04.07.2017 · Category: Bio-Energy Project Nepal

In Remote Forest Areas, Poor Villagers Turn into ‘Green Entrepreneurs’

Poor villagers from remote forest areas in Nepal are becoming entrepreneurs producing charcoal.


Bishal Kharel wakes up every morning at 4am and walks for two hours across unpaved tracks and forest paths to reach his school. The 17-year-old student of management lives in the village development committee (VDC) of Sanobangthali in Nepal's Kavre district, nestled among valleys and forests at an elevation of more than 2 200 meters.

Living conditions in the area are precarious, with livelihood options typically confined to subsistence agriculture or wage labour. The education level is low, often hardly beyond basic literacy. The most daring would try their luck at moving abroad or to Kathmandu, some four hours' drive away, in search for better jobs despite higher living costs in the capital.

Earthquake-inflicted damages are still visibile outside the house of one of the forest dwellers who has recently turned to charcoal production.


For the residents of Sanobangthali, life took a further turn for the worse in 2015, when one of the strongest earthquakes in Nepal's modern history hit the area. In addition to a heavy human toll, the natural disaster left its mark on the built environment. Houses, roads and shelters were damaged and destroyed.
Two years after the tragic event, reconstruction still remains a priority in these locations.

YOUTH ENTREPRENEURSHIP

17-year-old Bishal walks towards his kiln, carrying a notebook where he records his monthly production.


Since this earthquake, Bishal and his family have been living in a temporary shelter. This is where he heads back to when his morning classes are over, after another two-hour walk. Next to his family's hut a kiln stands in place, loaded with weeds to be charred.

For a few decades, the 378 hectares of local community forest - the Saagaswoti Deupokhari Laure Community Forestry User Group - have suffered from the spread of invasive species of South American origin that jeopardise reforestation and are a potential source of fire hazards. Several attempts at keeping the forest clean turned out in time-consuming, labour-intensive and costly experiments that ultimately failed to solve the recurrent problem.

Foreign species have been infesting Nepal's forests, causing fire hazards and threatening biodiversity.


That of Bishal is one of the 15 charcoal making kilns that dot the village of 481 households. Through the initiative of the EU-funded SWITCH-Asia project Bio-Energy, led by HELVETAS Swiss Intercooperation, 16 districts in Nepal have now taken to collect the invasive species in the forests to transform them into charcoal. Via a dedicated training and market chain supported by 'Bio-Energy', villagers with vulnerable livelihoods are now producing and selling charcoal to retailers and processers, who produce briquettes, pellets and incense sticks out of it. Replacing firewood, charcoal briquettes and pellets made of weeds help protecting the forests from illegal logging. As a source of energy, they produce less indoor air pollution while being more efficient.

Bishal works at his kiln every afternoon. He loads it with weeds collected in the neighbouring forests, turns their biomass into charcoal and packs it into sacks. The student started this part-time, income-generating activity nine months ago. He tells us that on average every month he produces up to 100 sacks of about 15 kg of charcoal. He sells each sack at NRP 150 (EUR 1,27), thus earning as much as NRP 15,000 (EUR 127) per month.

For him, the youngest of six siblings, it comes to a meaningful source of income in a family that used to live on subsistence agriculture and a few farm animals.

INVESTING IN A PROMISING FUTURE

Kashi Kharel sits with his wife in their kitchen. Their house stands next to the charcoal collection point he opened in 2016.


Bishal first learned about the charcoal opportunity from his peer, the son of Kashi Kharel. After his friend explained him how to run a charcoal-making kiln, Bishal did not hesitate to try it. With the stable income he is now earning, he is grateful to his friend and rejoices over his decision.

Kashi Kharel used to be a taxi driver in Kathmandu. He was able to earn NPR 500 (EUR 4, 24) per day but living costs in the capital were much higher, he recalls. One year ago he returned to his native Sanobangthali and there he set up the first charcoal collection point, with a storage capacity of up to 500 sacks. Depending on the season and rate of production, he arranges two to three collections per month.

Kashi Kharel's collection point can store up to 500 sacks of charcoal.


On average, he collects 1 800 sacks per month, which he purchases at NPR 150 and sells at NPR 275 (EUR 2,33) per sack. Once the costs of transportation, royalty, tax and storage deducted, he can count on a monthly profit of about NPR 59,000 (EUR 500,6).

As the market supply remains significant and demand stable, he is now trying to secure an investment of NPR 120 000 (ca. EUR 1 018) for machinery that turns charcoal into powder, so to further cut transportation costs. If grounded and hence less bulky, charcoal could be transported at one third of the current costs, he explains.

UNTAPPED MARKET DEMAND

After grinding, the collected charcoal is processed into briquettes used by restaurants and barbeques (left) and domestic cook stoves (right).


