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Appendix 4.2.2

TRADE AND MARKETING OF NON-WOOD FOREST PRODUCTS

L. Lintu 1/
FAO Forestry Department

INTRODUCTION

With recognition of rapidly dwindling forest resources (especially in tropical regions) and concern over sustainable development emerging as an UNCED follow-up, sustainable forestry has come to the forefront of the debate on environmental forestry development.

Sustainable forestry consists of conservation, sustainable forest management and sustainable utilization of forest resources. Compared to the conservation and resource management, sustainable utilization appears to be frequently overlooked in the forestry sector, although it is the element which is creating value for the resource and thus making resource conservation and management feasible and attractive. It is an important means not only in creating value but also in distributing it among those involved in forestry operations. The value from the forest resource is derived through harvesting, processing and marketing of products based on wood, non-wood materials and services provided by the forests.

In aiming at sustainable forest utilization, contributions of a multitude of forest products and services have to be simultaneously recognized. The range of non-wood forest products (NWFPs) is currently receiving increasing attention. It is important to recognize that not all NWFPs, despite their name, originate from pure forests. They can also be produced on farm and grazing lands.

In sustainable forest utilization, marketing provides a means for maximizing the values and distributing them among the participants in forestry activities. It is closely linked to processing which converts the resource into marketable products. In this paper marketing is discussed with specific reference to NWFPs, without forgetting the other elements which are equally vital for sustainable utilization.

After defining the term "marketing", this paper will place the marketing of NWFPs into perspective by highlighting some examples of the importance of selected products, markets and the related trade flows. This paper does not try to quantify these markets nor indicate the predominant trade flows in general. Discussion of the marketing environment and trade policies is beyond the scope of this paper.

The paper will then review the basic components of NWFPs, their producers, markets and competitors from the marketing point of view. It will describe some of the typical features of NWFP marketing practices.

The next three sections will discuss the importance of marketing information, needs for marketing capabilities and institutional and infrastructural support to marketing.

Conclusions drawn from major issues emerging from the discussion will then form the basis for making recommendations for strengthening and developing NWFP marketing to better contribute to sustainable utilization of forest resources.

MARKETING DEFINED FOR THIS PAPER

In the socio-economic context of forestry, marketing is one of the means, in combination with processing and resource management, to cater for the needs of people involved. Marketing provides a set of tools with which people can create more efficiently economic value for the resource and products made of it. Proper marketing also assists in a more equal distribution of the economic value created among the participants. Marketing is therefore vital not only to medium and large-scale industrial enterprises but also in helping small farming and forestry communities move from a subsistence economy to one in which they can start and sustain profitable enterprises on their own.

For clarity this paper will use the following definition of marketing:

Marketing is basically a technology which is at the disposal of producers to identify market opportunities in the form of market needs and wants, analyze competition, develop appropriate approaches to reach the markets and to make profit. It uses a mixture of basic factors comprising product, channels of distribution, promotion and price by which it satisfies the needs and wants of the customers in the markets. Marketing operates in an environment which is created by economic, social, cultural, technological, political, regulatory, legal, institutional and infrastructural factors, all of which are beyond the control of the individual operators doing marketing. Discussing marketing in the context of NWFPs means discussing marketing in all its possible variations. NWFPs comprise such a varied group of products that meet the needs and wants of all kinds of end-users. Some of the products find markets with final consumers without any major processing (e.g. fruits, berries, mushrooms, etc.), others have markets with industrial customers which use them as raw materials in making either other industrial products (e.g. converting essential oils or gums to fragrances and flavours) or consumer products (e.g. rattan furniture). This paper tries to limit the discussion mainly to the marketing of consumer products from the forest to the final consumers and to that of raw materials to the processing industries. However, in view of the increasing interest in value-added products the marketing of further processed goods either to final consumers or to further processing industries cannot be entirely ignored.

In discussing NWFP marketing one has to be careful in defining the context in which the discussion takes place. Does it concern marketing of products gathered from the forest to the first processing stage, or marketing of primary processed products to the secondary processing stage, or marketing of secondary processed products to further processing stages or final consumers? These are basic questions which have to be asked in order to identify the kind of marketing approach. Figure 1 tries to illustrate the basic cycles of "processing-product-marketing" chain which follow each other in taking the forest products from forest to final consumer. The discussion in this paper will concentrate on the first two levels of the "processing-product-marketing" cycles, i.e. from forest to primary processing/consumers and from primary processing to secondary processing/consumers.

NON-WOOD FOREST PRODUCTS TRADE

Information on NWFP resources, harvests, processing and trade is scarce and dispersed. For some internationally traded products the information is more readily available than for others of more local importance. Some specific case studies provide information on trade for some products. Furthermore many NWFPs can be and are produced as purely agricultural activities and statistics make no distinction between agriculture-based and forest-based products. Information on some of the further processed products of NWFP origin are combined with that of synthetic products. Data and information are not collected regularly but often through specific surveys only. It is therefore not possible to estimate the volume and value of the whole NWFP sector in terms of trade. The In case this page changes remove the double spaces in the last line.

Figure 1: Cycles of processing - product - marketing












Source: Lintu, L. 1986. Marketing in the forestry sector.
Unasylva 153, Vol. 38. FAO. Rome.

importance of this trade can only be illustrated by citing examples of products for which some systematically collected information is available. Some information collected by FAO for exports of gum arabic from Sudan and rattan from Indonesia, Malaysia and the Philippines is shown in Tables 1 and 2 to illustrate the importance of the trade of these products to the countries concerned.

Table 1: Volume and value of exports of gum arabic from Sudan, 1980 to 1990



 
 
 
 
 
 

Year 
Volume (1,000 mt) 
Value (million US$) 
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990
26.2 
33.4 
29.9 
27.3 
38.4 
27.4 
19.1 
18.6 
18.6 
18.1 
25.0 
36.7 
43.5 
42.7 
38.0 
51.0 
28.9 
56.7 
60.0 
62.5 
49.4 
53.0 

Source: FAO, 1993
 
 
 

Table 2: Value of exports of rattan from Indonesia, Malaysia and
the Philippines, 1981 to 1990



 
 
 
 
 
 
 
 
 
 
Country 
1981 
1982 
1983 
1984 
1985 
1986 
1987 
1988 
1989 
1990 
 
(million US$) 
Malaysia 

Philippines 

Indonesia

45 

73

42 

83

56 

86

60 

93

58 

97

62 

104

20 

94 

151

31 

136 

56

32 

137 

117

26 

121 

-

Source: FAO, 1993

It is generally maintained that NWFPs are important locally, nationally and internationally. Many of the products contribute significantly to the creation of economic benefits and cash income at the community level (e.g. forest foods marketed at village markets). Some of the products contribute to the national economy (e.g. tendu leaves for bidi production in India) while many enter international trade and are vital elements in many industries worldwide (e.g. essential oils sold to the fragrance and flavour industries).

A great number of products is marketed simultaneously in all three main market levels. Very seldom does any one NWFP alone reach outstanding economic significance in trade. In most instances their significance stems from the cumulative contribution of several diverse products in the trade of a nation. For instance in India, at a national level, over 50 percent of forest revenues and 70 percent of export income comes from NWFPs. They provide 50 percent of income for 20-30 percent of rural people (Sekhar et al., 1993). The number of these products is huge. Tewari (1994), for example, lists 282 edible fruits, 104 edible stems-tubers, 199 edible leaves, 112 edible seeds, 46 edible flowers and 74 underground roots, rhizomes and tubers. The theme paper on socio-economic benefits of NWFPs by J.E.M. Arnold highlights their importance to local communities and societies as a whole.

