriculture, serves as the risk hedging instrument in crop loss years, meets requirements of health emergencies and major consumption expenditures like clothes and festivals. India has about 16000 recorded plant species. Of these 3000 yield minor forest produces(MFPs). Nearly 100 million tribals and other forest dwellers of the country depend on MFPs for sustenance and as a supplement to their income. 55 per cent of the employment in the forestry sector is attributed to MFP sub sector. MFP based small scale enterprises account for upto 50 pc of income for 20-30 per cent of rural labour force in India. Over 50 pc of the revenues earned by the state forest departments comes from MFPs and the growth in revenues from MFPs is 40 pc higher than timber. MFPs constitute 56-75 pc of the total export of forest products. Studies in Madhya Pradesh including Chhattisgarh, Orissa, Himachal Pradesh and Jharkhand revealed that 17 pc of landless are dependent on MFP collection as daily wage labourer and 39 pc are involved in MFP collection as a subsidiary occupation. Mahua flower is one of the top five minor forest produces in the country. Madhuca longifolia, commonly known as mahua, is a tropical tree found largely in the central and north Indian plains and forests. It is a fast growing tree that grows to approximately 20 meters in height, possesses evergreen or semi-evergreen foliage. It is adapted to arid environments, being a prominent tree in tropical mixed deciduous forests in India in the states of Chhattisgarh, Jharkhand, Uttar Pradesh, Bihar, Madhya Pradesh, Kerala, Gujarat and Orissa. Outside India, it is found in Sri Lanka and doubtfully in Myanmar(Burma).

It is cultivated in warm and humid regions for its oleaginous seeds, flowers and wood. The oil(solid at ambient temperature) extracted from its seeds is used for the care of the skin, to manufacture soap or detergents, and as a vegetable butter. It can also be used as a fuel oil. The product is often used in sweets and chocolates. The seed cakes obtained after extraction of oil constitute very good fertilizer. The flowers are used to produce an alcoholic drink. Several parts of the tree, including the bark, are used for their medicinal properties. It is considered holy by many tribal communities because of its usefulness.

Table 1: Mahua: An Introduction

Characteristics Madhuca longifolia

Habit A large, evergreen tree

Stem Short, 3.6 meters, with a dense, spreading crown.

Bark Yellowish grey to dark brown-red and milky inside, scaly.

Leaf Clustered near the apex, linear lanceolate, tapering towards the base, glabrous when mature.

Flower Pale yellow, many small, with rusty, pubescent calyx and fleshy corolla, aromatic, in dense clusters near the ends of the branches.

Fruit Ovoid, 5 cm long, 1-2 seeded berry, yellow when ripe.

Seed Compressed, yellow or light brown, shining, smooth.

Mahua has a significant place in tribal culture. Every tribal household retains a part of the annual collection for various rituals. Apart from providing cash income, it also plays a role in food security. Mahua tree is a family jewel which is passed on from one generation to the other; but is never sold. Mahua flower, the sub sector Though various parts of Mahua tree are used in households and has commercial value, the most visible face of Mahua is its flower. The cream coloured corollas of the flower of the tree are commercially known as Mahua or mohwa flower. The chemical composition of this product is given in Table 2. In addition, phosphorous, calcium, iron, magnesium and copper are present in small quantities. Table 2: Chemical composition of Mahua flower Chemical element Presence in % Moisture 18.6 Protein 4.4 Fat 0.5 Total sugar 72.9 Fibre 1.7 Ash 2.7 (Source: The Wealth of India: Raw Materials, Vol. VI: LM, CSIR, New Delhi, 1998) From the table, it is clear that it is not an intoxicant in itself. It becomes liquor only when it is fermented and other materials are added. Second it is a rich source of sugar and protein. Current uses of this product in various parts of the country are

• Food in raw and cooked form, Mahua pitha and mudhi • Conversion to alcoholic beverage • Cattle feed

Mahua flowers are also considered good for cooling, and are used as a tonic and demulcent. However an estimated 90 per cent of the production goes into brewing beverages. Seventy five per cent of the tribal households in our country are engaged in Mahua flower collection meaning a population of around 7.5 million is into this livelihood activity. Various studies indicate that a household gets between Rs 2500-5000 in a normal Mahua year. An estimate says that 28600 person years of employment are generated in mahua flower collection every year(FGLG India, 2008). But the income for the primary collectors/processors in this transaction is very low. This is often attributed to an unorganized market and little access of the primary collectors to the market. Another feature of this sub sector is that the producers and the consumers are essentially the same group of people, the tribals. 1.1 National Context Chhattisgarh, Madhya Pradesh and Orissa account for nearly 80 % of Mahua trees in India. As per various estimates, the undivided state of Madhya Pradesh has 3 to 5 million trees of Mahua. The estimated collection of Mahua is pegged at 85,000 tons out of a potential of 4,90,000 tons. This difference can be attributed to both under reporting and dwindling collection from forests and other commons.

