"Reducing poverty by strengthening the sal leaf chain in India"

1. Value Chain Finance
"Reducing poverty by
strengthening the sal leaf
chain in India"
Presented By Group : 3
• Amit Ranjan(152010001)
• Mohammad Sultan(15201013)
• Panchali Chakraborty(15201014)
• Rishi Raj(15201018)
• Subhasmita Pradhan(15201028)
• Netra Manjhi(15201036)

2. Sal leaves cups and plates
• In India the use of disposable cups and plates in all types of
functions,party and especially in wedding.
• Unlike their plastic or coated paper equivalents in the West, in India these
are often made of leaves. They are cheap, disposable and biodegradable.
• They are also used in festivals and ceremonies, and to make offerings to
Hindu gods.
• These cups and plates are made from the leaves of the "SAL TREE"
(Shorea robusta) – a tall timber tree common in eastern and central India.
The oval leaves are 10–25 cm long and 5–15 cm wide – too small to hold
more than a morsel of food, so they must be sewn together and then
pressed into shape to make a rigid plate or cup.
• These items are made by some of poorest: tribal women in the states of
Orissa, West Bengal and Jarkhand.
• We are talking a lot about these leaves cups and plates as Collecting leaves
and making plates and cups is a major source of income for thousands
of people who live in this region’s forests, as well as for hundreds of
traders which is much important for their livelihood.

3. Location of the sal leaf industry
in India

4. Stages in sal leaf production

5. Sal Leaf Value Chain
 COLLECTORS
• Most of these are tribal women. They collect sal leaves in the forest
• for about 8 months of the year, dry them and stitch them together into dwipatris
• (twin leaves) or khalis (raw plates). These stitched leaves become the raw material
• for making sal leaf plates and cups. They bundle them and sell them to local
• agents, earning about $0.24 to $0.30 per day.
 LOCAL AGENTS
• Agents, also called “cycle wallahs”, are men who go door-to-door
• buying the stitched leaves from collectors, paying them in cash. They sell bundles
• of leaves on the local market or directly to processors who convert them into cups
• and plates.They are better off than the collectors, earning US$90–100 per month.

6.  PROCESSORS
• Processors are women who work at home to make cups and plates
• from the leaves. Sometimes their teenage daughters stay home to help out. They
• operate one or two electric pressing machines. They buy stitched leaves from
• the local agents or local markets, press them and sell them to traders.They earn
$20–30 a month if they use family labour.
 TRADERS
• Traders are men who buy the cups and plates from the processors.
• Some also process leaves themselves. They hold a license to operate as a sal
• trader and a transit permit to transport the finished product to wholesalers and
• retailers.The average annual turnover of a processor–trader is $20,000 to
$30,000.

7. Problems in the value chain
 For Collectors:
• Inappropriate credit.
• Inappropriate use of loans.
• Lack of business skills.
• Reduced availability of sal leaves..
• Lack of market information..
 For Processors:
• No access to credit.
• Low productivity due to outdated technology.
• Reduced income in the low season.
• For Traders:
• No access to credit.
• Competition from substitute products.

8. The sal leaf value chain

9. The sal leaf value chain after UNIDO’s
intervention

10. Financial innovations
Primary collectors
• Training on credit and business management : UNIDO counselled the
self-help groups on good financial practices, including savings, internal
lending and trained its own field staff
• Federation loans : The Ahari Federation, composed of six self-help
groups, was formed to improve the management of loans among the
collectors.The Federation uses this capital to give small, short-term loans to
individual selfhelp groups to enable collectors to stockpile leaves and wait
for market prices to rise before selling them.
• Bank loans : UNIDO sensitized the banks about collectors’ credit needs
and how the chain works.after seeing the success of the Federation loans,
the banks realized that collectors need small amounts of credit for short
periods – around $10–20 for up to 6 months.
• These were production loans, intended for collectors to develop their sal
businesses and to develop an alternative livelihood during the low season
for sal leaf. Sabai, a type of grass used to make rope, is another forest
product found in the region which could serve this purpose.