The Brazilian Amazon region provides an example of the importance of NWFPs in regional trade. The total value of these recorded products obtained by gathering and traded in the Brazilian Amazon amounted to US$ 110 million in 1987. The trade was composed of a number of different products. By order of importance they were: acai (US$ 42 million), babassu (US$ 22 million), rubber (US$ 20.7 million), palm-hearts (US$ 11.8 million), Brazil nuts (US$ 9 million), and sorva (US$ 1.2 million). They are followed by several other products with values less than US$ 1 million each, comprising: gums and waxes (balata, licuri); fibres (buriti, piacava, tucum); oils (andiroba, virola, licuri); and medicinal plants (jaborandi, ipecauanha, timbo) (Vantomme, 1990).

Although NWFP activities with clearly identifiable markets provide value to the resource and thus contribute to the resource conservation and settling of farming populations, there are counter-arguments that the activities are not sustainable. For example, Vantomme (1990) maintains that for the Brazilian Amazon region, extractivism in its actual terms and products is slowly but definitely becoming an obsolete economic activity.

There also appears to be a switch from a purely subsistence use of NWFPs to commercial export-based activities, with significant consequences to marketing practices and related institutional support structures.

One of the main determinants for trade in NWFPs is naturally their sustainable and, especially in case of industrial raw materials, their continuous availability. The competing uses of forests which change the land use, in particular and large-scale timber production, are real and potential threats to NWFP availability. Forest ownership and user rights are also determinant factors in evaluating long-term availability of NWFPs for the market. Similarly, the appropriate assessment of relative economic potential of alternative resource use options is vital in evaluating the supply potential of products from a specified forest area. The volume of trade also varies depending on market prospects. With high prices, supply often increases to levels which threaten the sustainability of resource, and eventually floods the markets with resulting collapse of prices.

Availability also has to be stable, regular and predictable. Many of the customers are industrial operations which expect to operate their plants without interruption, or at least be able to predict possible shutdowns (e.g. with seasonally available raw materials). However, the conditions under which most NWFPs are harvested in natural forests make regularity of supply very difficult to achieve. Weather conditions and other nature-related factors make availability irregular. Furthermore, gathering of these products is in most instances a side activity for farmers whose main income comes from agriculture. Any conflict of NWFP gathering with farmers' agricultural activities can thus reduce their interest in NWFP activities and thus weaken the supply chain. The regularity of supply of some food items may also indirectly be disturbed by calamities on the farming side when people have to rely more on the forest resource for their own consumption, resulting in decreased supply for the market.

Local Trade

Local trade, although relatively small in quantities and values in case of individual products and producers, is often of vital importance to local communities by allowing increased efficiency in resource utilization, opening up outlets for producers/gatherers with excess production and thus providing cash income to them and others involved in selling and distributing the products. The aggregate of a large number of NWFPs and their individual producers makes local and national trade in many instances more important than the international trade.

In order to assess the volume and reliability of potential supply, an analysis of what determines the marketable surplus is important. It is needed for the business sector to estimate the supply volume for trading and processing. Policy-makers need to know how much income can be derived from these products in order to identify appropriate development strategies to target small farmers and other gatherers.

With the increase in economic well-being and shift to monetary economies, factory-made products increasingly erode the local markets for NWFPs in their traditional uses. Under these circumstances, the contribution of the trade of these products to local economies starts depending on national and international markets. This will, of course, in most instances change the product range demanded and the marketing approaches applied. The barter and customary sharing of products which still exists at the local-level trade will gradually be replaced by money-based exchange systems.

In India, for example, local-level trade is important particularly to forest dwellers, including tribals, some of whom still depend entirely on the forests. About 60 percent of production of NWFPs in India is consumed by about 50 million tribal people. NWFPs are estimated to constitute about 10 to 40 percent of tribal household earnings. Collection of a single NWFP from existing resources is, however, not able to provide enough income to sustain people. Hence different NWFPs in different seasons are collected and marketed to ensure sustained income (Sekhar, et al. 1993).

According to a study from the Philippines, no less than 46 percent of the total multipurpose tree products production, which includes many NWFPs, went for home consumption while 10 percent was given away to neighbours and relatives. Only the remaining 44 percent was sold. This implies that small farmers catered more to family consumption on a subsistence level than to markets (Raintree and Francisco, 1994). A significant part of local trade in NWFPs takes place through bartering.

Trading activities are often conducted seasonally, when demand for agricultural (or other) labour is low. Especially the rural poor rely on income from NWFPs in these periods when returns from other sources decrease.

The process of exchange takes place in village markets between the gatherers/producers and final consumers. Most of the products traded are consumer goods, i.e. they are not processed further by any industrial activity. NWFPs traded locally include fodder, food items, plant- and animal-based medicines, construction materials and furniture. Quantification of the local trade is extremely difficult due to its sporadic nature and because only a part of it is monetary-based. Some efforts on a case-by-case basis have been made to measure local trade using sample surveys. Some local markets can, however, be described as industrial markets. For instance, strong demand for fruits in local markets is often propelled by fruit processors, such as syrup and concentrate manufacturers, ice-cream makers, fruit juice makers, and jams and preserve manufacturers (Raintree and Francisco, 1994).

National Trade

There are national markets that support trade of NWFPs in specific countries. Products entering national trade include fruits, nuts, spices, raw materials for flavours and fragrances, medicinal plants, furniture, and many other products. For instance, customary food habits provide national markets for spices and flavours which cannot be sold elsewhere. Herbal medicines is another category of products which are tied to local traditions and therefore to specific national markets. The increasing number and income level of city dwellers especially make these markets expand and require particular marketing approaches, as people who have moved to cities often maintain their cultural habits. Significant opportunities could be identified through appropriate market and marketing studies in these markets.

Tendu leaves for bidi production in India provide an example of national trade in NWFPs. Of the various tobacco products consumed in the world, bidi is a product of typically Indian origin. It is the Indian cigarette in which tobacco is wrapped in tendu leaf instead of paper. India's share of the total world production of tendu leaves is estimated at 85 percent. Most of the annual production of over 350,000 tonnes of tendu leaves are processed into bidi cigarettes in India. The average revenue earned by different states in India from the production of tendu leaves amounts to about Rs. 600 million (approximately US$ 30 million). The activities related to tendu leave collection, drying, packing and transportation are estimated to be equal to full employment of 107,000 (Dwivedi, 1993).

National trade of many NWFPs exists, of course, parallel to international trade of the same products. For example, some 6,000 tonnes of tendu leaves are exported with a total value of Rs. 83 million (approximately US$ 4 million) (Dwivedi, 1993).

The internal trade in medicinal plant material is, in many countries, often considerably more important than international trade. In the United States, for example, imports represent only a small percentage of the value of internal trade in medicinal plants.

International Trade

International trade of NWFPs is composed of imports and exports of many products at different stages of processing. Some of these are unprocessed goods from the forest while others have undergone processing to lesser or larger degree. Many of the products are often traded in rather small quantities compared to other commodities. For example, the quantity of cinnamon bark oil amounts to some 2.8 tonnes/year in the world trade; cinnamon leaf oil 120-150 tonnes/year and rosewood oil 100 tonnes/year. On the other hand there are NWFPs which are produced and traded in considerably larger quantities like Brazil nuts (14,000 tons/year), orange oil, gum turpentine, rosin, rattan and gum arabic.

Essential oils (comprising a number of individual products), which are traditionally used as basic raw materials in fragrances and flavouring, provide an example of international trade in NWFPs. In 1990, the value of total world imports of essential oils amounted to over US$ 1 billion. Principal import markets are the European Union, the United States and Japan, which together account for over 70 percent of the total trade. ASEAN, Hong Kong, Republic of Korea and India, with their share of some 12 percent of the world imports, indicate the importance of the Asian region in this trade. Consumer demand for natural flavourings and fragrances continues to grow despite the increasing market share of synthetic substitutes (ITC, 1993).

