Myanmar-Nepal Exchange of Forest and

Farm Producer Groups

Organized by MERN, IUCN, ANSAB, and FECOFUN

Sponsored by the Forest & Farm Facility and Pyoe Pin

9-16 June 2014

Executive Summary

On June 6-19, 2014, 24 representatives of Myanmar NGOs, parliamentarians, the Forest

Department, and local communities visited Nepal to learn from its experience with community

forestry and see what it takes to build successful community businesses. They met community

forest user groups (CFUGs), community enterprises, NGOs, buyers and marketers, and

government officials and discussed a range of issues from forest management to business

establishment and marketing. The trip, which was organized by IUCN and ANSAB, the Asia

Network for Sustainable Agriculture and Bioresources, was sponsored by the FAO-led Forest &

Farm Facility (FFF) and Pyoe Pin, a DFID/Sida-funded civil society support program in Myanmar.

The exchange demonstrated communities can manage community forests for both timber and

NTFPs sustainably for commercial and subsistence use. The community-based businesses the

group visited were profitable, created employment for community members, and provided

community shareholders with annual dividends of up to 50% of the share price in their best

years. Myanmar participants saw supply chains from harvest to export for a variety of natural

products, including handmade paper, bio-briquettes, and essential oils. The group visited

community forests (CFs) and successful community-based businesses in the middle hills, where

they discussed harvest, production, and sale of natural products. In the Terai, the group

discussed timber management and ecotourism with a CFUG and heard from the Chitwan

District Forest Office about CF management, illegal logging, and human-wildlife conflict. The

trip ended with a day and a half workshop where ANSAB, the Federation of Community

Forestry Users Nepal (FECOFUN), MoFSC, FNCSI, and IUCN Nepal shared their experiences with

community forestry, community enterprise, and FFF.

Nepal’s experience indicates that community-based businesses must be not only permitted but

actively encouraged in order to be successful. These community enterprises received initial

support from NGOs and donors and continue to receive assistance from companies like

Himalayan Naturals ad Himalayan Bio Trade Pvt. Ltd. in market analysis, advertising, supply

chain management, packaging, and obtaining various product certifications. These groups have

also provided training and technology to improve and standardize product quality for urban and

international markets.

Lessons from Nepal’s experience with these community enterprises can inform how Myanmar

might structure a market-led expansion of CF. While first generation community forestry in

Nepal focused on forest regeneration, second generation issues focus on community

enterprise, poverty alleviation, and governance. These stages are not mutually exclusive,

however, and business opportunities could encourage the spread of community forestry in

Myanmar and provide incentives for sustainable local forest management.

Forest and Farm Producers from Nepal and Myanmar Share Experiences

One-third of Nepal’s population, comprising 2.7 million households, is organized into over

18,000 community forest user groups. Over 25% of forested land in Nepal, over 1.8 million

hectares, is under community management. In contrast, by 2013 Myanmar has established 753

community forests covering around 48,549 ha, around 0.15% of its total forest area. In Nepal,

community forestry has benefitted from decades of strong donor support and a long process of

government decentralization. Though the Community Forestry (CF) Instruction was written in

1995, CF in Myanmar has received comparatively little support. Myanmar’s 30 Year Forestry

Master Plan (2001-2030) sets a target of just under 1 million ha (2.27 million acres), about 2.8%

of the country’s forested area, of CF by 2030. To date, only 48,549 ha are registered as CFs,

only 5% of the way toward the national target.

Myanmar’s Forest Department is increasingly open to collaboration with NGOs and is making

community forestry a higher priority, as indicated by the recently established Community

Forestry National Working Group and the creation of a Community Forestry Unit within the

Forest Department. Sustained commitment to expanding CF could allow Myanmar to emulate

the successes of Nepal’s CF system.

Throughout the visit, Myanmar participants were impressed by how well government, civil

society, and communities seemed to work together to support sustainable forest management.

