2014_Butternut Chiuri Value Chain.pdf

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A Value Chain Analysis

Butternut (Chiuri) in Nepal

Ministry of Industry


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The Inclusive Development of the Economy (INCLUDE) Programme is a joint Nepali-German initiativeunder the guidance of the Nepal Ministry of Industry and with Technical Assistance by the DeutscheGesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, acting on behalf of the German FederalMinistry for Economic Cooperation and Development (BMZ).

Published byInclusive Development of the Economy Programme (INCLUDE)

Narayani Complex, Pulchowk, LalitpurPO Box 1457, Kathmandu, NepalT: +977-1-5555289F: +977-1-15521712E: [email protected]: www.includenepal.org

Commisioned by

Inclusive Development of the Economy Programme (INCLUDE)All rights reserved. Published 2014

Compiled by:Mr Sichan Shrestha Editor:Jackie Taylor; INCLUDE

DesignKazi Studios This publication may be reproduced in whole or in part and in any form without permission from thecopyright holder, provided acknowledgement of the source is made and a copy is provided to INCLUDE.

Contents1. EXECUTIVE SUMMARY .........................................................................................................................2. BACKGROUND ......................................................................................................................................... 2.1. Context of the Assignment ....................................................................................................................... 2.2. Purpose and Objective of the Study .......................................................................................................... 2.3. Limitations ............................................................................................................................................... 2.4. Methodology Used in the Study .............................................................................................................3. CHIURI IN NEPAL ..................................................................................................................................... 3.1. Basic Information .................................................................................................................................... 3.2. Geographical Distribution........................................................................................................................ 3.3. Social Economic Importance ....................................................................................................................4. VALUE CHAIN MAPPING ........................................................................................................................ 4.1. Overview .................................................................................................................................................. 4.2. Actors in the Chiuri Value Chain .............................................................................................................. 4.2.1. Primary Value Chain Actors .............................................................................................................. 4.2.2. Supporting Organisations (NGOs, Associations, Development Partners) ........................... 22 4.2.3. Enabling Organisations (Government Entities) ..............................................................................5. ANALYSIS AND FINDING .................................................................................................................... 5.1. Key Constraints and Opportunities ....................................................................................................... 5.2. Government Policies ............................................................................................................................. 5.3. Linkages among the actors and potentials for market improvements .......................................32 5.4. Economics of the Value Chain ............................................................................................................... 5.4.1. Resource Availability ..................................................................................................................... 5.4.2. Cost Reduction, Increasing Revenue and Barriers of Entry and Exit ..................................37 5.5. SWOT Analysis .....................................................................................................................................6. INTERVENTION STRATEGIES ............................................................................................................

7. CONCLUSION AND RECOMMENDATIONS ......................................................................................8. ANNEXES ................................................................................................................................................ 8.1. Estimation of required demand and supply of chiuri seeds/ghee .................................................47 8.2. List of Nepalese herbal soap brands available in the market ........................................................50 8.3. Success Stories ...................................................................................................................................... 8.4. List of people interviewed ..................................................................................................................... 8.5. List of Tables and Figures ...................................................................................................................... 8.6. Reference List ........................................................................................................................................


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AcknowledgementTe study acknowledges the following personnel and organisations for their valuablecontribution in preparing this report:

1. Te Nepali-German Inclusive Development of the Economy (INCLUDE) Programme, a joint initiative under the guidance of the Ministry of Industry (MoI) and supported by theDeutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH acting on behalfof the German Federal Ministry for Economic Cooperation and Development (BMZ), forentrusting us to carry out this study that will contribute to the development of new projects.In particular, Ms Ellen Kallinowsky and Mr Roshan Shrestha for overall support andguidance in the study design and information gathering from the study districts, as well asMr Keshav Acharya and Mr Nibedan Baidya for overall support in planning and arrangingmeetings with key stakeholders.

2. Mr Artur Dillmann, Senior Consultant, Germany, for overall support and guidance in thestudy design and report writing.

3. Te Micro Enterprise Development Programme (MEDEP), District Chamber; Rupantaran,a NGO, and other local NGOs for arranging meetings and providing coordination andother management related support.

4. Finally, acknowledgement goes to project beneciaries; entrepreneurs; representatives ofgovernment line agencies at district and central level; project stakeholders; project donors,and NGOs for sharing their experiences, which have provided valuable information indrawing conclusions for this report.

Acronyms and Abbreviations AHP Alternative Herbal Products ANSAB Asian Network for Sustainable Agriculture and Bio-resourcesBO Built, Operate and ransferBMZ German Federal Ministry for Economic Cooperation and DevelopmentCFUG Community Forest User GroupDDC District Development CommitteeDFO District Forest OfficeDMEGA District Micro-Entrepreneur Group AssociationsDoF Department of ForestsDoPR Department of Plant ResourcesEIA Environment Impact AssessmentFACD Foreign Aid Coordination DivisionFECOFUN Federation of Community Forest Users, NepalFGD Focus Group DiscussionFNCCI Federation of Nepalese Chambers of Commerce and IndustriesFNCSI Federation of Nepal Cottage and Small Scale IndustriesGACP Good Agriculture and Collection PracticesGIZ Deutsche Gesellschaft für Internationale ZusammenarbeitHB L Himalayan Bio rade Pvt LtdHVAP High Value Agriculture ProjectIBA Indo Buyric AcidIEE Initial Environment ExaminationINCLUDE Inclusive Development of the Economy ProgrammeIPR Intellectual Property Rights JABAN Jadibuti Association of NepalLFP Livelihoods and Forestry ProgrammeMAPs Medicinal and Aromatic PlantsMEDEP Micro Enterprise Development ProgrammeMoFSC Ministry of Forest and Soil ConservationMoI Ministry of Industry MSDC Material Safety Data SheetMSEs Micro and Small EnterprisesMSFP Multi-stakeholder Forestry ProgrammeNGO Non-Governmental OrganisationNRs Nepali RupeesN FP Non- imber Forest ProductPPM Parts Per MillionPPP Public Private PartnershipPRAA Pest Risk and Assessment AnalysisR&D Research and DevelopmentSDC Swiss Development CooperationSME Small and Medium EnterpriseSWO Strengths, Weaknesses, Opportunities and Treats

EPC rade and Export Promotion CentreUSAID U.S. Agency for International DevelopmentVC Value ChainVDC Village Development Committee WWF World Wide Fund for Nature


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BUTTERNUT |VALUE CHAIN ANALYSIS

Context of the studyTe study was commissioned by the Nepali-German INCLUDE Programme, an initiativeunder the guidance of the MoI and s upportedby GIZ on behalf of the German FederalMinistry for Economic Cooperation and

Development (BMZ), with the perspective ofidentifying appropriate interventions for thepromotion and upgrading of the chiuri valuechain in three districts, namely, Dang, Pyuthanand Surkhet. Te study was conducted fromSeptember to November 2013. Data wascollected from primary sources throughinteractions, interviews and Focus GroupDiscussions (FGDs) with value chain actors,and through secondary sources (review of pastreports). Constraints and opportunities arelisted and analysed within the GIZ ValueLinksframework.

BackgroundChiuri (Diploknemabutyracea ), also known asNepali butter, is a multipurpose tree. Te mainproduct of the tree is ghee (butter), extractedfrom the seeds and named chiuri ghee orphulwara butter. Flowering starts during the

cold season and fruit ripens in June/July. Techiuri tree has been utilised for many uses byrural households. Ghee is used in daily cookingand as fuel for lamps; the fruit is eaten fresh;oil-cakes are utilised as manure, and the treeitself is used as rewood, etc. It has signicantcultural and livelihood associations with theChepang community.

1. Executive Summary


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Chiuri value chainChiuri trees are abundant (10.8 million trees,MEDEP Resource Survey, June 2010) throughoutNepal. Found in approximately 50 districts, thehighest numbers (40%) are found in the Mid-Western Development Region. Tere are four levelsof actors within the value chain, namely inputsuppliers/collectors; processors; wholesalers/retailer,and nal consumers. Te end market of chiuriproducts, especially ghee and herbal soap, are local,regional and national markets, as well as export toselected countries. Ghee, processed by a locally madewooden expeller (kol), is consumed by the processorsthemselves, while 85% is sold to various soap makingcompanies and partially exported to the USA, Europeand Asian countries. Tere are a large numberof collectors (on average, 100 to 200 householdsfrom each pocket area; 57 pocket areas in the threeselected districts; in total around 8,500 households)involved in the collection of chiuri seeds from thecommunity forests and partially from private land.Te seeds are cleaned, dried in the sun, and sold tonearby cooperatives or retail shops. In many pocketareas, seeds are further processed in a traditional kolto produce ghee. In the past, seeds were processed ina modern expeller, but this was found to produce aninferior quality of ghee. Processed ghee is transportedto herbal soap making factories located in majorurban areas and the Kathmandu Valley. Tere are 20to 30 herbal soap brands using chiuri ghee as one ofthe raw materials. Chiuri products are also exported,either in the raw form as ghee or as herbal soap.Nepalese consumers prefer herbal soaps.

Apart from the key actors, there are a fewprogrammes/projects, NGOs, associations andbusiness membership organisations providing servicesto the value chain (VC) actors through businesspromotion and capacity building. Te government

has been involved in the conservation of chiuri byproviding saplings, ensuring sustainable harvestingand monitoring activities.