Brazil nuts provide another example of international trade in NWFPs. Almost all Brazil nuts are destined for international markets. About US$ 50 million annually, or less than 2 percent of the US$ 2 billion international edible nut market, is made up of Brazil nuts. Brazil represents 80 percent of the production while the rest is covered by Bolivia and Peru. Main markets for Brazil nuts are the United States, Canada, United Kingdom, Germany and Australia (LaFleur, 1992).

International trade means knowing the markets outside the country of production. Very often the trade is controlled by local and foreign brokers, agents, traders and other middlemen. They all have vested interest in the business. Therefore relying solely on the information provided by them does not guarantee that the gatherers and producers get all the information that they need. Products which enter the international trade are often raw materials for further processing in countries of destination. There are also a number of value-added goods based on NWFPs which are internationally traded. The market size, growth and its specific requirements are determined by factors far away from the supplying countries. The reliable availability of marketing information is a key factor for successful marketing in export markets.

PRODUCTS, PRODUCERS, MARKETS AND COMPETITORS

It is not an exaggeration to say that NWFPs represent one of the most challenging product groups from the marketing point of view because of their number, versatility, end-use variation, dissimilarities of the producer base and resource richness. NWFPs are extremely numerous and versatile. They comprise unprocessed raw materials and consumer products as well as further processed consumer or industrial goods. Many of the products are seasonal and with fairly small overall markets, which means that individual producers can only seldom rely and specialize on one product only to make living on it. The resource base also varies greatly, some of it being natural and even wilderness while other resources are plantation-based.

Producers of these products are individual gatherers, including subsistence farmers and rural poor, or large-scale industrial plantations supplying either primary consumer goods or raw materials for further processing industries. They also include simple cottage-level processors, small-scale industries and huge multinational industries which deal with processed NWFP-based goods.

Markets range from simple local village level consumer markets to most sophisticated industrial niche markets in numerous end-use sectors both in developed and developing countries.

Competitors to NWFP marketers come from the sector itself or from other sectors with natural or synthetic products.

Furthermore, NWFP markets have been and continue to be in the middle of a drastic evolution. Traditional markets for many products have been lost to competing synthetic materials while new markets are emerging, especially with the growing interest in natural products. All this would require from the producers full understanding of the changes and ability to quickly identify threats and opportunities in the markets and swiftly adjust to them not only in marketing but also in resource management and processing in a harmonious manner. A further complication arises from the fact that many of these products serve several different local, national and international markets simultaneously, each requiring different marketing approaches.

The most serious problem arises, however, from the fact that many of the gatherers, primary processors and lowest level middlemen, who need all these capabilities are the least well-equipped for the task due to their low level of basic education and limited access to capital. This makes their position much weaker than that of the suppliers of competing substitute materials. It also weakens the position of these gatherers, primary processors and low middlemen compared to more knowledgeable and skilful members of the marketing and processing chain further up.

What does the gatherer/producer need to know in terms of marketing? The basic questions when starting any NWFP-based marketing activity are:

What are the potentially marketable products available?

What and where are the markets for those products?

Who are the competitors in supplying the markets?

What are the specific strengths of the producer/gatherer in supplying the markets in relation to the competitors?

What are the means to get to the markets in competition with other suppliers?

Some additional issues related to the first four questions will be dealt with below, while those relating to the last question will be covered in the following chapter on marketing practices.

Products

NWFPs and their characteristics are a compromise between the available resource and market requirements. Processing and marketing are the tools with which the raw materials are converted to appropriate products to meet market requirements. Processing provides the physical characteristics of the goods while marketing adds to it all the necessary services and other immaterial features to make it a complete product for satisfying the values sought in the market.

From the consumer's point of view, the products represent various values. For example, they can be the delicious taste for fruits, purity for gums, specific aromatic characteristics for essential oils, etc. The value characteristics can also be associated with resource conditions which determine the continuity, regularity and reliability of supply. They can also be economic values related to low cost in further processing, including low purchase price, low cost of delivery to the processing mill, low risk of spoilage in handling and storage, etc. The values can also be environmental, making the market prefer products which in their harvesting do not damage the resource base, or for which the processing does not pollute the environment, or which can be recycled, etc. These examples illustrate the point that, from the consumer's point of view, the product is something more than just the physical product. This also means that there are a number of physical products which can serve the same function. The product supplier has to be able to identify value characteristics with which the product can be made more desirable than competing products.

Being nature-based, NWFPs can never be totally uniform in their characteristics, nor can their supply be regular and fully reliable. Natural forest-based, "non-domesticated" products and wilderness-based products in particular are less uniform in their characteristics than plantation-based products. There is, therefore, a tendency to move towards more uniform plantation-based production whenever potential markets become large and attractive enough and the production is found to be feasible in plantations.

Some of the products originate from "wilderness", i.e. they are not domesticated. The products are collected depending on their seasonal availability or other nature-determined conditions which can affect both the quantity and quality of the products available. It also means that their availability can vary considerably from year to year and from location to location. From the marketing point of view this is, of course, a major disadvantage because many customers prefer sustained and secure supply of even-quality products. This is particularly important for products which are used as raw materials in further processing industries. Products originating from domesticated resources (i.e. systematically managed forests or plantations) provide more supply security to the customers and are therefore preferred by them.

Some problems of variation in products and their quality can be overcome by application of product and quality standards and related grading. Standards and grading rules are available for many NWFPs both at the raw material and at various processing levels. For example, the grading of gum arabic is based on physical parameters colour, shape, size and purity which makes the grading rather simple so that it can be done by the producers themselves. The standards and grading rules are, however, often very dispersed and vary from market to market and producer to producer. A serious effort would be needed to identify all the relevant standards, grading rules and related testing methods and initiate work on their harmonization to the maximum extent possible.

Another means for solving some problems related to the variation of product specifications and quality is appropriate packaging and storage. For instance, Iqbal (1993) found that if steps could be taken to deliver morels in a cleaner state to exporters, the product could be sold at higher prices and the collectors' profit margin would also increase. Processes like cleaning, grading and packaging are much cheaper in developing than in developed countries due to lower labour costs.

The type of the product is one of the factors which determines the marketing approaches to be used. Some NWFPs are ready for final consumption immediately after harvesting, while others need to be processed before becoming useful and acceptable to consumers, as discussed above. Some of the NWFPs have to go through several stages of processing before becoming a final consumer product (e.g. essential oils after having been extracted from wood are first converted to fragrances and then into perfumes). Many of these products are specialities serving very specific end-use niches in the market (e.g. chicle) while others represent commodity-type products (e.g. rattan stalks) and are used more widely.

Many products consumed as food items, medicines or health and beauty care products are subject to restrictions and regulations on their use, as they can potentially affect human health.

Another particular feature related to the NWFPs is their great number which has also been mentioned earlier in this paper. The draft classification presented in the theme paper by Chandrasekharan identifies a great number of product categories, each having numerous different products included in both at the resource level as well as the primary processing level. Medicinal plants imported to Europe via Hamburg alone number between 500 and 600, based on an examination of UK and German trade catalogues, particularly that currently published by the largest German importer, Heinrich Ambrosius. Many of these plants are imported in relatively small amounts, however (Lewington, 1993).

Even a single species can be a source of various products which find markets in numerous end-uses.

As mentioned earlier, the diversity of NWFPs and their markets means that practically all possible approaches of marketing are needed. Some of the products need to be marketed with consumer marketing methods while some others require industrial marketing approaches. For some products commodity marketing arrangements are adequate while for many speciality products niche marketing is the most appropriate method.

Producers

Producers will be described here only as part of marketing process. See the paper by Arnold for discussion of the socio-economic aspects of producers' involvement in processing and marketing.