In Myanmar, these relationships are newly developing and trust between government, NGOs,

and communities needs to be built. The establishment of community forests can contribute to

this process as it provides a positive way for communities and the Forest Department interact,

usually with NGO facilitation. FFF’s small grants program and domestic and international

exchanges also contribute by creating a space for these three groups to come together and

discuss CF.

Field Visits

The Middle Hills

Site visits to forests and farms in the middle hills, where community forestry is strongly

established, showcased the effectiveness of CF in increasing and maintaining forest cover.

Visits to successful businesses based on the harvest and processing of NTFPs demonstrated the

potential of this model for generating income and providing incentives for sustainable forest

management. Community enterprises produce natural products including essential oils,

traditional medicines, orchids, bio-briquettes, and handmade paper products.

While these businesses were

successful, they also relied on NGO

and donor support during their

establishment and early

development. They also depend on

companies like Himalayan Naturals

and Himalayan Bio Trade Pvt. Ltd.

do conduct market assessments,

advertise, and make connections

with buyers. These visits identified

factors for success but also

challenges on both supply and

demand sides.

In Sikre, Sindhupalchok the group visited Sikre Briquette Enterprise, a company that pays

community members to make bio-briquettes. The bio-briquettes are made from agricultural

waste, ferns, and the invasive Lantana camera and are sold for 25 rupees a brick, 15 rupees

wholesale. The company sold 200,000 briquettes in 2013. Thirty-five households are

shareholders, together holding 600,000 shares priced at 100 rupees a share. The dividend in

2012 was 50% of the share price; in a typical year the dividend is around 30%. The company

directs a percentage of the profits to support forest management. Producers use an electric

grinder on the charcoal to ensure a consistent quality.

Sikre Wintergreen Enterprise operates in the same community and

pays community members 4 rupees/kg for wintergreen gathered

from the community forest. The plant is distilled to create an

essential oil that can be used in balms, lotions, and cosmetic

products. Production fell by 75% last season because a

neighboring community set up its own distillery, competing for the

services of wintergreen collectors. Sikre Wintergeen Enterprise is

looking into ways to secure a sufficient supply of wintergreen for

the coming year, including paying more for each kilogram

collected.

Making bio-briquettes in Sikre

Wintergreen distillery

The group visited Aashapuri Organic Farm, a model farm run by ANSAB, in Kavrepalanchok to

learn about their cultivation methods and business model. The farm tests the growth of crop

varieties and provides a model of organic agriculture techniques for surrounding communities.

This diverse farm grows everything from fast-growing Paulownia and alder trees for

agroforestry to goji berries, yakon (ground apple), and shitake mushrooms to sell in Kathmandu

and Singapore.

In Ugachandrinala Village Development Committee, FFF and FNCSI are supporting a community

business to develop an organic fertilizer farm, along with raising pigs, cattle, and vegetables.

The project plans to promote the adoption of organic agriculture by demonstrating techniques

and providing fertilizer to other farms. This project is led by Urmila Shrestha, who recovered

from cancer that she told us was caused by very high levels of agro-chemical use in the area.

The group also visited a co-op of 100 women who make and sell candy from the indigenous

Lapsi tree (Choerospondias axillaris), also known as the Nepali Hog Plum. There are multiple

women-only co-ops and CFUGs in Nepal, directly providing opportunities for leadership and

entrepreneurship that remain less accessible to women in other CFUGs and enterprises.

Marketing and Sales

In Kathmandu, the group visited two natural products companies, Himalayan Naturals and

Himalayan Bio Trade Pvt. Ltd. Community businesses rely on these companies to connect them

with buyers, conduct market research and advertising campaigns, and provide input on design

and quality assurance. The importance of these businesses demonstrates the large level of

investment at multiple points in the supply chain that is necessary for successful community

enterprises in Nepal.