Constraints and opportunitiesIn spite of the availability of chiuri trees, collectorsare not motivated due to difficulty in harvesting, andthe unattractive price received from traders comparedto the income from vegetables and working as labourin the construction sector. Apart from the Chepangcommunity, there is a lack of awareness of the usesof chiuri. Te consumption of chiuri ghee and fruitis minimal at the local level, apart from a few festival

dishes. Little research and development has beencarried out to support possible commercialisationand utilisation of chiuri for industrial use. Adequatelaboratory infrastructure and human resourcesare not available in the country to provide labservices to the entrepreneurs. A few Sundharaexpeller machines were handed over to communitygroups and cooperatives by various developmentprogrammes/project in the past, but the results werenot satisfactory (the quality of the ghee producedby the machine was not accepted by the buyers).Currently, those expellers are not in operation. Tesupply channel is not properly established. Tereare few traders in the districts dealing specically with chiuri, as it is a seasonal business. Te fewcooperatives working in the chiuri sector do not haveadequate funds to purchase seeds from the collectors.Tere are a few cooperatives and group-ownedfactories promoted by various projects, who investedin the production of soap made from chiuri ghee andother ingredients. However, due to lack of propermanagement, marketing and nancial skills, theyare not operating successfully. Only a few individualentrepreneurs in the districts and in major urbanareas have been successful in establishing new Nepalisoap brands, which are well accepted by consumers.

If demand is created, there are market opportunitiesfor chiuri as a raw material in cosmetic products.Te cosmetic and beauty care sector demandsinnovative products, and there is an increasingdemand of herbal products. Efforts have been madein Nepal by a few entrepreneurs to develop newproducts, such as moisturising cream, etc. A numberof similar products were marketed by Europeancompanies on the internet. However, due to lack ofproper infrastructure and knowledge these efforts were not successful. Research and demonstrationcan create awareness of the unique benets ofchiuri and increase the demand of consumers. Inaddition, organic and other internationally acceptedcertication will further support the export of chiuriproducts. It is also necessary to position chiuri inthe market with different brands, such as a cheapraw material for lighting, edible oil and high-endcosmetics products.

Intervention strategies

Upon analysing information gathered from various sources and ndings, the following key actions arerecommended.

1. Tere is an urgent need for the government and development partners to invest in research anddevelopment (R&D) to provide sufficient evidence for the commercialisation and utilisation of chiuriin various industrial uses. Product development starts from investment in research work, possibly undera Public Private Partnership (PPP) model.

2. For immediate results, it is necessary to support the expansion and improvement of traditional kols toprocess chiuri seeds in partnership with local cooperatives, Community Forest User Groups (CFUGs)and other groups.

3. Further, facilitation of business linkages with large-scale companies will be necessary.

4. Piloting appropriate technology for chiuri processing should take place through identifying machinerymanufacturers in Nepal and India who can customise and install the equipment as required. Once theequipment is piloted successfully, it can be promoted in other locations.

5. Provision of support for other new technology and infrastructure, such as for drying, storing andpackaging, is required.

6. Commercialisation of innovative value-added products made f rom various parts of the chiuri treeshould be piloted. Te potential of chiuri honey enterprises should be explored.

7. Capacity building of local level institutions (groups, cooperatives, CFUG, etc) and micro entrepreneurson business and marketing skills , and technical know-how.

8. At the implementation level, there are areas for improvement in collaboration and networking withstakeholders. A detailed resource inventory of seeds, ghee, etc should be carried out.

If demand is created, there aremarket opportunities for chiurias a raw material in cosmeticproducts.

o conclude, there is a potential of increasingthe income of 7,000 target beneciaries (chiuricollectors and small-scale entrepreneurs) by engaging

them not only in the collection and sale of raw seeds,but in value adding activities such as processingchiuri into ghee and other new products.


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2.1. Context of theAssignmentTe Inclusive Development of the Economy(INCLUDE) Programme is a joint Nepali-German initiative under the guidance ofthe Nepal Ministry of Industry (MoI)and with echnical Assistance by theDeutsche Gesellschaft für InternationaleZusammenarbeit (GIZ) GmbH, acting onbehalf of the German Federal Ministry forEconomic Cooperation and Development(BMZ). Te programme aims to contribute toan environment that is particularly conduciveto socially balanced economic development.Following a partner-oriented and systemicapproach, INCLUDE strengthens institutionalcapacities at government, private sectorand cooperative levels and supports theirinteraction. Te economic stakeholding ofselected target groups is promoted specically

via value chain approaches. INCLUDE’sobjective is therefore: selected actors fromthe public, private and cooperative sectorincreasingly perform their roles in promotingsocially balanced economic development.

arget groups are the poor and u ltra-poorinhabitants of Nepal who are or could beeconomically active, as well as women,marginalised castes and ethnic/religious groups,the conict affected and people with disabilities.INCLUDE is focusing its programmeintervention on Kailali, Surkhet, Dang, Bankeand Pyuthan Districts.

Under its value chain component, INCLUDEmakes an effort to strengthen selectedvalue chains with a special emphasis on thecooperative sector. Currently, INCLUDE issupporting for the promotion of three valuechains including honey, medicinal and aromaticplants (MAPs), including chiuri, and dairy.

2. Background


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2.2. Purpose and Objective ofthe StudyTe value chain analysis of chiuri was undertakenwithin the GIZ ValueLinks framework, whichincludes four interlinked steps: 1. data collectionand research, 2. value chain mapping, 3. analysis ofopportunities and constraints, 4. review ndings withstakeholders and recommendations for future actions.For the analysis of constraints and opportunities,the following competitiveness factors are taken intoconsideration:

a. End markets

b. Business enabling environment

c. Vertical linkages

d. Horizontal linkages

e. Supporting marketsf. Value chain governance

g. Inter-rm relationships

h. Upgrading

Te overall purpose of the analysis is to set the basisfor identifying appropriate interventions for thepromotion and upgrading of the chiuri value chain inthe programme districts and beyond (if needed).

Te other specic objectives are as follows:

1. Conduct detailed chiuri value chain analysisand design appropriate interventions using GIZValueLinks approach;

2. Identify the key functions in the value chain as wellas vertical and horizontal relationships and linkagesbetween the value chain operators and supportersinvolved in the sub-sector;

3. Identify key strengths, weaknesses, opportunitiesand threats at different levels of the chain;

4. Carry out an economic analysis of the valueaddition;

5. Identify key constraints and gaps, and

6. Propose key intervention strategies to upgrade thefunctioning of the value chain.

A value chain is a sequenceof related business activities(functions) from the provisionof specic inputs for aparticular product to primaryproduction, transformationand marketing, up to the nalsale of the particular productto the consumer. (ValueLinksManual)

2.3. LimitationsChallenges faced during the eldwork and overallstudy were as follows:

1. It was very difficult to gather information fromthe target beneciaries based on their recall ofexperiences, thus the data may not be scienticallyaccurate.

2. Actual baseline data of chiuri is not available andinformation gathered is based on interactions withkey persons. riangulation of data is also difficult, asit does not always match with other sources.

3. Government stakeholders are busy with manyactivities, and do not have sufficient time to meet anddiscuss.

2.4. Methodology Used in the StudyTe following methodology was adopted for the study.

Preparation work An extensive literature review of relevant past and on-

going studies, strategies and policies was conducted.Questionnaire tools were prepared and preliminarydiscussions with the INCLUDE focal person andProgramme Manager were carried out throughemails. An International Consultant visited Nepaland had thorough discussions on the questionnairetools and eld plan, after which they were nalised.

Field visits and interactions withdistrict and central level stakeholdersTe study team visited three districts (Surkhet, Dangand Pyuthan) and regional (Nepalgunj), as well asKathmandu, market centres to interact with the keyvalue chain actors, service providers, programmes/projects and government officials. In each district,FGDs were carried out with the collectors andprocessors.

Primary data was gathered through extensive eldvisits in the three districts and interactions with allkey stakeholders. Altogether, about 100 interviews were conducted, along with telephone interviews with relevant actors who were not available atthe time of the eld visit. In addition, physicalobservations on chiuri trees, processing equipmentand other infrastructure (drying methods, storagefacilities, etc) were made.

Before the eld visits, all eld level meetings werecoordinated with the stakeholders with the helpof the District Chamber Office. In the overallprocess, the INCLUDE central and regionaloffices were actively involved in the planning andimplementation.

A draft intervention design with detailed analysis was completed after the eld visits. Findings wereshared with stakeholders at a national stakeholders’ workshop.

S EP 1

Preparation work

S EP 3

Participatory workshop

S EP 2

Field visits and interactions

S EP 4

ender Documents

S EP 5

Value chain study report

Figure 1: Methodology of the Value Chain Study

Figure 2: Study districts Surkhet, Dang and Pyuthan, plus Nepalgunj (Banke) and Kathmandu

Surkhet

Banke

DangPyuthan


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3.1. Basic InformationDiploknemabutyracea also known as theNepalese Butter ree and locally known aschiuri is a multipurpose tree. It grows mainlyin the sub-Himalayan tracts on steep slopes,ravines and cliffs at an altitude of 400 to

1,500 metres. It can be found in most parts ofNepal. In India (Uttarakhand), it is available inPithoragarh District and in the adjoining areasof Almora, Bageshwar and Nainital District(Negi et al., 1988). Chiuri is a native of Nepaland distributed to Philippines, India (Garhwal,Kumaun) and Bhutan. It occurs naturally insub-tropical and warm temperate areas rangingfrom 1,000 to 2,000 m with a mean annualrainfall and temperature varies from 24° C to27° C. Medium soils with deep granules areconsidered good for chiuri plantations. Its seedkernel contains saponins.