Producers of NWFPs include the gatherers who collect the products from the forests. They also comprise those primary-level processors who buy the basic raw materials from the gatherers and convert them into primary products. Producers are also the ones who convert the semi-processed primary products to value-added, semi-finished products or to final consumer products at the successive stages of processing and marketing.

Individual producers/gatherers are numerous and small and thus have little power in the market place. Clay and Clement (1993) noted that, in the case of Brazil nut operations in the Amazon region, the gatherers cannot provide quantities of product that even a small manufacturer would need. The Xapuri Brazil-nut shelling factory, for example, produces 70 metric tons of Brazil nuts per year, but M&M Mars uses 70 metric tons of peanuts per 8-hour shift in Snickers candy bars. Individually, local Brazil-nut shelling cooperatives could never convince large companies like M&M Mars to use their nuts. By working together, producer groups can control larger market shares, exerting considerable influence over entire markets (Clay and Clement, 1993).

Although NWFPs have features which are attractive from the gathering and processing point of view, they may not necessarily be strengths in marketing the products, but rather the contrary. For instance, the following have been listed as advantages of NWFPs gathering and processing activities:

Many of these advantages on the gathering and processing side are disadvantages from the marketing point of view. Being small and household-based operations, they do not possess the necessary strength in negotiating with customers and middlemen in the markets. The diversity of product means the need to master different marketing approaches as products serve different needs and wants in the market. Their seasonal nature affects the continuity and regularity of supply and may make customers favour competing synthetic materials with more predictable availability. Simple technologies might in some cases also mean lack of flexibility in production and low quality. The gathering and processing activities provide direct benefits to local economies only if the products can be successfully marketed and the marketing is controlled by the producers to make sure that the benefits flow to the local community. Low income and socially disadvantaged groups often lack the necessary basic knowledge and resources for efficient marketing.

The gatherers of NWFPs are in most instances part-time operators whose main activity is farming. They do not necessarily have any long-term commitment to the activity should the main activity in farming require more time and other inputs.

The resource base for gathering activities is usually not owned by the gatherers, who only have formal or informal user rights. Resource management is therefore not the responsibility of the gatherers and their interest in its long-term sustainability is not always there. For example, the over-collection of many medicinal plants from the wild often stems from local poverty which is itself a result of the particular socio-economic situation in which many rural inhabitants find themselves (Lewington, 1993). Furthermore, alternative resource-use patterns with detrimental effects on gathering activities can be introduced without gatherers being involved.

The poor gatherers also lack adequate awareness and benefits obtainable from different species and different forestry programmes like social forestry and agroforestry (Sekhar et al., 1993).

In order to be successful, an NWFP operation has to be operated as a "business unit" which comprises and controls all its basic functions, including raw material procurement, processing, marketing, financing and human resource development. Running such a system requires business management capabilities, which poor gatherers are unlikely to possess or acquire on their own. There would seem to be a major role for the extension systems.

Markets

From the marketing point of view, markets are comprised of their geographic location, end-uses, and customer needs and wants in the end-uses and the buyers there.

Geographically, markets for most of the internationally traded NWFPs are in industrialized countries in Europe, Japan, Oceania and North America. There are also large domestic markets in the producing countries themselves, both in the developing and industrialized regions. Information on the geographic markets is mostly in the form of trade statistics which are, however, incomplete and only seldom allow worldwide assessment of the size and importance of markets.

In terms of end-use, the markets for non-wood raw materials and primary processed products are extremely varied, even for the same products. The end-uses for primary processed products are extremely numerous. The main end-use sectors served by non-wood forest raw materials and primary processed products include: cattle and other animal raising, food industry, pharmaceutical industry, fragrance and flavour industries, dye and colorant industries, insecticide industries, industrial chemical industries, furniture industries, building and construction industries, religious ceremonies, etc. Market information is very seldom available by end-uses.

The following few examples further illustrate the variety of end-uses for some NWFPs.

As regards detailed customer needs and wants in each of the end-uses, the markets are even further fragmented. Information is hardly ever readily available but has to be obtained through specialized marketing studies.

Some of the products are sold as bulk commodities like fodder in domestic markets and nuts, gum arabic and resins in export markets. Some other products are marketed to specific end-use segments or niches as specialities.

From the gatherers' point of view, the markets are the middlemen and the government-operated buying organisations which buy the products. The markets for gatherers are also the village or town markets where they sell or barter their products directly to the consumers.

Often the number of middlemen available to buy the products is limited and tied to a larger buying organisation. For example, in the case of Brazil nuts the gatherers sell the in-shell nuts to middlemen who trade mainly in merchandise or forward goods in exchange for a guarantee of future delivery of products. The buyers and their agents are normally forwarders of funds and merchandise to the middlemen but will also buy from independent middlemen. The gatherers only control the gathering of the nuts and their sale to middlemen.

Competitors

With the development of synthetic products, many of the traditional NWFPs have lost their markets. This often distorts discussion, as many nostalgic generalizations are still made. Synthetic materials are a reality and a constant threat to NWFPs.

Another competitor to certain NWFP activities comes from the sector itself: the tendency for marketable NWFPs to be cultivated, as mentioned earlier. A typical example of this is natural rubber. Wilderness-based rubber was overtaken by plantation-grown rubber, which is itself threatened in certain end-uses by synthetic rubber. Rubber itself came under heavy attack by plastics when they were introduced; overall rubber demand was significantly affected.

On the other hand, a NWFP can also pose a threat to a plantation-grown product, for example the threat posed by sheanut butter to cocoa butter. Sheanut butter is a very good substitute for cocoa butter, as their physical and chemical properties are very similar. Sheanut's most important use is in foods. Especially in the United States, Europe and Asia, sheanut butter is almost entirely used in manufacturing food items like chocolate, candies, margarine and bakery products, with only 3 to 5 percent of imports used in the cosmetics and pharmaceutical industries (Dwivedi, 1993).

Markets, once lost, are difficult to regain fully. This is illustrated by the case of gum arabic. Gum arabic sales had increased throughout the 1960s, reaching a peak around 1970 at approximately 70,000 tonnes. But the severe Sahelian droughts of 1973-74 led to a world shortage and high prices. This resulted in an impetus for some major users to shift to the newly developed modified starches. Consequently, annual sales of gum arabic never exceeded 40,000 tonnes again. A further disruption in supplies forced many more companies to shift irreversibly to reformulations of their products based on synthetic products. Sales could not exceed 20,000 to 24,000 tonnes per year, even after adequate gum arabic stocks became available in 1986. Nonetheless, despite steadily decreasing demand over the past 15-20 years, gum arabic still remains a major natural exudate of commerce (Anderson, 1989).

Government policies can also change the conditions for competition between various products. For instance, the policies regarding medicinal advertising often encourage the use of imported medicines as illustrated by an example from Nepal. Nepalese traditional medicine is very rich and still largely used in the rural areas. Most of the rural population cannot afford the costly "modern" medicines. Although health work should focus on the 85 percent of the population that uses traditional medicine, measures focus on helping the 15 percent that use "modern" medicines. International commercial pressure from Western and Indian pharmaceutical industries is slowly changing the medicine consumption habits of the Nepalese by using high-cost advertising campaigns with which no traditional medicine maker can compete (Dwivedi, 1993).

Sometimes NWFPs are hedged against competition by their specific features or their low cost relative to synthetic substitutes. For example, consumer demand for natural flavourings and fragrances continues to grow despite the increasing market share of synthetic substitutes which have lower production costs, stable pricing and regular supply. This is due in part to the fact that not all essential oils can be satisfactorily replaced by synthetic substitutes such as clove oil. Some essential oils, such as orange oil, are available at such low prices that the investment in research would not be worthwhile to develop substituting synthetic materials.