"The demand for charcoal briquettes and pellets is not a problem", reiterates Rajan Parajuli, the Executive Director of Organic World Pvt. Ltd. With two other investors, in 2015 he set up the company that transforms the charcoal, collected from four collection points in Sanobangthali, Laure, Sipapokhare and Khopasi, into briquettes and pellets. The SME caters to restaurants and hotels in the Kathmandu valley.

As he waits for his new pellet machine to arrive, he is busy setting up infrastructure for his processing unit, including an improved grinding machine. According to the company's latest five year business plan, their annual production capacity is expected to raise to 1000 metric tonnes per year. The company plans to increase its manpower up to 18 staff, including three factory workers for grinding and production, two workers in charge of the drying process, one marketing officer and several local resource persons contracted on a daily basis.

Mr Parajuli is excited to announce that the Hotel Association Nepal has already committed to buy all their production.

AN EFFECTIVE SUPPLY CHAIN

'Organic World' is one of the four SMEs so far mobilised by Bio-Energy to process and distribute charcoal.


It is through small companies such as Organic World that 'Bio-Energy' has reached out to hundreds of villagers across Nepal since the project has started in January 2014.

The private sector organises demonstration activities to raise awareness about the charcoal production business as well as to train those interested into setting up their own unit. Up to March 2017, 1 274 villagers have been trained by 'Bio-Energy' through its four counterparts from the private sector. They purchase back the charcoal produced by the villagers-turned-entrepreneurs and process it further. The market access and payback guarantee they provide are life-changing for communities located in remote and isolated communities such as Sanobangthali.

The approach developed by 'Bio-Energy' and its partners from the private sector enables even the poorest villagers to start a charcoal-producing business.


The project's approach of actively integrating the private sector ensures a direct, regular and trustworthy interface between current and prospective producers and their buyers. Additionally, the private sector is readily available to assist villagers in establishing their business, purchasing the kilns and operating them.

With the cost of a charcoal-making kiln ranging between EUR 100 and EUR 300, a support scheme based on re-payments through the proceeds from the sales of charcoal has also been designed to support those villagers who are interested in venturing into the charcoal business but do not possess the necessary start-up capital. The private sector provides entrepreneurs-to-be with the equipment and regularly deducts its cost from their monthly purchases of charcoal. In this way no advance payment is required to launch a charcoal production unit, and even the poorest can give it a chance.

FROM FARMERS TO ENTREPRENEURS

Together with his two brothers, Resham Parajuli is now making a living by producing charcoal.

46-year-old Resham Parajuli is one of the poor villagers in Sanobangthali VDC who became an entrepreneur producing charcoal after getting to know Organic World.
Until less than a year ago, he worked as a construction worker in Kathmandu. He moved back to his village and together with his two brothers invested on a charcoal-making kiln. Charcoal production is now their main business: they segregate the thick branches and twigs and produce every month 200 sacks of charcoal from twigs and 50 from thick branches. The former earn them NRP 30 000 (EUR 254,5), the latter NPR 10 000 (EUR 84,86).

Mr Parajuli, who is illiterate, has five children and is determined to provide them with education. Their new business secures him a regular, good income and does not force him to migrate for work. In addition, he says, they help keep the forests clean, which in turn keeps away dangerous animals such as leopards and boars that are damaging crops and harvests.

His brothers and he now practice only subsistence agriculture and for a few months during the year. Like him, more and more traditional farmers are turning to the green business of charcoal production to substantially complement the meager income generated by agriculture.

For villagers such as Gopal Khadka, pictured, charcoal production provides for a more secure and stable income than traditional subsistence agriculture.


Gopal Khadka is one of them. The 34-year-old father of two used to work as a farmer on his land and grow crops on other people's land until a year ago. Despite owning two hectares, his was merely subsistence agriculture that did not leave him with any extra savings. With the support of family members, he invested NRP 25 000 (EUR 212) to purchase a charcoal-making kiln. He is now working in the charcoal business together with his wife, producing 200 sacks of month, which earn the family NRP 30 000 (EUR 254,5) every month. As his new business is thriving, he is planning to stop working the land.

A BRIGHT HORIZON AHEAD

With the market demand for charcoal briquettes and pellets still unmet, the potential for increasing production and hence enhancing the life of more poor people is still vast.


In March 2017 the restaurant "Thakali Bhanchha and Sekuwa Corner" in Kathmandu started using the charcoal from the Bio-Energy supply chain. About a month later, the restaurant's manager praised the 'new charcoal' for being more durable and cheaper than what they used in the past, estimating savings in the range of 20-25%.

With its popular grilled and barbeque menu, Thakali Bhanchha uses some 350 kilos of charcoal per day across its 16 outlets in Kathmandu.

The market demand for 'Bio-Energy charcoal' remains abundant. By continuing to invest on optimising production and distribution capacities, bright prospects of improved livelihoods, employment generation and SME development are in sight for poor villagers and businesspeople in Nepal.

Text and photography by: Silvia Sartori (SWITCH-Asia Network Facility)
Edited by: Bio-Energy Project, Uwe Weber (SWITCH-Asia Network Facility)