Te main product of the tree is ghee (butter),extracted from the seeds and named ChiuriGhee or Phulwara Butter. Tis importantNon- imber Forest Product (N FP) is utilisedfor an array of purposes by rural householdsand represents an income source for many hillcommunities. It has traditionally been used fordaily cooking and as fuel for lamps. Te juicypulp of ripe fruit is eaten fresh. Te oil cakeshave pesticidal properties and are used formanure, sh poison and, after detoxication,

3. Chiuri in Nepal

Botanical Name Diploknema Butyracea

Common Name Nepalese Butter ree

Family Sapotaceae

Part-Used Fruit, seed, leaves, stem


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as feed for animals. Te chiuri tree produces fuelwood, hard and durable timber, and the leaves areused as fodder for cattle and buffaloes in many areasof Nepal. In addition, chiuri has a very importantcultural value in Nepal, especially in the Chepangcommunity where people give chiuri plants asdowries, indicating its signicance in the livelihood ofthe Chepang community.

wasps, hornets and other insects collect the nectar.

Due to its value as multipurpose tree, peoplenormally do not chop or fell chiuri trees. Tey applytheir own traditional way of tree management. Tereare a couple of development organisations supportingthe conservation and management of chiuri plants. Yet, there is still very little information availableon its ecology and biology. Likewise, there is littlepublished information about cultivation, tendingand management of chiuri in agro-forestry systemsor as a plantation fruit tree. Moreover, the resourceavailability in terms of quantity of butter, populationsize and trend of chiuri trees has not been preciselydocumented.

Chiuri may be propagated through seeds andcuttings. Te seeds should be de-pulped and washedthoroughly and allowed to soak in cold water for 24hours. Tis improves the germination of seeds. Tesoaked seeds should be sown in a nursery withinone week. After about 45 days, the seedlings can betransplanted in poly bags. Cuttings of 25 cm lengthand 12 to 18 mm thickness are collected from oldtrees during the period May to September. Tesecuttings are treated with Indo Butyric Acid (IBA) at1,000 PPM for better root initiation.

Flowering starts in the months of October/Novemberat the age of 8 to 10 years. Te ower is either whiteor yellow in colour with a special fragrance. Te fruitstart ripening in June/July.

Chiuri kernels contain a very high nutritional value.It contains 5 to 20% of protein, 30% of carbohydrateand 3.8% of ash.

3.2. Geographical DistributionTe geographical distribution of chiuri trees in Nepalextends from Darchula, Baitadi and DadeldhuraDistricts in the west to Dhankuta and Ilam Districtsin the east. Almost 50 districts are known tohave chiuri plants. Out of these districts, Baitadi,Dadeldhura, Doti, Surkhet, Jajarkot, Rolpa, Rukum,

3.3. Social EconomicImportanceTe chiuri tree is found on s teep and difficult slopes.Climbing the tree is difficult and dangerous. Tis taskis usually done by men while women and childrengather the seeds that have fallen to the ground.Despite some small-scale trading that has developedin Nepal, most people use chiuri for their personaluse and only sell what is left over. Rural communitiesin the mid hill areas are familiar with the effects ofchiuri butter on human skin, but the use of it as a rawmaterial is just starting. (MEDEP Resource Survey)

In recent years, some people have started plantingtrees on their private land and in the communityforestry areas. Yet, planting on farmland is not veryattractive for small farmers, since it is a slow growingtree and covers a large area in shade.

Te seed fat is applied for headaches, rheumatism,boils and pimples. It is also used as an emollient forchapped hands and feet in winter. Te juice of thebark is used for the treatment of indigestion, asthma,rheumatism and boils as well as anthelmintic. Asmentioned, the oilcakes have pesticidal properties andare used as manure, sh poison and, once detoxied,as feed for animals. Chiuri owers are extensivelyvisited by bees and hence beekeeping is very popularin areas where chiuri trees are abundant. Chiuriowers have medicinal value as the oil extracted fromits seed is also used to cure different kinds of skindiseases. Te timber is hard and durable and is usedfor furniture and the extracted seeds can be used asorganic fertilizer. Te chiuri tree is considered to be agood soil binder and could prevent soil erosion. Tetree provides habitat and food for a large number ofanimals and insects. Monkeys shake owers to collectnectar for drinking. Te pulp of the ripe fruit is eatenfresh. Te juice of the corolla is boiled into a syrupyliquid, which villagers use as a s ugar.

able 1: Chemical composition of chiuri

S.No. Parameters Amount 1

Fatty acid composition:

0.10%61.60%5%2.30%31.30%

4.10%0.10%

C14C16C16:1C18C18:1C18:2C18:3

2 Carotenoid 340 µg/100g 3 Vitamin E (total tocopherols) 44.8 mg/100g 4 α- ocopherol 10.3 mg/100g

5 ß- ocopherol 0.2 mg/100g 6 γ- ocopherol 32.4 mg/100g 7 δ- ocopherol 1.9 mg/100g 8 Retinol 0 µg/100g

Source: http://www.alternative.org.np

able 3: Li st of VDCs in the selected districts known to have chiuri trees

District No. of VDCs VDCs where chiuri trees are availableSurkhet 22 Lagam, Betang, Lekfarsa, Gumi, Bidhyapur, Guthu, Gadhi , Kunathari , Bijaura ,

Pokharidanda, Dahachaur, Lekgaun, Mehelkuna, Dasarathpur, Satakhani, Malarani,Lekparajul, Khanikhola, Rajena, Kamrichaur, Babiyachaur, Chhapre

Da ng 15 R am pu r, La ks hm anp ur, Ha pu r, Bij au ri , H al ba r, Pa ba nn ag ar, Pu ra nd ha ra , Ba gm are,Hansipur, Saiga, Siuja, Kavre, Loharpani, Ghorahi, ulasipur

Pyuthan 14 irang, Khala , Hansapaur, Bi juwar, Baghdula , Dharmawat i, Asurkot, Dhobighat, Jaspur, Chuja, Fatali, Maranthada, orbang, Markabang

otal 51

Nutritional Valueotal soluble solid 17 – 23° B

Non-Reducing sugars 8.31 – 11.9 %

PH 5.4

Reducing Sugars 4.8 – 6.1%Vitamin C 38 mg per 100 gm

Source: National Oilseeds and Vegetable Oils DevelopmentBoard, 2008

Botanical featuresIt is a medium size tree with a straight trunk of 15 to22 metres in height and a girth of 1.5 to 1.8 metres.Te bark is dark grey or brown and 1.3 cm thick.Leaves are 20 to 35 cm long and 9-18 cm wide,crowded at the end of branches. Te fruit is a berry,2 to 4.5 cm long, bright green or blackish, shinningwith a thick soft pericarp. Te fruit is oval in shapeand green in colour with three seeds that turn juicyand grey after ripening. Te exterior of the fruit isthick, soft, and rich with glucose and fragrance. Itcontains black and sparkling seeds of 1.5 to 2 cm inlength, which have almond shaped white colouredkernels inside. Te seed coat is thin to thick andwoody to crusty.

Te chiuri tree is considered to be a good soil binderand could be of immense value in promoting soilconservation. Te tree provides habitat and food fora large number of animals and insects. Children,monkeys and langurs shake the owers and collectnectar for drinking. A large number of honeybees,

able 2: Physico-chemical properties

Properties Value

Specic gravity 0.85-0.86

Refractive index at 40 degreecentigrade 1.05 - 1.46

Saponication value 191-200

Iodine value 90-101

R.M. value 0.4-4.3

Boiling point 39 -51

iter value 48-52

Palmitic acid 56.6%

Stearic acid 3.6%

Oleic acid 36%

Linoleic acid 3.8%

Pyuthan, Dang, Arghakachi, Makwanpur, Dhadingand Gorkha contain a large number of chiuri trees.Te total number of chiuri trees in the country isestimated at 10.8 million. Te highest number oftrees (almost 40%) is found in the Mid-WesternDevelopment Region, followed by the Far-WesternDevelopment Region. Rural communities in the midhills areas are familiar with effects of chiuri butter onhuman skin, but the use of it as a raw material is juststarting. (MEDEP Resource Survey)

Chepangs are known for their immense knowledgeof forestry products and their collection. Tey havea special relationship with chiuri trees as they have acustom of giving chiuri trees to their daughters as agift/dowry during marriage. Tus, due to its multiplebenets, chiuri is used and known as a privateresource for households in this community.


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Wine and fruit juicesMany people in rural community eat ripe chiurifruits. Te ower nectar and the pulp of ripened fruitcan be used to make wine.

General uses of chiuri

1. It is used as a food, fodder and for medicinal purposes, so called Kalp-Vriksha.

2. Wood is used for timber, furniture, handles of agriculture tools, fuel woods, etc.

3. Chiuri leaves are used as fodder for animals, and for making bio-degradable plates for serving food.

4. Chiuri ghee for cooking and frying of vegetables and food.

5. Ghee is also used for chapped skin, rheumatism, and in long lasting, smokeless butter lamps.

6. Ghee is used for preparing medicines, ointment, candles, cream and other cosmetic products.

7. Te oil-cake is a by-product made from the seed husks and seed waste after processing, and is used asmanure. It has pesticide properties. Te cake can be used as a crude sh poison s ubstituting dangerouschemical pesticides often used by rural communities. It has a fair amount of saponin, hence, can beserved as a source of saponin for industry in the future.