Himalayan Naturals is a bio-briquette wholesaler and marketer. The company was established

in order to create a market for bio-briquettes, which at the time were a new product. They

have conducted market assessments and marketing campaigns. They also provided charcoal

grinders to communities to standardize the quality of the briquettes. Briquettes are not

produced during the monsoon because they are dried in the sun, so the company stockpiles

bio-briquettes in hot season to maintain sales during the monsoon. After a successful

advertising campaign for urban buyers, the company told us they will have to continue to

innovate to maintain their position against competitors that may enter this new market. They

shared that, when working with community enterprises, it is essential to have staff who are

dedicated to social and environmental goals, as this is not a sector with fast or easy profits.

Himalayan Bio Trade Pvt. Ltd. sells a variety of natural products in

Nepal and internationally, including essential oils, paper goods,

and soaps. It sells high-quality handmade paper purchased from

Malika Handmade Paper Company, a community enterprise, to

the international cosmetics company AVEDA. The paper is made

from lokta (Daphne bhoula and Daphne papyracea) harvested in a

block rotation with a set allowable harvest in CF operational plans.

This harvesting method is certified as sustainable by the Forest

Stewardship Council (FSC). The community businesses they work

with have various fair trade, organic, and sustainable

certifications.

The Terai

There are relatively few CFs in the Terai as compared to the middle hills, and both

establishment and management of CFs face distinct challenges. Establishment of CFs in the

Terai has been hindered by its history, demography, and the high value of its sal (Shorea

robusta) forests. The Forest Department prefers collaborative forest management (CFM)

instead of CF in the Terai, and 19 CFM blocks have been established to date. These CFM blocks

are larger than CF, include distant communities, and allow the government to maintain more

control over forest use and revenue. In CFM, half the revenue from timber sales is collected by

the Forest Department and the other half goes to participating communities. With FECOFUN

leading the establishment of CFUGs in the Terai through strong national advocacy and local

awareness raising and technical support, around 5,000 CFUGs have been established to date.

While sal forests provided the sleepers for India’s railway system, high levels of malaria

prevented settlement in the region by any but the indigenous Tharu. After the National Malaria

Eradication Program in the late 1950s substantially decreased malaria risk, however, an influx

of migrants from the middle hills settled in the Terai. Now the Terai contains over 50% of

Nepal’s population but only 20% of its forests. Clearance for agriculture and new settlements

are major drivers of deforestation, along with illegal logging. Settlements are often distant

from blocks of forest, which makes them difficult to engage in forest management, including

patrolling against illegal timber extraction. In the middle hills, CF can reflect traditional

management of surrounding forest, but recent migrants to the Terai have no similar historical

use rights or relationships with the land for CF to build upon. The high value of timber in the sal

forests, as an attractive source of revenue for the Forest Department, has also hindered the

Essential oils at Himalayan Bio Trade Pvt. Ltd.

expansion of CF. Timber

concessions to foreign companies

have been blocked in the past

through advocacy by FECOFUN.

The Terai contains large blocks of

contiguous forest that serve as a

corridor for migrating wildlife,

including increasing tiger and rhino

populations. Landscape level

management is essential to

maintain these wildlife corridors,

and the Forest Department asserts that the larger blocks of CFM with greater government

control are more appropriate for wildlife conservation than the small and more autonomous

blocks of CFs. CFUGs, meanwhile, have the advantage of allowing communities to directly

benefit from wildlife by generating income from tourism to protected areas.

The group visited a CFUG in Kankali village near Chitwan National Park. Chitwan, Nepal’s first

protected area and a major tourism destination, was established in 1973 and covers over 900

km2. Kankali CFUG consists of 2,215 households from 9 different wards and manages 750

hectares of sal forest. The surrounding hills were bare when the CFUG was formed 25 years

ago and are now forested through a combination of enrichment planting on 85 ha and natural

regeneration in the remaining area. Timber sales generated an income of around $90,000 USD

in 2013 and ecotourism generated an additional $40,000. About one third of timber sold was

harvested from the CF, and the remaining 2/3 was first purchased by the CFUG and resold. The

CFUG has used this timber revenue to pay members for working on CF management, granting

zero-interest loans, supporting livestock and fisheries development for the poorest members,

and building village infrastructure, including a swimming pool. The CFUG has 7 subcommittees

to manage these activities, including ones focusing on conservation, ecotourism, and village

development. The group employs 10 community members as paid staff, including security

guards, and each CFUG member is paid for the mandatory 4 days of work they must contribute

to the CF each year. The finance subcommittee releases regular statements to promote

transparency.

