Village herbal medicines for healthcare & poverty alleviation

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Village herbal medicines for healthcare & poverty alleviation

India
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

CCD promoted a herbal medicine company named Gram Moolige Co. Ltd. (GMCL i.e. village herbs) with shareholding by rural women gatherer groups alone. These are landless laborer & gather herbs in dry season when farming ceases. Its now profitably sells raw drugs by avoiding middlemen & also manufacturing-selling herbal medicines.

About Project

Solution: What is the proposed solution? Please be specific!

GMCL is unique by making poor producers own it as shareholders in groups. There are groups of often women producers from landless families with no other assets. They gather herbs from wastelands & fallow farms in the dry, non-farming season. They sold it to local traders before who sold it to pharmaceutical companies & conceded profit. Women get paid poorly & cheated. They also lose on transport & wages for day of the marketing. Collectivization of their produce & its transport by tempo from the women’s door steps saved their drudgery. The tempo is owned by the women’s collective enterprise branded ‘village herbs’. It gave weigh scales to all groups & rented store cause in each village so women can stock the herbs & weigh correctly village herb. It offers constant pre-declared price across the season & avoids cheating. It also creates competition for other fodders to offer fair price & practices. These fair trade practices them selves raised gatherer’s income by 10-15% by availing losses, cheating etc. Another 10-15% was saved on taking loan from moneylenders on high interest (5-10% monthly). For, now they could get credit, from saving groups associated with CCD or bank loan to them, at just 1-2% interest monthly. This was needed for buying food, medical costs or any family functions etc. Village herbs then innovated & standardized 8 primary healthcare medicine in OTC (Over the counter) format & started its manufacturing & marketing by setting up a local factory.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

The village herbs community enterprise has been able to provide secured livelihoods for 1800 poor landless women gatherers for the last 5-6 years, who earlier earned below $ 1 daily. Initial 3-4 years were difficult & only it 3rd of the beneficiaries could be reached due to lack of capital & cash flow problems. The women earn better today, got food security & better health & productivity. Their assets increased with some household gadgets like fan or radio. Women got bank account, savings & cheap credit. Few even got group/family insurance benefit for occupational hazards/healthcare accidents. Their awareness grew as they moved for review meetings & exposure tours by & for the company. They spend more on children’s education. They have better social status & dignity. Few women even fought or even local governance council elections. Local banks were impressed with the financial performance & started lending for short term to the village herbs for routine business working capital after a Grameen Foundation (GF-USA) loan to CCD for disaster resilience in women entrepreneurs. much of the loan & now repaid & financial viability rations look sound. CCD trained about 10,000 (ten thousand) rural poor families to grow & use 10 species of herbs kitchen gardens on wastewater. This cut about 50% of their healthcare budget. The positive health impact & budget savings was found by as World Health Organization (WHO) consultant Dr. Lakshmi Rahamtullah. Other 3 companies (energy, food, fiber) provided similar benefits to other poor producers (farmers, weavers & sales women) in near by equal no. ‘s of (totaling 2,500 – too & half thousand) CCD’s herbal medicine company, mango pulp factory, bio-fuel pellet & smokeless stove companies are recognized widely in NGO world as examples of Corporate Social Responsibility (CSR, please see http://www.karmayog.org/newspaperarticles/ newspaperarticles_9996.htm)
About You
Organization:
Covenant Centre for Development (CCD)
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About You
First Name

Utkarsh

Last Name

Ghate

Your Organization

CCD

Country
About Your Organization
Organization Name

Covenant Centre for Development (CCD)

Organization Phone

+91 452 2607762

Organization Address

18 C/1, KENNET CROSS ROAD, ELLIS NAGAR, MADURAI 625 010

Organization Country
Organization Type

Non-profit/NGO/Citizen-sector Organization

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Your solution
Country your work focuses on

, TN

If multiple countries, please list them here. If your solution targets an entire region, please select it below
Region(s) your solution focuses on:

South Asia.

Range of turnover in your target firms, in USD

Less than $1 Million.

Average turnover in USD of your target firm

$50,000

Number of employees in your target firms

5-24.

Average number of employees of your target firm

20

Specify the size, average and range of expected loans or investments in each target firm

Food - $200,000
Medicine - $250,000
Energy - $100,000
Fiber - $100,000

What stage is your solution in?

Operating for more than 5 years

Innovation
How does your proposed innovation leverage public intervention in catalyzing private SME finance?

Government of India has started program to revive health traditions to secure health for all AYUSH (Ayuveda, Yunami, Siddha & Homeopathy) is the government department in charge of it. Government has all launched National Rural Health Mission (NRHM).

CCD seeks to highlight the empowerment of rural women groups in processing & marketing herbal medicines for primary healthcare. This will cost effectively, easily & quickly meet the NRHM goals if AYUSH legitimizes, standardizes & guides it. For, it is only promoting Ayurvedic Pharmacopeias based medicines today which is strong hold of the elite. However, 4 times the knowledge is practiced in village as per Govt. of India’s coordinated research led by National Botanical Research Institute (NBRI). It needs to be legitimized & standardized by AYUSH for its promotion & consumer safety.