8. Chiuri owers are a rich source of sugar and can be utilised for the preparation of sugar like substancesand for fermentation (alcohol).

Figure 5: Uses of chiuri trees, eld interview, September, 2013

Figure 6: Utilisation of various parts (nectar, fruit, seeds, wood, etc) of the chiuri tree

(Source: HVAP Brochure)

BeekeepingBeekeepers in chiuri threshold areas can earn asmuch as one third of their total cash income fromthe sale of honey and beeswax (Gurung et al, 2001).Beekeeping requires minimal start-up investmentand generally yields prots within the rst year ofoperation. It is very suitable for poor and low-incomegroups. Moreover, honeybees create a win-winsituation between preservation of the environmentand income generation; they help both maintainbiodiversity by providing pollination services andincrease incomes through the production of honeyand other bee products.

Considering the number of chiuri trees available inthe country, approximately 17,825 metric tonnes ofchiuri honey can be harvested. However, at present,beekeepers harness less than one per cent of the total

potential. (MEDEP resource survey report)

Fruit Juice and Squash

SeedsGhee for household consumption

SeedsGhee for soap and other cosmetics

Oil cakeOrganic insecticide

Organic fertilizer

FlowerChiuri Beekeeping

rees leavesFodder for animals

able 4: Chemical composition of chiuri cakeS.No. Parameters Amount 1 pH 5.62 Nitrogen (N) % 3.763 Phosphorus (P2O5) % 0.85

4 Potassium (K2O) % 1.555 Organic matter (OM) % 67.416 C.N. Ratio 10

Source: SNV Nepal, Agriculture laboratory of Agricultureechnology Centre (A C), -HVA-IB project

Butter or oilTe chiuri seeds are processed into butter or oil.Chiuri butter is rich in sugars and other nutrients,and used in daily cooking (Sundriyal and Sundriyal,2003).


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4.1. OverviewTe value chain map of chiuri describes theow of commodity from its initial harvestingfrom community and national forests andprivate lands to processing into oil and othernished products and nally to the end

consumers, both domestic and international.Te value chain map shows functions, actorsand relationships with other actors and serviceproviders (government and I/NGO).

Te end market of chiuri is the l ocalcommunity itself who consumes the gheeprocessed by locally made wooden expeller(kol). Other major usage of chiuri is industrialuse in the manufacture of herbal soaps andcosmetics such as moisturising cream, face wash, anti-aging cream, night cream etc. witha potential to replace imported products.Tere are 20 to 30 micro and small-scale soap

enterprises established in the districts withlimited production. A few more, with largercapacities are in operation in the KathmanduValley.

It is very difficult to estimate the actualproduction and consumption of chiuri gheeas there is no proper data available. Afterinteraction with the market actors, it can beroughly estimated that 200 tons of ghee areproduced in Nepal (68 tons from the threestudy districts). Eighty ve per cent is used insoap and other cosmetics, 5% used in localand neighbouring districts for daily use, andthe remaining 10% for exports in the formof ghee and herbal soap. With awareness andpromotion interventions along with linkages with industrial buyers, about 600 tons (referto able 20) of chiuri ghee can be produced within a short time frame. With intensivetechnological breakthroughs by introducing

4. Value Chain Mapping


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highly efficient expellers and expansion of improvedkols a production of about 1,500 tons of ghee can beachieved.

People who live in the mountains demand ghee fordaily use as a skin ointment and as a moisturiser.For this reason, few traders located in the mountainscarry ghee along with other commodities to thenearby urban market centres.

Tere are well established herbal soap brands (ChiuriNeem, Okhati, Mayur, Mero, etc.) manufactured inNepal with a wide national coverage. On the otherhand, there are many local brands of Nepali herbalsoap manufactured at the local level catering to localdemand, with limited capacity for wider distribution.

Chiuri ghee is being exported to Europe, USA andother Asian countries by some national companiesworking in the herbal sector. As per the interactionwith traders, the data shows that in 2012 more than20 tons of ghee was exported to Italy and France.Additionally, some quantities of soaps were exportedto Japan, USA and other countries. However, actualdata is not available. raders have expressed thatthere are difficulties in export due to the presenceof microbial bacteria in the chiuri ghee, packagingmaterials and high cost in seeds processing.

Chiuri saplings are distributed by the Department ofForests (DoF) to Forest User Committees and otherson a cost-sharing basis. Initially, NRs. 1 per saplinghas to be deposited in DoF’s bank accounts and uponthe sapling’s successful growth the depositor will berewarded with NRs. 5 per sapling after monitoring bya DoF official. On the conservation and regenerationaspects, there is little work done.

Tere are a large number of people engaged in thecollection of chiuri from both community and privateland in the months of July-September. Processingis usually done in a traditional wooden expellerowned by a community. Tere are no expenses assuch incurred in the processing of chiuri as the whole

family is involved in the processing. Approximately,four to ve people are involved to process 100 kgof chiuri seeds. Tere are seven modern expellermachines installed in the three districts (Surkhet - 4,Pyuthan – 1, and Dang – 2), supported by variousprojects and owned by cooperatives and privateentrepreneurs. However, these modern expeller aremostly not in operation due to their inability toproduce quality ghee. In addition, traders and soapcompanies demand ghee expelled by traditionalkols due to its colour and quality. Recently theINCLUDE Programme has supported Deuti Herbalcompany in Surkhet to install a new expeller machine with improved quality imported from India.

4.2. Actors in the Chiuri ValueChainEven though there is a large number of N FP traders

in Nepal, there are only a few traders who are wellknown in the chiuri sector. Below are the primary,supporting and enabling actors in the chiuri valuechain.

4.2.1. Primary value chain actorsInput suppliersInput suppliers are actors who provide all necessaryinputs in the chiuri value chain. Currently thereare very few actors, mostly DFO and projects, who support in the production of saplings thoughlocal NGOs and CFUGs for the protection andconservation of chiuri trees (not actually visible in thechain).

In the manufacturing of soap the suppliers ofchemicals and other oils are mostly from India andKathmandu. Te main chemicals used in herbal soapmaking are caustic soda, foam booster and spirit. Tevariety of oils used includes coconut oil, essential oilsfor fragrance, etc.

Collectors

Chiuri is mostly collected from community andnational forests and partially from private land. About 2.2 million households or 41% of the

F u n c

t i o n s

A c

t o r s

S e r v

i c e s

I np ut S up pl y C hi ur i P ro ce ss in g- Oil

Processing -Finished Products

Wholesale/Retail

End Market(Consumers)

Community/Natiional Forest

Chiuri Seeds(Bijula)Collectors

150 collector iseach pocket area

Private land

Traditional KolsHerbal Enterprises- Micro Retail Shops

Local Markets

Regional andNational Markets

Export - Europe,USA, Japan etc.

Chiuru Cooperatives(improved technology)

HerbalEnterprisesSME

Traders

15-20 Kols in eachpocket area

10 coop in Surkhet1 coop in Pyuthan

Chiuru Ghee

HerbalSoap 5%

85%

10%Limited number (5-6 in eachdistrict)

MostlyChiuruGhee andlessHerbalSoap

ChiuriCooperatives

20-30#

UNDP/MEDEPGIZSNVANSAB

HNCCJABANNEPHAFNCCI/AEC

DCSIMOFSCDOF

VC Stage

VC Operator

VC Supporter

VC Enabler

End Market

Links between operators

WWFCCISDC

Business Services Enabling Environment

Figure 7: Chiuri value chain map, GIZ 2013 Figure 8: Estimated demand of chiuri products by various target markets

raget Market Qty in ons

Soap companies 1,080

Monasteries and temples 120

Cosmetic companies 100

Export-Cosmetic company buyers 240

Source: Consultant’s forecast based on discussions with keystakeholders.

able 5: Community forest status of the three programme districts

District No. of FUG otal C.F area (in hectares) No. of HHSurkhet 302 59,856 45,756Dang 480 98,732 92,745Pyuthan 373 42,517 47,219

otal 1,155 201,105 185,720 All Nepal 17,809 1,665,419 2,194,545

Source: Department of Forest, Community Forest Division, Kathmandu, Nepal, 2013

able 6: Estimated area of chiuri forest and number of trees

District Forest area inhectare

Area of potentialchiuri forest

Approximate area ofcurrent chiuri forest

Estimated no. ofchiuri trees

Dang 873 281 93 519,211Pyuthan 935 288 95 530,820Surkhet 2,077 208 69 384,162

otal of MWDR 10,940 2,098 692 3,871,630 All otal (Nepal) 45,891 4,721 1,933 10,813,712

Source: MEDEP, 2009


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households of Nepal (5,423,297 HH, Census 2011)are involved in community forestry. Approximately,17,809 Community Forestry User Groups (CFUGs)have been formed. A total of 1.66 million hectares ofnational forest has been handed over as communityforest and 2.1 million households have beneted.Community forests have always been a source ofchiuri collection. On average, there are around 100to 200 households directly beneted from eachcommunity forest.

