Study site

Naugad (known as Khar Village Development Committee until 2017, when it was renamed under Local Government Act 2074) is a small rural municipality in Darchula district in far west Nepal (29°45′40.06″ to 29°49′2.33″N, 80°35′51.11″ to 80°41′0.11″E) within the Api Nampa Conservation Area, 12 km from the district headquarters at Dallekh to the northeast. It is around 1650 masl and covers an area of 26 km². It has 698 households with a total population of 4272 (2056 male and 2216 female) (NHPC 2011). According to a baseline survey conducted as part of the study in 2015, the 2 main population groups in Naugad are the Chettri (89%) and the Dalit (7.3%). In Nepal, the Chettri are generally considered socially and economically strong. However, because Naugad lies in the remotest part of the country, even members of its Chettri community are economically weak compared to urban dwellers. Women and Dalits are both identified as marginalized groups in Nepal's Constitution. Marginalized communities are those with less access to political, economic, and social opportunities because of their caste, culture, or sex.

Situation analysis and value chain selection

Allo was selected as a potential livelihood source, especially for women, following a stakeholder consultation carried out in 2014 in Naugad with local residents, existing allo producers, local entrepreneurs, and local government representatives. The consultation included a household survey conducted with members of allo producer groups in Naugad, 5 focus group discussions held with the members of allo producer groups, local government agencies, and women's groups at the community level in Naugad, followed by in-depth interviews with women and members of other marginalized groups in Naugad. Skills testing was carried out on yarn processing, weaving, and sewing, and the results were used as a basis for designing the skills-training part of the project.

Description of the private sector's involvement

In 2015, the KSLCDI team held a consultation meeting with the private-sector entities on potential areas for collaboration on strengthening the allo value chain in Naugad. One of the major criteria set by the initiative was to select a private-sector entity considering social and environmental aspects, in addition to economic outcomes in business. The South Asian Association of Regional Cooperation (SAARC) Business Association of Home Based Workers (SABAH) Nepal, a national organization possessing a South-Asian wide network that is promoted by SAARC, was selected for the allo value chain-strengthening project in Naugad. SABAH-Nepal is registered as a social business organization. Unlike other private-sector entities, SABAH Nepal's approach is to develop common facility centers in which members of the facility centers work together to add value to products at the local level. This gave SABAH Nepal an advantage in enhancing the quality of products and in marketing products made by rural women and men to ensure the sustainability of the project.

In 2016, with support from the KSLCDI, SABAH Nepal and the Naugad community established the Bhumiraj Allo Processing and Collection Center (BHPC). The BHPC is registered as a community-owned enterprise and is the focus of this study. SABAH Nepal provides skills training in sustainable allo harvesting, processing, and manufacturing and then promotes the allo products in high-end international markets. The BHPC started with 23 members in 2016; as of March 2017, its membership had grown to 82 members, including 69 women. In total, it lists 150 households as either members or indirect beneficiaries. With the completion of the project in December 2017, the BHPC was functioning independently with the help of the community members. One of the major outcomes of the project was the establishment of a new brand, Kailash—Truly Sacred, to promote local products. SABAH-Nepal has introduced a buyback guarantee scheme in the community through which the members of the BHPC can directly sell their entire produce to SABAH Nepal. Overall, the BHPC has reduced the cost of logistics, because members do not have to travel to sell their products; instead, the private sector entity buys them from the BHPC. The direct business link has also increased local residents' share in profits from the sale of allo and allo products by reducing the third-party involvement.

As a semiautonomous body of SABAH, the BHPC now serves as a key functional link in the allo value chain (Figure 2). Details of the approach used and the improvements introduced at different points along the chain are provided in ICIMOD (2015).

FIGURE 2 

Role of the Bhumiraj Allo Processing and Collection Center in the allo value chain.

Impact assessment

The KSLCDI team evaluated the impact of the BHPC on the allo value chain, and particularly on women's lives, using primary and secondary data collected as follows. Primary data were collected using an open-ended questionnaire survey targeting the female members of the BHPC in November 2016. Of the 82 BHPC members, 24 (30%) were randomly selected for interviews. Key topics in the survey included traditional uses of allo in Naugad, benefits of the enterprise setup, types of skills training the women had received and their impact on income generation, degree of involvement of women and other marginalized groups, and market linkages. The survey data were supplemented by key informant interviews and focus group discussions. For key informant interviews, factors such as age, sex, caste, and ethnicity were taken as important parameters for capturing the views and experiences of diverse social groups and deriving information from a social perspective. The interviews and discussions focused on the status of allo as an alternative source of income before and after the allo value chain project.