During a visit to the Chitwan District Forest Office, the group learned about policy and

implementation of leasehold and collaborative forest management. Leasehold forest

management is designed for poverty alleviation and grants 40 year leases of degraded land to

groups of 5-15 people, with 1 hectare or less for each household. The Assistant Forest officer

Kankali Community Forest

also described the process of establishing collaborative forest management (survey and

mapping, inventory, operational plan development). He discussed the challenge of preventing

illegal timber extraction in government forest and how the District Forest Office has the

authority assign fines and jail time if the value of the illegal timber is under 10,000 rupees

(about $100 USD), while penalties are determined by the court system if the value is higher.

The presentation also described the Forest Department’s efforts to mitigate human-wildlife

conflict, including building fences and trenches.

The workshop

Dr. Annpurna Nand Das, Chief Foreign Aid Coordination Division, Ministry of Forests and Soil

Conservation emphasized that community involvement is essential for forest conservation and

CF needs strong government support to be successful. He also explained that forests are

essential for agriculture, tourism, biodiversity conservation, sustaining the hydrological system,

and mitigating climate change. He described how CF in Nepal has increased forest area,

clarified tenure rights, improved forest health, generated income, provide a safety net for the

poor, and developed local leadership.

Rajendra Khanal from IUCN Nepal explained progress and structure of the Forest and Farm

Facility in Nepal.

Ganesh Karki, Chairperson of FECOFUN, discussed how they support CFs as a national

federation of CFUGs. FECOFUN advocates for CFUGs in policy dialogues, acts as a watchdog to

protect CFUG rights, and provides training and raises awareness to promote new CFUGs.

Challenges identified were an unstable political situation, delayed rollout of CF in the Terai, and

need for training to support sustainable community enterprise.

Jaganath Poudel of the Federation of Nepal Cottage and Small Industries (FNCSI) discussed the

challenges of community enterprise, including a need for infrastructure, business training,

policy support, and marketing strategies. FNCSI has 40,000 members and chapters in 74 of

Nepal’s 75 districts.

Puspa Ghimire shared ANSAB’s experience supporting community-based businesses. Their

success with handicraft paper, bio-briquette, essential oils, and other businesses has shown

that market-oriented management of CFs is a viable method for conserving forests and

generating income. This approach takes considerable investment and commitment, but there

is no short-cut or substitute.

Lessons Learned

Participants from Myanmar were most impressed by the evident cooperation between the

government, NGOs, FECOFUN, and communities. Each of these groups has played an important

role in expanding CF in Nepal, with additional assistance from international donors. Trip

participants from government, NGOs, and communities all recognized that similar cooperation

will be essential for Myanmar to meet its CF target. This cooperation can only occur as trust is

built up between the forest department and communities, a process which may be facilitated in

party by NGOs assisting communities to gain CF certification.

Policy

Nepal’s most significant piece of legislation for CF, the Forest Act of 1993, established CFUGs as

legal entities and provided the legal framework upon which CF could grow. Subsequent

legislation, including the Forest Regulations of 1995 which required District Forest Offices to

provide technical support to CFUGs, further strengthened the legal basis of CF.