Ranchi is the biggest trading centre for Mahua in India and the price here influences its price all over India. So most of the Mahua collected in the state go to Ranchi through 2-3 levels of kutchias, traders and commission agents. Mahua is in demand throughout the year in Ranchi. Mahua flower can also be sent to other parts of the state or neighbourhood M.P, if the areas have had less harvest for some reason or other.

Traders at Ambikapur store mahua after buying from different parties, from where it is primarily transported to Ranchi by truck. There is a road stretched to Ranchi from Ambikapur within the jungle. So it is easy for traders to transport mahua. In Ranchi mahua is used for preparation of wines. This season, around 200 - 250 trucks of mahua have been transported to Ranchi and Bodhgaya at Rs 9/- a kg. The transporting cost to Ranchi by truck is found to be Rs 800/- a ton.

With the liberalization and opening up of international wine market under the WTO regime, Govt. of India is trying to promote “Wines of India” and Agricultural and Processed foods Export Development Authority has been entrusted to develop a strategy. Mahua has the potential of becoming an excellent wine and finding ways to the lucrative export market. Researches have been initiated for process standardization in order to prepare good quality Mahua flower wine. Central Institute for Subtropical Horticulture Lucknow and IIT Delhi are the pioneers in this.

1.2 State Context The state of Chhattisgarh came into being on 1st November 2000 as the 26th state of the Indian Union. It is spread over an area of 135,000 sq km. The total population of the state stood at 20.83 million in 2001 of which 79.93 per cent resided in rural areas. The scheduled tribes constitute 31.8 per cent of the population. 98.1 per cent of the tribal population lives in rural areas. The state has 20,378 revenue villages of which 19,720 are inhabited. Out of this 11,185 are classified as forest fringe villages. Tribals constitute more than 50 per cent of the population in 9500 villages or 48 per cent of all inhabited villages. In terms of land use, 44 per cent of the total area of the state is under forest cover accounting for about 12 per cent of India’s forest resources. There are around 9.78 lakh rural poor forest produce gatherers. The annual trade in NTFPs is estimated at Rs6000 million. Mahua flower accounts for around one third or an estimated Rs2000 million. During the period of nationalisation, collection of Mahua (1969-72) was 1129.77, 7323.46, 402.01 MT respectively in the whole of undivided Madhya Pradesh. In terms of GDP, it does not contribute much. But for the six million tribals, Mahua flower is a cash cow. Map 1: Forest map of Chhattisgarh Production of mahua is fairly distributed across the state with every region producing some quantities of the produce. However the Bastar region comprising Sukma, Dantewada, Bijapur, Kondagaon and Narayanpur contributes almost 50 pc of the total production of the state. In the northern hills, Jashpur is a major Mahua producing district. The above map depicts the forest cover in Chhattisgarh. Since Mahua is found in all the forest types present in the state, the Mahua map broadly coincides with the forest map of the state. Hence the forested southern and northern parts of the state are the major producing areas.

2. Objectives and Methodology 2.1 Objectives The objectives of the study are a. Map and analyze the process of production of Mahua flower b. Map and analyse the roles of various players in Mahua flower trade c. Identify Best Practices, Quality Control Protocols, and Certification Processes d. Conduct inflow-outflow analysis and assess the potential for marketing of products. e. Identify domestic and international trends, issues and opportunities related to the sub

sectors f. Identify legal hurdles, if any, that inhibit effective performance of the sub sector. g. Suggest models of Public, Private and community partnership that can be replicated

in various regions and identify role of community, panchayat and private entrepreneurs therein and also suggest necessary changes in policy & legal framework, if any.

h. Identify the extent of market led, state led and civil society led coordination failures in each sub sector.

i. Suggest intervention strategy 2.2 Methodology The standard sub sector methodology was followed to carry out the study. The steps in that are

1. Preparing a preliminary sub-sector map 2. Refining understanding of sub-sector 3. Analyzing sub-sector dynamics and leverage points 4. Choosing intervention point

The study was preceded by a design workshop in which the detailed methodology and tools to be used were finalized. 2.3 Sampling strategy The sampling strategy adopted had two key elements

• Identify the major producing area and draw the sample from that area • Identify the major concentration of channel players and draw sample from there

In a way it was representative of the sub sector in the state, rather than the state per se. hence Bastar and Jashpur in north were chosen as the sample district. The research team then followed the chain upto Raipur and then upto Ranchi in Jharkhand and Udaipur in Rajasthan.

2.4 Major tools used The tools used in collecting data are

• Key Informant Interviews • FGD • Policy matrix to look at implications on various players (access, storage,

transport, licensing, taxes and duties) Separate interview schedules were developed for various categories of key informants. Similarly a FGD checklist was also developed. The study team of The Livelihood School went ahead with the mahua sub sector study by dividing the tasks under following heads

• Review of literature • Developing a preliminary sub sector map • Field visit and preliminary interaction with the stakeholders • Purposive sampling and semi structured interviews with key informants • Developing the final sub sector map • Analysis of external environment including policies and legal frameworks • Interaction with experts and taking inputs on strategy • Preparing the report

A quick desk review of literature was done during January 10. Data collection instruments were also developed during January. Data collection was done during Feb March 2010. 2.5 Significant people interviewed/interacted As part of the primary data collection process, 37 people were interviewed from 12 different categories. Table 3 below gives the details including the place where they were interviewed. Table 4 gives the profiles of traders interacted. Mr Arjun Nag of LEAF who is promoting Mahua Banks was also interviewed.