11. Cont...
• Access to market information : The collectors used to rely entirely on the
local agents to sell their products to processors.They had no access to
market or to information, so the agents could get away with paying below-
market rates.The Ahari Federation also started an information and
communication centre at its offices where collectors can get such
information.
• Integrating the value chain : The self-help groups applied for a licence to
trade in sal leaves. Licensing is required by the government because of
over-exploitation of the forest.The self-help groups applied for a licence to
trade in sal leaves. Licensing is required by the government because of
over-exploitation of the forest.
• Emergency loans : The Ahari Federation started offering emergency loans
to cover sudden expenses such as illness. The Federation keeps cash at its
offices so it can provide such loans immediately.

12. Processors
• Financing production facilities :- demonstrating new processing technology, and
for training processors how to improve their productivity, reduce their costs,
conserve energy and developnew products from the sal leaves.
•
• Bank loans:- UNIDO organized workshops with bankers to explain how the value
chain works, the opportunities and strengths of the chain.One major improvement
was a thermostatic cut-out to prevent overheating, re-duce electricity consumption
and improve safety.
• New product development :-In an effort to reduce leaf consumption and over-
exploitation of the forest, UNIDO started motivating processors and traders to
develop new products. A trader came up with the idea of using glossy paper for the
bottom layer of sal leaf cups, rather than using two layers of sal leaves.

13. • Traders :-banks refused to lend to traders was their lack of financial
records such as balance sheets and income statements. Initially the traders
were sceptical and did not want to disclose their business turnover. But
UNIDO arranged meetings with bankers, took the traders on an exposure
visits, and helped the traders prepare basic financial data so the bankers
could appraise their businesses and lend them money.
Social and environmental innovations
Insurance
Health training
Forest conservation
Engaging banks with the sal leaf chain
• In the past, there was a total mismatch between the sal leaf value chain and
the financial system.
• Collectors received overly large loans and got into deep debt as they were
unable to repay, while traders and processors had no access to bank loans
and were unable to invest in their businesses.
Cont...

14. Dumapada self-help group taking its unused
loan back to the bank
Intervention of UNIDO:
• In 2007, a self-help group from the village of Dumapada applied for a new
bank loan. In November that year it received $600 from the regional rural
bank Baitarni Grameen.UNIDO organized a meeting with the group and
found most of them do not know the purpose of using the loan Some replied
that since they had no business plan, they would keep it in their savings
account.
• That is when UNIDO decided to provide financial counselling to help the
members develop a business plan and direct the loan towards production. A
half-day training on business plans and financial management was organized
in which member learned to calculate their loan needs, the best use of the
loan and a repayment plan.
• They decided to divide $400 among the members and return the rest to the
bank. All the members invested their loan money in their sal leaf businesses
and have decided on a repayment schedule of 10 months. Five months later,
they were repaying their instalments regularly and earning more from their
businesses.

15. • Collectors – Ahari federation – bank
• Processors – Betnoti federation – bank
Benefits
1) Collectors - At the start of the programme, the collectors earned about
$0.30 per day, or $10 a month. By selling directly to the Federation and not
using the services of agents, they were able to increase their incomes to
$14 a month.
2) Processors-The Betnoti Federation supports processors by giving them
access to raw materials in the low season. It gives them loans to install
better technology and energy-saving devices. It also provides employment
to many people.
3) Traders-Thirty traders received loans from banks and increased the scale
of their business.
4) Banks-Banks now experience better loan recovery: the repayment rate
increased by 55%.
UNIDO’s pro-gramme established two
triangles of value chain finance:

16. • Some 1,560 primary collectors and 120 processors now have personal
accident insurance.
• The introduction of paper into cup-making cut the use of sal leaves by half,
supporting conservation efforts. The growth of the Joint Forest Protection
Committee from 7 village members to 95, and its renewed activities has also
had an impact: llegal tree felling has stopped in 47 villages because of the
patrol squad.
• The social impacts on the chain have also been significant. Most processors
are women. Once they gained access to working capital, they could upgrade
their equipment, buy cheaper raw materials, and earn more. Better
technology has reduced their physical burden. Because they are earning more
in less time, they now have more time for their families.
• Once their mothers started earning more, the children had a better chance of
getting an education and breaking out of vicious cycle as children were often
involved in processing, meaning they missed school.
Social and environmental impacts

17. Challenges and Lessons
• Length of intervantions
• Local agents
• Credit
• Multiple approach
• Importance of grassroots institutions
• Local adaptation
• Multiple approach