Livelihood Based Agri Business and Market Studies for North East Rural Livelihood Project
Final report, Sikkim April 2011
Submitted by
MART A-32, 1st Floor, Sector 17, Noida - 201 301 Tel: 0120-2512140, Fax: 0120-4273995 www.martrural.com
Livelihood based Agri Business and Market Study in Sikkim
Acknowledgement
At the onset, we extend our thanks to DoNER for giving us this opportunity to undertake this important livelihood study under NERLP.
We thank Mr. Alok Kumar Shrivastava, Project Director, NERLP and his entire team at Guwahati for their constant guidance and unconditional support during the entire study period. A number of meetings with him and his team at Guwahati and Delhi helped in smooth completion of the assignment. We would again like to thank him for his and team support for facilitating the stakeholders’ workshops in states. NERLP feedback on draft report has helped us improve it suitably to make it a useful project document.
We would like to sincerely thank Mr. Biswajit Sen, Senior Rural Development Specialist, and Mr. Nathan M. Belete, Senior Rural Development Economist at World Bank for their constant support in ensuring completion of the study; the first meeting at World Bank office along with PD, NERLP helped finalize the report templates. Subsequently, the initial feedback after the first field visit has helped in finalizing selection of 5 economic activities for undertaking detailed value chain analysis in the state. We would also like to thank Mr. Varun Singh, Social Development Specialist at World Bank and Dr. Amarendra Singh for their valuable feedback on the study.
We would also like to thank Shri A. K. Ganeriwala, Secretary RMDD, Dr. S. Tambe, Special Secretary RMDD and Shri D. T. Bhutia, State Coordinator NERLP for their critical support and wonderful coordination to make the study a reality. We would like to thank all state level officials and resource persons including Mr. A. K. Singh, District Collector, Namchi, Mr. J. S. Raje, SDM, Soreng, Dr. P. Senthil Kumar, MD, Sikkim Milk, Mr. B. Swaroop, MD, SIMFED, Mr. R. Gurung, CEO, ECOSS, Mr. Raj Basu of Help Tourism Private limited, Mr. J. C. Biswas DDM, NABARD, Mr. B. K. Rai, Joint Director HCCD, Dr. K.C. Bhutia, Joint Director, AHVS, Mr. B. Subba of VHAS, Mr. Vishal Mukhia, BDO, Sikkip and Ms. Chandrakala Rai, Deputy Director, SIRD who spared their valuable time to provide us important information and relevant documents. We particularly thank all the stakeholders present in the two highly informative and fruitful workshops conducted at Gangtok on 23rd August 2010 and 9th February 2011 for their invaluable contributions and feedback in guiding and finalizing the study.
We would also like to thank all SIRD, HCCD and AHVS staff who facilitated and organized village meetings and also accompanied us in villages.
We would like to thank a large numbers of villagers, SHG members, cooperative society office bearers, entrepreneurs who spent their valuable time with us in field and also a number of market players including wholesalers and retailers, processing units, transport services and various other support services at Gangtok and district markets.
MART Team
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Livelihood based Agri Business and Market Study in Sikkim
Contents Abbreviations and Glossary of terms ...... 5 Executive Summary ...... 6 Chapter 1: Background and methodology ...... 12 1.1. Background ...... 12 1.2. Objectives of the study ...... 12 1.3. Approach of the study ...... 13 1.4. Key features of study methodology ...... 14 1.5. Limitations of the study ...... 15 Chapter 2: State Profile and Livelihood Issues ...... 16 2.1 State profile ...... 16 2.2 Key indicators for project districts ...... 17 2.3 Rural livelihood and poverty issues ...... 17 Chapter 3: Livelihood Profile ...... 20 1.1 Overall Livelihoods Profile ...... 20 1.2 Infrastructure and Resource Profile ...... 22 1.3 Banking and SHG Profile ...... 24 1.4 Market Profile ...... 25 1.5 Land based livelihoods ...... 27 1.6 Floriculture ...... 32 1.7 Live stock based livelihoods ...... 33 1.8 Service based livelihoods ...... 35 1.9 Rural tourism...... 37 Chapter 4: Value Chain Analysis ...... 38 4.1 Introduction ...... 38 4.2 Summary of suggested interventions ...... 40 4.3 Value Chain of Dairy ...... 43 4.4 Value Chain of Ginger ...... 54 4.5 Value Chain of Pig ...... 68 4.6 Value chain of Floriculture ...... 78 4.7 Value chain of Homestay Rural Tourism ...... 90
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List of secondary sources/references ...... 103 Annexure ...... 104 Annexure 1: Some Steps taken by the State Government ...... 104 Annexure 2: List of participants for the stakeholder consultation workshop ...... 107 Annexure 3: List of select stakeholders met during the field visit ...... 108 Annexure 4: Support plan for Dairy development in the NERLP Project Area ...... 110 Annexure 5: Sikkim State Stakeholders Consultation Report ...... 116
List of Tables
Table 1: Key Indicators for project districts ...... 17 Table 2: Surveyed Villages ...... 20 Table 3: Infrastructure Profile ...... 22 Table 4: Market Facilities ...... 25 Table 5: Market Profile ...... 26 Table 6: Cropping Pattern vis a vis Households ...... 28 Table 7: Seasonality of Crops ...... 29 Table 8: Average Investment size ...... 30 Table 9: Average Selling Prices of crops ...... 32 Table 10: Household Involvement in livestock based livelihoods ...... 34 Table 11: Household involvement in service based livelihoods ...... 35 Table 12: Skill levels in service/nonfarm based livelihoods ...... 36 Table 13: Summary of suggested interventions ...... 40 Table 14: Extension services in Dairy ...... 47 Table 15: Constraint Solution Matrix for Dairy ...... 49 Table 16: Financial plan for Dairy farming ...... 51 Table 17: Sensitivity Analysis forDairy ...... 52 Table 18: Implementation plan for Dairy ...... 52 Table 19: Constrain Solution Matrix for Ginger ...... 62 Table 20: Financial plan for Ginger cultivation ...... 64 Table 21: Sensitivity analysis for Ginger ...... 65 Table 22: Implementation plan for Ginger ...... 66 Table 23: Comparative weight gain analysis of 2 pig varieties ...... 71
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Table 24: Constraints Solution Matrix for Pig rearing ...... 72 Table 25: Financial plan for pig rearing ...... 74 Table 26: Sensitivity Analysis for pig rearing ...... 75 Table 27: Implementation plan for pig rearing ...... 76 Table 28: Comparative analysis of different flowers ...... 80 Table 29: Constraints Solution Matrix for Floriculture ...... 84 Table 30: Financial plan for Floriculture (Alstroemeria) ...... 86 Table 31: Sensitivity analysis for Floriculture ...... 87 Table 32: Implementation plan for Floriculture ...... 88 Table 33: Constraints Solution Matrix for Homestay...... 96 Table 34: Financial plan for Homestay ...... 98 Table 35: Sensitivity Analysis for Homestay ...... 99 Table 36: Implementation plan for Homestay ...... 100 List of Box items Box 1: Study Framework ...... 13 Box 2: MART's 3M Model ...... 15 Box 3: Value chain analysis framework ...... 38 Table of Figures Figure 1: Sikkim: Area and landuse Map ...... 21 Figure 2: Cropping Pattern ...... 27 Figure 3: Consumption vis a vis Marketable Surplus ...... 30 Figure 4: Crop Marketing Channels ...... 31 Figure 5: Sikkim milk production estimate ...... 43 Figure 6: Value chain map of milk ...... 45 Figure 7: Production trends of Ginger ...... 54 Figure 8: Value chain map of Ginger ...... 57 Figure 9: Value chain map of Pig ...... 70 Figure 10: Value chain map of Flowers ...... 81 Figure 11: Value of Tourism Projects in Sikkim ...... 91 Figure 12: Value chain map of Homestay rural tourism ...... 94
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Abbreviations and Glossary of terms APRLP Andhra Pradesh Rural Livelihood Project AHVS Animal Husbandry and Veterinary Sciences Department DoNER Ministry of Development for North Eastern Region DRDA District Rural Development Agency FGD Focus Group Discussion FYM Farm Yard Manure GPU Gram Panchayat Unit GNP Gross National Product GSDP Gross State Domestic Product HCCD Horticulture and Cash Crop Development Department HDI Human Development Index Hul Unit of land Ishkus Squash, a fruit bearing creeper used as vegetable Kg Kilogram Kms Kilometers MART A leading livelihood and marketing consultancy agency MFI Micro Finance Institution MPDPIP Madhya Pradesh District Poverty Initiatives Project MT Metric Ton NABARD National Bank for Agriculture and Rural Development NERCRMP North Eastern Region Community Resource Management Project for Upland Areas NERLP North East Rural Livelihood Project MGNREGA Mahatma Gandhi National Rural Employment Guarantee Act NREGS National Rural Employment Guarantee Scheme NSDP Net State Domestic Product OTELP Orissa Tribal Empowerment and Livelihood Program RBI Reserve Bank of India RGVN Rashtriya Gramin Vikas Nidhi ROI Return on Investment RMDD Rural Management and Development Department Rs Rupees SGSY Swarnjayanti Gram Swarozgar Yojana SHG Self Help Group Sikkim Milk Sikkim Cooperative Milk Producer’s Union Limited SIMFED Sikkim State Cooperative Supply and Marketing Federation Limited SIRD State Institute of Rural Development SISCO Bank Sikkim State Cooperative Bank Ltd SHRA Sikkim Hotel and Restaurant Association TASS The Travel Agents Association of Sikkim (TASS) VAT Value Added Tax WORLP West Orissa Rural Livelihood Project
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Executive Summary
The North East Rural Livelihood Project (NERLP) of the Ministry for Development of North Eastern Region (DONER), Government of India, aims to address rural poverty in the region through creation of sustainable livelihood for the rural poor, particularly for women. The project has commissioned ‘Livelihood Based Agri Business and Market study’ in Sikkim, Mizoram, Nagaland and Sikkim to MART, a leading livelihoods and marketing consultancy, which was selected to conduct the study in all four states. MART signed a MoU with DoNER and closely coordinated with Project Director, NERLP based at Guwahati for finalizing study design, plan, fieldwork and information to key state stakeholders. The primary objective of the study is to assess economic opportunities in both farm and non-farm activities in the project area. NERLP assumes that intensive and innovative use of these local opportunities can result in enhanced livelihood opportunities and incomes for the communities. MART used 3M approach for the study that looks at ecosystem at the village level, market and enabling environment to analyze the livelihood scenario and challenges. Study looked at existing resources, skills, infrastructure and support services, markets for poor, major livelihoods of poor involved in agriculture, livestock and non-farm activities to suggest practical interventions. Study followed an 8-step approach involving secondary literature review, stakeholders’ consultation, preliminary field visits, village and market survey, writing draft report and final report after receiving feedback from NERLP and the World Bank. MART covered 13 villages with DRDA support and conducted FGDs and individual interviews with villagers, state and district officials. Market study involved interviews with wholesalers and retailers, traders, transporters, entrepreneurs, cooperatives and processing units based at South district, West district and Siliguri. MART coordinated with Project Director, NERLP during the entire study period for finalizing study design, plan, fieldwork and information to key state stakeholders. MART used 3M approach for the study that looks at ecosystem at village level, market and enabling environment to analyze the livelihood scenario and challenges and accordingly suggest practical interventions. Sikkim is rich in natural resources and one of the most sought after tourist destinations of India. In 2015, the number of tourists visiting the state is expected to be around 7.93 lakhs (Department of tourism) which is more than the existing population. The community consists mainly of Nepalese, Lepcha and Bhutia community with Hinduism and Buddhism being the major religions. Land ownership in Sikkim is restricted to two types only; government land and private land with no common land or panchayat land. The NERLP project area of South and West districts of Sikkim is the most poverty stricken area with acute water shortage. Almost 1/3rd land of the project area is unfit for agriculture. There is a strong need for land development activities to promote cultivable crops. The area is also prone to natural disasters like landslides which affect the transport and communication very severely. There are about 2000 SHGs formed by State Rural Development Agency and other NGOs all across the state of which around 1300 are in the NERLP project area with almost 100% coverage of the poor under SHGs. The SHGs are also federated in some cases although the linkages and institutional structure of these federations are reported to be weak and needs strengthening. The poor in Sikkim is also reported to have low levels of business and marketing skills.
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MGNREGA is reported to be functioning satisfactorily in the state with a very high (around 80 days) average person days of work being generated. All 163 panchayat units of the state have gone through social audits. The government has taken up a drive towards financial inclusion by promoting business correspondent models using biometric cards for payments and other financial service extension in rural areas. Under the Sikkim Universal Financial Inclusion Project, the government has taken a target to open savings account for 7500 married rural women across Sikkim and provide doorstep banking services including health, life and property insurance through the business correspondent model. The government is also implementing a unique housing policy to make the state free from “kachha houses” by 2011. It is also worth mentioning that Sikkim is one of the few states in the country to have received “Nirmal Rajya” award following achievement of almost 100% sanitation. The Government also has a special focus on promoting organic agriculture/horticulture/milk produce through Sikkim Organic Mission. The State Institute of Rural Development (SIRD) is also actively implementing livelihood schemes on Apiculture and floriculture under SGSY special projects. The extension departments of the government provides free of cost training and exposure apart from inputs like seeds, bio fertilizers, cattle feed and also infrastructure support like poly-houses, tools, implements etc. It was also observed that most government schemes routed through the line departments of Agriculture, Horticulture, Animal Husbandry etc. do not have specific schemes for the poor and and thus there is little pro-poor focus in the implementation of these schemes. All surveyed villages have mobile network coverage, bank, post office, milk collection centre, roads, skill training centres, transport services, drinking water, electricity, school building, veterinary department, agro cooperatives and haats. While 80% villages had marketing cooperatives and access to nurseries, 90% of the surveyed villages had community buildings, too. About 40% of the villages had irrigation facilities in the form of springs and rivulets. However, access to cold storages and forest godowns is low; around half of the surveyed villages had access to market yards. Recently a few floriculture cold storages are also opened in the state. Since paddy is sparsely grown paddy hullers are found in only 20% villages. About 90% of the surveyed villages are connected by all weather roads which are frequented by private jeeps and taxis along with occasional buses run by Sikkim Nationalized Transport. While all surveyed villages had access to 24 hour electricity, approximately 80% population in all the villages had mobile phones. The stakeholders feel that in spite of the progressive actions from the government regarding livelihood promotion, the participation of the poor in the aforesaid programmes is less and there is an ardent need of community level institutions like cooperatives, farmers’ groups, producers’ company etc. The government has also taken policy level decisions to promote and encourage cooperative systems in the state by awarding all government contracts and tenders for supply of materials and construction to registered cooperatives only. However, the participation of the poor and the needy in these cooperative institutions are still areas of improvement. There are five apex level cooperative bodies in the state which are Sikkim State Cooperative Supply and Marketing Federation Ltd (SIMFED), Sikkim State Cooperative Bank Ltd (SISCO Bank), Denzong Agriculture Cooperative Society Ltd, Sikkim Cooperative Milk Producers’ Union Ltd and Sikkim Consumer Cooperative Society Ltd.
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There are 16 bank branches in South District and 9 in West District. While deposits have registered a healthy growth rate in 2009-10 (19.66% in South District and 25.94% in West District), the growth rate of loan outstanding is surprisingly low (10.32% in South District and 3.99% in West District). SISCO bank is a major stakeholder in extending financial services to the rural poor and Kisan Credit card being the major financial product for on-farm credit. Credits to farmers are routed through primary agriculture credit societies at the village level. The credit portfolio of SISCO bank in the South District has been mainly for financing Ginger cultivation, dairy and piggery and also SGSY and non SGSY activities. The major SGSY activities sanctioned by the South district branch are floriculture, goat rearing and vegetable cultivation. Other activities supported and financed through SHGs and SHG federations are marketing of hill broom, piggery, ginger cultivation, wool knitting etc. The rural community has been found to be more or less financially disciplined with around 6.7% NPA of the South district branch of SISCO Bank. However the banks and financial institutions were found to be very conservative in extending adequate and timely loans to poor. Activity specific funding based on practical return on investments need to be promoted. Government administrative officials stated that implementation costs of central government funded schemes are very high in Sikkim due to extremely difficult terrain, high cost of transportation, inputs and labour. Although an allowance for hilly areas exist for some schemes, they are found to be largely inadequate. It is also worth mentioning that Sikkim has the highest per capita central assistance in the country (planning commission). It was also suggested by the stakeholders that NERLP needs to promote certain potential activities in a cluster based approach to achieve economies of scale and build cost effective aggregation and marketing models around the same. The cluster approach will also help in minimizing costs of support service extension and reduce transport costs for input supply and output marketing. It was also suggested that local level resource persons be engaged in motivating community for enhanced participation in the project. There are no regulated markets or mandi for farm based produce in Sikkim. The major feeder and terminal market of Sikkim is Siliguri which is in West Bengal. Jorethang, due to its strategic border location between South District, West District and West Bengal is the next important market after Siliguri. Other important town level markets are Namchi, Namthang, Ravongla etc. Permanent shops exist in all villages, vendors and traders all villages in deal in agriculture, allied and non-farm activities. Most GPUs have access to weekly markets all across the state which offer producers the opportunity of selling directly to consumers. A wide range of crops under agriculture and horticulture are cultivated all across Sikkim. Maize is chiefly cultivated in the area but as a fodder crop. Paddy is cultivated only in patches. 100% paddy and maize are consumed at the household level. The project area cultivates ginger as a principal cash crop. A shift in the winters and prolonged summers in the state is being attributed for the downfall in quality and quantity of large cardamom produced in the state. Sikkim otherwise is the largest producer of large cardamom in the country. All types of vegetables like cabbage, cauliflower tomato, potato, peas, cherry chilli, Squash etc. are also cultivated. While most vegetables are primarily for self consumption potato, tomato, chilli and Squash are regularly sold in the market. While high valued cash crops are sold through town level traders, vegetables and other crops are often sold through weekly haats and village level traders. Floriculture has picked up pace in the state with the
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government putting a lot of effort in promoting the activity by providing free of cost inputs, infrastructure development, capacity building and handholding. SIRD is also promoting a special SGSY scheme around floriculture in the project area. The major markets for flowers are SIMFED and Mainam Gardens which are currently absorbing most of the produce. Sikkim has a strong base of Livestock based rural livelihoods. Around 73% of population engaged in animal husbandry sector is women. Animal husbandry and fisheries sectors together engage 3.7 lakh populations. The total employment in animal husbandry and fisheries is around 9.05% of the total work force. All villages surveyed were found to have 60-65% dairy and pig farmers. Sikkim is a milk surplus state with Sikkim Milk producer’s Co-operative Limited (Sikkim Milk) being the biggest player in Dairy in the State. More than 12,000 dairy farmers through nearly 280 co-operative societies are registered members of this cooperative. More than 15,000 litres of milk are being processed everyday by the cooperative resulting in incomes to the tune of Rs 60 lakhs per month to dairy farmers. An average household has 3 cows of local variety with average 6 litres of milk output per day. After a household consumption of 1-2 litres the average household sells off the surplus to the milk collection centres in the GPUs. The state government has launched dedicated missions on Poultry and Dairy to enhance livelihoods promotion initiatives under these activities. The poor in Sikkim are reported to have low levels of business and marketing skills. The rural youth of Sikkim was reported to be mostly literate but lacking in specialized vocational or employability skills. As a result most vocational jobs like that of cook, plumber, electrician, barbers etc in the state constitute of non locals. The state and district level stakeholders interacted shared the view that there is a lot of potential for the local youth to be absorbed in the hospitality industry provided they acquire required skills. Apart from targeting to be a poverty free state by 2015, there has been substantial focus of the government to create employment avenues through creation of Livelihood Schools (vocational training centres) for youth in all constituencies of the state. These Livelihood Schools are to be managed by the State Institute of Capacity Building headquartered at Jorethang and having state of the art infrastructure for imparting trainings. Most surveyed villages had people in government service, teaching and army etc. fixed jobs. Incidence of private jobs is very low. Carpentry, construction and driver are certain skills in which a considerable number of households were engaged. Women possess traditional skills like food processing and knitting but very few use these skills for business purposes. Rural tourism is one of the most upcoming sectors in Sikkim which has potential to provide employment and address poverty. Most SHGs in Sikkim have less than nine members and no age bar. The members of SHGs make average monthly savings of Rs 50 to 100, and are found to be actively involved in inter-group loaning at rates of interest ranging from 24% to 60% per annum. However, there is a risk aversive behavior when the same loan is routed from banks at lower rates of interest. SHG members were found to be taking loans from SHG funds primarily for consumption purposes with a section of productive loans for ginger cultivation, piggery and poultry activities. Most activities taken up by SHGs under SGSY are at individual levels only. Many SHGs have experimented with activities like paper bag making, pickle making, knitting, mushroom cultivation etc. but have faced marketing problems for their produce. There are number of activities that project can promote among the poor that includes potato cultivation, vegetable cultivation, fish culture, pineapple cultivation, piggery, goatery, pulse cultivation, cow rearing, rubber plantation, and areca-nut cultivation. However, five activities namely
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potato, vegetables, fish culture, pineapple and pulses have been shortlisted in consultation with PD, NERLP and the World Bank staff for a detail value chain analysis using criteria such as interest and capacity of poor, possibility of engaging large number of poor, project mandate, market demand and gestation period. Value chain helps to identify opportunities for poor at every stage of product movement from producers to consumers based on which intervention strategies can be designed. The supply for select five products in the state is less compared to their demand and therefore, these can be promoted in the state. All five products are feasible from technical, market and economic point of view. The key constraints involved in value chain products are high costs of initial investment, use of traditional practices, low productivity levels, and low affinity among farmers for collective inputs sourcing and output marketing. The suggested interventions and size of investments along with partnership potential regarding the selected products are as follows: Produce Intervention Size of activity suggested Convergence and / Suggested Unit of Fund RoI partnership Product activity requireme (%) potential nt (Rs) Cow Milk Improved practices 3 cross bred 151598 29.4 AHVS department and in dairy farming cows per 3 Sikkim Milk union. both project house hold districts
Ginger Improved package 1 acre 24300 73.6 Wholesalers, HCCD of practices for Department, SIMFED, Ginger cultivation Progressive farmers and in both project Financial institutions districts Pig Rearing of 6 pigs (5 209234 36.2 Wholesalers and retailer, American female and 1 Inputs suppliers , Hampstead variety male) per Progressive farmers, of pig by adopting household Financial institutions improved package And AHVS department of practices Floricult Cultivation and 400 saplings 263200 10.9 HCCD Department, ure marketing of under 1 poly SIMFED, Mainam Gardens, Alstroemeria house of 90 ft Other Wholesalers and flowers by 22 ft retailers, Inputs suppliers , Financial institutions and Progressive farmers Rural Promotion of 1 household 462400 20.3 Tourism Department, tourism Homestay based constructing various cooperative Rural Tourism additional societies involved in rural room for 4 tourism, ECOSS, Help persons tourism, TASS etc
The activities to be performed by the project involves selection of beneficiaries and cluster, social mobilization and institution building of poor, preparation of business plan with the community, organize technical and business trainings, market exposure visits, establish backward and forward linkages with resource agencies, facilitate market linkages and monitoring and evaluation, and promoting higher order institutions such as federation and producer groups for collective actions.
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Project needs to create a chain of marketing professionals at head office, state level and district level and para professionals at the village level to execute the implementation plan.
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Chapter 1: Background and methodology
1.1. Background
The North East Rural Livelihood Project (NERLP) of the Ministry for Development of North Eastern Region (DONER), Government of India, aims to address rural poverty in the region through creation of sustainable livelihood for the rural poor, particularly for women. The project has commissioned ‘Livelihood Based Agri Business and Market study’ in Sikkim, Mizoram, Nagaland and Sikkim.
MART, a leading livelihoods and marketing consultancy, was selected to conduct the study. MART held discussions with DONER team at New Delhi and signed a MoU. MART placed a two member team for each state to coordinate the study. MART maintained close coordination with Project Director, NERLP based at Guwahati to facilitate the study.
1.2. Objectives of the study
The primary objective of the study is to assess economic opportunities in both farm and non-farm activities in the project area. NERLP assumes that intensive and innovative use of these local opportunities can result in enhanced livelihood opportunities and incomes for the communities. The study evaluates livelihoods and opportunities on the basis of the following two components: 1.1.1 Infrastructure, resources and support services Identify major livelihood occupations of the rural community, categorize them according to geographical, ecological and watershed clusters and assess their viability based on local resources, infrastructure, support services, technology, policy environment and potential for growth. Suggest strategies to enhance income and nutritional security from the existing livelihoods through improved productivity, access to inputs and markets, capacity building, and collective action in marketing to achieve economic scale. Provide guidance in agriculture and horticulture development, changing demand and supply scenario, projection of future trends to ensure that farmers are able to face the challenge of negotiating on an equitable basis with market players. 1.1.2 Value chain analysis Shortlist major high growth subsectors and commodities for value chain analysis where the project can intervene to benefit the poor. Prepare value chain map for key products/commodities/services reflecting economic return at every stage, product movement from the rural producers to the final consumers. Identify major players in technology, markets, finance, and inputs contributing to value chain, and explore partnership possibilities with them. Identify infrastructure availability and institutional arrangements for input supply and output marketing. Identify constraints and institutional obstacles, social process, vulnerabilities and risks hampering benefits to the poor along the value chain. Identify critical investment needs in the value chain that can accrue better income to the poor.
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Prepare techno economic feasibility guideline for setting up small, viable and sustainable processing units to impart value addition and longer shelf-life to-farm products.
1.3. Approach of the study
Box 1: Study Framework
Activities Key Steps Outputs
Reviewed of project literature and Developed better understanding of the reports Step 1 study and project states Studied livelihoods initiatives such as Pre study Finalised study design and plan NERCRMP in north east states. preparation Project Director sent intimation to state Studied secondary reports rural development office regarding Met World Bank and Project Director, MART field visit and coordination NERLP at New Delhi to discuss support study design
Met state nodal officer, rural List of key stakeholders finalised for development department officer at Step 2 meeting Agartala Initiation Feedback on livelihood constraints and Meeting with DRDA and line meeting at opportunities in the state department officers state and Finalized approach and methodology Shared study approach and district level methodology Understand NERLP objectives
Interacted with key stakeholders Shortlisted 10-12 major products for from line departments such as Step 3 promoting in the state and value chain agriculture, horticulture, animal Fieldwork -1 analysis husbandry, resource agencies, and (Interactions Prepared list of stakeholders and value key market players with key chain players and service providers Visited three villages in two project stakeholders) Finalized plan for Fieldwork-2 districts Generated list of livelihood activities
Met with World Bank staff and Finalised five products i.e. Ginger, Dairy, Project Director, NERLP at New Step 4 Pig rearing, Floriculture, and Rural Delhi to share fieldwork-1 Initiation Tourism for value chain analysis observations and experience Report Submitted initiation report containing Discussion to finalise products for livelihood profile and issues, overall taking up value chain analysis approach and methodology, and field visit plan Finalized field visit plans Completed livelihood survey in villages Placed field teams Step 5 and markets Visited 10 villages in two districts and Fieldwork -2 Collected information for value chain interviewed producers/farmers (Interactions analysis of 5 products by meeting value Met market players in wholesale and in villages chain players retail markets at Agartala and project and markets) districts.
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Met line-department officials
Livelihood analysis Draft report as per study objectives and Value chain analysis for 5 products Step 6 feedback of World Bank and PD, NERLP Data analysis Draft Report Report writing
Share draft report through power Agreed feedback of stakeholders on the point presentation to World Bank, Step 7 draft report DoNER staff and other stakeholders Stakeholders Content for final report finalized as suggested by the PD, NERLP consultation Stakeholders consultation workshop workshop to report share Draft Report
Feedback incorporated from Final report as per study objectives stakeholders consultation workshop Step 8 defined earlier report Final Report
1.4. Key features of study methodology
MART coordinated with Director, Ministry of DoNER and Project Director, NERLP, Guwahati for finalizing study design, plan, fieldwork and intimation to key stakeholders. The Project Director, NERLP intimated the state government’s rural development department about the proposed study to seek their cooperation during the field visit. Additional Secretary, Rural Management and Development Department introduced MART team to district level officials of both project districts and also facilitated meeting with heads of government agencies at state level. MART team got in touch with officials of both project districts to finalize village selection for undertaking village survey and meeting with state line department officials. Line department, NGO and SIRD staff accompanied MART for village visit and facilitated meetings with villagers.
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MART used 3M approach to capture the existing livelihood scenario as described in Box 2. Box 2: MART's 3M Model 3M is a systematic approach to livelihood based on the three tenets of micro finance, micro market and micro planning. The model primarily provides a tool to systematically map the local resources, skills, support services, markets and enabling environment for developing business plans. This process of 3M is as follows: surveys are conducted to assess the current available resources as well as the existing market demand. Once established, the levels of supply and demand determines the selection of appropriate livelihoods activities.
Analysis of information collected from villagers, market players and enablers leads to field based practical strategies to successfully launch and manage the activities. MART has extensively used 3M (Micro Finance, Micro Market and Micro Planning) Model for livelihood promotion, for resource mapping under various poverty alleviation projects across India such as APRLP, WORLP, OTELP, APDPIP, MP-DPIP and Rajasthan-DPIP. Based on its successful implementation a User Manual has been prepared with support of DFIDI and CARE India for its replication by agencies engaged at grass root level in poverty alleviation. The model has been presented at national and international seminars in USA, Philippines, Sri-Lanka and Thailand.
The fieldwork was planned in two phases: in the first phase knowledge of major livelihood activities was gathered through discussions with stakeholders at the state and district levels and popular activities were selected for the study; in the second phase, value chain analysis of the livelihood practices, productivity and marketing challenges was done. Ten villagers were visited in two project districts and information was collected from villagers through Focus Group Discussion (FGD). Individual interviews were conducted with farmers/villagers engaged in shortlisted activities for value chain analysis. List of villages are mentioned in Chapter 3. Interviewed value chain players like the producers, wholesalers, retailers, traders, transporters, entrepreneurs, processors, cooperative agencies and government institutions at village, block, district, and state level. List of stakeholders met is annexed.
1.5. Limitations of the study
The information from villagers was collected using FGD approach and therefore primary data collected from them may not exactly match with data available with government department. Market related data has been collected from wholesalers and retailers in the wholesale and retail markets by conducting interviews. Therefore, accuracy of data may not be entirely reliable. Discrepancy has been noticed in various state level data available from various secondary sources. Self judgment has been used while using the data from a particular source. The value chain analysis of each products and the intervention plans have been worked out after interactions with entrepreneurs, best practitioners, market players and enabling agencies. The unit costs and return on Investments may vary from circulated and published unit costs and return on Investments by different agencies like the line department and NABARD.
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Chapter 2: State Profile and Livelihood Issues
2.1 State profile
The Location: Sikkim is placed between latitudes of 27° 5' N to 20° 9' N Map 1: Sikkim District Map and longitudes of 87° 59' E to 88° 56' E. Positioned in north-east, Sikkim is the second smallest state of India. Sikkim is sandwiched between Nepal in the west and Bhutan in the east, China in the north and West Bengal in the south. The Indian border of Sikkim is shared only with the state of West Bengal.
The Land: Oblong in its shape, Sikkim lengthens 114 kms approx. from north to south and broadens 64 kms approx from east to west. Sikkim covers an area of 7,096 km². Highly dominated by mountainous terrain, Sikkim gets water from rivers like Teesta and Rangeet. The State receives an Annual Rainfall of 2000mm to 4000mm.Roughly three-quarters of its perimeter, enfolds the east and the west, incorporating the complete northern borderline. The southern fringe of Sikkim is the only liberated edge that is open to West Bengal.
