Non-timber forest products marketing: field testing of the marketing information system methodology

Abwoli Y. Banana
Department of Forestry
Makerere University
P.O. Box 7062
Kampala, Uganda

Abstract

Despite their overall economic importance, studies have shown that the proportion of the final sale price of non-timber forest products (NTFP) received by the local level producers or processors is extremely small. The main reason for the low profitability of NTFP enterprises is the lack of an organized information system to help individual producers organize production and distribution, determine appropriate prices, select markets, follow supply and demand or promote merchandise.

An evaluation of the two marketing information system (MIS) field test sites in Uganda of the Forests, Trees and People Programme revealed that MIS had a significant positive impact on the two communities. The information on product sales was used in both communities to adjust production and stocking levels and product lines and, in the process, increase the profitability of their enterprises. MIS was also used to change product mix and to target different market niches.

The impact of MIS seems to have been greater in the community (Masaka) that participated the most in the design of the system. They had the greater appreciation of the potential value of MIS.

Introduction

Non-timber forest products (NTFPs) have received increasing attention and are making significant contributions to local economies. In India, for example, the NTFP sector provides over 30 million jobs (Koppell 19 93). The continued importance of NTFPs as a source of income and employment for the people at the grassroots has led many people to initiate or increase production and to harvest NTFPs for various markets.

Despite their overall economic importance, studies on NTFPs have shown that the proportion of the final sale price that the small-scale collector, producer or processor gets is extremely small and therefore, that profitability is low. The main reason why NTFP enterprises are not more profitable is the lack of an organized information system to help individual producers organize production and distribution, determine appropriate prices, select markets, follow supply and demand or promote merchandise. Even when there is market information, it is frequently not disseminated to local small-scale producers.

In 1992, the Forests, Trees and People Programme (FTPP) developed guidelines for the creation of local-level marketing information systems (MIS) for NTFPs. The objective of developing MIS was to assist producers increase the income they derive from their small-scale NTFP enterprises, while at the same time learning about marketing, the production chain, simple accounting and new production processes. This knowledge should also increase the leverage and market power of the local producers and sellers.

Development of a methodology for the local design and operation of MIS was initiated in 1992 in the Philippines (3 sites), and tested in the Solomon Islands (2 sites), Bangladesh (1 site), Uganda (2 sites) and Peru (1 site) in 1993.

The range of participants, the kind of information they collected and the type of products for which they collected information varied widely. In the Philippines, Bangladesh and the Solomon Islands, farmers and swidden cultivators focused on marketing information about cultivated and gathered agricultural and forestry products, including tree leaves, fruits, nuts and lianas. In contrast, in Uganda, participants were groups of small traders and producers of baskets, mats, chairs, stools and bags derived from NTFPs. The MIS was structured to collect and analyse information on sales from the stalls and determine consumer preferences.

Definitions

Markets are potential outlets for products. They include places and institutions where people are interested in selling or purchasing a given product or service.

Marketing encompasses all the activities involved in determining and meeting the needs and interests of customers, to maximize profits. Marketing involves `finding out what the customer wants and helping to set up the production/marketing system which supplies that demand and maximizes income' (Dixie 1989).

Marketing information includes all the data that help those involved in production and selling to determine and meet the needs and interests of the consumer.

Marketing information system (MIS) is an organized procedure for gathering and analysing information. It involves collecting, analysing and distributing predetermined types of marketing information (table 1) for informed decision-making and increased bargaining power.

Non-timber forest products (NTFP) include all tangible products, natural, crafted or processed, derived from forests or any other land under similar use, other than timber (Chandrasekharan 1995).

Table 1. Content of a marketing information system

Steps taken in creating local-level MIS for Uganda

Selection of sites in Uganda

The following factors were used to determine whether a given site was suitable for the establishment of MIS:

· Expression of local needs and interest in using marketing information: local interest is necessary to ensure the collection of reliable data and its sustained utilization in an MIS.

· A level of production above the subsistence level: where families and individuals produce solely to meet their own needs, there is no relevant market about which to gather information.

· Producers of NTFP have physical access to data and information: if the source of information is far away, travel costs could prevent its collection.

· A high level of `community' spirit: to establish a cooperative, locally run and managed information system, local people must work together.

Using the above criteria, two participating communities were selected, one in Mukono town, 10 km east of Kampala (Mukono handicraft seller), and one in Masaka, 80 km west of Kampala (Bamuna supermarket).

Getting baseline information

One of the two participating communities (Masaka) proceeded through the entire design process before starting to collect data. Using participatory rural appraisal (PRA) methods, it made each design decision as a group. Using the checklist presented in table 2, it obtained baseline information about the goods that are produced in the area, production levels, use and sales of various NTFP.

Table 2. Forest and tree products questions about the NTFPs to be covered by the MIS

Designing the system

Having gathered the relevant information, the community proceeded to design the MIS. Each design decision was discussed by the community to ensure that all the relevant considerations were thought about.

The primary design decisions made during the PRA exercises addressed the following points:

· what are the goals and objectives of the MIS?

· who would benefit from the information (the target user group(s))?

· what types of data should be gathered?

· what are the sources of information?

· who should analyse the information and how?

· how should the information gathered be communicated?

· what are the training needs of the community?

Implementing the system

Once the design process was completed, implementation of the MIS commenced. Adaptations to the design were made during the process of implementation. The implementation stage consisted of, organizing collection and analysis of information, establishing the monitoring and evaluation structure and instituting the training programme.