Table3: Key Informant interviews Sl. No.

Key Informant/Interviewee Number Village/Area

1 Mahua flower and seed collectors 15 Netanar 2 Liquor maker and seller 01 Netanar 3 Kuchiya/middlemen/Local kirana

shopkeeper 01

4 Wholesaler 04 Raipur and Jagdalpur

5 Retailer 05 Jagdalpur and Nangur

6 Commission Agent 02 Raipur 7 Big Trader 02 Raipur and

Jagdalpur 8 Cold storage owner 01 Jagdalpur 9 NGOs 03 Jagdalpur 10 Transporter Bastar Parivahan

Sangh 11 Gunny bag supplier 01 Jagdalpur 12 Forest department official 02 Raipur and

Jagdalpur Table4: Profile of Traders interviewed Sl. No.

Name Area Role Age Nature of Business

1 Gautam Chand Lodha

Kamla Supermarket, Raipur

Broker 35-40

Large agent doing family business

2 Pankaj Kumar Mahawar

Ram Sagar Para, Opposite SBI Bank

Commission Agent

30-35

Large agent, entrepreneur

3 Anil Agrawal

Kamla Supermarket, Raipur

Trader and president of Raipur Vanopaj Sangh

40-45

Big Trader

4 Taar Mohammad

Jagdalpur Wholesaler 40-45

Big trader cum wholesaler

2.6 Limitations The study is limited to studying the Mahua flower sub sector. Another major product of Mahua tree, Mahua seed is part of a completely different value chain and hence is not part of this study. Trade in Mahua flower is considered a very secretive affair and it is difficult to get reliable data. Various secondary sources give very different sets of data for comparable years. The range of variation is as high as 200 per cent. It is neither a nationalized item nor an excisable item in undivided Madhya Pradesh even before PESA came into force. Hence Govt. departments do not have the Mahua flower related data for the last one and a half decade. Unless it is transported over longer distances, transit pass and mandi receipts are not required. In fact the mandi in charge told us that barely 5-10 per cent of total production comes to mandi. Hence the study has to rely on primary sources of data and estimates made in studies conducted earlier. 3. Sub sector Map 3.1.1 The production sub system

Mahua trees are found both in forest lands and in lands owned by the individuals. Farmers with more lands are expected to have more number of Mahua trees. The practice is to collect Mahua flower from own trees first and then go to the forest for collection. An estimated 35pc of the collection comes from own trees and rest from forests. Mahua flowering happens for around 4-6 weeks between March to May. But the period varies from place to place. Rains during this period affect the crop. The process of collection starts with cleaning of the forest floor on the previous day. Next day morning the women and children go to the tree/forest forest for collection. It continues from early in the morning till the sun is right above the head(from 6 am till 1 pm). The effective collection days per household are 20 days in a season. Collection is done by women and children of the household in the baskets, which are hand made out of bamboo. On an average one family member manages to collect 10-15 kgs (1=Gapa=1Basket) of Mahua in a day. Collection from one Mahua tree varies from 1.5 to 3quintals depending upon the age and the girth of the tree.

An average sized tree yields about 50 – 100 kg of flower in a season that lasts around a month. It is said that low rainfall in previous year adversely affects flower production. One Mahua tree has an annual average yield of 62.5 kg of flower and 59 kg of gully as per one study. Another study done by SFRI, Jabalpur finds that yield per tree varies between 11.43 to 76.8 Kg a year.

Table 5: Productivity of Mahua flower at different ages of Mahua Tree

Age in Years Quantity (Kg/ Tree)

10 10

20 30

30 60

40 90

50 135

60 140

There are three distinct and marked phases of flower dropping.

• Shuru – this lasts for 5-6 days. During this period, flowers that are collected possess a shrunken appearance. On drying, flowers collected during the phase yield 25% by weight of total collected produce.

• Bharwari – this stage follows shuru period, and lasts around a week. The qualities of flowers that drop during this period are highest, with yields going up to 50% post drying. They possess a bold and succulent appearance.