It is estimated by the Micro Enterprise DevelopmentProgramme (MEDEP) resource survey that 10.8million chiuri trees are available in the country. Ofwhich, 5.6 million (52%) are in owering stage. Teaverage number of trees was estimated as 5,593 persquare kilometre.

Chiuri is usually collected for two to three months,ending in August. Even though actual data is notavailable, as per the interactions with the collectorsfrom three districts, on an average, each householdcollects 50 to 250 kg of seeds in a season.

Tere are 100 to 150 collectors in each pocket area(57 pocket areas are estimated in the three districts;in total around 8,500 households) where chiuri isavailable, who sell seeds to the l ocal retail shops,cooperatives or other middle-men, who then furthersell it to the national processing companies. InSurkhet, there are ten active cooperatives and tenprivate individuals involved in chiuri s eed collection.

In Dang, there is no cooperative involved in chiuri.In Pyuthan, only one cooperative is actively involved.Last year, twenty tons of seeds were collectedfrom these cooperatives. Apart from chiuri, thesecooperatives also deal in other N FPs available inthe districts, namely mentha, timur, malagedi, harro,barro, etc.

Once the seeds are harvested they are cleaned anddried. In the village, the seeds are dried by placingin a mat above the re. Unsold seeds are processedinto ghee by crushing the seeds in a locally madetool called dong, dhalei, or musal. It takes twohours to crush 12.5 kg of seeds. After crushing, theseeds steam for one hour, in a dikchi (local cookingutensil). o extract the ghee, the crushed and steamedseeds are pressed using a chepuwa. Tis is a local

piece of equipment made from the log of a tree. Teyput the seeds in a special basket and put the basketbetween the logs. Ten they tie the logs together verytightly, with a stick and then the ghee is squeezedout. It takes 15-20 minutes for two people to squeezeone basket of seeds. Te pina (waste product thatremains in the basket) sells for NRs. 12-15 per kilo.Te liquid ghee is put into pots and after 12 hoursit solidies. Te pots can be silver, wooden, plastic,or even the crown of a banana tree or a piece ofbamboo. One household uses approximately 60kgof ghee per year. Te ghee that is extracted with thechepuwa has a good taste. Sale o f the ghee takes placeonly once in a year.

ProcessorsChiuri is mostly processed by traditional expellers(kols). In each pocket area of each VDC there are15 to 20 kols. Tere are a few modern expellersmanufactured in Butwal (brand name: Sundhara)installed in a few locations, but the quality of gheefrom these expellers is not satisfactory. Te machinesare usually owned by groups and cooperatives withsupport by various projects and programmes. womethods are followed for expelling oil from the s eeds.

Te traditional processing technique involves thefollowing steps:

a. Washing for cleaning;

b. Drying to remove the moisture content;

c. Grinding of seeds;

d. Placed in a locally made vessel made by husks

and steamed at optimum level until vapourstarts;

e. Placed in an expeller to extract oil;

f. Extraction of oil ltered through a white clothand stored until it is either sold or stored forfuture use, and

g. Te butter is nally packed with leaves intopieces of 2.5 kg in weight.

Tere are two types of traditional kols: one whichuses circular movements by a wooden log andanother which uses two chopped wooden logs,compressed by human force.

Modern expelling of ghee involves the followingsteps:

a. Washing of seeds for cleaning;

b. Drying of seeds;

c. Hauling to remove outer shell;

d. Extraction of oil using modern expeller;

e. Filtering machine, and

f. Butter is nally packed in a vessel.

Te product is bitter in taste due to high content ofimpurities such as saponins, which are carried along with the fat extracted in this process. Te ghee needspost ltration or purication to become edible. Tenal product is white with a strong smell and taste.Chiuri ghee remains solid up to 48 °C and does notdeteriorate in hot weather.

able 7: Seed and ghee collection in tons

S.No. Description District Collection quantity in tons1 10 Cooperatives at 10 quintal each Surkhet 102 10 individual businessmen at 6 quintal each Surkhet 63 Others Surkhet 4

otal – Surkhet (seeds) 201 Airawati Agriculture Multipurpose Coo perative Pyuthan 22 Soap Factory Pyuthan 33 raders - 6 No. at 5 quintal each Pyuthan 34 Others Pyuthan 2

otal – Pyuthan (ghee) 10otal – Pyuthan (seeds) 30

1 Soap Factory Dang 12 raders (10 No.) Dang 203 Others Dang 2

otal – Dang ( ghee) 23otal – Dang ( seeds) 69

All otal (seeds) 119

Source: Field Survey

Figure 10: Expeller, Sundara Brand, Pyuthan, eldsurvey, September, 2013

S EP 1

Collection of Chiuri Fruits

S EP 3

Remove the Pulp

S EP 5

Drying the Seeds

S EP 8

Extract oil using modern or raditional Oil Expeller

S EP 2

Squeezing the chiuri fruits

S EP 4

Cleaning Seeds

S EP 7

Crush and steam the Seed Flour

S EP 6

Grading the Seeds

S EP 9

Filter and purify Oil

Figure 9: Chiuri processing steps


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Tradersraders operate at local, regional, and national levels.

Chiuri seeds or processed ghee is purchased by thelocal level traders, retail shops or cooperatives. Teseeds and ghee are sold to the processing companieslocated mostly in the Kathmandu Valley; there are avery few in the districts. Cooperatives and retail shopsplay a vital role in collection of chiuri seeds and the

ghee from the collectors by paying them immediatecash, which has motivated collectors and spread amessage in the community that seeds and ghee can beeasily sold in the market.

TransportersMost forest products are collected from remote areasand have to be transported a long way to Kathmanduor other trade centres. On the way, traders haveto pass through several checkpoints set up by thepolice, the Forest Department and local government.At each point, the products or documents have

to be submitted for inspection. Tis increasestransportation time, creates hassle for entrepreneurs,and can create situations vulnerable to corruption. Inmany instances, the quality of seeds degrades due tothe long transit time.

Media (local FM radio and television)

In Nepal, local FM radio and television have playeda key role in the promotion of products. Te localbrands of herbal soaps which are promoted this way have raised awareness of herbal, animal-fat free,Nepalese products.

End market actorsHouseholds: Chiuri butter has been used in ruralhouseholds for many years, and during FGDs it wasfound that butter can be stored for a whole year afterprocessing. A large number of the rural populationliving at high altitude purchase chiuri butter from

neighbouring districts for daily consumption,especially for cracked skin and as a moisturiser. Tereare some retail shops located in urban areas of thethree selected districts that purchase chiuri butterfrom the local community and sell it to neighbouringdistrict traders. For example, traders from Rukum and Jumla District purchase chiuri butter when they cometo Surkhet to purchase other commodities for resale.

Soap manufacturers: Tere are a small number ofherbal soap manufacturers all over Nepal, includingthe three study districts, who produce soap us ingchiuri ghee. Tere are some soap manufacturersin Kathmandu who cater to the specic nicherequirements of buyers. Tere are now more than40 brands of herbal soaps, sold in large quantitiesand available all over Nepal. Among them, Okhatiand Asmi herbal soaps are the most popular. Tesetwo brands have do ne aggressive marketing throughlocal media and television. Tere are also local levelsoap manufacturers supported by MEDEP that caterto local demand and some have links with nationalmarketing companies, such as Mahaguthi and otherexporters.

Herbal soap companies are performing well in themarket. Te Okhati brand has sales of more than100,000 bars of soap per month. ‘If herbal soap hadonly 5% of the total soap market in the country,it would be sufficient to sustain business. Selling500,000 bars of soap would also not be a big task,’says Mr Shova Basyal, CEO, Jai Kali Soap. Herbalsoap is a unique product and has a niche market as ituses chiuri as a base oil instead of animal fat. Herbalsoap making is an innovative process using a varietyof ingredients, essential oils, fragrances etc, dependingon the target market’s need.

Lighting producer: In the past, chiuri ghee wasused for lighting in all temples and monasteries,and during rituals due to its purity. Nowadays there

are other substitute butters and oils available atcompetitive prices and thus chiuri ghee is mostly notused in such places anymore.

Cosmetic producers: In Nepal, there has beenlimited use of chiuri in cosmetics products. Te Alternative Herbal Products Company has producedmoisturising cream with the brand name “NikoCrack” targeting local markets, which has a similaruse to products such as Nivea and Ponds creams. A few European companies have produced variousproducts, such as face wash, after-shave, various typesof cream, toothpaste, etc made from chiuri, which areavailable for sale through online direct marketing.

Dealers: Tey are the marketing agents selected bythe soap manufacturers for regular distribution andmarketing of products.

