Marketing of Minor Forest Product & Development of Value Chain to Minimum Sales Price
Problems to access proper banking system
Due to dearth of fund, tribes are more prone to take loans from the money lenders and due to high rate of interest charged by the money lenders, they have to bear huge amount of interest. As a result of that, they are not able to earn maximum profit from the sale of the forest products. One of the major problems is that due to unawareness and lack of banking facilities in rural areas, tribes are unable to access the banking system.
In order to resolve the problem of capital or fund crunch of the tribes for cultivation activities, there are plenty of ways to accumulate funds or arrange finance for the purpose of cultivation in the forest land.
A. Fund Raising Model from foreign investors
Now a day’s many foreign investors are investing their funds in Start-ups in case the project appears to be viable to them. In order to attract foreign investors, following recommendations are as follows –
I. Formation of Company: Foreign investors prefer to invest in a private limited company than any other forms of the organisation namely proprietorship and partnership etc. It is recommended to form a private limited company where there would be two stake holders in that company, one Government and other one is cultivators.
One of the reason of making Government as stakeholder in the newly formed company, as cultivators or tribes are not aware or rather not having experience of running a private limited company in collaboration with the foreign investors. Here the role of the Government is to act as intermediary or mediator between cultivators and foreign investors and also role of the government is to take care of administrative, legal, financial matters, marketing and selling of forest products etc. in relation to the company and more importantly also to provide training to the cultivators or tribes to make them self-competent in the long run. There would be a definite time line says a period of 10 years, where active involvement of the government in terms of taking care responsibility of administrative, financial, legal etc. of the newly formed company and then post 10 years tribes themselves would directly deal in respect of all the company matters and also directly connect with foreign stake holders. During this period of 10 years, training would be provided to the tribes so that they would be capable to take over the role of the government post 10 years. Post completion of 10 years, the role of the Government is only to oversee or review the company matters.
II. Identification of priority pockets with large concentration of tribes who are engaged in cultivation activities
Tribes are scattered across India. Hence, prior to formation of the company it is required to identify the areas with large concentration of tribes who are engaged in cultivation of forest products. Then, post identification of such areas, the company would be formed, covering large areas where tribes are engaged in cultivation activities a stakeholder or shareholder in the company, e.g. say Maharashtra, particular area would be selected where many tribes have been engaged in cultivation of minor products and a company would be formed by covering only that area and tribes in such areas only would become stakeholder or shareholder of the company. In this process, companies would be formed across India and primarily focus would to cover only those areas where there is large concentration of tribes.
III. Ownership & control of newly formed company: In this particular model, prior to infusion of funds by the foreign investors, 30% ownership of the company would be in the hands of tribes and rest 70% would be in the hands of the Government. With regard to transfer of shares, it would be specifically mentioned in the Memorandum of Association that tribes cannot transfer their shares to any outsiders other than to the existing tribes who are shareholder of the company.
IV. Ownership & control of newly formed company : post infusion of funds by the foreign investors: Post infusion of funds by foreign investors, up to maximum 19% of share would be transferred from the Government to Foreign Investor. In any circumstances, Government’s stake in the newly formed company would not be less than 51%.
V. Board of Directors in newly formed company: In the newly formed company, on the basis of percentage of shares hold, 3 representatives from government, 2 representatives from Tribes and 1 representative from foreign investor would be elected as Board of Director of the company. As far as representation of the tribes in Board of Directors is concerned, it will be selected on the basis of number of votes among tribes.
vi. Minimum support price to the tribes : During the first few years of the formation of the company, company may not able to achieve profit due to incurring huge cost in marketing. Hence, in order to sustain livelihood, Government would give a fixed amount to tribes as subsidy.
B. Conventional route of arranging finance for cultivation activities
There are also convention route of arranging finance for cultivation activities. However, as tribes are located in the extremely remote places, they are not able to access the normal banking system. It is recommended to introduce a proper micro finance system in the Tribal areas so that tribes would be able to arrange finance for themselves for the purpose of cultivation activities and chances of being trapped by local money lenders would be get reduced. In order to boost the micro finance system in interior tribes places, it is recommended to implement following modes –
1. Community Banking – This model treats the whole tribal community in a particular area as one unit and establishes semi-formal or formal institutions through which micro-finance is dispensed. In this particular model, wealth of all tribes in particular areas would be accumulated and at time of need, a loan would be provided to tribes and same would have to be repaid along with reasonable rate of interest within specific period. In order to execute this model, NGO would be appointed and the role of NGOs are to train the members of community bank i.e. tribes in various financial activities of the community bank.
2. Grameen Bank Model – In this particular model a bank unit would be set up with a Field Manager and several bank workers, covering an area of about 15 to 22 villages of tribal areas. The managers and workers start by visiting villages to familiarize themselves with the locals i.e. tribes and also they will educate the tribes or local about the banking process and as well as explain the process, functions, and mode of operation of the bank to the local population.