• Kanwa – last stage of flower dropping, they indicate end of collection period. The flowers of this stage bear resemblance to that of flowers at initial stage in appearance as well as in yield. The collected mahua is then kept for sun drying for 3-4 days on the roof top, in the open area inside the house or in the front yard depending upon the sunlight. Sun drying may be followed by shade drying before it is finally stored or disposed off. Each day’s collections are dried separately so that there is no moisture transfer from one lot to another. Cloudy weather at times poses a great problem with the mahua flower not being dried properly. It looses its colour and turns black and also prone to insect infestation. Large amounts of Mahua are then kept in bigger basket which is locally known as kadagi. Table 6: Gender distribution of activities Activity Men Women Children Floor Cleaning and Burning

√ √

Collection of Mahua Flower

√√√√√ √

Drying √√√√√ √ Packing √√√√√ √ Selling in Local Haat/market

√ √√√√√

Processing/Liquor making

√√ √√√

3.1.2 The processing sub system Processing of Mahua occurs at three levels: • Drying: collectors dry the flowers before they sell • Stocking: traders stock in cold storages • Brewing: brewing of liquours household/bhatti/large brewer level Drying is done immediately after collection. It is rarely observed that the flower is sold without drying. Hence this is generally put as part of production sub-system. Stocking, technically, is not a processing activity. However, in the case of Mahua it has a special connotation. In order to retain its colour and quality Mahua is put in cold storage. Generally this is done by the large traders and wholesalers. The most important processing done with mahua flower is brewing. For household use, the tribal brew it at home. However commercially it is undertaken by Bhattis or large scale brewers. Processing of Mahua flower into brew Large scale brewing by licensed bhattis is not permitted in Chhattisgarh. Hence brewing is a household industry in the tribal belt of the state. However every household does not engage in brewing. In a village of 60-70 households, barely 5-7 households are engaged in this activity. The process Mahua flowers are put in earthen pots filled with water two days before it goes into brewing. After the bubbles are seen on the top of the pot, that pot of flowers is fit for further processing in the furnace and transferred to the brewing brass pot on the bottom. The brewing room has a hearth/furnace with three pots put on one another (see photograph below). The bucket placed near the furnace is connected to the brew pot with a pipe. The process often takes five to six hours. The skills of brew making are primarily with the women. Often as a business woman, they protect the brew from the male members of their households so that they get the returns expected. They lock the brewing room if they go out for some other work. 3.1.4 The marketing sub system Marketing of Mahua occurs at two levels: • Direct selling by collectors to Kuchias or to haat traders • Bulk selling by Kuchia / haat traders to wholesellers who in turn sell it to brewers or retailers – at this level it involves cold storage too. Mahua though changes hands, but does not change form. But there are many players who make or loose money in the business. A tribe called “kuchia” is associated with Mahua trade. They visit villages in their bicycles ready with their kit of weighing instruments

and packing bags. They follow a definite cycle for visiting different villages in the demarcated catchment. Catchment areas of kuchias are defined and generally respected. Haat days collections are generally brought to the haat by women. Kuchias and also traders put up their kantas (weighing scale) in the haat. Certain amount of Mahua flower is also sold at the village kirana shop against requirements of daily provisions. Then the Mahua is divided into two parts. A part is retained at the haat trader level and another part is transferred to the wholesalers of Jagdalpur and Raipur. From Raipur Mahua is transported to many parts of the country. They include Tata and Ranchi in Jharkhand, Udaipur and Banswada in Rajasthan, Godhra of Gujurat. Here the brokers and commission agents come into the picture. They put up a shop at a vantage point, collect and provide market information and keep samples of various quality produces. They charge a fee of around 0.5 pc of the transaction. Chhattisgarh is both an exporter and importer of mahua depending on production and demand cycles. Hence Chhattisgarh also gets Mahua especially from Lalitpur and Allahabad. The players again repeat their roles. A retail market has come up in Jagdalpur. Around 25 shops are there exclusively selling Mahua. Retailers get their suppliers from large traders and sell it keeping a margin.

Mahua Sub-sector Map

Tribal haat Kuchiya

Haat trader Mandi

Cold storage owner

Whole seller

Retailer in Urban places

Haat retailers

Tribal HH Large Scale brewers / Bhattis

Production Sub-System

Marketing Sub-System I

Processing Sub-system I

Marketing sub-system II

Wholeseller Haat trader

Stocking

Brewing

Processing Sub-system II

Retail Liqour market

Tribal HH

Collection and drying

Forest Dept NGOs Credit Institutions

Conservation, credit, training and other support

Broker/ commission agent

Market/ Stages of value addition

3.2 Condition of support industries Cold storage, transportation and packing materials are the three main supporting industries considered critical for the vibrant functioning of the mahua sub sector. An analysis of the data reveals that on an average 25 pc cold storage space is utilized for stocking Mahua flower. In Jagdalpur, Mahua flower is one of the top three items in cold storage. The cold storage industry has come up reasonably well in Chhattisgarh. A liberalized policy regime coupled with incentives in the form of capital and interest subsidy has helped this industry acquire its present shape and scale. No trader has complained of lack of space. The Table indicates that there are 44 private cold storages in various towns of Chhattisgarh. Cost of putting up a 2000 metric tonnes capacity cold storage comes to Rs.14 million. Similarly the cost for a 5000 metric tones capacity unit comes to Rs27 million and 10000 metric tones unit costs Rs40 million. Table 7: Cold Storages stocking Mahua in Chhattisgarh S.No. City/Place No. of Cold

Storages S.No. City/Place No. of Cold

Storages 1 Raipur 12 7 Patthalgaon 02 2 Jagdalpur 11 8 Raigarh 01 3 Dhamtari 03 9 Kharsiya 01 4 Ambikapur 03 10 Jashpur 01 5 Durg 03 11 Gharghoda 01 6 Bilaspur 03 12 Kondagaon 01 Similarly there seems to be a well laid out system for making trucks available to traders of Mahua. Bastar Paribahan Sangh, the apex body of transporters processes transport requirements within two days on a first come first served basis. The wait period is not more than 48 hours. The packaging industry is characterized by suppliers only. There are sixteen gunny bag suppliers in Jagdalpur town. Similarly Raipur being the rice trading hub has adequate supply of gunny bags with large number of suppliers.