CCD set up village Herbs Company & showed feasibility of this model. It can be now up scaled nearly in every rural block of the country. FRLHT (Foundation for Revitalization of Local Health Tradition) a center of Excellence of Ministry of Environment & forests, Government of India guided & funded CCD in setting up village herbs.

It is also recognized as praiseworthy initiative by the National Biodiversity Authority (NBA) of the Indian Government (www.nbaindia.org/docs/biologicalact2002.pdf) & United Nation Equator prize (http://127.0.0.1:4664/images/stories/2002winners/summaries_equatorprize.doc). So there is hope for its replication, growth & public funding in future.

What barriers does your proposed solution address?

Lack of financing to women entrepreneurs.

If you checked any of these barriers, describe how your solution addresses them

Lack of finance to women entrepreneurs is a huge constraint the women entrepreneurs groups do not get business equity. For, they do not posses assets due to patriarchal tradition. So they cannot pledge it as security for loan. Their groups are small & savings limited, mostly used in internal lending. So they cannot pledge it either. They business size profit margin & growth rate are too small to lure equity.

Hence, CCD tried to leverage donor grants for rural development & tied it to community contribution in terms of material for sales (raw drugs). For, it is a grant so there is no repayment burden & it can even pay for learning losses. However, it cannot pay for infrastructure or working capital, as most donors disapprove it. So CCD built in rental costs for infrastructure & market assistance cost for, raw drugs & used them together to make advance payments to gatherers. Also it took bank loan to promote the business & repaid it partly from business returns & nominally from grant fund.

Impact
Provide empirical evidence of your proposed solution's success/impact at present. If your project is in the idea phase, please provide evidence that speaks to its potential impact

The village herbs community enterprise has been able to provide secured livelihoods for 1800 poor landless women gatherers for the last 5-6 years, who earlier earned below $ 1 daily. Initial 3-4 years were difficult & only it 3rd of the beneficiaries could be reached due to lack of capital & cash flow problems. The women earn better today, got food security & better health & productivity. Their assets increased with some household gadgets like fan or radio. Women got bank account, savings & cheap credit. Few even got group/family insurance benefit for occupational hazards/healthcare accidents. Their awareness grew as they moved for review meetings & exposure tours by & for the company. They spend more on children’s education. They have better social status & dignity. Few women even fought or even local governance council elections.

Local banks were impressed with the financial performance & started lending for short term to the village herbs for routine business working capital after a Grameen Foundation (GF-USA) loan to CCD for disaster resilience in women entrepreneurs. much of the loan & now repaid & financial viability rations look sound.

CCD trained about 10,000 (ten thousand) rural poor families to grow & use 10 species of herbs kitchen gardens on wastewater. This cut about 50% of their healthcare budget.

The positive health impact & budget savings was found by as World Health Organization (WHO) consultant Dr. Lakshmi Rahamtullah.

Collateral Benefits –

CCD was enthused by the success of this community health enterprise. So it started & more enterprises based on local resources & traditional skills & (LRTS) as below –

a) Energy – smokeless stores & biofuel pellets in partnership with British Petroleum.
b) Food – Grocery (pulses, spices, oil) retailing & mango pulp factory
c) Fiber – Coir enterprise to restore lives of Tsunami victims, organic cotton factory & tree cotton variety farming to reduce faming costs as suicide prevention/as prevalent in other states due to farmers indebtedness as cotton farming is loss making

The village herbs company has a turnover of Rs. 7 million (US $ 150,000) annually ensuring income of Rs. 4,000/- each to 1,800 women gatherers. This is 30% above the income they got before or other gatherers get today. This is part from the security (saving, credit, insurance & market assurance) & social (empowerment) benefits village herb members got.

Other 3 companies provided similar benefits to other poor producers (farmers, weavers & sales women) in near by equal no. ‘s of (totaling 2,500 – too & half thousand)

CCD’s herbal medicine company, mango pulp factory, bio-fuel pellet & smokeless stove companies are recognized widely in NGO world as examples of Corporate Social Responsibility (CSR, please see http://www.karmayog.org/newspaperarticles/ newspaperarticles_9996.htm)

How many firms do you expect to reach?

CCD has identified 5 such Community Based Enterprises (CBE) in the herbal sector in 5 neighboring safety it will incubate them similarly from their present start up stage in bulk marketing of raw drugs & OTC unit. It may later start other rural development enterprises there. For instance, Sheopur district in Madhya Pradesh state & Balangir district of Orissa state are amongst the poorest ones.

What is the volume of private SME finance you aim to catalyze?

CCD has designed a budget of US $ 500,000 for outreach to 5 other states in GMCL format. Other enterprises may take double of this investment. Water borne diseases (WBD) affect about 4% of the population & 10% of children, as in Balangir with over 50,000 patients annually. WBD include diarrhea, hepatitis, typhoid, cholera, jaundice, worms, malaria etc.