Myanmar’s Community Forestry Instruction was adopted in 1995 and remains the primary

document on CF in Myanmar. Based in part on Nepal’s Forest Act passed just two years before,

it lacks the government support and strength of law enjoyed by CF in Nepal. A group of NGOs

have submitted recommendations to strengthen community forestry policy, and the revision of

Myanmar’s Forest Law currently in progress is expected to strengthen the legal framework for

CF. The establishment of a Community Forestry Unit within the Forest Department

demonstrates an increased focus on CF within the government. Community Forestry can also

be advanced through the recently formed Community Forestry National Working Group, which

facilitated by RECOFT and whose members include representatives from multiple ministries and

NGOs.

In Nepal, the District Forest Office has both the authority and responsibility to establish and

support CFUGs, but the highly centralized government system in Myanmar has prevented such

devolution of power. When CF was started in Myanmar, the District Forest Officer held the

authority to issue CF Certificates while having to inform the Forest Department headquarters.

In response to instances of corruption, the authority to grant CF certificates was shifted to the

Director of a Division or State, who also needed approval from the Director General of the

Forestry Department for each certificate. The need for high-level permission slowed the

establishment of new CFs. In late 2013 the policy changed again, and now the Director of a

State or Division can issue a CF certificate and only needs to inform Forest Department

headquarters instead of needing to secure approval. While this may be more efficient than the

previous arrangement, communities report that it is difficult to know how to follow up at

district or state levels if their application is being processed slowly.

The most rapid expansion of CF in Nepal coincided with post-conflict government

decentralization and democratization in the 1990s. CFUGs supported these processes by

training local leadership, strengthening civil society, and promoting more inclusive and

transparent local decision-making. CF has the potential to play a similar role in Myanmar.

Advocacy

FECOFUN has been essential for the success of CFs in Nepal, generating local awareness of

community forestry, providing training and advice to communities, advocating for policy

changes, and now supporting community-based businesses. FECOFUN’s strong advocacy for

CFUGs at a national level, including success at reducing taxes on timber from CFs and

promoting CFs in the Terai, has been critical for CF expansion. FECOFUN leads public campaigns

and demonstrations when dialogues with government are unproductive, but always with the

intention of renewing a more productive dialogue. This advocacy role is accepted by the

government as part of the consultation process that is essential to policy-making in Nepal.

FECOFUN’s local chapters and NGOs both support CFUGs in ways that the department of

forestry has neither the capacity nor the staff hours to provide directly. They play an extension

role by raising awareness about community forestry and providing training as well as legal and

technical support. Nascent associations of CFUGS at the township level in Myanmar may play a

role in CF extension in their area and facilitate communication between CFUGs and the Forest

Department.

In Myanmar, the Forest Department has increasingly recognized the role that NGOs can play in

conservation and forest management. There has also been increased support for community

based management of forests and protected areas from high levels of the Ministry of

Environmental Conservation and Forestry. This may open a space for NGOs to advocate

effectively for changes in policy and implementation in the future.

Community Enterprise

Community enterprise requires substantial investment, including training community members

in business and technical skills, providing appropriate technology, and ensuring sustainable

harvest. These investments are usually made by donor-funded projects, and many businesses

set up in this way remain dependent on some outside funding. Linking communities with

interested buyers and private sector investors may help to reduce the current dependence on

donor projects, and efforts to mobilize private capital for community business are being

pursued.

In Nepal, even the most successful community enterprises are dependent on other businesses

to conduct market research, run marketing campaigns, link them with buyers, make

innovations on product design, and support certification. The business and market knowledge

that these groups provide are invaluable. In Myanmar, the number of social enterprises has

been increasing and some may fill this niche in the future.

Communities in Myanmar use many forest products that could be commercialized within a CF,

including bamboo, rattan, elephant-foot yam, and timber. There is traditional paper production

in Myanmar, but the industry is much less developed than it is in Nepal. Bio-briquettes are also

made in Myanmar, mostly through NGO-led conservation and livelihood projects. These groups

sell the briquettes to tea shops, which need to boil large volumes of water over long periods of

time. The group purchased bio-briquette stoves from Himalayan Naturals and noted the design

to see how they might modify it to fit the Myanmar market.