The findings from the primary data collection were strengthened using secondary data, mostly from a review of journal articles, reports (published and unpublished), working papers, and conference proceedings. Microsoft Excel was used to carry out descriptive analysis, like deriving the percentages of women benefiting in different forms from the allo enterprise setup.

Skills and trust development

A total of 15 training sessions were organized by SABAH-Nepal in 2016 and 2017 for BHPC members at the facility center in Naugad and in Kathmandu. The aim was to increase the number of women participating in the training for sewing, tailoring, and weaving, because these activities could be carried out at home and would help build entrepreneurial skills. Participation in the training sessions is shown by gender in Figure 3. Following the training, the number of women in Naugad who participated in thread-making skills increased by 23%. An additional 14% of women in Naugad developed their skills in knitting, and 31% developed sewing skills; 18% of women members were engaged in weaving allo fabrics for the first time in the community center (Figure 4). The buyback guarantee scheme encouraged women and marginalized groups to spend more time on allo activities, because it ensured their economic security. To increase understanding of the potential markets and demand–supply processes, 9 women and 4 men from the BHPC participated in 3 exposure trips—visits to trade fairs in the national capitals of India and Nepal. These trips helped to increase their knowledge of how they could add value to their products and increase their earnings.

FIGURE 3 

Participation in skills training by gender.

FIGURE 4 

Women's participation in production activities before and after the project.

A similar approach was taken in Bangladesh in 2012 by the Swedish fashion company KappAhl (BSR 2016). KappAhl worked in partnership with a local development nongovernmental organization (NGO) to open a training center in the town of Tongi. The aim was to provide economic opportunities in global value chains for poor women in the community. Women age 18–25 from poor households participated in a 3-month training program that included basic education (reading, writing, and arithmetic), as well as technical skills such as sewing. Around 500 women were trained and guaranteed a job at one of KappAhl's suppliers. Many of them went to work in factories and were able to earn an independent living for the first time. After the Rana Plaza Factory collapse in 2013, families worried about the safety of workers in such factories; because of traditional cultural norms, many fathers and husbands did not want female household members to work outside the home. However, the NGO adopted culturally sensitive awareness campaigns in communities and visited families in person to build trust. This in-person engagement proved important to gaining the support of family members, which is considered a key strategy for the program's success.

In value chain development, building trust is of utmost importance for the sustainability of the chain. This was addressed by KappAhl in Bangladesh; similarly, trust was maintained among the partners in the allo value chain development project in Naugad. In both cases, because of the training given to women, the mindset of the community has changed, and men have slowly started allowing women to work outside their homes and earn money for themselves, even if it is just enough to fulfill limited household needs. One of the unexpected benefits was the creation of an informal network for some of the women, who made friends within the group and used the platform to share thoughts on common issues and support each other both inside and outside work.

Improved processing techniques and value addition

A number of improvements were introduced in the techniques for allo harvesting, processing, and value addition (Table 1). Among others, respondents noted that the new practice of making yarn from fresh green bark rather than dried bark improved yarn quality considerably, while the use of ash in place of caustic soda for extraction reduced negative health impacts like allergies, coughing, and gastritis and was more environmentally friendly. Previously, large amounts of caustic soda were used in processing to reduce the extraction time and generate finer fiber (Singh and Shrestha 1988), and the chemicals were washed into nearby rivers, polluting the water. The ash method enables production of chemical-free fiber, an organic product with a niche value in the international market.

TABLE 1 

Improvements in allo production and their impacts.

As a part of developing and strengthening the allo value chain, considerable effort was put into technology transfer. In addition to training, modern equipment was provided to BHPC members to improve efficiency (Shah et al 2017). Survey respondents indicated that replacement of the traditional katuwa (hand spindle) with modern equipment had improved thread quality and increased income from allo by 27%. The introduction of energy-efficient rocket stoves (hot-burning stove using small-diameter fuelwood) to replace conventional stoves had reduced the amount of firewood needed to boil 30 kg of nettle bark by two-thirds, from 240 to 80 kg (ICIMOD 2016). Although a detailed analysis has not been conducted, according to almost all respondents, the fuelwood requirement for a rocket stove is easily met with twigs and dried bark from nearby fields, and the frequency of visits to forests to cut trees has decreased, in contrast with conventional stoves that require more and thicker fuelwood from the forest. Hence, the use of energy-efficient stoves has helped to reduce tree felling, excessive smoke emission, and indoor air pollution. Cooking time per batch was reduced by 45 minutes, providing relief to women from household chores and allowing them to spend more time on childcare and income-generating activities.