Wholesale/Retail: Herbal soaps are sold to theconsumers through medical and Ayurvedic shops andother retail shops located all over the country. Tereare specialised herbal soaps which are manufacturedas per the clients need or targeted to tourists andalso sold in bookstores and gift shops such asPilgrims, Wisdom Books etc. Raw ghee is sold in the

Figure 11: raditional Kol, wooden type A, Laximpur, Dang, eld survey, September, 2013 Figure 12: Flow chart of chiuri herbal soapmaking process

1. Heat a mixture of chiuri ghee,coconut oil, and castor oil to 120deg.

2. Stain

5. Add spirit (2 litres) and stir well

6. Add lemon grass oil (80 ml) andcover with cloth for some time

7. Stain

8. Add Neem oil (50 gm)

9. Add Mentha (50 ml) and stir well

10. Pour in mold(4 molds)

11. Un mould, cutting, curing andpackaging 72 pieces of 80 gmsoaps

3. Add caustic soda solution (1.5 kg) with a caustic soda water (ratio of1:1.75) and stir well with the stick

4. Add heated sugar syrup (1.67 kg with 1:1 sugar water ratio and stir well

M i x i n g t h e

o i l b a s e

C u t t i n g ,

c u r l i n g , &

p a c k a g i n g

M i x i n g l y e o r C a u s t i c

S o d a ( s o d i u m h y d r o

o x i d e ) s o l u t i o n

M i x i n

g L y e S o l u t i o n

a n d O i l

M i x i n g w i t h e s s e n t i a l o i l a n d

f r a g r a n c e s


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Federation of Community Forest Users, Nepal(FECOFUN) is a formal network of Forest UserGroups (FUGs) from all over Nepal. FECOFUNis a representative umbrella organisation of theCommunity Forest User Groups for the sustainablemanagement of forest resources and the formulationof necessary processes, structures and monitoringmechanisms. Tere are more than 17,800 CFUGsand other Community Based Forest ManagementGroups (such as leasehold forestry groups, religiousforestry groups, buffer zone and traditional forestmanagement groups) in Nepal.

Jadibuti Association of Nepal (JABAN) wasestablished in 1995. Te main objective of JABAN, which is mainly based in Nepalgunj, is to makesustainable use of the country’s natural resourcesand provide necessary support to rural communitiesfor producing and marketing quality Non- imberForest Products (N FP). JABAN is also committedto be attentive for making maximum use of rawmaterials to produce consumer goods and supportentrepreneurs in this eld. It has tried to introduceits herbal resources to the national and internationalmarket. JABAN is particularly attentive toenvironmental conservation, quality herbal products,buyer’s interest etc.

Asia Network for Sustainable Agriculture andBioresources (ANSAB) is working in the eld ofbiodiversity conservation in the mountain districts.It is doing so through its various programmes, suchas, enterprise-based biodiversity conservation bypromoting community based forest enterprises;market information system for N FP, andcertication and sustainable marketing of N FPs.In its programme, there are elements of N FPspromotion through enabling the Forest UserGroups to include N FPs in forest managementplans. Te NGO helps identify N FP promotioninterventions. ANSAB has tied-up with an US basedcosmetic company (AVEDA, http://www.aveda.com), and research work (testing in the market) hasbeen carried out for commercialisation of variouscosmetic products.

In the past, development partners in the chiurisector, have supported in the collection of seeds,capacity building of collectors and designing newimproved technology to process chiuri into ghee. Atpresent, there is no other development programmeactively engaged in the study districts.

MEDEP has been engaged in the chiuri valuechain since 1998 and created 192 entrepreneurs(MEDEP report) in processing and herbal soapmaking. MEDEP has conducted a resource survey,several entrepreneurship skill trainings, soap makingtrainings, upgraded processing technology for oilextraction, and has provided marketing supportthrough the District Micro-Entrepreneur Group Associations (DMEGA) and Saugat Grihas. Similarly,the Livelihoods and Forestry Programme (LFP)through SDC support has supported local groupsand cooperatives in establishing upgraded processingtechnology.

SNV Nepal piloted (2010) the value chaindevelopment of chiuri in 18 VDCs of SurkhetDistrict to test and learn how the Inclusive Businessapproach developed by SNV could make a differencein linking remote farmers to markets in Nepal. Eightcooperatives signed contracts to supply 35 tons ofchiuri beans (collected by 1,040 households) witha trading company. Te company provided 25%payment in advance to the cooperatives and theNational Co-operative Bank provided another 25%as a loan for the required working capital. Te pilotproject supported in many areas: temporary dryinghouses for cooperatives; harvesting training to seedcollector of eight cooperatives; facilitated in seedtransportation from Surkhet to Nawalparasi, andlaboratory analysis as well as chemical compositionfrom okyo, Japan. A major challenge was toorganise the ‘paper work’ related to permits and taxes(royalties) to export from one district to another. AnInitial Environmental Examination (IEE) is requiredto establish harvestable amounts, which could not becarried out on time.

INCLUDE Programme is supporting communitybased cooperatives for the promotion of medicinaland aromatic plants (MAPs) including species likechamomile, mentha, lemongrass, ginger and chiurithrough its interventions at different levels of thevalue chain. In this regard, it has followed the s trategyof building the institutional and business capacity ofcooperatives and linking them with market players.Te INCLUDE Programme has provided training forthe sustainable harvesting of chiuri seeds and for seedquality maintenance. It has supported seed dying inplastic greenhouses using locally available resources.Te programme is now supporting 10 communitybased cooperatives for their investment in DeutiHerbal Company for processing and marketing ofchiuri ghee using a modern expeller machine.

local market centres by retail shops for householdconsumption and medical uses.

Exporters: Tere are few exporters of herbal soapswho export mostly to Europe, USA and other Asiancountries. Tere are no export gures available to datethus it is very difficult to estimate the exact quantityexported from Nepal.

Te export of herbal soap is difficult due to qualitystandards and regulations. Some specialised herbalsoap producers, such as Bounty Himalaya, Nature’sEssence, Mero Herbal, Wild Earth, and a few fairtrade shops, such as Mahaguthi, have been exportingherbal soaps to other countries. Tere are a few herbalcompanies who have been exporting chiuri ghee tocosmetic companies in Europe in small quantities.According to interaction with export companies,Himalayan Bio rade Pvt Ltd (HB L) has exported1.6 tons of chiuri ghee, Alternative Herbal Products(AHP) has exported 12 tons, and few other

companies such as Bounty Himalaya and Mahaguthihave exported small quantities. AHP, HB andBounty Himalaya are active in Surket, Pyuthanand Dang Districts. In order to secure orders fromoverseas buyers, they send samples through courier.Tose cosmetic companies are rening and furtherprocessing chiuri ghee into other forms for use in themanufacture of cosmetic products. Tose productsare sold through network marketing, websites, andpersonal contacts.

According to the data of the rade and ExportPromotion Centre ( EPC), Nepal currently importshuge quantity of palm oil and animal fat and oil for

industrial use. Te import value of these products in2012 and 2013 was about NRs 32 billion and NRs15 billion, respectively. ( able 8) Tis import valuecan be reduced if proper support is provided to makesoaps, shampoos and other products using chiurighee as one of the basic raw materials.

4.2.2. Supporting organisations (NGOs,associations, development partners)In the districts there is a lack of service providersfor skills training on cultivation and processingtechnology, social mobilisation and capacitybuilding which could be used in the chiuri valuechain. Te NGO Sundar Nepal Sanstha supportedthe piloting of the chiuri value chain programmethrough the High Value Agriculture Programme(HVAP) in Surkhet District. HVAP, Micro EnterpriseDevelopment Programme (MEDEP) and MSFP areactively involved in the working districts.

Federation of Nepalese Chamber of Commerce andIndustries (FNCCI) is the federation of all districtchambers of commerce and trade associations. Itis the apex body of larger enterprises and providessupport to industries and traders. It works for theinterest and promotion of investors and is currentlylaunching a number of projects with the support ofmany donor agencies.

Federation of Nepal Cottage and Small ScaleIndustries (FNCSI) is an apex body of micro, smalland cottage industries. It represents their interestsand takes initiatives for policy and other changes.However, the FNCSI mainly represents industrialand service enterprises.

able 8: Import of palm oil, animal or vegetable fats and oil seeds in Nepal

S.No.

Product Name Year 2012 Year 2013 (October)

Quantity (kg) Value ( NRs) Quantity (kg) Value (NRs)

1 Crude palm oil 36,245,949 3,334,518,602 24,508,294 1,886,095,9552 Palm oil 3,273,307 331,879,218 2,989,311 249,589,847

3 Oil seeds and oleaginous fruits:miscellaneous grains~ seeds andfruit: industrial or medicinalplants: straw and fodder

1 95 ,0 98 ,8 81 8, 13 7, 32 4, 310 1 29 ,7 56 ,1 91 4 ,2 17 ,8 92 ,1 52

4 Vegetable fats and oil~ partly or wholly hydrogenated

2,005,349 282,441,526 484,950 47,066,649

5 Animal or vegetable fa ts andoils and their cleavage products:prepared edible fats: animal orvegetable waxes

1 89 ,4 08 ,1 79 20 ,0 76 ,0 28, 55 4 9 4, 24 7, 62 1 8 ,7 39 ,4 56 ,2 41

Grand otal 426,031,665 32,162,192,210 251,986,367 15,140,100,844


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4.2.3. Enabling organisations(government entities)Tese organisations provide services to the valuechain actors in terms of promotion and conservationof the sector.

Ministry of Forest and Soil Conservation (MoFSC)has been formulating rules, regulations and makingother policy decisions in order to enhance the incomeand employment status of rural people who aredependent on N FPs for their basic requirements.It also coordinates among various departmentsand projects within the Ministry. Te Foreign AidCoordination Division (FACD) of the Ministry is

regulation. Te Department of Forest evaluates theEnvironmental Impact Assessment (EIA) reports ofthe proposed projects. Nepal’s environmental policies,legal provisions and government guidelines have setstringent provisions, such as the requirement for anEIA and an Initial Environmental Examination (IEE)to be carried out before establishing forest-basedenterprises. Small and medium forest enterprises thatoperate with modest environmental effects have togo through a detailed EIA and cumbersome approvalprocess. In many instances, these requirements are adeterrent to their development.