3.3 The Policy and Institutional Context After the enactment of Provisions of Panchayats(Extension to Scheduled Areas) Act policies relating to non timber forest produces were liberalized across the country. State forest department now exercise less or no control over the trade in Mahua. Mahua is a non nationalized non timber forest produce in Chhattisgarh. Mahua is also outside the ambit of excise law. But most states still retain excise regulation relating to Mahua. One can not imagine a Sanjay Market of Jagdalpur lined with retailers of Mahua in neighbouring Orissa. Since there is largescale movement of Mahua from and to Chhattisgarh, the policies of other states impact the performance of the sub sector in the state. The transit rules and procedures also differ from state to state. This adds to the transaction costs. Taxation regimes also vary from state to state. Mahua flower attracts broadly four taxes, VAT, excise duty, mandi tax and forest development cess/tax under four different legal provisions. Traders of Chhattisgarh seem to be happy with the policies of Govt. of Chhattisgarh. Rather they were complaining about the policies of Orissa, Bihar, Jharkhand Govts. But the distortion caused by differing policies and taxation regimes has significant bearing on the sub sector. But the hands off approach has created a situation where the primary producers have to bank on solely on the traders, big or small. There is no mechanism to address a glut or an overheating in the market. The absence of promotional institutions neither at the grassroots nor at the apex is a key element of this sub sector. Production varies from year to year and the pendulum swing is as high as 100 pc. There is no system or agency for calculating the impact of “Mahua drought” and mitigation measures for that. These imbalances in cash flows are a major livelihood concern. The major producing areas are also the remotest parts of the state where the access to formal credit system is very minimal. Traders double up as money lenders and seemingly taking an undue advantage of the situation. The sub sector in the state is also characterised by near absence of producer organizations. The hangover of the Van Dhan Samitis still persists. Initiatives like Mahua Banks promoted by LEAF, an NGO is yet to scale up and become a business model. Primary Cooperatives under CG MFP federation are yet to play a role in procurement and trade of Mahua flower. 3.4 The Environmental Context The process of collection of Mahua flower often is considered environmentally hazardous. Collection from forest areas often involve burning of forest floor which is cited as one of the important reasons of forest fire. Burning limits the bio diversity of the

area by destroying the seeds and seedlings. Second, over exploitation of flower is leading to depletion of Mahua resource. Harvesting protocols have been prepared and are being suggested as an answer to these concerns. But in the absence of concerted efforts and coordinated campaign to educate the primary collectors, these protocols have limited ground level impacts. With no plan and significant investments for increasing the Mahua tree population, Mahua may not remain a lucrative livelihood option in the long run. 3.4 Financial Overlays Mahua flower is converted into an alcoholic brew which is generally prepared and consumed by the tribal households. Both the process of collection of Mahua flower and its conversion to brew are done by the same group of tribal households. But Mahua flowers are available for a six week period with the consumption of the end product spread through the year. Hence it has to be kept stored and released to the market according to the requirements. The sub sector players and their roles were given in Table 8. Table 8: Players and their role Sub sector players Role Mahua producer/collector

Collection, drying

Kuchia

The first level of trader who visits villages for collection of Mahua flower with a bicycle

Haat trader Storage and sale to haat retailer Wholesaler Purchases from both mandi and kuchia, stores in cold storages

and sells back to the kuchias and also to bulk traders Commission agents/brokers

Facilitates transactions without directly taking any responsibility of movement of produce

Retailers Procure Mahua from whole sellers and sale in retail outlets Cold storage owners Storage Mandis Facilitate bulk trade, issue mandi tax receipts Forest department officials

Supposed to play the role of facilitator

Transporters Bulk transport of Mahua flower Gunny bag suppliers Providing packaging materials NGOs Advocates interests of primary collectors, facilitates

collectivization at village/local level Bhatti owners(other states)

Bulk consumers and play a role in determining prices

It is almost impossible to get reliable data on margins at various levels. However discussions with various players have yielded some insights.

