In this paper we have tried to explore the trade and marketing prospects of timber in community forestry in Nepal by reviewing various published journals as well as policies Nepal.

1. TRADE AND MARKETING PROSPECTS OF
TIMBER IN COMMUNITY FORESTRY.
(A Term Paper on SFM702 Community
Forestry and Governance.)
Group Members
Madhuri Khadka* (Roll. No. 47)
(khadkamadhuri48@gmail.com )
Manju KC (Roll. No. 48)
Sabita Thapa (Roll. No. 38)
Shambhu Kumar Mishra (Roll. No. 46)

2. PRESENTATION OUTLINE
INTRODUCTION
OBJECTIVES
METHODOLOGY
DISCUSSIONS
CONCLUSIONS

3. INTRODUCTION
 Community Forestry-a system where the symbiotic relationship
of people with the forest makes them managers and saviors of
the forest helping sustain this relationship with or without
direct commercial benefits (Rath, 2010).
 The original focus of CF was to develop forests to supply forest
products to the community members to fulfill basic needs
during the 1970s and 1980s (Gilmour and Fisher 1991 cited in
Paudel et al. 2010).
 In recent years, there has been a shift towards
commercialization of forest products to generate increased
financial benefits (Paudel et al. 2010).
 At present, a number of CFUGs stepped into monetized sector
of economy in addition to fulfilling the basic needs of users
(Jha, 2008).

4. Contd…
 CFUGs generate income from various sources among
which timber is the major one. Overall timber occupies
the major share by contributing over two thirds to the
CFUG income (Pokhrel, 2010).
 Timber and fuel wood are main product for in country
consumption whereas NTFPs, basically products with
medicinal and aromatic value, have been used both within
the country and for export (Dhugana and Bhattrai, 2008).
 Despite of the fact that Nepal has abundant forest
resources to meet the demand of the country as well as
potential to trade timber, it still imports timber.
 Community forestry-being most successful forest
management regimes has enormous potential to trade
timber.

5. OBJECTIVES
To study the timber trade procedure and
practices in Community Forest.
To explore the prospects and issues of timber
trade and marketing in Community Forest.

6. METHODOLOGY
Data Collection
Secondary – information collected via
different researches, newsletter, articles,
books, journals, publications, websites etc.

7. DISCUSSIONS
1. PROCEDURE OF TIMBER TRADE IN CF (Gritten et
al. 2013)
 Before cutting down the trees the user’s
committee should forward a request letter to
district forest offices.
 After getting approval, trees at all will be
harvested need to be marked at a certain point
from the bottom of the trees. This would enable
the forest agency to check the number of the
harvestable trees.

8. Contd…
 After harvesting, in case any forest product is available in
accordance with the Work Plan it should be consumed by the
user group itself, the user group need to prepare the receipt
in triplicate and hand over one copy to the buyer and other
copy to the Concerned Area Forest Offices, and remaining
copy by itself.
In case, if the users’ group want to sell the surplus forest
product harvested within the limit of the approved work plan,
user’s committee should acquire prior approval from the
District Forest Offices.
After getting formal approval, user’s committee need to
announced wood bidding in details at daily newspaper.
The collected sealed bidding forms need to be open in the
presence of bidders or contractors, representatives from
District Forest Offices and users’ committee member.

9. Contd…
 The committee shall issue timber collection permit to the highest
bidder,
 The contractor should deposit royalties and other legal charges to
the District Forest Offices before collecting timber from
community forest,
 The users’ committee shall have to maintain accurate records of
forest products sold from their forest as well as the account of
their income and expenditures.
 The users’ committee shall prepare an iron stamp for the purpose
of transporting the timber from community forest and submit an
application to the District forest Offices for its registration.
 For the purpose of transporting the timber outside the FUG,
users’ committee need to mark the timber with the stamp issued
by the District Forest Offices and issue a release permit,
 Then the contractor is allowed to transport permitted timber only
after informing the concerned Forest Offices in advance and
having the matter endorsed by check post located en route.