There is also a growing tendency on the part of consumer to prefer the use of "natural" ingredients in the composition of a product. For example, there is a general market trend away from petrochemically derived substances back towards natural products. Natural materials can, however, only regain ground if they are competitively priced and meet other requirements of the customer. If the natural product is only slightly more expensive, then there is still a reasonable incentive for the buyer to choose "natural", as the public acceptance and environmental implications of the natural additive should broaden the appeal of the finished product. This trend is especially pronounced within the food industry.

MARKETING PRACTICES

Descriptions of a marketing practices are too often limited to portraying it as a physical activity of haulage, sorting, grading, packaging, storage, display, etc. In spite of the fact that ultimately the buyer is directed by the values which are provided through the physical activities, value-based descriptions of marketing practices are really rare.

The marketing of NWFPs used as raw materials in industries normally takes place in two main stages:

The first stage is mainly carried out in the producing, developing countries with less-developed marketing organisations, while the latter is carried out in the consuming, industrialized countries with modern marketing organisations.

The most simple marketing practices for NWFPs can be found on the local and national markets. An example of local level practices is provided by the leafmeal fodder marketing in the Philippines. Leaves used for animal feed in the Philippines mainly come from leucaena (Leucaena leucocephala)and are processed by leaf millers. The pre-sale activities include sun-drying, bagging the leaves in straw sacks and hauling them manually or by animal-drawn sleds to the roadside where middlemen come. The marketing of leafmeal from the farmer leaf-gatherers to the users passes through two stages. Although farmer gatherers could sell directly to the leaf millers, there are local traders who assemble the farmers' produce. From the leaf-millers, middlemen act as dealers of milled leaves to the end-user. These middlemen are recognized by the farmer/leaf gatherers and leaf millers as an important part of the marketing channel, since they bear all the risks and costs related to the marketing of whole, powdered or pelletized leaves (Raintree and Francisco, 1994).

Another example of local-level marketing practices is fruit marketing, also in the Philippines. There it is based on contract marketing. The process starts when the trees start to flower. The seller and buyer jointly estimate the price on a tree-by-tree basis, based on the foreseeable volume of harvest. The buyer pays half of the assessed value in advance; the rest is paid at harvest. The contract buyer bears all the cost of pre-marketing services and sometimes also transportation costs and handling in delivering the products to wholesalers and/or retailers (Raintree and Francisco, 1994).

At the raw material level, gatherers may sell their product to middlemen and/or to a government buying or export agency. The practices for selling gum arabic in Sudan illustrate this approach. Distribution channels for gum arabic in Sudan can be described as simple and governed by the social and economic forces operating in the Sudanese economy. Like all other Sudanese products, they consist of three sub-systems, ranging from a subsistence producing end to semi-modern exchange sub-system, and at the receiving end to a modern export-oriented system.

Typically, gum arabic involves a large number of producers scattered in remote areas, whereas consumers are large, varied and scattered in the developed countries in the Western world. The product is gathered from remote areas in small quantities into concentration points. Storage is an important step. Most of the product has to be stored along the delivery line because of long transport distances. The concentration of supplies is by the piece, while selling to the consumers is in bulk. The gatherers' role in the marketing system is instinctive and traditional.

Theoretically every gatherer should sell the gum in the auction markets organised by the government, where the product is sold to specialized merchants who transport the gum to their storing shed for cleaning, grading and packaging. All clean and graded gum is then sold to the gum exporting company. However, in practice the gatherers are often prevented from selling their produce at the auctions by lack of cash, transport, water and labour. Their actual marketing difficulties start even before the gum arabic is produced. As it often happens, the gatherer needs cash before the product can be harvested. For this he has to arrange an advance sale of the expected produce with the village merchant in order to get his/her essential supplies or with the water transport operator to get the water. Both the price of the essential supplies and that of the expected produce are fixed by the village merchant and the transport fee by the truck operator. Under the circumstances, the gatherer has no alternative but to accept. It has been estimated that about 30 percent of the producers do not sell their product in the auction markets due to the above reasons. The gatherers sell their gum unsorted, although the grading is quite simple, based on physical parameters of colour, shape, size and purity (El Hag Makki Awouda, 1990).

Marketing practices in selling Brazil nuts are quite similar in that the gatherers are dependent on the supplies made available by the buyer-dependent middlemen and they are not involved in the simple value-adding processes of grading and shelling the nuts.

Marketing of essential oils to flavour and fragrance industries provides another example of marketing practices at the next level of processing and marketing chain, i.e. from the primary processing to the secondary processing. According to an ITC Market Profile (ITC, 1993), the fragrance and flavours industry is dominated by a few multinationals which produce and trade fragrance and flavour chemicals and compounds worldwide; an estimated 60 to 80 percent of essential oil imports are carried out by the industry. Until the mid-1980s, the industry was relatively fragmented with a large number of medium-sized and small companies which blended their own perfume and flavour compounds from natural and synthetic raw materials or purchased ready-made formulations from larger compounding houses. By the end of the 1980s, there was a shift towards a larger concentration of the market in the hands of a few multinational companies with worldwide manufacturing facilities.

An indicative breakdown of the relative market shares of the major fragrance and flavour producing companies in the world, which together cover 70 percent, or over US$ 5 billion, of the world market in terms of value, according to industry sources, is given in Table 3.

Table 3: Breakdown of relative market shares of major fragrance
and flavour producing companies


Company 
Market share (percent) 
IFF  Givaudan-Roure (Hoffman-La Roche) 

Quest/Unilever 

Takasago 

H&R (Bayer) 

Firmenich 

PFW (Hercules) 

BBA (Union Camp) 

Dragoco 

Florasynth 

Hagasegawa

12 

11.5 

10 

Source: ITC, 1993.

At the level of producer/distiller of essential oils, the process of marketing starts with the development and appropriate product testing. For example, essential oil used as a flavouring or fragrance agent is evaluated by taste or smell, respectively. The oil undergoes laboratory testing based on representative samples to qualify it chemically and set acceptable limits for the major components and for physical characteristics such as colour, specific gravity, etc. The conditions of sale often also require compliance with legislated technical specifications. Furthermore, in many countries individual ingredients must be formally approved by government institutions before they can be offered for sale. The process of product development and testing can take several years and is expensive. For the oils which are well established in the market, the standard specifications have been set and are published by ISO and national standard organisations. Buyers assess new essential oil sources on the basis of samples which have to be representative of the actual batch to be delivered. Another basis on which buyers assess the supplier is the regularity of supply. The main threat is posed by synthetic substitutes which do not suffer from supply shortages. The quality, the service, and the technical support are the main means to guarantee the long-term success as a reliable supplier (Boland et al., 1991).

The basic structures for essential oil marketing from farmer/distiller to flavour and fragrance industries vary. The traditional marketing channel used to be through brokers. The brokers have gradually started taking possession of products and thus are becoming dealers who hold stocks and sell the product at marked-up prices. There is, however, also a growing tendency to bypass dealers and brokers in favour of establishing direct contacts between distillers and larger flavour and fragrance industries.

Many NWFPs are gathered from natural forests with the aim of sustaining the social and economic development of local populations and thus contribute to the sustainability of forest resources, especially in tropical countries. All these issues have been and still are in the centre of environmental discussion all over world which draws attention of not only decision-makers but also the "man in the street". The concern over forest resources and introduction of NWFPs as environmentally-friendly alternatives to timber in converting the forest resource to economic benefits has given unprecedented amounts of free publicity to nature-based products. Some commercial NWFP initiatives have been able to take advantage of this free image advertising. The "green marketing" schemes make up one form of these initiatives. They increasingly apply sophisticated marketing and promotional tools and techniques and often use mass media coverage, advertising and packaging to get their message across and increase sales. A number of funding agencies and environmentally oriented grant, loan and investment funds have also been set up over the last few years with the mandate and commitment to support relevant research and commercial development. Much "green marketing" is based on linking the identification and promotion of new products with the market opportunities rising from consumer consciousness of environmental values. "Green marketing" emphasizes ecological origin of products, sustainable use of resources and the involvement of local population in the activities in its promotional campaigns. It has developed and introduced product names in which words like "green", "ecology", "rainforest" and "community" are used. Such product names associate the product to nature and local communities in the minds of the consumers. "Green marketing" aims to satisfy the needs and wants of customers for ecological and social values together with the product.