• Kuchias’ margins vary from 8-12 per cent • Haat traders’ margins vary between 14-20 per cent

• Retailers keep a margin of 8-10 per cent • Commission agents charge a brokerage of 1 pc • Wholesalers margin is at 8 pc • Haat retailers get a margin of 5-7 pc

4. Key Constraints and Leverage Points 4.1 Key constraints at production, processing and marketing Mahua flower is a very different sub sector where the producers and the ultimate consumers are often the same. Yet there are many players and each player sees the chain in a very different way. The study team tried to analyse the responses of various stakeholders in the sub sector and identified key constraints at production, processing and marketing stages. Production and procurement The major issues concerning the production and procurement of Mahua flower are

• Distress selling and low price realization at the producer end • Unsustainable harvesting and often environmentally damaging practices in

collection • Developing quality parameters and ensuring quality product • Depletion of the resource base and its concentration in the hands of large farmers

Credit is an important input in the production process. Tribals after collection and drying sell off the collection for cash or against provisions in local kirana shop. Immediate cash needs often force them to sell the collection to predetermined traders at predetermined rates. Market prices have little value for them. They can not access the mainstream credit market either individually or collectively. He does not have enough space to stock the produce also. Hence the primary producers resort to distress selling. The process of collection of Mahua flower often is considered environmentally hazardous. Collection from forest areas often involve burning of forest floor which is cited as one of the important reasons of forest fire. Burning limits the bio diversity of the area by destroying the seeds and seedlings. However cleaning the forest floor or the area below the tree is equally an important traditional practice. The adoption of this practice is constrained by dense bushy vegetation beneath the canopy. Quality of Mahua flowers are dependent on collection practices and post harvesting treatments. Color of the dried flower is an indicator of quality. Contamination with soil during collection and improper drying leads to less quality products. Proper drying not only ensures color but also protects it from fungus infestation. Degradation of forests, conversion of tree lands into other crop lands and negligible attention to Mahua in public plantation programs is leading to depletion of population of Mahua trees. Division of families is leading to number of Mahua trees per household. Processing

Almost ninety per cent of the Mahua flower is used for making brews. Hence tribals who collect and produce are also the ultimate consumers. In the case of Chhattisgarh, tribals are the only legal processors. But what is important is that every other player in chain is expected to contribute to keeping the form intact including colour and texture. Change of form is not desired. Every tribal household sells the collection during the collection season and purchases it round the year. But they do not have the capacity and wherewithal to store the annual requirements. Those having storage capacity or access to storage facility are the gainers in this game. In our context availability of modern storage facility or even a modest godown is limited to urban places. The state owned warehouses primarily caters to agricultural produces. To quote a premier Mahua trader, production of Mahua flower may vary between two to four lakh tonnes. However comparing the national production data, it may be an over estimation. But it speaks of the variations. Similarly price varies between Rs 12 to 24 in the retail market. Production in neighbouring states especially Orissa also influences prices. But these swings are not always in favour of the primary producers. These fluctuations in production and prices make availability of storage facility/infrastructure in an accessible place and at affordable cost a critical constraint. Currently Chhattisgarh does not allow large scale mechanized brewing. This may be a constraint in tapping the external market, both national and international, where stringent standards in manufacturing processes are expected to be followed. Marketing Raipur has emerged as the Mahua trading centre of the country with a number of services being provided. The excise policy of early nineties exempting mahua from excise led to the development of trade and business centring around Raipur. Due to a favouarble policy environment created in the early nineties, a number of businessmen took to Mahua trade. In fact some traders shifted their base from Sambalpur in Orissa to Raipur. The range of services and the organized nature of the trade in the city offer opportunities to many. However traders are not well versed with the grading and marking of Mahua flowers. Similarly inter state transit remains a constraint due to application of excise laws in certain states namely Orissa and Bihar and differential transit procedures/documents and tax rates. 4.2 Approaches by the development actors Various development agencies have tried to address the issues and constraints in Mahua flower sub sector at various points of time in varied ways. Rights perspective dominated the early phase of intervention in the sub sector. Rights of the primary collectors to collect and sell Mahua flower unhindered was an issue in the eighties and early nineties. Monopoly leasing and nationalization are now passé. PESA and Forest Rights Act have established the supremacy of PRIs and primary producers over their collection. Adoption of value added tax has brought significant change in the tax regime across the country. Hence the focus of interventions has shifted to collective trading for achieving scale, storage infrastructure and alternative products.