The whole setting makes a horseshoe corral, which acts as a trap for moisture-laden winds from the Bay of Bengal. Consequently, Sikkim receives plenty of rain showers round the year. With the elevation ranging from 280 m (920 feet) to 8,585 m (28,000 feet), Sikkim has diverse climate ranging from tropical to tundra. The geographical statistics of Sikkim is probably the reason for the rich collection of flora and fauna in this small state.
The People: The population of Sikkim is 540851 (2001 Census) with around 20.6% Scheduled Tribe population and 5% Scheduled Caste. The population density of the state is 76 persons per square kilometer with 36.55% population below poverty line. 68.8% Sikkimese are literate.
Sikkim has an interfusion of diverse communities, cultures, religions and customs. In Sikkim, the leading communities are the Lepchas, Bhutias and Nepalese. However, the municipal areas are dominated by the plainsmen, who have settled there, owing to their businesses and Government services. The developmental activities in Sikkim like construction of roads, bridges, buildings etc, have informally invited migrant laborers from the plains and Nepal.
The Lepchas: The Lepchas are said to be the original inhabitants of Sikkim. They used to reside in Sikkim, long before the migration of Bhutias and Nepalese. The original Lepchas were believers of the bone faith or mune faith. The faith was essentially based on spirits, good and bad. They used to worship spirits of mountains, rivers and forests. Constituting only 13% of the total population of Sikkim, Lepchas are concentrated in the central part of Sikkim. Lachen, Lachung River and Dickchu are the prominent places of Lepchas.
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The Bhutias: The Bhutias are people of Tibetan origin. After the 15th century, these people migrated to Sikkim. The northern part of Sikkim is basically inhabited by the Bhutias. These people speak 'Sikkimese' language. If compared with the Lepchas, the Bhutias are dominating large number of villages constituting around 16% of the total population of Sikkim,
The Nepalese: In Sikkim, the Nepalese came long after the Lepchas and Bhutias. They migrated to Sikkim in huge numbers and rapidly, emerged as the leading community. In the present day, the Nepalese constitute 67% of the total population of Sikkim. These people commenced terrace farming in the state. Cardamom is an important cash crop that was cultivated by the Nepalese. The Nepalese are sub-divided into various castes and tribes like Bawans (Brahmans), Chhetries, Gurungs, Tamangs, Rais, Limbus, Magars, Damais, Kamis etc.
The Economy: The State is one of the most bio-diverse areas in the country, suitable for a large variety of Agro/horticultural crops. Approx. 11% of the total geographical area is under agriculture. Cultivators account for the greater majority of the people in the state with 57.84%. The importance of agriculture can be judged by the high percentage of population approx. 65% engaged in it Agricultural labourers as a whole constitute only 7.81% of the workers in the state. Animal husbandry is also an integral part of the house hold economy of the region. The past one and half decade has witnessed a tremendous upward swing in various development programs giving a new thrust to the Sikkim economy. This process has increased wage employment opportunities. Though most of the inhabitants are basically agriculture, they have diversified into tertiary jobs such as Government services.
2.2 Key indicators for project districts
Table 1: Key Indicators for project districts
Indicator State South District West District Population (Census 2001) 540851 131525 123256 Total area (square kilometers) 7096 750 1166 Percentage of total population 100 24.31 22.79 Total Number of Households (2009) 76813 20380 23851 Households who have availed no 5973 1827 1397 benefits from Government schemes Number of SHGs (as per SIRD) 2000 737 537 Number of bank branches 80 13 10 Average population per branch 6761 10117 12326 Source: “Sikkim in Brief 2005”- Government of Sikkim, RMDD census 2009, NABARDs
2.3 Rural livelihood and poverty issues (Source: Rural Management and Development Department and Human Development Report 2001)
Being the highest, steepest and remotest state in the country poses unique challenges for sustainable development. Inaccessibility, marginality, fragility in physical terms lead to a limited base for sustaining livelihoods and result in a higher degree of vulnerability, risks and uncertainty in realizing the outcomes of livelihood activities. Any activity conducted by the poor is restricted in terms of access to markets and
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support services. Market information is also restricted in remote villages where the markets are mostly controlled by middlemen. The major feeder and terminal market of Sikkim is Siliguri which is in West Bengal. The state is also dependent upon West Bengal for the major railway junction of the area which is New Jalpaiguri and the only airport in the area which is Bagdogra. Though per capita resource is high, productive resource or asset base is limited.There are a total of 26 Developmental Blocks, 163 Gram Panchayat Units, 891 Gram Panchayat Wards (GPW) in the State.
Primary sector employs about 50% of the working population, 12% are in government jobs and about 10% are self employed. Slightly more than 5% of the total rural population was found to be unemployed, which along with the issue of underemployment is a matter of concern. Unemployment is highest in villages with higher levels of education and those that are adjacent to urban areas. The multifarious development schemes of the government are omnipresent and 5973 households (less than 8%), have indicated in the State census 2009 that they have not received any benefits from the state government so far.
Of the total rural area of 1633 square kms, dry land farming constitutes 53%, 21% is wasteland, 19% is under large cardamom plantations, and 7% is irrigated and is under paddy cultivation. Taking into account the sharp decline in large cardamom production, nearly 40% of the private land is non-productive and mostly a waste land as far as rural livelihoods is concerned. The productive resource base in rural areas is only a fraction of the total resource owned. Ninety percent of the State population is rural and agriculture is the primary source of livelihood for the villagers. However, the contribution of agriculture to the state GSDP has been showing a declining trend, indicating a stagnation and reduction in incomes due to reduction in productivity and production of the major cash crops, namely, ginger, large cardamom and orange which are facing pathological problems leading to low income levels in the villages. The sectoral contribution of agriculture to the GSDP has been declining from 52% (1980-81) to 21% (2004-09).
Limited irrigation coverage, mostly rain fed farming, high percentage of wasteland, coupled with reduction in production and productivity of horticulture crops has resulted in stagnation in farm income. Consequently, the demand for non-farm employment from the rural households has been sizeable and nearly 52,000 rural households out of 90,000 were provided employment under MGNREGA during 2008-09. There are limited employment opportunities in the urban areas as well to attract seasonal migration. Also, there is a general reluctance amongst the simple hill folks to venture outside the state in search of employment. The demand for non-farm employment is during the period October to March, which is the dry season as well as agriculturally lean season. Employment opportunities for educated youth in secondary and tertiary sectors are very limited resulting in high scale of unemployment.
Population projections indicate that the annual growth rate will continue to be almost double that of the national average during the period from 1991 to 2016. As per these projections, the population of Sikkim would be 739,000 by 2016 . This high rate of growth points to the need for interventions in the area of population management in the State. A positive feature, however, is that Sikkim has a very young demographic profile, with only 4.5 per cent of its population in the 60+ age group . Population in the 0–14 age cohort is 39 per cent of the total population, while 60 per cent of the total population is below 24 years. Thus, State policies should focus more on the youth who, if properly motivated and trained, could be of tremendous value to the State building process
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Of the total 76,813 rural households, 3106 (4%) are vulnerable ( vulnerability being defined as Single woman headed household, Old age headed household and Minor headed household), out of which more than half were old aged households i.e. these old aged were staying alone. There is a need to provide a selective robust social safety net for these vulnerable households specially for those among them who are economically challenged.
More than two fifth (42%) of the rural houses were found to be pucca or permanent type, which had both the walls as well as the roof made of pucca material. The government is implementing a special mission to make the state kuccha house free by 2015.
At the state level, of the total 76,813 households, 24,397 households (32%) were found to be educationally backward with educationally backward households being defined as those who have no family member above 30 years of age, who has passed fifth grade.
There is an acute water shortage during winter which is the dry season. November to March is the dry season, and due to the reduction in the discharge of the mountain springs during these 5 months, the rural water security is adversely affected. The East, South and West districts are the most affected since village springs here are dying up due to insufficient recharge. 13 of the 26 blocks namely, Duga, Rakdong, Pakyong, Rhenock, Khamdong in East, Namthang, Jorethang, Melli, Namchi, Wok and Temi in South and Kaluk, Soreng and Gyalsing in West are facing the maximum shortage in drinking water.
In terms of sanitation, the State has made tremendous progress and only 797 (1%) of the total 76813 households do not have toilets. These are mostly in the labour camps of BRO, hydel power developers, transition camps, temporary herder sheds and others. The state is the only state to have achieved “Nirmal Rajya” award from the president of India.
The persistence of poverty in this hill State is in stark contrast to its relatively high achievement in the social sectors as compared to the national average. However, this could be explained by considering that Sikkim remained marginalized from the development activities that characterized mainstream India. Prior to its merger with India, its very political economy did not, in fact, permit Sikkim to entertain development interventions of a democratic variety. Only in the last 25 years, the philosophy of growth with equity and self-reliance in the planned development of the State has become important.
The per capita GSDP at current prices for 2003-04 was Rs 23786 while that of India was Rs 23492. Also the BPL population as per 2001 census of Sikkim was 36.55% while that of India was 26.1%. The high per capita GSDP vis-à-vis a very high poverty status implies that income distribution is very skewed in Sikkim. The coexistence of extremely affluent segments with the astonishingly poor overwhelming majority is hard reality for Sikkim, although there are no incidences of abject or extreme poverty. Secondly, since most of the poverty-stricken people are concentrated in rural areas, the urban-rural gap, in terms of both distribution of income and asset creation, could emerge in a very precarious manner. In the long run, this may go against environmental security and socio-economic sustainability of the State. Thirdly, the syndrome of income concentration indicates a deviation in the fundamental principle of objective governance and management of the economy wherein the guiding philosophy has been to distribute national wealth across the State in an increasingly equitable manner.
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Chapter 3: Livelihood Profile
The success and growth of poor’s livelihood depends on enabling environment in terms of support services provided by government and private players, availability of basic infrastructure facilities, training and skills promotion facilities, marketing information and infrastructure, private sector participation, promotion of micro, small, and medium enterprises, supportive legal and policy framework, and overall entrepreneurial environment.
At an individual level viability of a livelihood is influenced by entrepreneurial attitude of the community, organization and management practices and decisions related to input sourcing, adoption of package of practices, technology, market access, access to finance, and access to government support for the sustainability of livelihoods.
The following section presents findings from the field survey for existing infrastructure and support services used by villagers, markets availability and linkages, existing livelihoods pursued by villagers, and livelihoods pursued by SHGs.
1.1 Overall Livelihoods Profile
Table 2 is a list of the villages surveyed under the study along with the number of households and average landholding per household for each village.
Table 2: Surveyed Villages
Average Average number Sr. Number of landholding per Village Name District of members per No households household household (units in acre)
Mellidara Ward 1 South 150 6 2 -1
2 Salghari Upper South 80 6 3
3 Sallebong South 69 6 2.5
4 Biriang Ward South 1600 4 3
Ramaram Kali 5 South 160 6 2 Khola
6 Darap Lagay West 40 5 3.5
Samsing Ward 7 West 100 7 2.5 – 5
8 Tinzerbong West 107 6 1.5
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Rodhu Khandu 9 West 300 6 1.5 Sanku
10 Lower Okharey West 65 5 7
The data above was collected during focused group discussions in the respective villages and may vary with data from other sources.
Villages in Sikkim are referred as wards and each ward generally constitutes of 100 – 300 households; each household has average of 6 members in the surveyed villages. A cluster of 4 -5 wards make a Gram Panchayat Unit (GPU) , and a group of 4-5 GPUs make a Block Administrative Unit (BAU).
Land holding in Sikkim is classified into private land or government land. The average land holding in the surveyed area is around 2.5-3 acres per household. The average arable land per household is 70% of the total land holding per household.
About 90% of the state population is rural and agriculture is the primary source of livelihood. However, contribution of agriculture to the state GSDP has Figure 1: Sikkim: Area and landuse Map been showing a declining trend, indicating a stagnation and reduction in incomes.
The farm productivity and income has been declining due to limited availability of irrigation, which is largely rain fed, and high percentage of wasteland. The sectoral contribution of agriculture to the GSDP has declined from 52% in 1980-81 to 21% in 2004-09.
NERLP PIP document states that though the average land holding is 3.25 acre, the operational holding is only a fraction of this. Out of the total cultivated land of 2.75 lakh acre only 11% is irrigated, while 58% is rainfed. The maximum dry land rain fed farming area is in the West District (35%), followed by South (33%).
Figure 1 depicts a GIS map of Sikkim (Source: Rural Management and Development Department, Govt. of Sikkim) showing the dry areas of the state. The project area of South and West Sikkim is the driest part of the state with minimum rainfall and no perennial water sources.
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1.2 Infrastructure and Resource Profile
Being an entirely hilly state, people in Sikkim face difficulties in commutation and information access. However, being one of the most frequented tourist destinations, infrastructure development in Sikkim is quite regular. The state is rich in natural resources and lays special focus on protecting them. The government is also implementing a unique housing policy to make the state free from “kachha houses” by 2011. It is also worth mentioning that Sikkim is the only state in the country to have received “Nirmal Rajya” award for 100% sanitation. Through its Organic Mission the government promotes organic agriculture/horticulture/diary produce.
Table 3 displays the accessibility of various infrastructure and resources from the surveyed villages. It needs to be appreciated that compared to plains covering even seemingly small distances can be arduous in hills. Table 3: Infrastructure Profile
Distance travelled to Access Infrastructure Accessibility (%) Infrastructure At own Less than 5 More than 5 Village km km Telephone (mobile) 100 10 0 0 Bank 100 1 2 7 Post Office 100 4 4 2 Skill training centre 100 2 2 6 Milk collection centre 100 9 0 1 Road 100 9 0 1 Irrigation 40 4 0 0 Nursery 80 5 0 3 School Bldg 100 10 0 0 Drinking Water 100 9 1 0 Com. Building 90 7 2 0 Transport 100 10 0 0 Electricity 100 10 0 0 Cold storage 20 0 0 2 Veterinary dept. 100 7 1 2 Agro. Co-operative 100 10 0 0 Marketing co-operative 80 8 0 0 Market Yard (RMC) 50 0 0 5 Haat 100 3 1 6 Forest Go down 10 0 0 1 Rice mill (Hullers) 30 2 1 0
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All surveyed villages have mobile network coverage, bank, post office, milk collection centre, roads, skill training centres, transport services, drinking water, electricity, school building, veterinary department, agro cooperatives and haats. While 80% villages had marketing cooperatives and access to nurseries, 90% of the surveyed villages had community buildings, too.
About 40% of the villages had irrigation facilities in the form of springs and rivulets. However, access to cold storages and forest godowns is low; around half of the surveyed villages had access to market yards. Cold storages located at Singtam and Gangtok in East District are accessed mainly for potato. Recently a few floriculture cold storages are also opened in the state. Since paddy is sparsely grown paddy hullers are found in only 20% villages.
There are five apex level cooperative bodies in the state , Sikkim State Cooperative Supply and Marketing Federation Ltd (SIMFED), Sikkim State Cooperative Bank Ltd (SISCO Bank), Denzong Agriculture Cooperative Society Ltd, Sikkim Cooperative Milk Producers’ Union Ltd (Sikkim Milk) and Sikkim Consumer Cooperative Society Ltd. The cooperative movement has picked up momentum in the state as all the villages have multipurpose cooperative societies dealing in agriculture and horticulture produce. Sikkim Milk is found to have milk collection centres in 90% of the surveyed villages. Similarly SIMFED and Denzong Cooperative, dealing in marketing of agri-produce and horticulture commodities, are functional all across the state. SIMFED in particular plays a very important role in marketing of ginger and flowers from the surveyed villages.
Dairy and piggery are popular occupations in all surveyed villages, and there is a good network of extension services from the animal husbandry and veterinary services department. About 70% villages have department representatives servicing their villages. Also there are artificial insemination centres in almost all GPUs, which are run by private paravets trained by the department.
About 90% of the surveyed villages are connected by all weather roads which are frequented by private jeeps and taxis along with occasional buses run by Sikkim Nationalized Transport. Since ward or village level households are scattered there are foot paths connecting these households to the main road. Travel from nearest road points to households is often difficult as foot paths are often steep and narrow. Sometimes mules are also used for transportation from these roads to respective households.
The state government has opened livelihood schools (vocational training centres) in all the constituencies of the state to create employment. These Livelihood Schools are managed by the state-of-art State Institute of Capacity Building headquartered at Karfectar. The major capacity building institutions accessed by the surveyed villagers, apart from the livelihood schools, are village level training centres operated by the Department of Handloom and Handicrafts. About 40% of the surveyed villages were found to have such training facilities either in their villages or within 5 km from their villages.
Sikkim is an electricity surplus state and all the surveyed villages are not only electrified but electricity supply was reported to be regular and very satisfactory.
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Sikkim has one of the highest mobile phone densities in the country. The surveyed villages were no exception. An average of approximately 80% population had mobile phones in the surveyed villages.
Banks and Post Offices are accessed by all villages with around 70% surveyed villages having banks at a distance at more than 5 kilometers from villages.
The line departments of the government provides free of cost training and exposure apart from inputs like seeds, bio fertilizers, cattle feed and also infrastructure support like poly-houses, tools, implements etc. However, it was observed that most government schemes, routed through the line departments of agriculture, horticulture, animal husbandry etc., do not have specific measures for the poor and thus there is little pro-poor focus in the implementation of these schemes.
The government officials stated that implementation costs of central government funded schemes are very high in Sikkim due to extremely difficult terrain, high cost of transportation, inputs and labour. Although an allowance for hilly areas exist for some schemes, they are found to be largely inadequate. It is also worth mentioning that Sikkim has the highest per capita central assistance in the country (Planning Commission).
1.3 Banking and SHG Profile
There are about 2000 SHGs in the state, of these around 1300 are in the NERLP project area with almost 100% coverage of the poor under SHGs. The SHGs are also federated in some cases although the linkages and institutional structure of these federations are reported to be weak and needs strengthening. The poor in Sikkim are reported to have low levels of business and marketing skills.
Most SHGs have less than nine members and no age bar. The members of SHGs make average monthly savings of Rs 50 to 100, and are found to be actively involved in inter-group loaning at rates of interest ranging from 24% to 60% per annum. However, there is a risk aversive behavior when the same loan is routed from banks at lower rates of interest.
SHG members were found to be taking loans from SHG funds primarily for treatment of illness, marriages and festivals etc. A major section of productive loans was for ginger cultivation, piggery and poultry activities. Most activities taken up by SHGs under SGSY are at individual levels only. Many SHGs have experimented with activities like paper bag making, pickle making, knitting, mushroom cultivation etc. but have faced marketing problems for their produce.
As informed by NABARD, there are 16 bank branches in South District and 9 in West District. While deposits have registered a healthy growth rate in 2009-10 (19.66% in South District and 25.94% in West District), the growth rate of loan outstanding is surprisingly low (10.32% in South District and 3.99% in West District).
Sikkim State Cooperative (SISCO) Bank is a major provider of financial services to the rural poor and Kissan Credit Card for farm credit. The credit portfolio of SISCO bank in the South District indicates loan financing for ginger cultivation, dairy and piggery. The bank also finances SHGs directly for SGSY and
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non SGSY activities. Credits to farmers are routed through primary agriculture credit societies at the village level.
The major SGSY activities sanctioned by the South district branch are floriculture, goat rearing and vegetable cultivation. Other activities supported and financed through SHGs and SHG federations are marketing of hill broom, piggery, ginger cultivation, wool knitting etc. The rural community is found to be more or less financially disciplined. The NPA of the South district branch of SISCO Bank was about 6.7%.
To support the financial inclusion of the women, the government is promoting business correspondent models based on biometric cards for payments and other financial services. Under Sikkim Universal Financial Inclusion Project, the government has set a target to open savings account for 7,500 married rural women across Sikkim to provide them doorstep banking, health, and life and property insurance services through the business correspondent model.
1.4 Market Profile
Sikkim is characterized with scattered villages and extremely difficult terrain. .. There are no regulated markets or mandi for farm based produce in Sikkim. The major feeder and terminal market of Sikkim is Siliguri which is in West Bengal. This restricts access of the primary producer to the terminal market. Furthermore, the entry into the regulated market signifies movement of the produce from one state to another, which necessitates further expenses like Sikkim Nationalized Transport (SNT) tax, West Bengal government tax, bribes to policemen and regulated market tax. Thus, only large volumes of produce in units of truck loads are economically viable to be transported to Siliguri. This is in particular difficult for any primary producer due to absence of economies of scale and lack of market information.
Jorethang, due to its strategic border location between South District, West District and West Bengal is the next important market after Siliguri. The area has overwhelming number of town level traders. These town level traders are mainly from Marwari and Bihari community with a few Sikkimese traders.
Table 4: Market Facilities
Types of Market Facilities Availability in percentage of village Permanent shops in the village 100 Temporary Shops in the village 20 Vendors of the same village 20 Vendors coming to village/day 80
Table 4 showcases percentage of surveyed villages having different types of marketing facilities. All surveyed villages have around 3-4 permanent shops selling products ranging from utensils, grocery items, cosmetics to vegetables, tea stalls, mobile recharge vouchers etc. 20% of the surveyed villages had vendors residing in them while another 20% villages recorded presence of temporary shops. About 80% of the surveyed villages are frequented by vendors dealing in steel utensils, clothes, scrap, shoes, cosmetics, toys, mattress and razai making, etc.
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Most villages however have village level traders who procure village produce of ginger, Squash etc and sell them off to town traders. However, most villagers prefer to sell their produce to town traders themselves or to village level multipurpose cooperative societies.
Traditional rural weekly markets (haat), held on specific days of week all across Sikkim, form the main retail markets for primary producers. The Haats are often frequented by both town level and village level traders, where producers sell their agro produce.
Haats are generally held at all GPUs. Certain places are exclusively named after the day it hosts the haat e.g. Sombarey named after Sombar (Monday), Mangalbarey named after Mangalbar (Tuesday) etc. The town markets like Namchi, Jorethang etc. also host haats one or two days a week. Town level markets in each district function for six days a week. Table 5 showcases the major town level markets of South and West District and profile of commodities traded
Table 5: Market Profile
South District Markets West District Markets Products traded Town level markets Jorethang, Namchi, Melli, Gyalshing, Geysing Legship, Ginger, Cardamom, Orange, Ravongla Chilli, Vegetables, Milk products, Poultry, Pork, Mutton, Clothes, utensils, consumer goods, Agri implements, Agri inputs, Cattle Feed, service centres, departmental stores etc. Weekly (Haats) and village level markets Simchuthang (Mangley), Reshi, Hee, Sombaria, Soreng, Daramdin, Ginger, Cardamom, Orange, Majhitar, Temi Bazar, Dentam, Chilli, Vegetables, Poultry, Damthang, Namthang Rinchenpong, Kaluk, Mangalbarey, Pork, Mutton, Clothes, utensils, Kewzing, Yangyang, Ralang. Shreebadam, Bermiok, Agri inputs, Cattle Feed, etc. Pelling, Tashiding, Chakung, Nayabazar.
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1.5 Land based livelihoods
Ginger is the principal cash crop grown in the project area. Apart from this, a wide range of agriculture and horticulture crops are cultivated all across Sikkim. Vegetables are grown primarily for local consumption. Paddy is cultivated in relatively plain and irrigated areas. The agriculture and horticulture yield in the project area is seemed to be affected by recurring spells of freak climatic conditions.
Figure 2: Cropping Pattern
120
100
80
60 Availability Percentage in surveyed village 40 Percentage of Households involved
20
0
Shown in Figure 2 and Table 6 is the percentage of households involved in the cultivation and marketing of various crops in the surveyed villages. Maize is the most prevalent crop; it’s grown by all landholding households. The crop is however exclusively for consumption at the household level and cattle feed.
Paddy was found in only one surveyed village although rice is the staple food of the region. Large cardamom, one of the most expensive produce, was grown in 40% of the surveyed villages, whileginger, another cash crop, is grown by 60% villages. Tomato is commercially cultivated in around 50% of villages.
Squash, locally called Ishkus, is found in all villages but commercially grown in 30% of the surveyed villages. This creeper crop is also a regular source of income to villagers. Likewise Chilli (Cherry Chilli locally termed as Dalle) is found in all villages and mainly consumed at the household level was found to be commercially grown in 30% surveyed villages.
Orange is also cultivated in a few patches of West District in particular. Less than 20% households of the 20% villages are involved in orange cultivation.
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Peas and pulses were commercially grown in only 10% of households.
Table 6: Cropping Pattern vis a vis Households
Table 6 (a) Crops Prevalence in Average Area per Average crop Average surveyed villages village (acres) area / Yield/acre (Percentage) Household (quintals) (acres) Ginger 60 42.6 0.81 17.6 Maize 100 146 5.4 1.73 Paddy 10 30 6 24 Tomato 50 23.35 0.628 16.2 Potato 20 90 0.96 16 Peas 10 3 0.48 6 Pulses 10 2.5 0.1 3.2
Table 6 (b) Crops Prevalence in surveyed Average no of households Average Yield/Household villages (Percentage) per village cultivating the (Quintals) crop Squash 30 108.3 68.6 Chilli 30 25.8 1.8
Table 6 (c) Crops Prevalence in Average number of Average trees / Average Yield/ surveyed villages trees per village Household Tree (Percentage) Orange 20 450 101 1050 pieces Large 40 17950 524 0.031 quintals Cardamom
As mentioned in Table 6 (a) maize has the maximum area under cultivation per household – nearly 5 acres per household. Ginger, the main cash crop in 60% of the surveyed villages, has average cultivation over 0.8 acres per household. As mentioned in Table 6 (b), while Squash and chilli are commercially cultivated in 30% of the villages, an average of around 68 quintals of Squash is produced per household every season.
Orange and large cardamom yields are recorded on the basis of yield per tree. Table 6(c) shows that in 40% of the surveyed villages, where cardamom is a major crop, each household had average of 524 trees.
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However, during recent years, the production of cardamom has decreased drastically due to degeneration of old plants and various diseases.
Information from Spice Board of India reveals fall in the production of large cardamom in Sikkim from 5401 tons in 2003-04 to 3833 tons in 2006-07. Long summer spells in the state are being attributed to deterioration in quality and quantity of large cardamom in the state. Sikkim is traditionally the largest producer of large cardamom in the country.
Seasonality of the major crops are mentioned in Table 7
Table 7: Seasonality of Crops
Crops Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Ginger P P PM P P PM M M
Maize P P P P P P
Paddy P P P P P P
Tomato PM PM P P PM PM P P PM PM P P
Potato P PM P P PM M P P P P PM P
Pulses P P P P PM
Squash PM PM PM PM PM PM PM PM PM PM PM PM
Chilli P P PM PM PM
Orange P PM PM M
Large Cardamom P P PM PM PM PM M M P: Production phase, M: Marketing Phase
The mother rizhome of ginger, locally called Mau, is harvested and sold in May; it fetches around Rs 55- 65 per kg.
While maize is grown during the summer and rainy season, paddy in irrigated patches is grown twice a year. Tomato and potato have three seasons per year while Squash is produced and marketed throughout year. Orange and cardamom being plantation crops starts bearing fruit from November and May, respectively. While the marketing season of Orange is during the winters, cardamom has a long marketing period of around six months starting from July.
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Figure 3: Consumption vis a vis Marketable Surplus
100% 0 0 90% 30 80% 70% 60% 90 90 92 85 50% 95 100 100 100 95 95 40% 70 30% 20% 10% 10 10 8 15 0% 5 0 5 5
Percentage consumed Percentage Surplus
Figure 3 denotes the approximate percentage of domestic consumption and marketable surplus of major crops in the surveyed villages.
Maize and paddy are fully consumed while around 30% of total pulses (Yellow) production is sold off.
While around 15% of peas production was locally consumed ginger, orange, potato, Squash and chilli were found to have less than 10% domestic consumption. This signifies a unique cropping pattern in Sikkim – one that prefers cultivation of cash crops to that of consumption crops.
Table 8: Average Investment size
Crops Average investment per unit (Rs) Value addition at the village level Ginger Rs 10000 per acre Cleaning by few farmers Grading by few farmers Maize Rs 2500 per acre Cleaning Drying Grading Crushing into flour Paddy Rs 8000 per acre Cleaning Threshing Husking into Rice Tomato Rs 5000 per acre Grading by few farmer Packing in Baskets
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Potato Rs 7000 per acre Cleaning by few farmers Peas Rs 3000 per acre Grading by few farmers Pulses Rs 2500 per acre Cleaning Drying Squash Rs 5000 per household None Chilli Rs 2000 per household Grading and drying for consumption Orange Rs 5000 per household Grading Box packing Large Cardamom Rs 20000 per household Cleaning Kiln drying Grading
Table 8 presents the amount of investment for major crops and value addition after harvesting. While products like paddy, maize, and chilli undergo value addition for consumption purposes, cardamom is the only crop which undergoes market led value addition. Cardamom is dried in wood kilns and graded as per quality and size. A few progressive farmers only however clean and grade ginger before selling.
Figure 4 depicts approximate percentage of produce sold by the primary producer through different channels viz. village trader, haat and town trader.
Figure 4: Crop Marketing Channels
Sale percentage of major crops through different channels 100 90 80 70 60 50 40 30 20 10 0 Large Orange Pulses Ginger Peas Quash Potato Tomato Chilli Cardamom Village Trader Haat Town Trader
While large cardamom, orange, peas, pulses, ginger and Squash are largely sold to town traders, chilli and tomato are largely sold at retail through haats. Important markets for ginger are Namchi, Naya bazaar, Namthang, Reshi, Legship etc. Cardamom farmers generally take their produce to town level markets including Gangtok and sell them to Marwari and Bihari traders. Oranges are sold per piece and often
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traded before production. Traders often visit orange farmers and pay an advance amount for the forthcoming production. Nowadays, some multipurpose cooperative societies and agro cooperatives at the village level are also procuring ginger.
The role of village traders is prominent though small in turnover. They generally procure from marginal and small farmers who do not have enough produce to achieve economies of scale for selling their produce directly to the town level trader.
The produce collected by town level traders and even by some village level traders is transported to Siliguri. Cardamom and ginger are supplied to all across the country from Siliguri. Some produce like potato, Squash, chilli, peas, pulses and tomato have a minor but remunerative marketing channel ending at Gangtok.
Average producer sale prices of the major crops, as per information collected from the surveyed villages, are mentioned in Table 9.
Table 9: Average Selling Prices of crops
Crop Unit Average Selling Price (Rs per unit) Ginger Quintal 4050 Tomato Quintal 1760 Large Cardamom Quintal 45000 Squash Quintal 466.6 Chilli Quintal 9666.6 Orange Per piece 2.12 Potato Quintal 5900 Peas Quintal 2500
The prices of cardamom and ginger have escalated over the last 3 years due to reduction in production and increase in demand. Average price of cardamom have increased from Rs 100 per kg in 2007 to Rs 200 in 2008 and finally Rs 450 in 2010. Similarly average prices of ginger in 2007 were Rs 15 which increased to around Rs 20 in 2008 and Rs 40 in 2010.
However, the prices of vegetables like Squash and peas have a marginal increase in average prices over the last three years.
1.6 Floriculture
Floriculture is a new but common activity in almost all villages. Although the number of farmers currently involved in this occupation is low as compared to ginger or cardamom farmers, the number is growing fast. The activity attracts heavy investments and has long payback period and so the state government is extending extensive support to promote the activity.