As illustrated by the examples above, marketing of NWFPs does not just happen on its own. A considerable amount of time and money must be invested to make it happen in a way that will return the most revenues to forest residents and the countries in which they live. Much of the current activities around these products are, however, still heavily production-oriented. It is clear that production orientation is needed to improve the quality and quantity of supply and to reduce the costs, while a marketing orientation is mainly aimed at increasing demand and value and to allow more products to enter the market.

The production-oriented approach uses product development, efficiency in raw material, labour and capital inputs and technology as main means to achieve better performance in producing increasing volumes of higher-quality products at lower costs.

In a marketing-oriented approach or practice, the use of the basic elements of marketing, (i.e. product with its various features like quality, distribution channels, promotion and price, as an appropriate mix), becomes a dominant feature.

Marketing-oriented approach has to identify and solve problems related to individual marketing factors. Table 4 lists some marketing problems in the uplands in the Philippines.

Table 4: Marketing problems and issues in the uplands in the Philippines


Product 
Price 
Promotion 
Distribution Channels 
People and Producers 
Others 
Finding the right product Unstable prices due to volume fluctuations Lack of post-harvest facilities Existing cultural barriers that result to difficulties Land tenure issue especially among tribal communities Land tenure 
issue especially among tribal communities
Quality handling technology Lack of inadequate entrepreneurial skills in pricing Lack of capital to engage in promotion activities Insufficient or lack of transportation facilities Illiteracy of same upland farmers Conflicting government 
policies
Volume of pro-duct is seasonal thus supply may be insufficient at certain times of the year Monopoly of traders dictating market prices Lack of NGO capability to act as marketing arm   Lack of organisation among farmers Government regulations 
on raw 
materials and semi-finished products
Lack of product development initiatives 

Lack of product alternatives 

Lack of capital

Insufficient knowledge on market information such as market prices and industry profile       Lack of farm-to- 
market-roads 

Existing peace and order situation 

Access to market information 

Lack of entrepreneurial skills 

Lack of capital

Source: Raintree and Francisco, 1994 (Original source: Philippine Uplands Resources Centre, UNAC 1991, 1st NGO Consultative Workshop on Upland Development Issues Proceedings.)

MARKETING INFORMATION

Marketing is a largely information-based, or "soft", technology. It is operated on the basis of information about markets, means of accessing the markets, competition and business environment. Efficient marketing relies on a well-functioning marketing information service that provides necessary quantitative and qualitative information regularly, reliably, timely and at a lowest possible cost.

Information is needed on the markets (demand, end-uses, supply), marketing factors (products, distribution channels, promotion and prices), competition, marketing environment (comprising social, economic, political, technological, regulatory, legal, cultural, infrastructural, etc. environments), and institutions related to marketing.

Especially in the case of NWFPs, systematically collected, analyzed and disseminated information is seldom available except for a few selected products and markets.

Much of the information on these products is collected from the resource side or at the level of processing. This is, of course, appropriate when satisfying the needs for information for marketing from the resource to the primary processing. Increased attention would seem to be needed to collect information from the markets and end-uses to which the primary processing industry is selling its products. Similarly, collection of information on marketing factors would need to be improved.

For an efficient collection of data and information, a well-defined classification of products is the foundation. Equally important is to identify and classify the end-uses in different markets to which the individual products can be sold.

As illustrated earlier, the demand for many NWFPs is derived, i.e. the final consumption takes place after a great number of successive loops in the production-product-marketing chain. Better understanding of the actual needs and wants of the customers in the market requires learning about the specific values that customers associate with the products offered. The marketing information system would therefore have to allow for providing relevant information.

Lewington (1993) provides an example of the frustrations that a market analyst faces in studying the markets for medicinal plants. She notes that perhaps the primary and most logical avenue to pursue in search of detailed import information, customs and excise records, proves to be of little help. In practice, one finds that the categories under which most medicinal plants are listed are so broad as to make the information almost useless. Only those plants entering a country in very large quantities are listed individually, but complicating the matter to a much greater extent is the fact that both those plants listed individually (and which do not have some medicinal use) and those grouped together, may also be used for several other purposes perhaps as foods or flavourings, or for cosmetics which are not distinguished. In the absence of detailed official statistics, interviews with traders would seem to be the best avenue to pursue. However, here one finds that the complexity of the trading network and the levels of secrecy (or confidentiality) are such that very little can be ascertained. According to Lewington, an examination of trade catalogues provides the only relatively detailed information as to the number and names of plants entering Europe (specifically Germany and the United Kingdom), although it has not been possible to get information relating to the serious matter of origin, wild or cultivated.

According to Carandang (Raintree and Francisco, 1994) who analyzed the market for small-scale multipurpose tree products in the Philippines, most of the producers (56 percent) depend on buyers (mostly wholesalers) as their source of price information. Only 10 percent of them have actual access to the prevailing market prices, while very few (1 percent) depend on their own discretion to assess the fair market price for their products. This, of course, leaves the producers largely at the mercy of middlemen as to the availability and accuracy of information on which they base their marketing decisions.

Some efforts have been made to set up marketing information systems to cater specifically to the needs of local operators. These are usually set up to provide price information on agricultural products, but some also cover selected NWFPs.

For example, the Tribal Cooperative Marketing Development of India Limited (TRIFED) operates a marketing information system which mainly serves the agricultural sector but also covers some NWFPs. The system collects price information from the domestic and export markets and disseminates it to the member cooperatives in a mimeographed publication fortnightly. The information does not, however, reach the local people.

The Agricultural Market Information Service in Indonesia is a large and expensive national marketing information system in which price collectors gather information at selected markets. The system uses computers and other high technology in processing and radio for national dissemination of information. At the local level, however, the system distributes information by using blackboards.

A further example comes from Ghana, where a Marketing Information System has been set up and operated by government agencies to provide agricultural market information. Twice a month, the system collects wholesale and retail prices for some 30 commodities. The primary target group for the information, which is composed of wholesale and consumer price indexes, is government agencies.

With the assistance of FAO, a market information system specifically designed for forestry communities was set up in early 1990s in the Philippines. The system continues to be in operation, run by volunteers, mainly women, from the local community supported by the government forestry agency. From the local nearby markets, the system collects prices of products grown by the farmers involved and reports them on blackboards set up in suitable positions in the community. A detailed description of the system is presented in a satellite paper.

Identification of appropriate sources of marketing information can often pose difficulties. Preparation of appropriately annotated listings of relevant databases is one way to solve the problem. For example, FAO is in the process of testing a Compendium of Computer-Based Databases of Relevance to Forest Products Marketing, which also covers NWFPs and should thus help to increase knowledge of possible information sources. More work in this area would merit consideration.

Market information, once available through marketing intelligence systems, can also be disseminated through mass media. For example, in India the major means for disseminating marketing information to remote farmers include: All India Radio (95 percent coverage of the country's area), the National Television (90 percent) and the business sections of newspapers. In order to be able to tap this vast and powerful network some basic factors need to be recognized (Dwivedi, 1993):

One specific and important means to collect market and marketing information is through market and marketing research. Especially detailed information of end-uses of individual NWFPs and means of accessing the markets have to be obtained through specific marketing studies. Marketing studies are needed to analyze the flow of raw materials from the gatherers of NWFPs to the primary processing industries. They are also needed to study the market opportunities and means of accessing the markets for products from the primary processing industries. The latter markets are often abroad. Information from the studies can be used both for planning and operation of marketing activities, including also components of marketing, such as product development, pricing, promotional policies and marketing and delivery channel development.