Van Dhan Samitis of Bastar Van Dhan Samitis are an institutional arrangement created directly under the zilla panchayat in Bastar district with the purpose of collecting forest produces from tribals and in the process stop exploitation of tribals in the trade. It started with a campaign called Imli Andolan by the district administration of the then Bastar district in Feb 1999. the then Collector of Bastar Mr Pravir Krishn was instrumental in conceiving and grounding the initiative. Self Help Groups were formed in villages through panchayats and entrusted the responsibilities of purchasing minor forest produces from villagers. TRIFED agreed to buy the forest produces so collected. A general manager level post was created so that quick decisions are taken in the highly volatile NTFP market. An SHG in Aasna village earned Rs 25,000 in just 15 days. After the success of SHGs, more groups were formed directly under the district panchayat, and these were called the Van Dhan Samitis (VDSs). TRIFED advanced funds to these samitis to purchase tamarind from villagers and sell it to the federation. The idea was to eliminate the profiteering middlemen. The district administration enforced the Krishi Upaj Mandi (Agricultural Produce Marketing) Act, which forbids traders from buying notified produces outside the marketing yards where the produce is auctioned. The SHGs monopolized the weekly haats. After a first year, market reality struck in 2000-01. TRIFED had bought more than it could sell. Moreover purchase prices were set at a level much above the market prices. The traders bought tamarind from neighboring Orissa and sold it at much cheaper rates. TRIFED could not sell and held on to the stock to get better prices and in the process lost huge money. The scheme ended in May 2001. The scheme was heavily dependent on the support from district administration. Mahua Banks The purpose of Mahua banks is to provide a cushion against the distress sale of Mahua by tribals. It purchases Mahua at the going rate or a notch above and sells it at less than the market price. The fee charged is called the storage fee. Five such Banks are operational now. The system involves following. Households sell their mahua in the bank. Price paid is two rupees higher from the market price and at the time of buying same mahua after a period of 4-5 months the same mahua could be purchased at a rate which is three rupees less than market price. Also from the profit 3% is given to Village welfare fund for health related welfare activities. 150 HH are currently selling their Mahua in five banks. In 2008-2009, mahua worth of Rs.60, 000 was purchased which was less than the previous year’s purchase of Rs.1, 07,000 as last year the crop of mahua was not so good due to unfavorable weather conditions (rains not in time). The rates of these villages have been influenced by Mahua bank as the traders/middlemen have to raise their prices to purchase from these villages. Collective marketing Many NGOs adopt this approach. They facilitate aggregation of produces at SHG and federation level and then sell it to large traders. In the process the bargaining power of the primary producers are enhanced. This approach has been adopted for collective marketing of Mahua in Western Orissa Rural Livelihood Project and Jharkhand Tribal Development Project. In WORLP, drying platforms have been constructed so that Mahua

flower is dried properly to ensure quality. Udyogini promoted Women Enterprise Groups in Mandla, Madhya Pradesh to engage in Mahua flower trade as a collective venture. Women were trained as entrepreneurs so that they are enabled to take business decisions. Mini Godowns/warehouses Since availability of storage facility at the village/local is a critical element in getting higher prices, some projects and organizations focused on creating warehouse spaces at local level. Mini Godowns were built in villages in western Orissa under World Food Programme. Revolving Fund All these models of collectivization depended on infusion of credit as seed capital or revolving fund. But a common feature of this approach was that there was either under financing or over financing of the activity. Requirement of finances were never estimated in a systematic manner. Hence the collectivization process often ended with the exhaustion of the seed capital. Revolving fund never really revolved. Setting minimum procurement/support prices States like Andhra Pradesh and Orissa have some form of price bench marking. In Andhra Pradesh Girijan Cooperative Corporation still purchases Mahua flower from tribals. In Orissa minimum procurement prices are supposed to be fixed by panchayat samitis(middle tier PRI) before the start of the NTFP season for 68 NTFPs including Mahua flower. Many NGOs advocate for minimum support prices for Mahua flower on the lines of agricultural produces given its role in the economy of tribal households. Alternate uses and developing commercially viable Mahua flower based non alcoholic products Some believe and argue that Mahua has a negative impact on tribal household. It makes tribal men lethargic and affects family peace. Moreover it has got negative impact on health because the brewing techniques are neither standardized nor followed. Often it leads to death due to consumption of spurious liquor. Hence search for alternate commercially viable products like kismis, jam and jellies from Mahua flower have intensified. In fact some NGOs have started developing Mahua kismis at local level with the support of SHGs promoted by them. Mahua flower can be converted to an excellent sweetener. Local technology for this is available in the villages though it is fast vanishing. Commercial processing of Sal seed started using the basics of traditional technology and there after it has emerged as a much sought after product in the vegetable oil market. 4.3 Strategic Choices and Key Recommendations The above discussions lead us to three major leverage points namely

� Credit � Storage � Knowledge

All three need to be considered as a package for its effectiveness.

Recommendations: Credit • A micro credit fund should be created for meeting the cash needs of Mahua

collectors and Mahua procurement is assisted through this fund. The fund may be placed in the hands of producer organizations.

• Appropriate credit cum insurance product may be designed to meet the specific requirements keeping the Mahua trade cycle in mind.

• At the apex level, the fund should be managed by a special purpose vehicle for at least three to five years. The experiences gained in the process may be incorporated in future design.

• A decentralized procurement mechanism should be created so that primary collectors get better price of their produce. This mechanism should be managed at the cluster level by an organization of primary collectors. Van Dhan Samitis and Mahua Banks are initiatives that need to be considered while designing such a mechanism. Existing MFP cooperatives may be encouraged to take up collection of Mahua flower. CGMFP federation had already issued circulars in this respect.

Recommendations: Storage A decentralized storage infrastructure with large number of mini godowns at vantage places should be created in public private partnership mode. This infrastructure should be placed in the hands of the panchayats who would charge a fee and manage the godowns. The following two models can be considered.