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Cultivation of cymbadium orchids, zantedeschia (cala lily), alstroemeria, lilium, gervera, rose etc. is being promoted by the horticulture and cash crop development department across Sikkim. The department regularly imports seed bulbs and tubers from New Zealand, Netherlands etc through suppliers in Pune and Bangaluru and provides them free of cost to a number of farmers. The major suppliers are Kumar Florists of Pune and Florence Flora of Bangaluru. A number of poly houses are also provided along with training, irrigation facilities and implements.
A model floriculture centre is being set up by the department to develop floriculture in the state. It disseminates technical knowledge, provides support services and inputs for floriculture. The centre is also equipped with a cold storage. Apart from this, cold storages have come up in Daramdin and Soreng. One is also sanctioned to be constructed in Seleb.
Rose village near Daramdin in the West district has around 70 households with 91 poly houses in the area along with a cooperative society for cultivating and marketing different varieties of roses. It also has a cold storage for storing rose sticks. Around 3000 to 4000 sticks are produced daily from the area, which are transported to Namchi and Siliguri. The activity is entirely supported by horticulture department and calls for huge investments and efficient irrigation facilities.
Sikkim State Institute of Rural Development (SIRD) is also implementing a special SGSY project on lilium and glorecia plant nursery. The seeds are provided by SIRD along with buyback support for saplings. A nursery spread over 1 hul or ¼ th acre of land is expected to yield Rs 30,000 per year. SIRD has also facilitated SHGs to be linked with State Bank of India for SGSY loans.
It is worth mentioning that some private nurseries and floriculture companies are also supporting floriculture venture of the state. ‘Mainam Gardens’ of Namchi is one of the most prominent private institutions functional in the area. Owned by Mrs. Tika Maya Chamling, it procures flowers from farmers and supplies them all over India. Zopar Exports Private Limited, having more than 80 poly-houses in Sikkim and Darjeeling district of West Bengal, supplies multiple varieties of roses.
SIMFED is a major stakeholder in providing marketing support to the farmers of Cymbidium and Lilium. It has buyers and agents all across the country. Any procurement by SIMFED is however only done at Gangtok and thus needs special transportation from the project area.
1.7 Live stock based livelihoods
Sikkim has a strong base of Livestock based rural livelihoods. Around 73% of population engaged in animal husbandry sector is women. Animal husbandry and fisheries sectors together engage 3.694 lakh populations, including 2.088 million women. Thus, the total employment in animal husbandry and fisheries is around 9.05% of the total work force. According to estimates of the Central Statistical Organization (CSO), the value of output from livestock and fisheries sectors together at current prices was about Rs. 2, 82,779 crores during 2007-08 (Rs 2,40,601 crores for livestock sector and Rs 42,178 crores for fisheries) which is about 31.6 percent of the value of the output of Rs. 8,94,420 crores from Agriculture
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& allied sector in the state. The contribution of these sectors in the total GDP of Sikkim during 2007-08 was 5.21%.
Milk and meat (beef, chicken, pork and mutton) contributes largely to the food plate of Sikkim. The contribution of milk alone (Rs 1,62,136 crores) was higher than paddy (Rs 95,038 crores), wheat (Rs 71,579 crores) and sugarcane (Rs 33,691 crores). The value of outputs from meat group as per estimates of Central Statistical Organization (CSO) at current prices in 2007-08 was Rs 40,399 crores. The present demand of pork in Sikkim is around 550 Metric tonnes per annum, while the production is about 150 Metric Tonnes per annum showcasing good scope.
Sikkim is a milk surplus state with marketable surplus milk being sold to neighboring state of West Bengal. The per capital milk availability is Sikkim is 243 grams per day. Sikkim Milk producer’s Co- operative Limited (Sikkim Milk) is the biggest player in Dairy in the State. More than 12,000 dairy farmers through 270 co-operative societies are registered members of this cooperative. More than 15,000 litres of milk are being processed everyday by the cooperative resulting in incomes to the tune of Rs 60 lakhs per month to dairy farmers. Sikkim Milk Union is reported to be earning profits since last two years. (Source: Sikkim Livestock Policy document 2009-10).
The state government has launched dedicated missions on Poultry and Dairy to enhance livelihoods promotion initiatives under these activities. Almost all households practice backyard poultry for household level consumption of eggs and chicken. Broiler is also practiced by some villagers whose marketing networks are present in towns like Jorethang or Namchi. Incidence of disease and geographically restricted immediate support service is a bottleneck for broiler.
3.7.1. Status of Livestock based livelihoods
Table 10: Household Involvement in livestock based livelihoods
Major Livestock Availability in percentage of Percentage of households involved villages Dairy 100 65 Piggery 100 60 Goat rearing 70 25 Poultry 100 50
As mentioned in Table10, Dairy, Piggery and Poultry (backyard and broiler combined) are by far the most important Livestock based activities found in the surveyed villages with all villages having 65%, 60% and 50% households involved in these activities respectively. Goat rearing is prevalent in 70% villages but involving 25% houses.
In Pig rearing, the majority of poor farmers rear local and indigenous breeds, a few progressive farmers have adopted American Hampshire and Yorkshire breeds also. An average of 7-9 piglets is produced every 6 months in case of the American Hamstead variety while the local variety generally produces 5-6. The mortality in local varieties is also high.
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While poultry farming is mainly consumption based, some SHG members have taken internal SHG loans for piggery and poultry activities. The presence of functional milk cooperatives in the villages have boosted the dairy activity a lot and mostly surplus milk is sold at the village level through milk collection centres facilitated by Sikkim Milk Union.
The AHVS department has a good network of veterinary doctors and staff for providing extension services free of cost in the villages. Sikkim Milk also has its own veterinary care centre at Karfectar.
3.7.2 Marketable surplus and selling dynamics
Average of 3 indigenous variety cows are assets to all households who keep cows. The average milk output per cow in the surveyed villages is 6 litres per day and the average milk output per household is 11 litres per day. 1-2 litres are consumed at the household level while the rest is sold.
Sikkim milk has a minimum procurement price of Rs 16 for standard milk with 3.5% fat and 7.5% SNF. However, the quality of the milk in the surveyed villages have seldom reached the desired level in terms of fat and SNF. The average price at the village level that is fetched by the dairy farmer is around Rs 13 to Rs 15 per litre. Maximum price of milk at the village level was reported to be around Rs 19 per litre. (as per primary survey)
Price of piglets vary between Rs 2000- 2500 per animal while full grown pigs sold for pork are sold at an average price of Rs 100-110 per kg. Piglets pigs are generally sold from the farm gate to butchers and other farmers.
3.7.3 Seasonality
All the major Livestock activities do not have any fixed season for production or marketing. However, the festive seasons sees an increase in demand of livestock. Prices for some products are elevated during this period. Sikkimese people being primarily non-vegetarian, their food plate includes livestock products all year through.
1.8 Service based livelihoods
Table 11: Household involvement in service based livelihoods
Availability in Average number of Livelihoods percentage of villages households involved Army 70 6 Permanent govt. job 100 17 Permanent private job 40 5 Electrician 50 2 LIC agent 20 1 Driver 90 8
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Plumber 60 1 School teacher 100 8 Hotel jobs 10 2 Government temporary 20 10
Table 11 clearly depicts that government service, Army, teacher etc fixed income based livelihood are more or less consistent in the surveyed villages. 90% villages had drivers from around 8 households. The apt transport system of Sikkim through shared taxi jeeps and vehicles explains the finding. Only a few other households are engaged in other service based occupation like electricians, insurance agents etc.
The different skill levels of villagers in the surveyed villages have been mapped in table 12.
Table 12: Skill levels in service/nonfarm based livelihoods
Avg. no of Use skill Available persons for in % of possessing Business Tradition skill/ Skill villages skill purpose acquired skill
Stitching 60 4 Few Acquired / Traditional Food processing 40 All women No Traditional
Handicraft 40 6 Yes Acquired / Traditional
Weaving 30 7 No Traditional
Knitting 50 All women Few Traditional Yes Electricals 40 2 Acquired Yes Carpentry 100 9 Traditional Yes Construction 70 12 Traditional Yes Driver 100 9 Acquired Yes Insurance agent 10 1 Acquired Yes Beauty Parlour 20 2 Acquired Yes Electronic Repair 30 1 Acquired
While women of 40-50% surveyed villages were traditionally skilled in knitting woolen garments and food processing (primarily pickle making and making fermented food products), very few of them are actually using the skill in business generation. Construction and carpentry related skills are high in villages. Both of these skills are traditional in nature and 9 households of every village are engaged in the crafts of wood carving.
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As mentioned earlier, the state government has opened livelihood schools (vocational training centres) in all the constituencies of the state to create employment. These Livelihood Schools are managed by the state-of-art State Institute of Capacity Building headquartered at Karfectar. The major capacity building institutions accessed by the surveyed villagers, apart from the livelihood schools, are village level training centres operated by the Department of Handloom and Handicrafts. About 40% of the surveyed villages were found to have such training facilities either in their villages or within 5 km from their villages.
1.9 Rural tourism
Around 40% of the villages visited had villagers interested in homestay based village tourism.
As mentioned in the Tourism sector Policy 2010 of Sikkim Tourism department, the number of Domestic tourists in 2003 were about 1, 76,659 while in 2008 more than 5, 00,000 tourists have visited the state. The estimated number of domestic tourists in 2009 is around 6,00,000. This signifies a growth of around 3.5 times within a time span of 6 years.
The boost in the growth of tourism in the state is also attributed to the growth in the associated sectors. Sikkim since last 5 years is following a strict Organic policy and is also the first state in the country to achieve total Sanitation. A Green Mission program has been launched by the government under which every individual, agency and the Department contributes towards the planting of trees all over the State. Village tourism is being specially encouraged to preserve culture, heritage & handicrafts and to create better economic and employment opportunity in the rural area. Floriculture is being promoted at large in the State and Sikkim has earned its place as a major orchid and exotic flower producer in the country. Use of polluting plastic is also banned in the State. All the ethnic Communities have different and distinct festivals, which are celebrated all over the State. Tourism Department plays a major role in promoting these festivals in order to showcase Sikkimese culture and heritage.
The ability of rural tourism to contribute directly to the village economy and the growing industry of tourism can be capitalized to mitigate poverty by promoting rural tourism in pockets of poverty. The interventions regarding home stay based tourism mentioned in Chapter 4 is an attempt to include the poor in the larger ecosystem of Tourism.
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Chapter 4: Value Chain Analysis
4.1 Introduction
Chapter 3 captured community’s engagement in long list of livelihoods across agriculture, livestock and non-farm sectors. Field experience shows that there is very little value-addition taking place at the producer level in villages leading to a large chunk of produce moving out of the village in the raw form. Value addition is generally taken up by players with high capital base located at higher order markets. However, simple aggregation at village level with rudimentary value addition activities like cleaning, sorting, grading, drying etc. can fetch higher price to the poor rural community.
Value Chain development is a process, which analyses every stage of the product or services i.e. from production to the end consumer and endeavours to build the competitiveness across the chain. Value chain analyses involves identifying product movement, number of channel partners involved and roles performed by them, value received by each of the channel partners, constraints faced by each player in the chain. Value chain analysis helps to identify opportunities for value addition at every stage of the product from production to its marketing, prices at every stage and corresponding value addition possibilities, assess infrastructure requirement and capacity building needs of producers to achieve higher value in the chain.
Activity selection for value chain analysis Following is the flow of key steps performed to select the five potential products for conducting value chain analysis;
Box 3: Value chain analysis framework
Task performed Key Steps Shortlisted activities
Review of regional Small holder dairy farming, piggery, poultry, implementation plan provided village tourism, land development, by World Bank horticulture (large cardamom, ginger, fruit Step 1 plants, floriculture (rose, cymbidium), Study secondary reports and Literature review offseason vegetable, bee keeping, concerned websites handicrafts, fodder development, Vocational trainings, entrepreneurship seed funds, placement support
Meeting with state nodal officer Dairy, Ginger cultivation, Floriculture, Pig Stakeholder consultation rearing, Homestay (Rural Tourism), Hill
workshop with line department grass trading, Poultry farming, cardamom Step 2 officers, bankers and NGOs at cultivation, offseason vegetable farming, Stakeholder Gangtok bee keeping, goat rearing and wool knitting. consultation in Meeting with govt. officials, Sikkim SHG members and NGOs at
District levels Village visits in both districts
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Review of secondary reports
Meeting with World Bank staff Dairy Step 3 and Project Director, NERLP at Ginger cultivation Consultation with New Delhi Floriculture PD, NERLP and Analysis of secondary reports World Bank staff Pig rearing Homestay (Rural Tourism)
Based on the discussion with Project Director, NERLP and World Bank staff at New Delhi criteria (engagement, interest and capacity of the poor, possibility of engaging large number of poor, market demand, gestation period) was shared to shortlist five products i.e. milk, ginger, pig, flowers and homestay for carrying out value chain analysis. All the five shortlisted produce are suitable for both project districts. Summary of the recommended products and interventions are mentioned in Table 13.
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4.2 Summary of suggested interventions
Table 13: Summary of suggested interventions
Produce / Intervention Size of activity suggested Convergence Key support Product Suggested Unit of Fund RoI and to be activity requirement (%) partnership provided by (Rs) potential the Project Cow Milk Improved 3 cross bred 151598 29.43 AHVS Organise poor practices in cows per department in SHGs, dairy farming houshold and Sikkim federation and both project Milk union. producer districts group
Introduce collective action for input sourcing
Capacity building on improved package of practices,
Finance linkage
Handholding support
Institutional support to Sikkim Milk Ginger Improved 1 acre 24300 73.6 Wholesalers, Organize poor package of HCCD in SHGs, practices for Department, federation and Ginger SIMFED, producer cultivation in Progressive group both project farmers and districts Financial Introduce institutions collective action for input sourcing and output marketing
Capacity building for improved package of practices
Finance
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Produce / Intervention Size of activity suggested Convergence Key support Product Suggested Unit of Fund RoI and to be activity requirement (%) partnership provided by (Rs) potential the Project linkage
Market linkages
Market exposure
Handholding support Pig Rearing of 6 pigs (5 209234 36.2 Wholesalers Organize poor American female and and retailer, in SHGs, Hampstead 1 male) per Inputs federation and variety of pig household suppliers , producer by adopting Progressive group improved farmers, package of Financial Introduce practices institutions collective And AHVS action for department input sourcing
Capacity building for improved package of practices
Finance linkage
Market linkages Handholding support Floriculture Cultivation 400 263200 10.9 HCCD Convergence and marketing saplings Department, with HCCD of under 1 poly SIMFED, department Alstroemeria house of 90 Mainam flowers ft by 22 ft Gardens, Organize poor Other in SHGs, Wholesalers federation and and retailers, producer Inputs group suppliers , Financial Introduce institutions collective and action for Progressive input sourcing farmers and output marketing
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Produce / Intervention Size of activity suggested Convergence Key support Product Suggested Unit of Fund RoI and to be activity requirement (%) partnership provided by (Rs) potential the Project
Rural Promotion of 1 household 462400 20.3 Tourism Formation of tourism Homestay constructing Department, homestay based Rural additional various collectives Tourism room for 4 cooperative persons societies Capacity involved in building for rural tourism, improved ECOSS, Help package of tourism, TASS practices etc Finance linkage
Market linkages Market exposure
Handholding support
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4.3 Value Chain of Dairy
4.3.1 Background
It is well known that India is the world’s largest milk producer. In 2006-2007, it celebrated reaching to the magical figure of 100 million tonnes. The growth of the milk production has been consistently high since 70s. For example, since the inception of the “Operation Flood” program (1971-1996) by the National Dairy Development Board (NDDB) Anand, the average annual growth rate of milk production has been over 5 percent during the period. In 2005, the size of India’s dairy sector was estimated at Rs 2300 billion, with a production of 95 million tonnes. Dairy India 2007 estimates that by 2011 the value of the dairy industry will more than double, reaching Rs 5200 billion, with annual milk production of 120 million tones. (Source: IIMB Management Review, Volume 20, Number 1 Article by Vinod K Huria March, 2008)
Figure 5: Sikkim milk production estimate
Estimates of Milk Production in Sikkim ('000 tonnes) from 1997-98 to 2009-10 Source: Ministry of Agriculture, Govt. of India 60
50 48 48 49 49 49 49 45 46 40 35 35 35 35 37 30 20 10 0
Sikkim has been a major milk producing state in the North eastern region of the country. Figure 5 shows that while the increase in milk output since the last decade in Sikkim has been more or less slow, it has also been consistent and steady. The growth in the sector has been brought about not by enhanced milk productivity but by the formalization of milk marketing channels through cooperatives. Unlike most heavy milk producing states, milk in Sikkim is primarily sourced from cows. The current average milk yield per cow in the state is 6.5 litre per day. There is thus scope of productivity enhancement in milk in the state.
The per capital milk availability in Sikkim is 243 grams per day. At present total milk production in Sikkim is around 49000 MT per annum and milk procurement and processing in the organized sector is 15000-17000 litre per day which is meeting the requirement of the state. The marketable surplus milk is being sold to the neighboring state of West Bengal. The government has a target to process at least 40,000 litres of milk in the milk unions and other organized sectors by the year 2015.
Since the last 5 years Sikkim has been following organic practices in cultivation of maize and other fodder and as so the milk being produced in Sikkim is more or less organic. However, proper certification of the
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milk as organic and positioning of the same as organic milk is yet to be done. (Source: Sikkim Livestock Policy document 2010)
4.3.2 Feasibility of the activity
Technical feasibility
The agro climatic conditions of West and South districts of Sikkim (project area of NERLP) are suitable for dairy farming. The dairy practiced in Sikkim is primarily of cow milk since the climatic conditions of the state do not encourage keeping buffalos. The basic skill for dairy farming is available with the poor community since most housholds keep animals. Dairy is a part of the Livelihoods basket of almost all rural households of Sikkim. There are also no social taboos or caste preference for Dairy in Sikkim and the activity is practiced by all ethnic groups across all sections of the farmer community, big or marginal alike. There is an strong enabling environment in the state for Dairy farming with the Department of Animal Husbandry Livestock Fisheries and Veterinary Services (AHVS) of providing regular trainings, required extension services and inputs. Research agencies like the ICAR and KVKs are also conducting research to enhance productivity in Dairy farming. The importance of the dairy subsector in Sikkim is also accounted by the fact that Sikkim has been following organic practices in agriculture which has banned the use of chemical fertilizers and cow dung is the single most bio-fertilizer that is being used.
Market feasibility
The Sikkim Cooperative Milk Producers Union Ltd. (Sikkim Milk) formed in the year 1980 is an apex body of the primary milk producers’ cooperative societies formed at the village level on Anand Model Milk Cooperatives. The milk union is a profit making entity and has more than doubled its turnover in the last 4 years. Sikkim has a very good network of village level milk marketing cooperatives at all GPUs. There are functional milk collection centres in all of the surveyed villages which are operated by Sikkim milk. The Milk Union offers a minimum price of Rs 16 per litre at the village level for standard milk with 3.5% fat and 7.5% solid non fat (SNF). This minimum rate is one of the highest in thye country for cow milk. Sikkim Milk has a wide network of retailers and milk parlours all across Sikkim for marketing milk and milk products. Unlike other tribal areas, Milk is a part of the daily diet of Sikkimese people. There are various value added milk products like curd, paneer, churpi, butter, ghee etc. which are in high demand in urban all across Sikkim. The toursim sector in Sikkim is pretty evolved with a large number of hotels and restaurants all across the state. This secor is one of the highest absorber of milk and milk products.
Economic feasibility
The ideal investment is Rs 55000 per unit. The overall income per household is around Rs 44699 with 29.4 % return on investment. Finance is available from SISCO bank, other commercial banks and Micro finance institutions like BASIX and Bandhan. However, the available finance from banks is often not adequate for the dairy farmer and special financial support in Dairy farming is expected from the project.
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The Potential Linked Credit Plan prepared by NABARD outlays Rs 62.1 lakhs for West District and Rs 40.5 lakhs for South District for bank loan on Dairy farming for the year 2011-12. This target allocation has increased by 20% in South and 4% in West district signifying a thrust on the activity.
4.3.3 Production Cluster
The dairy activity by virtue of the well networked milk collection centres at almost all GPUs of the state are suitable to be implemented in both the project districts of South and West. There might be some constraints for villages with water shortage to take up dairy activity since the activity requires adequate water. However, since almost all rural households keep cattle, Dairy farming can be easily taken up by the poor of both the districts.
4.3.4 Value chain map of Milk
Figure 6 is a depiction of the value chain of Milk from the surveyed villages in Sikkim. Figure 6: Value chain map of milk
Unprocessed: Rs 24-30/ litre Consumers Consumers Consumers, Hotels, High cream: Rs 36 / litre Restaurants Toned: Rs 25/litre
Retailers Franchisee Franchise / Retailer and milk Institutional (Outside Sikkim) margin: Re 0.5/litre parlors supply. e.g.
(Inside Army, IRCTC Sikkim) Milk unions outside Commission to Sikkim Cooperative (side Sikkim) Processing by Sikkim Milk Societies: 3.3%
of value of milk Milk Collection centre run by Milk producer’s Cooperative Societies Unprocessed: Rs 13–18/ litre
Dairy Farmers
Input Supply Fodder, Cattle feed, nutrient supplements, dairy implements, equipment, etc.
The two most prominent players in the value chain of milk especially in Sikkim are the dairy farmer and Sikkim Milk. Around 65% of the households of the surveyed villages keep milching cows. Average of 3 indigenous variety cows are assets to all households who keep cows. The average milk output per cow in the surveyed villages is 6 litres per day and the average milk output per household is 11 litres per day. 1-2 litres are consumed at the household level while the rest is sold.
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4.3.5 Fodder and feed
The major fodder for cows constitute of wild grass, maize stocks, paddy straw, maize dust (Bhoosa) and paddy husk. Green fodder in the form of wild grasses is sourced locally. Most farmers also grow fodder on their fields in the form of Napier and C1 grass. 22% of the total area of Sikkim is reported to be available for fodder cultivation (NABARD Potential Linked Credit Plan 2011-12). Milk output of the project area decreases after the rainy season due to shortage of green fodder and water in some areas during winter. During this period substitutes are used or fodder is purchased from Jorethang and other places. Oil cakes (locally called pina) and common salt is also used as mineral supplements.
Cattle feed like Hemul Dana constitutes an important part of input supply for Dairy farming other than fodder. Feeds and supplements for Dairy, Poutry and Piggery are commonly available in special shops selling in major towns of Namchi, Jorethang, Namthang etc. There are cattle feed factories in Siliguri producing cattle, poultry and pig feed in bulk. At Chompasari in Siliguri, West Bengal Dairy and Poultry Development Corporation (a unit of Government of West Bengal) manufactures Hemul Dana, a highly sought after feed in Sikkim. Samrat Feeds Private Limited and Apic Feeds Private limited are two private players with factories at Fulbari and Mallaguri respectively. The feed from all these companies are brought in regularly to these towns from the respective factories. Apart from these companies, Anmol and Amrit feeds from Bihar are also available in these markets. Although cattle feed is exempted from VAT in West Bengal, the transportation costs from the factory at Siliguri to the town level markets are high. Each bag of cattle feed (sizes vary between 50 kg, 65 kg and 70 kg) incur around Rs 50-60 for transportation including Sikkim Nationalized Transport tax, regulated market charges of Siliguri, market charges of the local market, loading, unloading and miscellaneous charges. The retailer margin on each bag is around 8%. Around 9-10 such retailers are present in Jorethang market.
Some entrepreneurs use waste of beer factory as a cheap substitute for cattle feed which is sourced from the beer factory at Melli.
4.3.6 Extension Services
The AHVS department has a good network of veterinary doctors and staff for providing extension services free of cost in the villages. Sikkim Milk also has its own veterinary care centre at Karfectar. However, accessibility of these services in far flung villages is restricted. While big farmers and entrepreneurs are regularly visited by the veterinary doctors, poor farmers often spend around Rs 300 -500 per visit for transport of the doctor. Vaccinations and de-worming are done free of cost from the respective cooperatives and AHVS department. The department also forwards cattle insurance facilities to farmers in association with Oriental Insurance Company wherein 50% insurance premium of each cattle insured is borne by the department. Under a tribal sub-plan, there is a provision for distributing 1 cow per every BPL household along with 5 day training on cattle management after the formation of a cooperative society with at least 10 members. The scheme, however, has not been implemented satisfactorily since community mobilization was inadequate and the process required a recommendation from the local MP/MLA. The department also provides a subsidy of 33.33% in association with various banks for procurement of animals under SGSY. Cows are procured by department of AHVS from other states like West Bengal, Haryana etc. Some local dairy based entrepreneurs reported sourcing cows from Kurseong and also Pashupati in Nepal through the Sukhia border between Nepal and Sikkim. Generally price paid for a good HF breed is around Rs 25-30 thousand while a Jersey breed is expected to cost around Rs 15- 20 thousand. Cross bred animals are expected to cost around Rs 10 -12 thousand.
Table 14 showcases the strength of the extension services in the two project districts.
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Table 14: Extension services in Dairy
Particulars Number in South District Number in West District Veterinary hospitals 2 3 Veterinary Dispensaries 6 6 Disease Investigation 1 1 Laboratories Artificial Insemination 27 38 centres Stockman Centres 21 16 Rinderpest checkpost 1 1 Source: NABARD Potential Linked Credit Plan 2011-12 for South and West Districts
The AHVS department has trained educated youth in the area to run Artificial Insemination (AI) centres at the GPU level. Semen, liquid Nitrogen and other equipments are regularly made available with these para-professionals. The charges for AI are paid after the cow gives birth, which is Rs 300-500 for a male calf and Rs 800-1000 for a female calf.
The KVKs located in each of South and West Districts also conduct various capacity building programs for dairy farmers on Dairy in association with external experts, best practitioners and AHVS department.
A recent drive by the AHVS department in promoting good breeds is expected to increase the number of cross bred cows with Holstein Frisian (HF) or Jersey variety. The department has established a Brown Swiss Farm at Ravongla and a State Bull Rearing Farm at Karfectar for promoting good breeds. However, as per the feedback of senior scientists of the department promotion of dairy among the poor should be focused on cross breed cows only since pure breed HF and Jersey are expensive, more prone to diseases and difficult to maintain under the known constraints of green fodder shortage during winters, water shortage and low capacities of the poor dairy farmer. The milk of pure breed HF is also low in fat and hence is expected to yield lower returns when marketed through the formal cooperative milk marketing channel. As per the department, a properly maintained cross breed jersey cow can yield around 20 litres of milk under ideal conditions.
The department recommends construction of Silage pits for storing fodder to address the shortage of green fodder during winter along with following special winter package of practices. The department also has completed an exercise in mapping mineral potential of entire Sikkim to find out mineral deficient areas and supplement adequate mineral mixture for these areas for enhanced milk productivity all year round.
4.3.7 Milk Marketing and role of Sikkim Milk
A majority of dairy farmers in each village are members of the milk producer’s cooperative society at the GPU level. These collection centres are equipped with electronic lactometers and necessary equipments for accurate measurement of fat and SNF in milk. There are generally 2 staff of the respective cooperatives for each collection centre who are trained in testing milk. Payment registers are maintained by the staff according to an index chart which determines due payments as per fat and SNF content. Payments to members are done weekly. Collection of milk occurs twice a day and the collected milk is transported by milk vans to nearest milk chilling units to be transported to the milk processing plant at Karfector near Jorethang. There are also around 40 deep freezers provided by Sikkim Milk to various cooperative
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societies. While the centre at Karfector caters to South and West districts, East and North districts are catered by a bigger unit at Tadong in Gangtok.
Sikkim milk has a minimum procurement price of Rs 16 for standard milk with 3.5% fat and 7.5% SNF. However, the quality of the milk in the surveyed villages have seldom reached the desired level in terms of fat and SNF. The average price at the village level that is fetched by the dairy farmer is around Rs 13 to Rs 15 per litre. Maximum price of milk at the village level was reported to be around Rs 19 per litre. (as per primary survey)
Sikkim Milk is associated with 286 cooperative societies all across Sikkim with 114 in the South and West Districts. Sikkim Milk has an association with West Bengal Dairy and Poultry Development Corporation for bulk procurement of Himul dana. The annual report of Sikkim Milk signifies that in 2008-09 procurement of milk was 2213048 litres and 718201 litres from South and West District respectively. Sikkim Milk has the following products under its belt:
o Pasteurized Fresh Cow Milk o Toned Milk (3% fat and 7.5% SNF) o High Cream Milk o Butter o Paneer o Curd o Lassi o Chhurpi
Sikkim Milk has institutional tie ups with the Army cantonments in Sikkim for regular supply of milk and milk products. Linkages with IRCTC are also in the process. Apart from this a chain of retailers and milk parlors are associated with Sikkim Milk for marketing of the aforesaid products. Sikkim Milk is also supplying surplus milk to West Bengal.
The cooperative societies associated with Sikkim Milk gets the following benefits from Sikkim Milk:
o Commission to the societies at 3.3% of the value of milk procured. o Societies received bonus in the year 2009-10 at 50% of the average monthly milk supplied. o Supply of Cattle feed at cost price to the farmers with transportation costs being borne by Sikkim Milk. o Provision of milk cans at subsidized cost. o Provision of mineral mixture, de-worming and medicines free of cost according to availability under different projects/grants. o Provision of Bulk Milk coolers and deep freezers under various projects / grants. o Emergency veterinary support o Free Capacity Building to members and functionaries
While a majority of the milk nowadays is collected by the milk collection centres, a few dairy farmers with enough scale directly sell milk to consumers, hotels and restaurants in major markets of Namchi, Jorethang etc. This milk is not processed (although adulterated with water in some cases) is often sold twice a day to fixed consumer households, hotels, restaurants, sweet shops etc. The price of milk ranges between Rs 20-30 per litre based on the quality of the milk. In some cases, the farmer also collects milk at
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the village level to achieve scale and then supplies the same in the market. The payment for regular household level or hotel supply is generally made monthly.
There are a few milk producer groups which have come a long way in manufacturing of milk products and marketing the same. Naya Bihane SHG (men SHG) of Lower Okahare procures milk at the village level and uses a cream separator to make paneer, butter and Chhurpi. The products are packed and branded “Naya Bihane” before marketing through different channels (retailers based at Gangtok, Jorethang, Sombarey and Dharamdin). The SHG is selling around 4 kgs of paneer every day at Rs 140 per kg to these retailers. However, the SHG is restricted to scale up due to the need of advanced machinery and refrigerators.
An Alpine cheese factory at Dentam has been set up under the Indo –Swiss project. The factory is administered by a cooperative society which also procures around 2500 litres of milk everyday from local dairy farmers. Amul is currently marketing the cheese manufactured by the factory.
4.3.8 Constraints-Solution Matrix
Table 15: Constraint Solution Matrix for Dairy
Factor Constraints faced by small and poor Critical Intervention points dairy farmers Input sourcing Availability of adequate water and Establish a formal arrangement with and Production green fodder round the year. the AHVS department and Sikkim Low productivity of cows. Milk for ensuring availability of good Availability of good cross breed cows. quality cross bred cows. Dairy farmers different qualities and Promote Silage pits for storing green quantities of cattle feed resulting in fodder. non standardization of practices Identify and promote specific cluster of villages for specially producing fodder. Ensure adequate availability of mineral mixtures and nutrition supplements at all project village levels. Create village level cadre of technical persons to provide technical services to dairy farmers regarding productivity enhancement. Regular training on best practices and exposure visits to best practitioners in the local area.