Domestic market and marketing studies are carried out by local research institutes and universities. For example, in the Philippines the few existing marketing studies on multipurpose tree species have mostly been conducted in research and academic institutions in different regions, particularly state universities and colleges. Studies covering a certain area or commodity are not yet consolidated. They cannot therefore provide a general picture of the marketing system and practices of products in the country.

At the local level, limited marketing studies could be carried out with the assistance of extension workers. There is, however, a need for appropriate guidelines on how to carry out such studies as many extension workers do not have any experience with them.

Many studies related to marketing of primary processed NWFPs have to be conducted in export markets. For these, specialized market research consultants have to be used. In view of the high costs of carrying out market and marketing studies in the export markets, ways and means to conduct them jointly through farmers cooperatives, industry associations or some other institutional set up are worth exploring. In some instances, international organisations can assist in this.

In developing information systems especially for small-scale enterprises and community forestry systems, two critical questions should be asked: How sophisticated do the information systems have to be? and Can the truly small enterprises afford them?

As illustrated above, the information systems in their initial stages can be fairly simple and low-cost operations and still serve a useful purpose. However, with experience in using information, the needs for further sophistication will increase and the costs of the information will undoubtedly go up. One way to keep the cost of information at an affordable level is to cooperate in its collection. Knowing that all enterprises will need the same basic information should make cooperation in information collection feasible as soon as users realize the real value of information. Therefore, as important as an appropriate information system is the need to realize the value of information and to be able to use it properly. This also means that the improvement of marketing information systems has to be closely tied to the development of capabilities in marketing and using marketing information. The increased efficiency in operating businesses leading to better results will make it possible even for small-scale enterprises to help upgrade marketing information services.

MARKETING CAPABILITIES


Marketing capabilities include the basic knowledge of marketing, skills to apply that knowledge in practice, and appropriate attitudes to recognize and appreciate the value of marketing as one of the basic functions in an NWFP business.

The marketing capabilities are needed at all levels, starting from gatherers and farmers of non-wood raw materials through operators of primary processing industries to further processing industries. The members of the marketing and distribution channels specifically involved in marketing need the capabilities for their every-day operations. The government officials at the policy-making level, as well as in regulatory activities, need to have a basic understanding and appreciation of marketing. People in various governmental and private organisations who are involved in promoting trade in NWFPs also need to have basic capabilities in marketing.

According to Pabuayon (Raintree and Francisco, 1994), human resource development at all levels cuts across all people-oriented programmes and sectoral groups involved in extension. In government, the target groups are: policy/decision-makers and administrators for re-orientation seminars on extension concerning current development thrusts and objectives; and trainers (core training staff) and extension workers. Both of these groups must be adequately equipped in terms of principles and techniques/skills in farm management and marketing. As also illustrated above, the needs for capabilities vary depending on the target group.

Poor recognition of the role of marketing is clear in most NWFP activities. Planners and operators in this sector are more involved with issues of resource, processing and community development than with those related to identification of potential markets and developing appropriate marketing approaches to take full advantage of them.

Pabuayon (Raintree and Francisco, 1994) notes that until recently, marketing extension services were rarely considered in the agricultural development programmes of Malaysia and Indonesia. In Thailand, marketing extension was referred to as "the neglected services". In the Philippines also, past efforts did not fully recognize the importance of providing farmers with marketing services in view of the largely sectoral orientation (i.e. production) of agricultural development planning. Thus, the marketing aspects of the farming business for the most part received little attention and the farmer likewise assumed an attitude of passing on to middlemen and trading sectors all post-production activities. This limited opportunities for increasing income.

To better guarantee a success, all economic activities related to NWFPs should start from the markets and their needs and wants. Many activities concentrate on producing something and only then start finding markets for products which may not have been adequately developed to meet the needs and wants of markets. Much of this is due to poor recognition of marketing as one of the basic functions of forest-based community-level businesses. This is partly due to the fact that markets are far away and that all commercial activities are done by middlemen from outside the forestry sector. LeCup (Raintree and Francisco, 1994) notes that the villagers in a project area in Nepal had no marketing knowledge because they were far from roads and from the trading places for medicinal plants. They did not know the use nor the quality required of those plants.

Another reason for a heavy resource and production orientation could be the low level of recognition of marketing in the basic training of forestry specialists in many instances. Marketing is either not present in the curriculum of forestry training institutions, or only marginally. Extension workers and NGO staff are faced with similar shortcomings.

Pabuayon (Raintree and Francisco, 1994) notes that in the Philippines agricultural and forestry development planning, the traditional concern of an extension service is providing farmers assistance to enhance technology adoption. Thus, human resource development for extension workers has generally focused on technical skills in agriculture and agroforestry. In addition to being production oriented, the extension service has been commodity-specific, resulting in the proliferation of many government agencies, each providing its own extension service.

The lower-level middlemen who have acquired their marketing capabilities through practice are often claimed to take advantage of farmers' and gatherers' ignorance of marketing. Farmers and gatherers are, indeed, in a weak position when they do not understand the commercial mechanisms that determine product characteristics, service requirements and prices. Their additional weakness derives from the lack of organisation. Individual gatherers are in a much weaker position in negotiating with middlemen than a cooperative. On the other hand, the lower level middlemen, with their largely experience-based knowledge and skills, are in a relatively weak position when dealing with industry-level buyers who have formal education in marketing and skills sharpened through experience. The intuitive skills of lower-level middlemen could be developed into full capabilities through appropriate training which provides them with the necessary knowledge base.

Government officials involved in the development of NWFP activities responsible for formulating and introducing policies and implementation measures in the sector could benefit from a sufficient recognition of marketing and an understanding of its basic elements. For instance, surveys of training needs in marketing of forest products in Indonesia (Ollikainen, 1991) and in the Philippines (Lintu, 1991) identified several ministries and their departments as well as various governmental and non-governmental agencies involved in marketing of forest products, including NWFPs, as potential target groups for marketing training.

According to the training needs surveys carried out under FAO's Forest Products Marketing Programme, there are only limited training opportunities specifically designed for forest products marketing offered in the forestry faculties of universities. Industry marketing specialists who have a basic training in marketing received it in colleges of business administration, without any specific training in forest products or the forestry sector. Some national training organisations (e.g. in the Philippines, the Institute of Small-Scale Industries, and the Philippine Trade Training Centre; in Indonesia, the Indonesian Export Training Centre) offer some training events of relevance to marketing of processed NWFPs.

Some initiatives by NGOs are contributing to training in forest products marketing. The recent Workshop on Marketing of Multipurpose Tree Products in Asia, organised by the Forestry/Fuelwood Research and Development (F/FRED) Project together with other NGOs and donor agencies and held in the Philippines, tackled issues directly relevant to the marketing of NWFPs.

Case studies, NWFP monographs and market profiles produced by FAO and ITC, among others, provide relevant training material for seminars and workshops on NWFP marketing. Additional training material is being produced by FAO in the form of manuals and guidelines specifically targeted to community-level forestry operators.

INSTITUTIONAL AND INFRASTRUCTURAL SUPPORT TO MARKETING

Institutional support to marketing is provided basically on two levels. At the highest level it comes in the form of government policy measures and regulations governing their implementation. In the case of NWFP marketing, the implementation of trade policies and forest policies in particular has the greatest impact. At the operational level, institutional support consists of the various cooperative arrangements among producers, standardization organisations, product and quality monitoring and control institutions, research institutes, extension and other human resource development services, banking and credit services, marketing information services, transport and communication networks, etc. Most institutional support is provided by the governmental or other public organisations and is therefore to a large extent beyond the control of individual operators in a single sector. There are, however, forms of institutional support for which operators in the sector can organise themselves, such as getting organised as groups, initiating training and forming joint marketing information systems.

