"Easy Money" A market-based livelihoods research among smallholder farmers within SNV’s Inclusive Business project for chiuri in Surkhet, Nepal
MetadataShow full item record
This thesis is designed around the High Value Agriculture – Inclusive Business Pilot Project for chiuri (a non-timer forest product) in collaboration with SNV Nepal in order to identify its strengths, weaknesses, opportunities and threats and to give recommendations on the larger High Value Agriculture project to be implemented in 2011. The pilot project is executed in Surkhet district, part of the Hill areas in the Mid-Western Development Region of Nepal with the main goal as “to contribute to the reduction of poverty and vulnerability of women and men in selected villages in the project area of the Mid-Western Development Region, to the improvement of their living conditions and to their food security”. It has been designed around the Inclusive Business principle that aims at mutual value creation for business and low-income segments and implemented by means of contract farming. The underlying literature includes theories around value chain coordination and in particular contract farming and its different forms and possible (dis)advantages for smallholder farmers. The value chain analysis is combined with a livelihoods research, based on the Sustainable Livelihoods Framework, including livelihood assets, activities, strategies and the related vulnerability context. The research aimed to conduct a value chain analysis of the chiuri value chain, identify the major livelihoods characteristics of the households in the project, and to asses the role of the value chain in these households’ livelihoods as well as its sustainability. The methods used were a) a desk study, b) household surveys conducted among 73 chiuri collectors, c) three focus groups, d) key informant interviews, and e) three life history interviews. The value chain knows three main actors, the collectors, the cooperatives acting as middlemen, and Alternative Herbal Products Pvt. Ltd. as the contractor and is characterized by low bargaining power on the cooperatives’ side while the firm reaps the highest benefits. The collectors belong to the Bottom of the Pyramid population segment as they are part of rather marginalized households. However, they are unlikely to get indebted or experience agribusiness normalisation since chiuri collection does not require any investments or inputs. It is a pro-poor value chain, increasing the inclusiveness of smallholder farmers without imposing any obligations due to the absence of a formal agreement on their side. Moreover, selling chiuri seeds generates an additional income rather than a livelihood strategy due to the product’s seasonality and limited income earning opportunities (3.25 percent of total income). What the value chain provides for the collectors are market access and price certainty as this project created the market and set a fixed price. As the quality of the seeds is difficult to specify the cooperatives are vulnerable to (disguised) contractual hold-up by the contractor as they have a formal agreement with the firm. Moreover, the value chain is unlikely to be sustainable due to lack of mutual trust, mutual dependency, and contract enforcement mechanisms. Also the institutional environment hampers the development of the value chain through market policies. Due to the product and contract characteristics it is difficult to evaluate the value chain as a contract farming agreement as several (dis)advantages of contract farming for smallholder farmers are not applicable. Neither does the project contain all key element of Inclusive Business. At last, the research results are combined in a SWOT analysis of the project to give recommendations for the High Value Agriculture project.