Businesses need both economic incentives and secure tenure in

order to be sustainable. Higher quality products that provide

higher revenue can provide the necessary economic incentive.

This may require training of skilled workers and the provision of

machines (e.g. charcoal grinders) to standardize quality.

Mechanized processes that produce a uniform, high-quality

product may be slow to be adopted in Myanmar, as rural

electrification is limited and even towns and cities suffer from

unreliable power supply. Certification of products can both

promote sustainability and help market high quality products,

especially in international markets.

While the group only visited successful enterprises, they can also learn from the many failed

community businesses in Nepal. During the workshop, groups discussed a few lessons from

these experiences. In order to increase the chance of success, the group was told to consider

the market situation of the product, the market accessibility of the community, and whether

there is access to appropriate technology and investment. A value chain approach can help

determine suitable products. Balancing the business structure between inclusion and allowing

for efficient everyday operation can be a challenge. Having many shareholders at the initial

stages of the project can increase the chance of failure.

Bio-briquette mold

Inconsistencies in the regulatory framework and taxation of CF products have been obstacles to

community businesses in Nepal. In Myanmar, a pathway to certify timber harvested from CFs

for legal sale outside of townships could increase income generation from CFs. Changes in the

regulation of restricted tree species and increased clarity of CF policies would also facilitate CF

expansion.

Aashapuri Organic Farm

Participants

Sr. Name (as per PP) Designation Organization

1 Aung Thant Zin CEO MERN

3 Jake Brunner Programme Coordinator (Myanmar, Vietnam, Cambodia)

IUCN

2 Julia Recatta Fogerite Project Officer (Myanmar) IUCN

3 Aung Khin Project Manager MHDO

4 Wai Lin Maw Project Manager MCS

5 Tun Lay Local Community MCS-FFF Project

6 Thet Paing Hmu Project In-charge FOW

7 Maung Myint Local Community FOW-FFF Project

8 Kyaw Sint Project In-charge SDF

9 Zaw Moe Local Community SDF-FFF Project

10 Aung Htoo Myaing Project Manager ECCDI

11 Ba Aung Local Community ECCDI-FFF Project

12 Naung Zin Latt Project Manager SVS

13 Myint Myat Khaing Local Community SVS-FFF Project

14 Myint Thein Khaing Assistant Director Forest Dept.

15 Kan Htun Staff Officer FD (Bogalay)

16 Htay Lwin Staff Officer FD (Nyaung Shwe)

17 Zaw Min Htun Staff Officer FD (Pathein)

18 Zaw Lin Than Staff Officer FD (Gwa)

19 Thein Than Htike Range Officer FD (Ywanyan)

20 Myint Kyaw Deputy Chairman Kachin Parliament

21 Ding Hkang Dar Wi MP & Chairman of Forest, Mine, Environment, Livestock & Agriculture Committee

Kachin Parliament

22 Joseph Siing Khan Pum

Office Staff Kachin Parliament

23 Brang Shaung Project Officer Shalom Foundation

24 Maw She Local Community Wai Maw CF

25 San Lwin Translator Freelance

Participants from Nepal

Agenda

Date Activities

June 9 Arrival of participants at Kathmandu, Nepal

June 10 Travel to Sikre, Sindhupalchok

Visit Sikre Briquette Enterprise and Sikre Wintergreen Enterprise

Night stay at Dhulikhel

June 11 Visit FFF pilot site in Ugachandrinala VDC, Kavrepalanchok

Visit Aashapuri Organic Farm in Kavrepalanchok

Visit briquette marketing company Himalayan Naturals (HN) in Kathmandu

Visit forest product processing company Himalayan Bio Trade Pvt. Ltd. (HBTL) in Kathmandu

June 12 Travel to Chitwan

Meet with Chitwan District Forest Office

Meet with Kankali CFUG

June 13 Visit Lumbini

June14-15 Workshop to exchange experiences and lessons learned at Hotel Himalaya in Kathmandu

June 16 Departure of participants