NWFP activities usually fall under several ministries, such as national planning, agriculture and forestry, trade and industries, health and education. Coordination of work at the national level is a precondition for successful development of NWFP activities, including their marketing. However, adequate recognition of these products and their importance by the various policy making bodies is the primary condition for initiating such cooperation.

Many NWFPs are export commodities and therefore governed by foreign trade policy, which is a combination of:

At the national level, trade is further influenced by monetary, fiscal, production and price control and investment policies.

Many institutions are responsible for various foreign trade activities. Table 5 lists institutions which were identified in an ITC study as concerned with foreign trade (ITC, 1986).

Forest services and customs offices have a particular role in NWFP activities. Their limited capability for dealing with such a varied product category often poses problems, as illustrated by an example from Nepal in which the government charged different royalties for different medicinal herbs collected from the forests and where there were differences in export regulations depending on the products. Some herbs were banned for export altogether. Identification of products based on samples involved problems of incorrect names, which required significant amounts of knowledge and institutional support from research institutions for the officials to correctly identify the products traded (Malla et al., 1993).

As NWFPs are only one of many product categories over which forest and trade policies have an influence, in most instances no specific attention can be paid to them unless they turn out to be particularly important in that country. In India, the Ministry of Environment and Forests has initiated the concept of Tree Growers' Cooperatives in collaboration with National Dairy Development Board. The cooperative undertakes marketing of the produce of the farmers by entering the market for certain non-wood and other forest products to purchase the commodities at the current market price and selling them at the market price. The entry of the cooperative as a large buyer pushes up the market prices and thus helps the farmers to get better return for their efforts (Raintree and Francisco, 1994).

The national forest services are also involved in inventorying NWFP resources, regulating their harvesting and collecting royalties from the gatherers.

Universities, other training institutions and extension services provide institutional support through training of personnel for the marketing function. Government agencies and private industry organisations collect, analyze and disseminate information to support marketing efforts. These commendable national efforts should be brought together at the regional and international levels to make the information more readily available to other interested users.

Industries, private-sector research institutes and individual scientists have data and information which is useful for NWFP marketing. For example, health and safety information needed by manufacturers probably already exists but is not readily available. Similarly, industries know the standard chemical properties of each product they are dealing with. Identification of such sources of information and establishment of appropriate alliances to get an access to the information are therefore important.

At the operational level of marketing, banking and credit systems provide financing to support production and trade of NWFPs. Transportation and communication authorities provide services vital to efficient marketing. They all are important to a successful operation of the NWFP sector, especially if the sector and its importance are sufficiently known to them.

Cooperatives are vital in organising gatherers and small-processing industries and developing marketing structures jointly. In the agricultural sector there are already well-functioning cooperatives which may be interested in expanding their activities to cover NWFPs. In India, for example, there are many success stories of marketing agricultural produce through the cooperative sector.

Due to the great variety of NWFPs, some of which even compete with each other, sector-wide cooperation appears difficult to achieve. Due to the lack of common representation, for instance in the form of producers' associations which could serve as sector spokespeople, specific public support in many instances is not apparent.

In some sectors of NWFP trade there are national trade associations and even regional federations. For example, the European Scientific Cooperative for Phytotherapy (ESCOP) has been set up under the auspices of the European Union to advance the status of herbal medicine in Europe and assist with regulatory status. One of ESCOP's main goals is the publication of 200 plant species monographs that will detail the pharmacology and preparation of medicinal plants in a proposed standard format for application to the European Union for marketing authorization.

In the fragrance industry, the International Fragrance Association (IFRA) has been set up primarily to monitor the toxicological and other hazardous aspects of the various raw materials used in the perfumery trade. The Research Institute of Fragrance Materials (RIFM) assumes a similar role in the United States.

Table 5: Institutions concerned with foreign trade and their functions *
 
 
 
 
 
CM +PO FTC CB MF MT MFA TPO SI BS TS
Functions related to foreign trade
Policy recommendations:                       
on exports
  (x)  (x)  (x)   
on imports
  (x)  (x)  (x)     x 
Policy-making:                       
on exports 
 x x  (x)      
on imports 
 x x  (x)      
Policy implementation:
                     
Control functions:                      
 on exports
      (x)     (x)     
on imports 
      (x)     (x)     
 
Export promotion:                       
Domestic promotion activities         x   (x)  x  x  
Advisory services to exporters            x   (x) (x)  x x
Commercial representation 
abroad 
            x (x)      
Trade fairs and missions           x x (x)  x    
Incentives:                       
establishment  x x (x)  x x   x      
granting     (x) (x)      x        
Export credit      x       x   (x)    
Export credit insurance      x x x   x (x)      
New export development  x x x       (x)   (x) x  
Training             x (x)   x  
 
Functions related to investment                       
Policy recommendations  (x)  (x)    (x)       
Policy formulation  (x)  x   x
Control functions  (x)    x x (x)  (x)   
Studies and profiles  (x)      (x) (x) 
Promotion x x   (x)

CM Council of ministers and/or monetary council;
PO Planning organisation: board or ministry;
FTC Foreign trade council or equivalent;
CB Central bank;
MF Ministry of finance;
MT Ministry of trade, commerce or development (divisions other than TPO);
MFA Ministry of foreign affairs;
TPO Trade promotion organisation;
SI Specialized institution, such as foreign trade institute, export credit insurance company, packaging institute, standards institute, etc.;
BS Banking financial system;
TS Trade sector
* x's in brackets indicate the institutions which seem best suited to perform the task concerned.
Source: ITC, 1986.

Significant support to the NWFP sector is coming from large and small NGOs. Their main concern is the resource conservation, environment and survival and well-being of local communities through NWFP activities, among others. Some of these NGOs have marketing well recognized in their programmes.

There are international and national organisations active especially in the areas of product classification, standardization and quality control. For example, the International Standardization Organization (ISO) and many national standardization organisations have established standard specifications and testing conditions for various NWFPs.

The World Health Organization (WHO) has been charged to develop international standards and specifications of identity, purity and strength for the most widely used medicinal plants and their galenical preparations. WHO has also produced Guidelines for the assessment of herbal medicines.

The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) provides an international instrument for listing species of plants and animals whose numbers are considered to be endangered to the extent that commercial trade must either be monitored and controlled or prohibited. Only very few medicinal plants are included in CITES lists.

The International Union of Nature Conservation (IUCN) and World Wide Fund for Nature (WWF) are working in the area of resource conservation and sustainable utilization.

FAO, UNIDO and ITC have NWFPs as part of their programmes which deal with their resource, processing and marketing aspects. FAO also provides specifications for food, flavouring and colouring agents and other food additives, through its various statutory bodies, international conferences, Codex Alimentarius and related guidelines and manuals which are disseminated as FAO Food and Nutrition Papers.

The work of various public and private organisations and institutions undoubtedly contributes to the common goal of increasing the awareness of the opportunities offered by NWFPs in sustainable utilization of forest resources and improving the related policy environment, information base, and technologies for resource management, processing and marketing. Many of the activities are still, however, overlapping and parallel. Appropriate mechanisms to increase cooperation and coordination would be helpful in increasing efficiency in the subject matter area.

CONCLUSIONS

The major issues which emerge from the discussion in this paper lead to the following conclusions related to the further development of NWFP marketing:

RECOMMENDATIONS

From these conclusions come the following recommendations for action to make the marketing of NWFPs more efficient:

REFERENCES

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1/. Senior Forestry Officer (Marketing), Forest Products Division, FAO, Rome.

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