Access to Availability of timely and right amount Organize poor famers in SHGs to link finance of credit for working capital and them with local banks to ensure their sourcing cows is an issue. Bank loan financial inclusion. also requires a lot of paper work. Develop partnership with existing MFIs and banks working in the area MFIs and banks encourage them to provide loan but their loan products develop specific loan products for don’t match expectations of dairy commercial dairy farming and farmers. Even established dairy expansion
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Factor Constraints faced by small and poor Critical Intervention points dairy farmers entrepreneurs face problems in scaling The Project can also fund the activity their activities due to lack of adequate directly. bank finance. Marketing Payment for milk is based on fat and The project can facilitate proper SNF content which is low in cow milk. organic certification of milk and The niche value for cow milk is not develop niche markets for cow milk to accrued to the producer. enable premium prices for the poor Although the milk produced in Sikkim producer. is primarily organic, there is no premium price to producers for being organic. Cooperation There is low affinity among farmers Guide dairy farmers for collective among farmers for collective action for sourcing of sourcing of feed and fodder to reduce and institutions feed and fodder in higher operating operational costs. building costs. Govt. policies Low outreach of schemes for dairy Appoint implementing agencies and and external promotion among poor. develop village level service providers ecosystem Blockage of roads and landslides may to help famers link with need based lead to market failure making dairy government schemes and services. activity unviable. Development of adequate milk chilling and storage mechanism at village level to withhold milk from perishing during roadblocks due to landslides.
4.3.9 Project Interventions
Project can promote Dairy farming to be taken up by SHGs and dairy groups in a cluster. Individual farmers will be keeping cattle for milk production but sourcing of feeds and fodder can be done collectively. Marketing can be done through the cooperative societies associated with Sikkim Milk. Special marketing infrastructure can be build and existing infrastructure of Sikkim Milk can be enhanced by the project to facilitate efficient marketing of milk once the total volumes of milk in both the district enhances due to project interventions. Project need to work on strategies and capacity building inputs suggested in the previous section and by adopting an implementation plan described later. Project can facilitate funding to individual farmers on the basis of unit cost described below.
4.3.10 Economics of Dairy farming (for 1 houshold keeping 3 cross breed cows)
a. Assumptions
Calculations have been done for 3 cows with 1 acre of land for fodder cultivation. Cost of various inputs and outputs are based on information collected from villagers, entrepreneurs, market players, Sikkim Milk and AHVS department. A silo pit for storing green fodder will be constructed at Rs 40,000 per year for 10 dairy farmers. The rate of interest for bank loan is taken @ 12% per annum. The average price of milk is assumed to be Rs 18/ litre after following best practices. 3 cows will produce 20 litres of surplus milk per
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day. Income from selling 2 calves per year and selling dry cow dung has also been taken into account. Table 16: Financial plan for Dairy farming
Unit Total Sr. No Particular Unit Quantity Price Amount (Rs) (Rs) 1 Fixed capital 3 cross breed cows including 1.1 transportation numbers 3 15000 45000 Shed Reinforcement with locally 1.2 available materials lumpsum 1 5000 5000 1.3 Milk Cans and implements lumpsum 1 5000 5000 1.4 Total fixed capital 55000 2 Yearly Revenue generation Sale of Milk at Rs 18 per litre for 20 2.1 litres per day Days 365 360 131400 Sale of dry Cowdung at Rs 100 per bag (3 cows produce 15 bags per 2.2 month) Bag 12 1500 18000 2.3 Sale of 2 calves at Rs 5000 per calf lumpsum 2 5000 10000 2.4 Total Income 379 159400 3 Yearly Expenses Cultivation Expenses for fodder 3.1 (Napier) in 1 acre land lumpsum 1 5000 5000 Cattle feed (Hemul dana) at Rs 14 per 3.2 kg (1 kg per cow per day) Days 365 42 15330 Maize dust (Bhoosa) or paddy straw 3.3 at Rs 10 per kg (2 kg per cow per day) Days 365 60 21900 Oil cake (pina) at Rs 14 per kg (1 kg 3.4 per cow per day) Days 365 42 15330 Mineral Mixture at Rs 15 per kg (0.5 3.5 kg per cow per day) Days 365 22.5 8212.5 Calcium Supplement at Rs 100 per 3.6 litre (1.5 litre per cow per month) Months 12 450 5400 Labour Charges at Rs 15 per cow per 3.7 day Days 365 45 16425 Silage pit for Fodder storage (Rs 3.8 40,000 for 10 farmers) lumpsum 1 4000 4000 3.9 Artificial Insemination charges lumpsum 1 4000 4000 3.10 Insurance lumpsum 1 1000 1000 3.11 Total running cost 96597.5 4 Profit before interest 62802.5 Interest (12% per annum on Total investment including fixed 5 capital) 12% 151,598 18191.7 6 Net profit 44,611 7 ROI 29.43% 8 Payback period Year 2.413877
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b. Sensitivity Analysis for Dairy
Table 17: Sensitivity Analysis forDairy
Revenue Expenses Profit before Sr. No Parameters (Rs) (Rs) interest (Rs)
1 What if labour utilized is family labour 159400 80172.5 79227.5 2 What if running expenses go up by 10% 159400 106257.3 53142.75 3 What if running expenses fall by 10% 159400 86937.75 72462.25 What if average price of milk decreases by 4 Re 1 152100 96597.5 55502.5 What if average price of milk increases by 5 Re 1 166700 96597.5 70102.5 What if average productivity of milk goes 6 up by 1 litre 165970 96597.5 69372.5 What if average productivity of milk falls 7 by 1 litre 152830 96597.5 56232.5
4.3.11 Implementation plan for Dairy promotion
Table 18: Implementation plan for Dairy
Key steps to be Activities to be performed by project followed
Phase I – Preparedness at the community level
Cluster selection Select the right cluster for initiating dairy promotion based on technical feasibility. Identify target block, village and the community. Social mobilization Sensitize poor dairy farmers on potential of dairy using the findings of value and institution chain analysis described earlier and their impact on livelihood. building Share various possibilities of Dairy, its cost benefit analysis, and assess community interest level to take up the activity.
Identify the members/groups to start Dairy as a new unit. Initially only a limited number of groups should be encouraged to start the activity. Based on the results of pilots add more members. List out members separately who are already doing the activity and want to either expand or strengthen the activity. Initiate participatory discussion to arrive at consensus on roles and responsibilities of members and group leaders to take up the activity. Preparation of Prepare a proper business plan for Dairy in consultation with the business plan community detailing the economics of the activity, sourcing of inputs, linkages with market players, production practices and technology to be used, and government schemes to be availed. Capacity building Leadership training for group members–functions and responsibility to interact with external players.
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Training in business and marketing skills (costing, pricing, accounting, sales and marketing, negotiation, market analysis) to members using participatory techniques. Technical training on better practices, exposure visits to nearby best practitioners and outside the states as well. Identify suitable government and private agencies that can provide need- based technical and business training at the community level. Identify local level best practitioners. Phase II - Launching of the unit
Backward linkages Counsel farmers to procure feed and fodder collectively in bulk to reduce operational costs. Systematize training management. Establish finance support for Dairy on unit cost basis. Production Implement best practices. Clarity of roles, specialization and continuous skill improvement Bring quality control in production to achieve efficiency, higher productivity at lower costs. Better record keeping and financial management. MIS development and multidimensional intervention opportunity. Market access Identify suitable and multiple markets and prepare list of market players with their contact details for sourcing inputs. Identify niche markets for cow milk and organic milk. Clarify on profit sharing and funds rotation among members in case of group activity. Understand organic certification norms and methodology to obtain organic certification. Prepare special action plan for the same. Build System for collaborations and employment
Possibilities of Partnership
Partnership possibilities exist with AHVS department and Sikkim Milk union.
As mentioned earlier, Sikkim Cooperative Milk Producers Union Ltd. (Sikkim Milk) is already functional in the project area and can act as a ideal stakeholder in promoting cluster based interventions around Dairy for the project. However, the institution needs support in strengthening its infrastructure and building appropriate capacities to specially include the project beneficiaries under its umbrella. A 3 year plan jointly prepared by Sikkim Milk and MART, for the project to support Sikkim Milk is annexed with this report.
Possibility of setting up processing unit
There is a possibility of processing milk into milk products like ghee, butter, churpi etc. However, setting up such processing units at the village level would require sufficient entrepreneurial skills among poor, marketing and technical skills, and ensured market linkages with bulk buyers to sustain such units. The demand at the village level is low and marketing of products outside would require successful marketing interventions such as proper packaging and branding. Sikkim Milk is already processing the same. It is, therefore, suggested that for first couple of years poor (both individuals and groups) should encouraged
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for milk production, productivity enhancement and market linkages. After a couple of years project can identify few individuals with entrepreneurial skills to experiment setting up few processing units.
4.4 Value Chain of Ginger
4.4.1 Background
Ginger (Zingiber officinale) is an herb that is native to South East Asia and has been used as a food additive for more than 4,000 years, and for medicinal purposes for more than 2,500 years. Originaly cultivated in China ginger is now equally spread around the world. It is the "root" of the ginger plant (which is actually not a root, but a rhizome) that is most useful for medicine and for flavoring food.
The eight North Eastern states of India accounts for 49% of India’s Ginger producing area and 72% of India’s ginger production. Ginger is an important cash crop of Sikkim. It is grown by all section of farmers including small and marginal farmers. The ginger available in Sikkim is less fibrous with high moisture content. Ginger produced in these parts are reported to have higher oil (5.9-8.56%) than ginger from other parts of India (5-8%). (Source: Traditional practices of ginger cultivation in Northeast India; H Rahman, R Karuppaiyan, K Kishore & R Denzongpa; Indian Journal of Traditional Knowledge).
Figure 7: Production trends of Ginger
Year wise area under Cultivation and Production of Ginger in India (Source: Ministry of Agriculture and National Horticulture Board) Production ('000 Tonnes) Area under cultivation ('000 hectares) 600
500 391.2 393.4 382.6 380.1 359.0 322.1 400 301.9 282.6 288.0 280.2 252.1 263.2 300
200
100 95.3 110.6 106.1 104.1 108.6 75.6 77.6 80.8 86.2 91.3 88.2 85.1
0
Figure 7 shows the trend of ginger production in India from 1997-98 to 2008-09 which clearly shows a fall in productivity and production since the last 5-6 years.
The last five years have been crucial for ginger production in Sikkim as well, since the state has stopped using chemical fertilizers and pesticides for ginger cultivation. Use of chemical fertilizers and pesticides
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has been banned all across the state. Currently only preventive organic pesticides like Neem is being used by farmers. The most common problem faced by ginger farmers of Sikkim is soft rot, which is the most destructive disease of ginger resulting in total loss of affected clumps. Different research agencies like Indian Council for Agriculture Research (ICAR) and Krishi Vigyan Kendra (KVK) are still in the process of developing curative organic pesticides for the same. This has resulted in a marked decrease in production and productivity of ginger due to high incidence of diseases.
However, in-spite of the problems faced, ginger remains as one of the most important cash crops of the state.
4.4.2 Feasibility of Activity
Technical feasibility
The agro climatic conditions of West and South districts of Sikkim (project area of NERLP) are suitable for ginger cultivation. Ginger available in Sikkim is less fibrous with high moisture content. Ginger produced in these parts are reported to have higher oil (5.9-8.56%) than ginger from other parts of India (5-8%). This attributes to the good quality of ginger that ios produced from this state. Sikkim has around 7000 hectares under Ginger cultivation which annually produces around 377000 tonnes. This accounts for around 9.8% of India’s production. (Source: Ministry of Agriculture, Govt. of India - 2007-08) The basic skill for ginger cultivation is available with the poor community. Ginger is also cultivated across all sections of the farmer community, big or marginal alike. There is an enabling environment in the state for ginger cultivation with the horticulture department providing regular trainings and inputs for ginger cultivation. The department supports around 300 hectares of ginger cultivation every year in the two project districts of South and West alone with seeds, bio fertilizers etc. Research agencies like the ICAR and KVKs are also conducting research to enhance productivity and counter diseases in ginger cultivation.
Market feasibility
The quality of ginger produced in Sikkim is one of the best in country as per market demand. Thus the Sikkim’s variety of ginger fetches the best prices in the market. There is well organized market network in the state for ginger. Villages of South and West districts are connected to various assembled markets like Namchi, Jorethang, Soreng, Singtam, Reshi etc. Ginger from all these markets are traded through Siliguri regulated market. There are multi purpose cooperative societies formed in almost all Gram Panchayat units which deal in ginger. These societies either trade by themselves or pass on their produce to Sikkim State Cooperative Supply and Marketing federation Ltd. (SIMFED). SIMFED has a counter at the Siliguri regulated market and also linked to various national and international buyers. Siliguri, the main regulated market of the area is a major ginger hub of the country which supplies ginger to Delhi, Mumbai, Kolkata etc National markets as well as international markets like Bangladesh. There are around 150 national and international level traders dealing in ginger having counters at the Siliguri regulated market. As estimated by ginger traders, an average of 1500 tonnes of ginger is traded out of Siliguri every day.
Economic feasibility
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The ideal investment is Rs 23300 per acre. The overall income per acre is around Rs 17844 with 73.6 % return on investment. Finance is available from SISCO bank, other commercial banks and Micro finance institutions like BASIX and Bandhan. However, the available finance from banks is often not adequate for the ginger farmer and special financial support in ginger cultivation is expected from the project. The Potential Linked Credit Plan prepared by NABARD outlays Rs 444 lakhs for West District and Rs 740 lakhs for South District for bank loan on Ginger cultivation for the year 2011-12. This target allocation has increased by 57.2% in South and 34.7% in West district signifying a thrust on the activity.
4.4.3 Production clusters
Sikkim produces one of the best qualities of ginger in the country.Ginger cultivation is generally practiced throughout the state. The project districts of South and West Districts are ideally suited for ginger cultivation and almost all villages are well suited for Ginger cultivation. Productivity of Ginger is found to be best in villages with heights between 2000 feet to 4500 feet.
4.4.4 Major usage and by-products
Ginger has a strong distinct flavor that can increase the production of saliva due to which Ginger is mainly consumed as a major spice and flavor ingredients all across the globe. Pickles, ginger flavoured tea, candy, toffees, lozenges etc are also common. A Government Fruit Preservation Factory by the Governemnt of Sikkim is functional at Singtam which
Compounds in the ginger rhizome, called oleoresins, have anti-inflammatory properties and are also known to have a positive effect on the muscles in the digestive tract. Thus Ginger is often an important ingredients in various medicines, chawanprash, syrups, health tonics, cough tablets, digestive tablets etc various applications.
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4.4.5 Ginger value chain map
Figure 8 is a depiction of the value chain of Ginger in Sikkim. Figure 8: Value chain map of Ginger
Consumers Consumers Consumers
(Local market)
Retailers Retailers Retailers Rs 5500-7000/q (Outside Sikkim) (Outside Sikkim) (Gangtok, Namchi, Jorethang)
Wholesalers Wholesalers Rs 4500-5500/q (Delhi, Mumbai, Kolkata) (Delhi, Mumbai, Kolkata)
Wholesalers Wholesalers Rs 3500 -4500/q Wholesalers (Siliguri) (Siliguri) (Siliguri)
Traders at Traders at SIMFED Rs 2500-3500/q Jorethang, Reshi, Namchi, Jorethang, Reshi, Namchi, Namthang,etc. Namthang,etc. Multipurpose Cooperative Societies Village level traders Rs 2000 -2500/q*
Ginger Farmers
Input Supply from farmer’s own sources Seeds, bio-fertilizers, agriculture implements, equipment, cow dung
* The rates given are for fresh Ginger and ‘q’ stands for quintal.
Siliguri is the terminal market for ginger not only for Sikkim but also for all other North Eastern states and West Bengal. Ginger in Delhi, Kolkata, Mumbai and other major cities of India are mainly sourced from Siliguri. There are also regular international consignments to Bangladesh from Siliguri. Ginger is sold throughout the year. However the ginger sold through vegetable retailers at Gangtok, Namchi, Jorethang etc. urban centres of Sikkim often come from Siliguri except during the harvesting season. By the time the produce reaches consumers in major cities, almost 3 times value is accrued to Ginger from the base value that the producers get. High transaction costs also contribute the enhanced value of Ginger.
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4.4.6 Input suppliers
The main inputs required for Ginger cultivation are seeds, organic fertilizers and agri implements. Under a directive by state government, the farmers of Sikkim have stopped using chemical fertilizers and pesticides for Ginger production. Chemical pesticides and fertilizers usage is not only banned by all Gram Panchayat Units, but also sale of such products are banned in markets. The GPUs have a system of imposing fines in case of non compliance.
Currently, the only fertilizer being used is cow dung. Ash is also applied as a fertilizer. Neem is often used as a preventive fungicide / pesticide. However, there is a dearth of availability of curative organic fungicides and pesticides. Horticulture department provides certain bio fertilizers free of cost but only to a limited number of farmers. As mentioned earlier, research is being undertaken at KVKs and other ICAR organization for developing suitable bio fertilizers, fungicides and pesticides.
4.4.7 Farmers
Farmers generally keep seeds from previous year harvest. Seeds are also procured from nearby open markets. Farmers are also provided free of cost seeds and other inputs from the Horticulture department. Cow dung is often used from farmer’s own sources since almost all farmers keep cattle and bullocks. Around 70% of the farmers in the surveyed villages had their own bullock pairs for ploughing. Since the fields are terraces cut out on hill slopes, mechanization of the ploughing process in the form of tractors or power tillers is either not possible or very difficult. Irrigation is through natural springs (locally called Dhara) and water tanks specially constructed by Horticulture department or department of soil and water conservation. However irrigation facilities are very much limited and ginger cultivation in Sikkim is primarily rain fed.
A collective farming system called Parma system prevails among many communities in Sikkim in which friends and relatives of individual farmers come together to work in the fields of the farmer free of cost. Mutual help saves labour costs.
4.4.8 Production practices
In the selection of land for ginger cultivation, fields where water stagnates are avoided. Farmers also believe that planting the same land every year does not produce a good crop. Chosen fields are cleared of all vegetation by burning and the ash is also used as fertilizer. The land is then ploughed, dug and hoed. A second plowing occurs 15 to 18 days later. Cow dung is applied to the fields and they are plowed again to mix the manure into the soil. Beds 20 to 25 cm high are prepared with drains between them. Just before planting, the stored ginger seed rhizomes are sorted again. Good healthy rhizomes, that are, large, shiny, free from spots or marks, and free from bud or eye injury, are selected.
The selected ginger rhizomes are planted in two or three zigzag rows in the beds and covered with up to 8 cm of soil. The spacing between the rhizomes are about 15 cm. Some farmers believe that to increase production, one can plant three or four rows in a bed. During planting the seed rhizomes are broken into pieces to ensure that each has two to four sprouts. Immediately after planting, the beds are mulched with dry leaves up to 8 to10 cm thick. Some farmers use mulch made by putting grasses in the cowshed for a few days so that it mixes with cow urine and dung. Mulching protects the seedlings from rain, prevents
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weed growth, keeps the soil soft and moist, and accelerates growth. Most farmers, practice intercropping with maize as maize plants provide shade to the ginger. Maize is planted in the drains in between the beds.
After about a month, the beds are weeded. Ginger shoots are still very small and the chances of damage to them are high. Weeds are uprooted and disposed of outside the bed. When the ginger plants have three or four leaves, the mau or mother rhizome is removed, although if it is too small, it is left in place. Care is taken not to damage the roots and cause infection. The roots are immediately covered again with soil. The mau is sold off to traders at Namchi, Jorethang, Reshi etc. markets which fetches anywhere between Rs 3500 to 4500 per quintal. Fifteen days after mau extraction, manure is applied.
To keep the seeds for the next season, healthy looking plants are selected i.e. plants that are not dried, which are harvested 15 to 20 days before and stored in a dry, shady place. The rest of the crop is harvested for sale. Some farmers harvest the entire crop and then select healthy rhizomes and store them either in a pit covered with straw or in a cool, dry place in the house or godown.
If seeds are bought from open market or obtained from government sources, they are stored in house in a cool, dry place covered with gunny bags or outside in a dry, shady place. The ginger for sale is harvested depending on the market price. Farmers usually change the seed every two to three years to reduce the prevalence of disease. A few rich farmers also store the harvest to sell in off season when prices are comparatively higher.
Bhainse, Gurubathane and Majauli are the three types of Ginger harvest based on their respective sizes of the harvested rhizomes. However, there are little efforts by farmers to sort the produce according to their sizes and sell the same. However, the Bhainse variety fetches better prices than Gurubathane and Majauli.
Farmers have been experimenting with various disease management practices in different villages. Some Lepcha farmers clean all the mud from the bottom of the diseased plant and expose the roots to the sun. Rotten plant roots are scratched and ash is applied. Some believe that just exposing the roots of infected plants to the air and sun can stop further spread of disease. The farmers say that these roots or rhizomes germinate and grow well. Some farmers cultivate ginger only in sloping fields using traditional methods, that is, without much land preparation. They just scratch the soil to make a hole and plant the rhizome seed in it. Many farmers contend that red soil helps control disease.
4.4.9 Market access
Farmers sell Ginger in local weekly haats, to local traders and traders at Namchi, Jorethang, Legship etc. rural and urban centres. All transactions are done in cash. Sikkim has a very vibrant cooperative system at the village level and some multipurpose cooperative societies at the GPU level also procure Ginger from farmers and sell the produce to wholesalers at Siliguri through SIMFED. In the surveyed villages, while around 20% of the produce was sold through village level traders and cooperative societies, another 20% were sold through weekly markets and 60% is sold directly to traders at Namchi, Jorethang etc. urban centres.
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Ginger is generally sold loose by farmers without much cleaning and value addition. The unit of sale is Mon which is equivalent to 40 kgs. The average price received by farmers is Rs 2000- 3000 per quintal. When sold directly to town level traders, farmers generally bring their produce in jute bags (borra) via local jeep transport. After selling the produce the jute bags are taken back by the farmers.
4.4.10Village level traders
Village level traders generally deal in multiple produces and receive advances from wholesalers in Siliguri for procuring Ginger from farmers at the village level itself. A section of these traders are also linked to town level traders for passing on the produce to them in the value chain. The village level trader in some cases were found to undergo basic value addition to the procured Ginger in terms of cleaning, sorting, grading and standard packing the ginger into jute bag (borra) packets of 60 kgs. Village level traders of the surveyed villages transport their produce in half trucks at an average cost of Rs 10 per Borra (60kgs) to town level traders. Sometimes local transport jeeps are also used as transport.
4.4.11 Town level traders
A large section of the town level traders constitute of Bihari community along with Marwari community. These traders are the major aggregators of Ginger at the town levels and also form the main link with wholesalers in Siliguri. While Namchi has around 50-60 such traders, Naya Bazaar near Jorethang houses another 70-80. The town level traders grade the produce according to parameters like size of rhizomes, quality, moisture content, colour etc. Generally the market area from which the produce has originated bears much importance in marketing of Ginger. e.g the Melli quality named after the market of Melli in South Sikkim is one of the best qualities of Ginger. Similarly Reshi and Singtam variety refers to the market of Reshi of West Sikkim and Singtam in East Sikkim respectively which procures a bulk of the Ginger of the area but has lower quality attributes. There is a price difference of around Rs 5-8 per kg between these qualities. The procurement prices of Ginger in these town level markets fluctuate often according to the demand and supply conditions of the Siliguri market. These traders negotiate with wholesalers in Siliguri and finalize deals telephonically before sending the produce. Later they themselves visit Siliguri to collect their due at least once in every fortnight. The traders store the procured produce in their own godowns and sends off the collected produce to Siliguri regulated market every week. A primary function of the town level trader is to grade the collected produce and pack them in standard packing sizes of 60 kg jute bags. The weight of the jute bag which is around 900 grams and costing around Rs 25 per piece is also included in the weight of the packet. The labour charges incurred by the trader are around Rs 10 for packing, weighing and loading the packets onto the vehicles of transport. The town level traders often deduct 3-4 kgs per packet while paying the farmer his dues by accounting for impurities in his ungraded produce. There is also incidence of cheating in weights where at least 1-2 kgs per packet goes unpaid for.
4.4.12 Transportation
All types of transport vehicles are used for transport of Ginger ranging from Half trucks with 2-5 tonnes capacity to 9 tonnes and 16 tonnes capacity trucks. There are around 8-10 different transporters in Namchi alone who own trucks. As informed by some interviewed traders around 4-5 trucks of 9 tonnes
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capacity ply every day from Namchi to Siliguri carrying ginger during the harvesting season. A 9 tonne truck is also reported to carry around 180 packets as an optimum. The transportation charges charged by transporters are around Rs 40 per packet from Namchi to Siliguri. The same cost varies as per distance like from Melli it is Rs 30 per packet and from Geyzing it is Rs 45 per kg. This includes various costs of transport like Sikkim Nationalized Transport tax of Rs 9 per packet, West Bengal regulated market tax of Rs 6 per packet, charges for crossing over to the state border (often referred as Gunda tax), bribe to policemen etc.
4.4.13 Wholesalers
There are around 150 wholesale Ginger traders in the regulated market for Agri-Horti produce in Siliguri. Ginger from Sikkim, Darjeeling, Kalimpong , Dimapur, Shillong, Guwahati, Aizwal etc. converge in Siliguri to be traded to all corners of the country. In this market the quality of Ginger is differentiated not only by the area of origin like town level traders but also by the thickness of the Rhizome which are Mota (thick) or Patla (Thin). While the produce of Sikkim is largely thick, the variety of Ginger from other North Eastern states of Mizoram, Nagaland and Meghalaya are of thin quality. The thick variety is reported to be of demand in Delhi and North Indian places while the thinner quality is in demand in the eastern parts of the country like Kolkata, Patna and also Dhaka in Bangladesh.
The produce after arriving in the regulated market undergoes a washing (in the river or specially constructed tanks) and grading again to be repacked into packets of 60 kgs. The washing of the produce brings about a special glaze to the ginger which not only fetches a good price also restores the lost moisture. However, only the fresh ginger is washed and mother rhizhome (Mau) is not washed. There are around 15-20 organized players in the regulated market who exclusively performs the washing grading. Expenses per packet of 60 kgs for each process is as follows;
Unloading charges: Rs 2.5 (charges fixed by labour union) Washing: Rs 25-30 Sorting and Grading: Rs 3 (done by women and charges fixed by labour union) Packing, weighing and Loading: Rs 7 (charges fixed by labour union)
There are generally three types of deals that generally occur between town level trader and wholesalers in Siliguri.
1. The wholesaler acts as a commission agent in selling the produce to wholesalers in other places of the country. The commission charged is 5% from both parties (seller and buyer) and all other costs like sorting, grading, washing, weighing, loading, etc are borne by the seller. Unloading expenses is borne by the buyer. The responsibility of taking the produce to the regulated market is also with the buyer. The wholesaler plays the mediator between the buyer and seller. 2. The wholesaler acts as a trader and negotiates a deal from the seller by fixing the price of the produce per quintal such that whatever be the prevailing prices in the market, the deal will be carried out at the negotiated prices only. Under such circumstances all expenses are generally borne by the wholesaler himself including transportation charges. The wholesaler decides himself whom to sell and at what price to sell and the buyer and seller do not come face to face with each other.
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3. The wholesaler acts as a service provider between two parties (seller and buyer) and does not charge a fixed commission but a facilitation and service provision charge for arranging transportation and other services. All expenses are borne by the parties and certain services like transportation, loading, grading etc are provided by the wholesaler.
Some transport costs per kg as reported from traders in the regulated market are Rs 2.3o for Delhi (Azadpur Mandi) and Rs 2 for Kolkata (Barabazaar).
There is some weight loss (around 1 -2 kg per packet) reported of the Ginger by the time it reaches its destination in Delhi or Kolkata. This is due to the loss of moisture that occurs in the fresh Ginger. To counter this weight loss the packet size is made at 61 kgs instead of 60 kgs. This weight loss is however very little for mau or the mother rhizome.
The actual produce is often devalued on paper to reduce the imposed sales tax on the item. The financial transactions that occur between various wholesalers are not always through ethical or legally sound channels with a majority of them being conducted through Hawala at a commission of 3%. There are also reported systems of bribes to the tune of Rs 5 lakhs per annum from the regulated market for these transactions to continue unhindered.
4.4.14 Constraints-Solution Matrix
Table 19: Constrain Solution Matrix for Ginger
Factor Constraints faced by small farmers Critical Intervention points Input sourcing Ginger seeds from the government Establish a formal arrangement with and Production department are distributed to only a the Horticulture department for handful of farmers who are not ensuring adequate supply of Ginger marginal or poor. seeds and fertilizers to farmers. Availability of bio fertilizers other Support KVK and ICAR in speedy than ash and cow dung. research of appropriate organic Availability of organic fungicides and fertilizers, fungicides and pesticides. pesticides. Appoint implementing agencies and Incidence of diseases like Poinle or develop village level service providers Soft rot. to help famers link with need based Farmers who took one-time training government schemes and private from agriculture department didn’t services. get the desired yield. By hit and trials Create village level cadre of technical approach they develop package of persons to provide technical services practices. to farmers. Cold storages are very far and few. Regular training and exposure visits to best practitioners in the local area can help poor farmers. Set up new cold stores after feasibility study. Access to Availability of timely and right Organize poor famers in SHGs to link
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Factor Constraints faced by small farmers Critical Intervention points finance amount of credit is an issue. Bank them with local banks to ensure their loan requires a lot of paper work and financial inclusion. farmers’ don’t have proper papers Develop partnership with existing against their land. The loan provided MFIs and banks encourage them to is also inadequate for ginger farming. develop loan product for Ginger MFIs and banks working in the area cultivation based on its economics. provide loan but their loan products The Project can also fund the activity don’t match expectations of farmers. directly. Value addition Farmers do not clean their produce Cleaning, sorting and grading should and sells off the produce immediately be taken up at the village level by after harvesting without sorting and farmers to maximize profits. grading Capacity building of farmers should be done in taking up elementary value addition. A 7.5 MT/day capacity ginger processing plant has been commissioned recently at Jorethang which will be operated by SIMFED. The centre can cater to the needs of the poor farmers in the project area through convergence by NERLP. Market access Farmers sell individually to the village There is scope for collectivizing level trader or town trader resulting in farmers to sell collectively and directly higher overhead marketing costs to higher order markets at towns and Farmers get 1/3 rd of value paid by the Gangtok for better price realization. final consumers Cooperation There is low affinity among farmers Guide farmers for collective sourcing among farmers for collective action for sourcing of of seeds and marketing to reduce and seeds and sale of Ginger resulting in operational costs. institutions higher operating costs. building Govt. policies Blockage of roads and landslides may Development of local market system and external lead to increase in input costs and will reduce dependence on external ecosystem market failure making Ginger markets. cultivation unviable.
4.4.15 Project Intervention
Project can promote Ginger cultivation to be taken up by an individual family. Individual farmer will do the production but sourcing of seeds and marketing can be done collectively.
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Project need to work on strategies and capacity building inputs suggested in the previous section and by adopting an implementation plan described later. Project can facilitate funding to individual farmers on the basis of unit cost described below.