What time frame will be required to reach these targets?

3 years (2011-14)

Does your solution seek to have an impact on public policy?

Yes

What would prevent your solution from being a success?

Rain fall is vital for herbal production & climate change is a huge risk to upset herbal production. Legal restrictions such as Good Manufacturing Practices (GMP) helped consumer safety but many rural herbal enterprises were closed. For, govt. did not pay to upgrade quality of factories/processes through training & infrastructure. Thirdly, govt. welfare scheme of Rural Employment Guarantee (REG) is paying good wages for non farm work such as road building or pond digging. More laborers are attracted to it than treacherous act of herb collection from wastelands.

There 3 factors are beyond the community control – climate, policy & other schemes. They pose potential risk to herbal enterprise. Potential strategies to minimize there risks are to (a) promote cultivation near assured irrigation funds (b) to seek investment & technology to maintain up to date standards & (c) to tap lucrative premium markets to price/wages. Flower that needs next business plan few years from now.

Sustainability
List all the funding sources that are required for the sustainability of this solution

It is proposed to seek $ 250,000 from multilateral donors (EU, FAO, IFAD). Another $ 100,000 will be mobilized from domestic donors. Another $ 150,000 from investors. About 50% of it from local banks & rest from venture capitalists.

Following donors supported this initiative in the past–
2000: Hivos – $ 25,000/- 2003-04
2001-2: DANIDA – 125,000/-
2002-04: Ford Foundation – $ 75,000/- 2002-05 (through FRLHT)
2003-04: Tata Trust - $ 25,000/- 2003-04 (through FRLHT)
2006-07: GFUSA (Grameen Foundation, USA, loan, not grant as above)

The Hivos grant was to study feasibility of the enterprise. Once found viable, Ford Foundation sponsored start up phase. Tata Trust funded value addition by setting up factory. DANIDA supported cultivation trials. FRLHT routed all these projects. DST supported drug development & standardization; the company is running viably for the last 5 years with 3 times growth.

Demonstrate how your proposed solution has the capacity to graduate from dependence on public finance. What is the time frame?

GMCL needed 3 years (2000-2003) for raw drug trade to break even with 800 with 4% profit gatherers & Rs. 3 million sales annually. OTC medicine production started in 2004 & reached breakeven in 3 years (2005) at just Rs. 1 million sales/year due to higher profit margin (9%). Thus expansion to new areas will need 3 years for the breakeven & freedom from grants/fresh investments.

Demonstrate how your proposed solution will survive a potential loss of its largest private funding source

Village Herbs Co. has no grant/equity income doubt sales revenue as the only income source. It has 3 major buyers –

Himalayan Drug Co. Ltd, Banglore
National Remedies Pvt. Ltd (NRPL), Banglore
Cavincare, Chennai

Initially only NRPL was the chief buyer. There are 5 other buyers now exceeding $10,000 purchase/year, including 3 local companies, one of them being govt. owned. Only quality & assured, timely supply helped to achieve this reputation.

It is hoped that village herbs will stick this experience & reputation in its business growth to the new poor regions. In case one of the potential equity investor exists, CCD will tap 1-2 other investors. CCD also has applied through village herbs for a loan of $ 50,000 for expanding local operations. This could serve as hedge fund. Also, the buyers have offered about $ 10,000 investments in agro-technology of few herbs for farming & buyback. There are safety cushions if future investors are lost.

Please tell us what kind of partnerships, if any, could be critical to the greater success and sustainability of your innovation

Value addition for export is a critical & unexplained partnership route for greater success. For, price & profit is much higher in it & producers can benefit greatly. Dynamic management can manage its risks.

Are there non-financial issues that could threaten the sustainability of your proposed solution?

As said before, climate & policy are 2 important non-financial risks to this enterprise ways to minimize those are mentioned there. Competition is another potential risk that looks non existent today. For, traders now cooperate with village herbs by selling it when own sources of village herbs are in shortage. Further, other NGO‘s tried such herbal enterprise but could not grow to this scale due to lack of business aptitude & management skill. Supply chain yet disruption of charity donation or currently fluctuation is another risk it CCD depend on foreign aid to expand herbal enterprise.

Please tell us if your proposed solution aims to scale up through a high growth sector, expand immediately to multiple sectors, and/or scale up geographically

Medicine is a high growth sector doubling the economic growth rate in many cases (16% & 8% resp. in case of India). Thus, village herbs grew at 25-30% rate/year from 2001 to 2007. However climate change welfare schemes & govt. regulation have curbed further growth in the last 3 years. With expansion to new areas, historical high growth story may be repeated. As it will spread to other sectors- food, energy, fiber, education, faster growth can be achieved, as experienced in Madurai in the past 10 years. So sectoral growth & expanding to new remote, hilly, forested areas for poverty alleviation will together ensure fast growth, alongside govt. schemes & venture capital.