Department of Plant Resources (DoPR) isproviding special services in the eld of research anddevelopment of plant resources in Nepal. Underthe trade promotion programme, the Departmentis providing laboratory services for exports. opromote chiuri, the Department has been providing,at a nominal cost ‘identication and certication’to individuals or companies for exporting to othercountries. Tis has helped exporters clear their goodsthrough Custom Offices in Nepal. Recently, theDepartment has standardised chiuri with certainspecications (gravity point, melting point, iodinevalue, acid value, etc) from samples collected fromfour districts, namely Salyan, Jajarkot, Baitadi andSurkhet. Te data has not yet been disseminated.However, the results show that the quality ofchiuri is best from Salyan and Jajarkot Districts.Te Department is involved in the managementand improvement of N FP resources. It has manyfarms, botanical gardens and herbariums establishedto undertake active research activities and pilotingof extension activities. Ex-situ conservation ofendangered as well as high value N FPs is themajor activity of these farms. Data and informationcollection on MAPs, integrated research activities,publication of documents and extension materials onN FPs are the major focus area of the Department.

It has also established a distillation unit at Jumlafor high value aromatic oils. It is also undertakingdemonstration of cultivation management of highvalue MAPs and information dissemination throughtrainings.

District Development Committee (DDC) and Village Development Committee (VDC): Te DDChas extensive power, functions and responsibilitiesand takes full responsibility for all developmentrelated work in its district. It is an apex coordinatingbody, providing development programmes with alist of functions and duties to be performed at VDC

and Municipality levels. DDCs/VDCs have, in somecases, also imposed local taxes on different N FPsand/or their derivatives before they could be exportedfrom their respective locations.

responsible for the overall coordination with donorsand the recipients, among the government agenciesand I/NGOS working in the eld of N FPs andMAPs. Policy formulation, conict resolution,and information dissemination is being providedby the Ministry and its departments. Biodiversityconservation, research, monitoring and evaluation,

cultivation management and establishment ofmarketing channels are the major focus of theMoFSC. Recently the Nepal Government hasestablished a high level N FP Promotion Board forthe development and promotion of the N FP sector.

Department of Forests (DoF is the main governmententity for the conservation and promotion of forestresources. DoF has an enterprise development fundto support the creation and promotion of enterprisesmostly to community groups. DoF collects aroyalty from national and community forestsaccording to the rates specied (NRs3 per kg) in the

able 9: Legal steps for collection and export Requirement Issuing Agency

C ol le cti on Pe rm it DF O/ CF UG

Royal ty Payment DFO/CFUG

Issue (transit) Permit DFO

Local axes DDC

Certicate of Origin FNCCI/CCI

Product Certication DPR/ DOF

Export License Department of Industries

Export Duty Customs of ce

Source: Forest Connect: http://www.fao.org/forestry/site/42297/en

Department of Cottage and Small Scale Industries(DCSI) and Cottage and Small IndustryDevelopment Board (CSIDB): Te DCSI andCSIDB register, approve and administer cottage andsmall-scale industries. Tey provide vocational andentrepreneurial training and also regulate the MSEs.


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5.1. Key Constraints andOpportunities As consumers are increasingly becomingattracted to natural, herbal or organic products,there is growing demand in Nepal and abroad.Chiuri ghee and herbal soaps are exported toEurope, the USA and other Asian countries.

Despite the high potential of chiuri tocontribute to poverty reduction of rural people,there are challenges and constraints as well.Both aspects are elaborated elaborated on thefollowing pages.

5. Analysis and Findings


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Chiuri Collection

Constraints Opportunities

• Although the number of collectors is high, they are

only engaged for a limited time and not on a full-timebasis. Tey do not see the collection of chiuri as abusiness, but rather as seasonal labour.

• Chiuri trees are mostly found in rugged terrainand it is difficult to climb trees to collect seeds. Tecollectors have to wait for the fruit to ripen and theseeds to drop. Tat means sometimes the collectorsreturn without any seeds or resort to cutting wholebranches to access the seeds. Average collection ofseeds ranges between 10kg to 250kg each season perhousehold. Tis is mainly used for personal householdconsumption.

• Collectors are not attracted to chiuri collection whenthey can earn money more easily from vegetables andN FPs.

• Due to the high risk involved in harvesting the chiurifruit, normally male harvesters climb the tree and women gather the fallen fruit. Children also help infruit collection.

• Lack of knowledge results is overharvesting andpremature collection.

• Fruiting occurs every alternate year.

• A basket (doko) is used for harvesting, no otherequipment is available.

• ransporting the fruit by tractor from the collectioncentre to the nearest market centre is d ifficult duringthe rainy season, as the streams become impassableduring that period.

• Chiuri seeds need to be properly dried before selling.However, due to difficulty in drying during themonsoon, seeds may be sold without being properlydried.

• CFUGs have not included chiuri in their operationalplans, as they have not realised its importance andincome potential.

• If traders can guarantee regular markets then there is apossibility of regular fruit collection by the collectors.

• Not all chiuri seeds or ghee are sold in the markets,almost 50% (as per FGDs) is sa ved for householduse. At household level the butter is used in dailyconsumption and for relatives and neighbours.

• Collectors are aware of the multiple benets of thechiuri tree, and if there were markets, they would bemore willing to work in this sector.

• Community Forest User Groups (CFUG) andcooperatives could be the right institutions for thecollection, collective marketing and further processing

for cash incomes.• Te chiuri seed collection process could be improved

by implementing proper sustainable harvestingpractices.

• If collectors were organised in a group and affiliated with cooperatives or user’s groups then there wouldbe possibilities for collective marketing and increasedefficiency in the regular supply chain.

Processing of Chiuri Ghee


• In the past, a few donors (LFP, MEDEP, WWF, etc)

distributed expeller machines in many parts of Nepal, without piloting this technology up to receivingeffective results. Tese expeller machines were notcustom designed for chiuri, and are perceived of beingunsuitable for processing.

• Improved expeller machines (Sundhara) installed byprojects in many locations have also not shown goodresults and are mostly not in use. One reason is thatthe machine gets jammed within a short time whenthe temperature of the seeds is below 35 °C.

• Due to the moisture content in the raw seeds, theprocessed ghee is of inferior quality and not acceptedby buyers. Exporters have reported that the ghee to beexported was rejected due to presence of fungus. Teraw seeds are not properly dried and processed intoghee.

• Te traditional processing technique is labou r intensiveand requires the involvement of many people toproduce ghee. Up to four people are involved in gheeprocessing.

• Te processing of the product requires a substantialquantity of fuel-wood, which is not accounted incosting, as it is freely available in the forest.

• Te efficiency of the traditional expeller (kol) is low.It extracts only around 25%, whereas in an improvedexpeller (Sundhara brand) extracts as much as 30 to35%.

• Te oil content of chiuri seeds gradually reducesduring the cold season due to the lower temperature.

• Te ghee produced has a smoky smell, when it is driedin smoke.

• Ghee processing through traditional kols is labour

intensive and involves many steps, but the quality ofghee is good and mostly available in each pocket area where chiuri trees are available.

• Custom designed expeller machines for chiuriprocessing will result in better efficiency and reducethe cost of ghee production.

• Quality improvements in the processing of ghee will result in better overall performance of cosmeticproducts.


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rading of Chiuri Seeds and Ghee


• Tere are a limited number of traders (individuals or

cooperatives) involved in purchasing seeds and gheeboth in the study districts and Kathmandu. Due tothis reason, collectors are less motivated and it is moredifficult for them to sell seeds or ghee.

• Not all cooperatives have the capacity to purchaseseeds for cash.

• raders have to bear unseen expenses and informaltaxes during the transportation from rural areas to theprocessing units.

• Proper packaging materials are not available for localtransportation and exports.

• Few cooperatives (approximately ten in Surkhet and

two in Pyuthan Districts) are purchasing seeds fromcollectors by cash, through utilising savings from theirmembers.

• In the future, these cooperatives could upgrade intovalue addition activity by processing ghee usingimproved expellers.

• Tere are retailers who have long experience inthis business and therefore could be interested inpurchasing seeds from collectors.

Consumption and Industrialisation


• Due to the lack of lab reports to prove that chiuri

ghee is edible and free from harmful toxic chemicals,many industries hesitate to use it as a raw material.

• Tere are very few activities for demand creation.Even though chiuri has been used in ruralcommunities for a long time, in urban areasconsumers have lost the knowledge of the benets andthe habit of using chiuri butter, mainly because of thehigh price.

• Due to the cost factor, monasteries in Nepal do notuse chiuri ghee for lighting lamps as they did in thepast. Currently they are using a cheaper and morereadily available butter.

• Chiuri ghee is adulterated through being mixed withother dairy butter.

• Tere are no proper packing materials available fortransportation.

• Local community households are consuming chiurighee daily. Most traditional sweets are prepared byusing chiuri ghee.

• Consumers demand beauty care products withscientic evidence that the product can solve theirspecic problems. Tere might be an opportunityfor chiuri to enter into the high-price segment of thecosmetic product market.

• Buyers demand quality certication and other detailsof products. Organic certication may be an addedadvantage.

• A few experts say that chiuri ghee can be used as analternative to Shea Butter in the cosmetics industryfor skin and hair related products.