4.4.16 Economics of Ginger cultivation (for 1 acre) a. Assumptions
Calculations have been done for 1 acre of land for Ginger cultivation activity. Cost of various inputs and outputs are based on information collected from villagers, market players and agriculture department. The rate of interest for bank loan is taken @ 12% per annum. Bank loan is considered for 1 year. The wholesale price of Ginger is taken as Rs 25/kg for Manjali and Gurubathane varieties while Rs 30/kg for Bhainse and Rs 40 /kg for Mau. Table 20: Financial plan for Ginger cultivation
Unit Price Total Sr. No Particular Unit Quantity (Rs) Amount(Rs) Fixed capital (Agri-implements, 1 packing and storing materials) lumpsum 1 1000 1000 2 Revenue generation Sale of Majauli and Gurubathane 2.1 ginger (Rs 25 per kg on average) Quintal 5.4 2500 13500 Sale of Bhainse ginger (Rs 30 per kg 2.2 on average) Quintal 5.4 3000 16200 Sale of mother rizhome (mau) (Rs 40 2.3 per kg on average) Quintal 3.6 4000 14400 2.4 Total Income 14.4 44100 3 Cultivation Expenses Land preparation (2 times ploughing at 3.1 Rs 200 /plough) Plough 2 200 400 Fertilizer Application (raw cowdung cowdung 3.2 100 baskets at Rs 20 per basket) basket 100 20 2000 Seed cost (360 kgs at Rs 35 per 4 kg) Kg 360 35 12600 5 Labour Expenses Labour employed for fertilizer application and seeding (10 5.1 persondays) Persondays 10 100 1000 3 times weeding (requiring 10 5.2 persondays per weeding) Persondays 30 100 3000 Labour charges for extraction of 5.3 Mother rizhome (10 persondays) Persondays 10 100 1000 5.4 Labour charges for harvesting and Persondays 10 100 1000
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Unit Price Total Sr. No Particular Unit Quantity (Rs) Amount(Rs) storage (10 persondays) 6 Marketing expenses Labour charges for cleaning, sorting 6.1 and grading Quintal 10.8 100 1080 Transport charges to nearest town level 6.2 market Quintal 14.4 50 720 6.3 Miscellaneous marketing expenses lumpsum 1 500 500 7 Total running cost 23300 8 Profit before interest 20800 Interest (12% per annum on Total investment including fixed 9 capital) 24,300 12% 2916 10 Net profit 17,884 11 ROI 73.60% 12 Pay back period Year 1.16
b. Sensitivity Analysis for Ginger cultivation
Table 21: Sensitivity analysis for Ginger
Profit Total Revenue Expenses before Sr. No Parameters Investment (Rs) (Rs) interest (Rs) (Rs) 1 What if productivity of ginger 38050 23300 24300 14750 goes down by 20% 2 What if running expenses go up 44100 27960 28960 16140 by 20% 3 What if sorting grading is not 41400 23300 24300 18100 done and output is sold at Rs 25 per Kg 4 What if running expenses fall by 44100 18640 19640 25460 20% 5 What if selling price of fresh 50040 23300 24300 26740 ginger goes up by 20% 6 What if productivity of ginger 50150 23300 24300 26850 goes up by 20% 7 What if labour utilized is family 44100 15300 16300 28800 labour and cowdung is used from own sources
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4.4.17 Implementation plan for Ginger cultivation promotion
Table 22: Implementation plan for Ginger
Key steps to be Activities to be performed by project followed
Phase I – Preparedness at the community level
Cluster selection Select the right cluster for initiating Ginger promotion based on technical feasibility. Identify target block, village and the community. Social mobilization Sensitize Ginger farmers on potential of Ginger cultivation using the and institution findings of value chain analysis described earlier and their impact on building livelihood. Share various possibilities of Ginger cultivation, its cost benefit analysis,
and assess community interest level to take up the activity. Identify the members/groups to start Ginger cultivation as a new unit. Initially only a limited number of groups should be encouraged to start the activity. Based on the results of pilots add more members. List out members separately who are already doing the activity and want to either expand or strengthen the activity. Initiate participatory discussion to arrive at consensus on roles and responsibilities of members and group leaders to take up the activity. Preparation of Prepare a proper business plan for Ginger cultivation in consultation with business plan the community detailing the economics of the activity, sourcing of inputs, linkages with market players, production practices and technology to be used, and government schemes to be availed. Capacity building Leadership training for group members–functions and responsibility to interact with external players. Training in business and marketing skills (costing, pricing, accounting, sales and marketing, negotiation, market analysis) to members using participatory techniques. Technical training on better practices, exposure visits to nearby best practitioners and outside the states as well. Identify suitable government and private agencies that can provide need- based technical and business training at the community level. Identify local level best practitioners. Phase II - Launching of the unit
Backward linkages Counsel farmers to procure seeds collectively in bulk to reduce operational costs. Systematize training management. Establish finance support for Ginger cultivation on unit cost basis.
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Production Implement best practices. Clarity of roles, specialization and continuous skill improvement Bring quality control in production to achieve efficiency, higher productivity at lower costs. Better record keeping and financial management. MIS development and multidimensional intervention opportunity. Market access Identify suitable and multiple markets and prepare list of market players with their contact details. Engage in bargaining, marketing of produce and realize better price. Clarify on profit sharing and funds rotation among members in case of group activity. Build System for collaborations and employment Phase III – Up-scaling
Monitoring and Set up regular follow up and monitoring system to evaluate units from evaluation time to time to finds out gaps, take corrective steps and ensure delivery of appropriate extension services. Strengthening Facilitate secondary institution (producer group) to upscale and sustain Institution the initiative. Plan capacity building for strengthening of secondary institutions Diversify activities to increase income Create village level cadres to extend technical and marketing inputs to community at village level. Provide handholding and technical support to secondary institution Legal aspects Compliance to legal implications for excise, sales and VAT (once activity achieves scale it would be required to market Ginger directly to Siliguri regulated market).
Possibilities of Partnership
Partnership possibilities exist with Wholesalers, HCCD Department, SIMFED, Progressive farmers and Financial institutions.
Possibility of setting up processing unit
There is a possibility of processing ginger into pickle, candy etc. However, setting up such processing units at the village level would require sufficient entrepreneurial skills among poor, marketing and technical skills, and ensured market linkages with bulk buyers to sustain such units. The demand at the village level is low and marketing of products outside would require successful marketing interventions such as proper packaging and branding. It is, therefore, suggested that for first couple of years poor (both individuals and groups) should encouraged for ginger production, productivity enhancement and market linkages as supply of ginger in the state is going down steadily. After couple of years project can identify few
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individuals with entrepreneurial skills to experiment setting up few processing units. Project staff with marketing skill could be involved for conducting the detail feasibility study before setting up such units.
4.5 Value Chain of Pig
4.5.1 Background
Pork is naturally low in salt and a rich source of good quality protein. Lean pork is a great source of protein in your diet. Lean red meat when eaten with starchy carbohydrates, fruit and vegetables form part of a healthy, balanced diet. A 100g portion of pork provides about half of the protein needed in a day. It is also a good source of several vitamins and minerals needed for good health including iron, zinc, some of the B group vitamins, selenium and phosphorus. (Source: http://ireland-guide.com)
Sikkim’ after Orissa is the second state in India to come out with a unified livestock sector policy framework. Livestock sector contribution to Sikkim’s GDP in 2002 was over 6%. In Sikkim’s context livestock holds immense potential for diversification in agriculture, offering gainful employment and incremental incomes to tens of thousands of landless, marginal and small farmers. Livestock sector in Sikkim is highly livelihood intensive, agriculture along with livestock is the single largest employer in the state. over 80% of households in the state own livestock and earn supplementary income from them, distribution of livestock holdings is less iniquitous-over 80% of all species of livestock are owned by marginal and small holders.
Pigs account for 9% of livestock population in the Sikkim and pork contribute 8.13% to the total livestock asset value. In Sikkim pig farming has a special significance and can play an important role in improving the socio- economic status of the weaker community. Pig rearing is very popular among the tribal community in the State. It is due to food habits of the people in hills, every household reared few herds of pig to cater to their demands of meat. The State Government has extended a great help to the weaker sections of the society by arranging subsidy and Bank loan to popularize the pig rearing.
4.5.2 Feasibility of piggery in Sikkim
Technical feasibility The agro climatic conditions are suitable for pig promotion the state. There is one state veterinary hospitals in east district, four district veterinary hospitals, 7 sub division veterinary hospitals, 23 veterinary dispensary, and five piggery farm in the state. The basic skill for pig rearing is available with the poor community. Pig farms exist at Gyaba,Chungthang, Mangalbaria, Karfector and Tingvong. Two new pig farms have been set up; Assam Lingzey in east district and Melli dara in south district to provide sufficient number of piglets to farmers. There are also no social taboos or caste preference for Pig rearing in Sikkim except the Brahmin Chettri community and the activity is practiced by most ethnic groups across all sections of the farmer community, big or marginal alike. There is an strong enabling environment in the state for Pig rearing farming with the Department of Animal Husbandry Livestock Fisheries and Veterinary Services (AHVS) of providing regular
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trainings, required extension services and inputs. Research agencies like the ICAR and KVKs are also conducting research to enhance productivity in Pig rearing farming. Government is introducing improved breed of pig such as American Hampshire and White Yorkshire to improve productivity. The AHVS department has established 1 piggery farms in Gyalsing of West District and 3 farms in Karfectar and Ralong of South District.
Market feasibility Pork is an important part of the food plate for Sikkimese. There is a huge gap between the supply and demand of pork in the state. The current demand is 550MT and supply is only 150 MT per annum. Government to set up modern slaughter house at the Majitar with a pig line of carrying capacity of 50 numbers in one shift. There are 30 rural primary markets in the state where farmers can sell pig/pork directly to consumers.
Economic feasibility The cost of investment is Rs 124200 per unit. The net income per year is around Rs 75858 with 36.2 % return on investment. A pig are highly prolific, grows fast and farrows 8- 10 piglets at a time. Pigs convert inedible feeds, forages, grain by-product and garbage into valuable nutritious meat. Finance is available from SISCO bank, other commercial banks and Micro finance institutions like BASIX and Bandhan. A large number of SGSY loans have been disbursed around piggery activity in the state. The Potential Linked Credit Plan prepared by NABARD outlays Rs 29.25 lakhs for West District and Rs 58.5 lakhs for South District for bank loan on Pig rearing farming for the year 2011-12. This target allocation has increased by 19% in South and 11% in West district signifying a thrust on the activity.
4.5.3 Production Clusters
The Pig rearing activity by virtue of high demand in the state is suitable to be implemented in both the project districts of South and West. Since almost 60% household in all the surveyed villages keep pigs, Pig rearing farming can be easily taken up by the poor of both the districts. However, Piggery is best suited for mid hill and low lying areas in the state and the activity in the higher altitudes may not yield desired results.
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4.5.4 Value chain map of Pig
Figure 9 is a depiction of the value chain of Pig from the surveyed villages in Sikkim.
Figure 9: Value chain map of Pig
Pork: 110 - 120/Kg Consumers Pig Farmers
Pork Pork seller margin: shops in Temporary Rs 1000/quintal Namchi, shops in Gangtok, haats across Piglets for Jorethang Sikkim breeding purpose etc Pig for pork: Rs
100-110 per kg Breeding piglets: Rs
2000-200 / piglet Pig Farmers
Input Supply Fodder, Pig feed, nutrient supplements, implements, equipment, etc.
4.5.5 Input Supply and Production
The two most prominent players in the value chain of pig especially in Sikkim are the Pig rearing farmer and Sikkim Pig. Around 60% of the households of all the surveyed villages keep pigs. Average of 4-5 indigenous variety pigs are assets to all households who keep pigs.
The major fodder for pigs constitute of grasses, maize stocks, millet dust and maize dust (Bhoosa). Practices differ from farmer to farmer and many farmers do not use pig feeds especially for local variety pigs. Growth of pigs not fed with Pig feed is also low.
Feeds and supplements for Pig rearing, Poutry and Piggery are commonly available in special shops selling in major towns of Namchi, Jorethang, Namthang etc. There are feed factories in Siliguri producing cattle, poultry and pig feed in bulk. West Bengal Pig rearing and Poultry Development Corporation (a unit of Government of West Bengal) Samrat Feeds Private Limited and Apic Feeds Private limited are feed manufacturers with factories at Chompasari, Fulbari and Mallaguri respectively. The feed from all these companies are brought in regularly to these towns from the respective factories. Although pig feed is exempted from VAT in West Bengal, the transportation costs from the factory at Siliguri to the town level markets are high. Each bag of pig feed (sizes vary between 50 kg, 65 kg and 70 kg) incur around Rs 50-60 for transportation including Sikkim Nationalized Transport tax, regulated market charges of Siliguri,
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market charges of the local market, loading, unloading and miscellaneous charges. The retailer margin on each bag is around 8%. Around 9-10 such retailers are present in Jorethang market. Retail prices of pig feed vary from Rs 550 – 900 per bag.
As informed by a local pig farmer, a mixture of around 15 kgs (1 tin) of fodder ingredients (30% maize dust, 50% grasses and 20% millet dust) are boiled in 3-4 litres of water. This mix is used as primary fodder twice a day for each more than 6 months old pig. Apart from this organic household wastes are also added to the mixture. Around Rs 800 per month is accrued for such a availing such a fodder per month.
The practices of Sushil Subba from Dentam, an entrepreneur rearing pigs are however different from the one mentioned above. The waste of beer factory in Melli is procured every month and mixed with 2 kgs of pig feed, whea (locally available from alpine cheese factory at Dentam) and water and fed thrice to the pig each day. In case the whea is not available, salt water is used as a substitute. Pig feed although available in Jorethang, Namchi and other towns, is procured in bulk from Siliguri. Separate nutrient supplements are also used from time to time. While the earlier feeding practice was for local varieties, Subba had sourced 8 American Hampshire breed pigs from the AHVS department in 2009.
An average of 7-9 piglets is produced every 6 months in case of the American Hamstead variety while the local variety generally produces 5-6. The mortality in local varieties is also high.
Scabies is a common disease in pigs which is countered by application of Sulphur powder (locally available or sourced from AHVS department) from time to time.
The approximate weight gained in time by the American Hampshire and local varieties are mentioned in Table 22 which is derived from Field Survey.
Table 23: Comparative weight gain analysis of 2 pig varieties
Approximate Weight in Kgs Months American Hampshire Local variety 1 6 5 2 10 8 3 12 10 4 15 13 5 25 20 6 35 30 7 45 40 8 55 50 9 65 60 10 75 70 11 85 80 12 95 85 13 100 90 14 105 95 15 110 100
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16 115 105
The local varieties are available in all villages at Rs 2000-2500 per piglet. The American Hampshire breed is available at Karfectar pig farm at Rs 3000 per piglet. However, prior order has to be placed for the same at least 2-3 months in advance. Subba sells his piglets at Rs 2000 for female and Rs 2500 for male.
The AHVS department has a good network of veterinary doctors and staff for providing extension services free of cost in the villages. Pig farms and demo units are established all acoss the project area. However, accessibility of these services in far flung villages is restricted. While big farmers and entrepreneurs are regularly visited by the veterinary doctors, poor farmers often spend around Rs 300 -500 per visit for transport of the doctor. Vaccinations and de-worming are done free of cost from the AHVS department.
The KVKs located in each of South and West Districts also conduct various capacity building programs for Pig rearing farmers on Pig rearing in association with external experts, best practitioners and AHVS department.
4.5.6 Pig and Pork Marketing
Pigs are sold either directly to pork shop owners and occasional customers for pork or to fellow farmers for breeding purpose. While the sale for breeding pigs is assessed per animal basis, price of pigs sold for pork is assessed by weight. Sale of pigs is often an insurance activity and they are sold whenever there is need for liquidity. Seasonally, the festive seasons has more demand when the rate of pork also steps up.
The price of pork does not vary on the breed of the pig. There are around 4-5 permanent pork shops in Namchi while another 5-6 regularly sets up temporary shops on weekly market days. Pigs are seldom reported to be traded out of state. Butchers and pork shop owners regularly procure pigs from villages at around Rs 100 -110 per live weight. There are no formal measurements of weight done before selling. Prices are fixed after negotiations and visual inspection. Payment is in cash and immediate.
The entire pig apart from wastage of around 5-6% of the weight of the animal is sold as pork. As mentioned by a retailer at Namchi, the main prices of pork items are; Pig legs at Rs 100 per kg (constituting around 4% of the total weight), pork meat at Rs 120 per kg (constituting around 80% of the total weight), intestines and guts at Rs 80 per kg (constituting around 5% of the total weight) and pig head at Rs 120 per kg (constituting around 5% of the total weight).
A pork shop owner has a margin of around Rs 1000 per 1 quintal of pork, which takes approximately 2 days to sell out in a place like Namchi.
4.5.7 Constraints-Solution Matrix
Table 24: Constraints Solution Matrix for Pig rearing
Factor Constraints faced by small and poor Critical Intervention points Pig rearing farmers Input sourcing Availability of adequate water and Establish a formal arrangement with and Production fodder round the year. the AHVS department for ensuring
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Factor Constraints faced by small and poor Critical Intervention points Pig rearing farmers Low productivity of local varieties. availability of good breed pigs. Availability of good breed pigs. Identify and promote specific cluster Pig rearing farmers use different of villages for specially producing qualities and quantities of pig feed fodder. resulting in non standardization of Ensure adequate availability of practices mineral mixtures and nutrition supplements at all project village levels. Create village level cadre of technical persons to provide technical services to Pig rearing farmers regarding productivity enhancement. Regular training on best practices and exposure visits to best practitioners in the local area.
Access to Availability of timely and right amount Organize poor famers in SHGs to link finance of credit for working capital is an them with local banks to ensure their issue. Bank loan also requires a lot of financial inclusion. paper work. Develop partnership with existing MFIs and banks working in the area MFIs and banks encourage them to provide loan but their loan products develop specific loan products for don’t match expectations of Pig commercial Pig rearing farming and rearing farmers. Even established Pig expansion. rearing entrepreneurs face problems The Project can also fund the activity in scaling their activities due to lack of directly. adequate bank finance. Cooperation There is low affinity among farmers Guide Pig rearing farmers for among farmers for collective action for sourcing of collective sourcing of feed and fodder and institutions feed and fodder in higher operating to reduce operational costs. building costs. Govt. policies Low outreach of schemes for Pig Appoint implementing agencies and and external rearing among poor. develop village level service providers ecosystem to help famers link with need based government schemes and services.
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4.5.8 Project Interventions
Project can promote Pig rearing farming to be taken up by SHGs and Pig rearing groups in a cluster. Individual farmers will be keeping pigs for production but sourcing of feeds and fodder can be done collectively. Project need to work on strategies and capacity building inputs suggested in the previous section and by adopting an implementation plan described later. Project can facilitate funding to individual farmers on the basis of unit cost described below.
4.5.9 Economics of Pig rearing (for 1 household keeping 6 American Hampstead pigs) a. Assumptions
Calculations have been done for 6 pigs (5 female and 1 male). Cost of various inputs and outputs are based on information collected from villagers, entrepreneurs, market players and AHVS department. A pig sty will be constructed on the land of the farmer. The rate of interest for bank loan is taken @ 12% per annum and insurance is assumed to be 12.5% of the stocks. The average price of pig is assumed to be Rs 3200 per pig including transportation. 5 female pigs will produce 80 piglets per year with a sex ratio of 50:50. Male piglets will sell at Rs 2500 while female piglets will sell at Rs 2000 per piece. Pig feed Gunny bags and pig manure will be sold
Table 25: Financial plan for pig rearing
Unit Total Price Amount Sr. No Particular Unit Quantity (Rs) (Rs)
1 Fixed capital 5 Female and 1 Male Americal Hamstead at Rs 3200/ pig 1.1 including transportation pigs 6 3200 19200 1.2 Construction 23 by 24 ft Pig Sty lumpsum 1 100000 100000 1.4 Tools, buckets and implements lumpsum 1 5000 5000 1.5 Total fixed capital 124200 2 Yearly Revenue generation 2.1 Sale of 40 male piglets per year piglets 40 2500 100000 2.2 Sale of 40 female piglets per year piglets 40 2000 80000 Sale of pig feed gunny bags and 2.3 manure lumpsum 1 1000 1000 2.4 Sale of Manure lumpsum 1 5000 5000 2.5 Total Income 186000 3 Yearly Expenses
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Unit Total Price Amount Sr. No Particular Unit Quantity (Rs) (Rs) Unskilled Labour charges at Rs 3.1 2000 per month month 12 2000 24000 Grower ration concentrate at 1.5 kg 3.2 /pig/day (Rs 14/kg) for 6 months days 183 126 23058 Breeder ration concentrate at 2 kg/pig/day (Rs 14/kg) for 6 3.3 months days 182 168 30576 3.4 Medicines lumpsum 1 5000 5000 3.5 Insurance at 12.5% of total stocks livestock 12.50% 19200 2400 3.6 Total running cost 85034 4 Profit before interest 100966 Interest (12% per annum on Total investment including 5 fixed capital) 209,234 12% 25108.08 6 Net profit 75,858 7 ROI 36.26% 8 Pay back period year 2.07
b. Sensitivity Analysis for Pig rearing
Table 26: Sensitivity Analysis for pig rearing
Expenses Profit before Sr. No Parameters Revenue (Rs) (Rs) interest (Rs)
What if labour utilized is family 1 labour 186000 61034 124966 What if running expenses go up by 2 10% 186000 93537 92463 3 What if running expenses fall by 10% 186000 76530 109470 What if average productivity of pig 4 goes up by 2 piglets/pig/year 208500 85034 123466 What if average productivity of pig 5 falls by 2 piglets/pig/year 163500 85034 78466
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4.5.10 Implementation plan for Pig rearing promotion
Table 27: Implementation plan for pig rearing
Key steps to be Activities to be performed by project followed
Phase I – Preparedness at the community level
Cluster selection Select the right cluster for initiating Pig rearing promotion based on technical feasibility. Identify target block, village and the community. Social mobilization Sensitize poor Pig rearing farmers on potential of Pig rearing using the and institution findings of value chain analysis described earlier and their impact on building livelihood. Share various possibilities of Pig rearing, its cost benefit analysis, and assess
community interest level to take up the activity. Identify the members/groups to start Pig rearing as a new unit. Initially only a limited number of groups should be encouraged to start the activity. Based on the results of pilots add more members. List out members separately who are already doing the activity and want to either expand or strengthen the activity. Initiate participatory discussion to arrive at consensus on roles and responsibilities of members and group leaders to take up the activity. Preparation of Prepare a proper business plan for Pig rearing in consultation with the business plan community detailing the economics of the activity, sourcing of inputs, linkages with market players, production practices and technology to be used, and government schemes to be availed. Capacity building Leadership training for group members–functions and responsibility to interact with external players. Training in business and marketing skills (costing, pricing, accounting, sales and marketing, negotiation, market analysis) to members using participatory techniques. Technical training on better practices, exposure visits to nearby best practitioners and outside the states as well. Identify suitable government and private agencies that can provide need- based technical and business training at the community level. Identify local level best practitioners. Phase II - Launching of the unit
Backward linkages Counsel farmers to procure feed and fodder collectively in bulk to reduce operational costs. Systematize training management. Establish finance support for Pig rearing on unit cost basis.
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Production Implement best practices. Clarity of roles, specialization and continuous skill improvement Bring quality control in production to achieve efficiency, higher productivity at lower costs. Better record keeping and financial management. MIS development and multidimensional intervention opportunity. Market access Identify suitable and multiple markets and prepare list of market players with their contact details for sourcing inputs. Clarify on profit sharing and funds rotation among members in case of group activity. Build System for collaborations and employment Phase III – Up-scaling
Monitoring and Set up regular follow up and monitoring system to evaluate units from time evaluation to time to finds out gaps, take corrective steps and ensure delivery of appropriate extension services. Strengthening Facilitate secondary institution (producer group) to upscale and sustain the Institution initiative. Plan capacity building for strengthening of secondary institutions Diversify activities to increase income Create village level cadres to extend technical and marketing inputs to community at village level. Provide handholding and technical support to secondary institution
Possibilities of Partnership
Partnership possibilities exist with Wholesalers and retailer, Inputs suppliers, Progressive farmers, Financial institutions, and AHVS department.
Possibility of setting up processing unit
There is a possibility of producing and marketing pig meat (pork) directly. However, setting up such processing units at the village level would require sufficient entrepreneurial skills among poor, marketing and technical skills, and ensured market linkages with bulk buyers to sustain such units. The demand at the village level is already fulfilled by local butchers and marketing of pork products outside would require successful marketing interventions such as proper packaging and branding. It is, therefore, suggested that for first couple of years poor (both individuals and groups) should encouraged for pig rearing, productivity enhancement and market linkages. After a couple of years project can identify few individuals with entrepreneurial skills to experiment setting up few pork processing units. Project staff with marketing skill could be involved for conducting the detail feasibility study before setting up such units.
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4.6 Value chain of Floriculture
4.6.1 Background
Sikkim is house to over 4,000 species of plants and shrubs, around 556 varieties of rare orchids and rhododendrons and mountain flowers of myriad hues and sizes which makes the state a very important centre for floriculture. Making full use of this natural advantage, the State government has successfully implemented a multi-pronged strategy for the development of floriculture.
Development initiatives by the government include expansion of land under floriculture, mass publicity through training and awareness camps, establishment of joint venture companies and market linkage through market intelligence network.
One of the thrust areas in this sector is the promotion of Cymbidium orchids, Zenderdechia, Alstroemeria, Rose and Gerbera. For promoting cymbidium orchids, 157 units have been developed covering large areas of East, West and South districts of Sikkim. A Cymbidium Development Centre has been envisaged at Rumtek, which will have facilities for research, a full-fledged tissue-culture laboratory for production of planting materials, and a virus indexing unit.
The high level of investment required makes it difficult for the State government to promote floriculture in all parts of the State. It has marked out some areas as Floriculture Zones for example Assam Lingzey for cymbidium orchids, Duga Bhurung for gerbera, Kamrang for Alstroemeria, Gladiolus and Gerbera, and so on.
Also, for the first time in Sikkim, rose cultivation has been started commercially, for which a complete pre-fabricated green house with high-quality planting materials have been imported from the Netherlands, and from reputed nurseries in India.
The government has also established two joint venture companies for the development of floriculture - the Sikkim Himalayan Orchid Ltd at Assam Lingzey, and the Sikkim Flora Ltd at Mazitar.
4.6.2 Feasibility of Activity
Technical feasibility
Out of the 26 Biodiversity hot-spots in the world, India owns 2, namely the Western Ghats and the Eastern Himalayas. Sikkim covering just 0.2 % of the geographical area of the country has tremendous biodiversity and has been identified as one of the these hotspots in the Eastern Himalayas. There are 10 bio-geographic zones & 25 biotic provinces in Sikkim which have 16 major forests types and more than 200 sub types(Champion & Seth 1968). As a result the agro climatic conditions of Sikkim is well suited for a range of floriculture, especially a range of cymbadium orchids.
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Land availability, young entrepreneurs, capital investments from the Horticulture and Cash Crop Development Department (HCCD) and convergence of resources are the main factors behind the success of floriculture in the State. There is a strong enabling environment in the state for floriculture with the HCCD department providing intensive support in the form of free of cost poly houses, implements, saplings and bulbs etc along with necessary training, exposure visits and handholding.Trainings are also organized regularly by SIMFED and KVKs on floriculture. SIRD is also implementing a special SGSY project promoting floriculture for enhanced income of poor households in the project area. There are many cooperatives and community based institutions that have come up to promote floriculture at the GPU level in the project districts. The HCCD department regularly imports bulbs, seeds, tissue culture and tuber bulbs from the Netherlands, New Zealand etc. countries. The department is setting up its own tissue culture and seed producing centre at a model Floriculture centre in Maniram. A Rs 500 crore investment in being planned by the government for setting up such cold chain systems near the upcoming national airport in Sikkim, near Gangtok for supporting floriculture activity A wide range of floriculture activities are being promoted by the HCCD department. Howeever looking at the gestation peiod, availability of resources, amount of investment required and the heights of the villages the following three types of plants are recommended to be taken up by NERLP for the poor; o Alstromeria (Peruvian Lily) and Zanderdeschia (Cala Lily) for villages at a minimum height of 4000 ft from the mean sea level. o Gerbera and Carnation for villages below 4000 ft from the mean sea level.
Market feasibility
Nationally and internationally, Sikkim is famous for the quality of its orchids. Sikkim is a sought after tourist destination and floriculture is very well associated with the tourism industry. A recent international flower show was organized at Ranipool where around 58 private parties and agencies from different parts of the country and 17 State Governments and more than 300 floriculturists and vegetable growers including 12 international florists from 22 countries participated. The HCCD department had a budget of Rs 19 crores alone for this event to promote Sikkim as a major player in floriculture (Source: Business Line). All the floriculture farmers of South and West District are linked to different markets. The largest procurer of flowers are SIMFED and Mainam Gardens Private Limited based at Namchi. Both SIMFED and Mainam Gardens has suppliers and agents for their produce all across India. There are also several small private players at Gangtok and district levels who procures produce from farmers producers. Low quality floweres are also sent to Siliguri for marketing. Gangtok is also a local market for flowers and orchids. The department also has established cold storages for floriculture at Dharamdin, Soreng, Maniram etc places. Mainam Gardens has also got its own cold storage at Namchi. This ensures longer shelf life of produced flowers and orchids.
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Economic feasibility
Floriculture is Sikkim without the intensive support of the governemnt would not have been a viable proposition. However the support provided by the department to not one or two but many villages have opened up a huge potential for the activity. The activity thus has potential to be adopted as poverty allieviation tool under the aegis of NERLP. The ideal investment is around Rs 2 lakhs per household. The overall income per household is around Rs 28816 with 10.95% return on investment. Finance is available from commercial bank, other commercial banks and Micro finance institutions like BASIX and Bandhan. However, the available finance from banks are often not schematized for floriculture and special financial support in building infrastructure is expected from the project.
Analyses of a few varieties of flowers are mentioned in Table 27.
Table 28: Comparative analysis of different flowers
Sr. Parameters Cymbidium Calla Lilly Rose Anthurium Gerbera Gestation 1 Period 3 t0 4 yrs 1 yr 6m - 1yr 2 yrs 6m - 1yr Planting Sikkim & 2 material Abroad Abroad Pune Pune Pune March- 3 Planting Time Feb-March Feb-March March- April Feb- March April 4 Variety Mixed Mixed Mixed Mixed Mixed Planting Budded/ 5 mechanism Seedling Tubers Grafted Seedling Seedling 4500 - 6500 2500 – 3500 1000 – 2500 2000 – 6 Ideal Elevation 4500 - 6500 ft ft ft ft 3500 ft Water 7 requirement High High High Medium Medium Rs 10 per Rs 3/ 8 Market Price Rs 50/ flower Rs 5/ flower Rs 3/ flower flower flower Production per 20 - 25 9 plant 4-6 nos 4-6 nos flowers 6 flowers 20 flowers Total income 10 per tree Rs 200-300 Rs 30 Rs 60 - 75 Rs 60 Rs 60 11 Season Oct – March July-August All Season All Season All Season 12 Local market Assured Assured Assured Assured Assured Pest and 14 Disease risk High Medium High High High (Courtesy: Horticulture and Cash Crop Development Department)
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4.6.3 Production Clusters
Both the districts of South and West can be taken up for floriculture promotion under NERLP. However, as mentioned before, the following criteria should be kept in mind while promoting floriculture. o All villages should have adequate water supply throughout the year. Dry and draught prone areas should be avoided for floriculture to maintain ecological balance. o Alstromeria (Peruvian Lily) and Zanderdeschia (Cala Lily) can be taken up for villages at a minimum height of 4000 ft from the mean sea level. o Gerbera and Carnation for villages below 4000 ft from the mean sea level. o Both Altstromeria and Gerbera are relatively simpler to grow, requires less investment, yield income throughout the year and has a low gestation period.
It is also important that the activity is promoted in clusters to facilitate input supply, service delivery and marketing.