Socioeconomic transformation, especially for women

Small and medium enterprises are particularly important in developing countries because of their potential for entrepreneurship development and employment generation (Cook 2000), and Nepal's government policies have recognized the potential of such enterprises to contribute to poverty reduction (Kunar et al 2009). However, in traditional societies, normalized gender discrimination and attitudes about behavior in the public arena often limit women's ability to take advantage of economic opportunities (Kabeer 2012). The lives of women are generally more precarious than those of men in terms of access to resources and income-earning opportunities, as well as quality of life and wellbeing (Seddon and Hussein 2002; Acharya et al 2007). Although lack of income affects all members of a family, the human impact of poverty tends to affect women and children disproportionately (Sawhill 1988; Wood 2003; Acharya et al 2007). Research conducted in countries like Bangladesh, Brazil, Kenya, and South Africa has indicated that globally, financially independent women have more control over income expenditure, which results in improved health and education for children and has a positive impact on development (United Nations 2009). Thus, there is growing recognition of the importance of promoting women as business leaders, which is also true of the allo value chain development in Naugad, as discussed later.

Allo collectors in Nepal are mostly women from poor families with little access to financial resources, and their contribution to the value chain is rarely recognized (Gurung et al 2012; ICIMOD 2015) in terms of remuneration by the actors involved in the chain. In Naugad, a focused effort was made to include women and other people from marginalized groups as important actors in the value chain. The training and exposure visits helped them build their capacity and take a leading role in the value chain. Women noted that they had considerably increased their skills in thread-making, sewing, and weaving following the training (Figure 4) and could now produce diversified products such as bags, purses, suits, cushion covers, scarves, shawls, pot holders, and runners. This had led to an increased demand for their products in the market.

One of the most important impacts of the allo project was the perception (by 77% of survey respondents) of allo as a new source of income (Figure 5). BHPC members reported earning NPR 3000–4000 per month, ie NPR 130 per day on average from sewing, which compares favorably with the average daily labor wage in the community of NPR 100. In the past, social and cultural norms in Naugad limited the participation of women in mainstream development activities. However, there has been increasing acceptance of women's leadership since allo value chain development began in Naugad in 2015, and women are now considered important actors in the chain. People in Naugad have received various skills and leadership training irrespective of their age, caste, religion, or ethnicity and are producing a variety of nettle fiber products. Women who were previously dependent on their husbands for cash resources now contribute to the family income. The cost of general household items like soap, butter, and sugar (NPR 3000–5000 per month) is covered by the income generated through allo. The BHPC also serves as an enabling workspace where women and members of other marginalized groups work together to address issues related to personal and community wellbeing. Enterprise-related decision-making is now entrusted to women.

FIGURE 5 

Socioeconomic impact of improvements in the allo value chain.

The success of the BHPC has encouraged entrepreneurs to develop small businesses at all points along the allo value chain. More than 25 women entrepreneurs were identified in Naugad with allo-based microbusinesses, from home production of thread to tailor shops using allo and other fabrics and even exploring cross-border sales options in India. As of December 2017, 36 women were employed at BHPC making value-added products.

A study conducted by ICIMOD (2015) reported an annual income of NPR 35,000 for a woman who had been working on allo for the last 15 years in Naugad. It reported that she collected 500–800 kg of allo every year from the forest and sold semiprocessed bark at the district headquarters. She also produced about 200 thick threads for use with livestock and for the production of damlo (rope to carry loads) and sold them at a rate of NPR 200 each until 2016. The same woman in the survey reported that with improved skills at BHPC, she is now able to sell fine allo thread instead of semiprocessed bark, thus earning more.

Another woman member of BHPC reported that her increased skills in producing finer allo threads and in sewing and weaving allo products (ICIMOD 2016), after receiving the training in 2016, had established her as an entrepreneur in Naugad, making her financially stronger and more independent than in 2014. The income generated by these women entrepreneurs has helped them cover household expenses and invest more in the education and welfare of their children (Subedee et al 2017).