10. Contd….
2. PRACTICES OF TIMBER TRADE FROM COMMUNITY FOREST
• VALUE CHAIN MAP OF TIMBER TRADE FROM CF
A value chain map presents different supply channels that transform
raw materials into finished products and then distribute those
products to final consumers; and the different markets or market
segments to which products are sold.
Resource Production System/Harvesting (Wagle, 2012).
 In community forest production is restricted by community forest
inventory guideline.
 Annual Allowable Cut is restricted to 40-70% of annual increment
of forest.
 Annual increment is fixed at 1-3% of total growing stock of forest.
 Priority of felling is given to fallen, dead, dying, diseased,
decaying, and malformed and so on.
 In many cases annual allowable cut is fulfilled by collecting fallen
trees only.

11. Contd...
1. Actors involved and their function (MSFP, 2013).
a. Community Forest User Groups
In CF, CFUGs sale within user group and do
auction if there are surplus timber.
There is no any policy or system of timber pricing.
The people who participate in auction and bid
highest money get the timber.
They generally sell to the saw mill or sale to the
market after sawing it as sawn timber (Wagle,
2012).

12. Contd…
b. Saw mills
Wood of varying quality is collected from the
CFs.
Saw mills then process these logs into timber
of different sizes, and sell the timber to
furniture industries.
The price of timber is determined by the type
of timber with Sal, Wild Sissoo and Satisal
being the most valuable.

13. Contd…
c. Log Traders
 In some cases, log traders purchase logs via auction mostly
from CFs and sell to saw mills.
 Anyone who is PAN and VAT registered as dealer in forest
based products can be a log trader.
d. Furniture industries
 4 categorizes
1. Industries that focus their products for rural
communities/villagers.
2. Industries that focus their products for commercial
customers such as offices, banks and restaurant's.
3. Urban Industries
4. Onsite Manufacturers

14. Contd….
2. Consumers
 The purchasing capacity of consumers and availability
of furniture in their proximity determines the type of
furniture used.
 Consumers in rural communities mostly demand door
and window frames and simple beds.
 Consumers on the high- ways, and near headquarters
demand frames, cupboards, kitchen cupboards, beds
etc.
 Urban dwellers demand all types of products offered.
 Offices and corporate houses mostly demand tables,
chairs, and designer products.

15. Contd…
3. Input suppliers
Input suppliers supply the accessories needed
to manufacture furniture.
These include: paint stores, hardware shops
(nails, screws, teak, dendrites, glues, ply
wood, sun-mica), machinery suppliers etc.
They are again organized in their respective
commodity associations and work closely with
actors in the furniture value chain.

16. Contd…
4. Enablers (MSFP, 2013)
 IRO issues PAN and VAT number, collects revenue and VAT amount
and is responsible for checking and verifying accounting matters
and malpractices like under billing.
 DFO is involved in policy implementation, registration of forest-
based products and approving the operational plan of CFUGs.
 MoCS and MoFSC prepare and promulgate the policy, rules,
regulations and circulars.
 TCN is a semi-autonomous government body that is authorize to
sell timber throughout Nepal, in co-ordination with DFO.
 CIAA regulates the harvesting, sale and auction of timber by
publishing circulars.
 FENFIT is the umbrella organization of forest based industries.

17. Contd...
PROSPECTS OF TIMBER TRADE FROM CF
1. Policy Framework
Constitution 2015 (GoN, 2015)
 Interprovincial Trade: No obstruction of any kind or levying of taxes
or discrimination shall be made in the export and import of goods
or services from one province or local level and in the
transportation of any goods or services through the territory of any
province or local level to another province or local level of Nepal
(Part 20-236).
Budget of Fiscal Year 2016/17 (GoN, 2016)
 Scientific forest management program will be expanded from 6
districts to 11 districts that will help to increase production of
timber and substitutes of its import.
 Forest based industries will be treated as special industries with
respect to income tax exemption.