4.6.4 Value chain map of Floriculture
As under stood from the surveyed villages, Figure 10 is a flow diagram of Alstroemaria (normal stick) as an example.
Figure 10: Value chain map of Flowers
Consumers Consumers Consumers
Retailers Retailers Rs 10-15/stick (Outside Sikkim) (Outside Sikkim)
Retailers (Siiliguri, Gangtok, Rs 8-10/stick Wholesalers, Agents Wholesalers (Delhi, Mumbai, Kolkata) (Delhi, Mumbai, Kolkata) Namchi)
Rs 2-3 /stick SIMFED Mainam Gardens Private Limited, Namchi Village level Rs 1-2 /stick traders
Floriculture Farmers
Input Supply Saplings, NPK, fertilizers, fungicides, floriculture implements, cow dung
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4.6.5 Input Supply
As mentioned earlier, the HCCD department is a prime stakeholder in the value chain if flowers in Sikkim. The amount of investment made by the department is the primary reason in making the activity viable in Sikkim. Seeds, tissue cultures, bulbs are often imported from different countries like Netherlands and New Zealand. The department also procures these inputs from Florence Flora in Bengaluru and Kumar Florists in Pune. Since most seeds and bulbs are genetically modified and patented, they have to be procured on a regular basis. However, the department is setting up its own tissue culture and seed production farm in Maniram of South District. While these inputs are provided by the department free of cost while they are charged by SIMFED and Mainam Gardens who also procures them from abroad and the mentioned sources.
Fungicides, pesticides, dolomite and various medium for bed preparation along with various implements are available in local shops for floriculture in Namchi, Jorethang, Gangtok and other towns e.g. Tarakeshwar Stores in Namchi is a similar shop.
4.6.6 Quality parameters
The production of flowers is a very intensive activity and requires specific capacity building along with a lot of attention to the plants. Most harvested flowers and orchids were found to be graded according to their qualities. The grading is generally done by the procuring agency and vary as per quality. Straight and long (minimum 2 feet) cut flower sticks with sufficient numbers of equi-directional semi-bloomed flowers of good appearance generally fetch good prices. The cultivation practices are often non-negotiable for higher priced orchids since a small variation in the package of practices can bring around a change in quality of the output. Based on the mentioned parameters, three different types of qualities are judged by the procurement agencies. Any flower sticks which do not expect these criteria are often rejected which are sold in the local market. This makes cultivation of Cymbadium, Lilium and Anthurium risky for the farmer since a slight change in judged parameters can result in a drastic fall in expected price from Rs 15- 20 per stick/flower (best quality) to Rs 5-8 per stick/flower (rejected quality sold in local market or Siliguri). The Altroemeria and Gerbera sticks which are priced at Rs 2-3 per are relatively safer positioned since the rate difference between grades is only around Re 0.5-1.
4.6.7 Market Players and Marketing
Mainam Gardens private Limited, an enterprise owned by Mrs. Tika Maya Chamling (wife of Chief Minister of Sikkim) is based at Namchi with 150 plus employees and having its own cultivation farms. The company is also planning to set up its own tissue culture laboratory. The company has an outreach for procurement of flowers from farmers in West and South districts. SIMFED on the other hand has its operations all across Sikkim in the context of enhanced production of various flowers through NERLP, SIMFED has the potential to scale up its operations. The biggest bottleneck for marketing of flower is the delicate and perishable nature of the flowers. SIMFED needs to develop a cold chain transport system to address this. No regular exports of flowers to other countries were reported from these two agencies due to absence of cold chain transport system and refrigerated flight containers from Bagdogra airport. The nearest airport with this facility is Kolkata.
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Cut flower sticks and buds are packed in plastic sheets or cartons in bundles. The packing material is locally available in the towns of Namchi, Ravongla, Jorethang etc. Mainam Gardens also provide card board cartons for packing flowers. The transportation of flowers is often through local jeep transport with charges ranging from Rs 20-50 per carton (containing 80 -100 flowers). In such cases, the driver of the local transport jeep hands over the cartons (with name and contact details of the farmer mentioned on the carton) to the representatives of Mainam Gardens at Namchi. Mainam gardens keep exclusive records for entry of flowers from each farmer. After grading of flowers the due payments are noted down. Payments are often made in cash to the farmer directly whenever he visits Namchi in a week or fortnight. Some cooperatives having enough scale use exclusive vehicles for transport which reduces transportation costs. Around 5-8% of the transported high cost flowers are reported damaged which result in decrease in quality and/or rejection.
Both Mainam Gardens and SIMFED have suppliers and agents all across India and cut flowers are regularly sent to them by rail/road or air. Flowers are in high demand during marriage seasons, Christmas or festive seasons. The demand for roses is also reported to shoot very high during Valentine ’s Day. SIMFED procures flowers from Gangtok and thus access to SIMFED from far flung areas in West District turn out to be expensive. The payments of SIMFED were also report to be irregular for Lilium and Cymbidium to the extent of delay up to 4-6 months. The officials at SIMFED however said that this was a temporary phenomenon due to rare market failure from their end and currently the system has been streamlined.
Rose village of Dharamdin in the West district has around 70 households with 91 poly houses in the area along with a cooperative society for cultivating and marketing different varieties of roses. There is also a cold storage for storing Rose sticks. Around 3000 to 4000 sticks are produced daily from the area at Rs 4- 5 per stick which is transported to Mainam Gardens in Namchi. The low quality and rejected flowers are sent to retailers in Siliguri.
Some farmers were also found to sell flowers directly in weekly and daily markets of the Gangtok and other towns frequented by tourists. There are village level traders of flowers in some villages who procure flowers directly from farmers and passes the same to different florist chains and retailers in Gangtok and other towns of Sikkim.
Zopar Exports Private Limited, a private floriculture company having more than 80 poly-houses in Sikkim and Darjeeling district of West Bengal is dealing in multiple varieties of roses. Although the company has ploy houses in Dharamdin, there is little convergence with the local cooperative society.
4.6.8 State Institute of Rural Development’s role in Floriculture
State Institute of Rural Development (SIRD), Karfecter, South Sikkim has undertaken a special project of floriculture under Swarnajayanti Gram Swarozgar Yojna. The project of Rs 695.44 lakhs project from 2006-07 till 2010-11 is aimed to enable 2000 Below Poverty Line families to cross over the poverty line within a period of two-three years. This includes women, SC/ST and also the physically challenged. Two hundred new Self Help Groups have been targeted to be formed under the project till 2010-11.
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The project is also designed to assist APL families and educated unemployed youth through schemes of National Horticulture Board or even State Programs to become an example for BPL families. The project mostly concentrates in South and West districts and some selected villages of North and East districts.
The villages selected in South are Sadam, Sumbuk, Turuk, Namchi, Singhithang, Boomtar, Kamran, Perbing, Namthang, Maniram, Salghari, Tenik, Chisopani and Wok. While in the West District the villages are Tashiding , Yoksom, Hee, Budang, Sombarey, Soreng, Zoom, Sigeng, Mabong, Suldung and Kamling.
One of the thrust areas of the project is to take up Gladiolus farming which has been found ideal for the region. Farmers are also encouraged to take up other species like Cymbidium, Lillium, Glorisa, Amaryllis, Cala Lily, Haemanthus etc. A nursery spread over 1 hul or ¼ th acre of land is expected to yield Rs 30,000 per year. SIRD has also facilitated SHGs to be linked with State Bank of India for SGSY loans.
Training for the farmers and Self Help Groups is conducted at SIRD, Regional Centre and Floriculture Centre of the Horticulture Departments. The seeds are provided by SIRD along with buyback support for saplings.
SIRD, also has already received the sanction for an AC refrigerated transport van at the cost of Rs 12 lakhs for the transport of cut flowers to Siliguri, New Jalpaiguri and Bagdogra airport in West Bengal. A cold storage facility at the cost of Rs 15 lakhs is also to be built to enable farmers to store the bulbs and also facilitate the stocking of cut flowers during road blockade in the monsoon season. A collection-cum- grading centre at the cost of Rs 10 lakhs is to be established near Melli in South district.
4.6.9 Constraints-Solution Matrix
Table 29: Constraints Solution Matrix for Floriculture
Factor Constraints faced by small farmers Critical Intervention points Input sourcing Highly capital intensive activity to be Identification of interested poor and Production taken up by small farmers without farmers and establish a formal assistance and support. arrangement with the HCCD Source of seeds and other inputs are department for ensuring adequate not only expensive but access to these supply of inputs. Convergence of the sources is restricted by large players department support with the project is since they have to be imported. crucial. Most floriculture activities involve an Support HCCD department, SIMFED, intensive package of practices which KVK and ICAR to take up research for calls for rigorous capacity building. developing appropriate Although the support from HCCD seeds/tissues/bulbs for floriculture department is provided to farmers, which is otherwise very expensive and very little poor and marginal farmers have to be imported. have come up to take up the activity. Appoint implementing agencies and develop village level service providers to help famers link with need based
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Factor Constraints faced by small farmers Critical Intervention points government schemes and private services. Create village level cadre of technical persons to provide technical services to farmers. Regular training and exposure visits to best practitioners in the local area can help poor farmers. Access to Availability of timely and right Organize poor famers in SHGs to link finance amount of credit is an issue. Bank them with local banks to ensure their loan requires a lot of paper work and financial inclusion. farmers’ don’t have proper papers Develop partnership with existing against their land. SISCO bank takes a MFIs and banks encourage them to mortgage of loans above Rs 60000. develop loan product for Floriculture MFIs and banks working in the area cultivation based on its economics. provide loan but their loan products The Project can also fund the activity don’t match expectations of farmers. directly. Market access Farmers sell individually to the village Promote the activity in a cluster to level trader or Mainam Gardens or optimize input costs and transport SIMFED resulting in higher overhead expenses. marketing costs. There is scope for collectivizing farmers to sell collectively and directly to higher order markets through SIMFED or Cooperative retail outlets in Gangtok for better price realization. Cooperation There is low affinity among farmers Guide farmers for collective sourcing among farmers for collective action for sourcing of of inputs and marketing to reduce and inputs and sale of flowers/orchids operational costs. institutions resulting in higher operating costs. building Govt. policies Blockage of roads and landslides may Set up new cold stores for storing and external lead to increase in input costs and flowers and cold chain transport ecosystem market failure. system after feasibility study. A Rs 500 crore investment in being planned by the government for setting up such cold chain systems near the upcoming national airport in Sikkim, near Gangtok for supporting floriculture activity
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4.6.10 Project Intervention
Project can promote floriculture to be taken up by an individual family. However, as mentioned before, cluster based approach needs to be taken to achieve economies of scale. Individual farmer will do the production but sourcing of inputs and marketing should be done collectively. Project need to work on strategies and capacity building inputs suggested in the previous section and by adopting an implementation plan described later. Project can facilitate funding to individual farmers on the basis of unit cost described below.
4.6.11 Economics of Alstroemeria cultivation (for 1 household)
Alstroemeria, commonly called the Peruvian Lily or Lily of the Incas, is a South American genus of about 50 species of flowering plants. Each year up to 80 new shoots are produced from the rootstock and each terminates in an umbel of a few up to 10 or so flowers. Alstroemeria come in orange, pink, rose, purple, red, yellow, white or salmon colors. The prices offered for a normal Alstroemeria stick by SIMFED and Mainam Gardens vary between Rs 2 -3.5 per stick as per season. a. Assumptions
Calculations have been done for 400 saplings planted in a poly house of 90ft by 22 ft dimensions. Weekly marketable production from the saplings are, 800 sticks from September to February, 1000 sticks from March to May and 900 sticks from June to August excluding damaged and rejected flowers. Cost of various inputs and outputs are based on information collected from villagers, market players and HCCD department. The rate of interest for bank loan is taken @ 12% per annum. A separate irrigation tank is being setup for irrigation.
Table 30: Financial plan for Floriculture (Alstroemeria)
Total Unit Price Sr. No Particulars Unit Quantity Amount (Rs) (Rs) 1 Fixed capital 90 ft by 22 ft poly house with bamboo 1.1 structure lumpsum 1 100000 100000 Bed preparation, Rack construction 1.2 and netting for 400 saplings lumpsum 1 50000 50000 1.3 Irrigation tank with 22 mm poly pipe lumpsum 1 45000 45000 1.4 Tools and implements lumpsum 1 5000 5000 1.5 Total fixed capital 200000 2 Yearly Revenue generation Sale of 3200 sticks per month at Rs 2.1 3.5 per stick for 6 months (Sept - Feb) sticks 19200 3.5 67200 2.2 Sale of 4000 sticks per month at Rs 2 sticks 12000 2 24000
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Total Unit Price Sr. No Particulars Unit Quantity Amount (Rs) (Rs) per stick for 3 months (Mar- May) Sale of 3600 sticks per month at Rs 3 2.3 per stick for 3 months (Jun - Aug) sticks 10800 3 32400 2.4 Total Income 42000 123600 3 Yearly Expenses Labour charges for Trimming, Weeding and Irrigation at Rs120/personday for 5 personday 3.1 persondays/month s 60 120 7200 Sapling cost at Rs 30 per sapling for 3.2 200 saplings saplings 400 30 12000 3.3 Packing material at Re 0.75 per stick sticks 42000 0.75 31500 3.4 Medicines lumpsum 1 2000 2000 3.4 Transport costs of sticks sticks 42000 0.25 10500 3.5 Total running cost 63200 4 Profit before interest 60400 Interest (12% per annum on Total investment including fixed 5 capital) 263,200 12% 31584 6 Net profit 28,816 7 ROI 10.95% 8 Pay back period year 4.35
b. Sensitivity Analysis for Alstroemeria cultivation
Table 31: Sensitivity analysis for Floriculture
Profit Revenue Expenses before Sr. No Parameters (Rs) (Rs) interest (Rs) 1 What if labour utilized is family labour 123600 56000 67600 2 What if running expenses go up by 10% 123600 69520 54080 3 What if running expenses fall by 10% 123600 56880 66720
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4.6.12 Implementation plan for Floriculture cultivation promotion
Table 32: Implementation plan for Floriculture
Key steps to be Activities to be performed by project followed
Phase I – Preparedness at the community level
Cluster selection Select the right cluster for initiating promotion based on technical feasibility. Identify target block, village and the community. Social mobilization Sensitize Floriculture farmers on potential of Floriculture cultivation using and institution the findings of value chain analysis described earlier and their impact on building livelihood. Share various possibilities of Floriculture cultivation, its cost benefit
analysis, and assess community interest level to take up the activity. Identify the members/groups to start Floriculture cultivation as a new unit. Initially only a limited number of groups should be encouraged to start the activity but enough to achieve scales. Based on the results of pilots add more members. List out members separately who are already doing the activity and want to either expand or strengthen the activity. Initiate participatory discussion to arrive at consensus on roles and responsibilities of members and group leaders to take up the activity. Preparation of Prepare a proper business plan for Floriculture cultivation in consultation business plan with the community detailing the economics of the activity, sourcing of inputs, linkages with market players, production practices and technology to be used, and government schemes to be availed. Capacity building Leadership training for group members–functions and responsibility to interact with external players. Training in business and marketing skills (costing, pricing, accounting, sales and marketing, negotiation, market analysis) to members using participatory techniques. Technical training on better practices, exposure visits to nearby best practitioners and outside the states as well. Identify suitable government and private agencies that can provide need- based technical and business training at the community level. Identify local level best practitioners. Phase II - Launching of the unit
Backward linkages Counsel farmers to procure inputs collectively in bulk to reduce operational costs. Systematize training management. Establish finance support for Floriculture cultivation on unit cost basis.
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Production Implement best practices. Clarity of roles, specialization and continuous skill improvement Bring quality control in production to achieve efficiency, higher productivity at lower costs. Better record keeping and financial management. MIS development and multidimensional intervention opportunity. Market access Identify suitable and multiple markets and prepare list of market players with their contact details. Engage in bargaining, marketing of produce and realize better price. Clarify on profit sharing and funds rotation among members in case of group activity. Build System for collaborations and employment Phase III – Up-scaling
Monitoring and Set up regular follow up and monitoring system to evaluate units from evaluation time to time to finds out gaps, take corrective steps and ensure delivery of appropriate extension services. Strengthening Facilitate secondary institution (producer group) to upscale and sustain Institution the initiative. Plan capacity building for strengthening of secondary institutions Diversify activities to increase income Create village level cadres to extend technical and marketing inputs to community at village level. Provide handholding and technical support to secondary institution Legal aspects Compliance to legal implications for taxes and VAT (for marketing Flowers directly to Siliguri).
Possibilities of Partnership
Partnership possibilities exist with HCCD Department, SIMFED, Mainam Gardens, other wholesalers and retailers, Inputs suppliers , Financial institutions and progressive farmers
Possibility of setting up processing unit
There are little possibilities in processing fresh flowers at the village level. The project can however help set up a cold chain network for effective and fast transportation of flowers to higher order markets.
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4.7 Value chain of Homestay Rural Tourism
4.7.1 Background
Tourism is one of the priorities and important sector of the State and there is special focus to make tourism as a major contributor to the State Economy.
The state of Sikkim takes pride in its natural beauty manifested by the snow clad mountains, landscape dotted with perennial streams & waterfalls, lush green forests, picturesque villages, natives in traditional dresses and indigenous architecture. The crime rate is low and special focus of the state on maintaining an eco friendly environment makes Sikkim one of the sought after tourist destination in the country. Being a prominent place on the Buddhist tourism circuit also contributes to this.
Tourism sector is looked at a creator of a substantial employment, directly or indirectly Eco-tourism in Sikkim especially has evolved as a non‐polluting, low cost and high return industry where a large section of the Sikkimese population can be involved.
As mentioned in the Tourism sector Policy 2010 of Sikkim Tourism department, the number of Domestic tourists in 2003 were about 1, 76,659 while in 2008 more than 5, 00,000 tourists have visited the state. The estimated number of domestic tourists in 2009 is around 6,00,000. This signifies a growth of around 3.5 times within a time span of 6 years.
Number of foreign tourists in 2003 was reported to be around 11,966 while in 2008 about 23,000 foreign tourists visited the state.
The boost in the growth of tourism in the state is also attributed to the growth in the associated sectors. Sikkim since last 5 years is following a strict Organic policy and is also the first state in the country to achieve total Sanitation. A Green Mission program has been launched by the government under which every individual, agency and the Department contributes towards the planting of trees all over the State. Village tourism is being specially encouraged to preserve culture, heritage & handicrafts and to create better economic and employment opportunity in the rural area. Floriculture is being promoted at large in the State and Sikkim has earned its place as a major orchid and exotic flower producer in the country. Use of polluting plastic is also banned in the State. All the ethnic Communities have different and distinct festivals, which are celebrated all over the State. Tourism Department plays a major role in promoting these festivals in order to showcase Sikkimese culture and heritage.
Figure 11 depicts the central and state share to different tourism projects taken up between 2004-05 and 2007-08. As is evident the share of central assistance in tourism has shown a sharp increase.
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Figure 11: Value of Tourism Projects in Sikkim
Value of Tourism Projects sanctioned in Lakh Rupees (Source Sikkim tourism department) 8000
7000 6880.21
6000
5000
4000 Central Share State Share 3000 2914.71 2687.89 2000 1576.83 1000 1031.38 323.25 0 112 107.36 2004-05 2005-06 2006-07 2007-08
However, the total central sanctioned projects are worth Rs 258.67 lakhs only during this period. (Source: Lok Sabha un-starred question number 738 dated 23.02.2006 and question number 791 dated 22.11.2007). Thus there was a large scope of central funding particularly in Rural tourism projects. Moving towards promoting rural and eco tourism, the central assistance in undertaking Eco tourism projects alone in 2007-08 was Rs 389.54 lakhs which paved the way for a focus on promoting Eco tourism (Source: Press Information Bureau, Govt. of India).
During the 11th 5 year plan up to September 2009, the Ministry of Tourism had sanctioned a total sum of Rs 163.44 crores for 63 different tourism related projects for Sikkim making the state to receive the highest amounts of tourism funds from the centre. Recently the Asian Development Bank (ADB) has signed an agreement with the union government and the State government for providing a credit of US $ 20 million to enhance religious, eco tourism and adventure based tourism in the state. Under the South Asian Infrastructure Development Project, the ADB has aimed to contribute to sustainable and inclusive development of this part of Asia by tapping complimentary and contiguous tourism assets. (Source: Sikkim Express, 5th October 2010)
4.7.2 Homestay
Homestay is a form of tourism that allows visitors to rent a room from a local family to better learn the local lifestyle as well as improve their language ability. While homestays can occur in any destination worldwide, some countries do more to encourage homestay than others as a means of developing their tourism industry – Wikipedia.
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Village/Rural tourism in the form of Home stay has emerged as a very new concept in the tourism industry. This concept is fast growing in Sikkim as a responsible and sustainable tourism product with critical social objectives through people’s participation. Home stay rural tourism is perceived as an effective tool in boosting the overall tourism scenario of Sikkim as its rural hinterlands are endowed with fabulous natural beauty, serene environment, heritage sites and unique cultural flavor. The endorsement of rural tourism ensure the dispersal of tourists from city congestion to the villages so that they can have a glimpse of rural Sikkim, familiarize with unique village culture and heritage so that they are mentally rejuvenated, culturally enriched and spiritually elevated. The objective is therefore to harness vast untapped rural tourism potential of Sikkim so that their multiplier benefit reaches out directly to the rural communities. Some of the villages of Sikkim like Kewzing, Hee Bermoik, Yoksum, Lachen, Tumin, Pastanga, Tinchim, Lunchok, Maniram, Rong, Jaubari, Linjee Payiong, Darap etc. have already taken up lead in home stay facilities for the tourists.
Under the present purview of NERLP, Home stay rural tourism has been found to be a growing sector with particular potential for providing Livelihoods to rural poor.
4.7.3 Feasibility of the activity
Technical feasibility
There are well identified tourist circuits in West and South districts of Sikkim (project area of NERLP). Sikkim is connected by rail, air and road with the rest of the world through Siliguri /Bagdogra. There are also helicopter services from the Bagdogra Airport to Gangtok. The flow of tourists continue for the whole year with peak tourist seasons from September to March. The warm reception of the state, cultural richness of the ethnic groups and peaceful and friendly environment combines with the natural and beautiful environment of rural Sikkim to attract tourists. There is an enabling environment in the state for Homestays with the tourism department, NGOs like Ecotourism and Conservation Society of Sikkim (ECOSS), agencies like Help Tourism Private limited which provides regular trainings and inputs for establishing Homestays. There are a numerous cooperatives and community based institutions that have come up to promote village based tourism and homestays in the project districts. Some of these have already made good progress in terms of providing quality services to tourists. South Sikkim Tourism Development Society and West Sikkim Tourism Development Society are two district level societies established in the two project districts of South and West Sikkim respectively as apex level institutions for the respective village level societies that have been established.
Market feasibility
The Travel Agents Association of Sikkim (TASS) and Sikkim Hotel and Restaurant Association (SHRA) are Department of tourism recognized bodies which are associated with homestay rural tourism. Travel agencies have included home stay packages in their itenaries. Homestays are positioned as a learning and sharing platform and is thus different from other tourism concepts. Thus rural homestay has created its own niche which is also often priced at premium rates
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in comparison with budget tourism packages. Help tourism alone has a network of over 6 lakh tourists worlwide who regularly keep visiting Sikkim and prefer accommodation at village homestays. Apart from the niche markets the mainstream travel agents in West Bengal, Delhi, Mumbai etc places along with others in the international circuit also recognize and support homestays.
Economic feasibility
Rural Tourism enables a lot of cash flow at the rural and underdeveloped pockets of the state and boosts the local economy. Darap Eco tourism Committee of Darap village in West district reports that in the last financial year, around 3000 tourists have stayed in 10 homestay houses under their society which have resulted in an average income of Rs 1 lakh per household per season. The Homestay concept is thus has potential to be adopted as poverty allieviation tool under the aegis of NERLP. The ideal investment is around Rs 3 lakhs per household. The overall income per household is around Rs 94,112 with 20.35% return on investment. Finance is available from commercial bank, other commercial banks and Micro finance institutions like BASIX and Bandhan. However, the available finance from banks are often not schematized for home stays and special financial support in building infrastructure is expected from the project.
4.7.4 Promotion clusters
Homestay based rural tourism can be promoted in almost all villages of both the districts of South and West. However, looking at the potential of tourism and environmental concerns it is advisable to restrict the activity to a maximum of 20% households in each village. The activity is also different from other activities in the sense that only interested and adequately capacitated households can be included in home stays. The activity requires a lot of customization at the household level and is difficult to regularize through the area.
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4.7.5 Value Chain and stakeholders of Homestay Rural Tourism
Figure 12 is a depiction of the flow of tourists for Homestay in Sikkim.
Figure 12: Value chain map of Homestay rural tourism
Homestay Households Homestay Households Homestay Households
Village based tourism societies in Sikkim
(Kewzing, Hee Bermoik, Yoksum, Lachen, Lunchok, Maniram, Rong, Jaubari, Lingi Payong, Darap etc)
Travel agents in Sikkim Travel agents in Sikkim
20% referral commission Web site booking Travel agents International outside Sikkim Travel agents
Sikkim Tourism department, ECOSS, Help Tourism Pvt. Ltd
Domestic tourists International Tourists
Around 80% of the homestays surveyed in South and West Sikkim were found to be frequented by domestic tourists from other parts of the country while remaining 20% constituted of international tourists.
Various kinds of referrals were found in the form of Travels agents at international level, national level and at Sikkim level and websites. While almost all international tourists were found to come through referrals of various forms, a section of domestic tourists were found to be walk in customers directly in home stays.
The general commission paid by the home stays for any kind of third party referral is 20% of package charges. In case two or more players exist in the referral chain, the same commission is shared among the players. In off season, however, there are little referral commissions and tourists directly contact the homestay societies.
A major facilitating role for tourists visiting home stays is played by the Sikkim Tourism department which has tourist information offices at all district places across Sikkim and also in Delhi, Kolkata,
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Siliguri, New Jalpaiguri station, Bagdogra Airport etc important locations. The department also has a detailed website which provides information and contact details of various home stays across Sikkim.
A similar role is played by an NGO Ecotourism and Conservation Society of Sikkim (ECOSS) and agencies like Help Tourism Private limited which provide regular trainings and inputs for establishment of Homestays under various projects. These agencies have expertise in implementation of Homestay schemes and can be partnered with under NERLP as well.
4.7.6 Home stay packages
The Homestays generally offer tourists a combination of accommodation and food along with certain cultural packages e.g. cultural shows, traditional attire etc. Each home stay is thus unique in itself due to the inclusion of the cultural package. The cultural package generally allows the tourist to experience a slice of life lead by rural Sikkimese people. The cultural package often involves cross cultural learnings like learning a new recipe of traditional food by the tourist, learning local language, learning various agricultural practices followed in the village, voluntary teaching of the tourists in local schools, interaction on maintaining health and sanitation etc. This adds further value to the tourism experience of the tourist which clearly differentiates home stay from any other kinds of tourism.
Certain other recreational activities are often included in the packages which include angling in the rivers and streams, bird watching, meditating, jungle walk, yoga, rock climbing, trekking, camping, sightseeing, etc.
All the family members of a host household are involved in the concept and the tourist is also treated like a family member. The accommodation is generally modest as per typical rural culture of Lepcha, Limboo, Bhutia etc ethnic groups. A typical homestay household has 2-3 exclusive and fully furnished rooms for tourists. The food is also traditional and in some cases customized to the requirement of the tourist as well. Generally the charges paid by the tourist ranges anywhere between Rs 400-500 to Rs 3000-4000 per person per day depending on the package and amenities provided.
Generally any household opting for Home stays maintain a clean and healthy environment both inside and outside the house with clean toilets and comfortable beds for tourists. The food is also prepared hygienically.
4.7.7 Registration and legal formalities
Currently the concept of Home stay is new to Sikkim and clear cut government policies are yet to be made. There are no legal or registration formalities for conducting homestays. A few homestays hold hotel license in the absence of any other form of registration. Sikkim is also a state exempted from direct taxes and thus there are no taxation formalities for conducting homestays also. In order to obtain a hotel license in a rural area an annual fee of Rs 450 is to be submitted to the department of Urban Development and Housing along with the annual renewal of no objection certificates from Power department, Fire department, Forest department, Labour department and Health departments.
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While a drive is in force to promote village based tourism in the state, awareness and interest of rural people is also on the rise to get involved in homestays. There is urgent need of regulation and policy framing by the government in this regard.
4.7.8 Institutional Arrangement
The homestays in any village are generally not promoted in isolation. A group of 10-15 homestays involving same number of households are developed in a Gram Panchayat unit which forms a society at the village level. Many such societies have been formed in both the project districts of South and West Sikkim. While South district has at least 15 such village level societies, West district has at least 20. Each society undergoes different types of promotional strategies to attract tourists through websites, pamphlets, brochures, tie-ups with different travel agencies in and outside the state, affiliation to various tourism organizations etc. Once a tourist contacts the society, the society passes on the tourist to its member households as per preference of the tourist or availability. These societies generally have an annual membership fee for the facilitation provided.
In some cases certain supporting enterprises like poultry, dairy, provisional stores, handloom and handicrafts store etc are also developed under the aegis of these village level tourism societies. These enterprises support each other under conditions of mutual agreement. e.g. in Darap, a poultry enterprise and Dairy enterprise are members of the tourism society who is also the primary supplier of poultry and milk or milk products required for homestay households while attending to tourists.
Each district has an apex level Tourism Development Society at the district level for self regulation and policy advocacy to the government. These societies are also the gateway to various grants and assistance from the government and other projects regarding infrastructure development and training. As mentioned earlier, the tourism department and a few agencies also provide support to these societies.
4.7.9 Constraints-Solution Matrix
Table 33: Constraints Solution Matrix for Homestay
Factor Constraints faced by small Critical Intervention points households taking up homestays Infrastructure Homestays require basic Organize poor households into development infrastructure in the form of up- collectives in the form of societies or graded toilets, a comfortable bed and SHGs to link them with local banks to hygienic kitchens. The beneficiaries of ensure their financial inclusion. NERLP lack the necessary Develop partnership with existing infrastructure to set up Homestays. MFIs and banks encourage them to Access to credit facilities for such develop loan product for Homestay infrastructure development is based on its economics. restricted for poor households due to The Project can also fund the activity lack of collaterals and also lack of directly. prevailing unit costs with banks and
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Factor Constraints faced by small Critical Intervention points households taking up homestays financial institutions. Capacity The Homestay promotion requires Establish formal arrangements with Building of adequate capacity building of the the Sikkim Tourism department, community entire household on aspects like ECOSS, Help Tourism Pvt. Ltd etc for hospitality management and ensuring adequate capacity building etiquettes. of the target community through In order to attach adventure tourism training, exposure visits to successful concepts to the homestay the cases and handholding. Special community needs special capacity modules can be developed for building on activities like rock delivering special capacity building to climbing, facilitating trekking, rafting community on various highlighted etc. issues in tourism There is also a need for mobilizing the Appoint implementing agencies and community on sticking to certain develop village level service providers cultural values in order to make the to help mobilize the community and homestays culture exclusive and link them with various aspects of attractive. environment, health and sanitation The community also needs special along with tourism. capacity building on waste Establish proper community managed management and environment waste management systems at the protection issues attached with village level. tourism. Detailed health trainings should be The entire family needs capacity imparted to community on how to building on various health and avoid infection and maintain a hygiene issues since the entire healthy homestay business. household will be in contact with Certain sections of the poor outsiders. communities can also be trained in providing associated services like porters, cooks, guides etc. Cooperation There is low affinity among poor for Guide the beneficiaries for collective among adopting the activity and collective action and form societies on village households action for forming societies for based homestays through and homestay implementing agencies. institutions There is constant requirement of Create village level cadre of building market planning and institutional tie knowledgeable persons to establish ups for smooth flow of tourists. linkages with various institutions regarding tourism.