Manufacturing of Soap and Other Cosmetic Products


• Herbal products using chiuri as a base material are

unique in Nepal. Some companies have initiallyinvested in R&D for new product designs on theirown and thus the market price is relatively highcompared to the other available products.

• Te quality of ghee is not standard as it containsimpurities. For example, fungus exists due topremature harvesting and high moisture content.

• Tere is no regular supply of quality ghee for a varietyof reasons, and there is no guarantee of the quality ofghee. Soap manufacturing companies need a regularsupply to meet market demand and thus need to storeghee in large quantities (Bounty Himalaya needs upto 30 tons and Alternative Herbal needs 10 to 20 tonsper annum). Manufacturers might face difficulties instoring large quantities of butter, as well as makingcash payment to district traders.

• Tere is strong competition in the market. Newcompanies copy brands with similar products withoutproper R&D.

• Tere is scope for marketing herbal products in Nepal

and abroad.

• Te market for herbal products is huge and even asmall percentage of this market can sustain manyherbal enterprises.

• Intensive marketing through Ayurvedic centres/shops,dermatologists and beauty parlours can increase themarket of herbal soaps.

Manufacturing of Soap and Other Cosmetic Products


• Micro and small enterprises are not able to supply

soap regularly in the market due to lack of properplanning and purchasing of raw materials. Tey lackentrepreneurship and marketing skills.

• Te per unit cost of soap manufactured by small-scale entrepreneurs is high due to the small quantityproduced and the high cost of raw materials.

Integration (forward and backward)


• Due to the irregular supply of ghee and price issues,

many traders are not optimistic about this business.

• Due to the seasonal nature of the business (hardly twoto three months per annum) primary actors (collectorsand traders) are not in regular contact with each other.

• Tere are soap manufacturing companies who alreadyhave business relationships with the district traders fora regular supply of chiuri ghee.


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Governance


• Collectors are scattered in specic chiuri pocket areas

and due to this reason, the bargaining power of thecollectors is less. Te nal price of seeds or ghee isdetermined either by the trader or soap factory owner.

• Prot margins can be high in the processing andcollection of seeds, but as the quantity produced islow, processing prots are also low.

• During interactions with the stakeholders, themajority expressed that marketing actors will play animportant role in the development of this sector.

• Cooperatives, who purchase seeds or ghee fromindividual farmers, exist in all programme districts.Tis has increased the bargaining power of thecollectors.

5.2. Government PoliciesTe government has imposed taxes at different levelsfor collection and transportation. Tese include asystem of permission for the collection of chiuri(among others) products and a permission for thetransportation of the same.

Tis tax system applies only for national andcommunity owned forestland. Urban traders usuallyprepare a request for permission to transport therequired quantity from certain forestlands ahead ofthe harvesting period and obtain their permissionto collect during harvesting time. For cultivation onprivate land there is a provision of registration of treesat the District Forest Office (DFO), but the processis not easy. Due to this cumbersome governmentprocedure, there is a need of simplifying processesand educating farmers. Additional local taxes imposedby DDC, VDC, check-posts, political parties, etc.have to be paid at various points. raders are harassed

during transportation. Te Environmental ProtectionRules requires that an IEE be conducted in order tocollect ve to 50 tons of N FP per year. Similarly,an EIA needs to be conducted to collect forest relatedproducts, except for more than 50 tons of wood. Ittakes a huge amount of time to complete the wholeprocess. At the time of export, there is difficulty inquarantine due to the absence of harmonised codesand identication details. o motivate value chainactors, there should be lobbying for levy taxes andsimplication of the export procedure.

5.3. Linkages Among Actorsand Potentials for MarketImprovementsIn the three study districts, due to interventionsby MEDEP, INCLUDE and SNV, cooperativesare slowly building up trust with the collectors.Collectors can easily sell seeds by physically carryingthem to the cooperative counter. Spot markettransactions exist in urban market centres betweencollectors and retail shops as per the prevailingmarket rates. Market rates depend on the end marketdemand. Urban retail shops also act as collectioncentres to manage the desired quantity of seeds andbutter as ordered by buyers in Kathmandu.

Identifying competitive and comparativeadvantagesTere is an international demand for natural productsand hence the demand for Nepalese herbal productsis increasing. For marketing of herbal products, newproducts need to be introduced to s atisfy consumerneeds. In Nepal, chiuri ghee has been known forcuring chapped skin and rheumatism, and as a longlasting and smokeless fuel for lamps, so it should bemarketed by introducing new products.

Research and DevelopmentResearch and development (R&D) is an integral partof any s ector development. o date, little R&D hasbeen done for chiuri. Research should be done fornew product design and appropriate technology, as well as for marketing products and services.

QualityTe competitiveness of chiuri and other N FPs fromNepal depends on the quality requirements fromthe end users. Tere is no common understandingof quality requirements among the different actorsengaged in the chiuri business in Nepal. However,there are some minimum quality parameters thatbuyers from abroad have sought in the past. Tequality parameters below were collected frominteractions with key stakeholders:

a. Free from harmful chemicals, fungus, etc.;

b. Properly dried seeds with low moisture content;

c. Seeds of large size and fresh in colour;

d. Quality consistency;

e. Cleanliness;

f. White in colour, and

g. Free from smoke.

Potential for value addition and productdiversicationEven though the chiuri tree has multiple uses, it iscurrently only being used in making ghee, herbalsoap and few other cosmetic products in Nepal.In the past, a development organisation pilotedproducing chiuri juice made from its nectar, but dueto lack of proper technical knowledge and propersupervision, it did not succeed. Ghee exported fromNepal is used for making various cosmetic productssuch as a variety of soap, detergent, face wash,cream (moisturising, anti-aging, night), toothpaste,chocolates, etc. Tese unique products are marketedthrough marketing networks and websites. At the

local level chiuri has been used for juice production,leaf plates, compost, the resin of the chiuri tree is

used as glue to catch bats and houseies, and thetimber is used for construction and rewood.

5.4. Economics of the ValueChain An economic analysis of the value chain is importantfor making decisions. In this process, cost details arecalculated for all levels, from collection to marketing.Te overall objective is to assess the competitivenessof each business unit and to design future strategiesfor upgrading. Tis includes overall value additiongenerated by each chain actor, production andmarketing costs and performance of operators (interms of production, productivity, value addition andmargins).

Chiuri trees starts fruiting from seven to 10 yearsafter plantation and continue to yield up to 50 to 60years on an alternative year basis. Te average yield isestimated to be about 100 to 800kg per hectare. Te

average market price of chiuri seeds is about NRs. 30to 40 per kg.

5.4.1. Resource availability As per the study ndings conducted by MEDEP,there is a potential resource of 94,651 tons of seedsand 37,245 tons of ghee available in Nepal ( able9). Te IEE report in 2011 from Surkhet Districtshows resource availability of 200 tons of seeds inthe district. Te MEDEP study conducted separatelyin Dang District shows 2,000 tons of seed resourcesavailable in that district.

able 10: Access and power of chiuri value chain actors

Market actors Access status Mechanism for exercising accessLocal collectors Access to forests; direct access to CFUG

resourcesDFO approval of operational plans or collectionpermits; CFUG membership; traditional memberof communities; social groups; traditional collectionpractices

raders Access to seed and technology; relationship with local village traders for cash on directsales

Farmer need verication of his land, indicating the totalarea of chiuri cultivation, from the DFO office

Processors Access to urban traders who can supplyin bulk

Has to go through a tender process where the lowestbidder with the specied quality will qualify

Soapmanufacturingcompanies

Market contacts beyond Nepal; havedeveloped secret product formulas thatuse chiuri


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able 11: Resource avail ability of chiuri products in tons

District Number of fruitbearing trees

Quantity offruit in tons

Quantity ofseeds in tons

Quantity ofbutter in tons

Quantity ofchiuri honey intons

Dang 269,990 18,178 4,545 1,788 856

Pyuthan 276,026 18,585 4,646 1,828 875

Surkhet 199,764 13,450 3,363 1,323 633

otal ofMWDR

2,013,248 135,552 33,888 13,335 6,382

Grand otal 5,623,130 378,605 94,651 37,245 17,825

Source: MEDEP

able 12: Basic assumptions made for costing

Indicator Result otal number of chiuri trees in thecountry, MEDEP

10.8 million

otal number of fruit bearing treesin the country, MEDEP

5.6 million

Annual production of chiuri butterper household, MEDEP

60-500 kg

% of sales by each farmer, ownnding

50 – 60%

Seed production per tree,NEHHPA, N FP Manual, 2012

30 -35 kg

Number of tree per hectare, DFO,Rolpa, WUPAP, 2009

37-90

Oil yielding percentage – Efficiency(traditional Kols), DFO, Rolpa, WUPAP, 2009 [Daily output = 90kg, own nding]

25 – 30 %

Oil yielding percentage (modernexpellers), DFO, Rolpa, WUPAP,2009 [100 kg in 1 hour,

Consultants nding]

40 – 45 %

Number of seeds per kg, MEDEP 1,035 No./kg

Production of nectar per tree,MEDEP

13 litre

Fruit yield per hectare, DFO,Rolpa, WUPAP, 2009

100-800 kg

Source: Compiled from various reports

able 13: Prot margin for collection of chiuriseeds

S.No.

Description Amount

2014_Butternut Chiuri Value Chain.pdf

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