Collective action by local communities has increasingly been recognised as crucial for effective management of natural resources, particularly the management of forests in the rural settings. This recognition is principally based on the universal and often unquestioned assumption that the involvement of local communities in the management of forests can improve the forest condition and utilisation. The collective action by local communities has significantly improved the condition of forests.
It is well established that non-timber forest products (NTFPs) contribute in various ways to the well-being of many rural and urban households and populations around the world. Valuation of the tangible contributions via household provisioning and trade indicate that income shares from NTFPs vary within and between communities and regions, and range from just a few percent to over 50%. Broad patterns, albeit with exceptions, indicate the income contributions are often highest amongst the poorest households and communities, large households, and those in more remote settings. There is also growing evidence that local and wider-scale commercialization of NTFPs is increasing in many regions, providing cash income to numerous households.
There has been a longstanding interest in commercialization of NTFPs from different disciplines as, on the one hand, a vehicle for poverty alleviation, and on the other hand, a dynamic process with the risk of driving unsustainable resource use practices. Which of these outcomes is more likely is context specific and is also a function of scale of the market. Products that are sold on national and international markets gather more attention from government and development agencies because typically they can engage a lot of people, have a long market chain with a variety of stages, skills required, actors, some degree of specialization, and perhaps value addition. In contrast, local markets are often overlooked by government and development agencies because they are characterized by the very opposite. However, what they may lack in length and value of the market chain, they often make up in the sheer number of participants and transactions. Thus, there is a greater need to both understand the nature and dynamics of local markets, as well as foster environments and policies that will support them and the underlying sustainability of the NTFPs on which they are based.
The market chain concept has been adopted from agricultural and institutional economics and applied to a wide diversity of NTFP enterprises in Nepal, such as honey, wintergreen for essential oil, jatamanshi as traditional medicine, soapnut berries, chiuri butter, anthopogon and artemisia for essential oil, etc, . Market chains describe the several links that connect all the actors and transactions involved in the movement of NTFPs from the source to the final consumer, unveiling a sequence of stages through which a product is bought and sold from the harvesters, processors, and traders, up to the final consumers. A value chain analysis helps to describe markets for NTFPs and assess how well the market chain is working. A value chain approach is a diagnostic tool that guides the identification of the actors within the chain, and the share of the final price or value that each secures. It is helpful because it fosters an understanding of why poor participants may not benefit optimally from their productive activities and what can be done to improve the distributional outcomes of their participation. Though most NTFP markets require few capital inputs, for many, especially in local markets, trading them tends to have low returns per unit. Reasonable incomes are more likely to be achieved if high volumes are traded, which requires capital to buy, store and to transport the products. However, there are exceptions, such as where the trade is in sought after niche items, such as cultural or high-value artistic artifacts, or where a third party agency helps promote fair and ethical trade or where national or export markets are tapped.