18. Contd…
2. Nepal’s Accession to WTO
 WTO has substantial impact on the economic and
marketing aspects of the forestry sector in Nepal.
 China is interested in buying Sal (Shorea robusta) and
Sissoo (Dalbergia sissoo) logs for much higher prices than
the government royalties. Similarly, Japan is interested in
buying (Pinus roxburghii) logs.(Dhungana and Bhattrai,
2008).
 Wood is one of the items with largest proportion of cuts in
import weighted tariffs as per WTO so that exporting
countries of these products can reap benefits.
 Nepal will have comparative advantage in exporting these
logs

19. Contd...
3. Initiatives likely to foster forest products trade and
marketing in CF
a. Forest Certification
 Ensures sustainable forest management- increase the
supply of forest products.
 creates opportunities for exporting forest-based
products to the international market where demands
for products from certified forests are increasing.
 Currently in pilot phase-implemented only in 35 CFUGs
of Dolakha and Bajhang.
 If introduced in different other CFUGs-likely to enhance
the international trade and marketing of forest
products.

20. Contd...
2. Scientific Forest Management
 New concept-currently have started taking pace.
 It is believed even if 50 percent of the different forest
types of Nepal can implement scientific forest
management then a country can benefit around 15
million annually (GoN, 2014).
 Experts and technicians have calculated that if the
scientific forest management program model is applied
and timber extracted without hampering environment,
around 120 to 150 million cubic feet timber can be
produced in Nepal itself (GoN, 2014).
 After fulfilling the timber demands of CFUGs, surplus
timber produced can be traded.

21. Contd…
3. Marketing Information System
 A Marketing Information System can be defined as a set structure
of procedures and methods for the regular, planned collection,
analysis and presentation of information for use in making
marketing decisions (Kotler et al, 2006).
 An MIS can provide all the necessary information on the required
demands and supply of the forest products, markets for the
products, price, distribution channels, etc which will facilitate the
trade and marketing of the forest products.
 New concept-only single MIS developed by ANSAB 2010 in
operation.
 If can be developed further, the community forest users can easily
sell the different forest products like surplus timber, fuel wood and
NTFPs.

22. Contd….
Issues of Timber Trade in Community Forestry
 The formal procedure of timber trade does not allow
any misappropriation, both within community and the
Forest Administration. However, in practice timber
trade in community forestry is not transparent and
controlled by nexus of committee elites, Forest
Administration, contractors, political leaders, local
administration, police, media and local goons.
 The wood contractors reportedly enjoyed political and
administrative support, so field staff and villages could
not do a lot to stop them.
Source: Devkota, 2010.

23. Contd…
 There are cases that mainly in context of resource rich
status of CFs, where local wood contractors initiate the
forest registration process in collusion with local political
elites and foresters, tree felling is carried out immediately
after the forest is handed over.
 There are evidences that the government officials and
influenced members of FUGs are making millions by
selling the timber at a much reduced price than
determined by the government to timber traders.
 In order to make illegal trade wood contractors, foresters
and users committees also pay commissions to the local
journalists, political activists and individual who are
helping to cover up the scam.
Source: Devkota, 2010.

24. CONCLUSION
 CF in Nepal from the days of its initiation had been protection
oriented and its production/commercial aspects had been
sidelined. But the scenario is slowly changing.
Commercialization is gaining pace in our community forestry.
 CFUGs generate income from various sources among which
timber is the major one. Overall timber occupies the major
share by contributing over two thirds to the CFUG income.
 Policies have begun to be more focused and favorable
towards trade and marketing of timber.
 Initiation of different scientific concepts in community
forestry like certification, scientific forest management etc
have further enhanced timber marketing and trade from
community forest.
 Politics is a major issue of timber trade in community forestry.