The importance of local participation in the design process

Active participation of users in the design, operation and evaluation of the MIS is crucial to the success of the system. This is because the overall goal of any MIS is to serve the needs and interests of the target (user groups). Involving local people in the design process ensures that the information gathered and that the approach taken to data collection are appropriate given local circumstances. It also increases local ownership of the MIS and commitment to its sustained operation.

To test these assumptions, the second participating community (Mukono group) did not go through the whole design process. The group met with the local field test facilitator twice, was given predesigned forms and was taught how to collect marketing information. This community used the information collection forms designed by the Masaka group (table 3). Training in analysis and use of the information took place once data collection had started.

Table 3. Bamuna supermarket data collections sheet

Findings of the study

Using MIS, producers and sellers of non-timber forest products were able to determine which products sell best, and hence which products to offer for sale in future (introducing new products and eliminating others). The information also indicates the product quality and quantity that are most in demand by the customers (table 4, for example from Bamuna).

Table 4. Bamuna supermarket -NTFPs sold during August 199?; Overall sales of different products

At the end of every month, the numbers of items of each type sold were analysed and discussed by the participating stalls and producers. The results showed that there was a high demand for baskets, followed by trays and mats. It was advisable, therefore, to invest more in baskets than in mats. In the basket sales, small baskets were preferred. A total of 76 small baskets were sold in one month compared with 41 large baskets sold in the same period. However, the demand for large trays was higher than that for small ones. Colour also influenced customer choice. Tourists preferred brightly coloured baskets and trays while local people preferred plain ones. Tourists were the main purchasers of all the handicraft items sold. The handicraft producers should therefore target the tourists specifically.

Impact of MIS on participating communities

An evaluation six months after implementing MIS found that it had had a significant impact on business practices and marketing in both sites. Additionally, the MIS had improved the general confidence of participating groups and their willingness to collaborate on other projects.

A secondary objective of the project was to determine if the level of community participation in the design of the MIS had had an impact on its effectiveness. The MIS was designed according to the community choices in Masaka while in Mukono the facilitator designed the information collection system without community involvement but based on the Masaka information.

Masaka site

At Masaka, the introduction of the MIS led to significant changes in business practices. The impacts of the MIS are arranged of their importance to participants:

· Improved ability to respond to consumer interests

Participants cited this as the most beneficial effect of the MIS. Increased market transparency has increased their knowledge of the products and product attributes customers desire.

Using MIS information, Masaka participants changed the range of products offered, introducing some products, eliminating others, the specifications of those products, the items requested from producers, and the level of quality demanded from production.

Participants noted that the most important change in approach to business was that the seller now asked customers what other products, colours, shapes and sizes they would like to have available. In Masaka, participants wanted to have more information on how products are used once they are purchased so that they could change specifications according to the end use. For example, the raw materials used could be adapted to meet specific uses.

· Increased ability to target market segments

Through the information collected, Masaka traders tried to target their market more specifically. For example, the colour preferences of tourists could be matched to the market and reorient and so influence production accordingly.

· Ability to work together

Participants found that discussing the marketing information together gave them the opportunity to discuss business, so that a movement towards collaboration in purchasing and ordering was developed.

· Price-setting ability

Masaka used analyses of sales to improve price setting in response to levels of demand.

Mukono site

At Mukono the MIS, once again, had an impact on business practices, but the order of importance of the factors affecting impact was slightly different from that at Masaka. According to participants, the following are the most important changes:

· Improved ability to respond to customer interests

Mukono participants also felt that the MIS was most helpful for deciding what to stock and produce. However, they did not use the information to expand or change their product lines, although they did use it to place orders and buy new materials. Mukono participants did not, however, follow who was purchasing the different items. Their ability to target specific markets was therefore more limited than that of Masaka.

· Ability to set prices

Like at Masaka, the people of Mukono used sales information to determine prices.

· Ability to work together

The Mukono participants formed a traders' organization, following the initiation of the MIS. Although this group was more resistant to working together, their organization did move towards greater collaboration and, for example, purchased some raw materials in bulk.

· Decreased cost of production

Participants felt that a side effect of the MIS, through bulk purchasing of raw materials, was a decrease in the costs of production.

From these limited results it can probably be concluded that the group that had been involved in the design of the MIS had the greater feeling of ownership of the project and thus gained the most.

Programme shortcomings

The programme was generally a success; however, some significant shortcomings were identified:

· Limited community inclination to independently expand and adapt the system to changing needs

The facilitator was the driving force behind the evolution of the MIS. Although communities are able to collect and use marketing information, they seem either unwilling or unable to make adjustments to the system on their own. Some attention therefore needs to be devoted to ways to construct the MIS to encourage greater self-help. Perhaps with time and increased self-confidence, community willingness and ability to adapt the MIS will grow.

· Limited capacity to sustain MIS without external support

The communities would like to continue to operate MIS; however, without continued support and facilitation, it seems this may not happen. It is therefore important to consider how to make marketing information systems more sustainable. Both communities are very interested in continuing to work with FAO and Makerere University to develop their marketing potential and business operations.

References

Chandrasekhran. 1995. Terminology, definition and classification of forest products other than wood. In: Report of International Expert Consultation on Non-Wood Forest Products, Yogyakarta, Indonesia. FAO Non-Wood Forest Products 3:345-380.

Dixie G. 1989. Horticultural marketing: a resource and training manual for extension officers. FAO Agricultural Services Bulletin no. 76. FAO, Rome, Italy.

Koppell C. 1993. Establishing marketing information system field test sites in the Philippines and the Solomon Islands, June 1993 (trip report). FAO, Rome.

Plate 25. Handicrafts from non-timber forest product raw materials, at Mukono,
10 km along Kampala-Jinja road, Uganda. (photo: A.Y. Banana)