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4.7.10 Project Intervention
Project can promote homestays to be taken up by an individual family. 15 – 20 Individual households in homestay can form a collective for joint marketing initiatives and self regulation. Project need to work on strategies and capacity building inputs suggested in the previous section and by adopting an implementation plan described later. Project can facilitate funding for infrastructure building to individual households on the basis of unit cost described below.
A traditional village-based Sikkimese Homestay would maintain and share a traditional way of life and its values, provide traditional food, be based on eco-friendly concepts and require some amounts of investment for renovation.
4.7.11 Economics of Homestay Development (for 1 household) a. Assumptions
The Homestay includes accommodation and food for tourists. Calculations have been done for 1 household with an assumption that the household has enough space to construct a room accommodating 4 persons. Cost of various inputs and outputs are based on information collected from villagers, service providers and tourism department. The rate of interest for bank loan is taken @ 12% per year. Bank loan is considered for the entire year. The rates charged for Homestay are Rs 700 and Rs 500 per person per day in peak and off seasons respectively. Referral commission paid to travel agents is 20% of the earned revenue and is only paid in peak season. There are no referrals in off season. The homestay is being registered with a hotel license and at least 10 such homestays are being promoted in the concerned GPU forming a village level tourism society. The society will develop a common website and take on marketing activities in the form of brochures, pamphlets etc. The membership charges per homestay household are Rs 5000 per year.
Table 34: Financial plan for Homestay
Unit Total Sr. No Particular Unit Quantity Price Amount (Rs) (Rs) 1 Fixed Capital 1.1 Up-gradation of toilets and kitchen Lumpsum 1 80000 80000 Construction of 1 additional room (wooden) for accommodating 4 1.2 persons Lumpsum 1 150000 150000 Furniture and fixtures including 1.3 bed and beddings for 4 persons Lumpsum 1 70000 70000 1.4 Total Fixed capital 300000 2 Revenue generation from
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Homestay Homestay during peak season (6 months) at 4 persons/day/15 2.1 days/month persondays 360 700 252000 Homestay during lean season (6 months) at 2 persons/day/10 2.2 days/month persondays 120 500 60000 2.3 Total Income 312000 3 Homestay Running Expenses Food expenses at Rs 100 per 3.1 person per day for the entire year persondays 480 100 48000 Labour charges for maintenance at Rs 50 per person per day for the 3.2 entire year persondays 480 50 24000 Referral Commission during 4 peak season at 20% of revenue persondays 360 140 50400 Depreciation of fixed assets at 5 10% of fixed capital per year 10% 300000 30000 Yearly Membership to Village level tourism society for marketing and website 6 development Lumpsum 1 5000 5000 Miscellaneous expenses (Hotel registration and other 7 expenses) Lumpsum 1 5000 5000 8 Total running costs 162400 9 Profit before interest 149600 Interest (12% per annum on Total investment including 10 fixed capital) 12% 462,400 55488 11 Net profit 94,112 12 ROI 20.35% 13 Payback period Year 3.090909091
b. Sensitivity Analysis for Homestay
Table 35: Sensitivity Analysis for Homestay
Revenue Expenses Profit before interest Sr. No Parameters (Rs) (Rs) (Rs) What if number of expected tourists goes down by 10% during peak 1 season 286800 151960 134840
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What if number of expected tourists 2 goes up by 10% during peak season 337200 172840 164360 What if number of expected tourists 3 goes down by 10% during off season 306000 160600 145400 What if number of expected tourists 4 goes up by 10% during off season 318000 164200 153800
4.7.12 Implementation plan for Homestay promotion
Table 36: Implementation plan for Homestay
Key steps to be Activities to be performed by project followed
Phase I – Preparedness at the community level
Cluster selection Select the right cluster for initiating homestay promotion based on technical feasibility. Identify target block, village and the community. As mentioned earlier a maximum of 20% of households should be involved in each GPU for the activity. Section of communities which are already involved in similar activities can be started with. Social mobilization Sensitize interested households on potential of homestays as emerged and institution from the findings of value chain analysis described earlier and their impact building on livelihood. Share various possibilities and packages of homestay, its cost benefit
analysis, and assess community interest level to take up the activity. Identify the households to start homestay as a new unit. Initially only a limited number of groups should be encouraged to start the activity. Based on the results of pilots add more members. List out members separately who are already doing the activity and want to either expand or strengthen the activity. Initiate participatory discussion to arrive at consensus on roles and responsibilities of members and group leaders to take up the activity. Preparation of Prepare a proper business plan for homestay in consultation with the business plan community detailing the economics of the activity, capacity building requirements, issues and challenges, linkages with travel agencies, tourism packages to be developed, and government schemes to be availed. Capacity building Leadership training for group members–functions and responsibility to interact with external players. Training in business and marketing skills (costing, pricing, accounting, sales and marketing, negotiation, market analysis) to members using
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participatory techniques. Technical training on better practices, exposure visits to nearby best practitioners and outside the states as well. Identify suitable government and private agencies that can provide need- based technical and business training at the community level. Identify local level best practitioners. Phase II - Launching of the unit
Backward linkages List out major components required for setting up the homestay Guide and oversee appropriate infrastructure development for homestay promotion. Systematize training management. Establish finance support for homestay promotion on unit cost basis. Service delivery Implement best practices. Clarity of roles, specialization and continuous skill improvement Bring quality control in production to achieve efficiency, higher productivity at lower costs. Better record keeping and financial management. MIS development and multidimensional intervention opportunity. Market access Identify suitable and multiple markets and prepare list of market players with their contact details. Engage in negotiation with travel agents, drivers, hotels etc. players to establish relationship. Clarify on profit sharing and funds rotation among members in case of group activity. Build System for collaborations and employment Phase III – Up-scaling
Monitoring and Set up regular follow up and monitoring system to evaluate units from evaluation time to time to finds out gaps, take corrective steps and ensure delivery of appropriate extension services. Strengthening Facilitate secondary institution (district level) to upscale and sustain the Institution initiative. Plan capacity building for strengthening of secondary institutions Diversify activities to increase income Create village level cadres to extend technical and marketing inputs to community at village level. Provide handholding and technical support to secondary institution Legal aspects Compliance to legal implications in terms of licensing (hotel) and regulation.
Possibilities of Partnership
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Partnership possibilities exist with Tourism Department, various cooperative societies involved in rural tourism, ECOSS, Help tourism, TASS etc.
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List of secondary sources/references
1. Addressing Sustainable Livelihoods in Rural Sikkim: Experiences with Participatory Technology Development in Ginger cultivation; Indo-Swiss Project Sikkim 2. Annual Reports 2005-06, 2006-07, 2007-08 and 2008-09; The Sikkim Cooperative Milk Producers’ Union Limited (Sikkim Milk) 3. Annual Reports 2008-09, 2009-10; Sikkim State Cooperative Supply and Marketing Federation Ltd.(SIMFED) 4. Chautare India, East and North-East: TTF 2009-10; Help Tourism Pvt. Limited 5. Eleventh Five year Plan: Volume 1 - Inclusive Growth; Planning Commision, Govt. of India 6. Govt. of India Census, 2001 7. IIMB Management Review, Volume 20, Number 1 Article by Vinod K Huria March, 2008 8. Livestock Self Sufficiency Mission; Animal Husbandry, Livestock, Fisheries and Veterinary Services Department, Government of Sikkim 9. Lok Sabha un-starred question number 738 dated 23.02.2006 and question number 791 dated 22.11.2007 10. Markets that work, Making a Living from Livestock: 2007 Annual report; International Livestock Research Institute 11. NERLP Regional Project Implementation Plan document; Ministry of Doner, Govt. of India 12. Potential Linked Credit Plan, South District; National Bank for Agriculture and Rural development (NABARD), Regional Office, Gangtok 13. Potential Linked Credit Plan, West District; National Bank for Agriculture and Rural development (NABARD), Regional Office, Gangtok 14. Sikkim Express, dated: 05th October 2010 15. Sikkim Human Development Report 2001 16. Sikkim in Brief 2005; Government of Sikkim 17. Sikkim, Small and Beautiful, Shrivastava, Alok K, Tourism department, Govt. of Sikkim, 2006 18. Sikkim State census 2009 19. Sikkim State Livestock Sector Policy Perspective and Policy Elements; Animal Husbandry, Livestock, Fisheries and Veterinary Services Department, Government of Sikkim 20. Sikkim, A guide and Handbook; Seventeenth Edition 2009; Rajesh Verma 21. Sikkim…the land of peace and tranquility; Department of Tourism, Government of Sikkim 22. Tourism Sector Policy 2010; Sikkim Tourism department, Govt. of Sikkim 23. Traditional practices of ginger cultivation in Northeast India; H Rahman, R Karuppaiyan, K Kishore & R Denzongpa; Indian Journal of Traditional Knowledge 24. www.indianspices.com 25. www.indiastat.com 26. www.ireland-guide.com 27. www.pragya.org 28. www.sikenvis.nic.in 29. www.sikkiminfo.in
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Annexure
Annexure 1: Some Steps taken by the State Government (Courtesy Rural Management and Development Department)
The government of Sikkim has launched a dedicated mission for “Poverty Free Sikkim” by 2013. The five pronged strategy for becoming poverty free would involve: Providing universal access to essential infrastructure and services Improved earned incomes Increased emphasis on equitable and inclusive growth Facilitating empowerment A stronger safety net Following is a gist of action taken by State government of Sikkim in purview of promotion of Livelihoods.
The State Government has taken up a housing program by placing it at the top end of its development priorities, thereby imparting great vigour to the implementation process. A plethora of housing assistance schemes (RHS, IAY and recently MMAY) have been operational for more than 15 years now and have shown high impact, which can be discerned by the fact that in the year 2001 (9 years back) itself, only 16,487 (18%) of the total rural households were classified as Temporary (kutcha) as per Census of India, 2001.
Based on the physical progress over the last 9 years (from 2001 to 2009) of the ongoing generous rural housing scheme, it is estimated that in 2009, less than 8,000 (10%) rural households are staying in Temporary (kutcha) houses. The generous rural housing scheme of the State Government has now been universalized and has reached all the households. It is proposed to reduce the quantum of allocation under the saturated housing sector and use it for other need based areas like the wage employment sector.
After universalizing the Rural Sanitation sector in 2008, the State is now poised to universalize the important Rural Housing Sector as well. All it needs is a strong policy push by actively involving the Hon’ble Ministers, MLAs and Panchayats to give this vital sector high priority, to achieve the status of becoming the first state to become Temporary (Kutcha) house free, where all the rural households reside in either permanent or semi permanent houses. After achieving the first Nirmal Rajya status in 2008, this could be the next significant achievement in the rural development sector in 2010-11, and an important milestone in our journey towards achieving the vision of making Sikkim a poverty free state by 2015.
Under MGNREGA, Sikkim was ranked 2nd in the country in delivering the 100 days guarantee by the Ministry of Rural Development recently. The assets created in the village relate to minor irrigation channels, jhora training works, school playgrounds, footpaths, horticulture and pasture development etc. There is a provision of taking up maintenance of permissible assets that had been created under MGNREGA. Other than providing employment, the Scheme has been able to create durable assets related to income generation in the villages. Compared to the national average of 54 persondays per household in
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2009-10, Sikkim was able to provide 80 personday on an average to a household, with 23% of the households achieving 100 days.
One of the biggest concerns in the Rural Development sector is the maintenance of various Government owned physical infrastructure, whether it is primary schools, dispensaries, ICDS centers, footpaths, water supply, panchayat ghars, community halls etc. There is no regular scheme funded by the Union Government to assist in the maintenance of these physical assets created with sizeable government investment. Most of the rural households in the State are marginal farmers with fragmented land holdings and there is limited income from the traditional agriculture and horticulture sector (ginger, cardamom and orange). Hence of the three factors of economic production namely land, capital and labour, they are left mainly with the latter to contribute towards their economic development. Due to the low levels of industrialization in the rural sector, coupled with saturation in government jobs, there are limited employment opportunities at the government notified minimum wage rate of Rs 100 per day for unskilled labour. This has resulted in underemployment and unemployment in the rural areas.
It is proposed to initiate a new scheme which will be 100% funded from the State Plan budget as the “Mukhya Mantri Grameen Rozgar Yojana (MMGRY)”. This program will ensure in utilization of the existing, underutilized labour force with the rural poor getting productively employed to maintain the existing physical infrastructure of the Government, thereby giving a major thrust to sustainable development in the State. The program if implemented in all the 905 GPWs of the State, by employing 30,000 rural households (households expected to demand employment) for 30 days in a year, at the wage rate of Rs 100/day with a 50:50 wage material ratio, and 5% Administrative expenses will entail a financial outlay of Rs 19 crore annually from the State Plan.
Primary education has been universalized, and the rural literacy has touched 82 %. Currently 32% of the local rural households are educationally backward i.e. no adult member in the family above 30 years of age has studied upto class V. Currently the government’s support is in the form of free uniform and books upto class V and 50% subsidy on text books after that. Some children are forced drop out in Class VI since the cost of uniform, books, shoes etc which comes to about Rs 3500 per student forms an economic barrier for their parents.
In human resource development, new and innovative Conditional Cash Transfer (CCT) programs are in vogue over the last decade all over the developing world. These new methods serve the dual purpose of poverty reduction coupled with improvement in human capital (education and health). The conditions are focused on building the human capital of children (rather than simply supporting parents) adds to CCTs’ political acceptability as an instrument to promote opportunities; after all, it is hard to blame children for being poor. Making payments to mothers also resonates with well-accepted beliefs that women will tend to put funds to better use than will men.
The World Bank assessment of this program in several countries (Brazil’s Bolsa Escola, Mexico’s Oportunidades, Bangladesh’s Female Secondary School Assistance Program, Pakistan Punjab Education Sector Reform Program, India (Haryana) Apne Beti Apna Dhan) concludes that CCTs generally have been successful in reducing poverty and encouraging parents to invest in the health and education of their children. Enrollment rates have increased and dropout rates have reduced. The expected outputs will be
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significantly reduced dropout rates, improvement in school attendance, and also poverty reduction and the outcomes as the overall improvement in the human capital. The Cash Transfer programs have a track record of bringing about a behavioural change in the recipients, and if rural parents start giving top priority to their children's education by investing in them, then the human capital would show a qualitative jump in 5 years as envisioned by the Government.
In order to significantly improve the attendance in government schools and drastically reduce dropout, it is proposed to initiate a new education incentive program “Mukhya Mantri Gramin Shiksha Protsahan Yojana (MMGSPY)”. This is a cash incentive program for the mother of the household, to encourage the parents to invest in the human resource development of their children conditional on 85% attendance and passing the final exam. The total cost would come to about Rs 15 crore annually and the funds could be transferred after the declaration of final results into the newly opened Financial Inclusion bank accounts of the mother directly from the state level.
The Chief Minister’s Rural Universal Financial Inclusion Programme was launched during the Independence Day Celebration on 15th Aug, 2010. The programme aims to provide universal access to formal banking services to rural Sikkim, provide easy access to formal financial services, ensure inclusive and equitable growth, empower rural women and to accelerate economic development in rural areas in general. It will also provide insurance services related to house and personal accident to the beneficiary families. Under this programme, about 70,000 rural families in the State will be benefited by opening a savings bank account in the name of the mother of the nuclear family. They will be able to operate this account through a composite biometric smart bank card. The facility for savings and withdrawals from these bank accounts will be provided in the Gram Panchayat Unit itself by opening 163 Points of Service (PoS) facilities to be operated by Banking Business Correspondents as per the Reserve Bank of India guidelines.
Sikkim was ranked 3rd by the Ministry of Panchayati Raj recently in the performance and accountability of Panchayati Raj Institutions (PRIs). The schemes related to MGNREGA, Water Supply and Sanitation are being implemented bottom up though the PRIs. The Government has also approved the recommendation of the 3rd State Finance Commission of devolving 15% of the State Plan funds to the PRIs. It is estimated that the total fund outlay for each Gram Panchayat will be to the tune of Rs 80 lakh per annum.
The Skill Development Initiative was launched in 2003 and apart from the Directorate of Capacity Building, the State Institute of Capacity Building at Karfectar with state of the art facilities for residential training have been established. Under the Chief Minister’s Self-Employment Scheme 5,780 youths have been covered for self-vocational ventures encompassing various agro-based activities and IT and Tourism related vocations. As a pioneering step, livelihood schools have been established in every constituency. Many boys and girls primarily from rural areas are undergoing different kinds of vocational upgradation trainings in such Institutes across the State.
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Annexure 2: List of participants for the stakeholder consultation workshop (23rd August 2010, Gangtok, RMDD conference hall)
Sr. Name Designation Contact No Department Email No 1 Dr. S. Tambe Special 9474059291 RMDD [email protected] Secretary 2 Kailash Rai Dy Gen 9832014342 SIMFED [email protected] Manager 3 L Moorthy Asst Gen 9474983819 NABARD [email protected] Manager 4 D Tewari Dy. Manager 9434750527 SISCO Bank [email protected] 5 R D Kaleon Asst Manager 9434109713 SISCO Bank [email protected] 6 Dr. Partha Sr. Project 9775873293 WWF [email protected] Sarathi Ghosh Officer 7 Bhupesh Project 9733149964 VHAS, [email protected] Subba Incharge Gangtok 8 Gloria Deputy 9434037788 DPER NEIAP [email protected] Namchu Secretary 9 Kiran K Joint Director 9832017868 Agriculture [email protected] Pradhan 10 Anupa Under 9733012024 RMDD [email protected] Tamling Secretary 11 T. D. Bhutia Assistant 9434409281 RHH [email protected] Directot 12 R. P. Gurung CEO 9733088003 ECOSS [email protected] 13 Dr. S. Bhutia Dy. Director 9474350740 AHLF & VS 14 Dr. N.B. Jt. Director 9733255821 AHLF & VS Chettri 15 Dr. K. C. Jt. Director 208483 AHLF & VS [email protected] Bhutia 16 G. P. Chauhan Add. Director 9573776903 Horticulture 17 Tashi P Under 9547405676 RMDD Nagyal Secretary 18 L. P. Chettri P.D. SKDA 9434406753 RMDD 19 Ghanshyam IT Manager 9647892997 RMDD
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Annexure 3: List of select stakeholders met during the field visit
Sr. Name Designation Place Contact No
1 Ajneya Kumar Singh District Collector, South Namchi, 9434201222 2 Jitendra Singh Raje SDM Soreng, West Soreng 9434041007 3 Vishal Mukhia BDO Sikkip(Wok) Jorethang 9733064606 4 Chandrakala Rai Deputy Director SIRD 9733240418 5 J C Biswas DDM NABARD Namchi 9434089765 6 B. K. Rai Joint Director, Namchi 9434063536 Horticulture 7 D. B. Tamang Jt. Director, Horticulture Namchi 9434103504 8 H. Kuchay Consultant for Fabric Namchi 9647642198 print 9 D. T. Bhutia Ex Director SIRD Namchi 9434063279 10 Noveen Subba Branch Manager, SISCO Namchi 9775461855 Bank, South District 11 Subha Mukhiya BDO, Tinik Jorethang 9593886965 12 C. B. Rai Jt. Director, Soil and Namchi 9434063566 Water Conservation 13 Nandalal Subba Rose Farmer, Rose Dharamdin Village 14 L. B. Vijay Rose Farmer, Rose Dharamdin Village 15 Sujan Subba Rose Farmer, Rose Dharamdin Village 16 Smriti Pradhan Kanchenjunga Floratech Dharamdin Cooperative Society Ltd, Rose village 17 Pemdoma Bhutia Rose Farmer, Rose Dharamdin Village 18 Milan Chettri Rose Farmer, Rose Dharamdin Village 19 Shyam Kumar Field Staff, Horticulture Dharamdin department 20 Sai Patri SHG Tinik 21 Neel Kamal SHG Sisupani 22 Pragati SHG Ambote 23 Lilium SHG Samsebung 24 Gulab SHG Poklok Denju 25 Dr. P. Senthil Kumar MD, The Sikkim Co- Gangtok 94341-91883 IFS operative Milk Producers 03592 – 204133
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Union Ltd - Sikkim
26 C B Subba Former Speaker, SLA Gangtok 98320-34822 27 Noveen Subba Sikkim State Co- Namchi 97754-61855 operative Bank ltd 28 Rajendra P Gurung CEO, Ecotourism & Gangtok 02592-232798 Conservation Society of Sikkim 29 John Shankar AGM Marketing, Sikkim Gangtok 94341-27252 Tourism Development Corp ltd 30 Pavan Kumar Yangaldas Chief Executive, Srikar Gangtok 94340-76102 Knowcon Services 31 Karan Souvenir Tours & Treks Gangtok 97332-59355
32 Chewang Chojar Travel Sikkim Gangtok 94341-69615
33 Bijendra Swaroop IFS MD, Sikkim State Co- Gangtok 94341-69208 operative Supply and Marketing Federation Ltd 34 Kailash Rai Dy GM, Sikkim State Co- Gangtok 98320-14342 operative Supply and Marketing Federation Ltd 35 Sushil Tamang MD, Cherry Village Darap 97332-35441 Resort 36 Indra PD Shivakoti Subject Matter Namthang 94343-18310 Specialist, Krishi Vigyan Kendra 37 L Moorthy Asst GM, NABARD Gangtok 94749-83819
38 A P Sherpa Owner, Sherpa Lodge Varsey 94745-27836
39 Prasun Majumdar The Silk Route Tour & Kolkata 94335-07902 Travel 40 Suresh Patel Patel Ginger Company Siliguri 94324-02267
41 T N Sharma President, Hee-Bermiok Hee - Bermiok 94340-60563 Tourism Development & Heritage Conservation Society
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Annexure 4: Support plan for Dairy development in the NERLP Project Area
Dairy as an activity has been analyzed in section 4.3 and individual level plans have been shared for implementation. As mentioned earlier Sikkim Cooperative Milk Producers Union Ltd. (Sikkim Milk) is already functional in the project area and can act as a ideal stakeholder in promoting cluster based interventions around Dairy for the project. However, the institution needs support in strengthening its infrastructure and building appropriate capacities to specially include the project beneficiaries under its umbrella. A 3 year plan jointly prepared by Sikkim Milk and MART, for the project to financially support Sikkim Milk is as follows.
1. ACTION PLAN AND FINANCIAL OUTLAY:
Rs in Lakhs S. Key Activity Details Un Unit Year 1 Year 2 Year 3 Total No. it s Co Phy Fin Phy Fin Phy Fin Phy Fin st A Research and Training A.1 Dairy 1. Approaches to understanding Farmers cattle 3.0 Rs 5 15.0 5 15.0 0 0.00 10 30.0 Research feed strategies and identifying ways to improve per 0 0 0 Small Grants fodder supply that involve farmer and village- Stud Initiative for level initiatives in different agro-climatic zones. y PhD Scholars 2. Study of the contribution of the smallholder in the State in dairy sector to poverty alleviation. 3. Collaboration Indigenous knowledge system for tree fodder with national using a multi-method on-farm research and approach 4. Institutional, technological and international marketing systems, gaps and prospects in the experts from smallholder dairy sector of the state 5. Status, ICIMOD, SDC, potential and strategies for improving fodder IC, Amul etc supply from Goucharan forests of the state 6. Documenting the nursery techniques for fodder trees and grasses by compiling existing research studies in the region and documenting indigenous knowledge system using on-farm research approach.
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Rs in Lakhs S. Key Activity Details Un Unit Year 1 Year 2 Year 3 Total No. it s Co Phy Fin Phy Fin Phy Fin Phy Fin st A.2 Training 3 day Workshops, Designing the study and 4.0 Rs 2 8.0 2 8.0 2 8.0 6 24.0 Workshops in program in collaboration with national and 0 per 0 Collaboration international experts from ICIMOD. Outcomes work with National would include books along the lines of shop and "Smallholder Dairy in Mixed Farming Systems International of the Sikkim Himalayas: Issues and Prospects Experts from for Development" and "Livestock in mixed ICIMOD, SDC, farming systems of the Sikkim Himalayas: IC , AMUL etc trends and sustainability, training material and knowledge sharing. A.3 Training of One month long training to be conducted at 2.0 Rs 1 6.00 1 6.0 0 0.0 2 12.0 Technicians SIRD followed by annual week long training 0 per 0 for Extension programs. These technicians will in turn mont support the Milk Producers Cooperative h Societies
B Strengthening Local Dairy Marketing Infrastructure B.1 Strengthening To include milk transport cans, milk testing 5.0 Rs 0 0.0 13 65.0 13 65.0 26 130. Local Milk equipments, milk collection utensils and milk 0 per 00 Collection collection centers in the relative poverty unit Infrastructure hotspots of the state
B.2 Strengthening To include commissioning of bulk milk chilling 9.5 Rs 0 0.0 5 47.5 13 47.50 18 95.0 Local Milk machines of 1000-2000 liter capacity with gen 0 per 0 Chilling set, deep freezes and toolkits for operators in unit infrastructure the relative poverty hotspots of the state
B.3 Strengthening Capacity expansion of the existing Dairy plants 90.0 120. 90.0 300. the existing are required to make it capable of handling 0 72 Dairy increasing milk production from the Processing implementation of the project 1 Plant
1 Please refer to Support in Plant expansion as Point 2 of Annexure 4
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Rs in Lakhs S. Key Activity Details Un Unit Year 1 Year 2 Year 3 Total No. it s Co Phy Fin Phy Fin Phy Fin Phy Fin st C Cattle Improvement
C.1 Artificial To provide artificial insemination equipment, 2.0 Rs 0 0.0 13 26.0 13 26.0 26 52.0 Insemination including two liquid nitrogen containers, for 26 0 per 0 Equipment centres involved in cattle programmes to Equi improve productivity of existing cattle. pme nt Set C.2 Vaccination Comprehensive Vaccination of All Dairy cows 0.8 per 20 16.0 20 16.0 20 16.00 60 48.0 Against Major in the Project area - Annual Vaccination - 0 1000 0 Diseases 20000 cows doses C.3 Technical Extension services, including basic animal 15. Rs 1 15.6 1 15.6 1 15.60 3 46.8 Extension disease-prevention inputs, technical advice, 60 per 0 Service artificial insemination services and veterinary Year drugs, to be provided at a fee cost, which motivated technicians to improve the quality of their services. 26 Technicians to be paid honorarium of Rs 5000 per month for 3 years C.4 Crossbreed Crossbreed Milch cattle to be provided to each 0.5 Rs 0 0.0 225 1,23 225 1,237 450 2475 Milch cattle household as per economics provided under 5 per 0 7.50 0 .50 0 .00 for Poor section 4.3.10 of main report Hous Households ehold D Tree Fodder Development
D.1 Promoting Incentive of Rs 50 for every healthy seedling of 0.1 Rs 0 0.0 500 125. 500 125.0 100 250. Tree Fodder permissible fodder tree species on attaining 2 5 per 0 0 0 00 0 Development feet height, with an upper limit of Rs 2500 (50 Hous in Privately trees) per household ehold Owned Marginal Lands E Project Management
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Rs in Lakhs S. Key Activity Details Un Unit Year 1 Year 2 Year 3 Total No. it s Co Phy Fin Phy Fin Phy Fin Phy Fin st E.1 Project Hiring staff, Project office, Project 20. Rs 1 20.0 1 20.0 1 20.0 3 60.0 Management coordination, monitoring, evaluation and 0 per 0 reporting. Project administration, travel costs Year and financial accounting 1,7 F Total 170 01. 1,65 3,52 .60 60 1.32 3.52
B.3 SUPPORT IN PLANT EXPANSION
Rs in Lakhs Sr. No Particulars Units Cost/ Total Remarks Unit Cost 1 Pasteurizer 5000 litre capacity 2 18.00 36.00 Two Units to replace the old ones - one is already unserviceable and the other is critical 2 Milk Chiller - 5000 litre to 10000 litre 1 5.00 5.00 To support existing old chiller 4 Storage Silos -10000 2 8.00 16.00 5 Milk Tanker Tank -8KL with Chasis 3 18.00 54.00 To meet milk transportation from Jorethang/ from outside the state 6 TATA 407 for Marketing 1 6.00 6.00 to meet the increasing marketing 7 Pouching Machine - Double Head 1 9.00 9.00 to cope up with increased pouching 9 Piping and realigning 3 6.00 18.00 stainless steel piping needs of the plant 11 Plant Communication Systems 1 2.00 2.00 12 Inspection Vehicles for Procurement and Marketing 1 7.00 7.00 13 Curd Making Unit 1 22.00 22.00 1000 litre Capacity with incubator and packaging machine 14 Dairy Dock Automation System 1 14.00 14.00 Including Hardware and software
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Rs in Lakhs Sr. No Particulars Units Cost/ Total Remarks Unit Cost 15 Generator 1 8.00 8.00 for standby 16 Revamping of HT Electrical Fittings for the Dairy Plant 1 9.00 9.00 To Repair the Existing Electrical System to cope at Gangtok up with the expansion plans 17 Total 206.00 18 Installation, Commissioning and Contingencies- 12% of 24.72 the total 19 Repairing and Civil Works to accommodate the above 1 70.00 70.00 Lump sum expansion including the Cold store
Grand Total 300.7 2
2. TOTAL BUDGET
Rs in Lakhs Sr. No. Sector Budget A Research and Training 66.00 B Strengthening Local Dairy Marketing Infrastructure 525.72 C Cattle Improvement - Total 2621.80 Contribution from Farmers as loan (as per section 4.3.10 of report) 2475.00 Contribution from NERLP 146.80 D Tree Fodder Development 250.00 E Project Management 60.00 Total 1048.52
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3. SUGGESTED IMPLEMENTING AGENCIES
Sr. No. Sector Implementing Agency
Research by Dept of Science and Technology and Training by State Institute of Rural A Research and Training Development, Government of Sikkim
Strengthening Local Dairy Marketing B The Sikkim Cooperative Milk Producers Union Ltd, Tadong, Gangtok, Sikkim Infrastructure
C Cattle Improvement The Sikkim Cooperative Milk Producers Union Ltd, Tadong, Gangtok, Sikkim
D Tree Fodder Development Panchayati Raj Institutions
NERLP unit, Rural Management and Development Department, Government of E Project Management Sikkim
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Annexure 5: Sikkim State Stakeholders Consultation Report
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Background:
The North East Rural Livelihoods Project (NERLP) is a World Bank funded poverty alleviation initiative by the Ministry for Development of North Eastern Region (DoNER) which is planned in the 4 North Eastern states of Sikkim, Mizoram, Nagaland and Tripura. The project envisaged conducting Livelihood Based Agri Business and Market study in each of its project states.
MART a leading Livelihoods and Marketing Consultancy was commissioned to conduct the aforesaid studies through a contract signed between DoNER and MART on the 4th of August 2010. MART submitted draft report of Sikkim state to NERLP and World Bank by email to receive their feedback on the report. This report is the documentation of the feedback received on the draft report submitted by MART to NERLP. The feedback to be incorporated by MART in the final report is mentioned separately under section 3, later in this report.