A study conducted by Action Aid in 2014 in Palestine (Morioka and Nicholas 2014) showed similar results. Before participation in Action Aid's savings and loans groups, women did sewing, knitting, and weaving in isolation and mostly for friends and acquaintances. They had limited capacity to negotiate prices with suppliers for raw materials, were inhibited by expectations about appropriate behavior for women interacting with men outside the family, and operated only as processors, depending on others for sales and with little incentive to improve or upgrade. The women selected embroidery, vine leaf packaging, and loofah production as livelihood activities, and the program gave them the knowledge, skills, and confidence to add value to their work. The project eased their financial situation and helped them meet other women and overcome their isolation, as well as providing a much-valued opportunity to learn skills for production and managing an economic venture.

Another successful project took place in Sri Lanka: the 3-year Dairy Enhancement in Eastern Province program, launched in 2009 by Land O'Lakes International Development, the US Agency for International Development, and CIC Agri Business, a Sri Lankan dairy company (Steensland 2014). The program was designed to introduce improved technologies and link smallholder farmers to commercial markets, with the goal of increasing farmers' incomes by 75%. It also helped women move beyond irregular informal sales by developing a market-driven link to a private-sector processor willing to provide a higher farm-gate price. Today, CIC Agri Business is selling 50,000 cups of yogurt and 15,000 small packets of milk for children per day around Sri Lanka, providing a good example of successful scaling up.

Scalability and sustainability of the value chain

In value chain development, scaling up aims to extend long-term benefits to more beneficiaries by ensuring sustainability and providing additional resources and expertise (IFAD 2015), locally or over a larger area. Scaling up generally requires an organized group to ensure that integration in the value chain is viable and sustainable and that there is a regular supply of produce in sufficient quantity, which further improves bargaining power when interacting with private-sector actors along the chain (IFAD 2015; IFPRI 2016).

In Naugad, after the project intervention, BHPC members continued working together to maintain the supply of allo items required by the private sector. Using their improved skills, community members have started to produce high-quality items. The involvement of actors in the allo value chain in Naugad starts with the collection of allo bark from forests and ends with the export of value-added products by SABAH Nepal. Value addition occurs at 3 levels: first, by BHPC members in Naugad; second, at the district capital of Darchula by the traders from Naugad who travel there; and finally, at SABAH Nepal's facility in Kathmandu. After that, the products are either sold in SABAH Nepal's outlets in Kathmandu or exported. The income generated by selling allo products is shared by rural communities and urban entrepreneurs to ensure equitable benefit sharing among actors in the chain and to ensure the sustainability of the chain.

SABAH Nepal has expanded the idea of branding and collective production to other mountain commodities beyond allo. The Kailash–Truly Sacred brand now includes kidney beans, vegetables, dairy products, and medicinal plants from Nepal, as well as churia honey from India. This has led to the adoption of a basket approach that considers a variety of other products in the value chain besides allo, which has contributed to business diversification of the people of Naugad. The Naugad community has been able to make a barter agreement with SABAH Nepal to minimize the risks of a shortage of allo and maintain the business through the supply of other products available in the area. The project has helped community members improve their bargaining skills and enabled them to negotiate equitable prices for their products and thus sustain their businesses. In total, 6 national and international market linkages have been established by the allo producers, including a 3-star hotel in Kathmandu and buyers in India, Japan, and Norway. Allo is supplied in different forms depending on demand. These networks were established when community members participated in the trade fairs in Kathmandu and New Delhi.

As mentioned in the introduction, the textile industry worldwide is looking for alternative sources of natural fiber to reduce dependence on cotton and silk (Radhakrishnan and Preeti 2015). In Uttarakhand in India, van panchayat user groups (community-based forest management groups), started cultivating nettle fiber after realizing its potential to ensure secure alternative livelihood options (Radhakrishnan and Preeti 2015; Debnath et al 2017). Allo is widely distributed in subtropical to temperate areas across the Himalayan region, including Bhutan, China, India, Myanmar, and Nepal (Singh and Shrestha 1985, 1988; Radhakrishnan and Preeti 2015; Debnath et al 2017). Considering the resource availability and growing interest of local communities, the community-owned enterprise model introduced in far west Nepal has the potential for extension not only to other parts of Nepal but also to neighboring areas in Bhutan, China, and India. However, before promoting the approach, it is important to conduct a preliminary study of local conditions, as was the case before the project described here (ICIMOD 2017). This analysis found that although allo is a high-value product with substantial scope for value addition within the community, there is a risk of inadequate quality control, which may lead to difficulties in competing in international markets. In addition, the production of allo fiber at the local level is not cost effective, and because of the limited technology for and tedious nature of allo extraction, processing, and thread-making, allo-based entrepreneurs may lose interest, even though nettle products are emerging as one of the most important souvenir items in the tourist trade. Such findings need to be taken into account in developing a value chain project.