In this model, primarily a group of ten prospective borrowers are formed and out of ten prospective borrowers loan would be granted to two tribes and then it would be observed for few months whether members are conforming to the rules of the bank and depending on performance of two borrowers, bank would sanction loan to other borrowers. Due to this kind of methodology, there is a substantial group pressure to keep individual records clear in a sense that collective responsibility of the group themselves serves as collateral on loan.
Problems in the area of Marketing of Forest products
Government has taken plenty of measures for marketing of Minor Forest Products (MFP) through Minimum Support Price (MSP) and Development of Value Chain for MP over the years. However, the conditions of tribes have not improved much despite of taking so many measures and tribes are somehow managing their livelihoods. One of the major areas of concern is that forest products are not accessible to the masses due to lack of proper marketing policy. As a result of that clientele or client base of the forest products has not been expanded much. Moreover, despite having so much possibilities of selling forest products outside India, many areas has never been explored.
Major Problems Areas
The major cause of concerns with regard to marketing of forest products and developing of value chain of forest products are as follows –
> High Price of the product
> Smaller clientele
Despite having many problems, there are following opportunities as well in respect of Forest products –
> As forest products are natural products and now a days demand of natural products are growing across the globe, there is a huge potential of forest products in domestic as well as in foreign markets.
> Tribes are also engaged in the making of handicraft products, cotton products. There is a huge potential of these products in domestic as well as international markets.
Recommendation for Marketing of Forest Products
1. Name & logo and tagline of the product or company: A logo or name of the product or company would give a proper identity to the company or to the particular product and more importantly logo also attracts the consumer at large. Considering the potential of the forest products in the Indian market as well as overseas market, it is recommended to create a logo of the product or the company. A perfect logo of the product or company can create a positive image among the consumers at larger and more importantly can easily reach to consumers at large.
Another important part is tagline of the product or the company. During the last decade, there are numerous examples, where it is evident that tagline of the product or company wins the half of the battle as far as marketing of such product is concerned. So, it is recommended to create a tagline for forest products which will appeal to the mass consumers in the market.
2. Unique Selling Proposition (USP) : It is required to adopt a Unique Selling Proposition for the product which separates the company from the competitors in the market. Considering the fact, forest product itself is a unique product in the market and in terms of quality it is best in the market that should be focus point of USP of the product. It is required to communicate to the consumers at large about the USP of the product and more importantly it is required to convey why the product is different from other available products in the market.
3. Proper Packaging of the product : Proper packaging of product is also a marketing strategy to glorify the product in order to attract consumer’s attention in the product.
4. Feedback about the product : In order to communicate continuously with the consumers at large and also to improve the product, it is required to have a system of product feedback form where customers would be requested to give their feedback about the products. Based on the customer feedback, quality of the product would be improved so that best product could be offered in the market.
5. Marketing of forest products though Social Sites (Digital Marketing) : This is modern form of marketing and opposite of conventional form of marketing. Now a days, marketing of any product is more popular and effective in social platform commonly known as “digital marketing” than traditional way of marketing of the product. It is recommended to create a page of company in various social sites like Facebook, Instagram, youth tube etc. and also share pictures of the products and activities on regular basis on social platform. This kind of marketing will help in spreading awareness about the product among people on a large numbers.
6. Marketing of forest products through blogging : Another effective contemporary tool of marketing of the product is “Blogging”. In this case, it is required to write blogs about the product and the company as a whole and share the same on company website and social media. This method will help the company to engage with the followers and get insights from their comments and use such comments to improve the quality of the product. This is another way of taking feedback from the customers about the product.
7. Marketing of forest products through Influencer in the society : In this kind of marketing, generally promotion of the product would be done through a influencer in our society who has huge followers in the market, and this kind of influencer may be an actor or sportsman. The main purpose of choosing this kind of marketing policy is to connect with huge fan base of the influencers and make them aware about the product so that by word of mouth of such huge fan base, awareness of the product would be spread in the market.
Recommendation for development of value chain of the forest products
1. Lead Generation: On the basis of different marketing campaign by the company, company would get contact details of the people who may be interested in the product.
2. Evaluate potential leads: The next step is to evaluate the potential leads of the product and more importantly to identify whether potential leads can afford the price of the product. Then the last process is to communicate or connect with people whose responses are positive via emails, messages etc.
3. Presentation of the product : Once the potential leads of the products has been identified then the next process is to prepare a presentation of the product of the company and a sample product out of all forest products being cultivated is to be chosen for the purpose of presentation.
It is recommended to present the product through stories of tribal lives and in the presentation not only the products but also lives of the cultivators i.e. tribes would always be captured and also in the presentation it would be explained process of cultivating the forest products so that potential customers would be aware of the quality of the products. It is well known fact that stories attracts people more than a normal way of presenting the product.
4. Negotiation: Here the goal should be to make a win-win deal for both the parties and in case competitive price of the product has not been fixed in first round of negotiation with the clients then in order to get a competitive price for the product, it is recommended to have multiple round of talks with the client to get competitive price for the product.
5. Building long-terms relationship with the clients : Once the deal is closed with client, it is recommended to regularly follow up with the customers to build a long-term relationship.