Three kinds of consultations took place that gave feedback on the draft report are;
Written feedback from NERLP (23rd December 2010) and discussions with PD, NERLP in Delhi. Feedback from World Bank via forwarded email from NERLP on 26th January 2011 Stakeholders consultation workshop in Sikkim on 9th February 2011
Stakeholders’ consultation workshop
Objective : To share findings and recommendations of draft report Date : 9th February 2011 Venue : RMDD Conference hall, RMDD, Gangtok, Sikkim Time : 3:00 pm to 5.00 pm
MART has been conducting “Livelihoods based agribusiness and market study” in all four states under the purview of NERLP. In order to finalize the draft report of the aforesaid study in Sikkim, a multi stakeholder workshop was organized at RMDD conference hall of Gangtok at 3 PM on 9th February 2011.
Organized and coordinated by RMDD and SRDA, the workshop was attended by senior representatives of government department and state level resource agencies along with representatives of NERLP and MART. The workshop was chaired by Mr. A. K. Ganeriwala, Secretary RMDD. Secretary RMDD opened the workshop by welcoming all participants to the workshop and sharing the objectives of the workshop which were as follows:
Sharing of findings of the ‘Livelihoods based agribusiness and market study’ by MART Feedback and suggestions on the findings and recommendations by stakeholders in the context of implementation by NERLP.
Secretary RMDD also highlighted the timeliness of NERLP in the context of Sikkim and that the project had all the ingredients to eliminate poverty in the state. He mentioned that the project actually covers a large section of the poor in Sikkim and thus will be a major contributor to the state government’s mandate of “poverty free Sikkim by 2013”. He reasserted the fact that the role of all stakeholders in the form of line departments, cooperatives, banks, NABARD, resource agencies, NGOs etc. will be crucial in rendering success to NERLP. He then invited Mr. D.T. Bhutia, State Coordinator, NERLP for the opening remarks to the workshop. Mr. Bhutia, highlighted the salient features of NERLP in Sikkim and its coverage area. He
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also mentioned the premises under which the Livelihoods study was conducted by MART, a leading national level livelihoods consultancy agency and requested participants to actively participate in the workshop.
Post remarks by Mr. Bhutia, Secretary RMDD invited Mr. Sanjay Gupta and Mr. Nirmallya Mandal of MART to share the methodology adopted and the findings of ‘Livelihoods based agribusiness and market study’ conducted in Sikkim.
Mr. Nirmallya Mandal, presented the detailed 8 step methodology of the study followed by major findings in the context of existing rural Livelihoods in Sikkim like infrastructure and resources available, markets, land based activities undertaken in villages, Animal husbandry and livestock based activities undertaken and also Non-farm and service based activities undertaken. The detailed value chain analysis of milk, ginger, flowers, pigs and homestay (rural tourism) were shared with reference to value chain maps of each product, stakeholders and their roles, salient features of each value chain, constraints and gaps in the value chain in terms of inclusion of the poor and critical intervention points suggested. The power-point presentation is annexed with this report for reference.
In course of the presentation by MART, various comments were received from the participants which are as follows:
NERLP Project Manager, Ms. Sanchyeeta Gohain commented that value chain maps should be comprehensively drawn to include all necessary information in the map itself. She mentioned that the consumers should be highlighted in oval shape and separation of processes with stakeholders is required in the value chain map for better understanding. Percentage of product movement through different channels also needs mention. As per the findings of the dairy value chain, Mr. Gurung of ECOSS inquired reasons for low fat percentages in cow milk in Sikkim which was later answered by Dr. Senthil Kumar, MD Sikkim Milk. Dr. Senthil Kumar mentioned the reasons of low quality fodder and lack availability of green fodder are prime reasons along with the fact that milk from hilly areas have low fat content as compared with that of plain areas. Dr. Senthil Kumar highlighted the following points; o Dairy is Sikkim is traditional and people have the skills for practicing dairy activity. However, clusterization of the milk producing areas is required to achieve viability in terms of scale. Hence the project needs to be set up dairy clusters across the project area. Sikkim milk can be a major stakeholder in the same. o Although various schemes have distributed good quality cows in the rural hinterlands to poor beneficiaries their productivity often decrease after the initial milk cycles due to lack of good management of the cows along with shortage of good quality green fodder all the year round. Thus NERLP needs to take up special programmes on fodder development along with appropriate capacity building in the project area. Good quality cross bred cows should also be arranged by NERLP. o In order to maintain a proper milching cycle, strengthening of artificial insemination (already initiated by the AHVS department) needs to be supported by the project. o Marketing of milk is an area which needs proper support from the project and since Sikkim Milk is already functional in the project area supporting dairy farmers in providing marketing
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support, Sikkim milk can be a major stakeholder in implementing marketing systems for milk under NERLP. o Sikkim Milk already has a milk processing plant in Jorethang catering to the project area. However, the infrastructure of the plant needs serious and immediate renovation to be able to continue the marketing support. NERLP needs to support such infrastructure development in order to create robust marketing systems for milk in the project area. After the findings of the complexities in the traditional marketing channel of Ginger in Sikkim was shared, marketing through SIMFED was proposed as an option for small and poor farmers. It was also shared that bank credit in Ginger has increased during the last two years and banks are anticipating a rise in ginger cultivation Mr. P. Tshering, Director Food Security and Agriculture department also shared that a 7.5 MT/day capacity ginger processing plant has been commissioned recently at Jorethang which will be operated by SIMFED. The centre can cater to the needs of the poor farmers in the project area through convergence by NERLP. When a major bottleneck of absence of cold chain networks was highlighted for floriculture activity, Mr. Tambe, DGM NABARD shared the information that a Rs 500 crore investment in being planned by the government for setting up such cold chain systems near the upcoming national airport in Sikkim, near Gangtok. Mr. Gurung, CEO ECOSS suggested some action by NERLP to include the poor in Rural Tourism through creation of porter, guides, cooks etc. service delivery mechanisms and linking them with mainstream tourism initiatives. He stated that marketing is a major issue in the area of homestays and that as mentioned in the livelihoods study, NERLP should facilitate in setting up and running websites for marketing. He also highlighted the upcoming government policy of registering and certifying rural homestays for better monitoring and standardization.
After the end of the presentation, Secretary RMDD congratulated MART for completing the study successfully and satisfactorily. He mentioned that the study will largely help NERLP in planning and implementing the project in Sikkim. He also thanked all participants for participating in the workshop.
The closing remarks and vote of thanks to the workshop was presented by Ms. Sanchayeeta Gohain, PM, NERLP Guwahati.
Feedbacks to be incorporated in the final report
The following is a list of relevant feedback on the draft report received from various sources and their corresponding responses by MART;
Feedback received from NERLP
Observations Response
In the step 4 of Chapter 1, the examples of five Taken note of for addressing it suitably products should be relevant to a particular state as indicated in respect of other two state studies already.
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Observations Response
Regarding Chapter 4
The process of short listing of products has to be Justifications for short listing of products will be elaborated and justified. included under value chain analysis section
All the products should cover the national and Available data from secondary sources have been international market status and overall scope of the already included under background sections of products. each product value chain. However, will include additional relevant data if available.
The economic feasibility of the selected products Economic feasibility of all the selected products has not been mentioned are already mentioned under feasibility of the product (refer to sections 4.3.2, 4.4.2, 4.5.2, 4.6.2 and 4.7.3)
The study has suggested dairy farming at cluster The study proposes that the project should level, whereas, the economics of the sub sector has promote Dairy activity in a cluster to achieve been given according to individual basis. economies of scale. However, the activity needs to be conducted by each individual participating household hence the plan is given at the individual level.
The action plan for the cluster level sub sectors has Since Sikkim Milk is already functional in the to be suggested. area at the cluster level, a separate plan for supporting Sikkim Milk will be shared.
The economics of all the sub sectors should be Although most aspects have already been more broad, covering all aspects, including accounted for in the economics relevant marketing. explanations or additions will be provided for each economics.
The study has not identified the major players of Major players of all value chains are already the products within and outside the region. mentioned in the value chain map of the product with role of each in the subsequent paragraphs. Major players met during field survey will be annexed.
Similarly, the possibilities of partnership with the Taken note of for integrating the same separately identified players of the sub sectors have not been under each product value chain, although explored. possibilities of partnership have been accounted in the strategic action points of the constraint solution matrix of each value chain.
The study has not identified the critical Critical intervention points are presented as
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Observations Response intervention points in the value chain of the strategic action points in tabular form under products. Resultantly, it did not cover the constrain solution matrix for each product value investment planning for those critical points. chain. Economics of each value chain activity covers investment points for raw material/inputs, transportation, marketing, fixed cost and working capital requirement wherever relevant.
The study should provide guidance for setting up Taken note of for integrating it under each small, viable and sustainable processing units. product value chain
The study must also highlight the changing Additional information from secondary sources demand and supply scenario as well as projection will be collected and reflected if available. of the future trend to ensure that the farmers are However, based on the market scenario given in able to trace and face the challenges of negotiation introduction part of each value chain activity and with market players and ultimately get full benefits. field survey challenges for small and marginal famers are already included under each product value chain analysis.
Feedback received from World Bank feedback (26.01.2011)
Observations Response
The UNIT costs/investment required for each The details will be given in tabular form in the livelihood activity studied by them is put in a executive summary also. tabular form starting from the household/SHG/ and cluster level, so that we are clear what is the allocations for investments to be made from the various funds within the project
Also, for each activity in each state they should Potential partners will be mentioned in tabular clearly identify one agency who can be the overall form in the executive summary also. resource/ sector support agency which can be contracted in.
Relevant feedback received from State level consultation workshop (09/02/2011) and Special Secretary RMDD
Observations Response
Annexure 1: Some steps taken by the State Taken note of for integrating the same in the final Government needs to be updated with recent report. developments
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Observations Response
Section 4.7.12, Table 34: One criterion for selection Taken note of for integrating the same in the final of clusters can be areas where already similar report. community driven activities have been initiated.
Section 4.7.5, Figure 12: Linjee Payiong village to Taken note of for integrating the same in the final be added report.
Section 4.6.2, Table 27: Courtesy to be in the name Taken note of for integrating the same in the final of HCCD report.
Section 2.3: BPL percentage is around 20% as per The 2001 census has been referred for most DESME 2005 demographic data in the report. The section concerned in particular projects the findings of the HDI report 2001.
The report should highlight strong decentralization Taken note of for integrating the same in the final of the state with good PRI systems report.
The report should highlight the significance of Taken note of for integrating the same in the final safety net programs in the state ensures that there report. are no abject poverty situations in the state
Value addition of Hill Grass as broom stick as a The activity although significant in terms of potential activity livelihoods of the rural population, has little scope of value additions and thus the project’s interventions and investment potential is low. Hence it has been excluded as a major value chain activity.
Inclusion of Poultry as a potential activity The activity has already been included in the potential activity list for the state. However, being a risky activity in the hilly areas and bottlenecks in marketing and service delivery of poultry, piggery has been preferred to poultry.
Inclusion of Large Cardamom as a potential The said activity although important for Sikkim, activity has a high gestation period, declining production trend in the state and generally excludes the poor. Hence the activity has not been preferred to be included in the top 5 list.
Water is often a constraint in rural Sikkim and the Point taken; however water crisis is an universal activity plans shared in the report also assumes cross cutting issue in Sikkim which has a bearing water availability. on the successful implementation of the
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Observations Response
livelihood plans. Hence the project needs to implement special water harvesting plans through NRM related activities.
Value chain Analysis maps need to be more The value chain analysis sections of each comprehensive with all information potential product already cover all necessary information and simplicity in maps have been purposely maintained to ensure better visibility.
NERLP should support Sikkim Milk for ensuring A separate plan to support Sikkim Milk is shared better market linkages and processing of milk in the final report
Marketing of Ginger can be proposed through Already proposed in the report SIMFED since the other channels were found to be complex
A 7.5 MT/day capacity ginger processing plant has Taken note of for integrating the same in the final been commissioned recently at Jorethang which report. will be operated by SIMFED. The centre can cater to the needs of the poor farmers in the project area through convergence by NERLP.
A Rs 500 crore investment in being planned by the Taken note of for integrating the same in the final government for setting up such cold chain systems report. near the upcoming national airport in Sikkim, near Gangtok for supporting floriculture activity
Include the poor in Rural Tourism through Taken note of for integrating the same in the final creation of porter, guides, cooks etc. service report. However, from amongst all these options delivery mechanisms and linking them with to include poor in rural tourism, homestays is mainstream tourism initiatives. discussed in detail in the report.
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Annexure A: Presentation by MART in stakeholder consultation workshop (9th February 2011)
A-32, 1st Floor, Sector 17, Noida - 201 301 Tel: 0120-2512140, Fax: 0120-4273995 www.martrural.com
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Objectives of stakeholder workshop
Recap of study methodology and process adopted Share findings on livelihoods status Facilitate discussion on • Proposed implementation • Envisaged roles and responsibilities of project partners
Background The Ministry for Development of North Eastern Region (DONER), Government of India proposes North East Rural Livelihood Project (NERLP) to address the issues of rural poverty and creation of sustainable livelihood for rural poor particularly for women. Project states include Tripura, Mizoram, Nagaland and Sikkim. MART, a leading Livelihoods and Marketing Consultancy signed agreement on the 4th of August 2010.
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Livelihood based Agri-Business and Market study Assess economic opportunities in farm, off-farm and non-farm sectors Understanding existing infrastructure, resources , support services, major occupations, production systems, technology, policy environment and potential for growth Conduct market assessment and value chain analysis for potential livelihood activities Suggest viable income enhancement strategies for potential farm, off-farm and non-farm sectors Suggest business plans for appropriate livelihood interventions for potential activities
Approach of the study Activities Key Steps Outputs
Review of project literature and Develop better understanding of the reports Step 1 study and project states Study livelihoods initiatives/project Pre study Draft study design and plan such as DONER, NERCRMP in north preparation east states. Secondary reports and website Draft study design and plan
State wise meeting with state Develop better understanding nodal officer and stakeholders from Step 2 keeping project objectives in mind line departments and resource Initiation List out key stakeholders for meeting agencies Meeting at during field visit To understand NERLP objectives state level Feedback on constraints and and process, and key stakeholders opportunities in the state in the region Finalize approach and methodology Generate list of livelihood activities Finalize study villages based on Share study approach and availability of key products/services methodology Finalize field visit plan Share outline of draft report
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State wise data information State wise initiation report. It contains: collection, compilation and analysis Step 3 Existing livelihood profile and issues of initiation meetings Initiation Report SWOT analysis of the region Overall approach and methodology List of villages to be visited List of key stakeholders shortlisted Field visit plan Discussion guides 10-12 potential list of products for value chain analysis
Interaction with key stakeholders Shortlist 4-5 products/commodities/ from line departments such as Step 4 services per state for undertaking agriculture, horticulture, animal Fieldwork -1 value chain analysis husbandry, resource agencies, and (Interactions List of stakeholders/VC players and key market players with key products/commodities/ services Analysis of secondary reports and stakeholders) villages finalized for Field Work-2 market analysis Finalized discussion guides for Fieldwork-1
Finalize study design Fieldwork involves Finalize field visit plans Step 5 Livelihood survey in villages and Finalize field teams Fieldwork -2 market and meeting with enablers Undertake field visit (Interactions in Value chain analysis of 4-5 Finalize list of stakeholders to be villages and products/commodities/services and met markets) meeting with value chain players
Data compilation and analysis Draft report as per objectives listed Prepare draft strategies Step 6 out earlier Draft Report
Share draft report though power Agreed feedback of stakeholders on point presentation to World Bank, Step 7 the draft report DoNER staff and other stakeholders Stakeholders Content for final report finalized as suggested by the project consultation Stakeholders consultation workshop workshop to report share Draft Report
Additional data analysis and Final report as per study objectives information collection from Step 8 defined earlier secondary sources Final Report Feedback incorporated from stakeholders consultation workshop report
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3M Concept
Matching Supply & Demand Supply Possibilities Demand Pattern Income Opportunity Project Support
Survey in Market survey Identification Villages • Own Village Handholding of Viable services . Resources –Shop Activities Training . Skills –Trader Exposures . Technology –Vendor Infrastructure . Finance • Haat Bazar Sustainable . Infrastructure • Town Market . Support Activities Services
Study villages
District Villages
Mellidara Ward -1, Salghari Upper, South Sallebong, Biriang Ward, Ramaram Kali Khola
Darap Lagay, Samsing Ward – 5, West Tinzerbong, Rodhu Khandu Sanku, Lower Okharey
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Key Stakeholders consulted
Key Informants Place Villagers (Farmers, SHG Members, 10 villages in South and West youth, Panchayat members etc.) districts Secretariat & Directorate Officials Gangtok, Soreng, Namchi Govt. Line Dept. Officials Gangtok and Dist. HQs Support Institutions (NABARD, SIRD, Gangtok, Jorethang, Dist. SISCO Bank, SIMFED, Sikkimilk etc.) HQs, blocks, GPUs NGOs (ECOSS, VHAS, Help Tourism Gangtok, Siliguri, Dist. HQs etc.) Gangtok, Siliguri, Dist. HQs, Processors, Traders, Transporters etc. Jorethang etc. Namchi, Geyzing, Daramdin, Others (Mainam Gardens, GPU level Gelling, Varsey, Seleb, Darap, Cooperatives, eco-tourism societies) Hee-Bermiok
Livelihood Profile
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Infrastructure and Resources
100% surveyed villages had mobile network coverage, bank, post office, milk collection centres, roads, skill training centres, transport services, drinking water, electricity, school building, veterinary department, agro cooperatives and haats. 80-90% of the surveyed villages had community buildings, marketing cooperatives and access to nurseries 40% of surveyed villages had access to irrigation facilities in the form of rivulets and springs
Markets South District West District Markets Products traded Markets Town level markets Jorethang, Namchi, Gyalshing, Geysing Legship, Ginger, Cardamom, Orange, Melli, Ravongla Chilli, Vegetables, Milk products, Poultry, Pork, Mutton, Clothes, utensils, consumer goods, Agri implements, Agri inputs, Cattle Feed, service centres, departmental stores etc. Weekly (Haats) and village level markets Simchuthang Reshi, Hee, Sombaria, Soreng, Ginger, Cardamom, Orange, (Mangley), Majhitar, Daramdin, Dentam, Chilli, Vegetables, Poultry, Temi Bazar, Damthang, Rinchenpong, Kaluk, Mangalbarey, Pork, Mutton, Clothes, utensils, Agri inputs, Cattle Namthang Shreebadam, Bermiok, Feed, etc. Kewzing, Yangyang, Pelling, Tashiding, Chakung, Ralang. Nayabazar.
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Land based Livelihoods 120
100
80
60
40
20
0
Availability Percentage in surveyed village Percentage of Households involved
Seasonality Crops Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Ginger P P PM P P PM M M
Maize P P P P P P
Paddy P P P P P P
Tomato PM PM P P PM PM P P PM PM P P
Potato P PM P P PM M P P P P PM P
Pulses P P P P PM
Quash PM PM PM PM PM PM PM PM PM PM PM PM
Chilli P P PM PM PM
Orange P PM PM M
Large Cardamom P P PM PM PM PM M M
P: Production phase, M: Marketing Phase
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Consumption pattern 100% 0 0 90% 30 80% 70% 60% 85 90 90 92 50% 95 100 100 100 95 95 40% 70 30% 20% 10% 15 10 10 8 0% 5 0 5 5
Percentage consumed Percentage Surplus
Marketing channels Sale percentage of major crops through different channels 100 90 80 70 60 50 40 30 20 10 0
Village Trader Haat Town Trader
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Animal Husbandry and Livestock Major Availability in Percentage of households Livestock percentage of villages involved Dairy 100 65 Piggery 100 60 Goat rearing 70 25 Poultry 100 50 • Animal Husbandry and Fishery contributes to 31.6% value in the entire Agri allied sector of Sikkim. • Highly women centric activities • Dedicated Poultry and Dairy Mission by the Govt. • After farmers, Sikkim Milk and AHVS dept. largest stakeholders in Dairy.
Non-farm and Services Women are traditionally skilled in knitting woolen garments, stitching, pickle making and making fermented food products. Very few use skills for income generation. Construction (70%) and Carpentry (100%) related skills are high. 90% villages had drivers while 70% villages have Defense personnel. Low specialized skills like mobile repairing, electronics repairing, insurance agents etc. Livelihood Schools by Govt. to enhance skill development 40% surveyed villages interested in Homestay based Rural Tourism
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Value Chain Analysis
Dairy
Unprocessed: Rs 24-30/ litre Consumers Consumers Consumers, Hotels, High cream: Rs 36 / litre Restaurants Toned: Rs 25 / litre Franchisee Retailers (Outside Institution Franchise / and milk Sikkim) al supply. Retailer margin: parlors (Inside e.g. Army, Milk unions Re 0.5/litre Sikkim) IRCTC outside Sikkim Commission to Cooperative Processing by Sikkim Milk Societies: 3.3% of Milk Collection centre run by Milk value of milk producer’s Cooperative Societies Unprocessed: Rs 13 –18/ litre
Dairy Farmers
Input Supply Fodder, Cattle feed, nutrient supplements, dairy implements, equipment, etc.
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Salient features of Dairy 65% of HHs keep milching cows. 2-3 cows /HH. 8-10 litres/ HH • Different package of practices by AHVS, Entrepreneurs and local villagers. Marketing by Sikkim Milk, Entrepreneurs, SHG (Naya Bihane) Constraints Water availability Green Fodder availability round the year Low productivity of cows Cow milk is low in fat content no organic premium Access to credit Road blocks and market failure risks
Critical Intervention Points Formal arrangement with the AHVS department and Sikkim Milk for ensuring availability of good quality cross bred cows. Promote Silage pits for storing green fodder. Identify and promote specific cluster of villages for specially producing fodder. Ensure adequate availability of mineral mixtures and nutrition supplements at all project village levels. Create village level cadre of technical persons to provide technical services to dairy farmers regarding productivity enhancement. Regular training on best practices and exposure visits to best practitioners in the local area. Organize poor famers in SHGs to link them with local banks to ensure their financial inclusion. Develop partnership with existing MFIs and banks encourage them to develop specific loan products for commercial dairy farming and expansion The Project can also fund the activity directly. The project can facilitate proper organic certification of milk and develop niche markets for cow milk to enable premium prices for the poor producer. Guide dairy farmers for collective sourcing of feed and fodder to reduce operational costs. Appoint implementing agencies and develop village level service providers to help famers link with need based government schemes and services. Development of adequate milk chilling and storage mechanism at village level to withhold milk from perishing during roadblocks due to landslides.
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Ginger
Consumers Consumers Consumers (Local market)
Retailers Rs 5500-7000/q Retailers Retailers (Outside Sikkim) (Outside Sikkim) (Gangtok, Namchi, Jorethang) Wholesalers Wholesalers Rs 4500-5500/q (Delhi, Mumbai, Kolkata) (Delhi, Mumbai, Kolkata)
Wholesalers Wholesalers Rs 3500-4500/q Wholesalers (Siliguri) (Siliguri) (Siliguri)
Traders at Traders at SIMFED Rs 2500-3500/q Jorethang, Reshi, Jorethang, Reshi, Namchi, Namthang,etc. Namchi, Multipurpose Namthang,etc. Cooperative Societies Village Rs 2000-2500/q* level traders Ginger Farmers
Input Supply from farmer’s own sources Seeds, bio-fertilizers, agriculture implements, equipment, cow dung * The rates given are for fresh Ginger and ‘q’ stands for quintal.
Salient features of Ginger
Siliguri’s regulated market is the terminal market with year round trading. Farmers get 1/3rd price paid by end consumers. Bhainse, Gurubathane and Manjali are different varieties at the farmer level. Reshi, Melli and Singtam are qualities at the market level. Trading of Ginger (by the book) to Siliguri is often not viable Constraints Diseases, soft rot, availability of organic curative solutions Lack of basic value addition Inadequate market infrastructure Availability of credit Roadblocks and market failure risks
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Critical Formal arrangement Intervention with the Horticulture department Points for ensuring adequate supply of Ginger seeds and fertilizers to farmers. Support KVK and ICAR in speedy research of appropriate organic fertilizers, fungicides and pesticides. Appoint implementing agencies and develop village level service providers to help famers link with need based government schemes and private services. Create village level cadre of technical persons to provide technical services to farmers. Regular training and exposure visits to best practitioners in the local area can help poor farmers. Set up new cold stores after feasibility study. Organize poor famers in SHGs to link them with local banks to ensure their financial inclusion. Develop partnership with existing MFIs and banks encourage them to develop loan product for Ginger cultivation based on its economics. The Project can also fund the activity directly. Cleaning, sorting and grading should be taken up at the village level by farmers to maximize profits. Capacity building of farmers should be done in taking up elementary value addition. There is scope for collectivizing farmers to sell collectively and directly to higher order markets at towns and Gangtok for better price realization. Guide farmers for collective sourcing of seeds and marketing.
Pig rearing
Pork: 110 - Consumers Pig Farmers 120/Kg
Pork seller Pork shops in Temporary margin: Rs shops in 1000/quintal Namchi, Gangtok, haats across Jorethang Sikkim Piglets for etc breeding purpose Pig for pork: Rs 100-110 per kg Breeding piglets: Pig Farmers Rs 2000-200 / piglet Input Supply Fodder, Pig feed, nutrient supplements, implements, equipment, etc.
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Salient features of Pig rearing
60% of HHs keep indigenous variety of pigs. 4-5 pigs per HH. The current demand of Pork in Sikkim is 550MT and supply is only 150 MT per annum. Constraints Availability of water and fodder round the year Non standard package of practices Low productivity of indigenous pigs Availability of good breed pigs Access to Credit
Critical Intervention Points Establish a formal arrangement with the AHVS department for ensuring availability of good breed pigs. Identify and promote specific cluster of villages for specially producing fodder. Ensure adequate availability of mineral mixtures and nutrition supplements at all project village levels. Create village level cadre of technical persons to provide technical services to Pig rearing farmers regarding productivity enhancement. Regular training on best practices and exposure visits to best practitioners in the local area. Organize poor famers in SHGs to link them with local banks to ensure their financial inclusion. Develop partnership with existing MFIs and banks encourage them to develop specific loan products for commercial Pig rearing farming and expansion. The Project can also fund the activity directly. Guide Pig rearing farmers for collective sourcing of feed and fodder to reduce operational costs. Appoint implementing agencies and develop village level service providers
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Floriculture Alstroemaria (normal stick)
Consumers Consumers Consumers
Retailers (Outside Retailers Rs 10-15/stick Sikkim) (Outside Sikkim) Retailers Rs 8-10/stick Wholesalers, Agents Wholesalers (Siiliguri, (Delhi, Mumbai, (Delhi, Mumbai, Gangtok, Kolkata) Kolkata) Namchi)
Rs 2-3 /stick SIMFED Mainam Gardens Village Private Limited, level Rs 1-2 /stick Namchi traders
Floriculture Farmers
Input Supply Saplings, NPK, fertilizers, fungicides, floriculture implements, cow dung
Salient features of Floriculture
High investment and technically intensive activity. Very strong support system by HCCD. Alstromeria (Peruvian Lily) and Zanderdeschia (Cala Lily) proposed for villages at a minimum height of 4000 ft from the mean sea level. Gerbera and Carnation for villages below 4000 ft from the mean sea level. Flowers from the project area mostly sent to domestic markets with very little or no exports. Constraints Access to direct sources of seeds and tubers Inclusion of poor in the activity Lack of adequate marketing infrastructure (cold chain) for exports Access to credit Road blocks and market failure risks
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Critical Intervention Points Identification of interested poor farmers and establish a formal arrangement with the HCCD department for ensuring adequate supply of inputs. Convergence of the department support with the project is crucial. Support HCCD department, SIMFED, KVK and ICAR to take up research for developing appropriate seeds/tissues/bulbs for floriculture which is otherwise very expensive and have to be imported. Appoint implementing agencies and develop village level service providers to help famers link with need based government schemes and private services. Create village level cadre of technical persons to provide technical services to farmers. Regular training and exposure visits to best practitioners in the local area can help poor farmers. Organize poor famers in SHGs to link them with local banks to ensure their financial inclusion. Develop partnership with existing MFIs and banks encourage them to develop loan product for Floriculture cultivation based on its economics. The Project can also fund the activity directly. Promote the activity in a cluster to optimize input costs and transport expenses. There is scope for collectivizing farmers to sell collectively and directly to higher order markets through SIMFED or Cooperative retail outlets in Gangtok for better price realization. Guide farmers for collective sourcing of inputs and marketing to reduce operational costs. (Rural tourism)Homestay
Homestay Homestay Homestay Households Households Households
Village based tourism societies in Sikkim (Kewzing, Hee Bermoik, Yoksum, Lachen, Lunchok, Maniram, Rong, Jaubari, Darap etc) Travel agents Travel agents in Sikkim in Sikkim 20% referral commission Web site Travel agents booking outside Sikkim International Travel agents
Sikkim Tourism department, ECOSS, Help Tourism Pvt. Ltd
Domestic tourists International Tourists
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Salient features of Rural Tourism 80% domestic and 20% international toursists 20% referral commission No registration and legal norms by govt. yet Constraints Infrastructure bottlenecks for the poor Access to credit Capacity building of entire family on various aspects like waste management, ettiquettes, etc. Associated sectors like health care, law and order, environment etc. Sensitivity of tourism Market, road blocks etc.
Critical Intervention Points Organize poor households into collectives in the form of societies or SHGs to link them with local banks to ensure their financial inclusion. Develop partnership with existing MFIs and banks encourage them to develop loan product for Homestay based on its economics. The Project can also fund the activity directly. Establish formal arrangements with the Sikkim Tourism department, ECOSS, Help Tourism Pvt. Ltd etc for ensuring adequate capacity building of the target community through training, exposure visits to successful cases and handholding. Special modules can be developed for delivering special capacity building to community on various highlighted issues in tourism Appoint implementing agencies and develop village level service providers to help mobilize the community and link them with various aspects of environment, health and sanitation along with tourism. Establish proper community managed waste management systems at the village level. Detailed health trainings should be imparted to community on how to avoid infection and maintain a healthy homestay business. Guide the beneficiaries for collective action and form societies on village based homestays through implementing agencies. Create village level cadre of knowledgeable persons to establish linkages with various institutions regarding tourism.
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Summary Produce / Intervention Size of activity suggested Convergence and Product Suggested Unit of Fund RoI partnership activity requirement (%) potential (Rs) Cow Milk Improved practices in 3 cross bred 151598 29.43 AHVS department and Sikkim dairy farming both cows per house Milk union. project districts hold Ginger Improved package of 1 acre 24300 73.6 Wholesalers, HCCD practices for Ginger Department, SIMFED, cultivation in both Progressive farmers and project districts Financial institutions Pig Rearing of American 6 pigs (5 female 209234 36.2 Wholesalers and retailer, Hampstead variety of and 1 male) per Inputs suppliers , pig by adopting household Progressive farmers, improved package of Financial institutions practices And AHVS department Floriculture Cultivation and 400 saplings 263200 10.9 HCCD Department, SIMFED, marketing of under 1 poly Mainam Gardens, Other Alstroemeria flowers house of 90 ft Wholesalers and retailers, by 22 ft Inputs suppliers , Financial institutions and Progressive farmers Rural tourism Promotion of 1 household 462400 20.3 Tourism Department, various Homestay based Rural constructing cooperative societies involved Tourism additional room in rural tourism, ECOSS, Help for 4 persons tourism, TASS etc
Implementation Phase I – Preparedness at the community level Cluster selection Social mobilization and institution building Preparation of business plan Capacity building Phase II - Launching of the unit Backward linkages Service delivery Market access Phase III – Up-scaling Monitoring and evaluation Strengthening Institution Legal aspects
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Thank You
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Annexure B: List of Participants in stakeholder consultation workshop (9th February 2011)
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