• Panchayats construct and manage, charge a storage fee • Panchayats construct, producers manage and pay a rent

Recommendations: Knowledge A combination of local wisdom and modern practices would reduce spoilage, improve quality and fetch better prices.

• Knowledge and practices relating to harvesting and post harvesting treatments need to be codified. Protocols developed and suggested by Ministry of Environment and Forests should be popularized through training and campaign programmes.

• Orientation of the primary producers and traders on grading and marking of

Mahua as prescribed in Mahua Flower Grading and Marking Rules, 2008 should undertaken on a regular basis.

• Plantation of Mahua trees needs to be encouraged given the level of depletion of

resources. Plantation programmes by state forest department and various other agencies should have a component for Mahua plantation. NREGA can be harnessed for the purpose of both plantations on individual lands and common lands. A variant of Tree patta model can be worked out for poorer families having no or less land.

Other Recommendations Policies and institutions Stakeholders generally had a positive opinion of the existing policy framework for trade in Mahua flower. However policies of other states relating to excise and transit do impinge the performance of the sub sector. Recommendations

• A National Transit Code may be formulated/facilitated for inter state movement of Mahua as Mahua is both exported and imported by Chhattisgarh in substantial quantities. This would cut down on transaction costs.

• As trade through mandi has come down drastically, mandi tax may be imposed only on the produce traded through mandi.

• An inter state consultation forum on excise regulations relating to Mahua flower may be evolved so that the effects of sudden changes are minimized.

Product diversification and development The effect of liquor consumption in tribal society is often debated and Mahua is associated with something bad. But Mahua has the potential of emerging as a nutritious food and beverage supplements. Some attempts have been made by various research institutions like TFRI, Jabalpur to develop Mahua based products. A focused research should be commissioned to develop Mahua based products. This research should be funded by a consortium of state agencies, research institutions and marketing bodies and should include market studies. 4.4 Potential Role of PRIs The recommendations already suggests defined role for PRIs in creating and managing storage infrastructure at local/village/panchayat levels. The following roles are envisaged for the PRIs as part of the intervention strategy.

• Role in enhancing production- NREGA funds utilized to plant Mahua trees on private and public lands

• Role in providing infrastructure-BRGF funds channelised for building storage infrastructure

• Role in institution building- Panchayats should be made responsible for forming/reviving producer organizations

• Role in registration of traders, price setting and data gathering- GPs may be allowed to register traders operating in the area for a fee. Block/Zilla Panchayat may fix an indicative procurement price before the collection season starts. Procurement by all the players must be reported to the panchayats.

4.5 Financial implications The micro credit fund should start with an initial corpus of Rs200 million targeting financing 10-20 per cent of annual trade in Mahua flower in terms of value. The storage infrastructure would cost around Rs400million for 1000 mini godowns. Knowledge related interventions others would cost around Rs100 million. The total cost of the intervention comes to Rs700 million which is expected to benefit at least 20 per cent of state population or four million people.

Annexure 1 Prominent NGOs engaged in Mahua Sub- Sector in Chattisgarh

Name of NGO Work profile in Mahua Sub-sector

Key contact person and address

LEAF Working in Mahua Bank

CRETA Experimenting with making Bio-diesal out of Mahua Flower

Mr. Shailendra Shukla (9425205897)

Mr. Mukesh Dolakiya

Jan Vigyan Kendra Making Mahua kishmis out of mahua flower

Mr. Lalaram Singh, Kanker ( Mobile-9406097475)

Mr. Santosh Ku. Khare, Durg (9826161329)

List of potential research and technical input supplier agencies

1. Tropical Forest Research Institute, Jabalpur 2. Central Tuber Crops Research Institute, Regional Centre, Bhubaneswar 3. Central Institute of Sub Tropical Horticulture, Lucknow 4. Chhattisgarh State Minor Forest Produce(Trading and Development) Cooperative Federation

Limited, Raipur 5. Indian Institute of Technology, Delhi 6. Central Food Technological Research Institute, Mysore 7. The Livelihood School, Hyderabad 8. LEAF, Jagdalpur

Annexure 2 Literatures reviewed

1. India Environment Portal 2. India in Business, FICCI, New Delhi 3. Ramnath M, Mahua Banks: An obtuse look to a familiar problem 4. NTFP Enterprise and Forest Governance: Mahua, FGLG India 5. Green India Mission Document 6. State of Forest Reports, FSI, Dehra Dun 7. NTFP State Study Reports by Regional Centre for Development Cooperation, Bhubaneswar 8. Journal of Scientific and Industrial Research, Vol. 69, June 2010

Websites

1. Chhattisgarh Forest Department website 2. CG MFP Federation website 3. Agricultural and Processed Foods Export Development Authority website

Annexure 3 Field photographs Slide 1: Focus Group Discussion with Mahua flower collectors in Netanar village in Bastar district

Slide 2: Fresh Mahua Flowers

Slide 3: Brew making in a tribal household in Bastar

Slide 4: Interactions with a women trader in Nangur Hat

Slide 5: A women trader in Nangur haat with Mahua and the weighing instrument